Social Security (Departmental Expenditure Limit) (Hansard, 25 January 2001)

§ 1. Mr. Tim Boswell (Daventry)
What misappropriations in the departmental expenditure limit for the Department of Social Security he has identified. [145790]

§ The Chancellor of the Exchequer (Mr. Gordon Brown)
None. Total social security spending, which rose by 4 per cent. in the previous Parliament, has risen by only 1.3 per cent. in this one. That figure includes the calculation of tax credits, and is the lowest increase in social security spending over any Parliament since the war. But for our choices to raise pensions and child benefits, social security spending would actually be falling each year.
In the interests of prudence, savings from fraud are not included until there is clear proof that they will be achieved. The costs of unemployment have fallen by £4 billion a year, partly as a result of the new deal and the new deal for lone parents. We believe that it is important in the national interest that those deals be maintained. It is for those who would promise a total of £2 billion in social security and new deal savings to explain in detail how they could be achieved.

§ Mr. Boswell
I thank the Chancellor for his characteristic and somewhat distinctive account of prudence. However, does he acknowledge that, apart from other important areas, the big three areas where fraud can arise in benefits are in jobseeker's allowance, housing benefit and income support, which together amount to more than 1p in the basic rate of income tax? Will he explain why the Government last year missed their fraud target by the staggering sum of £700 million?

§ Mr. Brown
Fraud was not even calculated by the previous Government for 16 of their 18 years in office. 1060 Fraud has fallen by 6 per cent. in the past year. We have implemented the Grabiner report, and are now legislating to move forward in that regard. We have implemented the main recommendations of the Scampion report as well, and are moving forward on that, too.
I had thought that we would get an explanation from the hon. Member for Daventry (Mr. Boswell), who is the Opposition spokesman on education and employment matters, about the savings that the Opposition claim to be able to achieve and how they would achieve them. [Interruption.] They get very upset when we ask them questions. I can only refer the House to the former Opposition spokesman on economics in the House of Lords, Lord Skidelsky, who said that the £1 billion of savings to be made by eliminating benefit fraud is the bottomless source of hypothetical savings to which all Chancellors are driven when they have run out of anything else to cut.—[Official Report, House of Lords, 7 December 2000; Vol. 620, c. 54.] That is a Tory verdict on the Tory party.

§ Mr. Nigel Beard (Bexleyheath and Crayford)
Does my right hon. Friend agree that the steps taken to reduce fraud have brought it to a potentially irreducible minimum, and that the Opposition's proposal to secure £1 billion out of further reductions is preposterous?

§ Mr. Brown
The Opposition have given no evidence that they could meet the £1 billion of savings from fraud that they are claiming. They have given no evidence either that they could achieve their savings target in single-parent benefits—save by cutting the benefit for every single parent on income support with a child over 11, while cutting the new deal for lone parents. They have given no evidence as to how they can continue to cut unemployment by abolishing the new deal. The choice at the general election, whenever it comes, will be between a party that is providing stability, creating jobs and investing in public services, versus a party of cuts, privatisation and boom and bust.

§ Mr. Matthew Taylor (Truro and St. Austell)
The Chancellor emphasises that he has held the rise in social security spending below the level achieved by the previous Government under the right hon. Member for Huntingdon (Mr. Major). However, cuts in disability benefits led his own Back-Bench Members to vote against him. Moreover, contrary to previous answers given in this House—and even when the benefits received by pensioners through the targeted income rises as distinct from the basic state pension are taken into account—the proportion of national wealth going to pensioners has fallen under this Government compared to the previous Conservative Government. Of which achievement is the right hon. Gentleman most proud?

§ Mr. Brown
We are spending more on disability benefits and pensions. We are spending more on health, education, social security and employment than the Liberal Democrat party was able to advocate at the previous general election. Some day, someone from the Liberal Democrat party will have to explain how it will spend more on everything—how it will finance its claims that it will raise spending in every area of the 1061 country. At the previous election, the party's policy was to raise pensions in line with inflation: we have done far better than that.

§ Mr. Andrew Miller (Ellesmere Port and Neston)
Is not a prerequisite of understanding departmental spending an understanding of basic arithmetic? I looked recently at Conservative figures suggesting that £425 million could be saved in housing benefit administration. When I looked a little deeper, I discovered that the arithmetic simply did not add up. Will my right hon. Friend help the Opposition by giving them a course in basic arithmetic?

§ Mr. Brown
Indeed, we are prepared to help out the Opposition if they are prepared to show some common sense, as they call it, in relation to their own policies. They have produced no evidence that they could ever get £1 billion in additional savings; they have produced no evidence that they could get £1.8 billion from cutting bureaucracy; and they have produced no evidence that they could cut single parents' benefit other than by taking benefits away from all single parents. They must now answer the question: how would they get the £1 billion worth of cuts?

§ Mr. Michael Portillo (Kensington and Chelsea)
I remind the Chancellor of the Exchequer that he is responsible for his own policies. What people will take away from today's exchange is that he is complacent about and indifferent to the amount of fraud in the social security system. I remind him that when the Conservative Government set targets to defeat social security fraud, we hit the target every time. As my hon. Friend the Member for Daventry (Mr. Boswell) has already pointed out, the Government have failed miserably to meet their targets.
What is more, the Government were presented with a clear recommendation to set up a single anti-fraud investigation unit. Not only have they failed to do that, but in a Labour party press release they pour scorn on that recommendation as being "an expensive mistake". Why is the Chancellor indifferent, and why does he lack the willpower to do what is necessary?

§ Mr. Brown
First, when the right hon. Gentleman was in the Treasury, there were no targets for fraud. Secondly, the author of the report that he is referring to in The Times, whom the right hon. Gentleman has used as his evidence, says that he is satisfied that the Government are making progress. Thirdly, all the experts who look at the Conservative party's proposals for saving £1 billion in fraud say that that cannot be done in the way suggested. [HON. MEMBERS: "Answer the question."] The question is that the Conservatives claim that they could save £5 billion, £1 billion of it from fraud, and they must now explain how they would do it. Every expert says that it is impossible. [Interruption.] They get very upset because they must go back to their constituencies and explain why they would cut into basic services.

§ Mr. Speaker
Order. May I remind the Chancellor that he is answering for Government policy? It is not for the Chancellor, at this stage, to ask the questions.

§ Mr. Portillo
Yesterday, a Minister was sacked for misleading the House of Commons, but today Ministers, in the form of the Chancellor, are once again failing to 1062 answer to this House. Is it not the case that, from the way in which they raise money, the way in which they represent Opposition policies and the way in which they fail to answer the House, we see the same pattern of sham and insincerity? Is not the truth that the only action that the Government have taken on fraud has been to reannounce the same policy 45 times? The right hon. Member for Birkenhead (Mr. Field) said, quite rightly, that the Chancellor thinks that issuing a press release and banging a drum amounts to the same thing as a campaign against fraud. It does not.
In The Times today, it is revealed that there have been 160,000 cases of suspected housing benefit fraud and only 800 prosecutions. That is the measure of the Chancellor's success. Is it not true that he is simply unconcerned with tackling fraud? He lacks the political willpower to do anything against it. He attacked the Scampion report in a Labour party press release, pouring scorn on it and saying that was is an expensive mistake. The only party with the willpower to tackle fraud and save £1 billion is the Conservative party.

§ Mr. Brown
The shadow Chancellor quotes the Scampion report every time and claims that the Government are not implementing it. In The Times this morning, Mr. Scampion answers the Conservative party once and for all. He states: "I understand"—[Interruption.] The right hon. Gentleman does not like it, but he is going to hear it: I understand where the Government are coming from. I don't see that what they are doing is undermining my recommendations at all. When we came to power, 40 per cent. of income support claims were erroneous: we have halved that. When we came in, there were no proper laws to deal with the fraud investigations that were taking place: we are taking action, with a new unit against organised fraud. When we came in, no proper cross-checking was being carried out on housing benefit claims: we have taken action on that. We set up the Grabiner committee; it has reported and we are implementing the report. The Social Security Fraud Bill is currently going through the House of Lords and will shortly come to the House of Commons. The Bill implements the "Two strikes and you're out" policy recommended by Grabiner.
In every example that the shadow Chancellor wants to use about non-implementation, we are taking action. However, after Mr. Scampion and Lord Grabiner, the right hon. Gentleman cannot come to the House and make up a figure of £1 billion in savings from fraud—just as he conjures up a figure of £1.8 billion from bureaucracy, and a figure for the scrapping of welfare to work and the new deal. That cannot be done without hurting some of the poorest people in the country.
In 1997, it was the shadow Chancellor who said that the Tories were linked to harshness. That is exactly where they are.