HL Deb 20 October 1998 vol 593 cc1314-6

3.12 p.m.

Lord Campbell of Croy asked Her Majesty's Government:

What action they are taking in order to counter the possible increase in fraud, if the scheme for working families' tax credit is continued in the form at present proposed.

Lord McIntosh of Haringey

My Lords, the working families' tax credit will build on and replace family credit from October 1999, legislation permitting. The working families' tax credit will help make about 400,000 more families better off in work than on benefit and the Government want the help provided by the working families' tax credit to go to all those who are eligible. It will be administered by the Inland Revenue which has considerable experience and expertise in detecting and combating fraud.

Lord Campbell of Croy

My Lords, I thank the Minister for his reply. Did the noble Lord note the reported comment by the former Minister for Welfare Reform, Mr. Frank Field, in his lecture to the Social Market Foundation that serious dangers were involved in those proposals because they offered large bonuses for dishonesty for both employers and employees? Are the Government prepared to be tough on fraud, and tough on the causes of fraud?

Lord McIntosh of Haringey

My Lords, I indeed saw the report of the speech by Frank Field. Part of it can be explained by his long-standing and honourable opposition to means testing. However, I believe that there were a number of errors in the analysis. First, it is not true that employers will need to calculate the working families' tax credit. That will be done for them by the Inland Revenue and they will simply be required to make the payment. Of course, if there is collusion between employers and employees to falsify employment records, that will be serious fraud. But there is no reason to suppose that the vast majority of honest employers will do that any more than they do so with their other obligations under the tax laws.

Lord Ashley of Stoke

My Lords, is the Minister aware that it is damaging to disabled people when newspapers grossly exaggerate any possible fraud on disability benefits? Some articles refer to a figure of £1 billion, or £0.5 billion. A figure is plucked from thin air. But that is after Ministers, including the noble Baroness, Lady Hollis, have said that after 30,000 investigations into the disability living allowance there was no evidence of one single confirmed case of fraud.

Is it not also disturbing that the Department of Social Security is responsible for some of those "leaks" to newspapers? The respected journalist, David Brindle, of the Guardian has said that the department is giving information about so-called fraud to journalists. Can we not stop that kind of practice?

Lord McIntosh of Haringey

My Lords, the Question before us is about the working families' tax credit rather than disability allowances. However, I understand my noble friend's fear; and I understand that other people have the same fear. If there is any evidence of leaks in an inappropriate way by officials, I am sure he will bring that to the attention of the authorities.

Lord Higgins

My Lords, is the Minister aware that many people regard the Labour Party's promise to cut social security in order to spend more on health and education as a fraud as it has totally failed to do so? Will not the matter raised by my noble friend in his Question exacerbate the situation?

Does the Minister recall that he set out Mr. Darling's great achievement as Chief Secretary as the setting in concrete of the spending plans for the next three years? As the Secretary of State for Social Security, how will he now change those plans?

Lord McIntosh of Haringey

My Lords, as the noble Lord has seen fit to accuse this Government directly of fraud, let me say that the undertaking by the Government was to decrease the proportion of public expenditure spent on welfare rather than to decrease the absolute amount. We have been consistent in that and have achieved that.

As regards Mr. Alistair Darling's role, the noble Lord knows that Mr. Darling has been consistent in the Treasury and the Department of Social Security, and he will see the results of that when the welfare reform White Paper appears.

Lord Addington

My Lords, can the Government tell us whether the levels of fraud in the benefits system are in any way superior to those of non-payment of legally charged taxes?

Lord McIntosh of Haringey

My Lords, that is a fascinating question and I should love to be able to answer it. I shall try to give an answer to the noble Lord, and make it more widely available. The noble Lord will understand that it would be extraordinarily difficult because both are "unknowable" statistics. If we knew where the fraud was, we would know how much there was; and if we knew where it was, we should be able directly to tackle it.

Lord Brooks of Tremorfa

My Lords, as the Government are prepared to consider introducing a registration scheme for dogs and to consult widely on that, will they be prepared similarly to consider introducing identity cards, and to undertake widescale consultation on that issue? It is understood generally to be the most efficient way of reducing fraud.

Lord McIntosh of Haringey

My Lords, in the 30th minute of Question Time I shall not be tempted into a question which is not only wide of that on the Order Paper but also, as my noble friend knows, of huge political controversy.