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House of Lords

Wednesday, 17th July 1996.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers--Read by the Lord Bishop of Lincoln.

Housing Benefit Fraud

Lord Northbourne asked Her Majesty's Government:

    Whether, in the light of the recently published Third Report of the House of Commons Social Security Committee which indicates that housing benefit fraud may now have reached £2 billion per annum, they are satisfied that the Department of Social Security, the Benefits Agency and local authorities have performed their duties in relation to housing benefit in a responsible and efficient manner.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, the Government's statistical review of housing benefit estimates that there is around £1 billion of housing benefit fraud, not the £2 billion suggested. The framework now in place for tackling housing benefit fraud is producing substantial results. Local authorities and the Benefits Agency have significantly increased benefit savings over the past three years.

Lord Northbourne: My Lords, I am grateful to the noble Lord for that Answer. It is good to hear that the Government are taking action on this important issue. Does the Minister agree that, whether the figure is £1 billion or £2 billion, it is nonetheless a very substantial sum of money, which could have been very much better used providing for the homeless or for those in unsatisfactory accommodation? Does he further agree that some local authorities have been reluctant to tackle the problem of fraud and that those that have actually been paying out claims in respect of properties which do not exist, have been seriously negligent in their stewardship of public funds?

Lord Mackay of Ardbrecknish: My Lords, I certainly agree with the noble Lord that it is a very large sum of money, whichever of the two figures one takes. It is a problem in the first instance for local authorities. Some of them are better than others. We have been encouraging them since 1993 when we introduced a financial incentive scheme which allows those local authorities which actually exceed certain thresholds to keep some of the savings. If they are way below those thresholds they are penalised. In addition, we are looking at various other systems; for example, the introduction of housing benefit matching services where computers can talk to each other and by that means perhaps pick out those people who are

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making fraudulent claims in, say, adjacent boroughs in London where obviously, as with other big cities, the problem is at its greatest.

Lord Monkswell: My Lords, do the Government agree that the House should pay tribute to efficient and sensible local authorities which challenge the extremely high rents that are sometimes charged by unscrupulous private sector landlords to those in the poorest sector of our society who are in receipt of housing benefit?

Lord Mackay of Ardbrecknish: My Lords, not only should local authorities challenge it: they are legally obliged to now because we have introduced legislation regulation which means that housing benefit is not paid fully for rents which are hugely above the average for the local area. I cannot quite recall whether the noble Lord's party supported us on that.

Lord Desai: My Lords, can the Minister say whether there are any plans to privatise the distribution of housing benefit, as one hears that there are plans to privatise everything?

Lord Mackay of Ardbrecknish: My Lords, the distribution of housing benefit is the responsibility of local authorities. There are some which have out-sourced to the private sector part of the work of administering housing benefit. Some of those local authorities are run by the party opposite.

Baroness Hollis of Heigham: My Lords, I believe we all agree that housing benefit fraud is not tolerable and should not be tolerated. Do the Government accept the evidence of the Select Committee that most housing benefit fraud is perpetrated by rogue private landlords claiming direct payment of housing benefit for non-existent tenants, and that in some cases private landlords are making fraudulent claims of up to £250,000 a year? To help local authorities stop such fraud, will the Government now do what they have so far refused to do, and allow local authorities to require from a landlord receiving direct payment of benefit a list of all the properties on which that landlord receives housing benefit? With such a list the local authorities can conduct proper checks, but without it, they cannot check fraud. Will the Government stop being soft on rogue landlords and give local authorities the tools with which to combat serious financial fraud?

Lord Mackay of Ardbrecknish: My Lords, the noble Baroness and I can certainly agree that landlord fraud is serious. But I believe that we part company when she seems to imply that that is the sum and substance of all the fraud. Indeed, there is landlord fraud, tenant fraud, and there is also collusive fraud between landlord and tenant. It is interesting that in its evidence the committee of the London Borough Fraud Investigators Group thought that landlord fraud in London accounted for some £40 million. If one translates that across the country, it comes to about

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£200 million. Clearly, as I have said, that is only part of the fraud. I do not believe that it is wise to try to pick out just one of the villains in this particular case.

Baroness Hollis of Heigham: My Lords, with the leave of the House, will the Minister answer my point? Irrespective of whether landlords are responsible for 40 per cent., 60 per cent. or 80 per cent of the fraud, what now stops local authorities from doing an effective job in checking on landlord fraud is that they simply do not have information on the properties owned by such landlords. They are not allowed to require it. When we tabled an amendment to allow them to require it, the Government resisted it.

Lord Mackay of Ardbrecknish: My Lords, the noble Baroness has clearly backed off the point that she made in her first question when the fraud seemed largely to be landlord fraud. She now says that landlord fraud accounts for only 40 per cent. or 60 per cent. of all such fraud. As I have said, it is both landlord and tenant fraud, and we shall bear down hard on both--

Baroness Hollis of Heigham: Answer!

Lord Mackay of Ardbrecknish: My Lords, I shall do so if noble Lords opposite will contain themselves with some patience.

Computer matching will be an important tool in identifying multiple applications, which is one of the ways in which both landlords and tenants manage to swindle the system. We are also becoming involved in better data-matching. We need to have more people on the ground, employed by the local authorities, to pursue fraud and to investigate whether the property and the tenant exist. That is all part and parcel of the campaign.

Earl Russell: My Lords, is the Minister aware that research carried out by Dr. Doig of the University of Liverpool shows that Liberal Democrat councils have more success in combating housing benefit fraud than councils of either of the other parties? Can the Minister give me an assurance that, if I should observe that his reply to the Select Committee gives me the second occasion in 24 hours to say that the Government have got something right, he will not expect me to complete the hat trick when we meet later tonight?

Lord Mackay of Ardbrecknish: My Lords, I have not read that research. However, I would certainly commend those councils where the success is greatest, whichever parties run them, because they are saving the taxpayer a considerable amount of money and are preventing fraudulent action against both the taxpayer and the benefits system.

Baroness Farrington of Ribbleton: My Lords, I listened carefully when the Minister said that there should be more officials working on this in local authorities. But how does the Minister think that they

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can investigate effectively if they are not allowed information as to which properties at which addresses they are supposed to be investigating?

Lord Mackay of Ardbrecknish: My Lords, investigating officials in local authorities know the tenant, the landlord and what is being paid for what. They can do what our investigators did in the survey--visit a property to check that it exists and that the tenant is whom he says he is.

Lord Avebury: My Lords, has the Minister read the press comments about the sect which is claiming housing benefit on behalf of people resident in premises in a number of different local authorities all over the United Kingdom and in some cases letting the accommodation (in respect of which the claim had been made) to temporary residents with no claim at all on our housing benefit system? Will the Minister say what steps the Government are taking to look into that claim and how there can be co-operation between the several different local authorities involved?

Lord Mackay of Ardbrecknish: My Lords, I do not carry such detail around with me. If the noble Lord would write to me about it, I shall be happy to look into it.


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