HC Deb 18 December 2000 vol 360 cc13-6
11. Dr. Lynne Jones (Birmingham, Selly Oak)

What his estimate is of the annual cost of fraud in the social security system. [141811]

The Minister of State, Department of Social Security (Mr. Jeff Rooker)

Social security fraud is estimated to cost the country at least £2 billion a year. We recently published figures that show a significant fall in fraudulent claims for jobseeker's allowance and income support. As a result, we are on target to reduce fraud by 10 per cent. by 2002 and to halve it by 2006.

Dr. Jones

Will my right hon. Friend clarify whether those figures include the cost of measures that have been introduced to detect fraud? Does he agree that prevention is better than cure and that designing out fraud is as important as rooting out fraud? Will he report on progress in simplifying the social security system so that more people can understand it and in reducing dependency on means-tested benefits and credits?

Mr. Rooker

My hon. Friend asks several questions. The answer to the first is no. The figure that I gave of £2 billion of fraud is established as a loss. Other figures have been bandied about, but they are based on strong or mild suspicion. We have a programme protection system. It costs several hundred million pounds a year to run and it protects a budget of £100 billion. However, it is necessary.

We have made considerable savings in the cost of fraud in this Parliament. We have saved more than £1 billion by implementing checks on new income support claimants, which is an improvement on the situation that prevailed before we took office. We have introduced several measures, which I could read to the House, and new legislation was forecast in the Queen's Speech. It is important to ensure that the correct benefit is paid to the correct person at the start of the claim and to keep that right. That is the one way to prevent fraud from entering the system.

Mr. Edward Leigh (Gainsborough)

The Minister might recall that in a previous Question Time I referred to an article in The Economist, which suggested that the amount of disability fraud is now so large and prevalent that the Government have given up trying to calculate it. The Minister was unable to estimate the level of disability fraud, but as time has now passed will he share such information with the House?

Mr. Rooker

No, not without being given notice of such a specific aspect of fraud. It is true—there is no question about it—that it is at a high level. We shall introduce legislation to fill gaps in our armoury against fraud, which I hope all hon. Members will support.

We have better-trained fraud investigators than ever before. The Department has recently taken on the former deputy director of MI5 and the former head of investigations at Customs and Excise. We are bringing into the Department people with better experience of rooting out fraud within the system. There is too much fraud, and we must do everything possible to cut it, whether it occurs in claims for disability benefits or other benefits.

Mr. Jeremy Corbyn (Islington, North)

Would the Minister care to consider for a moment that there is another form of fraud that his Department urgently needs to address? I refer to cases in which the administration and delivery of housing benefit is contracted out to various companies, which blatantly fail to perform that task. That results in thousands of people mistakenly being assigned rent arrears and, if they are local authority or housing association tenants, being threatened with the loss of their home, or, in the case of many private tenants, losing their home.

Is the Department prepared to look seriously at the appalling record of many of those companies—particularly IT Net, which administers the service in Islington and Hackney—with a view to terminating those contracts, ensuring that the job is done efficiently in-house and removing for many people the threat that they will lose their home?

Mr. Rooker

My hon. Friend raises important issues. In the administration of housing benefit, there are incompetent local authorities, just as there are incompetent private companies. The contracts to which my hon. Friend refers are awarded by the local authority, and it is not within my Department's competence to terminate them. The benefit fraud inspectorate scrutinises housing benefit authorities and publishes reports. In some cases there is collusion between tenants and landlords, and we must take steps to root that out as well.

It is outrageous that someone's home should be put at risk because of the straightforward incompetence of the private company to which benefit administration has been contracted out or the public sector that has not supervised the contractor sufficiently.

Mr. Eric Pickles (Brentwood and Ongar)

Does the right hon. Gentleman regret the answer on benefit fraud that he gave me on 13 November at column 640, when he said that the guidelines on the protection of customer information were identical to those that had previously been issued? It is clear that the discretion given to staff under the new guidelines is much greater than before and that there are other material differences.

Does the Minister also regret the written answer that he gave on 30 November, promising to deposit the old guidelines in the Library so that Members could compare them with the new ones? A few minutes before Question Time began, those guidelines had still not been placed in the Library.

Unarguably, paragraph 519 of the guidelines makes it clear that the Department will withhold from the police the identity of burglars, muggers and thieves. It is also clear from paragraph 511 that assaults on the Department's staff warrant disclosure, but assaults on members of the public do not. Is the Minister aware that, despite the guidance given in paragraph 517, the police are still struggling to get co-operation on matters as serious as murder? Is it any surprise that police morale is at an all-time low? Will the right hon. Gentleman stop defending the indefensible and change the guidelines?

Mr. Rooker

May I, first, apologise to the hon. Gentleman about the placing of the guidelines in the Library? Frankly, there has been a complete and utter breakdown. I answered a question and gave specific instructions. I rewrote the answer to the effect that, for comparison, I would put the previous guidelines in the Library until the last day of this year. They should be there, and I regret that they are not. I hope that they will be there by the end of Question Time. The delay is unforgivable and I apologise to the hon. Gentleman.

In a letter to the hon. Gentleman or in one of my answers I said that there were on-going discussions between my Department and the Home Office. They went on for a considerable time, and they have been concluded to my satisfaction and that of the Minister of State, Home Office, my hon. Friend the Member for Norwich, South (Mr. Clarke). A new concordat will be written and agreed by my Department, the Home Office and the police, so that there will be no complaints about the police not being able to get the information that they need from DSS officers in the pursuance of crime. There will be a change, as I forecast in one of my answers to the hon. Gentleman.