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Earl Russell: I hope that the Committee will forgive me for taking up one more point made by the noble Lord, Lord Grabiner, but if I do not take it up now I shall certainly have to take it up afterwards.
The noble Lord attempted to put on all fours the authorisation by a magistrate and judicial review. But there is a significant difference in that one of them happens before the event and the other happens after the event. Very often by the time information gets into the public domain the damage is already done and any attempt to restore it is too late.
The Data Protection Commissioner mentioned the possibility of bribery. Let me suggest a possible case. It is not likely, but I am sure that the noble Lord will not say that it is impossible. Let us imagine a newspaper, in collusion with an investigating officer whom it has paid, wanting to look at the bank account of a Minister and to discover where he spent a specific night. It finds that he spent the night in a double room at a time when his wife was certainly elsewhere. That would be of considerable interest to the newspaper. It would spread widely around the media and cause a great deal of comment. In such a case judicial review after the event would be otiose and I would be surprised if the Minister resorted to it.
Lord Grabiner: First, the example is a "homely" one. But what was absent was the existence of another party in the double room. By itself it would be entirely innocuous information. But that is beside the point and not much to do with social security fraud.
The noble Earl talks about the information being available at large, but that is not the case. We are dealing with information which will be known, on the examples with which we are concerned, to the investigating officer and to the magistrate to whom the matter has been presented, or simply to the investigating officer alone. If the noble Earl is talking of circumstances where, improperly and through bribery and corruption, the individual investigating officer transfers that information to a third party, with the greatest respect I must point out that this amendment will not help in the slightest. The information will be bribed out of the investigating officer and passed on to a third party and nobody will go anywhere near a magistrates' court. If that is the
Lord Grabiner: As I understand the proposed amendment, the individual seeking to obtain the order has to satisfy the magistrate that he has reasonable grounds for wanting the order. So ex hypothesi he must have the information before he goes to the magistrate. He cannot go to the magistrate with a blank piece of paper. He must say, "These are the facts of the case. I reasonably believe that an offence has been committed by this individual and would like access to", whatever it may be. But he cannot do that unless he has the information to enable him to make the application in order to exercise the powers. That is the point.
In this example, the individual would have the information. He would not need to go to the magistrate in order to exercise the power but, in return for payment, he would sell it to a third party. I believe that was the example posited.
Baroness Noakes: Perhaps I may take the noble Lord, Lord Grabiner, back to an earlier remark he made on the importance of the training and experience of the individuals within the Department of Social Security, or other authorities, exercising these judgments. With respect, that is perhaps a little of a red herring because all public servants engaged in carrying out such activities should first have proper training in them, whatever their level, whether they are making decisions and exercising powers under the clauses of this Bill or undertaking more commonplace activities.
Following on from that, in the light of the noble Lord's great experience and my lack of knowledge, can he say whether he is aware of any precedent of officials having similar powers to ask for information? There are many existing precedents where other authorities--for example, the Commissioners of Inland Revenue--are asked for decisions before those powers are taken.
These amendments seek to require DSS and local authority authorised officers to obtain an order from a magistrates' court, or a magistrate, in order to obtain any information from the organisations listed in new Section 109B(2A). I take this issue seriously and will try to give a careful reply. It is clearly a matter of concern to Members of the Committee. When people claim benefit they know that they are required to tell the truth. We shall make it clear that what we are told may be checked with third parties. If a person tells a lie
I want to make three points. First--this point was made by my noble friend Lord Grabiner--if the DSS and local authorities had to obtain a court order every time they wanted to check the information provided by a claimant, it would significantly hamper their investigations. The process would certainly take too long to enable us to check information before we pay claimants. That would mean that we would have to let fraud into the system that could have been prevented. It will lead to serious delays in which relevant information could vanish and financial matters be re-arranged. We would be asking magistrates to judge not whether a fraud had been committed but whether there was sufficient evidence to collect further evidence to establish that a fraud has been committed. The delays could be huge.
Perhaps I may give an example of a simple case. Someone moves to a university town and claims housing benefit. We suspect that that person is a student, but we do not know. Therefore, under the amendment we need to seek an order from a magistrate to enquire of UCAS, the university admission system. We then find that he is also claiming housing benefit at his local address. We check his address and find that it is in Norwich and that there he is an owner/occupier.
In the course of that simple investigation, we need to go to UCAS, because he is a student. We then find that he is claiming housing benefit and need to check that with his landlord. We then need to go back to Norwich, where he is also claiming benefit and where we find that he is an owner/occupier. That would involve four visits to magistrates to process one simple case.
Let us complicate the case and suppose that the claimant has now left Norwich, has moved to Cambridge to be a student and is subletting the house in Norwich to somebody who is also fiddling the benefits system. That would add another two or four visits to magistrates. It would require perhaps eight visits to magistrates for one pretty simple case. We cannot work the system like that. Perfectly properly, the noble Lord pressed my noble friend on how far we could go. However, we cannot neglect this point.
We estimate that we should have to make around 900,000 inquiries per year of the private and public sectors. That would require 3,500 applications to magistrates every working day compared to the police average of around 270, which would be 15 times as many. The increase in workload would be significant. Magistrates have a caseload of about 4 million cases per year. The proposal would add an extra 25 per cent to the caseload of a single magistrate. Inevitably there would be delays in dealing with real cases on the streets of young thugs and so forth, about which we are all rightly concerned. All the cases we investigate are potential frauds. Only 6 per cent of offences recorded by police in March 2000 were fraud or forgery offences. My first point, therefore, is that the amendment would create serious delays.
My second point is that there would be a serious impact on the magistracy to deliver law and order in other areas of its work. My third point, which is a direct response I made to the noble Baroness, is that we do not seek exceptional powers. It is not true that other state bodies can obtain access to a person's bank details only after obtaining a court order. Other government departments have a huge range of powers. I could discuss, for example, Customs and Excise, the Inland Revenue or the DTI. However, I shall take an example which is somewhat closer to the DSS in style; that is the Financial Services Authority and the powers given to it by the Financial Services and Markets Act 2000. That was a general power to require information or documents which may reasonably be required in connection with the discharge of its functions under the Act. The FSA can write to a person asking for the production of information or documents within a reasonable time-scale or it can send an officer to whom it has given written authorisation. That person is required to provide that information or documents without delay and may also be required to take any reasonable steps the authority may specify to verify the information provided.
I chose that example out of 20 I could give because the businesses concerned include banks, building societies, insurance companies, friendly societies, credit unions, Lloyds--I do not know why we have left that out of the DSS--investments and pension advisers, stockbrokers, professional firms, fund managers and derivatives traders. I could produce similar examples, though possibly not as full, of all other government bodies seeking similar powers without first needing to acquire judicial authorisation.
The noble Lord, Lord Goodhart, mentioned the police. He tried to suggest that we are asking for DSS investigators to enjoy greater powers than the police. That misses the point. The police need different powers because they are doing a different job. They have greater powers, certainly, than DSS investigators. They can arrest people on suspicion of committing an offence. With a warrant they can force entry to premises and carry out searches. They can remove goods that appear to be material evidence. DSS investigators do none of that. We have no plans to seek powers for them to be allowed to do so.
The noble Earl, Lord Russell, asked which I thought was the lesser evil. At the end of the day, benefit fraud costs between £2 billion and £4 billion each year. In comparison, credit, debit and charge card fraud losses in 1999 were less than £0.2 billion. The gross loss of cash in transit from armed robbery in 1999 was less than £0.01 billion compared to our £2 billion to £4 billion. Losses of theft and antiques is estimated at £ 1/3 billion to £½ billion per year, and approximately £0.0035 billion worth of counterfeit currency was removed from circulation in 1999.
At Second Reading I mentioned the assessment of benefit fraud by the National Criminal Intelligence Service. That organisation carried out an impact analysis in which it registered benefit fraud as high in the list of high-impact crimes and alongside drug trafficking, intellectual property theft and revenue
I seek to persuade the Committee that the powers we seek are in no way out of the ordinary. They are exercised by other bodies, both government bodies and the Financial Services Authority. To follow the path of the amendment would mean unacceptable delays, with perhaps three, five or 10 visits to the magistracy to collect information before we could prosecute one simple case. The implications for the capacity of the magistracy to deal with other areas of street theft and the like would be seriously impaired.
As my noble friend stated, these powers would not be exercised by anyone. Information will not be "floating around at large". There will be strong safeguards for the use of the powers. Only a handful of staff in each of the 13 areas of the DSS would be authorised to use the powers. They would be able to do so only within the terms of the code of practice, which we shall discuss later. All the staff would be thoroughly trained. Their use of the powers would be checked by senior managers, including their access to electronic information. If they misuse that power, disciplinary proceedings, including dismissal, would follow. As was said at Second Reading, there is the additional protection of the Data Protection Act and the Computer Misuse Act and the like.
We need the powers to assemble the information to establish a case to bring before the courts. We have to go to the courts to get the powers to seek to establish the information. That is, above all, post hoc propter hoc, in which we must already have the information we seek in order to prove the case. That would seriously fetter us. It would produce delays and burdens upon the courts. Above all, we would be asked to produce to the magistracy the evidence we seek to establish. That would make it difficult to eradicate the fraud from the system, which all of us want.
Finally, the powers will be exercised by those who have been professionally trained, and who will be properly supervised, and by a narrow, select group of relatively senior officials. I hope I have persuaded the noble Earl, Lord Russell, that the powers will be exercised properly with discretion. Without those powers, swathes of fraud, of which we may have high suspicion, will go unchecked and unpunished to the cost of us all and to the defrauding of our welfare state.
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