Social Security Fraud Bill [Lords]

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Mr. Webb: I accept the Minister of State's point that war pension is more complicated and that there is more scope for abuse, but the provision would apply only when fraud had been confirmed—and there have been only six cases in six months. The likelihood of a conviction happening twice is probably nil. The potential for fraud does not matter, because the provision would be activated only if fraud was detected. The Minister's figures show that it was detected only half a dozen times, and the chance of it happening twice must be next to nil, so why not remove the provision from the Bill?

Mr. Rooker: It is even worse than that. I may be undermining my case, but I want to be as open and frank as possible: six cases of fraud were detected, but there were no prosecutions. Judgments were made on the circumstances of each case, and no one was prosecuted. It can be argued that the provision should be removed, but I have listed five factors with potential for fraud, which show that there is a great difference between war pension and retirement pension, so it is sensible to leave war pension on the list, but not to include retirement pension.

This is not a question of promising or planning to change policy on prosecutions. There is no policy not to prosecute; there happened to be no prosecutions, but that was not a decision for Ministers. War pension includes factors--mobility, earnings, and cohabitation, for example--in connection with which fraud could occur, but those factors do not apply to retirement pension, and we do not want to wipe out the sanction, so it is sensible to leave war pension on the list. We constantly review legislation, and the House will also examine what happens in the fullness of time, but that is for the future, not now. I have explained the difference between retirement pension and war pension, and there are good grounds for leaving war pension on the list.

The hon. Member for Beckenham did not press the point about the working families tax credit, which we debated at an earlier sitting. It is available only to people who are working at least 16 hours a week, and replaces family credit. If a sanction were applied--I am not saying that we have considered that, and if we did, it would be a matter for the Inland Revenue, not the Department of Social Security--it might hit the children and other members of the claimant's family, and we have sought not to do that in respect of other sanctions. It might put a person's employment at risk, which is not what the working families tax credit is intended to do. The idea is to make work pay, and to get people off benefits and into work. The working families tax credit was designed to ensure that benefits paid in respect of a child or a partner are not sanctioned.

As I have said, tax credit fraud is a matter for the Government as a whole, and for the Inland Revenue and the Treasury in particular. In saying that, I am not opting out; the Government are actively interested in that issue. The credit—I almost said the benefit, but I stopped myself—is new, and time will tell how we will ensure that payment is made to the correct people at the appropriate rate, and prevent fraud in the system.

5.30 pm

Perhaps I will never be able to convince hon. Members about war pensions—an issue with an emotive aspect that I understand and respect. If I were sitting where the hon. Member for Northavon is sitting, I would be making the same case that he is making. However, having examined the matter I believe that there is a genuine case for including war pensions in the list, and I am quite comfortable with its inclusion. In terms of the rules, there is a distinction to be drawn between a war pension and a retirement pension. I am not simply spouting that line because I am taking the Queen's shilling, as it were. The distinction between a war pension and a retirement pension justifies including the former in the list, and it certainly justifies excluding the latter.

Mr. Webb: I am grateful to the Minister for his open response, which, as he hinted, has in fact strengthened my argument. He is arguing that a retirement pension and a war pension are different forms of benefit, and I fully accept that. However, the practical question is whether they are different in terms of fraud convictions, because it is only such convictions that will trigger the provisions in the Bill. He said that there had been no war pension fraud convictions in the past six months, but seemed unsure whether there had been any retirement pension fraud convictions involving the claimant.

Mr. Rooker: There are none that we are aware of.

Mr. Webb: If that is so, the two benefits have that in common. Given that the war pension is more complicated, it could in theory give rise to prosecutions, but the reality is that in the past six months it has not.

Mr. Rooker: May I make one further point? We are not making a big issue of the ``two strikes and you're out'' principle. We have made it clear that it is a deterrent, and that we do not expect many cases to arise. Off the top of my head, I think that of the millions of claims made, we anticipate only 500 cases a year. Rather than dwelling on the huge problems that exist, we are trying to send a signal that will persuade people to change their behaviour. We accepted the recommendation, laid out in the Grabiner report, that such a signal would be useful and would act as a deterrent. As I said, we do not expect thousands of cases, but it is important to make clear the existence of a deterrent. If no prosecutions arise, that will be the big success. We want not to sanction people but to prevent them from committing benefit fraud.

Mr. Webb: The Minister says that the point of the provision is to send a signal, but to whom will it be sent? We are discussing war pensioners, and it is the suggestion that serial fraud among war pensioners is a real issue that has given offence. The provision will send the signal to war pensioners and their organisations that, in the opinion of the DSS, serial war pension fraud is a real, or potential, issue—but the evidence does not bear that out. There has been not a single conviction in the past six months, let alone a repeat one.

The Minister will be unsurprised to hear that I do not find his response convincing—and perhaps he himself does not. I am not sure whether I am at liberty to divide the Committee on this issue, but I hope that the House will be able to return to it in future.

Mrs. Lait: We have debated the working families tax credit before, so I shall be happy to withdraw the amendment.

The Chairman: The hon. Gentleman could press amendment No. 44 if he wished to, but I take it that he does not.

Mr. Webb indicated assent.

Mrs. Lait: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mr. Peter Atkinson (Hexham): I want to use the discussion of clause 7 as an excuse to ask the Minister a question, which may also apply to clause 8. In a decision to reduce benefits, what discretion is available to Benefits Agency staff? In particular, jobseeker's allowance can be reduced rather than removed entirely, which, as mentioned in the explanatory notes, passports the claimant back on to housing benefit and council tax rebate. I want to discover whether discretion is involved in that process. Does it involve withdrawing one of the disqualifying benefits? I understand that maternity allowance cannot be withdrawn from a claimant. Are there circumstances in which certain allowances can be withdrawn? I ask that because there are many serial offenders—some in well organised criminal gangs—who commit fraud. It would be nonsense for such people, who have prosperous lifestyles and are claiming everything that they can get, including housing benefit and maternity allowance, to be allowed to keep those allowances when they had been convicted of a serious fraud offence. Will the hands of Benefits Agency staff be tied by the regulations?

Mr. Webb: If there is one clause that we would remove from the Bill, it is this one. It allows the Department to sanction someone who twice has been convicted of benefit fraud, and people can be sanctioned on benefits such as the means-tested safety net guaranteeing the basic minimum income. We are not arguing about whether someone who has committed fraud twice is in the wrong, but about whether the punishment under clause 7 is appropriate. In all cases of punishment, we must consider the concept of appropriateness and whether we have the right level of punishment for the offence. If society deems that someone has committed a serious offence, they are deprived of their liberty; we do not deprive them of food, clothing and shelter, because we do not believe that is an appropriate punishment even for the most serious crimes. Even murderers are fed, housed and clothed. Our contention is that the consequences of clause 7 would leave some of those thereby sanctioned below the poverty line and potentially unable to feed, clothe or shelter themselves. That is why we object to the clause.

I recently raised that issue with the Department during a Committee on a statutory instrument. The Under-Secretary responded by saying that the breach of community service orders was another action for which the Government intend to introduce benefit sanctions. My noble Friends in the other place, talking about the Government's strategy of sanctions, asked about the lack of research undertaken by the Department. There has also been a failure to take account of the limited research that has been undertaken. When I challenged the Under-Secretary about that research, she prevaricated until she was informed that a research report had been published in November 1998.

Angela Eagle: I did not prevaricate; I had the research document in front of me.

Mr. Webb: I gained the impression that the hon. Lady did not have the document then, but I apologise if I was wrong.

When the Department was challenged to produce evidence of the effect of sanctions on claimants, it cited a piece of research two and a half years old. Naturally enough, I have read that report, which refers to a sample of 30 claimants. It is in the nature of qualitative research that samples are not huge, but the Department is not making much of an effort if the principal research evidence that it can adduce on the effect of sanctions on recipients is based on a sample of 30 people taken two and a half years ago.

I make that point because the report's findings do not support the Department's sanctions policy. For the record, I am referring to research report No. 86 from the DFEE and the DSS, ``Jobseeker's Allowance Evaluation: Qualitative Research on Disallowed and Sanctioned Claimants. Phase Two: After Jobseeker's Allowance''. Page 27 of that report states:

    ``Seven of the respondents in the first round''—

that is, about a quarter—

    ``lived with their partner and child(ren). As might be expected, they appeared to be the hardest hit by the cuts in their benefit income.''

I am sure that the Minister of State will refer to the hardship payment system, which is supposed to mitigate the effects of sanctions—but the report examines the actual effects of actual sanctions. Families with children are the sort of people who might be entitled to hardship payments, but the research found that families with children

    ``appeared to be the hardest hit.''

That is not sanctioning the claimant; it is affecting the whole family, including innocent children. I should like to know how the Under-Secretary can tell us that the Department has taken account of its research in framing clause 7, when the clause goes no further than existing protections against hardship, which, according to its research, hit families with children the hardest.

A second group of respondents were those who lived alone. The report states:

    ``Most of the respondents who lived alone appeared not to be able to turn to their parents/family for support.''

A natural argument is, ``We sanctioned somebody, but they can go home to mum and dad, or ask their mates.'' However, the research states that that is not the case. The report continues:

    ``They gave the impression they were on their own and said that they could ask for only a limited amount of help from friends.''

The idea that they can get round the sanctions by asking their mates for a loan is unrealistic, and is not what the Department's research suggests.

There is other research on the effects of sanctions, which was commissioned not by the Department, but by Janet Allbeson, who has links with citizens advice bureaux. She—this quote is reproduced in the Department's research report—describes the severity of sanctions as

    ``causing a level of destitution out of all proportion to the `offences' involved.''

The evidence from that study reinforces the critical point that sanctions impose real hardship. [Interruption.] The hon. Member for Hexham (Mr. Atkinson) says that that is the idea of sanctions, but proportionality must be the key to punishment. We deprive people whom commit the most serious offences of their liberty, but we do not deprive them of the basic necessities of life such as food, clothing and shelter.

The study discusses someone in the community whom we would all—including the DSS—agree has committed a less serious offence, but is facing destitution

    ``out of all proportion to the offences involved.''

We are not arguing that there should be no punishment, but we are asking whether that is an appropriate level of punishment.

It is important that we make a stand on clause 7. It is another step on a road down which the Government have been marching, and we shall see them make more strides down that road if they win the next general election. Benefit entitlement will be seen as more conditional. Basic money for food, clothing and shelter will become conditional on jumping through a whole lot of hoops that will get tighter and tighter. The Government are clearly moving in that direction, and clause 7 takes us further down that road.

The Government may say that they do not have to worry because there are hardship provisions. However, hardship provisions still leave people below basic benefit levels, although not as far below as they might otherwise have been. Given that people on basic benefits are often in debt—to the social fund and all sorts of other lenders—and are already getting by on less than basic benefit levels, even a hardship scheme that modifies the penalty leaves them prone to destitution. Is that the punishment that the Government think appropriate? It will not make murderers destitute; it will make benefit fraudsters destitute.

If the hardship scheme is to be a defence, it must work properly, yet the Department's research report questions whether that is so. Page 28 states:

    ``One young man said that not only was he refused hardship payments, he was told he could not have a Social Fund loan because the sanction was intended to cause him hardship, as a punishment''.

That advice from the Benefits Agency was inaccurate. The hardship scheme leaves people below the basic benefit levels for food, clothing and shelter and, moreover, the people who run the system apparently do not know how it works.

5.45 pm

The Government's response to such criticism from Liberal Democrats is, ``Well, people shouldn't do it, should they?'' I hear that from Ministers all the time. However, we are not questioning the fact that such acts are wrong, criminal and deserving of punishment, but whether the punishment is right. Obviously, people should not do such things. They should not murder, but they do, and we must decide on an appropriate punishment. The same is true of benefit sanctions.

We will object to the sanction on principle until two conditions are met. First, decent evidence of its effects on the people who are sanctioned must be produced to determine whether it is appropriate or proportionate. That is frequently mentioned by Earl Russell in another place, where his views are treated with respect. Secondly, when that research is commissioned, there must be evidence that the Department is taking a blind bit of notice of it. So far, it has roundly ignored such research as has been undertaken. The punishment is not appropriate to the offence, and we therefore do not accept that clause 7 should stand part of the Bill.

 
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