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Baroness Hollis of Heigham: My understanding is that third parties may not know that a person has gone through the courts, that the matter has been officially upheld and that it has been quashed on appeal. All of that would be the divulging of information to third parties in terms of the circumstances, when they may not have known the original information. I am assured that that would involve a breach of the Data Protection Act as supervised by the Information Commissioner.

Lord Higgins: I am sorry to persist when the noble Baroness has been so helpful on other matters. Under the words of the amendment, the third parties have been informed of the restriction or have been contacted as part of the investigatory process in relation to the individual concerned so I do not believe that putting it right would be an infringement.

Baroness Hollis of Heigham: I was reading the amendment of the noble Lord which states:

The noble Lord is quite right about the first part of the amendment, but "contacted as part of the investigatory process" would mean that they would need to have been notified that the person had gone to court, that he had been convicted and that subsequently the conviction had been quashed, or they may have no such information. As I just said, that is my understanding of where we could run foul of the Data Protection Act.

Lord Higgins: I understand that the second part of the amendment may be faulty in that respect. If need be, we could deal with that on Report. But if a third party has been informed of a restriction--namely, that an individual has had her benefit restricted because she

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had been fraudulent twice--and to say to the person who was informed of the restriction that it was unjustified, seems to me to be reasonable.

Baroness Hollis of Heigham: Perhaps the noble Lord can help me. What body or person does he have in mind that would be informed on the first point, whereupon he would need further information in order for the first information not to stand, apart from local authorities? I have already made the position clear in relation to local authorities. They would be notified.

Lord Higgins: The main problem is with local authorities. If they are to be involved, that is fine. That is where I have concerns.

Baroness Hollis of Heigham: I am puzzled. About half of my reply related to local authorities. I am happy to restate what I said. There will be occasions, for example, when housing benefit has been sanctioned and the local authority needs to be notified that benefits should be repaid. Of course, in situations such as those, we shall tell a local authority. That is nothing new as we do that already as a matter of course if benefit has been suspended or withdrawn for any other reason. So that does not need to be put on the face of the Bill. It is custom and practice. I believed I had made that clear in my earlier remarks.

Lord Higgins: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 71 to 73 not moved.]

Lord Goodhart moved Amendment No. 74:

    Page 12, line 22, leave out from second ("references") to ("to") in line 24.

The noble Lord said: Amendment No. 74 seeks to rule out a case where a conditional discharge has been imposed as regards one of the two benefit offences for the purposes of Clause 6. It may be that it is not drafted entirely correctly because I suppose that it would extend to a case where a condition had not been satisfied because a second offence had been committed within the conditional period.

A conditional discharge is imposed for a relatively trivial offence or an offence in respect of which the court thinks it is not necessary or desirable to impose a sentence having an immediate effect, but the defendant is given a discharge contingent on not committing a further offence within a specified period. If that specified period elapses, the conditional discharge ceases as a form of punishment and the slate is wiped clean. It seems to me inappropriate that that should be one of the strikes for the purposes of the "two strikes and you are out" legislation.

Lord Astor of Hever: I rise to speak to Amendment No. 75, which makes it clear that if a person in Scotland receives an absolute discharge from the court or is placed on probation, he is not regarded as having

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been convicted. This amendment seeks to ensure, therefore, that for the purposes of this Bill a person placed on probation or granted an absolute discharge will not be treated as havingbeen convicted of a benefits offence. In Scotland, an absolute discharge or probation order does not in law amount to a previous conviction. It is necessary to make that distinction. If a court deems it appropriate to dispose of the case in that manner, it would not seem appropriate further to penalise the accused person by the deduction or removal of benefit.

Baroness Hollis of Heigham: I shall be extremely brief on both amendments, which relate to the question of what constitutes a conviction for the purposes of the loss of benefit provisions. In many respects, the type of sentence imposed by the court is not relevant to these provisions. What matters is whether or not the court has found a person guilty of benefit fraud, not what follows on from that. However, both amendments raise technical issues with regard to the question of sentencing which I should like further to consider and return to on Report. On the basis of that undertaking, I hope that the noble Lords will feel able to withdraw their amendments.

Lord Goodhart: In the light of the Minister's reply, which I welcome, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 75 not moved.]

On Question, Whether Clause 6 shall stand part of the Bill?

6.15 p.m.

Lord Goodhart: Most of what I had intended to say has already been said in relation to Amendments Nos. 68 and 69. However, there is a difference. By removing Clause 6 altogether from the Bill, one would achieve the objective of preventing the removal of benefits from being used in any circumstances as a punishment. Clause 6 therefore goes somewhat further than Amendments Nos. 68 and 69, which would reduce the level of punishment from 40 to 10 per cent.

I make it clear that the real objective of those on these Benches is to remove altogether the reduction in benefit as a penalty for previous convictions for benefit fraud. At Second Reading my noble friend Lord Russell said:

    "But in my scale of consequences, disentitlement is arguably a more severe punishment than imprisonment. I can see a strong case for imprisonment. But leaving people with no visible means of subsistence is something which the Minister knows, and has known for a long time, gives me profound misgivings".--[Official Report, 16/1/01; col. 1055.]

Baroness Hollis of Heigham: I thought at the time that it was very odd to suggest that prison is worse than receiving a 20 or 40 per cent reduction of benefit in terms of sums of 20 to 30 on an income of 200. It is incongruous to suggest that deducting up to 30 from 200 is worse than sending someone to prison,

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especially in cases in which children are involved. I am not sure that the noble Lord, Lord Goodhart, really believes that. I invite him to say whether he identifies with his noble friend's statement.

Lord Goodhart: A reduction in benefit could in some circumstances be a worse penalty for other members of the family. I can understand that generally for a fraudster it would not be. For other members of the family, depending on the family circumstances, it could be. Therefore, I am not prepared to disassociate myself from my noble friend on that particular issue.

Our view is that Clause 6 should not stand part of the Bill. We do not raise this objection as merely a peg on which to hang a debate. We genuinely believe that Clause 6 should not stand part. I shall not force the question to a Division today, but we may return on Report with an amendment to omit Clause 6.

Baroness Hollis of Heigham: I understand that the noble Lord's argument is based on family budget unit material and the like, and I accept that that is a powerful argument. I am anxious not to concentrate too much on the distinction between hard and soft and the weight to be attached to that distinction. However, to assist the Committee's understanding of our proposal, I should like to read into the record one or two examples of benefit fraud.

One claimant in receipt of incapacity benefit was found to be working as a disc jockey. He had fraudulently claimed a total of almost 9,000 before being caught and successfully prosecuted. Within weeks of being sentenced, he was found to be working while again in receipt of benefit. He was again successfully prosecuted, but not before he had run up a further overpayment of 500.

Another claimant was prosecuted when he was found to be working while claiming income support. He was convicted and received a conditional discharge for one year. Fifteen months later, he was again successfully prosecuted for stealing a relative's child benefit giro cheques. That still did not stop him. Within two years he again appeared in court for attempting to obtain the jobseeker's allowance, to which he was not entitled.

Another claimant was prosecuted and convicted for two offences of girocheque fraud. Some months later, he was prosecuted a second time for similar offences. That was not the end of the matter. He was later successfully prosecuted a third time for working while in receipt of incapacity benefit. On that occasion he had amassed an overpayment of almost 1,000.

There are many more examples of others who have not slipped into the system by error. The examples that I have given involved the commission of deliberate, repeated fraud. The public cannot have faith in a social security system that provides money to people who deliberately, wilfully and persistently defraud that system. I believe that that would bring the system into disrepute. The benefit sanctions proposed are appropriate to the level of fraud that we are discussing. As a result, I hope that the noble Lord will allow this clause to stand part of the Bill.

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Clause 6 agreed to.

Clauses 7 and 8 agreed to.

Clause 9 [Powers to supplement and mitigate loss of benefit provisions]:

[Amendment No. 76 not moved.]

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