HL Deb 13 March 1997 vol 579 cc430-83

3.45 p.m.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(Lord Mackay of Ardbrecknish.)

On Question, Motion agreed to.

House in Committee accordingly.


Earl Russell moved Amendment No. 44A: Before Clause 4, insert the following new clause—


(" . After section 187 of the Social Security Administration Act 1992 insert—

"Automated data processing.

187A. No decision concerning or relating to a person's entitlement to any benefit, or to the payment of that benefit, shall be validly made if it is based solely on the automated processing of data.".").

The noble Earl said: Having enjoyed the preceding exchanges, I shall begin in the same spirit by relating an incident. One very hot summer day in 1981 there was the kind of thunderstorm which only the east coast of the United States knows. The United States social security main computer was struck by lightning and lost its memory. That was discovered only when an old lady in San Francisco went to claim her pension and was given a monthly pension cheque for the sum of 5 million dollars. The old lady took it hack. That is an entirely commendable spirit of honour but one cannot count on it happening universally.

We all know that computers are capable of error. We have probably all experienced errors made by computers. Bank computers are capable of paying amounts to the wrong person. I have had a good deal of experience of that and have endeavoured to react in the spirit of the old lady in San Francisco. We heard recently in the debate on party funding and related matters a good many stories about fundraising letters which computers had sent out to the wrong people. So I do not feel that we need have any argument about whether or not computers are capable of error. They are.

It is also extremely difficult to correct an error made by a computer. Somebody has to talk to the computer and the computer does not always listen. Computer generated letters, repeating errors, are sent out and are received over and over again. I shall not regale the House with experiences involving other American banks. The Minister knows my views about the computers in American banks. But that underlines why it has been decided in European Union Directive 95/46, Article 15, that decisions should not be based solely on automated data processing. It is a very good protection for the principle of civil liberties.

Moreover, it is a directive which will need to be in force in English and Scottish law not later than April 1998. If it is not done now, which is a convenient moment to do it, it will necessarily take up the legislative time of a future government. To attempt to clutter up the legislative programme of a future government is a form of scorched earth policy in which I hope this Government will not indulge, especially since it is still possible that it just might be them.

I believe that it would be highly convenient as well as just and practical to put that principle into our law now. If we do not do it now, we shall have to do it very soon. It is a strong case and I do not see a case to be made against it. I beg to move.

The Earl of Balfour

Before my noble friend the Minister replies, I wonder whether I could ask him to take up with the social security offices throughout the country, and the Customs too for that matter, the need to ensure that at least somebody is trained to be able to delete a mistake in the computer and put it right. I am sure I cannot be the only one who has found that a number has been misplaced or a wrong postcode has been put on letters, and no matter what I do or what letters I send, they still come back wrong.

I understand that it is a matter of training and people need to be specifically taught to go through a special procedure—I do not know what procedure—whereby you can correct or delete something in a computer's memory and put it right. If I may respectfully say so, in a number of government departments the people with that ability seem to be extremely rare.

Lord Mackay of Ardbrecknish

Perhaps I may respond to my noble friend. It is not so much ability; it is authorisation. One has to ensure that the person who corrects or alters something in a data bank or database is authorised to do so, so that unauthorised persons cannot make changes which are not corrections but which are actually adding wrong data to the computer. It is more a matter of the people who are authorised to do it doing it than it is people trained to do it. The authorised people are well trained to do it.

The question of mistakes is one of the important aspects of the first part of the Bill. Data matching will in any case throw up mistakes of a postcode nature. It will then be up to people who have been employed to do this to decide what is, for example, the right postcode and then to make the alteration. They have to be authorised, otherwise one could have people making unauthorised entries which might be wrong or fraudulent entries. That is one of the things we have to guard against.

The amendment largely retraces some of the ground we covered on Tuesday. I shall therefore be fairly brief. I hope the noble Earl does not mind. I can easily refer him to quite a few column inches of Hansard for Tuesday on this point. The amendment is prompted by Article 15.(1) of the European Union second directive on data protection which is concerned with automated decisions. It is not clear that the article covers decisions about benefit entitlement. With the amendment, the noble Earl is seeking to insert into our domestic law a provision which would specifically prohibit benefit decisions being taken solely by the automatic processing of data.

I have already covered our plans for the use of the powers within the Bill but perhaps I may again offer the noble Earl the reassurance I offered earlier in the Committee stage about the code of practice and also in response to Amendment No. 20 in the name of the noble Lord, Lord Carter. The discovery of an inconsistency during a data matching exercise will not lead immediately or automatically to a stop on the payment of benefit. I can put it no plainer than that. I thought I had put it plainly on Tuesday.

Where an inconsistency is discovered which might indicate that an existing benefit award is incorrect, the normal procedure will be for the case to be referred to the benefit office responsible for further investigation. In the vast majority of cases where the rate of benefit is involved, the claimant will be asked to explain the inconsistency before any action is taken. That may be impractical where, for instance, the data suggest that the claimant has moved abroad or in cases where the whole identity is entirely fictitious. If the claimant fails to respond to a letter to his last known address within a reasonable time, powers exist within regulations made under Section 5 of the Social Security Administration Act to suspend the payment of benefit. I do not suppose anyone would argue against of those situations.

Adjudication officers then make decisions about an individual's entitlement to benefit by applying the law to the facts of each case. Local authorities do the same in relation to housing benefit and council tax benefit. If and when a decision is made by an adjudication officer or a local authority, that individual will be informed of that decision in writing and notified at the same time of his review and appeal rights.

Article 15 and the noble Earl's amendment relate to decisions based solely on the automated processing of data. I have explained that data matching does not involve taking decisions. All it does is identify inconsistencies which may then be subject to further human investigation. As I have said before, we believe that prior to October 1998, when we shall have to implement the directive into domestic law, the Government will have to bring forward the necessary legislation encompassing the whole field of data protection and data use and not just specifically this small corner relating to the Benefits Agency.

Although I hear what the noble Earl says about trying to prevent a future government having to take up the time of both Houses in order to bring forward legislation, I have to say to him that they will have to bring forward legislation. That is the proper place to do it and not in a Bill concerned solely with social security. I hope I have this time managed to explain to the noble Earl how the data matching and any errors thrown up by the data matching will be treated, and I trust I have assured him that there will be no automatic stopping of benefit.

Earl Russell

Before I consider what to do with the amendment, I wonder whether the Minister can tell me why he is not convinced that Article 15 of Directive 95/46 does not apply to social security matters. I was very surprised to hear him say that.

Lord Mackay of Ardbrecknish

I do not know what more I can say. We do not think it necessarily does, but we do not think the problem arises for the reasons I have explained. Equally, as I have explained, we shall have to address all these matters as they affect the whole field of data protection when we come to enact in our domestic law the necessary legislation in order to allow us to fulfil by October 1998 the terms of the directive. I really cannot be plainer than that.

Earl Russell

If the answer comes to the Minister and comes into his mind, I shall be happy to give way to him at any time when he is willing to ask me to do so. I cannot see any reason why he should have that opinion. He says that he does so for the reasons he gave me. That is a little like the letter I quoted last Thursday about the Jobseekers Act, "We have not granted you jobseeker's allowance for the reasons explained in a previous letter", which had not arrived. The point is of some importance, so if any light could be shed on it I would be happy to give way.

On authorisation, the Minister makes a good and valid point, and I accept it. But in doing that he inadvertently strengthened the case for the amendment. It is right that access to the computer should be restricted to those who have authority and the proper status, but that means that it takes longer to put errors right since the number of those people is limited. That means that the need for restriction on decisions made on potentially erroneous data is rather bigger than it was before.

The Minister says that data matching does not involve decisions. In a very narrow and technical sense, that is true. Yet it is equally true that data matching is presumed to be the cause of decisions. Otherwise there would be no point in all the effort put into the Bill. The risk of erroneous decisions remains. I believe the Minister is receiving some light on this matter. I shall be interested to hear what it is.

Lord Mackay of Ardbrecknish

I thought I had shed more than enough light on this point on Tuesday when I made it clear what the position would be and I explained what data matching was. I said in my original remarks not so much that it did not apply but that it was doubtful whether Article 15 concerns the evaluation of certain personal aspects relating to a person such as his performance. I am afraid that I am now having some trouble with the writing on the notes.

I come back to my main point. This is a much wider matter than simply data matching in the Department of Social Security. We shall have to address the issue in the next Session of Parliament in order to put into domestic legislation before October 1998 the terms of the directive. It seems to me that that is the sensible way to proceed. I do not believe that it is sensible to do a little bit on social security especially when I hear the noble Earl suggesting that even if a doubt is thrown up by data matching somehow or other the adjudication officer will not be able to change a benefit decision because the doubt has been put into his mind by an automatic process. That is trying to say, "Let us not have the modern world or any computers." One of the things they do very quickly and cleverly is throw up information on which one can act in every field of life. I do not quite understand that particular part of the noble Earl's argument.

Article 15 says, Member states shall grant the right to every person not to be subject to a decision which produces a legal effect concerning him or which significantly affects him, and which is based solely on automated processes of data intended to evaluate certain personal aspects relating to him such as his performance at work, credit worthiness, reliability and conduct". That is based solely on automated processing of data. I believe I explained that the way we envisage this working it will not be based solely on the automated data process. It may be based on the automated data process, but it will then have to be taken on board by the people working in the Benefits Agency and, at the end of the day, by the adjudication officer if it comes to a decision on benefit. I believe that I am just repeating what I said on Tuesday. I cannot be any clearer than that.

4 p.m.

Earl Russell

If I understood the Minister correctly, he has just granted the whole substance of this amendment. He said that no decision would be based solely on automated data matching: in other words, it would he checked first before any action was taken. If the Minister said that, I thank him warmly. He has granted me what I was asking and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 [Unauthorised disclosure by officials]:

Lord Carter moved Amendment No. 45: Page 10, line 25, at end insert— ("() At the end of section 123 of that Act insert— (11) For the purposes of this section, a "disclosure without lawful authority" includes the circumstances where information is disclosed to a person who is employed in social security administration or adjudication, but where that information is subsequently used by that person for an unauthorised or an unlawful purpose.".").

The noble Lord said: This amendment deals with a very important point which has been drawn to our attention. We are advised that there could be a major flaw in the Bill. It will be interesting to hear the Minister's view. The amendment brings in a new subsection to Section 123 of the Social Security Administration Act 1992. The words of the amendment are: For the purposes of this section, a 'disclosure without lawful authority' includes the circumstances where information is disclosed to a person who is employed in social security administration or adjudication, but where that information is subsequently used by that person for an unauthorised or an unlawful purpose".

The implication is that although the disclosure is proper, the use is not.

The purpose of the amendment is to assess whether there is adequate protection from the unauthorised use of personal data by an official who is authorised to use it. The point was raised at Committee stage in another place.

The problem seems to be that the Data Protection Registrar is of the view that there is a loophole in the law but the Government are not of that opinion. They cannot both be right. It is important that the divergence of opinion is resolved. The Government are proposing wider access to sensitive personal data and we are opposed to that. They must be sure of the position should an official abuse that ability to access personal data. The impact of the amendment is to widen the offences in Section 123, which are currently linked to disclosure. The amendment also removes the uncertainty which may surround Section 1 of the Computer Misuse Act 1990.

For example, under the Bill there is increased potential for an estranged partner to pry into the affairs of another, a scenario which can apply to an official who uses access to DSS and tax records in order to locate his former partner or wife who perhaps he has intimidated or beaten up. He might use his access to pry into the financial circumstances of his ex-wife's new lover. In such cases there is no disclosure to a third party. Legitimate access is given to information which results in it being used for another, but improper, purpose. The offences in Section 123 might not apply because they relate to disclosure of personal information to a third party. That is the basis of the advice we have been given.

The absence of disclosure of information is the key issue in these examples. An official who is authorised to have access to such information may not disclose it but could use it for his own purposes. That is why the amendment deals with circumstances in which the information accessed by an official is used for an unauthorised purpose. Thus it tracks the unauthorised use of the information for the purpose of locating an ex-partner or studying the financial affairs of an ex-partner's new partner.

The amendment sends a clear signal that unauthorised access to, and use of, information as well as disclosure, can lead to prosecution. We are advised to ask the Minister what the impact is of the case of R. v. Brown which reached the House of Lords. The prosecution was overturned on appeal because it was deemed that a police officer had accessed the police national computer to obtain personal information and had used that data.

The Minister may cite the Computer Misuse Act 1990 as a way of getting round the examples I have given. However, I refer him to page 85 of the annual report of the registrar which states, It is not clear whether access is 'unauthorised' for the purposes of the Computer Misuse Act where the employee has authority to access data for limited purposes and in fact accesses them for other purposes".

The Data Protection Registrar is saying that the 1990 Act may be insufficient to deal with disclosure. There is the possibility of disciplinary action against an official who accesses information for improper or personal purposes, but we understand that there is no opportunity to take legal action against such an official by prosecution in the courts. If information is used for offensive purposes action should be merited.

Therefore, we are trying to help the Minister by tightening up the provisions on disclosure, and that is why there is access and usage. The Audit Commission's report of March 1995 found that instances of computer hacking in Whitehall had increased by 140 per cent. in 1994. The report went on to say that the majority of the 655 reported incidents involved staff exceeding their authority by using their passwords to try to obtain information on members of the public to disclose to outsiders.

I am not sure whether the Minister is aware of the correspondence between my honourable friend Mr. Harry Cohen, the Minister and the Date Protection Registrar. My honourable friend wrote to Mr. Oliver Heald, the Parliamentary Under-Secretary, on 16th January 1997, on a point raised in Committee. I return to a point I raised with you. It relates to offences under the Computer Misuse Act 1990 and the circumstances under which an employee who is authorised to access a computer exceeds his or her level of authorisation. The point I was raising was that the Date Protection Registrar has made a statement in her twelfth annual report which expresses some doubt on the circumstances. You on the other hand are convinced that the 1990 Act is certain. My understanding (from hearsay sources I should add) is that there [have] been cases where the Crown Prosecution Service has failed in the prosecution of these offences, where a case has come to trial before a judge".

Mr. Cohen asked to be reassured that the registrar was mistaken in her concerns. He wrote, As you can imagine, if there is any doubt, I would like to see the law amended and the Fraud Bill offers a suitable opportunity in this regard".

A copy of that letter was sent to the Data Protection Registrar. There is an interesting little sidewind on this. Mr. Cohen wrote on 16th January 1997. In all the discussion we have had about information in documentation and computers being wrong, the reply of the Data Protection Registrar was dated 27th January 1996. The typist in the office of the registrar obviously had not realised that the new year had started and put the wrong date on the letter. The interesting point is what would have happened if that letter was filed through the word processor under its date. It would have disappeared into the computer works in the previous year.

In her reply the registrar thanks Mr. Cohen for the copy of the letter and says, One of the cases to which you refer is R. v. Victoria Parker (now Bignell) heard before Southwark Crown Court. This has increased my concern that there is a gap in the protection provided by the Data Protection Act 1984 and the Computer Misuse Act 1990. I understand from the CPS that they intend to appeal the point to the Divisional Court".

As I say, that was on 27th January, and I am not sure whether the appeal has yet been heard. She copied her reply to Mr. Heald.

The Minister will agree that this is an extremely important point and that real concern has been expressed by the registrar that the Act could be flawed. This amendment provides the Minister with an opportunity to say who is right and who is wrong. I beg to move.

Earl Russell

Some years ago my wife was visiting the local women's refuge, as she did from time to time, when a call came in from the local police station to one of the women in the refuge. The call was from a policewoman, wishing to check whether the woman in question was actually in the refuge. She was. That sounds a perfectly reputable call, but if you work in a women's refuge you are trained to be extremely wary of disclosure, so somebody asked the woman if she knew anything about the person who was calling her and discovered that the policewoman who was calling happened to be the best friend of the woman's ex-husband from whom she had fled to the refuge. Disclosure to a policewoman is not necessarily unauthorised disclosure; for a policewoman to possess information is not necessarily unauthorised possession of information, but to disclose it to the violent ex-partner is unlawful disclosure.

The whole point of the amendment is that it does not deal with disclosure only; it deals with use. A person may be perfectly authorised to be in possession of information, but not to use it for a particular purpose. After all, every public servant is not only a public servant; he or she is also a person with all the normal human weaknesses, sins, failings and liability to temptation. That point used to be expressed under the doctrine of what lawyers used to call "the king's two bodies"—there is the king's public body, which one might describe as the Crown, and the king's personal body, which is the one that gets the toothache. That is perhaps most clearly expressed in the recent case of President Carter's signature. When he was running for office, Mr. Carter was absolutely horrified to discover that not all letters from the President were signed by the President, so he gave an election pledge that he would personally sign all letters from the President. After he had been elected, his staff slowly and painfully succeeded in explaining to him that that task would take him exactly 24 hours a day. In the end, President Carter was persuaded to understand the doctrine of "the king's two bodies". I hope that persuading the Minister to understand it will not be quite so laborious, but the Minister is extremely quick so I do not think that it will be.

The point is to create an offence of unlawful use because without it, there is no protection. The Minister may invoke the Data Protection Act, but the Data Protection Registrar has stated: it is not clear whether access is 'unauthorised' for the purposes of the Computer Misuse Act where the employee has authority to access data for limited purposes and in fact accesses them for other purposes". That is exactly our case. The Data Protection Registrar is not clear that the law is sufficient, and if she is not clear, others might not be clear either.

The Minister in another place gave a whole series of reassurances against disclosure. He gave the assurance that if a battered wife is concerned that a member of staff might let her husband know where she lives, the record could be deemed to be sensitive. The Minister repeated that assurance the other day. That was very welcome, but it does not cover this case because this case is not about disclosing information to the husband; it is about what happens where the authority concerned might actually be the husband. That cannot be covered by any reassurance about disclosure. We need a separate reassurance about use.

In the case of R v. Brown, which reached the House of Lords, whether such use of the police national computer was an offence appeared doubtful and, in effect, the prosecution failed. That indicates a real gap in the law. If the Minister would like to be generous just once on this Bill, this would be a suitable place. It would protect many innocent people and, as far as I can see, it would cost the Government nothing.

4.15 p.m.

Lord Mackay of Ardbrecknish

I hope that I can be generous at least in the assurances that I may be able to give both the noble Lord, Lord Carter, and the noble Earl. A fair number of points arose in the speeches that we have just heard and I shall try to deal with them all although I believe that the noble Earl realises that I answered one of his points the other day on the question of the battered wife. A battered wife could indicate that there was a problem, in which case her file would be subject to access only by highly authorised persons. That would give her protection.

Earl Russell

I did thank the Minister warmly for that assurance, but what I have said today is that that is not the same case as that which we seek to cover in this amendment, so that assurance, however welcome, is not to our present purpose.

Lord Mackay of Ardbrecknish

I thought that I should reiterate it. I must have misunderstood the noble Earl's point because I thought that he was raising the question again and I wanted to be sure that the point that I made two days ago was clear.

Section 123 of the Social Security Administration Act makes it an offence for employees of, and contractors to, the Department of Social Security and certain other government departments to disclose personal social security information unlawfully. Clause 4 of this Bill extends that offence to employees of local authorities, and to any contractors or their employees exercising housing benefit or council tax benefit functions. Unauthorised disclosure is an offence which attracts a penalty on conviction on indictment of imprisonment for a maximum term of two years, or a fine, or both.

The department considers unauthorised disclosure of information from departmental records or other information obtained by staff in the course of their official duties to be serious misconduct, and incidents are met with a range of penalties including dismissal. Where work is performed by contractors, strict conditions of confidentiality are included in the relevant contracts; moreover, our contractors, whose business often depends on the confidential processing of personal information for many other clients as well as ourselves, take confidentiality as seriously as we do and their employees are subject to similarly stringent disciplinary procedures.

Local authorities have their own disciplinary procedures, and of course their staff are subject to a general duty of confidentiality. Once this Bill has received Royal Assent, the department will issue a circular to draw local authorities' attention to the new offence.

The amendment seeks to make it an offence to pass on information to a person employed in social security administration or adjudication if that person subsequently uses the information unlawfully or without authority. That seems a little harsh. Indeed, having listened to the noble Lord, Lord Carter, I suspect that that is not what he meant although it is what the amendment would achieve. The amendment would make the supplier his brother's keeper by placing him under a responsibility for the receiver's behaviour. The receiver may, of course, be committing an offence himself under Section 123 of the Social Security Administration Act, for which he could be fined, imprisoned or both; and the offence would occur with retrospective effect. At the time the information was supplied the receiver would have done nothing with it, but the supplier could, by the mere act of supplying information in a way which was lawful at the time he did it, become guilty of an offence by the receiver's actions at some undefined point in the future.

As drafted the amendment would make officials of the department responsible for any later lapses in security by local authorities and their contractors, or others to whom they have passed information including the department's own contractors. The effect could be that no information would be passed between for fear of later culpability. Nor is it clear where the chain of culpability would stop: if the end receiver used the information unlawfully or without authorisation, then the supplier would have committed an offence, but what about the person who supplied him? Is he guilty too?

I believe that the noble Lord's amendment is intended to extend the offence to a person who uses information in an unauthorised way without disclosing it to another person. Such a case might hypothetically be one where an official accessed the records of an ex-partner in order to find out his or her whereabouts and then harassed that person. That was the example used. Officials do not have unrestricted access to information held in the department's systems. It is made very clear to them that they may only access information relevant to the work allocated to them, and access to any other information for which prior authority is not given by a senior officer is therefore unauthorised. This guards against staff entering a database and browsing through it, whether or not they then use the information themselves unlawfully or disclose it to another person. In such cases, whether or not the offence in Section 123 of the Social Security Administration Act, which I described earlier, applies, there are other safeguards elsewhere in legislation to ensure that information obtained in the course of an individual's job is not used unlawfully. Browsing is an offence under Section 1 of the Computer Misuse Act 1990, which creates the offence of accessing information without authorisation. A person is guilty of an offence if the access he intends to secure is unauthorised and he knows at the time he accesses the computer that that is the case. Successful prosecutions have been brought for unauthorised access to computers under this offence.

Section 122C(4) gives the Secretary of State power to impose conditions on the use of information supplied by the department to local authorities. We intend to exercise this power to impose requirements which are aimed at ensuring the security of data supplied. However, responsibility for preventing unauthorised access inevitably must remain with each local authority itself.

The noble Lord referred to R. v. Brown which, as I understand it, related to browsing. Browsing is, I suppose, rather like surfing the Internet. Browsing is the viewing of data without using it, disclosing it or even mentioning it to anyone else. In this particular case, on 9th February 1996 the court held that the employee could not be prosecuted under the Data Protection Act for simply browsing computerised personal data without using or disclosing it. I understand that the Home Office has considered the matter very carefully following the Brown decision but, in the light of the facts of that case, has concluded that it is not necessary to take any immediate action to make any amendment to the Data Protection Act.

In Brown it was also held that the term "use" in the Data Protection Act, while not wide enough to cover the situation where someone merely called up and viewed computerised personal data, should nevertheless be given its natural meaning. The effect of this is to confirm that if that data is subsequently used for any unauthorised purpose that action is caught by the existing legislation. Brown also confirmed that while unauthorised access was not an offence under the Data Protection Act, the Data Protection Registrar can still take action against the data holder for a breach of the data protection principles. In addition, the Computer Misuse Act continues to be effective against employees or contractors who access computer systems beyond the extent of their authorisation, and the Department of Social Security has brought successful prosecutions on this basis. Moreover, in the case of personal data relating to social security, the offence under Section 123 of the Act would also be relevant. As I believe I suggested earlier, it could easily lead not just to prosecution but to disciplinary action: either downgrading of the person involved or dismissal from the service of the department.

A number of other issues have arisen. The noble Lord, Lord Carter, asked me who was right: the Data Protection Registrar or the Secretary of State.

Lord Carter

Make my day—say that you are wrong!

Lord Mackay of Ardbrecknish

I will not say that at all. What I will say is that it is ultimately for the courts to decide how the law is to be interpreted. It is not for me to decide who is right and who is wrong in this matter. However, if there are difficulties in this area it is for the Home Office to address the point. I underline that my department has relied successfully on the Computer Misuse Act 1990 when dealing with situations of this kind. There have been three successful prosecutions of the department's staff under that Act.

To demonstrate that the department takes this matter very seriously, in 1995/96 it dismissed eight members of staff and 12 others had penalties imposed, including fines, downgrading and written warnings on account of unauthorised access to departmental systems. In addition, two members of staff were dismissed and three others had penalties imposed for the unauthorised disclosure of information. I hope that both the noble Lord and the noble Earl can be assured that we take these matters very seriously indeed. Staff within the department do not have unrestricted access to the information held in its systems. It is made very clear to them that they may only access information that is relevant to the work that is allocated to them. Access to any other information for which prior authority is not given by a senior officer is therefore unauthorised. All staff receive an on-screen warning that accessing departmental data without authority is an offence; in other words, when they enter the system to do whatever they need to do legitimately they receive a warning. We provide a wide range of guidance to staff. Indeed, the issue of hacking has recently been drawn to the attention of all staff in a security campaign run by the department.

We take these matters very seriously. If one looks at the three levels of the problem—access, use and disclosure—it is clear that, as to access, the Computer Misuse Act 1990 can be and has been used. We also have the internal disciplinary system within the department. As to the question of use, the Data Protection Act can be applied. We also have the disciplinary procedures within the department. As far as concerns disclosure, use can be made of the Social Security Administration Act and the Data Protection Act. We believe that we have sufficient safeguards.

I said earlier that I believed the amendment of the noble Lord, Lord Carter, did not do exactly what he intended. But I hope that I have dealt with what he is after, explained that we take these matters very seriously and the different levels of protection in our internal disciplinary systems. Further, we have been and are able to use the three Acts that I have mentioned to deal with those who infringe both those enactments and the principles and guidance given to staff in the context of what the department fully accepts is the need to handle other people's data with care.

Baroness Hollis of Heigham

The Minister has been very helpful and clear in dealing with the procedures in place within the DSS, partly because it is a very large organisation with very clear lines of responsibility and detailed forms of management, on the assumption that the work is done in-house. But the problem is perhaps less likely to occur within the department than within local authorities. In local authorities it is not a question of browsing or unauthorised or illegitimate access. One may be dealing with a small local authority that has only a few officers who are handling this material. They will have a right of full legitimate access to that information. For example, the individuals may be housing officers checking against income support records. They realise for the first time that the person on income support is having some top-slicing—it is an issue to which the noble Earl will refer on a later amendment—which suggests arrears of debt and so on, which are unknown to the local authority officers. That is information, legitimately obtained, which he might go on to use illegitimately.

Can the Minister assure us over and above the general reference to local authority good management guidelines, and so on, that that offence would be caught within the Bill at present? Surely we need an amendment such as that moved by my noble friend, or a revised version, to pick up that point. We are not talking about browsing or unauthorised access but legitimate authorised access which gives rise to unauthorised use. In the situation I have described, can the Minister assure us that we do not need this additional protection?

4.30 p.m.

Lord Monkswell

I have followed the debate with interest and it appears that the Minister has given assurances about unauthorised access and unauthorised disclosure. I think that there is probably enough protection in terms of the use of information for an unlawful purpose. If it were unlawful, those issues would be caught by some other statute.

However, the concern relates to the unauthorised use of information obtained on an authorised basis. The noble Lord, Lord Russell, mentioned the individual who may have authorised access to the whereabouts of a spouse whom he has mistreated in the past. Perhaps I may suggest another example. A senior official within the housing benefits service runs in his private capacity establishments which have as tenants predominantly people who are in receipt of housing benefit. The information that he would legitimately obtain as a senior housing benefit officer from the computer system would be useful to him in running establishments with predominantly housing benefit tenants. I hope that that officer would not be authorised to use that information that he has legitimately obtained as a senior housing benefit officer in his private capacity. From what the Minister said, there is nothing that renders that use unlawful. That is the crux of this issue.

I accept the intention as described by the noble Lord, Lord Carter. The wording of the amendment may not be quite right. I am not sure that the Minister addressed the kernel of the problem which we addressed with the amendment.

Earl Russell

I think that the Minister tried hard to be helpful. When he said we take these matters seriously, he clearly meant what he said. What I am not quite so certain about is whether the matters that he takes seriously are these matters. The Minister referred to the matter resting on three legs: disclosure; access; and use. He is right. But all the reassurance that he gave related to disclosure and access. Clearly the department is aware of those two risks and is doing everything it can to meet them. But we are dealing with disclosure to a person who is actually authorised to have the information, and access by a person who is allowed to have it.

Let me take some cases which have arisen. They concern the police. In my opinion, the Conservative Party has suffered severely and unjustly from a number of cases where some of its Members in another place have been stopped by the police, questioned but not charged, and the information has found its way on to the front page of the Sun. In those cases, police officers were clearly authorised to have access to the information, but they were not authorised to use it, possibly for their own purposes, and possibly even for their own profit. The noble Baroness reminds me that that may constitute disclosure. But if the policeman writes the piece himself—and I would not be surprised if that has been known—that is not covered; and the provisions do not cover the case where the person uses the information purely for his own personal benefit.

Let us suppose that the information is market sensitive, and the individual acts upon it. He may make a considerable sum of money out of it. In my opinion that is an unauthorised use. I cannot help remembering the words once used in this Chamber by the right reverend Prelate the Bishop of Guildford: it is not that we cannot get them to meet our concern; it is that we cannot get them to see that this is our concern.

Lord Mackay of Ardbrecknish

If the noble Earl checks in Hansard, he will see that I ended my summary by talking about access, use and disclosure. I discussed in each case the Act which could be used in a breach. I instanced the fact that the Data Protection Act could be used in the case of unlawful use. I added that the Department of Social Security would take disciplinary steps against the individual. That leads me back one step to the point raised by the noble Lord, Lord Monkswell. The unauthorised use of information obtained lawfully is unauthorised and therefore it is in breach of the Computer Misuse Act. That is the point I make about use; it is a breach of the Computer Misuse Act.

As regards the noble Lord's example, it would be doubtful whether a local authority would give a person such as he instanced the right to access the kind of information we are discussing. However, let us leave that to one side. Even if it did, and the individual had authorisation for access, if he used that information in an unauthorised way, he would be in breach of the Data Protection Act and I suspect that he would not long have his job with the local authority.

The noble Baroness asked me a question about local authorities and, quite rightly, said that some local authorities are quite small and will not have big data bases. That will not allow them to escape from the legislation contained in the Computer Misuse Act or the Data Protection Act. They will clearly be caught by that Act regardless of the size of the data base. The Bill before us provides that information can he supplied only by the Department of Social Security to local authorities, and by one local authority to another, to tackle benefit fraud and for specified benefit administration purposes.

Authorities will be responsible for ensuring that their staff comply with the new law, and with the requirements of the Data Protection Act, and in addition to internal authority controls, authorities' external auditors may become aware of and comment upon any unauthorised use of personal data.

Baroness Hollis of Heigham

Perhaps the Minister will forgive my intervening. It may give time for him to be given the information if he does not have it to hand.

In a small local authority with few officers, a local authority officer has legitimate use of the full file but he proceeds to make use of the information in some private capacity. Can the Minister read out, or tell us, the words of the Data Protection Act which catch the offence of unauthorised use of authorised material?

Lord Mackay of Ardbrecknish

I do not have the Data Protection Act to hand, but I have made it clear that it covers the unauthorised use of information to which the person had authorised access. As I mentioned earlier, we have successfully prosecuted department staff under the Computer Misuse Act.

I was about to give the noble Baroness the reassurance that Clause 4 makes an offence the unlawful disclosure of personal data by local authority staff, auditors, and local government ombudsmen. Therefore, it makes an offence the unlawful disclosure of personal data by those people, including local authority staff mentioned by the noble Baroness.

To sum up, we believe that in addition to the tight internal controls we have, and what I believe will be the responsible way local authorities will deal with the three issues of access, use and disclosure—we shall be sending out a circular once the Bill receives Royal Assent drawing attention to the new offence in Clause 4—the legislation is in place which will allow the authorities to prosecute anyone who breaches the terms of the Act; that is, through unauthorised access, unauthorised use or unauthorised disclosure. In addition, we will certainly take disciplinary steps against such a person.

Lord Carter

I am sure that the Committee is extremely grateful to the Minister. Perhaps while I ask the Minister a question, advice will reach him on the Data Protection Act. We can see only the provisions which deal with disclosure. We can see nothing which deals with use. Perhaps advice about that will be forthcoming and we can be directed to the relevant part of the Data Protection Act.

If the amendment is incorrectly drafted it can be redrafted, or the Minister can bring back his own amendment if he is prepared to take the point. I am still not convinced, not about authorised access as part of a person's work—that is the proper access of information—but about the unauthorised use of such information. The Minister has not dealt with the concerns of the registrar, which I read to him. Perhaps I may again quote from her letter. It refers not to R. v Brown but to R. v. Victoria Parker, now Bignell. It was heard before Southwark Crown Court. In January, the registrar stated: This has increased my concern that there is a gap in the protection provided by the Data Protection Act 1984 and the Computer Misuse Act 1990". Obviously, the CPS takes the matter seriously enough to appeal the point to the Divisional Court in order to have the law clarified.

The Minister must deal with the issue. It is the job of the Data Protection Registrar to consider such issues. She has expressed real concern that there is a gap in protection and the amendment is intended to deal with that. However, the Minister appears to be saying that the department is entirely happy that there is no such gap. The Minister must say in terms on what grounds the registrar's argument is misconceived.

Perhaps I may give an example. It is not wholly appropriate, but it shows what can happen. I am not sure whether the Committee is aware that banks have what are called "related" or "connected" accounts. At a particular bank in the area where I live, I am involved with a number of accounts both personal and business. I introduced a co-director to that bank. When I ask the bank for a printout of the balances on the various accounts I invariably receive one which has his name and his balance in the middle. That is not unauthorised use because the employee of the bank is completely authorised to search the records for that information. I do not know whether he or she is authorised to pass that on to me, but, as the Minister says, he or she cannot be responsible for my behaviour. I might go back to my company and say to the director, "Look, you are heavily overdrawn and I wish that you would do something about that".

I was surprised when I was handed such information, but it is standard procedure in this bank that all accounts which it calls "connected" or "related" are printed out together. Those balances are elicited every day so that the manager can look at them. That is an example of authorised use. I am not sure about disclosure and certainly not the use I might make of the information.

I hope that the Minister has taken on board the point that we are not talking about browsing. We are talking about someone who is authorised as part of his duty to obtain information about taxation, housing benefit, or whatever, who realises that it applies to someone he knows—it could be a former partner, for instance—and who then proceeds to use it.

Is the Minister really happy that that is the case? I know that he has said he is. I do not want to press the amendment to a Division but it relates to an important point. I wish to give the Minister an opportunity to discuss it following this stage of the Bill or to write to me. I hope that if he says he will write he will not merely repeat the argument because I am still not convinced. I do not believe that he has answered the concerns of the registrar.

4.45 p.m.

Lord Mackay of Ardbrecknish

During our little discussion about right or wrong, I indicated that it is ultimately for the courts to decide how the law is interpreted in this dispute, if I may put it as strongly as that, between the Data Protection Registrar and the Secretary of State. We have relied on the Computer Misuse Act quite successfully. As regards the Data Protection Act, perhaps I may refer to Section 5(1) and (2), which creates the duty, and to subsection (3), which clearly applies the duties to the employee. It states: A servant or agent of a person to whom subsection (2) above applies shall, as respects personal data held by that person, be subject to the same restrictions on the use, disclosure or transfer of the data as those to which that person is subject under paragraphs (b), (d) and (e)". The offence is created in subsection (5), which states: Any person who contravenes subsection (1) above or knowingly or recklessly contravenes any of the other provisions of this section shall be guilty of an offence.". We in the department, and that includes the people who run and work the system, are satisfied about the matter. It may be additionally helpful to explain that the report of the Data Protection Registrar on Brown states that your Lordships' House in its judicial capacity, also showed concern that the term 'use' should he given its ordinary meaning and not interpreted in a way which would narrow the scope of the Act and make it difficult to fulfil the intention of Parliament. It was for this reason they rejected the argument put forward by Counsel.". The noble and learned Lord, Lord Goff, in the judgment said: It seems to me that the above reading of the statute (the judgement) accords not only with the natural and ordinary meaning of the word 'use' in its statutory context, but also with the statutory purpose of protecting personal data from improper use.". In the same vein, the noble and learned Lord, Lord Hoffmann, rejected the argument that the term "data" covers only data held in the memory of the machine with the words: It would he strange if the Act was concerned only with what happened unseen in the computer and not with what happened when the information became accessible to the human user. This is not making the tail wag the dog; it is all tail and no dog.". I realise that these are complex issues and I understand the seriousness of them. However, I hope that the reassurances I have given will at least help the noble Lord to check when he has an opportunity following today's Committee stage. If he has any further reservations, I should certainly be happy to try to resolve them either at a meeting or in writing.

Lord Carter

Just so that we are clear, the Minister was correct to refer to the case of Regina v. Brown which reached the House of Lords. As I said before, in that case the prosecution was overturned on appeal because it was deemed that a police officer who had accessed the Police National Computer to obtain personal information did not use the data. However, I would ask the Minister to comment on the other case that I mentioned. The Minister referred to that specifically. I do not have the details of that case but I presume that the context was different. This is the one about which the Data Protection Registrar said: This has increased my concern that there is a gap in the protection provided by the Data Protection Act 1984 and the Computer Misuse Act 1990". The Minister does not seem to have been briefed on that case. It may be better to return to this matter when the Minister has had the briefing. We may need to have a meeting or return to this matter at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 46 not moved.]

Clause 4 agreed to.

Clause 5 [Overseeing of administration by Secretary of State]:

Baroness Turner of Camden moved Amendment No. 47: Page 10, line 30, at end insert ("with relevant experience").

The noble Baroness said: This is a very important amendment. Its intention is to ensure that anyone appointed to report on the administration of housing and council tax benefits has relevant experience in the administration of those benefits.

It is a probing amendment but I hope that it will provide an opportunity to debate the issue of the importance of relevant experience for members of the fraud inspectorate. I am informed that local authority fraud investigators have had difficulties in the past because DSS officials with no specific experience of housing and council tax administration have sometimes sought to impose inappropriate policies on them.

I am told that the best example of that is the failure by DSS officials to recognise the importance of organised landlord fraud because they do not have to deal with landlords as their experience is confined to DSS benefits. Any person appointed to examine the administration of housing and council tax benefit must have a background in the administration of those benefits to ensure that their advice is based on a realistic understanding of the issues and the practical difficulties involved.

I gather that this amendment, or something similar to it, was debated in Committee in another place. At that time the reaction of the Minister was that people with local authority experience would be recruited. But I am told that the local government associations and the Association of Metropolitan Authorities still remain of the view that members of the fraud inspectorate should have experience in the administration of the benefits which they are investigating—that is, housing and council tax benefit. They believe that that requirement should be written onto the face of the Bill.

I emphasise, as we have repeatedly done on this side of the Committee, that everything possible must be done to minimise fraud but the benefit system is intended to provide a safety net for the poor, the disadvantaged and the vulnerable. Therefore, it is very important that we achieve the right balance; and, in particular, it is important that we have in place a system, and people experienced in the administration of the system, to detect and deal with possible landlord fraud. One of the problems which I face in looking at this legislation, while I oppose fraud from wherever it comes and whoever is responsible for it, is that we may well identify people who have inadvertently become involved in what could look like fraud but people who have a much greater stake in organised fraud are able to get away with it much more easily. That is much more likely to be the case unless the people involved with the administration and the inspectorate have experience of the housing benefit and council tax system to which this amendment relates.

I hope that since the matter was debated in the other place, the Government have had an opportunity to reconsider what was suggested in the other place because this seems to me to be a useful amendment. If accepted, it will send out the right signals that we want people who are experienced in these particular benefits. I beg to move.

Lord Mackay of Ardbrecknish

I do not think that there should be any doubt about the Government's commitment in the fight against fraud. I am sure that Members of the Committee noticed that my right honourable friend Peter Lilley, yesterday morning, held a press conference and unveiled a poster on the occasion of the milestone being passed in the various area benefit spotlights of more than £100 million of benefit money being saved by those area spotlights.

Our commitment is there to be seen. Nobody should doubt that we shall be appointing people who possess relevant experience and qualifications in order to carry out the inspections of local authority benefit administration and anti-fraud performance because we wish to enhance that anti-fraud performance. It would not be in the Secretary of State's interest to do otherwise. I echo the reassurances given by my honourable friend Mr. Alistair Burt in another place.

It is intended that the persons authorised under this clause will be the staff of the new Benefit Fraud Inspectorate. The head of that inspectorate is currently in the process of recruiting staff, and advertisements for two of the senior management posts have appeared already in the national press. In addition, those posts have been advertised both in local government publications and throughout the Civil Service. The intention is to attract public and private sector staff but particularly to target audiences who are likely to have the most appropriate skills and experience for those vital roles.

We can all agree—and I am sure that we do—that the recruitment of high calibre staff is an integral part of ensuring that the inspectorate is effective. That the head of the inspectorate is seeking to recruit such staff is demonstrated clearly in the essential skills and qualities set out in the advertisement. Perhaps it may be useful if I outline briefly the skills and experience considered essential for the inspectorate's staff team. Of course, one person will not necessarily have all the skills but the team collectively will have them all. They are: a knowledge of financial systems; a knowledge of local government administration; a knowledge of the benefits payment system; a knowledge of benefit fraud investigation; a knowledge of audit and management systems; and a knowledge of information technology. That is what we shall be looking for in the staff appointed to the inspectorate.

Therefore, I do not believe that it is necessary to place a statutory obligation on the Secretary of State to ensure that staff recruited to the inspectorate have the appropriate skills and experience. The noble Baroness referred in particular to landlord fraud. We accept that there is landlord fraud as well as all the other kinds of fraud. That will be part and parcel of the skill and experience which we shall be looking for, perhaps under the heading of "benefit fraud investigation". But it is also related to the system of payment of benefit because one way in which the fraud takes place is by the misuse or abuse of the benefits payment system by which we pay out housing benefit.

I hope that I have reassured the noble Baroness, Lady Turner of Camden, that her amendment is unnecessary. I ask her to withdraw the amendment with my assurance in relation to the skills which we believe will have to be present in the whole team when we have completed the appointments.

Lord Monkswell

It strikes me that in the list of qualifying experience to be part of the team, the Minister has not mentioned one area of experience and expertise—that is, experience of being a residential landlord. I should have thought that that would bring an expertise to the team in terms of what might be described as poacher turned gamekeeper. That might be quite useful to the team in carrying out its functions in relation to rooting out landlord fraud.

5 p.m.

Lord Mackay of Ardbrechnish

If I had suggested that we recruit a landlord to this, Members of the Committee opposite would have thought that I was being less than serious about the pursuit of landlord fraud.

Baroness Turner of Camden

I thank the Minister for his explanation. Certainly, he has given extensive assurances as to the kind of experience people would be expected to have before they could even be considered for this kind of post. It is very reassuring.

I still fail to see why there is any objection to including this in the Bill and in primary legislation because, if we did so include it, it would send out a very clear signal that we were going to insist upon people having a standard of skill in particular areas of operation that are regarded as important within the context of the Bill. However, I do not intend to press the amendment today. I shall look carefully tomorrow in Hansard at what the Minister has said, but he has given quite extensive assurances and we are very grateful for them.

Baroness Hollis of Heigham

Before my noble friend sits down, I wonder if she is aware that such phrases would actually be extremely valuable. Recently I was shown a report by one of the newly appointed school inspectors under the Government's initiative containing 13 mistakes of spelling, syntax, grammar and comprehension which the head of the English department had corrected before sending it back. This was a school inspector of standard English. I saw the report myself—the comments and corrections. They were entirely correct and valid. It suggests that sometimes people are being appointed by the Government who do not appear to possess the most obvious qualifications required for the exercise of their duties. I wonder if my noble friend agrees.

Baroness Turner of Camden

I wonder whether the Minister would like to respond to that. We are in Committee.

Lord Mackay of Ardbrecknish

We have strayed considerably from the initial point, and I know nothing of the case in point. It sometimes seems that in relation to appointments to this House there does not appear to be the relevant experience in being able to understand my arguments, but perhaps that is a biased position. It would be unusual if the Secretary of State appointed people who did not have some relevant experience for the job they were doing. He would be exposing himself to a fair amount of ridicule and he would be exposing his policy to the risk of failure.

Lord Monkswell

Surely, the Government can accept that this Government have rather a reputation in that regard. I seem to remember an advertisement in the national press for someone to run British Rail which said that no previous experience in running a railway was required.

Baroness Hollis of Heigham

Or was desirable.

Baroness Turner of Camden

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Carter moved Amendment No. 48: Page 10, line 31, leave out from ("administration") to ("their") in line 33 and insert ("of social security benefits and, in particular,").

The noble Lord said: In moving Amendment No. 48 I shall also speak to Amendments Nos. 50 and 60. Amendment No. 48 is intended to ensure that the fraud inspectorate will be able to cover all social security benefits administration. The amendment would allow the formation of an independent fraud inspectorate with a remit to investigate efficiency in the administration of all benefits, not just housing benefit and council tax benefit, but DSS-administered benefits too. There appears to be no justification for confining the power to appoint persons to report on administration to those benefits administered by local authorities only. The implication seems to be that local authorities need to be coerced into fighting fraud but that the record of the DSS, the Benefits Agency and other government departments is above reproach. I apologise to the Minister; this briefing is rather pointed.

In fact, central government's record is far from perfect. For example, the Commons Social Security Select Committee severely criticised the lack of control exercised over the national insurance number system as a major contributor to benefit fraud. Local authorities also have practical experience of cases where they detect housing benefit fraud and the recipient is also implicated in fraudulently obtaining DSS benefits. However, in some cases, when they inform the DSS, the department has been extremely slow to act on the information and stop the fraudulent claim. Perhaps the officers concerned did not have the relevant experience.

Amendment No. 50 requires the fraud inspectorate to publish an annual report. What the report is intended to contain appears in the amendment. The fraud inspectorate would be required to publish reports on at least an annual basis. They would have to contain details of the costs of the inspectorate, of the individual studies carried out, of reports produced, of recommendations made and of the action taken in response to those recommendations. In particular, the amendment would give the inspectorate powers to make general recommendations, including recommendations to the Secretary of State, about how benefits administration could be improved.

As drafted, the Bill requires the fraud inspectorate to report to the Secretary of State on individual local authorities, but there is no requirement for a more general report on its work or for more general recommendations on the administration of benefits. The amendment would give the fraud inspectorate the opportunity to give details of its work and to make recommendations on best practice which might be of value to all agencies administering benefits. Crucially, it would also give the inspectorate the opportunity to make recommendations about central government's benefits policy if changes were required to improve efficiency and prevent fraud.

On a number of Bills relating to social security and indeed other fields, such as health and agriculture, over the years, I have proposed amendments asking for reports either on a regular or an annual basis. We always receive the same answer. It would be interesting this time if the Minister were to be able to give some new arguments when he rejects the amendment, if he does reject it.

Amendment No. 60 is to give the Audit Commission powers to conduct studies into the administration of all social security benefits. The amendment would ensure that the powers being given to the Audit Commission to conduct studies cover all social security benefits, not just council tax and housing benefit. It does not seem unreasonable that there should be some independent scrutiny of the DSS administration of the benefits for which it is responsible. We are not entirely clear whether it should be the Audit Commission or the National Audit Office. It will be interesting to hear the Minister's response. The argument is about independent scrutiny. That is the important point.

The amendment also provides an opportunity to ask the Minister to explain why the powers contained in Clause 6 are necessary. What does this clause add to the Audit Commission's existing powers to conduct studies into local government economy, efficiency and effectiveness? Why are specific new powers to look at council tax benefit and housing benefit deemed to be necessary? I beg to move.

Lord Monkswell

I support my noble friend on this amendment. A phrase we hear quite regularly is that one is trying to achieve level playing fields. That is something very pertinent to our culture. Generally speaking, we believe in fairness: it is something very deep in the British psyche.

The amendment tries to ensure that in terms of social security administration and the prevention of fraud we are looking towards a level playing field. We do not want a situation where central government can use, as a stick to beat local government, certain facts and figures. There has been continual criticism of the high levels of voids—unlet domestic property—in council housing stock. However, when one looks at the figures and the information one finds the level of voids in central government housing stock to be far higher than that in the local authority stock.

We should recognise that there will be differences and variations. We should be prepared to learn from the good examples of administration of social security matters under local authority control. That experience, one hopes, can be fed back not only to other local authorities but also to the national scene. The amendment of my noble friend not only accords with the British psyche; it will provide long-term benefits for public administration at national and local level.

Lord Mackay of Ardbrecknish

I think I have explained to the noble Lord, Lord Monkswell, that the concept of a level playing field is entirely theoretical. If level playing fields existed, teams would not have to change ends at half time.

Baroness Hollis of Heigham

Has the noble Lord not heard of the sun?

Lord Mackay of Ardbrecknish

I am not entirely sure what the sun has to do with it unless it is the newspaper. As the sun seldom shines—

Baroness Hollis of Heigham

The Minister will surely accept that tennis courts are level but nonetheless people change ends because otherwise one player is playing into the sun?

Lord Mackay of Ardbrecknish

I think that illustrates my point that there is no such thing as a level playing field because players have to change ends. I am not entirely sure why I am being pulled up on my reprimand about the level playing field concept. Everything I say appears to be controversial today.

This group of amendments seeks to broaden the scope of matters which the Benefit Fraud Inspectorate and the Audit Commission would consider, in carrying out their functions under the provisions of this Bill, and to place a requirement upon the inspectorate to report on work undertaken and its effectiveness.

Amendment No. 48 would give the Secretary of State power to authorise persons to consider and report to him on the prevention and detection of fraud in all social security benefits. While I understand the intention behind the amendment, it is absolutely unnecessary because the Secretary of State does not require any additional powers to authorise investigations of social security benefits in general. He already has these powers. Indeed, we have fraud teams that work inside the Benefits Agency. The administration of housing benefit and council tax benefits raises different issues because local authorities are independent of the Secretary of State and have individual approaches to carrying out their obligations to administer benefits. That is why we need the new powers in this clause. That said, generally it will not be sensible to examine the administration of housing benefit in isolation and the inspector's remit will therefore include the interconnection between local authorities and the Benefits Agency. Where any such considerations identify a problem or a solution that has implications throughout the system the Committee may be assured that the appropriate action will be taken.

Amendment No. 60 is similar to the amendment we are discussing in that it would allow the Secretary of State to request the Audit Commission to undertake studies into the administration of all social security benefits, not just housing benefit and council tax benefit. This amendment is both inappropriate in principle and unnecessary in practice as it would give the Audit Commission a role in examining the administration of centrally administered benefits which fall outside its remit. The broader constitutional position is that the Comptroller and Auditor General, together with his staff in the National Audit Office, is responsible for external audit in central government. The Audit Commission and its cousin or brother, the Accounts Commission for Scotland, are responsible for external audit in local government and individual health bodies. Amendment No. 60 would cut across these long-established principles.

As I have already explained, the Secretary of State does not require any new powers to authorise investigations of the administration of social security benefits in general. He is able to invite external auditors to examine any part of departmental benefit procedure under current provisions.

Amendment No. 50 would place a statutory duty on persons authorised to carry out inspections under Clause 5 to prepare reports at least once a year on the inspections carried out, the costs involved, the recommendations made and the steps taken in response to those recommendations. The Benefit Fraud Inspectorate will form part of the department and will be accountable to the Secretary of State. It will be a separate unit operating independently from the agencies within the department which have responsibility for administering benefits.

The head of the inspectorate will produce annual accountability reports for the Secretary of State explaining the work the inspectorate has carried out and the running costs, staffing and resources involved. Reports will also contain information of a more technical nature commenting on overall achievements and on points of general interest arising from that year's inspection programme. We do not, however, consider that it would be appropriate for the inspectorate's annual accountability report to contain all the detailed recommendations which have been made in each of the individual inspection reports compiled during the year. There are two main reasons for this. First, the reports are relevant to the individual authority at the time of the inspection. Secondly, authorities will be under no statutory obligation to adopt the detailed recommendations contained in inspection reports.

While it is intended that the head of the Benefit Fraud Inspectorate will make annual reports to the Secretary of State and that generally these will be published, it would be inappropriate for those reports to cover all the subjects suggested in the amendment. It is also worth noting—although I do not think this was the intention—that it appears that the reporting requirement would fall on each individual who was authorised to report. That would be impractical and unwieldy. However, I know that was not the intention of the amendment. I hope that with those explanations of how we believe the system will work and of the quite different role of the Audit Commission and of the National Audit Office, the noble Lord, Lord Carter, will see that the provisions and the powers that the Secretary of State requires are already to hand.

5.15 p.m.

Lord Carter

I am extremely grateful to the Minister for that reply. I think I said that we were not quite sure whether it was a case of the Audit Commission or the National Audit Office. Is it correct that the appropriate parts of the annual accountability report will be published and will be in the public domain but it will be the responsibility of the Secretary of State to decide what is or is not published? That is how I expected the position to be. I shall read with care what the Minister has said but I think he has satisfied our concerns. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hollis of Heigham moved Amendment No. 49: Page 10, line 34, at end insert (", and with compliance with the data protection principles (as set out Schedule I to the Data Protection Act 1984).").

The noble Baroness said: The Secretary of State will authorise people to report to him on local authorities' administration of housing benefit and council tax benefit and their performance in detecting fraud. This amendment would ensure that at the same time they would also report not just on their performance in detecting fraud but also on their observance of the principles of data protection as laid down in the 1984 Act. I am sure the Committee is acquainted with those principles but I shall summarise them briefly.

The principles are as follows. Data will be obtained and processed fairly and lawfully. Data may be held only for lawful purposes which are described in the register entry. Data should be used or disclosed only for those or compatible purposes. Data must be adequate, relevant and not excessive in relation to the purpose for which they are held. Data should be accurate and, where necessary, kept up to date. Data should be held no longer than is necessary for the purpose. Individuals should be allowed to access information held about them and, where appropriate, correct or erase it. Data must be surrounded by proper security.

Asking local authorities, in their report to the Secretary of State on their performance in eradicating fraud, also to report on their observance of the above eight principles is an essential safeguard to ensure that not just the end—eradicating fraud—but also the means—the observance of proper procedures in so doing—is respected. I should like to see local authorities being required to name a specified local authority officer, for example the city solicitor or the electoral registration officer, who has designated responsibility. His or her job would be made more straightforward if he or she not only conformed to those principles but also was guided by what we hope will be in the code of practice. It is essential that a proper balance is maintained between being tough on fraud and respecting the rights of the individual to privacy and confidential handling of sensitive material, for example on issues such as immigration status, cohabitation, financial and health status.

I have no doubt that most local authorities will observe these principles but there is the possibility of abuse, perhaps where an authority is facing a subsidy penalty for not uncovering sufficient fraud and seeks to cut corners. There is also the possibility of abuse where some of this work has been contracted out to private companies which would like to exploit some of the information for commercial gain, perhaps to promote medical insurance or to inform clients of people's credit ratings. We hope that that will not happen but this amendment would construct a local authority mindset that it must observe the ethic of data protection while being vigorous in attacking fraud. The Minister's proposed code of practice, which he conceded in Tuesday's discussions, may cover these points. We should like confirmation from the Minister that that will indeed be the case. If not, we shall obviously want to press him further. I beg to move.

Earl Russell

Ministers do not run well in blinkers. For that reason, I am happy to support the amendment. The Minister may recall—I shall not rehearse it in detail—that I said on Second Reading that getting the Bill right was going to be a matter of observing balance. Whenever one sets an administration to pursue a single objective in isolation, that sense of balance goes. One gets a single-minded blinkered concentration upon a single subject. That way injustice happens. There is nothing new about it. It has always been true.

The Minister knows—or at least he has good cause to know—that the need to report on something tends to concentrate one's mind heavily on that one thing. Whoever is carrying out functions under the Bill will have to report on fraud. As the Bill stands, it risks focusing their minds in a single-minded, obsessive way on fraud. Making them think that what results in the apparent—I stress the word "apparent"—detection of fraud is always good, and that that is the only criterion of good. That way injustices are likely to happen and probably will happen. But if the amendment is accepted, then in the course of reporting upon something else as well, having another priority they wish to satisfy, another thing that is marked as good, they will, as the noble Baroness persuasively put it, have something which influences their mindset in a much more constructive direction. That is a good thing indeed. Good is not a single thing, and the better we appreciate that, the better we shall do it.

Lord Mackay of Ardbrecknish

The amendment seeks to place a statutory requirement upon the Benefit Fraud Inspectorate to monitor local compliance with the Data Protection Act 1984. It merely adds the words of the amendment to the first subsection of Section 139A, which states: The Secretary of State may authorise persons to consider and report to him on the administration by authorities of housing benefit and council tax benefit and, in particular, their performance in the prevention and detection of fraud relating to those benefits". That is why it is called the Benefit Fraud Inspectorate. The amendment would add to its role the duty to look for compliance with the data protection principles as set out in Schedule 1 of the Data Protection Act.

The protection of individual privacy is an important responsibility of those in charge of local authorities. Quite rightly, each local authority holding relevant personal data is under an obligation to comply with the Data Protection Act. It is the proper role of the Data Protection Registrar to enforce that legislation. It would not be appropriate to usurp the registrar's position by giving a completely unrelated organisation a partial responsibility for policing data protection. To do so could only cause confusion.

The amendment would considerably alter the role of the inspectorate. We envisage the inspectorate as a dedicated unit set up specifically to examine, and report on, the administration of social security benefits. Its staff will be experts on social security matters. To give them other responsibilities, unrelated to the social security system, will inevitably dissipate the impact of the inspectorate and its effectiveness.

Baroness Hollis of Heigham

I am grateful to the Minister for giving way. He said that the inspectorate is being asked to pursue functions unrelated—"unrelated" is the word that he used—to the purposes of whatever system. The point about this is that how that fraud is pursued—that is the data protection issue—is integral to the purposes for which the Bill is being addressed. The Minister has tried to make a separation between means and ends, which we are trying to keep firmly integrated.

Lord Mackay of Ardbrecknish

I do not think it is integration, I think that it is addition. When it is looking at how the local authority may be running its system, the inspectorate may well have to look into the computer systems; but it will be doing so specifically on the basis of checking on how it is running its anti-fraud systems. Priority must be given to reducing the £1 billion of housing benefit fraud. I am sure that that is agreed between us.

If we were to place this additional burden on the inspectorate, then clearly it would have another function placed upon it, and that would add to the cost of running it. This extension of the inspectorate's role would lead to an increase in its running costs. It is hard to justify an additional role and additional expenditure to duplicate functions which are already, under other Acts, the proper responsibility of others.

I do not believe that it would be appropriate to extend the Benefit Fraud Inspectorate's remit in the way suggested. Neither do I believe that such a change would achieve any additional protection of the individual's right to privacy. Indeed, there is a risk that by confusing the responsibilities for those important issues, the amendment will achieve an effect quite the opposite of that intended.

I should point out that under Section 5 of the Local Government and Housing Act 1989 every authority is required to appoint a monitoring officer specifically to deal with contravention of any rule of law, or statutory code of practice, by that authority's members, officers, or employees. The monitoring officer has, in turn, duties to report to the members of the authority who are themselves accountable to their electorate.

If any information comes to light during an inspection which casts doubt upon the legality of an authority's data protection procedures, then that will be reported to the monitoring officer concerned in that specific local authority.

I hope that with that explanation of why I do not believe that that additional burden should be placed on the fraud inspectorate and the explanation of what the fraud inspectorate will do if it comes across an abuse of the Data Protection Act or misuse under the Act, the noble Baroness can withdraw the amendment.

Earl Russell

When the Minister talked about a dedicated unit and about the first priority, he entirely illustrated the ground of my misgivings. There is not a moment's dispute between us that the elimination or substantial reduction of the cost of fraud must be a high priority, but we are always going around in debate—I am sure that I am as guilty as anyone else—saying that this must be the first priority, this is the highest priority, this is the top priority. Priorities, like boxers, cannot all be the greatest. Priorities have to jostle with one another. Among priorities, just as much as in the market, there is a great deal of health in competition. The Minister is proposing here to set up a priority which is immune to competition. That is indeed dedication. It is the voice of the heresy hunter; it frightens me.

Baroness Hollis of Heigham

I wonder whether the Minister can help me with a question. When moving the amendment, I asked whether such matters will be covered by the code of practice which was granted, so to speak, by the Minister in reply to amendments we moved at the beginning of Tuesday's debate. Will the inspectors of the fraud squad, so to speak, monitor the compliance of local authorities with that code of practice, and will that code of practice embody the concerns that I have raised?

Lord Mackay of Ardbrecknish

We are a little confused about the role of inspectors and the code of practice which we discussed at the beginning of Tuesday, which was put in as part of the data protection measures, and is designed to ensure that the people who are doing the data matching and running the systems, comply with the provisions of Acts such as the Data Protection Act. That is what that code of practice is about.

If the inspectorate sees something that infringes the Act or indeed the code it will report that to the monitoring officer of the local authority, whose responsibility and duty it is to deal with these issues. That will be the clear line of reporting of any matter that the fraud inspectorate comes across. To add to its role and make it police the Data Protection Act as well is simply not sensible. The policeman for the Data Protection Act, and indeed other statutes, is the monitoring officer employed by the authority.

5.30 p.m.

Baroness Hollis of Heigham

I am rather disappointed by that reply. After all, the code of practice is the DSS code of practice, not that of the registrar. It is not unreasonable therefore that when government fraud inspectors investigate the performance of the local authority, they should also assess and review that same local authority's observance of the code.

The Minister persists in thinking that data protection on the one hand and pursuance of fraud on the other are two parallel responsibilities which do not meet, and to layer the one on to the other is to produce an additional role, responsibility and expense. That is profoundly to misunderstand the issue. Data protection is about how it is done. Dealing with fraud is what is being attempted.

The amendment tries to ensure that in the process of pursuing fraud—a matter on which we are entirely at one—nobody cuts corners by failing to comply with the principles of data protection. Therefore an inspectorate that is concerned, which is pressing and possibly harassing and hounding a local authority to meet its fraud targets, should at the same time be required to hold in consideration that in so doing the local authority must conform to the principles which I hope will be laid down in the code of practice and are certainly laid down in the Data Protection Act 1984. If not, there is a danger that corners will be cut and that, in the pursuit of fraud, with the inspectorate at their back, the local authorities will not comply as they should because there will not be an equivalent weight of consideration.

I am very disappointed by the Minister's reply. I wish to test the opinion of the Committee.

5.32 p.m.

On Question, Whether the said amendment (No. 49) shall be agreed to?

Their Lordships divided: Contents, 54; Not-Contents, 138.

Division No. 1
Addington, L. Graham of Edmonton, L.
Alderdice, L. Grey, E.
Beaumont of Whitley, L. Harris of Greenwich, L. [Teller.]
Borrie, L. Haskel, L.
Broadbridge, L. Hollis of Heigham, B.
Bruce of Donington, L. Hughes, L.
Carlisle, E. Jeger, B.
Carter, L. Judd, L.
Clancarty, E. Kilbracken, L.
Cocks of Hartcliffe, L. Lester of Herne Hill, L.
Currie of Marylebone, L. Longford, E.
David, B. Lovell-Davis, L.
Dormand of Easington, L. McIntosh of Haringey, L.
Dubs, L. McNair, L.
Eatwell, L. McNally, L.
Falkland, V. Mar and Kellie, E.
Fisher of Rednal, B. Monkswell, L.
Geraint, L. Morris of Castle Morris, L.
Gould of Potternewton, B. Ponsonby of Shulbrede, L.
[Teller] Prys-Davies, L.
Redesdale, L. Thurso, V.
Rodgers of Quarry Bank, L. Tordoff, L.
Russell E Turner of Camden, B.
Serota, B. Wallace of Coslany, L.
Whitty, L.
Shepherd, L. Williams of Crosby, B.
Stoddart of Swindon, L. Williams of Elvel, L.
Thomson of Monifieth, L. Winston, L.
Acton, L. Holderness, L.
Ailsa, M. HolmPatrick, L.
Aldington, L. Hooper, B.
Alexander of Tunis, E. Howe, E.
Allenby of Megiddo, V. Howe of Aberavon, L.
Ampthill, L. Hylton-Foster, B.
Anelay of St. Johns, B. Inglewood, L.
Annaly, L. Kenilworth, L.
Ashbourne, L. Kingsland, L.
Astor of Hever, L. Kinnoull, E.
Balfour, E Kintore, E.
Barber of Tewkesbury, L. Lauderdale, E.
Belhaven and Stenton, L. Lindsay, E.
Berners, B. Liverpool, E.
Biddulph, L. Long, V.
Blaker, L. Lucas, L.
Blatch, B. Lucas of Chilworth, L.
Boardman, L. Luke, L.
Boyd-Carpenter, L. Lyell, L.
Brabazon of Tara, L. McColl of Dulwich, L.
Brentford, V. Mackay of Ardbrecknish, L.
Bridgeman, V. Mackay of Clashfem, L.
Brigstocke, B. [Lord Chancellor.]
Brookes, L. Mackay of Drumadoon, L.
Brougham and Vaux, L. Macleod of Borve, B.
Butterworth, L. Marlesford, L.
Cadman, L. Massereene and Ferrard, V.
Campbell of Alloway, L. Merrivale, L.
Campbell of Croy, L. Mersey, V.
Carnock, L. Miller of Hendon, B.
Chelmsford, V. Milverton, L.
Chesham, L. [Teller.] Monckton of Brenchley, V.
Clanwilliam, E. Monk Bretton, L.
Clark of Kempston, L. Mottistone, L.
Coleridge, L. Mountevans, L.
Courtown, E. Mowbray and Stouiton, L.
Craigavon, V. Munster, E.
Cranborne, V. [Lord Privy Seal.] Murton of Lindisfarne, L.
Crathome, L. Nelson, E.
Crickhowell, L. O'Cathain, B.
Cross, V. Oppenheim-Barnes, B.
Cumberlege, B. Orr-Ewing, L.
Davidson, V. Oxfuird, V.
Denbigh, E. Park of Monmouth, B.
Denton of Wakefield, B. Pike, B.
Dixon-Smith, L. Pilkington of Oxenford, L.
Downshire, M. Platt of Writtle, B.
Dundee, E. Quinton, L.
Eden of Winton, L. Rankeillour, L.
Elibank, L. Rees, L.
Ellenborough, L. Rennell, L.
Elliott of Morpeth, L. Renton, L.
Elton, L. Renwick, L.
Feldman, L. Saint Albans, D.
Flather, B. St. John of Fawsley, L.
Forbes, L. Saltoun of Abernethy, Ly.
Gibson-Watt, L. Shaw of Northstead, L.
Gisborough, L. Skelmersdale, L.
Goschen, V. Soulsby of Swaffham Prior, L.
Gray, L. Stewartby, L.
Harding of Petherton, L. Stodart of Leaston, L.
Harris of Peckham, L. Strange, B.
Harrowby, E. Strathclyde, L. [Teller.]
Hayhoe, L. Swinfen, L.
Henley, L. Taylor of Warwick, L.
Teynham, L. Vivian, L.
Thomas of Gwydir, L. Willoughby de Broke, L.
Wise, L.
Trumpington, B. Wynford, L.
Ullswater, V. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

5.41 p.m.

[Amendment No. 50 not moved.]

Baroness Hollis of Heigham moved Amendment No. 51: Page 11, line 40, at end insert— ("(3) Any report which relates to an obligation to satisfy the requirements of any of the data protection principles (as set out in Schedule 1 to the Data Protection Act 1984) shall be sent to the Data Protection Registrar within three months of its delivery to the Secretary of State.—).

The noble Baroness said: Amendment No. 51 proposes that the report to the Secretary of State should, within three months, also be sent to the Data Protection Registrar as she is the custodian of civil liberties in respect of privacy, appointed by Parliament to undertake that function on our behalf. Her work will be greatly extended as a result of the Bill, monitoring a much more extensive and complicated set of information transactions between the DSS and the Inland Revenue, between Customs and Excise and the Inland Revenue via the DSS to local authorities.

We are obviously pleased that the registrar will be expecting data matching bodies to conform to the DSS code of practice. Could we ask the Minister what additional staff the Data Protection Registrar will have in the light of the additional responsibilities placed on her under the Bill? Am I right in thinking that the Home Office has cut the grant in aid to her office? Can we hope that the Minister will support what is, after all, a modest amendment but will lock the Data Protection Registrar into the system? As the Minister said on the previous amendment, she is the protector of these concerns. I beg to move.

Lord Mackay of Ardbrecknish

This amendment is similar to the last one, but in this case it places a statutory requirement upon the Benefit Fraud Inspectorate to send to the Data Protection Registrar reports on the local authorities' compliance with the Data Protection Act 1984.

For the reasons I outlined a short time ago, we do not believe that the Benefit Fraud Inspectorate ought to be asked to monitor compliance with the Data Protection Act. The proper place for that role is with the Data Protection Registrar. This amendment would considerably alter the role of the inspectorate, as would the previous one, and I believe that widening its scope would reduce concentration on its main task, which is housing benefit and council tax benefit fraud. It would also increase the running costs.

There is little difference between this amendment and the last one relating to the fraud inspectorate. Any authorised persons conducting an inspection on behalf of the Secretary of State will, of course, need to be aware of the legal context within which local authorities work. That will include the legislation relating to data protection. It will also include responsibilities relating to the employment of the health and safety laws. The noble Baroness is not yet asking that the fraud inspectorate monitor these Acts as well, but the inspectorate would have to be aware of the Acts, particularly the Data Protection Act. The inspectorate will not be able to ask local authorities to ride roughshod over the Data Protection Act, as the noble Baroness seems to think, in order to meet some fraud objectives.

Any concerns about possible breaches of data protection legislation encountered by the inspectorate will, as I have already explained, be reported to the chief officers within the local authority. It is the clear legal responsibility of those officers to comply with the Act. They are accountable for procedures in the local authority and it would be wrong to dilute that by placing a statutory responsibility on the inspectorate. The Data Protection Registrar gives advice to local authorities on issues concerning data protection.

To reiterate, it would not be appropriate to extend the Benefit Fraud Inspectorate's remit in the way suggested by the amendment. Nor do we believe that the amendment would offer any additional safeguard to an individual's personal privacy.

I hope that the noble Baroness will withdraw her amendment, but if she wishes to go to a vote, I am sure that my noble friends will support me in the Lobby.

Baroness Hollis of Heigham

I do not know why the Minister should be so certain, perhaps he should ask his noble friends. Is that not the appropriate etiquette on these occasions? I am baffled by part of what the Minister said—no doubt it is my fault. He said that the inspectorate was not responsible for ensuring health and safety either. That was the job of the Health and Safety Executive. Can the Minister explain to me what on earth that analogy has to do with the matters under discussion?

The point about this amendment as well as the previous one is that data protection principles ensure the propriety of the path trodden to get to the point of eradicating fraud. We are talking about data matching. That is how, to some degree, the fraud will be determined and made transparent and therefore pursued. Will the Minister tell us where he gets the analogy of the Health and Safety Executive? I do not understand it.

Lord Mackay of Ardbrecknish

I was pointing out that there are other pieces of legislation which control matters within local government. We would not expect the fraud inspectorate to be on the lookout for those, any more than we would expect those responsible for that legislation to monitor the Data Protection Act. If the noble Baroness does not like the example, then I withdraw it. But my argument stands in relation to the Data Protection Act.

I am clear as to what the fraud inspectorate's task is. If the noble Baroness wishes to dilute it, that is her concern. I do not. I believe that the proper procedures are in place with regard to the Data Protection Act. I do not think that it is necessary to add data protection duties to the activities of the fraud inspectorate.

Baroness Hollis of Heigham

It is clear that the Minister accepts the ineptitude of the analogy. The fraud inspectors will no more look into health and safety than they will look into equal opportunities, responsibilities on race relations, environmental assessments or anything else. The point about data protection is that in the pursuit of fraud one will handle sensitive material and, therefore, it should be handled in ways that conform to principles of data protection. It is about how you get there. That is why it is integral and the Minister knows that the cross-reference to health and safety was absurd.

Lord Mackay of Ardbrecknish

I did not wish to go back to the analogy, I was trying not to waste the Committee's time by continuing it. Of course, health and safety are concerned with the way the staff work. The point is that when it comes to the employment of fraud staff, health and safety issues are relevant when they relate to what people do and how they carry out their work.

If one were making the kind of argument put forward by the noble Baroness, one would say: "While they are at it, they had better check that what the staff are doing in their fraud work is consistent with health and safety issues". I said and remain of the opinion that there are proper bodies to do that, just as there are proper bodies to look after data.

Baroness Hollis of Heigham

That is an absurd analogy but we could argue about it afterwards. I do not understand where the Minister is coming from on this. He refuses to accept that we are talking about the methodology, how one gets from point A to point B so that the means do not subvert the end or the end does not subvert the means. I am very dissatisfied with the Minister's response and would like to seek the opinion of the Committee.

5.49 p.m.

On Question, Whether the said amendment (No. 51) shall be agreed to?

Their Lordships divided: Contents, 48; Not-Contents, 127.

Division No. 2
Addington, L. Eatwell, L.
Alderdice, L. Elis-Thomas, L.
Beaumont of Whitley, L. Fisher of Rednal, B.
Borrie, L. Gould of Potternewton, B.
Broadbridge, L. [Teller.]
Carlisle, E. Graham of Edmonton, L. [Teller.]
Carter, L. Grey, E.
Clancarty, E. Harris of Greenwich, L.
Cocks of Hartclilfe, L. Haskel, L.
David, B. Hollis of Heigham, B.
Dormand of Easington, L. Hughes, L.
Dubs, L. Jay of Paddington, B.
Kilbracken, L. Rodgers of Quarry Bank, L.
Lester of Herne Hill, L. Russell, E.
McIntosh of Haringey, L. Serota, B.
McNair, L Stoddart of Swindon, L.
McNally L Thomson of Monifieth, L.
Mar and Kellie, E. Thurso, V.
Meston, L. Tordoff, L.
Monkswell, L. Turner of Camden, B.
Wallace of Coslany, L.
Morris of Castle Morris, L. Whitty, L
Ponsonby of Shulbrede, L. Williams of Crosby, B.
Prys-Davies, L. Williams of Elvel, L.
Redesdale, L. Winston, L.
Acton, L. Holderness, L.
Ailsa, M. HolmPatrick, L.
Alexander of Tunis, E. Howe, E.
Ampthill, L. Howe of Aberavon, L.
Anelay of St. Johns, B. Hylton-Foster, B.
Annaly, L. Inglewood, L.
Ashbourne, L. Jeffreys, L.
Astor of Hever, L. Kenilworth, L.
Attlee, E. Kingsland, L.
Balfour, E. Kinnoull, E.
Belhaven and Stenton, L. Kintore, E.
Belstead, L. Lauderdale, E.
Berners, B. Lindsay, E.
Bethell, L. Liverpool, E.
Biddulph, L. Long, V.
Blaker, L. Lucas, L.
Blatch, B. Lucas of Chilworth, L.
Boardman, L. Luke, L.
Boyd-Carpenter, L. Lyell, L.
Brabazon of Tara, L. McColl of Dulwich, L.
Bridgeman, V. Mackay of Ardbrecknish, L.
Brigstocke, B. Mackay of Clashfern, L.
Brookes, L. [Lord Chancellor.]
Brougham and Vaux, L. Mackay of Drumadoon, L.
Cadman, L. Macleod of Borve, B.
Campbell of Alloway, L. Marlesford, L.
Campbell of Croy, L. Massereene and Ferrard, V.
Carnock, L. Merrivale, L.
Chelmsford, V. Mersey, V.
Chesham, L. [Teller.] Miller of Hendon, B.
Clanwilliam, E. Milverton, L.
Clark of Kempston, L. Monckton of Brenchley, V.
Coleridge, L. Mottistone, L.
Courtown, E. Mountevans, L.
Craigavon, V. Mowbray and Stourton, L.
Cranborne, V. [Lord Privy Seal.] Munster, E.
Crickhowell, L. Murton of Lindisfarne, L.
Cross, V. Nelson, E.
Cumberlege, B. O'Cathain, B.
Davidson, V. Oppenheim-Barnes, B.
Denbigh, E. Oxfuird, V.
Denton of Wakefield, B. Park of Monmouth, B.
Dixon-Smith, L. Pilkington of Oxenford, L.
Downshire, M. Platt of Writtle, B.
Eden of Winton, L. Quinton, L.
Elibank, L. Rankeillour, L.
Elliott of Morpeth, L. Rees, L.
Elton, L. Rennell, L.
Feldman, L. Renton, L.
Flather, B. Renwick, L.
Forbes, L. Saint Albans, D.
Gisborough, L. SL John of Fawsley, L.
Goschen, V. Shaw of Northstead, L.
Gray, L. Skelmersdale, L.
Haddington, E. Stewartby, L.
Harding of Petherton, L. Stodart of Leaston, L.
Harris of Peckham, L. Strange, B.
Harrowby, E. Strathclyde, L. [Teller.]
Hayhoe, L. Taylor of Warwick, L.
Henley, L. Thomas of Gwydir, L.
Trumpington, B. Wharton, B.
Ullswater, V. Willoughby de Broke, L.
Vinson, L. Wise, L.
Vivian, L. Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.57 p.m.

Lord Carter moved Amendment No. 52: Page 11, line 40, at end insert— ("(3) Any authority sent a report by the Secretary of State under subsection (2) above may, within 28 days of receiving the report, make such representations to the Secretary of State about the content of the report as it considers appropriate. (4) In considering any further action as a result of a report made under this section the Secretary of State shall have regard to any representations made by an authority under subsection (3) above.").

The noble Lord said: This amendment is designed to allow local authorities to respond to reports on social security administration. We are advised on this matter by the Association of District Councils, the Association of London Government and the Association of Metropolitan Authorities who believe that there is a serious point here and that the Bill requires amendment.

The amendment would give a right of reply to an authority which has had a report made against it under Clause 5. The intention is to give an authority in that case an opportunity to make comments about such issues as the accuracy of the statements in the report and the methodology used. It would also—which is extremely important—give the authority the opportunity to explain the reasons for any failings identified in the context of its own financial position, the level of subsidy received from the Government and the overall impact of the Government's benefits policy.

As drafted the Bill establishes a system which allows an adverse report to be made against an authority under Clause 5 which could then be used as the basis of a direction from the Secretary of State under Clause 8, the compulsory contracting out of benefits administration under Clause 9, and the deduction of subsidy under Clause 10. Although an authority will have an opportunity to submit proposals for improving its performance and remedying any failings identified in the report and prior to receiving a direction under Clause 8 there will be no statutory right of reply for the authority before that stage. That means that there is no requirement on the Secretary of State to consider an authority's representations before moving on to the next stage of making a direction or deducting a subsidy.

The amendment was moved in Committee in another place where the Minister argued that it was unnecessary because it would largely pre-empt the provisions already made in Clause 8. But the purpose of the amendment is precisely intended to pre-empt the provisions in Clause 8 because that is the clause which deals with directions by the Secretary of State. We feel that local authorities should have an opportunity to make comments on adverse reports against them and that the Secretary of State should be required to consider those representations before moving on to consider taking action against a local authority. In some cases, criticisms of poor performance may not be well founded or the poor performance may be caused by insufficient government subsidy for administration costs or by inappropriate policies which are pursued by the DSS. We know that central government subsidy now covers only two-thirds of actual benefit administration costs and in individual authorities the proportion will be much lower. In this context lack of central government support to a particular authority may be the principal reason for its failure to perform adequately. The authority should have the opportunity to make such points and the Secretary of State should be under an obligation to take them into account before considering the making of directions under Clause 8.

We think there is an injustice here. We do not think the local authorities will have the chance to respond before the Secretary of State makes directions under Clause 8. It would considerably add to the justice of the Bill if the Minister were minded to accept the amendment. I beg to move.

6 p.m.

Earl Russell

I am very happy to support the amendment. When one thinks of amendments in one's own mind one tends to use a shorthand. One identifies them by a single word with which one associates them. I am sure the noble Lord, Lord Carter, will understand why I have identified this as the Calderdale amendment. We have here another case of a report on which the local authority wishes to make comments. It is in the Government's interest to allow these comments before any action is taken and to institutionalise the procedure for them.

We have here a procedure which may end up in a deduction of subsidy or in another penalty. We have in effect an exercise of administrative power. All such excises of power, by a provision which is many centuries old in English law, are liable to review by the judges in court. The noble Lord, Lord Lucas, who, I am happy to see, is now in his place, will, I am sure, recall a very interesting discussion we had to which I referred the other day about the extent to which the drafting of legislation may tend to increase the number of judicial reviews. If there is no restriction on the powers of authority in the wording of the legislation, then, literally as a kind of court of last resort, the powers of judicial review come into operation. If this amendment is not accepted, the powers of judicial review will be the first port of call for controlling the Secretary of State's exercise of power. If it is accepted, then there will be what I am sure the Government will find more satisfactory—a statutory check on the exercise of power. Power can be checked according to the expressed will of Parliament. There are advantages in that if Parliament will express the requisite will. But it can only do so, so far as I can see, by accepting the amendment.

One of the ways in which the local authority might well wish to express the view that it had been unfairly dealt with is by making reference to its financial position. Local authorities very frequently believe, and very frequently correctly believe, that poor performance is the result of inadequate financial support. There is a certain amount of support from central government but central government subsidies now cover only two-thirds of actual benefit administration. Because of the very complex way the formula for local authority support works, in individual authorities it may be very much lower. In those cases in particular, they may have a very strong case indeed for wanting to make representations. Those are two strong points in favour of the amendment. I am happy to support it.

Lord Mackay of Ardbrecknish

The amendment would require the Secretary of State to allow local authorities a certain period in which to make representations to him on the content of inspection reports. The amendment largely pre-empts the provisions already made in Clause 8 of the Bill. I do not believe that it is necessary to pre-empt the provisions of Clause 8.

The proposed procedure of inspection, reports and directions was designed to be fair to local authorities. It may be helpful if I outline them briefly. Following receipt of an inspection report, the Secretary of State will first ensure that the report is copied to the local authority concerned. This will happen in all cases, even where the performance of the authority is exemplary. It is unnecessary in such cases to make provision for the authority to respond to the report as this amendment does. Indeed, to do so would create an unnecessary layer of bureaucracy.

In a case where the Secretary of State believes that action may prove necessary, he will be required, before taking any action, to invite the local authority to consider the report and to submit its proposals to improve performance and remedy any failings identified. The Secretary of State must then consider any response, along with the report, before making any directions to the local authority.

So the provisions in Clause 8 already ensure that the authority concerned will have the opportunity to consider and respond to the report before directions are issued. Clearly, where an authority disagrees with the accuracy of the report or wishes to challenge the findings, it will be free to comment accordingly. Where the authority considers that any recommendations are inappropriate it will be able to state the reasons why.

The Secretary of State's power to issue a direction is permissive precisely to allow for circumstances where it would not be appropriate to make or even consider making a direction. Where the authority has raised compelling arguments against doing so, the Secretary of State must take these into account. It may not be the intention, but the amendment as drafted appears to introduce an additional stage in the process. To require an additional period of 28 days for comment prior to inviting the authority's proposals would only prolong the process and make it unduly bureaucratic.

The amount of time allowed for an authority to respond to a report must be flexible. Given the wide differences in local authority performance and the variations in caseloads between different authorities, it would not be appropriate to lay down a mandatory response time. It is precisely in order to maintain fairness that we need to be able to adjust to the particular circumstances of each individual authority when setting deadlines for action. In general we do not anticipate that an authority would be expected to respond in less than 28 days. There may, however, be occasions when swift action is necessary, while in other cases longer periods would be justified.

Clause 8 already makes adequate provision for a local authority to respond. With that explanation of how we believe the procedure of inspection, report and direction will work, I hope the noble Lord will feel able to withdraw the amendment.

Lord Carter

That was a very helpful response but perhaps I may put a point to the Minister. He said that the amendment would require the local authority to respond even when there was no reason to criticise its performance. I suppose that it could always write back to say, "Thank you". The intention of the amendment is to give an authority the opportunity to make comments about such issues as the accuracy of the statement in the report and the methodology used. If we go along with the Minister's argument and say that this is not required, will the local authority be allowed to make such comments when it submits its proposals in response to the report? When it submits its proposals for putting right whatever may be wrong, will it be allowed to say, "Yes, we understand what we have to do but we would like to point out that the reason for the problem is the inefficiency of the department"?

Lord Mackay of Ardbrecknish

Yes. I think I indicated that where the authority disagrees with the accuracy of the report or wishes to challenge the findings it will be free to comment accordingly. It can make some of those comments before it even comes back to the things it might do if it wishes to challenge points of fact, if I may call them that, or the accuracy of the report. It can do that. That is why I think a little flexibility is required.

Lord Carter

I was referring not just to accuracy. I was also thinking of more subjective opinions where the authority might feel that the problem had arisen because of wrong action on the part of the DSS. I do not wish to press the amendment to a Division. I shall read with care what the Minister said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 agreed to.

Baroness Turner of Camden moved Amendment No. 53: After Clause 5, insert the following new clause—


(" . In section 5(1) of the Social Security Administration Act 1992 (regulations about claims for and payment of benefit) at end of paragraph (j) insert" and for requiring a review of the award and an award to be made within fourteen days of receipt of notice of any change of circumstances;".").

The noble Baroness said: The purpose of this amendment is to ensure that changes of circumstances are processed within 14 days of the notification of that change. As we know, people have a duty to inform the authorities of a change of circumstances, but, unlike the initial claim in housing benefit cases, there is no timescale within which the local council should process that change. As a result, when a claim is eventually processed, recipients may find themselves faced with considerable under or overpayment and local authorities will then have to seek to put the matter right.

We have to remind ourselves when dealing with the benefit system that we are dealing with people who are by definition very poor and often disadvantaged and who live, as it were, very close to the edge. That means that any underpayment may be a matter of grave penury. Alternatively, if through no fault of their own, having made the notification of change of circumstances, nothing happens and suddenly they are asked to make up the underpayment, that may be a considerable embarrassment and the person concerned may not have the money available.

I do not think that it is too much to expect that a change of circumstances should be processed within 14 days. If we do not have that kind of timescale laid down in legislation, we may very well find that people are subjected to disadvantage which should not be there at all. I beg to move.

Earl Russell

This is rather an important amendment. The Minister and the noble Lord, Lord Lucas, may remember a number of exchanges that we had on the housing Bill where we were in danger for a while of passing like ships in the night. The noble Baroness, Lady Hollis, and I and many others, were asserting that many people were made to wait for many months before getting housing benefit. The Minister gave a whole series of statistics showing that very few people had to wait beyond a fortnight. It was only after very lengthy debate that it emerged that we were measuring two different things. Those of us speaking on this side of the House were measuring the length of time from when people put in the initial application for housing benefit or notifying the change of circumstances from which a claim arose. Ministers were measuring the time of a fortnight, on which there is a statutory check, from when the local authority got all the information on board. The clock does not start ticking for a local authority until all the information has been gathered in.

There have been local authorities—I think of the London boroughs of Lambeth and Brent in the bad old days before reforms began—which used to leave things for many months before they even began to ask for the information needed. In fact, I believe that the London Borough of Lambeth—I would not swear to the recollection now—once discovered a number of sacks containing applications for housing benefit, which had been left lying in a corner of an office for as long as six months.

The point that the noble Baroness, Lady Turner of Camden, made about people living near to the edge is very applicable indeed in that situation. If people have received overpayment through no fault of their own and they are then asked to repay an enormous sum all at once, even if the money is legally due, repaying it may be very difficult indeed.

Some of us may have received bills from the Inland Revenue for several thousand pounds at a time for back tax which the Revenue has suddenly discovered is due, although in possession of all the information. That sort of thing can cause us, in much more comfortable circumstances, a considerable amount of dismay. If it can cause that to us, then how much more it must cause dismay to people who are really right on the edge and who may be refused the chance to cash a cheque because of an overdraft of £5?

At that sort of level, delay is very serious. So we need some recognition of the fact that the local authority clock ought to start ticking a bit faster. It is like not starting the stopwatch for the Olympic mile—or the 1500 metres, I should say, these days—until the runners are past the first 800 metres. That does not give a very accurate reading. This may not be exactly the right thing to do about it, but something must be done about the problem. People are suffering quite badly because nothing has been done yet.

6.15 p.m.

Lord Mackay of Ardbrecknish

The effect of this amendment would be to provide a power to make regulations to guarantee that notifications of changes of circumstances relating to the majority of benefits administered by my department and local authorities would automatically trigger a review which would have to be dealt with and a decision made within 14 days.

If regulations such as the amendment suggested were made, they could not provide for any exception to the 14-day time period. The amendment is needlessly restrictive. For practical reasons there is a need for exceptions to a 14-day general rule.

Decisions on benefit entitlement by adjudicating authorities are made on the information available to them and deciding the facts on the balance of probabilities. If the officer does not have sufficient information in order to make an accurate determination, he must properly seek more information, otherwise the claimant may be underpaid or overpaid. Proper determinations may not be possible within 14 days if further information has to be obtained either from the claimant or a third party.

For example, the claimant may notify that he has started part-time self employment but say that the business is not yet making any money. The adjudicating authority must arrange further inquiries on the nature of the business and estimated income and expenses before being able to decide whether benefit should be adjusted. A 14-day rule would place a requirement on the claimant to provide information to a very tight, if not impossible, deadline. Failure to provide the information may result in a decision which is to his disadvantage. Under present arrangements, the claimant is allowed up to a month to provide the information and that period runs from the date he was asked to supply it. The month may be extended for good reasons.

For most benefits, legislation has, since 1948, provided for decisions on claims and reviews to be made wherever practicable within 14 days. Different provisions exist for housing benefit and council tax benefit, but local authorities are nevertheless expected to deal with all determinations promptly. Failure to do so in overpayment cases may result in an authority losing central government subsidy.

It is, of course, a matter of public policy that the service given is prompt. Public services must now publish charters or service statements and report on performance and costs against those service standards. The Benefits Agency has targets for dealing with changes and the vast majority of cases are dealt with within 14 days. So, for the Benefits Agency, the increased costs would therefore be for very little gain.

While one always has to be a little cautious when looking at these measurements, because there may be a difference between the time of first notification and the time the clock starts ticking because the information was totally inadequate, the fact is that, for all changes—not just changes of circumstances—for income support, 95 per cent. of the cases are cleared within six days; for retirement pensions, 86 per cent. are cleared within five days and for child benefit changes, 92 per cent. are cleared within 13 days. Therefore, the Committee can see that we attempt to meet very exact targets because we are aware of the need to make speedy decisions in these cases.

As I have said, to make a 14-day rule would put the department and the various agencies into a straitjacket unnecessarily, which would not always work to the benefit of the claimant. Therefore, it is inappropriate to set on the face of legislation an absolute time limit which would apply in all circumstances regardless of the practical difficulties. I believe that the existing arrangements are satisfactory and that they do, in the great majority of cases, although perhaps not exactly, meet the purpose behind this amendment, as explained by the noble Baroness, Lady Turner of Camden. With that explanation, I hope that she can withdraw her amendment.

Baroness Turner of Camden

I thank the Minister for that response, but I am not entirely convinced that it is not a good idea to have such provisions stated on the face of the Bill. I know from my own experience that one can notify the Benefits Agency of a change of circumstance but that it may be some time before one is informed by the agency that that notification has gone through. I remember notifying the agency of the death of my husband. Some time went by and eventually I received a letter stating, "We are very sorry that your husband has died, but by the way you owe us £200 because there has been an overpayment". That is not a very good way of dealing with overpayments. That is an example from my own experience, but we must remember that those who receive council tax benefit or housing benefit are already living close to the edge, as the noble Earl said, and they really need some time limit to be put on the period within which the authorities should deal with a change of notification.

I shall read in Hansard what the Minister has said to see whether it might be a good idea to come back on Report with a slightly reworded amendment to deal with the exceptional circumstance. However, I believe that we must spell out somewhere in primary legislation the fact that 14 days is the period which would normally be expected to apply. In the circumstances, however, I beg leave—

Lord Mackay of Ardbrecknish

I simply want to suggest that the noble Baroness might like to look at Section 21 of the Social Security Administration Act 1992, which provides that: An adjudication officer to whom a claim or question is submitted under section 20 … shall take it into consideration and, so far as practicable, dispose of it, in accordance with this section, and with the procedure regulations under section 59 below, within 14 days of its submission to him". Perhaps the noble Baroness would care to consider that when she is reviewing what I have said.

Baroness Turner of Camden

In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Turner of Camden moved Amendment No. 54: After Clause 5, insert the following new clause—

OVERPAYMENTS: RECOVERY OF PAYMENTS FOLLOWING CHANGE INCIRCUMSTANCES (". In section 71 of the Social Security Administration Act 1992 (overpayment) at end of subsection (1) insert "and hut for any payments and sums which have arisen as a result of a failure to make an award within fourteen days following notification of a change of circumstances.".").

The noble Baroness said: This amendment seeks to deal with the situation when an overpayment has resulted from an error or from failure to process the claim. It proposes that changes in circumstances should be processed within 14 days. We are attempting to ensure that the recovery of overpayments following a change of circumstances should not be due to be repaid when that overpayment has arisen because there has been poor administration.

I am indebted to NACAB for some information about what happens in certain cases. It has told me that, with regard to attendance allowance, 26 per cent. of all decisions taken by adjudication officers were incorrect—that is, more than one in four—compared with 15 per cent. in 1994–95 and that 18 per cent. included either an incorrect payment or a case where the accuracy of the payment was in doubt. It has evidence relating to the disability working allowance also, showing that 40 per cent.—two in five—of all decisions taken were incorrect, compared with 31 per cent. in 1994–95. On family credit, NACAB states that 26 per cent. of decisions were incorrect, of which 14 per cent. included incorrect payments or cases where the accuracy of the payment was in doubt. On income support, 41 per cent. of decisions were incorrect, compared with 38 per cent. in 1994–95. Indeed, nine out of 10 decisions were wrong concerning overpayments, 46 per cent. of which included incorrect payments or cases where the accuracy of the payment was in doubt. On the Social Fund, NACAB stated that 74 per cent. of decisions were incorrect.

Coming from an organisation with a lot of experience of advising claimants, that is a record which shows that many decisions are incorrect. If people are disadvantaged because of those incorrect decisions, it seems wrong that they should be expected to meet the costs of those wrong decisions—yet that is what it amounts to. I repeat what I said in relation to the previous amendment: in dealing with people on benefit, we are dealing with people who live on tight budgets. Therefore, if mistakes are made by the authorities responsible for the administration of benefit, it seems to me that the claimants should not have to bear the weight of those wrong decisions. I beg to move.

Earl Russell

I shall not make a speech; I say only that the noble Baroness has made out a very strong case and I hope that it is taken seriously.

Lord Mackay of Ardbrecknish

As we heard from the noble Baroness, Lady Turner of Camden, the purpose of this amendment is to restrict the end date for the calculation of recoverable overpayments to 14 days following the date on which a claimant reports a change of circumstances. This does not fit well with the subject matter of Section 71(1) which concerns recovery of overpayments where a person has misrepresented or failed to disclose a material fact.

In any event, I can see no reason why the period of recoverable overpayments should be restricted in this way. As I explained on the previous amendment, every effort is made to action new information within 14 days. However, this is not always possible—particularly in complex cases or where the adjudication officer feels that additional information is required before the rate of benefit in payment can be reviewed. The practice of recovering the full overpayment was included in the 1948 National Assistance Act and has been reconfirmed by successive governments, both Labour and Conservative, in subsequent Acts—none of which restricts the period of the recoverable overpayment.

When people claim benefits they receive public money which Parliament has determined should be made available to those in genuine need. There is an obligation on those claiming benefit to ensure that they have reported everything that they should regarding their claim to benefit at the outset. Even where we are dealing with innocent misrepresentation where the claimant knew the facts but failed to report them, being unaware of the need to do so—and these cases are rare—the claimant has benefited from public money to which he or she was not entitled. In these circumstances it would be a dereliction of our duty if we did not seek to recover the overpayment in full.

Even when an adjudication officer decides that an overpayment is recoverable there is a right of appeal against the decision, and the Secretary of State can, and does, exercise his discretion where serious hardship would be caused to waive in whole or in part the recovery of the overpayment. In addition, where income support or jobseeker's allowance is in payment, the weekly rate at which the overpayment can be recovered is limited by regulations.

As far as improvements in the accuracy of payments of income support are concerned, the chief executive of the Benefits Agency has given assurances to the Public Accounts Committee of his commitment to accuracy improvement. He has set in motion both short-term measures—for example, to increase the accountability of managers and to improve the training given to staff—and longer-term measures to improve the processes and systems for awarding and paying benefit. That is one of the motivations behind the Change Programme. We want to see whether we can improve the system and one of our objectives is to improve the accuracy figures. I fully accept that that is important.

The calculation of overpayment is a complex area. The chief adjudication officer and the Benefits Agency are currently working together to improve standards by means of new information technology support, a programme of seminars, the production of new guidance and desk aids, and changes in class monitoring in order to increase the profile of adjudication within districts. I hope that all those factors will help to reduce the number of cases of inaccuracy and therefore the number of cases in which overpayment comes into play.

I am sure that the noble Baroness knows how we exercise our powers with relation to overpayment—and how we exercise discretion with regard to certain categories of people and the recovery of overpayment—and I hope that she will feel able to withdraw her amendment.

6.30 p.m.

Earl Russell

The Minister disappoints me. He deals with a case that has not been made. He answers a case against the recovery of overpayment. No one has made any such case. The case is simply that a degree of mercy be shown to people who have received a considerable amount of overpayment through no fault of their own. It is the recovery of those sums at speed, all in one go or over a very short period, which causes hardship. I can only hope that the Minister's tax inspector does not share his principles.

The Minister was also perhaps a little unwise to mention the Change Programme. I understand the case made by the Benefits Agency about the rate of error. I have always been inclined to the merciful approach because I know that to err is human and that the pressure to which it is subject is very severe. But I am surprised to hear the Change Programme invoked as a reason for the likely decline in the rate of error. One understands that wagers are not made in the Chamber. Were we to be outside the Chamber I might well have offered the Minister the wager that after three years of the Change Programme the rate of error would not be less than it is today. I would be rather surprised if the Minister took such a wager.

Lord Mackay of Ardbrecknish

I am not sure whether we can take wagers in the Chamber. The noble Earl says that we cannot. Given his long knowledge of these procedural matters, indeed we cannot. I say to the noble Earl that we would be extremely disappointed if we did not find ways to improve the accuracy of the information. One of the matters that we have discovered in looking at the process is that the point at which the raw information is checked is way down the system. Very often that is one of the factors that leads to inaccuracy. We hope that if checking takes place much closer to the beginning of the process not only will it speed up the process but it will also lead to greater accuracy. I do not want to go too far into the detail of the Change Programme. However, I would be deeply disappointed if the noble Earl's pessimism turned out to be justified.

As to hardship, the recovery of overpayment by the deduction of benefit is, we believe, the most cost effective way of recouping the loss. To ensure that no claimant suffers hardship, recovery from weekly amounts of benefit is subject to limits set out in the legislation. Where a claimant puts forward a good reason for a lower rate of recovery or argues that recovery should not take place, that case is looked at sympathetically. I hope that out in the field we look at individual cases of hardship sympathetically and at slower ways to recover overpayment or, in some cases, waive it.

Earl Russell

Whatever we can do about wagers, I am certain that in this Chamber I cannot tell the story of the Glasgow physiology student. Perhaps I can look forward to telling the Minister that story outside the Chamber.

Baroness Turner of Camden

I thank the Minister for his explanation. I remind him that we are referring here to the recovery of overpayments which are not the fault of the recipient but which arise because of incompetence or oversight on the part of the Benefits Agency or the authority responsible for making the payment. It must come as bit of a shock to many people suddenly to find that they are asked to make good an overpayment when they themselves have not been responsible for providing inaccurate information and the overpayment has arisen because someone else made a mistake in the system.

Although I do not intend to divide the Committee on the amendment, I feel strongly about it. I should like to think about what the Minister said. I am grateful to him for his comments about training. Obviously, it is important that staff should be properly trained and that performance monitoring should take place. I am also glad to learn that the head of the Benefits Agency intends to ensure that proper monitoring is carried out. However, that still does not tackle the situation I seek to deal with by way of the amendment; that is to say, to ensure that people are not suddenly faced, through no fault of their own, with a demand for repayment. I beg leave to withdraw the amendment on the basis that I am likely to come back with a rather similar amendment at Report Stage.

Amendment, by leave, withdrawn.

Baroness Turner of Camden moved Amendment No. 55: After Clause 5, insert the following new clause—

INFORMATION RELATING TO DETERMINATION OF CLAIM: TIME LIMITS (" . In section 5(l) of the Social Security Administration Act 1992 (regulations about claims for and payment of benefit) at end of paragraph (h) insert "and for requiring a request for information or evidence by the determining authority to be made in such a manner and within such a period as may be prescribed, not being more than seven days from the date on which the new claim is received at the appropriate DSS office or the designated office, whichever is the earlier, and where it appears to the determining authority that further information or evidence is required for requiring that request to be not more than ten days from the date on which the claim is received;".").

The noble Baroness said: The purpose of the amendment is to provide for regulations which will ensure that when applications are made for housing benefit, requests for information and evidence are made within seven days of the receipt of the claim. Delays in the determination of claims for housing benefit are a significant factor in causing arrears of rent, even homelessness, despite regulations which require local authorities to make payments within 14 days of receiving full information on the claim. One cause of delay is the current lack of any time limit on the period for requesting additional information. The amendment seeks to tackle that by introducing time limits for requests for additional information and evidence by the determining authority.

DSS proposals to pay housing benefit in arrears make it even more essential that the benefit is paid speedily. During the Housing Bill there was an argument for changing benefit regulations to ensure that local authorities made requests for information or evidence within specified periods in order to prevent delays but without much success. At that stage the Minister said: I am not complacent. I recognise the strength of feeling behind this amendment. I propose to monitor the position".

I am advised by NACAB, to whom I am indebted for briefing, that the problem persists. I beg to move.

Lord Mackay of Ardbrecknish

Having listened to the noble Baroness, I now appreciate that her amendment is directed at the Secretary of State who may be being dilatory in some cases in collecting the necessary evidence. Perhaps I may explain how the claim process works at present and why I do not believe the amendment would help either the organisation or the claimant. The onus for making the claim for benefit lies with the individual who wishes to claim. That claim is submitted to the Secretary of State whose task it is to check whether it contains sufficient information to enable the adjudication officer to make a determination. If it does he submits it straightaway to the adjudication officer under Section 20 of the Administration Act. Section 21 requires the adjudication officer, so far as practicable, to dispose of the claim within 14 days. However, it may be that before he can dispose of it the adjudication officer requires the Secretary of State to request further evidence. In such cases the 14 days may well be impracticable. If the Secretary of State requires more information before submitting it to the adjudication officer, Regulation 7(1) of the claims and payments regulations allows the claimant one month to produce the required information or such longer period as the Secretary of State may consider reasonable.

The amendment would introduce into this procedure deadlines for the request of information. The Secretary of State would have seven days to request information following the receipt of a claim and a further three days would be allowed where further information was requested. I can understand the desire to ensure efficient administration, but I believe that such an amendment would be counter-productive and would not achieve what the noble Baroness desires. I suspect that it would not be beneficial to the claimant. If the request for information was not made within the prescribed seven or 10-day period the Secretary of State would pass the claim as it stood to the adjudication officer. The adjudication officer would then be obliged to decide the claim on the evidence before him. The onus is on the claimant to show that he is entitled to benefit and most requests for further information are made because it appears that the evidence the claimant has provided is not sufficient to do this. So the almost inevitable result is that the claimant, under the noble Baroness's suggested rule, would be disallowed benefit.

I know that that is not what the noble Baroness has in mind when she proposes the amendment, but I believe that that would be its effect. In my view claimants are well served by the current provisions, which provide the flexibility needed to ensure that we can ask questions to make sure that the adjudication officer has all the evidence before he makes the decision. If he is forced to make that evidence on inadequate information because of time limits, the chances are that the information will be inadequate in such a way that the claimant will not receive the benefit, or perhaps as much benefit, as he is entitled to receive. I know that that is in no way the noble Baroness's intention.

With that explanation of how the system works at present—I am sure the noble Baroness knows it—and as regards the problem that will arise from her amendment, I hope that she will feel able to withdraw it.

Baroness Turner of Camden

I thank the Minister for that response. He is quite right. It is not the intention in moving the amendment to make it more difficult for the claimant to have benefit; quite the contrary. The intention is to ensure that the claim is processed as quickly as possible and that the claimant is not subject to unnecessary delays in seeking his benefit.

As I said in regard to the previous amendment, I shall read in Hansard what the Minister said to see whether it might be a good idea to come back with a different form of wording designed to achieve the objective of the amendment. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Gould of Potternewton moved Amendment No. 56: After Clause 5, insert the following new clause—

REPORT ON BENEFIT FRAUD BY ONE PERSON CLAIMING ON BEHALF OF ANOTHER (". The Secretary of State shall report to Parliament on the administration of social security in relation to the payment of benefit to another person on behalf of a person entitled to such benefit with particular reference to safeguarding such a person from fraud.").

The noble Baroness said: In moving the new clause, my intention is to highlight a crucial but so far ignored element in relation to fraud: the appointment of appointees and agents. I am somewhat surprised that a Bill which deals with fraud makes no reference to reviewing the system of appointeeships or agencies. There has been considerable evidence to suggest that such fraud as takes place is sufficient to warrant the Government conducting a substantial review of the system, in particular in respect of appointeeships.

The current arrangements which allow for a person to appoint someone else to manage his benefit entitlement on his behalf if he is mentally incapacitated, or to collect his benefit if he is unable to do so himself, can lead to considerable potential for undetected fraud and abuse. This possibility is exacerbated in a number of ways: by there being little statutory backing for the system for appointing appointees or agents; by there being no formal mechanism once an appointee is appointed; and because the Benefits Agency provides only limited public information on the system and conducts limited monitoring of appointees or agents.

At this stage I should declare an interest as I act as an agent. I have to say that I was disturbed at the time of my becoming an agent that no check was made as to my credentials. I have, however, an agency card stating that I am authorised to collect money on behalf of the named person. The Minister may tell us that there has to be a witness to such an appointment; and that is right. But there is no stipulation as to who that person should be. It does not have to be an accredited person such as a doctor or social worker. It can be someone closely connected to the person who is to act as agent. That is because officially the nomination of an agent is an informal arrangement between claimant and agent. It is assumed that the claimant is in a position to make judgments about who should act on his behalf. One consequence is that there is no monitoring of these arrangements, but it is all too easy for vulnerable people to be misled.

Another concern is that people acting as agents are under no obligation to inform the Benefits Agency when or if the claimant is no longer capable of giving the agent the authority to draw benefit. The agent could continue to collect benefits for someone when an appointee might be more appropriate. This opens the agent to the temptation to retain access to funds without there being the proper authority to do so. Relying on the integrity of agents, no matter how many are acting properly, is obviously a weakness in the system.

As it currently operates, the appointeeship system is even more open to abuse. Although this arrangement is intended for people who are unable to act for themselves, there is no requirement for medical confirmation that an appointee is required. Currently Benefits Agency staff without any special training or experience can make that decision alone. Similarly, there is a lack of public information about how the system operates and, as internal Benefits Agency staff guidance is inadequate, many procedures are not followed. For example, against current guidance some appointees have been appointed without a face-to-face interview to determine their suitability.

Once appointed, again there is no adequate monitoring. Staff guidance only suggests spasmodic case checks on appointees when a person is in residential care. Cases have arisen where the appointee has left his job at the home and consequently an unauthorised person has been collecting benefit entitlement, sometimes for years. Despite the Law Commission in 1993 concluding that appointeeships should be reviewed every six or 12 months, no action has been taken by the Government.

Another example is the number of care home owners who are often acting as appointees despite the fact that the Benefits Agency guidance states that they should be used only as a last resort. In order to protect the claimant, the very least that should happen is that the home concerned should be required to submit an annual account of the benefit claimed and how it has been spent. That would ensure that the benefit entitlement collected is spent on the person for whom the appointee acts.

It is difficult to estimate how widespread is fraud and abuse in this area of benefit payments. That is mainly because of the lack of information, lack of monitoring and the laxity of the current rules which provide adequate scope for fraud and abuse to occur.

In reply to a Question in another place, the Minister indicated that the department keeps these matters under ongoing review, and that in particular current arrangements for appointees and agents in the context of transition to payment by benefit cards is being examined. But that is not sufficient. There needs to be a tightening up of the whole process. The Secretary of State having to report to Parliament would highlight the shortcomings in the current system and would, one hopes, result in encouraging the DSS to consult on bringing forward adequate regulations. I beg to move.

Earl Russell

Agency is something which always needs supervision. Some of us have come across a fairly similar problem of agency in the administration of proxy votes. I do not make any party point. All parties have been accused of abusing the system. All parties need monitoring. Original sin does not have any party. But that is beside the present point. I hope that it may be discussed between our party headquarters.

We are dealing with a group of people who are often unable to look after themselves. For example, if someone suffers from Alzheimer's, he is not in a particularly good state to check whether the agent is exercising his power properly. There is some need for external supervision. What form that external supervision should take is a very much more difficult problem. One thinks perhaps of the powers of public trustees because the person concerned is in effect exercising a trusteeship and perhaps that is the appropriate form of supervision.

The Answer to a Written Question to which the noble Baroness, Lady Gould, referred was in answer to my honourable friend Miss Lynne in another place. I accept that the department keeps everything under review, but perhaps the Minister can tell us what kind of review is being conducted. What methodology is being used? What, if any, preliminary impressions has it gained?

Lord Mackay of Ardbrecknish

I have some sympathy with the concerns expressed by the noble Baroness, Lady Gould. It is recognised that the number of people who are incapable of managing their own affairs, and who are therefore in need of an appointee, is increasing. Regrettably, there have been cases where those who have been appointed to so act have misappropriated the money. In the past, some problems have been identified in relation to residential care and nursing homes, which are where those in need of appointeeship are commonly cared for.

However, I am not persuaded that the natural concerns that we all have are addressed by the proposed amendment. First, the vast majority of appointees are family or friends acting in a caring role and performing a valuable, but often unnoticed, task. I believe that it would be highly intrusive and provocative to conduct a survey which had a remit of checking that the appointee was not defrauding the person being cared for. I fear that a large number of existing appointees might respond to such a survey by requesting that the department appoint somebody else. The reality is that in many cases there would be no one else to be the appointee. That rather basic fact takes the edge off the point of conducting a survey.

I appreciate that in the past there have been problems in connection with some proprietors of residential homes. I can tell the noble Baroness that existing guidance to staff in Benefits Agency offices is that they should consider appointing a proprietor of a residential home to act for the claimant only where no other suitable person can be found. The reason for that guidance is not necessarily that proprietors are viewed by the department as potential fraudsters; it is simply that the task of being an appointee goes wider than just cashing the claimant's benefit, taking out the fees to the home and giving the claimant the remainder. There is an onus to report changes in circumstances which may affect entitlement to benefit, and proprietors of homes may not be in a position to fulfil such a role.

The noble Baroness outlined the procedure which currently exists before an appointee arrangement is approved. Perhaps I may go over that, too. The claimant is visited to ascertain whether he is capable of managing his affairs. The prospective appointee is also visited, either with the claimant or separately, to ensure that he understands and is prepared to take on the role of appointee. In addition the Secretary of State has discretion to terminate an existing appointment. He would certainly do that without delay if there were, for instance, any suggestion of the claimant being defrauded.

I can also tell the noble Baroness that the Benefits Agency looked at the whole area of appointee arrangements last year. It found that the procedures were basically sound, although some concerns were raised that procedures had not been properly followed. The noble Baroness suggested that, too. The conclusion of the agency was not so much that the procedures needed changing, but that it was necessary to emphasise the fact that the procedures should be followed.

I am grateful to the noble Baroness for raising these issues. I shall certainly discuss with my officials her point that procedures were not being properly followed. There is little doubt that they ought to be properly followed. I shall certainly take steps to ensure that the Benefits Agency is aware of the fact that the noble Baroness suggests that that may not be the case. As I said, after our investigation concerns were expressed that in some cases the procedures were not being followed. I hope that the emphasis we placed on following the proper procedures has, so to speak, got through to the staff on the ground.

The broader point raised by the noble Earl and alluded to by the noble Baroness related to keeping the matter under review. We are at a particular transition period in the way in which we pay benefits. The whole area of agent collection is being considered as part of the studies we need to undertake leading up to the benefit payment card. Research has shown us that we need to continue with an agent system for the collection of benefits because, as we all agree, there are customers who cannot collect themselves and who need appointees or agents. As my honourable friend said in another place, we are making the system more secure within the changes associated with the card. We must address methods of verification of the agent which are different from the current methods because benefit books are quite different from the systems which will be used for benefit payment cards. That is one of the problems we are having to investigate in addressing the introduction of benefit payment cards.

I hope that those words help to reassure the noble Baroness that we are looking at these matters with regard to the transition from the current system to the benefit payment card system. I should be interested to hear of any particular case she has in mind where the procedures fail to be carried out. Even if the appointee was the right and proper person to be appointed, the procedures ought still to have been carried out in order to ascertain that that was the case. We are all agreed that vulnerable claimants must be protected. I spend some time trying to tease out issues relating to the introduction of benefit payments cards. However, I believe that the amendment would take us too far down a different road and would not help to achieve our goal. I am pleased to have had the opportunity to discuss the matter and to hear the points put to me by the noble Baroness.

Lord Carter

Before my noble friend decides what to do with the amendment, perhaps I may make a suggestion. The Minister mentioned a review of the appointment of appointees and referred to the problems which arise when no one is available. We have an Official Solicitor and an Official Trustee. Will the Government consider an Official Appointee? Obviously, that would be a right and proper person and such an office would help to solve some of the problems described by the Minister.

Lord Mackay of Ardbrecknish

I have a suspicion that that would be a very bureaucratic system to devise as regards the bulk of the cases where the appointee is likely to be a close relative or friend of the person concerned. In the circumstances, it would be wrong to create a system similar to that of official solicitors and official trustees, but perhaps I have misunderstood the noble Lord's suggestion.

Lord Carter

I make the suggestion only in respect of those cases where there is a problem in finding someone to undertake the task. I believe that the Official Trustee delegates the task to a retired person. A retired insurance broker can act as an official trustee in certain cases. One could have a register of such people to be drawn upon when there was a problem finding the right person.

Lord Mackay of Ardbrecknish

When there is a real problem in finding an appointee the situation is different from that we have been discussing. It is not a matter of an appointee being available, but of an appointee being a right and proper person.

I shall look at that small point—small in number—and I shall try to ensure that after the Committee stage the Benefits Agency is aware of the concerns that procedures are not being properly followed.

Earl Russell

I am grateful to the Minister who has tried very hard to be constructive. Of course it is possible that this is not the best answer, but perhaps we ought to think about what is. When the Minister talked about the benefit payment card he was getting warmer. We must make some distinctions. It is not enough to control the choice of appointee. No one is immune to temptation, even close relatives. One need only think, "Oh, my prophetic soul, my uncle." One cannot deal with the problem simply by controlling the choice of the appointee; one must have some monitoring of the conduct of the appointee in office.

Here one needs to make another distinction between people who are unable to collect their benefit because of physical incapacity and people who are unable to do so because of mental incapacity. If you are unable to collect your benefit because of mental incapacity, you simply cannot monitor the person who is collecting it for you. That is what made me wonder about automatic credit transfer: I have heard the Minister sing its praises on other occasions.

Where there is a clear mental incapacity, if benefit were paid by automatic credit transfer it could be tapped only by somebody who had authorised access to the claimant's bank account, and access to bank accounts and use of them is carefully monitored independently. Is that a road which we might possibly go down?

Lord Mackay of Ardbrecknish

When we were having our discussions in relation to the benefit payment card, I discussed that point. The problem is that not everybody has a bank account. We may then start to go down the road of forcing somebody to have a bank account.

The noble Earl is quite right that the problem is greatly helped if the payment is carried out by ACT. But equally the money has to be collected from the bank. I am pleased to hear that the noble Earl thinks that the banks have sound systems in place—apart from American ones. My personal experience does not lead me to quite the same confident position which the noble Earl has adopted. But he has a point about the advantages of ACT with regard to someone who cannot get to the post office to collect his benefit either through the existing system or a future system. The problem is that individual circumstances are so varied it is difficult to make hard and fast rules.

Baroness Gould of Potternewton

I thank the Minister for his sympathetic reply and the comments he made. I believe that all parties agree with the noble Earl as regards the point he raised about proxy votes and use of them. I did not think that we should achieve such agreement on the rest of the amendment. I am pleased that we have gone so far in the meeting of minds.

I should be pleased to hear the results of the Minister's discussions with his officials so that we can reassure those many organisations which work in this field that action is being taken. That would be extremely helpful. I shall make sure that the Minister receives information about particular cases so that he will be able to refer those to his officials.

I was pleased to hear the Minister say that he will consider the point raised by my noble friend Lord Carter. In the light of the progress made on the amendment, I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Lord Lucas

I beg to move that the House be now resumed. In moving that Motion, I suggest that the Committee stage begin again not before five minutes past eight o'clock.

Moved accordingly, and, on Question, Motion agreed to.

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