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Mr. Field: I bring a certain amount of anger to the debate partly because of what some of my constituents have taught me: I am angry that they must work the system rather than work with the system and I am angry that others, who are not much better placed, must foot the bill. Any solution will take time, but the Government must make a commitment to prevent the spread of means testing. How they do that is important and it will cost money in the short term. The hon. Member for Billericay (Mrs. Gorman), who has left the Chamber, referred to the fact that the self-employed are much more effective in policing their organisations than are companies that belong to the state.
Mr. Nicholls: I understand what the hon. Gentleman says about means testing and I concede that means-testing benefits has implications for fraud. Does the hon. Gentleman agree that, as about 89 per cent. of contributors towards tax are basic rate taxpayers, if benefits are not means-tested, in many cases the working poor would pay non-means-tested benefits to people such as me and the hon. Gentleman, who do not need them? Whatever complications are inherent in means testing, although it is an imperfect instrument it is the only instrument for getting benefits to people who need them and not giving them in a blanket way to people such as the hon. Gentleman and me, who do not.
Mr. Field: I hope that we will hold a debate on wider-scale reform another time, when I can deploy arguments about how means testing--targeting in the way that the hon. Gentleman has just said--often fails to achieve the intended goal. One sees that most clearly with unemployment benefit.
There are increasing numbers of no-wage households with two, three or four wage earners. One reason is that once the senior partner--the main breadwinner--loses his job and then falls out of credit for unemployment benefit, it does not pay the wife to work because the benefit system pays the household more. A wife earning £100 a week when
income support and housing benefit offer £150 a week has to be of extraordinary courage and resolve not to choose to be £50 a week better off. Many of our constituents choose not to be better off in that way, but we cannot blame constituents who, acting like rational economic men and women, take the better deal.
Mr. Nicholls:
Does the hon. Gentleman agree--he is probably the only Opposition Member who would have the courage to admit this if he does--that he makes a powerful case for deciding that no one should ever be paid more on benefit than he or she would be capable of earning in the local job market if there were a job for a person of their skills? The hon. Gentleman is opening up a debate about whether we should reduce benefit so much that people with ordinary skills and talents are capable of earning more than they could ever get on benefit. That is a dangerous line of argument; it seems that the hon. Gentleman is going down that path.
Mr. Field:
No, I am not. I hope that we shall debate that subject before too long, but briefly, if we were to rebuild an insurance system for which one had to pay, the system should give incentives to people to take work, to take risks, to keep partners in work and so on. That would have a lower net cost, for them as contributors and generally for us as taxpayers, than the morass that we are in. Sadly, £1 of means-tested benefit helps generate the next £1 of means-tested benefit because it is so difficult, once one is on means-tested support, to disengage oneself and get off it, especially given what has happened to the bottom end of the job market.
Average wages for re-entry jobs are at or below a quarter of median earnings; they are £56 a week or less. It is difficult not to be better off on benefit when wages are so low. We need a benefit system that encourages people to take the risk that is often involved in accepting a job so that their wives and other family members can continue in work and the family is not brought down on to means-tested assistance, from which it is so difficult to escape.
The House will forgive me if I do not continue to argue that case. I hope that we have a chance to do so in future. In the second half of this brief contribution, I shall list the proposals that I should make if we had a Government who were serious about fraud.
First, the highest priority should be given to delivering to taxpayers a safe national insurance system. It was significant, was it not, that there was no mention of such a programme in the wonderful unveiling today of yet more measures to tackle fraud?
Secondly, there should be a determined attempt, from the Prime Minister downwards, to change the national culture from one that often turns a blind eye to fraud to one that opposes fraud, so that are not talking, as thehon. Member for South Dorset (Mr. Bruce) did earlier, about whether people should report people who were committing fraud; there would be no question about it.
Thirdly, there would be a Secretary of State whowas anxious to support his own fraud teams and--equally important--the local authority fraud teams in a way that enabled them to plan long term. Obviously there are difficulties because, if one gives things too easily to people, we well know that they will settle down to an easy life. I accept the stick-and-carrot approach that the Secretary of State has deployed for some time with local
authorities, but to attract high-quality staff, some of whom will risk their physical safety, it is important to offer contracts that extend beyond one year during which the Secretary of State will judge whether one's subsidy will continue or not.
Fourthly, if the Government were really serious about tackling fraud, maximum flexibility would be shown in the deployment of funds to counter fraud. The example cited earlier of the London initiative that was stopped by the Treasury would be the first and last example of that to be exchanged across the Dispatch Box.
Fifthly, to obtain widespread public support against fraud, we might use the savings made in tackling fraud to finance a better welfare state. Instead of announcing cuts, more cuts and yet more cuts, the Secretary of State would win the support of his colleagues to say, "I believe that the issue has been much underestimated. This is the sort of delivery that we believe we can make. We want to spend a fair share of that on improving welfare for the most vulnerable members of our community."
That brings me to my last suggestion. If we want voters to take the matter seriously, the Secretary of State should not only make announcements about new anti-fraud campaigns but place equal emphasis on the fact that the Department's second duty is to ensure that all those who are entitled to benefit gain the benefits to which, by law, they are entitled.
Mrs. Marion Roe (Broxbourne):
I welcome the opportunity to speak in this debate on social security fraud. I start by placing on record my congratulations to the Government on the initiatives that they have taken to combat bogus claims for benefit and on the new measures that my right hon. Friend the Secretary of State outlined earlier. My right hon. Friend reminded us that fraud, which cheats the needy and deprives of benefit those who have a genuine claim, also cheats the hard-pressed taxpayer, who must find the money to fund bogus claims.
I am pleased to say that Broxbourne borough council, which covers most of my constituency in Hertfordshire and serves a population of about 83,000 people, takes housing and council tax benefit fraud very seriously. Since the Government's action against fraud initiative was introduced in 1994, the council has set up an investigation and recovery section, which tackles the difficult task of fraud investigation and debt recovery. The section conducts inquiries and has a good working relationship with various agencies, such as the police, the Department of Social Security fraud inspectors and the Benefits Agency. The Government's scheme focuses on the savings to the public purse that follow from tackling fraud--a system of penalties and incentives to reward authorities that achieve target levels of savings, as set out by the Department of Social Security.
In the first 11 months of 1995-96, Broxbourne borough council identified weekly benefit savings of £381,324 against the target of £90,205. The council has earned £64,171 in cash bonuses, identified £76,835 of fraudulent overpayment and recovered £40,333 so far. It has also recovered seven council houses and flats that were bought fraudulently.
When the scheme was first established, there were suspicions that the work would become more difficult once the easy cases had been tackled, but that has not been the case--there is no shortage of work. Fraud is found in 52 per cent. of the cases that are referred to the council by the public or by the council's housing benefits administration contractor. The total case load so far this year is 456, or 4.3 per cent. of the total of 10,419 housing and council tax benefit claims.
The incentive to tackle benefit fraud is welcomed by everyone, but one must ask: if the scale of benefit fraud is so high in a small and mainly suburban area of the home counties, what is it in inner cities? Broxbourne borough council's work has uncovered a possible sub-culture of benefit abuse, including a number of cases of organised landlord fraud--which is difficult to prove.
The London boroughs fraud investigators group recently gave a presentation to the Conservative social security committee--of which I am chairman--and drew to our attention a number of concerns, one of which was organised housing benefit fraud. The income support rate for a single person is currently £45.70, but, in a large city such as London, many landlords charge a single person two or three times that amount because of the nature of the housing market, so housing benefit fraud can be much more lucrative than income support fraud.
It is claimed that organised housing benefit fraud is much more likely to be perpetrated by managing agents or landlords than by claimants. While some claimants perpetrate organised housing benefit fraud--and make or use forged documents to do so--landlords often need to collude to be successful. Managing agents and landlords have a ready-made base of addresses that they control or own from which to perpetrate the fraud. A minimum requirement is for housing benefit claims to be substantiated by means of proof of rent and tenancy, which would be signed by the landlord.
If further action is taken to verify the claim, the landlord might be asked to confirm the details that have been given. In addition, housing benefit can be paid direct to the landlord--indeed, some landlords insist on it. In such cases, landlords often control the claim: the forms are completed in the landlord's handwriting and give the landlord's authority to discuss the claim direct with the local authority benefits section and the landlord sends in the claim form and rings up the benefit section with queries about the claim. Most cases of organised housing benefit fraud involve claims where the benefit is paid direct to the landlord or to the managing agent. Landlords will insist that the person who is claiming is living at the stated address--they would, wouldn't they--because they would lose a considerable amount of housing benefits if they did not. When visits are made to check residency, there is often no reply--but that, in itself, may prove little. Those concerned could always be out, so repeated visits should be made at different times of the day and on different days of the week.
Often, landlords use false identities or seek out real tenants who speak or write very little English. There are several advantages to them in doing so--real tenants of that type are unlikely to be aware of their housing or benefit rights, there is an apparently good reason for the managing agent or landlord completing the benefit claim forms, the managing agent or landlord is better able to tell the tenant or the claimant what to do best to suit his financial advantage and the landlord can accuse anyone of racism if they seek to investigate the claim.I understand that that is frequently done.
The frauds are usually worked in two ways. First,a completely fictitious identity is set up--which is not too difficult if the type of identity chosen is of an asylum seeker or person from abroad. In this type of a case, it is difficult to prove beyond reasonable doubt that a person does not exist, so while it may be possible to cease a claim, it is harder to prosecute for fraud. The second way in which fraud is perpetrated initially involves real people. The managing agents move claimants on to another of their properties, often in another borough, so that the borough's computer will not show up two claims as soon as the claim is put into payment. They then ensure that a new claim is put in for the new address, while they knowingly continue to receive payments for the address the tenants have left. New real tenants will, in all likelihood, already be claiming from the first address.
Moneys obtained from benefit fraud are often used to fund mortgage fraud. Managing agents, only controlling other people's properties, seek to build themselves into property-owing landlords. This is a serious problem. It is serious financial crime--far different from the image of benefit fraud. For example, a managing agent who controls, say, 30 properties containing bedsits might be able to charge an average of £70 per week per bedsit, with four bedsits per property. The experience of investigators in London is that fraudulent managing agents will operate the fraud in between 35 and 50 per cent. of the properties that they control. That means that they will fraudulently obtain between £2,940 and £4,200 a week--and many control more than 30 properties. Practitioners estimate that, across London, as much as £40 million a year may be fraudulently obtained in that way.
London local authorities must face up to the problem and take appropriate steps to tackle it. I should mention, however, that the Labour party's proposals, which we heard this afternoon, are not original. I am aware that those working in the field, such as the London boroughs fraud investigators group, favour the creation of a specialist team of investigators who would mirror the Benefits Agency multiple claims team's work on organised income support fraud. An organised housing benefit fraud team in London could work alongside the multiple claims team, where appropriate, and link up with investigations into other types of fraud against local authorities in London via the London team against fraud.
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