HC Deb 01 May 2001 vol 367 cc798-814 6.45 pm
Mr. Webb

I beg to move amendment No. 3, in page 10, line 30, leave out clause 7.

Mr. Deputy Speaker

With this it will be convenient to discuss the following amendments: No. 2, in page 12, leave out line 20.

No. 18, in page 12, line 24, after "any", insert "state".

No. 4, in clause 8, page 13, line 3, leave out clause 8.

No. 5, in clause 9, page 14, line 8, leave out clause 9.

No. 6, in clause 10, page 15, line 18, leave out clause 10.

No. 7, in clause 11, page 15, line 36, leave out clause 11.

No. 8, in clause 12, page 16, line 18, leave out clause 12.

No. 9, in clause 13, page 17, line 1, leave out clause 13.

No. 1, in clause 20, page 23, line 11, at end insert— '(1A) The Secretary of State may not make an order under subsection (1) to bring section 7 into force before a period of two years has elapsed from the date on which this Act is passed.'.

No. 10, in clause 21, page 23, line 20, leave out— '7, 10, 11, 12(3), 13'

Mr. Webb

I am grateful for the opportunity to debate the other main part of the Bill, which relates to benefit sanctions. It may appear that we have gone a little crazy in tabling amendments to delete clauses, but essentially we want to remove clause 7, and as it is referred to throughout the remainder of the Bill, it would not have made sense if we did not seek to delete the rest of the Bill too. Clause 7 is the nub of our concerns, as hon. Members present will know well.

I shall deal first with the amendments that make more modest changes. Amendment No. 2 is the most modest and deals with our desire to remove the threat of sanction from those who are successfully prosecuted twice for war pension fraud offences. Amendment No. 1 seeks to delay the implementation of clause 7 and, by implication, the remainder of the Bill. My hon. Friend the Member for Sutton and Cheam (Mr. Burstow) will be hoping to catch your eye, Mr. Deputy Speaker, to speak to that amendment. Amendment No. 3 is obviously our preferred route, which is to remove clause 7 from the Bill altogether.

The House will be aware that we discussed briefly in Committee the matter dealt with in amendment No. 2. I expressed the concern, which had been voiced in the other place, that war pensions are on the list of benefits for which a fraud offence committed twice leads to a sanction, but retirement pensions are not. When I raised that point on Second Reading, the Minister of State, who has kindly explained why he cannot be with us, chose to imply, tongue in cheek, that I wanted to bring retirement pensions within the scope of the clause. Of course I want war pensions to be removed, and that is what the amendment would do.

In our Committee deliberations on 9 April the Minister of State gave some information about war pension fraud that we had been unaware of, when he said: I may be undermining my case, but I want to be as open and frank as possible: six cases of fraud were detected, but there were no prosecutions."—[Official Report, Standing Committee A, 9 April 2001; c. 79.] Hardly anyone ever gets done for war pension fraud—there are only six cases in recent memory and none of those led to a prosecution. Yet the provision on war pensions would be enacted only if a person were prosecuted twice. Something that seems not to happen at all would have to happen twice if the provision were to come into force.

One might say that although such prosecutions never happen, it does no harm to have such a provision in the Bill, but it is clear that war pensioners' organisations took offence at the suggestion that there was war pension fraud. As the Bill includes war pensions but not retirement pensions, there is some suggestion that retirement pensioners are deemed to be above fraud but war pensioners are not. Our judgment is that if a provision gives offence to a group who deserve our respect and achieves no practical purpose whatsoever, it should not be included. It achieves nothing.

Ministers are fond of saying that such measures send signals, but it is far from clear to whom this provision sends a signal. Presumably, it sends a signal to the six people who have committed war pension fraud, although none of the cases was considered sufficiently serious for the person to be prosecuted. To give offence to a significant group to whom this country owes a great debt for the purpose of sending a signal to, at best, six people, none of whom would be affected by the provision anyway, seems absurd. I hope that, in an end-of-term spirit, the Minister will look sympathetically on this modest change, which is unlikely to have any effect on the Government's finances or on benefit fraud but which will remove a source of offence to Britain's war pensioner community.

Amendment No. 3 deals with the substantive issue, as it would delete clause 7 from the Bill; the other amendments follow from that. I do not want to go over old ground again and repeat the debate that we had in Committee. I shall, however, summarise the key distinction between us, the Government and, probably, the Conservatives. We are far from the position that the Minister of State sought to parody when he introduced the notion of benefit fraudsters as lovable rogues; we have not used that term, and would never use it. All three parties are united in the view that benefit fraud is serious and needs to be reduced and stamped out. Indeed, that is why we shall not oppose the Bill on Third Reading. There is no difference between us on that.

I hope, though, that we can have a mature debate in the House on sentencing policy. When different parties debating a home affairs Bill agree that something is a crime, but do not know how severe a sentence should be, I hope that nobody says that one party is a friend of the criminal just because it thinks it appropriate to have a longer or shorter sentence. It is a matter of appropriateness, and that is what we are debating now. We are not debating whether something is right or wrong; the question is: what is the appropriate sentence?

The Government believe that, in cases of two strikes—two convictions for benefit fraud—it is appropriate to deprive people of part of their income. The biggest problem with that, however, is that it impacts not just on the individuals themselves, but on their dependants, including their children. An unanswered question from our earlier deliberations concerns the fact that the Government have pledged to abolish child poverty. I submit that any child living in a sanctioned household is, at the very least, at risk of poverty. An innocent child, whom we do not hold responsible for the actions of his or her parents, will be living below the poverty line in such a household. How can the Government's stated aim of abolishing child poverty be consistent with putting a child's household below the poverty line? We have not had an answer to that point and I do not suppose that we will, as there is none.

The second problem is the effect of the sanction. The Under-Secretary will say that the Government do not really want to use the sanction because, in practice, there will probably be a few hundred cases. She will say that the Government want to send a signal; they do not want the sanction to be used. Clearly, however, it is envisaged that it will be used in, say, 500 cases. What effect will forcing people below the breadline have on their subsequent behaviour? Is it clear that it is in society's interests for people not to have enough money to make ends meet? If someone has already transgressed the law not once, but twice, what effect will it have if we then find them stealing or doing something like that to make ends meet? It is not clear that that form of punishment is in society's interests at all. We object to the clause for the way in which it affects those incidental to the crime.

Mr. Pickles

I read the hon. Gentleman's contribution in Committee and have listened to him most carefully. So that I am clear, will he say whether Liberal Democrat Members believe that everyone has a right to benefit, regardless of behaviour?

Mr. Webb

We believe that an appropriate punishment for misbehaviour should not deprive people of subsistence. Obviously, we do not oppose putting people in prison for serious offences, but when they are there, they should not be deprived of food, clothing and shelter. Indeed, prisons provide all those things. People can be deprived of their liberty for something extremely serious, but are granted food, clothing and shelter. It is therefore anomalous that, if they do something else that we object to, but which does not warrant a custodial sentence—or, at least, in many cases does not get one—we should think it appropriate to deprive them of money needed for basic subsistence.

As members of society, people have a right to basic subsistence. For society to punish people by depriving them of basic subsistence is inhumane; for their dependants, it is particularly inhumane. If, for example, community service were used to penalise repeat offenders, that would penalise individuals without penalising their dependants or forcing households below the poverty line. If a custodial sentence were deemed appropriate for a serial offender, one could debate whether its effect on dependants was better or worse than getting by with no money. However, a humane society should not respond to what, admittedly, is serious crime by depriving people of the basics of life.

Angela Eagle

Is the hon. Gentleman saying that the only people who are going to commit benefit fraud are those with no money whatever?

Mr. Webb

No, of course not; that is an absurd suggestion. We are suggesting that the sanction policy will leave people below the breadline. In any given week, people already have fixed costs that they cannot avoid. For example, people have to pay their housing costs or else they lose their home, and they have to pay for their gas, electricity and so on. Once all those necessities have been paid for, the amount of discretionary spending may be extremely limited and it gets squeezed.

We have all heard stories of parents on a tight budget who forgo their meals to make sure that their children can eat. Basics such as food get squeezed because many household bills must be paid, come what may. I am therefore rather puzzled by the Under-Secretary's intervention. The intention of the policy is that people will be left below the benefit line, which—especially bearing in mind the children—is not an appropriate way for the state to punish people who transgress. Other forms of punishment are more humane and appropriate for that sort of offence.

In a moment, my hon. Friend the Member for Sutton and Cheam will seek to explain our thinking in trying to delay the provisions—if that is possible—and will look at the effects of other sanctions in the benefit system. Naturally, our preference is for these measures not to be in the Bill at all, and we wish to persuade the Government that the offence given to war pensioners through the inclusion of the measure in the Bill achieves no useful purpose and only gives offence. It would be to everyone's benefit if it were removed.

Mr. Pickles

The hon. Member for Northavon (Mr. Webb) said that very little would be achieved by clause 7, which was largely symbolic. That is the entire purpose of the Bill. I do not think for one moment that very much will be achieved by clause 7. The rhetoric of the Under-Secretary and the Minister of the State is quite different from the rhetoric that we heard when the Bill was first announced; the Prime Minister made great play of the clause and the policy of "two strikes and out". I recall that the departmental press release led with that item. However, the hard truth is that the provision is not likely to hit more than 500 people a year. Frankly, I doubt that the figures will ever reach that level, as the problem of reoffending is relatively small.

We support the clause on the basis of the assurances that the Under-Secretary has given. On Second Reading and in Committee, she was pressed on a number of occasions to say whether the provision conformed to the European convention on human rights. We are now a signatory to various ECHR protocols and it is part of our law. The Under-Secretary said consistently that we should put our trust in her; she had taken legal advice, and she could give us an assurance. The Opposition remain remarkably unconvinced by that argument. We do not believe that the provision will pass scrutiny in the courts, and we are worried about that because, in a few years' time, when we have been in government for a couple of years, we will get the rap. We will find ourselves having to go to the High Court to try to defend those systems. Those who introduced them will either have retired or be in opposition. We shall wait and see.

7 pm

I very much agree with the hon. Member for Northavon on war pensions. There is more than a tinge of post-modern irony in wishing to include them in the Bill. I cannot see the logic in applying the provisions to war pensioners and, frankly, it makes the Bill seem ridiculous. There is exactly the same logic in excluding war pensioners as there is in excluding state pensioners—very few of either category commit fraud. The hon. Member for Northavon said that there have been no prosecutions in the past six months and that there have been only six cases, but he did not say—out of charity, I suspect—that the Government do not know the figures.

The Under-Secretary has said that no study has been undertaken to ascertain the number of people involved, so let us assume that it is ludicrously low and that there is much more war pensions fraud than we think. Instead of six, the figure might be eight or nine, or it might even reach double figures. We are discussing not "one strike and you're out" cases, but repeat offenders whose involvement might run to 10 cases a year, although I doubt whether there would be even one. Why include the provision?

I doubt whether even the most low-brow television soap opera with flagging viewing figures would develop a story line suggesting as credible a repeat fraud offence by a war pensioner. There is no reason to include the provision, which demeans the Bill by its very presence, so I have a lot of sympathy with amendment No. 2, which has been tabled by the Liberals.

Our amendment, No. 18, would clarify the retirement pensions issue by inserting the word "state". I am sure that the measure is intended to cover state retirement pensions, but I would like an explanation of why that word is not included.

In reply to the question whether the Liberal Democrats support a universal right to benefit, the hon. Member for Northavon gave me a number of examples. In fairness, I think that he was saying yes. It does not seem to matter to the Liberal Democrats how the recipient has behaved or how much and how many times he has defrauded.

Mr. Webb

Will the hon. Gentleman give way?

Mr. Pickles

I am about to tell a rather good joke at the hon. Gentleman's expense.

Mr. Webb

rose—

Mr. Pickles

I shall take the intervention first.

Mr. Webb

I do not want to ruin the hon. Gentleman's timing, but to clarify the point I should say that we are certainly not querying punishment for benefit fraud. Indeed, I referred to community service and imprisonment. Clearly, people who are in prison lose their benefit, so we are not saying that entitlement should be retained come what may, but we are questioning whether removing benefit from someone living in the community is the right penalty.

Mr. Pickles

That was most helpful. I read the exchanges in Committee between the hon. Gentleman and the Minister of State, which at times seemed a little bad tempered. The hon. Gentleman is a very reasonable man, so I cannot understand why the Minister of State was so beastly to him.

Mr. Gerry Sutcliffe (Bradford, South)

I can.

Mr. Pickles

No doubt the Whip can, but I am a more tolerant chap.

I would not want to put words in the mouth of the Liberal Democrats, but they seem to be suggesting a strongly worded reprimand as a sanction—a cup of tea and an inquiry as to whether the recipient is getting enough benefit. In truth, I can see the Focus headline: "Liberal Democrats wag finger at fraudster", or "Fraudster told by top Lib Dem that he has been very, very naughty". Their response is wholly inappropriate.

I recall the hon. Member for Northavon quoting on Second Reading Mr. Paul Cavadino, director of policy at the National Association for the Care and Resettlement of Offenders. He was wise to do so, because those remarks sum up the objections to the Bill. The quote runs to only three sentences, so I shall read it into the record: Any change should be based on improving the likelihood of those on community sentences turning their back on crime and leading law-abiding lives. Withdrawing benefits from those not completing a community sentence order would be counter- productive. Without some other means of income, it is inevitable that some will fall back on crime to make ends meet. There is nothing inevitable about people committing crime—that is the politics of Danegeld. Why offer bribes to fraudsters to prevent them from committing crime? We should not say, "Here's a nice handout. Take it, and please don't commit crime."

I see the hon. Member for Bradford, South (Mr. Sutcliffe) on the Government Front Bench. He and I know areas of the north of England that are racked with poverty, but we also know that people in those areas do not habitually commit crime. They do not commit crime because they have pride in their neighbourhoods, their lives and their families. Nobody is forced to commit crime; the Government are right that no one has an automatic right to benefits; and we agree with them that there is a contract between the state and the recipient.

For the sake of time, I shall risk oversimplifying the matter. Some people may seek work or offer continuing care as part of that contract, but riding through it all is an obligation to be honest in order to qualify for benefit. The argument about serious crime and providing clothing and food for murderers is spurious, and I do not accept that the measure represents double punishment.

If a person applied for a grant to defraud the taxpayer, we would rightly refuse it, so why should fraudsters have their life style rewarded with continued full benefit? After all, the measure will apply for only 13 weeks; it is only a part-provision and other measures exist. Allowing people to continue to receive benefits when they have openly defrauded the benefits system—not once, but twice—represents laughing in the face of that system.

The measure may be symbolic, it may not have vast effect and only a few people may be affected by it. Nevertheless, I believe that it will continue the establishment of an important principle: there is no automatic right to benefit and there is a contract between the citizen and the state in respect of honesty.

Mr. Paul Burstow (Sutton and Cheam)

I shall speak briefly to amendment No. 1, but I must first pick up on a couple of comments made by the hon. Member for Brentwood and Ongar (Mr. Pickles). He referred to the exchanges in Committee on 9 April and, in particular, to the Minister of State's attempt to parody or caricature the position taken by the Liberal Democrats. The hon. Gentleman did his best to do the same.

We are not in the business of rewarding cheats. Like Labour and Conservative Members, Liberal Democrats believe that we have to bear down on benefit fraud, but we also believe that the punishment should be appropriate and targeted on the offender. It should not be so indiscriminate as to impact on the family, as if guilt by association justifies applying a sanction that will result in difficulties and hardship not only for the individual, who may deserve to face hardship, but for his relatives. We have therefore tabled amendment No. 1, although as my hon. Friend the Member for Northavon (Mr. Webb) said, we would much prefer the clause not to see the light of day.

We believe that a delay is necessary because the Government should surely take time not only to reflect, but, better still, to gather the evidence on which they want to justify their policy. There is a lack of evidence to sustain the case that the measure represents an effective means not only of sending a signal, but of genuinely changing behaviour. There are questions, which my hon. Friend raised in Committee and on Second Reading, as to the knock-on, collateral damage that will be done to the families of benefit cheats. It is wrong that families and children should be made to suffer for the sins and omissions of parents who are tempted to defraud the system.

My hon. Friend the Member for Northavon referred in Committee to the limited research that has already been done on the matter by the Department for Education and Employment and the Department of Social Security. That work is set out in research report No. 86, which evaluated jobseeker's allowance. I believe that Ministers have relied on that report at least as evidence to show that they have researched these matters, but the important thing is that it was based on a sample of only 30 people. That is the basis on which their policy is being built. When one considers what those 30 people said and the change of behaviour that was involved, one sees that the evidence does not support the Government's policy.

That is why we propose a novel idea to the House and to the Government: evidence-based policy. There should be some evidence before the Government act in a way that will do harm. That is why we are saying that they should delay the measure for two years. Why two years? We believe that, if the matter is to be investigated effectively, time will be needed to set up the necessary research and to track the impact of the policies and sanctions that are already in place in respect of jobseeker's allowance and the Child Support Agency. We must track their impact over time to investigate their effects on families and so on. Finally, at the end of such a project, there must be a proper evaluation.

As I said, we believe that benefit cheats should be punished, but that the children, who will be innocent of the crime, should not be punished with their parents. That is why we have said that benefits sanctions are about seeking retribution. We do not believe that that is the role of the state, although we think that it does have a role in seeking restitution and rehabilitation. That is the proper balance, but the Bill is unbalanced and is unfair and unjust as a result. It is entirely right to demand that people who defraud the system should repay the money, pay fines and give community service, and to ensure that habitual fraudsters serve time; but it is wrong of the House to agree to an unfounded, unresearched and ill-conceived measure without even having the grace to pause and conduct proper research. I hope that the House will consider accepting amendment No. 1, even if it is minded to reject the other Liberal Democrat amendments.

Angela Eagle

The amendment would either remove the two-strikes provision or delay it for two years. In effect, the delay would be longer, because the two strikes must be built up. It is reasonable to assume that it would be unusual for somebody to receive two convictions for benefit fraud in a single year, so the amendment would delay the biting of the two-strikes sanctions even further, and it will not surprise the House to learn that the Government oppose it.

The hon. Member for Brentwood and Ongar (Mr. Pickles) almost argued in his welcome last-ditch appearance in our proceedings that the Bill was modest. He seemed to hint that he wanted us to go further. However, the hon. Member for Northavon (Mr. Webb) was almost apocalyptic about the poverty that the two-strikes sanction would cause to innocent members of the families of benefit fraudsters. I do not underestimate the effect of sanctions, and the hon. Gentleman might have had a point if the sanctions involved in the two-strikes process, which is set out from clause 7 onwards, removed all benefit, but they apply only to the personal elements of benefits and are designed specifically to operate alongside a hardship scheme, which ensures that innocent members of a family unit whose head has been involved in benefit fraud are appropriately protected. He was guilty of the grossest exaggeration in his portrayal of some of the effects of the two-strikes sanction.

7.15 pm

Last year, more than 22,000 people were sanctioned for cheating the benefit system, and almost half of them were subsequently convicted of benefit fraud. On the hard core of repeat offenders, the hon. Member for Brentwood and Ongar rightly referred to 500 people; indeed, about 500 people a year would fall under the two-strikes provisions. The intention of the provisions is to deter those who persist in repeat defrauding of the benefit system, but never come across any sort of sanction.

I can give some examples of the sort of cases that are involved, some of which are mind boggling. For example, one person was prosecuted for working while claiming and was then done for stealing and cashing a relative's child benefit book. Undeterred, that person was then prosecuted again for attempting to claim jobseeker's allowance to which he was not entitled. The people whom we are targeting steal vast sums of money that could be better spent elsewhere on more deserving causes such as the alleviation of child poverty.

Two people were recently convicted because of their part in a ring involving stolen girocheques, which caused an estimated loss to public funds of £670,000. In another case, a woman admitted making false benefit claims after 11 benefit order books and documentation relating to several other different identities were found at her address. The overpayment was calculated at more than £140,000.

At the other end of the scale, a man was recently convicted of stealing from a blind friend a disability living allowance order book and girocheques worth £1,200. In another case, a man who had previously been convicted of order book fraud admitted on arrest to obtaining his ex-partner's order books and advancing the dates on them. He also admitted to a series of irregularities covering a further seven order books and a girocheque.

Mr. Pickles

Those examples illustrate the utter callousness of people who defraud the state, but surely the Under-Secretary's remarks do not apply to war pensions. Is not it better to concentrate on fraudsters such as those whom she describes and not to establish powers for war pensions that have not been taken in relation to state pensions?

Angela Eagle

I shall deal with the war pensions aspect of the amendments in due course. I am happy to answer the hon. Gentleman's question, but I would prefer to do so when I am speaking about the relevant aspects of the amendments.

The Department does not prosecute in cases where there is no public interest in doing so. The people whom the sanction will hit are the cheats who systematically abuse the system for their own gain, not only once but again and again. It is intended not only to provide a deterrent, but to send a signal saying that such repeat behaviour will not be tolerated in the system. I hope that it works as a deterrent. Paradoxically, one of the signs that suggest that it might be working is that there are few repeat offenders. People realise that the game is up and that they cannot continue cruelly and callously to milk the system. They must realise that cheating the benefit system and stealing money from the most vulnerable people in society, who rely on the welfare system, ensures that there is less money to go round for those who are needy. That is why we must consider a viable deterrent. The Government believe that the two-strikes sanction is an appropriate way of dealing with the problem.

The hon. Member for Northavon expressed in exaggerated terms his worries about the effect on the families of people who have committed the offences. The Government intend that the sanctions should hit the people who were responsible for the fraud, rather than their innocent family members. The sanctions affect 40 per cent. of the personal allowance, or 20 per cent. of it if there are vulnerable people in the family, which is the case when the claimant or a family member is pregnant or seriously ill.

Those sanctions are not new; they have been a feature of the benefits system for a long time. However, we are extending them to those who systematically defraud. Housing and council tax benefits will be unaffected when the claimant has an underlying entitlement to income support or income-based jobseeker's allowance. If there is no such underlying entitlement, we intend to reduce housing and council tax benefits by an amount equivalent to 40 per cent. of a single person's allowance or 20 per cent. if the claimant or a family member is pregnant or seriously ill.

The opposition of the hon. Member for Northavon to sanctions is well known. I know that I will not persuade him to change his mind, but I should like him to consider and accept that child benefit will never be withdrawn, that housing and council tax benefits will continue to be paid even when jobseeker's allowance or income support is sanctioned, and that premiums payable for the family and children will not be reduced. Only the personal allowance will be affected. Free prescriptions and school meals will remain available even when a benefit is sanctioned. All those protections will ensure that innocent members of families, about whom the hon. Gentleman is so worried, will not suffer.

The hon. Gentleman must accept that benefit sanctions are designed to deter persistent defrauding of the system. They therefore need to be tough. However, I hope that he will also accept that we have attempted to strike a balance and provide protection by granting access to hardship schemes. Those affected will, after all, have been convicted twice. I expect us to revert to those matters in future, but I cannot accept amendments that would tear the Bill in half and remove the sanctions.

I expect us to repeat some of the discussions that we held in Committee on war pensions. However, the amendments would have the unintended effect of preventing war pensions from being a disqualifying benefit. That would mean that fraud against it would not count as a strike under the two-strikes provisions. The amendments would also stop war pensions being a sanctionable benefit. If that happened, people could target war pensions for fraud. I suspect that the hon. Member for Northavon did not intend that.

War pensioners are decent and law abiding, and the money that they receive reflects the debt that society owes them. I can therefore understand the reasons for some hon. Members' reservations about their inclusion in a fraud-related provision. However, we believe that it would be inappropriate to exclude them. Opposition Members will not agree with me, but I shall explain why we remain of that opinion.

In Committee, the hon. Member for Northavon argued that if there was a good case for excluding retirement pension on the ground that there is almost no evidence of fraud, that also applied to war pensions. However, we are considering not merely numbers but whether a benefit should be sanctionable or has the potential for fraud.

The retirement pension is not a sanctionable benefit, and the majority of war pensioners are now over pension age. However, there are big differences between the rules for the two benefits. Those for the retirement pension are simple. Anyone who is over a certain age and has paid contributions receives it. It is difficult for someone to commit fraud against it. However, that does not apply to war pensions, and entitlement depends on other issues, such as income.

Mr. Burstow

I am listening closely to the explanation for retaining war pensions in the measure. Have the Government considered using regulations instead of specifying war pensions in the Bill? Such an approach permits the addition of benefits over time. If the Minister accepts that there is little fraud against war pensions, why not consider using regulations and removing the provision? The Government would thus not insult war pensioners.

Angela Eagle

We are not insulting war pensioners by stating in a measure that it is possible to commit fraud against war pensions. I agree that only a trickle of war pensioners have committed fraud, none of which has been sanctioned. We have been open about the figures in our debates. We do not prosecute when it is against the public interest. However, it is possible to commit fraud against war pensions. Including that possibility in the measure does not mean that the Government claim that all war pensioners defraud the system.

Mr. Pickles

The Minister is right to say that the clause is symbolic and conveys a message. However, including war pensions conveys a bad message for the Government. I am confident that she has examined the figures, so will she answer a simple question? How many war pensioners in the past five years, or the past year, have committed the offence twice?

Angela Eagle

The hon. Gentleman asks a question to which, like those in referendums, he knows the answer. In the past year or so, there have been six cases of war pensioners defrauding the system. None has been prosecuted and none has so far repeated the offence. As I said earlier, we have been as open as possible about the figures. However, that does not mean that the provision should not be included in the Bill. I emphasise that the Government do not claim that war pensioners are fraudsters, but we want to allow the Bill to extend as far as necessary in case there is a problem in future.

Amendment No. 18 uses the term "state retirement pension". It is widely used but has no meaning in law. The reference to "any retirement pension" may appear too broad, and I suspect that that led to the amendment. However, it should be considered in the context of "disqualifying benefit" in clause 7(8). It defines sanctionable benefits as any disqualifying benefit other than and lists the exceptions, including "any retirement pension".

Subsection (8) defines a disqualifying benefit as any benefit under the Jobseekers Act 1995 or its Northern Ireland equivalent, or any benefit under the Social Security Contributions and Benefits Act 1992", its Northern Ireland equivalent or "any war pension". The Bill therefore refers to any retirement pension that is paid under the 1992 Act.

We commonly describe those pensions as "state retirement pensions". The phrase covers the basic pension, the new second-tier pension or the old state earnings-related pension scheme. Other pensions, such as private and public sector occupational pensions, are not paid under the 1992 Act. There is therefore no need to tighten the definition because, perhaps despite appearances, the Bill makes the necessary provision.

We strongly believe that clause 7 and the two-strikes provision are important. We therefore oppose Liberal Democrat Members' attempts to remove them. The two-strikes requirement sends an important signal that we will not tolerate continued defrauding of the benefit system and that we will continue to search for methods of protecting public funds from people who believe that they can defraud the system indiscriminately. All the amendments are unacceptable and I hope that they will be withdrawn.

Mr. Webb

The Minister, with her usual prescience, guessed right: we are unconvinced by the responses. The best that the Government can do on war pensions, which united the Conservative party and the Liberal Democrats, is to say that if we squeeze other parts of the system, pressure will be brought to bear on war pensions and that that will lead to a mysterious surge in serial, bogus war pension applications. That seems practically absurd. Regrettably, this is a case of a Department that, at this end of the building, does not accept amendments to its Bills—however flawed they may be—on principle, regardless of the merits of the arguments.

7.30 pm

On the question whether the sanctions provisions should be in the Bill at all, I am grateful to the Minister for making at least some attempt to respond to the question, "What about the children?" She mentioned hardship provisions, and said that the sanctions would affect only the personal allowance, not the other parts of the benefit. However, she seems to be holding two mutually inconsistent positions. The first is that the sanctions are going to hurt and will be a deterrent. She believes that they will put people off, because people will know that if they are bad boys, the sanctions will hurt. Then she says that they will not hurt the children because there will be hardship provisions.

Those two statements cannot simultaneously be true. Either the sanctions are not going to hurt, in which case everything that the Minister claims for the Bill will not work; or they will hurt, in which case they will also hurt the children. It seems to me that, within a benefit unit, when the only income coming in is being paid to the claimant, about whom we are arguing—

Angela Eagle

rose—

Mr. Webb

This is very exciting; I give way to the Minister.

Angela Eagle

What I have tried to say is that there are protections for the children, and that there is also a balance to be struck between getting the deterrence right and indiscriminately hurting the innocent. The idea is that the provisions strike that balance, which is what I was attempting to get across to the hon. Gentleman.

Mr. Webb

The hon. Lady did, indeed, use the word "balance". However, the question is whether any diminution of the living standards of a child is acceptable. Can we go any way down that road when trying to strike a balance with the other things that we are trying to achieve? The rights and welfare of the child should be inviolate in these circumstances, and the punishment should not leave a household, or benefit unit, below the poverty line.

The Minister seemed to suggest that, because one part of the total amount of benefit was being sanctioned, it could somehow be ring-fenced and that the welfare of the child would not be prejudiced because the money intended for the adult would go down, but the money intended for the children would not. It is clearly an absurd notion that the flow of funds into a household can somehow be ring-fenced. Although one part of the money is nominally paid in respect of the adult and another part in respect of the children, in practice that money all goes into one pot in that household. As I said earlier, the first thing that happens is that the necessities are paid for. Necessities such as food and bills do not go away. What is left is then spent on what the household needs.

Angela Eagle

Given that, after a first conviction, an individual will receive plenty of warning not to do it again, and be told what will happen if he or she is convicted of a second offence, does the hon. Gentleman think that that individual should take any personal responsibility for his or her future actions and the effect that they may have on his or her children?

Mr. Webb

I absolutely think that they should take such responsibility. The question is if they breach that personal responsibility, who should suffer—the individual or the children? The Minister appears to be happy that the children would suffer as well as the parent. She has said precisely that. She has said that the appropriate penalty is a loss of income to the household. All the members of the household will suffer. They are not ring-fenced. A person who does something that we all agree is wrong, and who has committed the crime twice, is presumably not the kind of person to say, "Well, I'll keep the money for the kids and make sure that they are all right, while I take it on the chin." Indeed, the contrary would be the case.

Angela Eagle

I thank the hon. Gentleman for being so generous and giving way again.

All through the debate, the hon. Gentleman has said that he is happy for these people to go to prison. Does not he think that household incomes and children might suffer when that happens, probably in a far worse way than would be caused by a benefit sanction lasting 13 weeks?

Mr. Webb

So far as I am aware—the Minister may correct me on this point—the spouse and children of someone in prison retain full benefit entitlement proportionate to the size of the family that remains to be supported. [Interruption.] An intervention from a sedentary position suggests that prison would impose a bigger financial penalty.

Let us assume that a person—to make life simple, let us say a father—is in prison and has gone out of the household. The benefits system determines how much money the mother and children need to live on. Unless the Department of Social Security is saying that the benefit rate for what is left under the provisions is enough for a family to live on, that family will have a better standard of living than if it had an extra mouth to feed and a less than proportionate increase in benefit. Hon. Members have not grasped the point that a family whose father is in prison will have one mouth fewer to feed, but under the provisions it will have lost the sanctionable part of the money. Materially, its living standards would, therefore, be higher in the former case.

Imprisonment is an extreme penalty. I mentioned community service. Assuming that we consider community service to be a penalty—there might be those on the Conservative Benches who do not—why would not it be an appropriate response? It would penalise only the person who had committed the crime, not their children.

The Government have said that they want to abolish child poverty: they want no children—zero—in poverty. The measures, applied to a sanctioned family, will leave it in poverty, below the benefit level. So long as the legislation remains on the statute book and is being applied to families with children, the Government will never achieve their stated goal of abolishing child poverty.

My hon. Friend the Member for Sutton and Cheam (Mr. Burstow) suggested that we should delay the implementation of the provisions. In a slightly convoluted argument, the Minister suggested that a delay of two years would be a delay of more than two years because it would take time for things to get going. However, even if the Bill became law tomorrow, it would take time to get going, so my hon. Friend's proposal would entail implementation two years later than the Government's implementation and no longer. That time could be better used to examine the effect on children, for example, of sanctions that are already in place, before introducing any more.

The Government have cited one piece of research that they have carried out. There is no evidence that that research has informed the way in which the sanctions are structured. The Minister has not tried to argue that. The Government have done some research and, so far as I can see, ignored it. The evidence is that families, and particularly children, suffer in these circumstances.

There is clearly a fundamental difference of principle between ourselves and the other two parties. It would probably be fruitless to divide the House on this issue, but we shall certainly continue to campaign—in this Parliament and beyond—for the principle that punishing an innocent person for the guilt of another is not a humane punishment policy. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Order for Third Reading read.

7.37 pm
Mr. Rooker

I beg to move, That the Bill be now read the Third time.

I apologise for my absence during the last part of the previous debate. I am sure that hon. Members will appreciate the reasons. I am grateful to the Under-Secretary of State for Social Security, my hon. Friend the Member for Wallasey (Angela Eagle), for dealing with the last group of amendments.

This is a short Bill, which I described earlier as a technical adjustment of the Government's anti-fraud measures. It is a modest measure, but a necessary one. Each year the Department loses at least £2 billion through benefit fraud. That is more than the cost of administration of the Benefits Agency, which is part of the Department of Social Security. Hon. Members on both sides of the House agree that that level of fraud is unacceptable. The Bill will definitely help to reduce those losses and help the Department to achieve its targets for reducing fraud and error.

The Bill contains a range of measures. It is not necessary to list them in great detail. The key measure will require banks, building societies and other institutions to provide information when there is a reasonable suspicion that a person has committed or intends to commit benefit fraud. The Bill contains strict safeguards to ensure that that power is not abused. The code of practice will be properly consulted on, as I said earlier. It will be the guiding light under which the powers in the Bill are operated and it will be able to be used in court cases.

As my hon. Friend the Under-Secretary of State for Social Security said in the earlier debate, there is a balance to be struck. We could have left things as they were, although they were unacceptable, or we could have taken draconian measures. Instead, we have taken the modest measures in the Bill and will use our best endeavours to attack the level of fraud with which we have to cope.

The Bill also contains a power to exchange information with social security administrations in other countries to combat transnational benefit fraud. This is a limited, modest measure that will rightly be curtailed by proper Government-to-Government agreements. The Bill also introduces the "two strikes and you're out" sanction.

We make no great claims for the Bill, which is designed to be a deterrent. We do not think that it will affect more than 500 people a year. We do not know how many of those will have children, but the fact remains that it is designed to be a deterrent. We must be seen to be taking some measures, in the public interest, against the hard core of repeat benefit fraud offenders.

The Bill contains a power to apply civil penalties swiftly when an employer has colluded with an employee's benefit fraud. Such collusion is serious, but we want to be able to offer the employers concerned a quick civil penalty as an alternative to prosecution. We think that that will be in their interests, while also—we hope—acting as a deterrent. The amount of evidence must be the same, and the case will be dealt with by means of either prosecution or acceptance of the civil penalty. There is no question of there being no proper investigation of collusive employers.

We make no major claim for the Bill. We do not suggest that it will eliminate benefit fraud. As in all walks of life, there will always be crooks and fraudsters. We believe, however, that the Bill constitutes a reasonable attack on the current scale of benefit fraud in closing some of the more obvious loopholes that we have encountered in recent years. I hope that it will be given an unopposed Third Reading.

7.41 pm
Mrs. Lait

I was concerned for a moment, because I feared that we would not have a Third Reading speech from the Minister, and with it an opportunity to offer the ultimate valedictory wishes—or is it penultimate?

Mr. Rooker

Final.

Mrs. Lait

That means that there will be no social security questions on 14 May, which tells many of us many things. We are grateful to the Minister.

Discussion of this Bill has been interesting, easy and amiable. The cast of characters has been similar to that of previous debates. Perhaps the only moment of excitement occurred during debate on the last group of amendments, when the words "benefits unit" were used instead of "households", "people" or "individuals". It struck me then that the social policy professor, rather than the politician, was coming to the fore.

We have debated all the issues at some length. In one or two respects we shall still want reassurance in the form of Government action, although of course we never know: by 7 June it might be our action that is required rather than that of the present Government, in which event we might implement the Bill and ensure the provision of effective fraud prevention measures.

I have just noticed that, according to the television monitor, I should be talking about NHS appointments and political bias—in Westminster Hall, moreover. The monitor is clearly very confused. I do not plan to talk about political bias in NHS appointments, although it is obvious that it exists; I shall talk about the Social Security Fraud Bill, and the various matters that we shall monitor to ensure that the Government's intentions are implemented.

The Government have given me some reassurances about how closely they will listen to consultation, and about their negotiation—which we hope will take place—on the code of practice. As the Minister said, the code of practice is the key to many of the provisions relating to authorised officers, single points of contact, trawling and costs. We hope that a Government, or a Department, may be generous enough to produce a list of overseas countries with which contracts will be exchanged. We hope it might even be possible for the Government to see their way to becoming a member of CIFAS. We also hope very much that consultation will be productive, and that the fears and concerns expressed by various organisations will be dealt with. We trust that that will involve negotiation leading to agreement, rather than a stand-off.

The Bill makes a mockery of the programme motion system. It has gone through its stages largely as a result of agreement, although there may have been disagreement on certain points. There has been no trouble at all. The fact that we should have been debating Third Reading between 9 pm and 10 pm shows that the programme motion system is far too rigid, and that we would be better off with the old system.

I have no intention of opposing the Bill. We have supported its principles; we are just sad that it has taken the Government four years to produce them. We hope very much that, modest measure as it is—at this point I recall Winston Churchill's comment that Clement Attlee was a modest man with much to be modest about—the Bill will achieve what the Government want it to achieve.

7.45 pm
Mr. Webb

I am not sure that I can emulate the hon. Member for Beckenham (Mrs. Lait) by being in two places at once, but I shall do my best.

I think I am right in saying that the Bill we are discussing now is identical—apart from the reference to privilege—to the Bill that we discussed on Second Reading. However, the House will be relieved to know that I will not repeat my Second Reading speech.

It is symptomatic and regrettable, as I said in Committee, that the Department's strategy on Bills does not involve seeing the contributions of Opposition parties as a chance to improve them. Once Bills have been to another place, where the Government are forced to listen to the other side, the strategy is to steamroller them through. Debates such as the one on war pensions illustrate the fact that this Bill could have been made better, even without the sacrifice of any great points of principle. It is a pity that the opportunity was not taken.

As I said earlier, the Liberal Democrats will not oppose Third Reading. Notwithstanding the parodies of our position that we have heard, we are as committed as anyone to the elimination of benefit fraud. As we see the passing of new powers for the Government, it strikes me that they have failed to use existing powers. The fact that they can use those powers to force local authorities to crack down on fraud but have done so only once in the past 12 months, in the case of Northampton borough council, suggests that when seeking new powers Governments might be asked to use the powers that they have rather more effectively. Why that has not happened in this case remains a mystery to me.

We hope that the obtaining of third-party information will help to identify fraud. We have yet to be convinced that the seeking of some three quarters of a million bits of information each year can be policed very effectively, even if only a limited number of people are doing it. If I were an authorised officer, I could cover my tracks fairly effectively in the midst of a blitz of requests for information, with one or two rogue ones. I am still not convinced that we shall not have to return to the supervision of authorised officers. Fresh in our minds is the debate about sanctions, which I will not rehearse but which constitutes our principal misgiving about the Bill.

My colleagues and I wish the Minister well in his retirement. I am sure that long before I was a Member he had contributed a great deal to the procedures of the House.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

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