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Tom Brake (Carshalton and Wallington): On a point of order, Madam Deputy Speaker. I understand that at 3.30 pm today a press release was issued, announcing that the Government were to proceed with the public-private partnership for the London underground. Is that not a contempt of the House, given that the Secretary of State for Transport, Local Government and the Regions is due to make a statement at 7 o'clock this evening?

Madam Deputy Speaker: I remind the hon. Gentleman that what he says is correct: Mr. Speaker has agreed to a statement by the Secretary of State for Transport, Local Government and the Regions at 7 pm this evening.

New Clause 6

Aggravated tax credit fraud

'(1) A person is guilty of aggravated tax credit fraud if he is knowingly concerned in any fraudulent activity undertaken with a view to obtaining payments of a tax credit by him or any other person and—
(a) tax credits have been fraudulently obtained by himself or another in excess of the prescribed sum; or
(b) he has been convicted of an offence under the provisions of this Act or a benefit offence as defined by section 7 of the Social Security Fraud Act 2001 within the preceding five years.
(2) A person who commits an offence under subsection (1) is liable—
(a) on summary conviction, to imprisonment for a term not exceeding six months, or a fine not exceeding the statutory maximum, or both, or
(b) on conviction on indictment, to imprisonment for a term not exceeding fourteen years, or a fine, or both.
(3) Regulations may make provision as to the prescribed sum in subsection (1).'.—[Mr. Clappison.]

Brought up, and read the First time.

Mr. James Clappison (Hertsmere): I beg to move, That the clause be read a Second time.

Madam Deputy Speaker: With this it will be convenient to discuss the following: Government amendment No. 23.

Amendment No. 3, in clause 33, page 21, line 40, at end insert—

'(3) The Secretary of State shall within one year of this section coming into effect and every year thereafter lay a report before Parliament on—
(a) the extent of fraud in claims for tax credits, and
(b) the measures he has taken to deal with fraudulent claims for tax credits, including measures to facilitate the early detection and prevention of such fraud.'.

Amendment (a) thereto, in line 3, after "credits", insert—

', including the estimated extent of fraud as a proportion of all error in such claims,'.

Mr. Clappison: I shall briefly consider Government amendment No. 23 first, as it deals with a subject that is slightly different from the provisions on non-compliance. We welcome the amendment and we are grateful to the Paymaster General for writing to us about it. The change in the wording of clause 31 will be advantageous and fairer to employers, especially small employers. I ask the

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indulgence of the Financial Secretary to the Treasury and the House in permitting us modestly to claim some small credit for bringing that about by raising the issue in previous debates.

In Committee, we drew attention to what would have been a significant tightening-up of the provisions, which would have been a considerable imposition on employers. Following that scrutiny, it emerged that the situation that would have prevailed had the Bill been passed unamended would have been even worse than we originally thought. That point was disclosed in a letter from the Financial Secretary.

When we originally raised the issue, we were worried that the clause would extend liability for innocent errors made by employers—acts and omissions on their part—that were neither fraudulent nor negligent but that would have resulted in the imposition of penalties on employers. In the letter, it is revealed that it would have been even worse than that, because the liability would have gone further.

The Financial Secretary wrote that the clause

That means, quite simply, that an employer could have faced a significant penalty—a particularly significant penalty for a small employer—for something that had nothing to do with him and that was the result of someone else's actions. That would have been a serious state of affairs. Government amendment No. 23 puts it right, and we welcome it.

However, we add this sentiment, which is apt in the circumstances. It is a pity that we could not have extended to the rest of the Bill the detailed scrutiny that we were giving to the parts that were considered in Committee, to discover what other pitfalls there may have been. The Government amendment has emerged as a result of that scrutiny. We can only express the hope that there are no more pitfalls awaiting small employers or anyone else.

I now come to the meat of this group of amendments and the new clause: fraud. We believe that fraud within the tax credit system is a serious issue, and that the starting point for that issue is a proper assessment of the extent of fraud in the existing tax credit system. Quite simply, we need to know how much fraud there is within tax credits.

We have been asking that question for some time and, sadly, we are no closer to receiving a straightforward answer from the Government today than we were when we began asking the question. We would like to know, for example, whether the Government themselves know how much fraud there is. If they do, will they tell the House?

I asked the Paymaster General that question in March 2001, during a debate on the uprating of tax credits. She kindly agreed to write to me and she was as good as her word. She wrote in April 2001 and told me:

Taking the Paymaster General at her word, on 15 October I tabled a parliamentary question, to ask what assessment Ministers had made of the extent of fraud.

7 Feb 2002 : Column 1094

I received a reply in a written answer on 18 December. You might think, Madam Deputy Speaker, that from 15 October to 18 December was a rather long time to wait for a written answer, but I was treated better than the right hon. Member for Birkenhead (Mr. Field), because the answer that I eventually received was grouped with a question that he had originally asked back on 28 June, on much the same subject. Anyway, this is what I and the right hon. Gentleman were told on 18 December:

Well, here we are, early next year as it was then, and in Committee we had the opportunity to ask—at an appropriate time, it would seem—about fraud. We asked the same question, but without any greater success in getting an answer. We have been mulling over what the Paymaster General said in Committee:

Since then I have asked a further parliamentary question. I know that the Government like to control everything these days, but I would like to be the judge of how I discharge my parliamentary duties and I am afraid that the answer I have received from the Government does not enable me or anyone else to discharge their parliamentary duties. I was told:

I have been asking the same question for roughly a year. I have been taken through to the time when the Inland Revenue exercise concluded, at the end of September. We were no wiser at the end of that. We were no wiser as a result of asking the parliamentary question in December 2001. We were no wiser after the Committee, and we are no wiser after this most recent written answer. I do look to the Financial Secretary for an answer today.

Given the speed with which the Government are changing the tax credits system and the way in which new tax credits are constantly emerging, I am very worried that this tax credit will be abolished before we have the chance to know how much fraud there was in it. We shall move on to the next tax credit and we shall be told about that, that the Government are conducting a benchmarking exercise and it is too early to say what its results are. We need to know today from the Financial Secretary.

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