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Lord Higgins: The people we are talking about here, the "two strikes and you are out" group, are neither light nor heavy; they are in between. They are clearly not trivial, but they are also not engaged in organised crime or anything of that kind.

I do not know that it is appropriate for the Opposition Benches to suggest alternative penalties, but has any consideration been given to the possibility of imposing community service, to be done in the evenings for example?

Baroness Hollis of Heigham: The magistrates' courts already have the power to impose community service or imprisonment.

This is an offence against the benefit, not once, but twice. People will know when they first draw that benefit that the information they give will be checked, and that there will be penalties if they do not give the correct information. It would mean that somebody had not learnt their lesson from the first case before the magistrates' court and had gone on to repeat the offence. We are talking about quite small numbers of 350 to 500. I am quite willing to look at the question of community service. However, I feel that if people have twice deliberately defrauded the system established by the courts, then one should look at the benefit that is the subject of the fraud. I will, however, reflect on the situation. I suspect that quite a high proportion of offences will be committed by single people, and that therefore other members of the household will not bear part of the cost.

Lord Grabiner: I dealt with the point raised by the noble Lord, Lord Higgins, in paragraph 7.37. I am not sure that this solution will be remotely acceptable to the noble Lord, Lord Goodhart. There is a division of view on this point on the opposite Benches.

In order for a court to impose a sentence of community service, it has to be satisfied that the case would otherwise appropriately be dealt with by a prison sentence. It is only in those circumstances, in a suitable case, having obtained the consent of the defendant, that a court can impose a sentence of community service. That is an alternative possibility in paragraph 7.37 to the primary proposal, which is the "two strikes and you are out" point.

As a matter of principle, under the current rules for JSA, even if the conditions for entitlement are met, limited payments can be withheld for a specified period if jobseekers unreasonably cause or prolong their unemployment. For example, if they refuse to take a job without good reason, they can be sanctioned. The sanction period under the existing arrangements, as I am sure the noble Lord knows, is between one and 26 weeks. As a matter of principle, the point we are discussing is something that is already well established under our social security law.

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There is a very important distinction between the jobseeker example and the case we are now discussing where there have been two previous convictions for benefit offences in the criminal court. I would be interested to hear the noble Lord's reaction to that point. I appreciate, without wishing to put the answer in his mouth, that he would say that those rules were also wrong in principle.

Lord Goodhart: I am grateful to the noble Lord, Lord Grabiner, for his intervention. I can see some grounds for distinction between JSA here and income support. In the case of income support, what you are getting is, by definition at this stage, what you are entitled to get, and that is reduced because of something you have done in the past.

The Minister suggested that a reduction in the household income from 191 a week to 170 a week is not a damaging reduction. I should like to say that for a family that is very much on the financial borderline, that kind of reduction, prolonged for even a period of 13 weeks, could still be devastating. I continue to believe that withdrawal of benefit in these circumstances, on the basis of "two strikes and you are out", is a deeply unsatisfactory form of punishment.

Baroness Hollis of Heigham: I do not suggest for a moment that withdrawal of 20 for a lone parent, with a couple of children, would not generate hardship; of course, it would generate a degree of hardship. Equally, depending on the psychology one uses to approach this matter, a lone person would know, in advance of her first offence, that if she gives false information she can be prosecuted; yet she has been prosecuted and found guilty and continues. Might it be that because it would generate hardship, she might, on reflection, be deterred from committing a second benefit offence? We are seeking to prevent the offence occurring rather than punishing people after the offence because they have taken the matter so lightly.

Lord Goodhart: The people who become involved in that kind of situation are very often inadequate people who cannot break their own cycle of misbehaviour.

Baroness Hollis of Heigham: We are talking about deliberate, knowing fraud.

Lord Goodhart: I understand that. This concerns people who lie because they believe it is the easy way out and an easy way in which to acquire more money. However, they are unable to see the long-term consequences. Of course, the hardship falls not just on them, but also on their children, for the reasons that I explained. That is why we believe that this is a deeply unsatisfactory form of penalty. Of course, it is not my intention to divide the Committee now. I shall consult my noble friend, and I suspect that we shall return to this matter on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 69 not moved.]

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6 p.m.

Lord Higgins moved Amendment No. 70:

    Page 11, line 27, at end insert--

("Likewise any third party either informed of the restriction or contacted as part of the investigatory process shall be notified of the quashing of the conviction.").

The noble Lord said: The amendment concerns a part of Clause 4 which is concerned with putting matters right if they have gone wrong. It suggests that if there has been a mistake, any,

    "payments and other adjustments shall be made as ... if no restriction had been imposed by or under this section that could not have been imposed if the conviction had not taken place".

We suggest that any third party who has been informed of the restriction or contacted as part of the investigatory process shall be notified that the conviction has been quashed. If something has gone wrong, we are anxious to ensure that the status quo shall be established. Clearly, in a number of cases there are problems, as was said earlier, not least in local government where the situation is not satisfactory. It seems to us that we should make provision to ensure that a situation of the kind that I have described is put right if it arises. I beg to move.

Baroness Hollis of Heigham: This amendment would require the department to inform any third party who had been contacted during the course of a fraud investigation that lead to a second conviction, or who had been notified of the imposition of a sanction, that the conviction had been subsequently quashed on appeal. The intention behind the clause is to ensure that any money deducted from a claimant's benefit, as a result of a fraud sanction, is repaid in the event of one of the convictions being squashed.

Lord Higgins: I think the noble Baroness means "quashed".

Baroness Hollis of Heigham: Yes. That comes from singing the previous night. Whenever we in the parliamentary choir sing the "Excelsis" in Faure's Requiem, our "s"s come in the wrong places. One can tell Members of your Lordships' House who sing in the choir by the fact that they have an obsession with where the letter "s" goes.

The intention behind the clause is to ensure that any money deducted from a claimant's benefit, as a result of fraud sanction, is repaid in the event of one of the convictions being quashed. That is only right and the same principle applies to other benefit sanctions.

It is not, and never has been, normal practice to inform third parties either of the result of an investigation in which they may have been involved, or to notify them if a sanction has been imposed. To do so may well be contrary to the principles of the 1998 Data Protection Act. That is not to say that such information will never be passed to third parties. There will, for example, be occasions when housing benefit has been sanctioned and the local authority needs to be notified that benefit should be repaid.

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Of course, we would tell a local authority in situations such as those, as we already do, so that is not needed on the face of the Bill. This amendment would not add anything to the Bill; it would impose additional burdens on the department and it may have serious implications under the Data Protection Act and Human Rights Act. In the light of that explanation I hope that the noble Lord will feel able to withdraw his amendment.

Lord Higgins: I do not understand why. Why is it contrary to the Data Protection Act or the Human Rights Act to tell those who have heard about it that a conviction has been quashed? I have difficulty in understanding why that affects the Human Rights Act. I can see that it may affect that Act the other way around, but I do not understand why there is a problem in relation to this amendment. It merely proposes that the department should ensure that the matter is put right if people take an adverse view of an individual for the wrong reasons.

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