HL Deb 27 September 2000 vol 616 cc769-71

2.40 p.m.

Lord Campbell of Croy asked her Majesty's Government:

Whether their current estimate for fraud in the system of welfare benefits pertaining to social security and housing amounts to £4 billion per year.

Lord McIntosh of Haringey

My Lords, we estimate that roughly £2 billion is lost through fraud and about £2 billion through errors made by claimants and staff. We have started and are expanding a programme of measurement exercises to provide more precise figures, and we have set a challenging target to halve the rate of loss in income support and jobseeker's allowance by 2006.

Lord Campbell of Croy

My Lords, I am grateful to the noble Lord for his reply. If successful in its aim, it is encouraging. However, what progress has been made in reducing fraud in housing benefit, which is probably the worst area? The Minister indicated in response to my Question on 18th April that a new "verification framework" was being introduced. Is it true that two former members of MI5 and Customs and Excise have been appointed to head a new intelligence system concerning fraud?

Lord McIntosh of Haringey

My Lords, I am grateful to the noble Lord for what he said in introducing his supplementary question. I should make it clear that the campaign against fraud has not been undertaken only by this Government. The previous government, under Mr Peter Lilley as Secretary of State, commenced the war against fraud, so strictly speaking it is a non-party matter. I do not think that I can say what progress has been made in dealing with housing benefit fraud. Since the noble Baroness, Lady Hollis, answered the Question in April, no further statistics have been published.

As to the question of the assistance given to the department by those assigned to it from MI5 and Customs and Excise, the noble Lord is entirely right; and their contribution is very much appreciated.

Lord Morris of Manchester

My Lords, like my noble friend Lady Hollis has always done, my noble friend Lord McIntosh has demonstrated the Government's readiness to inform the House as fully as possible about fraud in the benefit system. Can he tell us now—or perhaps write to me to say—by how much disability benefits and the means-tested income support entitlements of frail elderly people went unclaimed at the latest date for which figures are available? What approximately were the total sums unclaimed?

Lord McIntosh of Haringey

My Lords, I am not sure whether it is possible now—or, indeed, in the future—to give accurate figures on under-claiming. Clearly the statistical exercise that is undertaken to check on over-claiming, whether fraudulent or not, can be carried out by a sampling exercise. However, under-claiming does not appear in the books of the Department of Social Security. Without sampling of the total population, which would be a very expensive exercise, it is not easy to make the kind of estimate that my noble friend seeks.

Lord Goodhart

My Lords, given the fact that the black economy involves both benefit fraud and, probably to a much larger extent, tax evasion, will the Government consider a joined-up attack on both kinds of fraud, linking both the DSS and the Inland Revenue?

Lord McIntosh of Haringey

My Lords, as the noble Lord will well know, my noble friend Lord Grabiner produced a report earlier this year for the Chancellor of the Exchequer on what he calls the "black economy"—we prefer to call it the "informal economy". That report covers both tax evasion and benefit fraud. The Chancellor of the Exchequer responded to that in his Budget Statement. I can assure the noble Lord, Lord Goodhart, that he is pursuing the matter very actively.

Baroness Sharpies

My Lords, does the Minister accept that this is possibly the time for us to have a national identity card system? Surely that would help to combat fraud in these areas.

Lord McIntosh of Haringey

My Lords, I believe that the noble Baroness is going somewhat wide of the Question on the Order Paper. However, there is a point behind what she says: the exchange of information between government departments that are concerned with different kinds of social security and housing benefit, as well as with the tax system, helps in combating fraud. The exchange of information that now takes place does so with the approval of the Data Protection Registrar.

Lord Elton

My Lords, as regards the Minister's own welfare, can he say whether he enjoyed a sufficient holiday during the Recess? It seems to me that his voice is no better now than it was at the end of July. If it is a matter of the Minister cheering himself hoarse for his leader at the conference, we are concerned that he should not now answer all the Questions on the Order Paper.

Lord McIntosh of Haringey

My Lords, I was indeed cheering my leader at the conference yesterday. Unfortunately, as my voice disappeared before then, it was not very effective cheering. I have no intention of answering any Questions on other subjects from noble Lords today, although I shall be happy to continue to answer questions on this matter as long as the House wishes me to do so.

Lord Higgins

My Lords, the House always admires the versatility of the noble Lord. However, on the point raised by my noble friend initially on housing benefit, does the Minister recall that the Audit Commission suggested last December that 40 per cent of councils do not require applicants for housing benefit to give their national insurance number? Further, is he aware of the very depressing statistic that benefit fraud by council staff and councillors affects some one-eighth of councils? Can the noble Lord say whether any progress has been made on either on those issues?

Lord McIntosh of Haringey

My Lords, the noble Lord is entirely right about the Audit Commission's report. It is certainly true that there is housing benefit fraud in some areas of the country on a very considerable and organised scale. However, it is largely landlord fraud rather than fraud by those receiving housing benefit or, indeed, by council staff. I am not aware of the accusation made by the noble Lord about councillors. If he has any further information on that point, I should be glad to know about it.

Yes, it is true that a great deal of further progress is needed on housing benefit fraud. It is also true to say that the failure of councils to take up the option that they have been urged to adopt to stop the Royal Mail redirecting housing benefit cheques still needs to be addressed by all local authorities. We urge them seriously to do so. We shall continue to make what progress we can.

Lord Campbell of Croy

My Lords, with reference to the remarks made by the noble Lord, Lord Morris of Manchester, can the Minister confirm, as the noble Baroness, Lady Hollis, has assured us at least two or three times in this House, that there is still very little fraud, if any, in the disability benefits system?

Lord McIntosh of Haringey

Yes, my Lords. Of the £4 billion of fraud to which I alluded in my Answer, that relating to disability living allowance amounts to not more than £0.5 billion. The figures for incapacity benefit and invalid care allowance amount to less than £0.25 million when put together, which represents a small proportion of the total. I should point out that those figures include both fraud and error.