Housing Benefit Fraud

HC Deb 05 April 2000 vol 347 cc222-42WH

11 am

Mr. Andrew Hunter (Basingstoke)

I welcome the opportunity to introduce a debate on the Government's measures to combat housing benefit fraud. As hon. Members will know, this year approximately £12 billion will be paid out in housing benefit by local authorities to almost 5 million people in England, Scotland and Wales. Labour's 1997 manifesto overstated the case, saying that housing benefit fraud amounted to about £2 billion a year. According to Government figures at the time, fraud cost about £1 billion a year. The National Audit Office reached the same conclusion in its press notice of 8 April 1999.

The Secretary of State estimates that housing benefit fraud and error cost taxpayers around £840 million a year, but, allowing for a margin of error and differing methodology, there is no real evidence that fraud has declined very much in the past three years. The problem remains real and acute.

The Government's determination to tackle the problem is commendable. I am sure that all political parties and all hon. Members share that objective. However, we are entitled to expose Government policies to scrutiny and to hope that the ensuing debate fully and frankly reflects the realities of what is a complex issue.

The Secretary of State for Social Security told the House on 6 March: We are completely driving fraud from the system. If only we could be certain that that were true. The latest departmental figures that I have seen show a negligible fall, which the Department has reportedly described as not statistically significant. I understand that a third of all councils have never prosecuted anyone for housing benefit fraud and that the National Audit Office has found that 25 per cent. of councils that it visited were in on the act. The Benefit Agency's own fraud investigation unit ran out of money in September 1998 and the Government has abandoned the London organised fraud investigation team, although much organised fraud takes place in London.

Similarly, the Secretary of State's further pronouncement on 6 March that the last Government did absolutely nothing—[Official Report, 6 March 2000; Vol. 345, c. 756.] about benefit fraud does not advance the quality of debate. It cannot be reconciled, for instance, with the steady increase during the early 1990s in prosecutions for all benefit fraud to more than 10,000 a year in 1995–96 and 1996–97, with a 99 per cent. conviction rate. Nor can it be reconciled with the rise in total fraud savings to an average of more than £1.5 billion in each of the last two years of the previous Administration.

The truth, which the Government are reluctant to acknowledge, is that most of their policies and initiatives have evolved from ideas and measures that pre-date the 1997 general election.

In reply to my written question on 7 February at columns 52-53W, the Under-Secretary of State for Social Security, the hon. Member for Wallasey (Angela Eagle) highlighted four key points in the Government's strategy against housing benefit fraud. Since then, I have been widely seeking comment on her reply and by no means exclusively from my Labour-Liberal controlled local authority, Basingstoke and Deane borough council.

It seems that the situation on the ground may not be quite so straightforward as Government statements suggest. First, in the Minister's reply to my question, she pointed to the reform of the anti-fraud financial incentive scheme for local authorities to ensure that they can be rewarded for detecting and prosecuting cases of fraud. I welcome that approach and I am sure that it is the right way to set about the task. It re-expresses the principle in the 1993 and 1994 schemes, which gave local authorities a share in savings above their share of a national baseline. By 1995–96, around 90 per cent. of all local authorities—421 of them—were receiving bonus payments as a direct result of their efforts to curb fraud. That year, £28 million in extra subsidy was earned from those incentive schemes.

I have one qualification. All too often, the efforts of local authorities are undermined when it comes to prosecuting cases of fraud. They are at a disadvantage compared with the Benefits Agency and they do not have the assistance of the Department's prosecution service. Local authorities have to secure the cooperation of their local police force, which then takes benefit prosecutions using the Crown Prosecution Service.

Unfortunately, as many local authorities have learned, the police are not always willing to act on housing benefit matters and it often falls to the council's solicitors to prosecute cases. That is a labour intensive, time-consuming and costly task and, to add insult to injury, the sentences are often derisory. The solution lies in local authorities having access to the Department's prosecution service.

Secondly, the Under-Secretary of State said in reply to my question that the Government had made an additional available £100 million over the next three years to enable councils to adopt the Verification Framework…which will help make housing benefit more secure.—[Official Report, 7 February 2000; Vol. 344, c. 53W.] The Government tell us that they are looking for a total saving of some £1 billion during the course of this Parliament through a tighter identification regime. I hope that they succeed, but there is a downside.

My Labour-Liberal controlled local authority is certainly not alone in having discovered that, while the verification framework has been in place, there has been a detrimental impact in one key respect: the time taken to process a housing benefit claim has virtually doubled. That is a regressive step. It means that some of the most vulnerable are left exposed and in dire circumstances for longer. There are even some indications that the delay may be deterring some of them from claiming housing benefit. I therefore urge that the workings of the verification framework are kept under close scrutiny. I suspect that, ultimately, the objectives of security and speedy processing of claims are incompatible and that an acceptable balance has to be found. I fear that that balance may not have been achieved.

I wish to raise another issue, which I hope that Government will consider seriously. Administration is certainly more secure under the verification framework, but the performance of housing benefit sections nationally has suffered a severe blow. It is therefore reasonable to expect performance indicators to reflect that. When the Government talk about setting indicators that provide a faster, more accurate service that is more secure against fraud, provides value for money and takes account of the views and needs of clients, one fears that they might be living in dreamland.

Thirdly, the Under-Secretary, in reply to my question, said that the Government had invited all local authorities to participate in the Royal Mail "do not redirect" initiative, which prevents claimants from using the Royal Mail's postal redirection arrangements to make false claims for multiple addresses. As the Minister of State, who will reply to this debate, knows, that scheme was conceived by the previous Government and would have been enacted regardless of the outcome of the 1997 general election. In 1996, my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) initiated discussions with the Royal Mail over access to the database of redirected mail to assist in tackling multiple identity and other frauds involving false addresses.

I do not doubt that the "do not redirect" initiative has a part to play in combating housing benefit fraud, but it should be seen in its true perspective. My local authority reacted more than a little cynically to the proposition that it had been invited to participate. I have been told that there is no option but to subscribe now. However, the initiative is not proving of great value. Indeed, in the experience of Basingstoke and Deane borough council, the service has produced absolutely nothing. In the past year, only two letters have been returned to the benefit service as a result, and those two accounts had already been closed by the housing benefit section.

Even the Government's estimates make pretty uninspiring reading—256 councils identifying only 174 cases of fraud a month. Although I acknowledge that the initiative may have an unquantifiable deterrent effect, the Government's prediction that "do not redirect" can realise savings of £5.3 million a year seems on the optimistic side.

The fourth dimension in the Government's anti-fraud strategy that the Under-Secretary highlighted was the £4 million made available to install computer terminals in local authorities to provide access to the Department's benefit systems. That, of course, evolved from the housing benefit review of January 1996. The then Secretary of State, my right hon. Friend the Member for Hitchin and Harpenden, announced the creation of a national register of housing benefit and council tax benefit, with a view to matching data across local authorities against departmental fraud detection systems.

I welcome that initiative and its extension, but it has latent drawbacks and deficiencies. In the experience of my local authority, the remote access terminal, a means whereby a housing benefit section can share information about an income support claim, has strictly limited advantages, for one reason: the fact that council staff have limited access to Benefits Agency records. I gather that the Government are seeking to increase that access. I am told that it is greatly needed.

I encounter here some cynicism—and not only from my own local authority. I am told that there has been little or no consultation between the Department and local authorities about the remote access terminals. In principle, the intention to exchange information electronically and to reduce paper flow between organisations is sound, but the receiving of information from the Department and how it can be handled effectively in council offices appear not to have been thought through.

The Government claim that, as a result of remote access terminals, 20 million fewer paper notifications of benefit changes will be made. Those councils that operate a document imaging system will have an advantage over those that do not because, although the electronic transfer of information into council document imaging systems will avoid the use of paper, those councils that do not use imaging will need to put the information from the terminal on paper, and many local authorities throughout the country will find that efficiency is not increased.

I have another, more general, point to make under this heading. Closer working initiatives are being encouraged by the Department, to enable Benefits Agency staff and local authority benefit staff to liaise and work together more closely. However, that is not always working out in practice. Benefits Agency staff at local level is not empowered to break with protocol, and all too often they do not feel able to co-operate with councils in the way that is needed. There are too many constraints. I have no reason to believe that my local authority is alone in finding that it is proving difficult to make any gains in that regard.

I genuinely applaud the Government's commitment to combat housing benefit fraud. I do not quarrel fundamentally, or in principle, with the measures that they are introducing, although I think it unlikely that the measures will live up to the Government's claims and expectations. Most of these initiatives evolve from, or are natural expressions of, the policies that we sought to implement during the previous Parliament, but I do find fault in two key respects.

First, almost all the initiatives that the Government has introduced have a downside. They have been thought through inadequately, sometimes with insufficient prior consultation. They may be basically sound in theory—I believe that they are—but they are flawed in implementation. They have negative as well as positive implications and repercussions that had not been anticipated.

Secondly, the rhetoric and polemic that the Government often employs in presenting their case oversimplifies and overstates. These are complex issues, and they are worthy of serious debate. I hope that the Government succeeds in this policy area: benefit fraud is one of the several cancers gnawing away at today's society. However, at the moment, the evidence that the Government are succeeding is strictly limited.

11.17 am

Mr. Steve Webb (Northavon)

I congratulate the hon. Member for Basingstoke (Mr. Hunter) on raising the important issue of housing benefit fraud. Whether the figure involved is £800 million or £1 billion, these are substantial sums that could, I suspect, be better spent by all of us, and the hon. Gentleman has done the House a great service by drawing attention to the issue today.

I shall make a relatively brief contribution. First, I shall touch on the conclusions and three of the supplementary recommendations of the Scampion report on benefit fraud, and offer a few comments on some of those as they apply to housing benefit. Secondly, I shall make a few comments on the housing Green Paper that was published yesterday, which has a section on housing benefit fraud and gives some idea of the Government's thinking on the issue.

The Scampion report recommends the idea of a common baseline application form for housing benefit for all local authorities. Although the recommendation allows for local supplements to that form to reflect local circumstances, I very much support the idea that there should be one form for what is, in large measure, still a national benefit, albeit administered locally. Clearly, when thresholds are set locally, various other aspects are determined locally, but the information needed to assess a claim is pretty standard throughout the country, and yet the quality of information that is being sought appears to vary greatly. That worries me considerably, as it has implications for counter-fraud strategy.

We had discussions in this very Room about common application forms when the Chairman of the Public Accounts Committee, the right hon. Member for Haltemprice and Howden (Mr. Davis), initiated a debate on a related issue, but I should be grateful if the Minister would tell us the Department's latest thinking on the development of a common form, which in principle I would support warmly.

Mr. Eric Pickles (Brentwood and Ongar)

Another thing that was striking in the report was the finding that local authorities did not get the opportunity to pass on information on tips and scams. If there was a common form and there was, let us say, a problem in Basingstoke, information about the problem could be passed on to Brentwood, Northavon and Birmingham.

Mr. Webb

The hon. Gentleman is absolutely right. The sharing of good practice must be encouraged, and a common form might be part of the strategy.

Scampion's second supplementary recommendation is to establish a working group to consider data matching and data protection. He considers the balance between a citizen's right to privacy and the state's need to protect public funds. In that context, I can see few reasons for preventing extensive data matching. There must be a good and effective gate-keeping arrangement, so that there cannot be easy and willy-nilly access to information on people's personal circumstances. However, when a good and grounded suspicion of fraud exists, all the information should be brought together. Different arms of government collect the information and they perhaps receive different answers from the same person at different times or answers from people using different identities. Therefore, they are sometimes unable to bring the information together. Provided that gate-keeping safeguards take account of civil liberties issues, that privacy can be protected from the gratuitous trawling for data and that certain steps are taken before data can be accessed, I would warmly support much more effective data matching.

I fondly look forward to the day when I succeed as Secretary of State for Social Security and set up one big computer to bring all such information together. On Monday, the Minister told us about another scheme that the Government had in mind and he said that the computers were not up to it. However, the pace of technological change is so fast that it is hard to believe that, in the medium term, the Government cannot set up computer systems that would facilitate data matching and have a real impact on fraud.

The third supplementary recommendation that I want to draw to the Chamber's attention is the possibility that the Department will join the credit industry's fraud avoidance scheme. I notice from today's Order Paper that the right hon. Member for Birkenhead (Mr. Field) has tabled a question to ask the Government about their plans to join the scheme. Perhaps, the Minister will anticipate the answer by telling us the Government's views on joining a private sector counter-fraud initiative. The hon. Member for Basingstoke rightly referred to incentives and the private sector has the biggest incentive to crack down on fraud, because its money is involved. I shall be interested to learn whether the Government think that they should play a part in that scheme; I think that they should.

The Green Paper that was presented yesterday has a slender chapter on housing benefit. It contains the equivalent of two sides of A4 on housing benefit fraud, but some interesting items are mentioned and it is relevant to bring them to the Chamber's attention. Paragraph 11.28 of the Green Paper appears under the heading "Tackling Fraud and Error" and it mentions the "do not redirect" scheme. There is some uncertainty about how the scheme is working in practice. The hon. Gentleman suggested that councils are effectively obliged to be part of it, but the Green Paper says that the Government have got two-thirds of local authorities to join…and more are joining all the time. Perhaps the two statements are not completely inconsistent, but I am puzzled why the Government did not take a much firmer line from the start and why they did not lay down the law to oblige local authorities to join the scheme. I do not know why the Child Support, Pensions and Social Security Bill, which is going through the House, could not contain a clause to oblige councils to be part of it. I see no reason why we might want to allow them not to join or why they might not want to part of it. We can argue about the scale of the savings—they may not be vast—but there are potential benefits.

If the Post Office knows that the post from a dozen or two dozen addresses is being redirected to just one address and the local authority knows that housing benefit is claimed at all those addresses, that raises questions about whether we should post so many cheques to one address. I hope that the Minister will reassure us that all local authorities will be part of the scheme. If not, I hope to know why not.

I commend the Government—I do not make a habit of that—on the proposals in paragraph 11.29 of the Green Paper. I have always thought that we needed to know—the hon. Member for Basingstoke referred to this in passing—how much benefit fraud takes place each year and the overall trend. One of the most frustrating things about Government announcements on benefit fraud crackdowns is that they always tell us how much they will save, but the scale of the fraud that remains is left unknown. We can never test the claims of how much the different measures will save, because we do not know what the starting number was. Indeed, the figures given for benefit fraud tend to be remarkably stable on the whole, despite announcements telling us every year that we will make hundreds of millions of pounds of savings. Something, somewhere does not add up.

The need for reliable, consistent information at a national and local level about the scale of fraud is vital. I welcome paragraph 11.29, which says: We also need to be able to monitor progress in reducing levels of fraud…Previous exercises to measures levels of fraud…produced national snapshot estimates, but did not allow us to track changes over time. That is the right approach, and I welcome it unreservedly.

The Green Paper contains a section entitled "Taking this forward", which describes the Government's thinking on housing benefit fraud. I want to make a few remarks about that. Paragraph 11.30 refers to giving local authorities the right incentives, a point that the hon. Gentleman mentioned. Incentives are central to the debate. We all have contact with our local authorities, and the hon. Gentleman has obviously researched thoroughly his local authority's approach to the issue and its views on the Government's plans. It is clear to me that local authorities have weak incentives to tackle fraud. They are extremely overstretched and their benefit departments have to cope with a hefty workload and all manner of changes to the rules that add to the system's complexity. Tackling fraud involves the expenditure of taxpayers'—and not the councils'—money. Therefore, getting the incentives right is important.

Mr. Hunter

Will the hon. Gentleman extend his comments to my point about the reluctance of local authorities to prosecute? They have to use the council solicitor, and prosecution involves time and cost. That additional dimension aggravates the problem.

Mr. Webb

The hon. Gentleman is right. A council faces the costs, such as the legal and staffing costs that the hon. Gentleman mentioned, of prosecuting cases when the return to it is pretty limited. Will the Minister set out in more detail the Government's thinking about how they will reward much more substantially councils that take the issue seriously?

Mr. Pickles

I have a note, which is the result of a conference, on the position in Milton Keynes and it adds force to the hon. Gentleman's argument. I have been informed that Milton Keynes saved £1 million over three years, but none of that money was returned to fraud investigation.

Mr. Webb

That comment shows the scale of benefit fraud in one authority. However, I am not sure that I necessarily want the money to be returned to fraud investigation; I want some money to go to the council to give it the incentive to pursue fraud further. It can then decide how much of that money it wants to spend on fraud investigation. Councils should feel that it is their money, but—apart from some incentive schemes at the margin—they do not. I hope that the Minister will assure us that he will beef up the incentives.

The central recommendation of John Scampion's report was an integrated approach to tackling benefit fraud. Although the Green Paper, at paragraph 11.31, mentions the report and refers to strengthening the professionalism of investigation and co-ordination of intelligence on benefit fraud, I am not convinced that the Government are going the full extra mile. I am not convinced that they have accepted the recommendation that there should be an integrated service. I hope that the Minister will clarify what is intended when he replies.

Although in many senses I am young and naive, I have quickly become cynical about the Department. I tend to assume that the volume of press releases on an issue is in inverse proportion to what is actually being done. Housing benefit fraud has seen a flurry of press releases, which makes me sceptical about whether anything is happening. I should like to be proved wrong.

It is regrettable that the Government has not set themselves measurable targets against which we can hold them to account. They tend to blame the previous lot, as it were, but they have had responsibility for these matters for three years. Three years on from the general election, we still have only a Green Paper, which in effect says, "We don't really know over time how much fraud there is." We need to know the extent of it. I know that that cannot be ascertained on day one, but, after three years, it is rather disappointing that it is now being discovered that we need to be able to measure the fraud that is taking place.

I hope the Minister will convince us when he responds that there will be a serious attempt to provide reliable estimates of the scale of the problem and measurable targets against which he can be held to account for reducing fraud. I hope that there will be a far more credible strategy than the rather weak practical steps that have been taken so far.

11.31 am

Mr. Eric Pickles (Brentwood and Ongar)

It is a great pleasure to be able to take up the remarks of the hon. Member for Northavon (Mr. Webb). I thought that he was kind to the Government in terms of the housing Green Paper. He said that, after three years, they seem not to have much of a clue about what to do with fraud. It would be fair to say that they do not have much of a clue about what to do with housing benefit. If they have opinions on the matter, it seems that they are not prepared to share them with the House. The hon. Gentleman said that he looked forward to becoming the Secretary of State for Social Security. I hope that the hon. Gentleman will not be offended when I say that only in a parallel universe will that honour fall to him.

Mr. Hunter

I think that the hon. Member for Northavon (Mr. Webb) was announcing that he was about the cross the Floor.

Mr. Pickles

That may be. If that is the case, our loss will be the Government's gain. If the Minister wants to offer some inducements, we would be prepared to turn a deaf ear.

The hon. Gentleman suggested that improvements in the computer system might be helpful. I think that computers would be helpful if he were Secretary of State. Only with computers could we keep track of the hourly changes of Liberal Democrat policy.

I congratulate my hon. Friend the Member for Basingstoke (Mr. Hunter) on initiating the debate and allowing us to redirect our efforts in respect of housing benefit. There was a debate in Westminster Hall in early February on the subject, and many of the points made then have been repeated. However, my hon. Friend brought an interesting perspective, if not a practitioner's eye, to some of the problems, especially the redirecting of mail. I have not come across that before, and he made a valid point. His remarks about co-operation with local authorities were most illuminating.

My hon. Friend is right to say that, for too long—this applies especially to the Government—we have been very quick to take credit and to say that things are improving without there being any evidence to show that anything has improved. That has made the Government look ridiculous, and it has given to those who seek to damage the system by fraud the false hope that we will not get on to them and will not try to stamp out their activities.

The hon. Member for Northavon referred to paragraph 11.29 of the Green Paper. He said that it was rather good that the Government is to make an attempt to try to work out exactly how much fraud is within the system. It seems that they will try to determine whether housing fraud amounts to £2 billion, or is considerably less than that. The Government will have some problems in arriving at a true estimation because fraud is endemic and deep within the system. The process of unravelling is not confined to anti-fraud measures because it will be necessary also to try to simplify the system. My hon. Friend the Member for Basingstoke outlined various figures, but the best guess is that fraud amounts to about 7 per cent. of total expenditure on housing benefit. We know also that, above that figure—probably taking it to 10 per cent.—there are discrepancies because of client or administrative error.

It is not surprising that there is a great deal of money to be saved. It is not surprising also that the Labour party in the shape of the Prime Minister, when he was Leader of the Opposition, presented a manifesto that stated: Just as we owe it to the taxpayer to crack down on tax avoidance, so we must crack down on dishonesty in the benefit system. We will start with a clampdown on Housing Benefit fraud, estimated to cost £2 billion a year, and will maintain action against benefit frauds of all kinds. Given the prominence of the issue in the Labour party manifesto, it is perhaps not surprising that the Secretary of State for Social Services was keen to say: We are already beginning to see results.—[Official Report, 11 January 1999; Vol. 323, c. 8.] My hon. Friend the Member for Basingstoke referred to various claims that have been made by the Secretary of State. I, too, was struck by a press release of 20 January, headed, "Darling welcomes successes in fighting benefit fraud", which states: Today's figures show that our tougher anti-fraud measures are beginning to bite…we are winning the fight against fraud. However, as my hon. Friend said, the Office for National Statistics said that the reductions to which the right hon. Gentleman was referring were not statistically significant. If that is right, I suppose that the figures could have gone either way; they could have gone down or up.

There is a problem when, at every false dawn, the Government claim a victory. My hon. Friend is right when he says that the quality of debate is not enhanced by that process.

I suggest that we need to get three things absolutely right in establishing an anti-fraud strategy. First, we must defend the gateway to benefits to ensure that fraudsters do not pass through it. However, we do not want to guard the gateway so strongly that folk who need benefit and help cannot get through. There is a fine balance to be struck. Secondly, we need to get fraud out of the system, and an important factor in so doing, as the hon. Member for Northavon suggested, is benefit simplification. Thirdly, we need to improve investigation skills and share knowledge with local authorities and the Benefits Agency.

The Audit Commission's report on tackling fraud paints a gloomy picture. As my hon. Friend the Member for Basingstoke said, the commission found that housing benefit administration was poor in 44 per cent. of councils. It also found—this should give us cause for thought—that speed, not quality, continues to be the sole target for the assessment of claims. The process is to get claims through as quickly as possible. Some simple checks are made, but the system means rushing things through.

I served for 12 years on a local authority, and I find it shocking and unacceptable that too many types of council have been experiencing fraud that has been perpetrated by officers and members of those councils. If we cannot run a ship without the crew being on the fiddle, what chance has we of commanding the confidence of the public? The lack of prosecutions of such offenders is a disgrace that besmirches those of us who are involved in local government. I do not care about the political make-up of the councils concerned: whether a council is Conservative, Liberal Democrat, Labour or hung, it is not acceptable to allow such a situation to continue.

The Audit Commission also found in one third of councils an unsatisfactory level of overpayment. Worse still, prosecutions were rare, for several practical reasons. Investigative journalism tells us that, in practice, councils are encouraged to chase only the worst offenders, so petty offenders can be confident, not only that they will never be caught, but that they will never even be investigated. At the end of January, the Government confirmed that local authority investigators ignore elaborate housing benefit fraud, because the financial incentives encourage them to hit relatively easy targets for prosecution.

The verification project is welcome, in that it systematically lays down minimum standards for verification and processing of claims. However, as my hon. Friend the Member for Basingstoke says, all is not well within the verification framework programme. The Local Government Association, of which I have the honour to be a vice-president, has accused the Department of "escaping its responsibilities" by contributing to the poor delivery of housing benefit. The LGA claims that the Department has ignored its concerns about the bureaucracy involved in the verification framework, and warns the Government that the verification framework threatens to submerge benefits staff in bureaucracy because of lack of funding. I shall quote two further LGA comments. First: It is important that the DSS and its agencies work collaboratively with local government in taking forward a comprehensive strategy for tackling fraud. I am sure that we all applaud that. Secondly, the LGA states: Many of the operational difficulties associated with anti-fraud initiatives on housing benefit have arisen through a failure to fully involve the LGA and local authorities at the development stage or an unwillingness to take on board constructive proposals. We have to work together to stamp out fraud—no one has a monopoly of knowledge.

Ignoring the experience of local authorities is not the way in which to obtain their co-operation; nor is it the best starting point for one of the three new initiatives announced by the Government, listed in paragraph 11.33 of the Green Paper, which is Setting up new arrangements with local authority and DSS fraud investigation units to pool resources, cut down on duplication of effort, share intelligence, and targeting investigations properly across the whole social security system. That cannot be done on the basis of the Department telling local authorities to do as they are told; there has to be acceptance of partnership. I hope that the Minister of State will tell us the exact extent to which the Department intends to co-operate with local authorities.

During an intervention on the hon. Member for Northavon, I pointed out that one of the problems is that local authorities do not share information among themselves: they all have different forms and different criteria. One authority might crack down on a specific fraudster, but another fraudster using an identical method in another area escapes. Apart from an annual conference at which information might be exchanged, there is no systematic method of sharing knowledge. Such co-operation will start only if the Department takes local councils into its confidence.

We put off much of our work on, and many of our suggestions about, dealing with fraud while we awaited the Green Paper. However, it announces only three new initiatives. We were told many times that we had only to wait—everything would be dealt with in the Green Paper, all our problems and worries would be settled by the Green Paper, and everything would be made clear. I was looking forward to the Green Paper. We had been told that it would not be published in July, so I commend the Government for having brought forward its publication, but if I had eagerly taken it home to read over the long recess, I should have been a most disappointed Member of Parliament to find only three measly measures on housing benefit fraud.

Now, we want to know the answers to the questions that we were promised would be answered by the Green Paper, but have not been. Specifically, we want to know what has happened to the housing benefit simplification project, the details of which were due to be published a year ago—in fact, I think that the anniversary of its intended publication date has passed. In addition, the Minister must explain why, if there are about 250,000 known cases of housing benefit fraud, there are only about 700 prosecutions. The simplification project would help to secure the three measures to which I referred—guarding the gateway, removing fraud from the system and improving investigation skills.

We wanted a dedicated anti-fraud agency, and the payment of benefit cheques directly to landlords to be banned. The Secretary of State said that all those matters would be dealt with in the Green Paper. However, on page 112, I find the new special arrangements for co-operation between local authorities and the DSS, which I have already mentioned, and the offer of "a national, single agency" and a "fraud hotline". So, we are to have a telephone number. I do not mock that measure—it would have looked marvellous in a list of 30 or 40 initiatives. However, it is the lead item in a list of three options. Perhaps it should be a premium line, so that we can recoup some of the money that we lose on fraud through people reporting fraud.

In addition, local authority staffs are to be allowed on-line access to DSS systems to trace National Insurance numbers. That is welcome. It would be useful if the Minister were kind enough to tell us how many people he estimates have two numbers, and how many duplicate numbers there are. We know that duplicate numbers exist—that someone in Blackpool can have the same national insurance number as someone in Brentwood.

I look forward to the Minister's reply, but I think that I have time to deal with a local matter connected with housing benefit fraud. During Social Security questions four weeks ago, the Secretary of State attacked Brentwood council, a Liberal Democrat council, for its record on fraud. My council officials are entirely innocent of being Liberal Democrats and run a tight ship, in my view, despite the incompetence of the administration.

I have a reply from Mrs. S. Keeble, the borough treasurer. She was astounded by the Secretary of State's charge that Brentwood council was soft on fraud. She writes: This is simply not true. The Council has, for a number of years, had difficulty in providing one of the government's statistical returns because of the way the data was stored in its computer system. The DSS are aware of this and it has never been raised as an issue before…The Council purchased a new computer system and it was installed at the beginning of the financial year. Mrs. Keeble explains the difficulties and states: I am pleased to tell you that the first statistical forms were produced last week, for the third quarter of the year, and have now been sent to the DSS…I am concerned that our problems with this statistical return have been interpreted as a lack of concern over Benefit Fraud and I must refute this strongly. She lists the steps that the council has taken, and reports that, recently, it successfully prosecuted a local resident, who was sentenced to 100 hours of community service and had to pay £120 in costs.

I trust that the Minister will pass that on to the Secretary of State, and I look forward to the poor burghers of Brentwood receiving an apology from the Secretary of State, whose remarks caused them great pain. When people are working hard to stamp out fraud, they deserve not to be part of the political football.

What do we want? A consensus is starting to form across the Chamber. The Deputy Prime Minister said that he wanted a consensus on housing benefit, and we are seeing the start of a broad coalition. We want the Government to implement the Scampion report. We do not want the Government to pick and choose, or to produce a hotline and nothing else. We want a proper, co-ordinated approach. Scampion knows what he is talking about.

The way in which the Scampion report was announced to the world could not have been less attractive. It was dumped—lodged—in the Library on a Friday evening. All Members of Parliament want to stay in the House as long as possible during the week, but Friday evening is not the time most conducive to getting wide publicity for such an important report. The Government has nothing to be ashamed of. They have made a number of commitments.

If we could take the politics out of the issue, and recognise that it will be difficult to remove fraud from the system, that it is not the Government's fault and that it is not up to the Secretary of State to deal personally with the problem, we could move towards some kind of consensus. As Scampion said, we need a single national intelligence system and a single investigatory agency. We want a proper partnership to be set up and to be given a time scale to submit proposals to the Department to deal with organised fraud.

The Minister is familiar with that and other suggestions that were offered by my hon. Friend the Member for Basingstoke and the hon. Member for Northavon. We are looking for a robust response from the Minister this morning, and I am sure that he will give it. If we were to sum up all our arguments in a single phrase, it would be: "Give us Scampion!"

11.54 am

The Minister of State, Department of Social Security (Mr. Jeff Rooker)

I am happy to congratulate the hon. Member for Basingstoke (Mr. Hunter) on securing the debate. At the risk of upsetting the cosy little consensus, I must say that I have been listening to a load of whinges from inefficient local authorities. That may seem unfair, but as a headline, "Whinges from local authorities" would be accurate.

Hon. Members are elected to Parliament to represent their constituents, not to represent local authorities. I want to put that on the record. We want to work with local authorities, and I shall explain how we do so, but I do not accept that out there, everything is sweetness, light and massive efficiency. There is far more red tape and bureaucracy in local government than in central Government. That is my experience from my terms in the House and my short period in government.

Mr. Pickles

If the Minister were not seeking consensus and co-operation from local authorities, what would his opening remarks have been?

Mr. Rooker

I wanted to set the tone. We do not intend to be the punch-bag for local authorities that are not doing what they should be doing or which are merely seeking excuses.

I shall respond as best I can to the points raised in the debate. I am grateful to the hon. Member for Basingstoke for informing my Department of the matters that he would raise, arising mainly from the parliamentary answer that he received earlier in the year.

On the request "Give us Scampion!", we will indeed give the country Scampion in due course. The first step, though, is to carry through the commitment that we made when we published the Scampion report—to appoint a head of profession. The post has already been advertised. I regret that it takes a long time to consult, advertise and carry out the proper scrutiny that is necessary for public appointments. The interviews will be held fairly soon. We expect the head of profession to be in post by August or September.

By the time we return from the long recess, I expect us to be in positive mode with regard to the other Scampion recommendations accepted by the Government. We may not have implemented them all, but we will have begun to get the plan ready. However, the first step is the appointment of the head of profession.

I shall deal first with the points made by the hon. Member for Basingstoke, which encompass many of the issues raised by the other two Members in their cosy consensual representations from their local government masters. That is the last time that I shall allude to that, but I think I have made the point that the Government do not accept the whinges and criticisms from local government of what the Department has been trying to do to tackle fraud. To speak of rooting out fraud is too strong a term, because ending fraud is like searching for the holy grail—there will always be fraudsters around. Nevertheless, we do our best to tackle a serious issue.

On the verification framework, I know from my own local authority, which is the largest in England, the problems that that has caused in delay and in respect of due procedures and training. I recently met about 40 representatives of local authorities to discuss aspects of the matter. We are trying to make improvements to the scheme and to help them phase it in over two years.

In many cases, local authorities have managed the verification framework so that vulnerable groups are not put at risk. I accept that many of the people in receipt of housing benefit are members of vulnerable groups, so non-payment of housing benefit puts the home at risk. That is the bottom line. If the benefit is not paid, the home is put at risk by the debt, the arrears and the other difficulties. We do not want to cause homelessness; that is the opposite of our intention.

We have removed the requirement for people in hostels to provide a national insurance number to support their claim. For those of us who live in the world of torrid bureaucracy, the idea that people do not have ready access to their national insurance numbers is surprising. We tend to believe that everybody has a national insurance number, but that is not so in the real world. People who live in hostels constitute a mobile population. For all the reasons people become hostel dwellers, it is easy to lose such information.

We have therefore issued guidance, which states that third party information from responsible organisations can be used to support claims from people in that position. We have learned that lesson from implementing the verification framework. I do not therefore simply claim that the framework has been established, that it is working and that we have made no change. We have made changes. We appreciate that they have caused difficulties for many local authorities.

The ordinary, common or garden honest claimant and well-run local authority have nothing to fear from operating the verification framework. Local authorities are required only to ask the questions and do the checks that they, as the guardians of public money, should have done in the first place.

That picks up a theme that the hon. Member for Basingstoke introduced. He said that local authorities did not own the money or the benefits. I freely admit that there is a long-term problem unless we can get local authorities to establish some sense of ownership. They own the administration of the money, but some do not believe that they are responsible for the benefit payments. When a senior official and I were in discussion, he said that he was not responsible for the amounts of housing benefit. He was a local government assistant director, yet he claimed that he was not responsible, and that the money was not part of his department's budget. He said, "It's not my money, it's the Government's money." Yet the Department was paying the local authority considerable sums of money to administer the system on behalf of the public.

The hon. Member for Northavon (Mr. Webb) mentioned incentive. He was right: incentives are built into the rest of local authority money, because inefficiencies in spending on one responsibility mean cuts in others. Local authorities do not like telling citizens that they are making cuts. However, council tax and housing benefit are different.

Mr. Pickles

The Minister mentioned ownership. Paragraph 11.39 of the Green Paper on housing considers the long-term future. It states that administration will remain the responsibility of local authorities. However, it also considers the ONE pilots and local authorities working closely with them on housing benefit administration. Is it absolutely clear that administration will remain with local authorities in the long term?

Mr. Rooker

I stand by the words of the Green Paper. We have no plans to remove housing benefit administration from local authorities, but nothing lasts forever. That is not a hint or a threat. The words in the Green Paper are valid. I shall consider the ONE pilot later. If local authorities can administer housing and council tax benefit efficiently and satisfy our constituents, they will encounter no difficulties. The Green Paper makes the position clear.

We have agreed with the Audit Commission and the Accounts Commission that any performance data that they publish will state that a local authority has been involved in operating the verification framework. I am almost expressing a caveat: operating the framework may slow down performance. We do not intend that to happen, but we understand that in the real world, operating a different system which is much more rigorous and a little slower can slow down performance.

I do not want a local authority that takes the verification framework seriously, and genuinely tries to make it work, to be penalised unfairly in the Audit Commission's published charts, which we receive regularly. I do not want us to observe that our local authority has dropped below a performance line and demand to know why. Local authorities will claim that it is not fair that they do extra work, which takes time, yet the report does not refer to it. They feel that they have been penalised. I hope that those comments will be taken in the spirit in which they were meant. We also take account of implementing the framework in the subsidy to local authorities. The Government, not local authorities, pay for the verification framework.

I regret that the hon. Member for Basingstoke forgot to mention the Royal Mail "do not redirect" scheme. Again, local authorities do not pay for that; it is fully funded by the Department. It is also voluntary. There may be arguments about it. One of the first questions that I asked on my first day in the Department eight months ago was, "Why is this voluntary? It is such a good idea." However, no local authority has complained about that. Not one has claimed that we are forcing local authorities to accept a scheme that they do not want to implement.

We have asked local authorities that do not implement the scheme the reasons for that. We got some stupid answers—for example, "We're waiting for another supply of envelopes, so we can have them reprinted." We have received barmy reasons which an alert local government officer would have tackled immediately.

I am surprised by the comments of the hon. Member for Basingstoke about his local authority. He said that only two envelopes had been returned to the council and that the accounts had been closed. I whispered to my colleagues that I wondered why the local authority was sending out envelopes if the accounts had been closed. That is the obvious question. The envelopes had been redirected back, but if the accounts had been closed, why did the local authority send out the cheques? Basingstoke council must answer that question.

Given that the Government have asked local authorities to undertake so many tasks, there are good grounds for establishing some schemes on a voluntary basis. I can understand frustration about not achieving 100 per cent. implementation, and about slowness, but I expect improvements by the end of the year. The service is recommended and part of good practice. Local authorities can learn from it.

One local authority has made dramatic savings through the scheme. It reported that "do not redirect" cases accounted for 10 per cent. of its fraud investigation case load. Two cases revealed fraudulent payments of £26,000 and £18,000. It is a good scheme, but no single policy initiative can solve all the problems. We must move forward on a wide front. There is no holy grail. I would not claim that we had won the battle and that benefit fraud was under control.

The benefits system pays £2 billion a week to our fellow citizens. The scope for fraud by organised criminals is great, and we spend a lot of money on trying to close the gateways and thus make it more difficult for the wrong person to get into the system and easier to root out fraud. We prosecute approximately 200 people a week for benefit fraud—and not only housing benefit fraud, which is the subject of the debate.

The hon. Member for Basingstoke said that remote access terminals are not very useful because they offer limited access, but they are a big innovation and providing local authority officers with a computer terminal so that they have direct access to the Department of Social Security computer network for certain benefits is pretty radical. I am not claiming credit and, as he said, a lot of those initiatives have come through the system, as is the case with any change of Government. I freely admit that our computer network is not exactly blue sky technology, but we are considering widening the range of DSS benefit information available as part of the housing benefit improvement programme through the access terminals. We hope to pilot some of those improvements later this year, with a view to rolling them out nationally in 2001.

The electronic transfer of data is also an issue. We consulted local authorities about initiatives during the evaluation of the ETD programme and 20 were involved in pilots during development. One does not consult every local authority, as more than 400 deals with housing benefit and we carried out a representative pilot. Before the national roll-out of electronic data, the local authorities were consulted through the remote access terminals national user group and they attended seminars on ETD, so we have involved them. We want to work in partnership, but sometimes new ways of doing things ruffle feathers or challenge local empires. There may not always be the degree of good will that there should be, but we have put our hand out to local authorities to work with them.

The electronic transfer of data offers other benefits, even if the local authority does not have the document image processing system. For a start, it reduces the time that it takes to process housing benefit and council tax benefit claims. It increases security in terms of data protection and data transmission and should enhance customer service by improving the speed and accuracy of benefit processing. There is no question but that it contributes to reducing the scope for fraud and error, and we hope that it will lower the housing benefit and council tax benefit programme expenditure.

I should make the point that the words "benefit fraud inspectorate" did not cross the lips of any hon. Member today. The inspectorate is a service provided by my Department to local authorities to go over the systems that they use. It is not a hit squad, but a systems squad that goes into local authorities to examine how they administer housing benefit and council tax benefit. In some ways, I regret that it does not consider other benefits such as student loans. There is a great deal of scope for that, because the inspectorate is expert in studying systems.

We publish reports for each local authority, although we remove any failures as they could be invitations to commit fraud more easily, and the good practice can be shared, one local authority to another. Local authorities do not necessarily even have to pick up the phone, as they can read reports on authorities with a similar demographic and geographic background or a similar housing benefit profile to see whether they can learn something.

This year, the benefit fraud inspectorate has been asked specifically to go into the 30 local authorities with the highest housing benefit spending. One knows which they are, by and large: they are big city authorities, and my own city of Birmingham is one. They are due to be dealt with—I hope in a way that brings them up to scratch and improves the situation—and I do not deny that we have had problems in the city of Birmingham with housing benefit administration. Of about 400 local authorities, 30 spend a third of the £12 billion of housing benefit, so it is sensible to target our resources there.

On Monday, we announced the programme for the next 30 authorities into which the benefit fraud inspectorate will go. They work in co-operation and are proceeding by agreement. There are set dates and a programme of work. The inspectorate will not knock on the door one Monday morning and say, "By the way, we have come to audit your systems." That is not the way to do it. The process is helpful and the more we can extend it, the better.

Mr. Pickles

May I make a straightforward point? It is right to examine the 30 highest spenders because most money will probably go to them, but they are likely to run a fairly decent show. Which authorities are not up to scratch or do not have the necessary? Would the Minister care to characterise them, but not in political terms? What kind of authority are they?

Mr. Rooker

The 30 biggest spenders come mainly from the 32 metropolitan districts, so we have probably covered most of those. A point came to me when I was asked to consider which authorities would be the next 30 to be examined. These programmes are planned well in advance and I specifically asked whether there were pockets of district councils that were small in terms of local government but had a preponderance of housing tax benefit and council tax benefit claimants and were a bit different from the average; or whether there was an authority that we had not heard about for a long time, perhaps because someone had not sent forms in; or whether there was an authority that was not involved in Royal Mail "do not redirect". I wanted to consider those factors, so the next 30 are a real mixed bag. There is no set pattern, but some of those thoughts went into the programme.

Perhaps we should have a look at some authorities: we may not have heard from them for a bit, but that does not necessarily mean that everything is okay. I certainly hope that when we have considered the top 30 and the next 30, along with those that have already been examined, we shall have a good picture of the local authority performance for the rest of the country. There are lessons that we can hope to roll out in the rest of local government.

May I touch on the point about cost, which is a fair one? I came across it in my previous role at the Ministry of Agriculture, Fisheries and Food. Local authorities are basically the enforcing authority in terms of food safety, and court costs can be horrendous. A small local authority in the north of England told us that a case would cost £250,000, but all the evidence suggested that it was important for it to go to court. It rightly claimed that there was unfairness, since a bigger authority would have the resources to take the case on and more lawyers would be available.

Authorities think that that on-cost might arise, but we have provided £200,000 as a pilot for my Department's lawyers to undertake housing benefit prosecutions and to develop longer-term options to encourage local authorities to pursue prosecutions. If a change is to be made, undertaking a pilot is always worthwhile. The pilot started in November 1998—a similar one began in Scotland in June 1999—and was available to 144 local authorities. It has been extended, partly because we have not used much of the resource that we offered to local authorities. I am not here to complain about why it has not been taken up, but I assure hon. Members that the figure I saw for what we were to spend was horrendous—it was only £200,000 to start with—so we have extended the pilot, because we want to learn from it. Unless it is decent, we will not learn lessons for the future. Although access to legal services is one aspect, some local authorities lack training in bringing prosecutions because of the absence of a formal prosecutions policy.

We have built in extra payments to the existing weekly benefit savings scheme for local authorities that have prosecuted fraudulent claimants since April 1999. Many of us see sentences reported in the press every day of the week and think, "How on earth can they do that?" However, "they" are the courts—not the House, not the Government and not the local authorities. Sentencing is the role of the magistrates and the judges in the courts. We give them the maximums, but it is their job to set the sentences. Benefit fraud cases that appear in the papers occasionally cross my desk. Ministers are warned in advance so that they do not get a big shock, and I sometimes see the result later on. I had a couple on my desk this week and the amount of fraud was the same in both. The circumstances, however, must have been entirely different, because the sentences were so far apart that they could have been on separate planets. Nevertheless, that was the judgment of those who had all the evidence. I, as a Minister, did not have all the evidence. In any event, we are co-operating with local authorities as much as we can.

The verification framework was originally developed with the full input of local authorities. Someone—I think it was the hon. Member for Basingstoke—mentioned the London fraud investigation. That was a joint local authority/DSS initiative designed to tackle organised fraud, which was ended owing to serious doubts about its effectiveness.

The hon. Member for Northavon asked about the ONE project, in the context of Scampion and the common claim form. It is ludicrous that there should be more than 100 different designs for housing benefit application forms. I did not know that that applied to claims for benefit, other than national benefits; it had never crossed my mind. We have issued guidance within the verification framework and in the benefit fraud inspection report, but we are considering the overall programme in the context of the ONE project, with the aim of providing a single gateway for all state benefits. We have schemes operating throughout the country, and they have important implications.

As hon. Members will know, we recently announced, in the context of the working age client group, what is in effect a merger between a large parts of the Benefits Agency with the Employment Service. That is a major change in the machinery of government, announced by the Prime Minister less than a fortnight ago. It will mean that everyone dealing with the Government will be in one place, and it will enable us to ensure that people do not miss out on their benefits and are aware of opportunities of which they are not always aware when they make claims.

Mr. Pickles: Last month, I heard the Minister refer to the lack of stigma attaching to claims for housing benefit and council tax rebate. How, then, can he explain the fact that claims for those two benefits effectively separate clients with the ONE project?

Mr. Rooker

I cannot, but the question is valid. Indeed, on Monday I drew attention to the paradox inherent in the fact that people were claiming housing benefit and council tax rebate but not claiming income support—all three being means-tested. I suggested that there should be a more friendly delivery service at the local neighbourhood office for people who did not want to go to "the social" or the Benefits Agency.

The solution to the pensions problem is to provide a freestanding, separate, brand new agency, or mini-Ministry. Planning for that has begun within the last few days, and it was announced within the last month. It will provide a one-stop shop for people wishing to discuss anything to do with pensions. It will be central, but there will be local access throughout the country. It will not involve uniformity, and it certainly will not involve the Benefits Agency.

This is probably one of the biggest changes ever to be made in the machinery of government. The jobs of tens of thousands of civil servants will be involved. Extracting the Employment Service and the Benefits Agency from the general system, enabling them to deal with a specific client group, is almost like planning a new Government Department. It will not be a five-minute job; it will take several years.

Welding that with the ONE project, and dealing with housing benefit, council tax rebates and so forth will be part of the agenda, and that means getting it right. We must not exacerbate the fraud problem by accident. Cutting out the problem in one area might open gateways for organised crime, as opposed to one-offs. We must root out error as well as fraud, because an error may later become a fraud. For instance, someone might discover an error and say nothing about it. Our central task in regard to housing and other benefits is to ensure that the benefit is right at the outset, and goes to the right person. That should be axiomatic, but the system has been such that it has not been possible.

Three years ago, when we came to office, we discovered that a horrendous number of income support payments had been wrong to start with. I do not want to initiate a debate about that; I merely say that we chopped the number by half, and will therefore be able to save £1 billion over the life of the current Parliament. I am not saying that that constituted fraud. The systems, the procedures and the training were wrong, and there was not the necessary challenge to ensure that benefits were paid to the right people. The new system will provide all the advantages, and none of the disadvantages.

I hope that I have given hon. Members some idea of where we are going. I cannot tell them all that they would like to know—for instance, how much fraud is going on. It is impossible to obtain a positive figure, by definition, although the statistics are likely to remain the same. Overall benefit fraud currently amounts to between £2 billion and £5 billion; housing benefit fraud amounts to about £800 million, which apparently is 7 per cent. of the total. Those figures are too high, and we must get them down, but there is no single magic solution: we must work on a series of fronts.

I know that I have my little dig occasionally, but I have tried—and we must continue to try—to operate on a consensual basis. That is in everyone's interest. If we do not do this, the public whose money is being spent will lose confidence in the benefits system, which will undermine the system. Rooting out fraud is in the interests of all, especially those who pay for the system in the first place.

Mr. Deputy Speaker (Mr. John McWilliam)

Order. Will hon. Members not wishing to stay for the next debate please leave quietly, so that we can have a nice early start?