HC Deb 06 March 2000 vol 345 cc755-8
8. Dr. Julian Lewis (New Forest, East)

If he will make a statement on the Government's involvement with local authorities in the detection and prevention of benefit fraud. [111838]

10. Mr. Peter Brooke (Cities of London and Westminster)

If he will report on progress in tackling housing benefit fraud. [111841]

The Secretary of State for Social Security (Mr. Alistair Darling)

Fraud and error in housing benefit cost £800 million a year, so I am writing to local councils today to make it abundantly clear that where investigations by the benefit fraud inspectorate identify persistent failings, I will use my statutory powers to direct standards and time scales for improved performance. Too many councils are not providing the management information that we need to assess their performance, so I intend to use my powers to compel them to do so. Councils have been warned.

Dr. Lewis

I am puzzled by that response, because was not the key recommendation of the Scampion report into organised benefit fraud that the Government should set up a single agency to investigate it? As part of our common sense revolution, the Conservatives have accepted that recommendation, but the Government have not. Why not?

Mr. Darling

In 18 years, the last Government did absolutely nothing to stop more and more fraud creeping into the system. This Government have made every single improvement, such as making sure that money is paid securely into people's bank accounts, introducing tighter requirements on identification and on housing benefit, cross-checking DSS records, requiring local authorities to comply with Government directives and, if necessary, taking action against them if they do not. We are saving £1 billion in this Parliament alone. The hon. Gentleman's puzzlement should be directed towards his own party, which did absolutely nothing when it was in office.

Mr. Brooke

Despite declaring an interest in the successful prosecution for housing benefit fraud of a majority party councillor on Westminster city council after detection by the council, I ask the Government whether they are prepared to contemplate rewarding local authorities and providing as much incentive for successful prevention of fraud as for detection after the event.

Mr. Darling

The right hon. Gentleman will be pleased to know that earlier this year we agreed to reward councils for prosecuting or preparing housing benefit fraud cases for prosecution, and it is absolutely right to do that. The problem with the previous incentives system, which the Conservatives introduced, was that it rewarded councils for allowing fraud to enter the system. We are completely driving out fraud from the system, ensuring that we get payments right first time and ensuring that councils have the right incentives so that they are rewarded when they discover fraud and then prosecute.

Mr. Jim Cousins (Newcastle upon Tyne, Central)

Will my right hon. Friend acknowledge the effective wave of prosecutions that there has been in Newcastle upon Tyne via the partnership of the local authority, the police and the Benefits Agency? Will he acknowledge also that one of the main conclusions to be drawn from prosecutions over the past five years is that there is a great problem with the direct payment of housing benefit to landlords? That often means that the landlord has no incentive to manage the property properly and the tenants are not even those supposed to be in the property. Will he look at the potential for abuse associated with the direct payment of housing benefit to landlords?

Mr. Darling

Yes, we are looking at that. My hon. Friend will be aware that the Government are publishing a Green Paper on housing later this year. One thing that we are considering is the problem that can arise when housing benefit is paid directly into the hands of landlords. He mentioned the scheme in Newcastle, where the city council, the Benefits Agency and the police are working together. That is an excellent example of cross-agency co-operation leading to a reduction in fraud or its prevention in the first place. We want more of that throughout the country.

Mr. Jeremy Corbyn (Islington, North)

Is the Secretary of State aware that nobody is in favour of defrauding the housing benefit system? Will he ask his inspectors to look at the number of claimants who are, in effect, defrauded by the inefficiency of the housing benefit service delivered by many private contractors, who are so incompetent that thousands of people either lose out on housing benefit and consequently receive eviction or arrears notices from the local authority or, rather worse, are evicted by private landlords who cannot wait any longer for housing benefit rent to be paid? In his examination of the workings of the system, will my right hon. Friend ensure that legitimate claimants receive money quickly and on time so that they can maintain their tenancies?

Mr. Darling

I agree with my hon. Friend that anyone claiming housing benefit ought to have it calculated and paid as quickly as possible, but I must tell him that only a handful of local authorities use contractors to make such payments. I am sorry to say that there are as many mistakes in the public sector as there are in the private sector. Mistakes are not just the province of the private sector.

I am more interested in ensuring, first, that we have a system that is far easier to administer—it is in need of overhaul and the Government are overhauling it—and secondly, that local authorities or their agents become more efficient. That is why I am writing to local authorities today to warn them that, unless they increase their effort and improve their act, they will get a direction from me requiring them to take the necessary action to run the system properly.

Mr. David Willetts (Havant)

Does the Secretary of State recall his Department's commitment on 22 February 1999 to publish the report of the housing benefit simplification and improvement project? His Department is now saying that it has no plans to publish that report. Why has he abandoned his commitment? Is it because the report would reveal the mess of housing benefit administration, and explain why there are 250,000 known cases of housing benefit fraud and 700 prosecutions?

Incidentally, I remind the Secretary of State that his Labour election manifesto stated that there was not £800 million of housing benefit fraud—the figure that he has just given—but £2 billion. That change is significant.

Mr. Darling

The hon. Gentleman should be aware that this Government, unlike the Government of whom he was a member, are taking a number of steps not just to remove fraud from the system but to improve the administration of housing benefit. I readily agree—in fact, it is common ground across the House—that the housing benefit system needs to be improved and simplified. The Government will publish proposals later this year, so that they can be properly debated and implemented. Housing benefit should have been overhauled years ago. We are taking the decisions necessary to make it better and to cut out some of the fraud and difficulty—something that the hon. Gentleman's party never did in almost 20 years of government.