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Mr. Willetts: My hon. Friend is right. As I was listening to the Secretary of State, I recalled the definition of absurdity as using a great force to lift a light object. I am afraid that that is what we heard from the Secretary of State. I shall come to my hon. Friend's point about local government shortly, but the mixed record of local authorities in tackling welfare fraud is another scandal that the Bill does far too little to address.

The problem of tax credits was outlined very well by the right hon. Member for Birkenhead (Mr. Field) in a speech just under a year ago to a forum on fraud organised

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by the credit industry fraud avoidance system. I hope that he will correct me if I am wrong, but the press release that was issued on that occasion said:

"The Inland Revenue have indicated to the Social Security Select Committee that the security arrangements are similar to those for the WFTC's predecessor Family Credit. The Benefit Review of fraud in Family Credit was cancelled following Frank Field's departure from office. There is particular concern over fraud involving nursery schools and collusion with employers over wages."

That is the account of the points that the right hon. Gentleman made last year, and I wholeheartedly agree with him. Given the evidence of fraud in tax credits, their deliberate and explicit omission from clause 7(8) of the current Bill is a serious matter that should be addressed.

There are other reasons why the Government have not been able to tackle fraud as effectively as we would have liked. It is not just that they have been a soft touch when it comes to tax credits. For example, I was struck by the evidence of the way in which the new deal has diverted people's efforts away from effectively tackling fraud. The 32nd report of the Public Accounts Committee, which was published last July, stated:

"As regards Jobseeker's Allowance, Mr. Mathison noted that the main contributory factor"--

to the level of fraud and error--

"had been the impact of the New Deal and various other Welfare to Work initiatives, involving the Employment Service. Experienced staff had been diverted on to these projects, leaving new and inexperienced people to deal with the administration of Jobseeker's Allowance."

That was Mr. Mathison's explanation of the unacceptable level of error and fraud in the system. The Government will not be able to get away with some of the claims that we have just heard from the Secretary of State, given that their own officials have said that the new deal has diverted people away from effectively and accurately delivering benefits to unemployed people.

What we have had from the Government--typically, of course--is a large number of press releases and a large amount of expensive advertising. We have counted 45 separate press releases during their period in office. They have averaged about one a month, and all have claimed that the Government are taking bold new initiatives to tackle fraud, whereas, in practice, they have done precious little about it.

The current advertising campaign has been received with widespread bafflement. I do not know how many millions of pounds the Government are paying for the press and television advertisements, but let us consider the effect of saying:

"'It's only a few quid, who notices that?' Do you find this acceptable?"

It is extremely doubtful whether such remarks, together with the many quotes apparently justifying welfare fraud, are having any effect in putting people off committing welfare fraud.

Unlike the advertisements that were produced when my right hon. Friend the Member for Hitchin and Harpenden was Secretary of State, these advertisements do not provide a telephone number that people can contact to shop a benefit cheat. They offer no means by which people can act. There is simply the slogan "Targeting Fraud", with no suggestion of the practical action that can be taken.

Mr. Webb: It is a post-modern advertisement.

Mr. Willetts: It will certainly soon be post-Labour.

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We know from evaluation of trials in the north-west that that approach was ineffective, but Ministers continued to spend all that money on the advertisements. The Secretary of State placed the evaluation report in the Library in response to a question that I tabled, and I appreciate that. The report states:

"One negative impact that may be the result of the campaign was that respondents within the test area perceived benefit fraud as easier to commit."

It was hardly a brilliantly successful anti-fraud advertising campaign. In fact, rather ruefully, the report added:

"However, it is difficult to make people aware that benefit fraud is widespread without increasing their perception of how easy it is to commit at the same time"

The following page of the report continued:

"In terms of likelihood of reporting someone via the NBFH"--

that is the hotline--

"results in the test area do not really show much difference to the country as a whole--demonstrating once again how entrenched opinions are on this topic."

The evaluation showed that, in the north-west, one of the effects of the advertisements was to make people think that benefit fraud was easier to get away with. There was no evidence whatever of an increase in the number of people reporting fraudsters to the hotline. None the less, despite the evidence from the north-west that the pilots were not getting the message across, Ministers went ahead with spending millions of pounds on a national advertising campaign. That is why the Department of Social Security's advertising budget is spinning out of control.

We see another example of the way in which spin has gone ahead of substance when we investigate the "two strikes and you're out" policy. The policy gets headlines for the Secretary of State, but how many people will be penalised by it? I tabled a parliamentary question simply to establish how many people had been successfully prosecuted twice for welfare fraud. The fact is that not many people are prosecuted successfully once. The figure is about 10,000 a year. The Minister of State replied:

"Our research suggests that approximately 5 per cent. of prosecutions involve a person with a previous conviction for benefit fraud."

According to the Minister's figures, about 500 people are second-time offenders. That is 500 too many, and of course we must be tough on them, but it is rather surprising that Ministers make such play of that provision and give it such a high profile when, as the Minister of State went on to say, they are

"putting in place mechanisms to identify second and further convictions."---[Official Report, 10 January 2001; Vol. 360, c. 576W.]

The Government did not even have the evidence on the number of people who had twice been successfully prosecuted for welfare fraud before they decided on the policy. Their estimate that there are perhaps 500 such people does not justify all the hype and headlines.

What more could be done? One of several possibilities is to implement the Scampion report on organised benefit fraud. I very much regret the way in which the Secretary of State smuggled out that report last January, and he has still not implemented all its recommendations. It is not simply a matter of setting up a single national agency, although that is one of Scampion's proposals that we have endorsed but the Secretary of State has not implemented.

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The underlying point in the report is that the problem is not merely an absence of legal powers. Indeed, it is doubtful to what extent it is a legal problem at all. It is an organisational problem, and a point about Ministers' commitment to tackling fraud. Passing laws or changing legal powers is the easy bit. The difficult bit is changing the culture of an organisation so that there is genuinely effective work on fraud.

We were all shocked when, on 23 January 2000, after his departure from the Government, the former Minister for Welfare Reform, the right hon. Member for Birkenhead said:

"My first big shock in Government was the realisation of the political reluctance to bear down on the welfare cheats."

Political will and organisational discipline are at least as important as legal powers.

Mr. Darling: The hon. Gentleman will accept that the last time that he launched into this theme, in The Times, John Scampion was quoted as saying that he was quite happy with what we were doing and that it in no way undermined what he was doing. Can the hon. Gentleman tell me how setting up a national organised benefits squad would save £1 billion in itself, as the shadow Chancellor keeps claiming?

Mr. Willetts: That is one of the measures that we would take, which together would ensure that we saved £1 billion. Tackling organised benefit fraud, which is a significant part of the problem, through the measures identified in the Scampion report would make a significant contribution to that target, but that is not all that we would do.

Mr. Darling: How does the hon. Gentleman know that he would save £1 billion, given that the Conservative Government did not do so in 18 years? He must know that the shadow Chancellor has already spent the money over and over, so he must know that he has it.

Mr. Willetts: The Secretary of State and his colleagues have said that they estimate that there is £7 billion of welfare fraud. In the manifesto on which he fought the last election, he even said that there was £2 billion of housing benefit fraud alone. [Interruption.] It is no good the Under-Secretary of State for Social Security, the hon. Member for Wallasey (Angela Eagle), saying that there is £2 billion of fraud in total. Four years ago, she fought the election on the manifesto claim that there was £2 billion of housing benefit fraud alone, and I presume that she does not think that there is zero fraud everywhere else in the social security system.

If there is £7 billion of social security fraud, we believe that we can take measures that will, between them, ensure that an extra seventh of that sum--£1 billion--can be saved. One of the ways of doing that is to tackle organised welfare fraud by fully implementing the proposals in the Scampion report. That is not merely a question of legal powers, although as I said at the beginning of my speech, the Bill is a useful step forward in that respect. It is a question of tackling organisational matters and bringing together the disparate responsibilities in different parts of the Department.

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