Social Security Fraud Bill [Lords]

Public Bill Committee, 5 April 2001.

Standing Committee A

Clause 2 - Electronic access to information

Peter Atkinson (Conservative, Hexham)

I beg to move amendment No. 26, in page 5, line 18, leave out

`that a person is required to enter into'

and insert

`entered into with a person'.

John Maxton (Labour, Glasgow Cathcart)

With this it will be convenient to take the following amendments: No. 28, in page 5, line 46, leave out from `may' to end of line 48 and insert

`enter into arrangements with that person under which authorised officers may obtain by electronic access to those records the information which they could have requested by a notice issued in accordance with section 109B(1)'.

No. 30, in page 6, line 12, leave out

`that a person is required to enter into'

and insert

`entered into with a person'.

Peter Atkinson (Conservative, Hexham)

We need not greatly trouble you or the Committee with the amendments, Mr. Maxton, as we covered their flavour in a previous sitting. They relate to a point that we made about the language in the Bill and whether people will be forced to provide information in ways that might be difficult or costly. The Minister of State gave us considerable assurances on Tuesday.

The amendments, especially Nos. 26 and 30, would moderate the language of the Bill. The clause ``requires'', and we want to soften that to introduce more of a joint agreement between the provider of the information and the Department of Social Security, rather than a forcing or requiring. We are asking for more gentle language—``enter into'' rather than ``required''.

Angela Eagle (Labour, Wallasey)

The hon. Member for Hexham (Mr. Atkinson) is right to point out the similarities between the debate that would in normal circumstances be triggered by the amendments and the debate that we had earlier in the week. He suggests that he was reassured by the undertaking and clarifications that my right hon. Friend the Minister of State gave the Committee when we considered the equivalent amendments to clause 1. The same applies to the amendments to clause 2, which also deals with providing information, but electronically.

The hon. Gentleman is attempting to introduce gentler language, as he describes it. Although the effect of the amendments, taken together, would be gentler, they would also make the provision of electronic information voluntary for organisations holding it, rather than a requirement, as the Bill provides.

As my right hon. Friend the Minister of State said, we shall not make unreasonable requests or put unreasonable requirements on organisations. Nor shall we expect them to provide electronic information to us if they do not provide it to others or require them to set up electronic databases for our convenience. That is outwith the scope of our intention.

Electronic information gathering is quicker, cheaper and often more efficient for those who provide the information, as well as for us. It is cheaper by a factor of 10 to one, and it is often less burdensome for providers, too. I hope that the hon. Gentleman accepts the assurances that my right hon. Friend the Minister of State gave and, despite having raised the matter, appreciates the point of our requiring electronic information, if it is available, to be given. As we have explained to the Committee, we shall not make unreasonable or overly costly requirements of electronic providers. With those assurances, I hope that he will withdraw the amendment.

Peter Atkinson (Conservative, Hexham)

We were pleased to receive assurances on Tuesday, and those who expressed anxiety will be able to read the record and the Under-Secretary's comments. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Peter Atkinson (Conservative, Hexham)

I beg to move amendment No. 27, in page 5, line 28, at end insert `; and

(e) such arrangements as are necessary to provide that person with a report upon the investigation should they either be incidental to the investigation in process or, if the subject of that investigation, found to be innocent of any wrongdoing'.

The amendment pursues a similar line to amendment No. 26. We are trying to change the balance in the Bill in favour of the information provider. As drafted, the Secretary of State can demand access to information under a system established by the Bill that may not suit the provider of that information. The amendment seeks to place a safeguard in the Bill to ensure that all investigations are policed properly and can be held up to scrutiny by those who find themselves subject to the information-obtaining powers. It provides a safety net for investigating officers and benefit claimants.

Liberty picked up on the problem during the consultation process, and is anxious that complete records should be kept on the use of the information-obtaining powers, by the investigators and the people and organisations from which information is required. We are seeking assurance on that matter.

Angela Eagle (Labour, Wallasey)

I hope that I will be able to reassure the hon. Gentleman about the safeguards that are in place to ensure that there is a proper audit trail, monitoring and effective policing of the investigatory powers in the Bill. As my right hon. Friend the Minister rightly said, the powers are modest in nature and, although new, are bound by strict rules. We examined proposed new subsection (2C) in clause 1 and discussed it in detail in our previous sitting.

The amendment seeks to ensure that innocent parties about whom information is required as part of an investigation receive a report of that investigation, and know that information about them has been obtained. The amendment is unnecessary because, as we said in our previous sitting, we will ensure that benefit claimants know that they may be subject to investigatory powers—benefit claim forms will make it clear to claimants that information that they provide may be checked with third parties. We will not use the powers before we have tabled a code of practice, a draft of which has been produced. Once the legislation has reached the statute book, the code of practice will be available to anyone who wishes to know more about our ability to obtain information.

I am arguing that the safeguards sought in the amendment already exist in law, and do not need to be replicated by a specific amendment to the Bill. First, the knowledge will be included on all claim forms. Secondly, the Data Protection Act 1998 already provides for individuals to find out about the information held on them, regardless of whether they are guilty, innocent, or however the hon. Gentleman wishes to categorise them. Individuals are free at any time to ask organisations—including the DSS—what data are held on them, and the organisation must provide that information unless that would jeopardise an investigation.

We also believe that the hon. Gentleman should consider the number of investigations—DSS and local authority investigators conduct more than 1 million each year. The amendment would make it incumbent upon us to provide information to anyone who may have been an innocent bystander in an investigation, which is a cumbersome way of achieving what is already a protection under the Data Protection Act. It would also be a hugely expensive and impractical way of providing the reassurances that we are already expected in law to provide.

I hope that, with those reassurances about our duties under existing statutes and our willingness to provide information to people who request it, the hon. Gentleman will withdraw his amendment.

Peter Atkinson (Conservative, Hexham)

I am grateful to the Minister for explaining our amendment, which is always helpful. I am reassured by the Minister's comments and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Jacqui Lait (Conservative, Beckenham)

I beg to move amendment No. 35, in page 7, line 2, after `refuses', insert `without reasonable grounds'.

The amendment is yet another attempt to ensure that protection is given—this time to the external agencies that may be required to provide information during an investigation that is carried out according to the Bill's provisions. We would like the Government to include the words ``without reasonable grounds'' in reference to an organisation's refusal to comply with a requirement to provide information because many organisations, as the Minister knows, have expressed worries about some demands that the Bill may place on them. We have discussed the number of inquiries, and implications on staffing and resources.

British Telecom has commented:

``It is . . . difficult to estimate the potential operational, cost and resource impact on any organisation asked to supply information under this proposed legislation, although it could well be significant, particularly if the organisation in question has a large and diverse national customer base.''

Most organisations that will be required to provide information have such a base and will have to put a mechanism in place to manage the supply of information to ensure appropriate validation, and that quality, compliance and management checks are in place. That would have direct monetary and resource implications.

Orange made the same point in an e-mail to me.

Steve Webb (Liberal Democrat, Northavon)

A text message?

Jacqui Lait (Conservative, Beckenham)

No, an e-mail. Orange does not send text messages to me. I would probably not be able to read them, so I am glad that it uses proper English.

Orange pointed out that information would be required within 10 days, which is a tight time constraint, and envisages that it would cost between £205,000 and £300,000 to upgrade a remote system to deal with information requests. Therefore, significant costs would be incurred in complying with demands and, although I plan to raise the matter of costs in a later amendment, I ask the Minister of State to reassure us that no demands will be made without reasonable grounds. Does he not think that an amendment such as this would be helpful to safeguard the Benefits Agency, local authorities and the DSS, as well as helping outside organisations that may face extensive costs and large demands on their time and management energy?

Jeff Rooker (Labour, Birmingham, Perry Barr)

I hope and believe that I may reassure the hon. Lady on the matter without accepting the amendment. It is almost axiomatic that we would not act unreasonably. [Interruption.] Well, the Government have a duty to act reasonably in all cases and if we do not, my learned friends will be informed of the matter, perhaps by outside bodies. Local authorities are also under a duty to act reasonably, as is the Secretary of State, wherever there is a power of discretion. That principle is well established and would apply to the provision.

Paragraph 4.6 of the ``Draft Code of Practice on Obtaining Information'' states:

``If a reasonable excuse for not providing the information has been given, the Authorised Officer must not insist on obtaining the information.''

That is unambiguous, and examples of industrial action or a computer breakdown are given. We have already said that organisations will not have to set up new software and information systems simply to meet the Bill's demands. Powers are limited to organisations that already provide third parties with electronic access to records. In those circumstances, I cannot see how it would be unreasonable to make a request. If the request were unreasonable, because it transgressed the code of practice and the legal rules that usually apply to the Government, it would be stopped, as the threat of judicial review would be hanging over Departments, which they do not enjoy because it brings them into disrepute and costs money.

Jacqui Lait (Conservative, Beckenham)

I welcome the Minister's reassurances, and I hope that he can also reassure BT and Orange that they will not have to invest in upgrading their systems to meet the demands. Therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.

Clause 3 - Code of practice about use of information powers

Jacqui Lait (Conservative, Beckenham)

I beg to move amendment No. 39, in page 7, line 10, after `shall', insert `by order'.

John Maxton (Labour, Glasgow Cathcart)

With this we may discuss amendment No. 40, in page 7, line 26, leave out subsection (4) and insert—

`(4) An order under this paragraph shall be made by statutory instrument and shall not be made unless a draft has been laid before and approved by each House of Parliament'.

Jacqui Lait (Conservative, Beckenham)

Once the code of practice is agreed, all proposed changes to it should be debated under the affirmative resolution procedure in the House of Commons, and subsequent changes should also fall under that procedure. The debate would be brief if the Under-Secretary were to nod her head in agreement to that. We have tabled the amendment because the Bill is not clear about the matter.

The code of practice is crucial, as it addresses contentious matters that could lead to litigation—although I do not wish to imply that Ministers have given reassurances in bad faith. The Minister of State referred to learned friends, and it is important to be aware that many brilliant minds are devoted to generating court cases from such matters. As the details of the code of practice are controversial, the House of Commons should debate any proposed changes to it under the affirmative procedure. Amendments to it could result from court proceedings, although I would prefer them to develop due to custom and practice, as systems are improved and problems are overcome.

Liberty and organisations that usually disagree with its point of view have expressed similar opinions about the Bill and the code of practice. That highlights why it is important that both Houses of Parliament should be able easily to debate them. I hope that the consultation on the code of practice will continue, as there have been oversights. For instance, with regard to the gathering of information, the problem of fishing expeditions arose. Efforts have been made to address that. In relation to the utility industries, the wording of the House of Commons draft code of practice is less open to fishing expeditions than was the wording of the House of Lords version. Chapter 2.3.e of the Commons code of practice, refers to

``Customer details from a utility company''.

However, on page 18, chapter 4.33.c mentions

``Utilities where we are obtaining bulk information'',

and ``bulk information'' allows for the kind of fishing expedition that worries me.

Angela Eagle (Labour, Wallasey)

We dealt with this matter in passing in previous Committee sittings. The bulk exchange of information with utility companies is based on addresses, not individuals. As my right hon. Friend the Minister of State said, the intention is to look for evidence of abnormally low or high use of utilities' services. It is a search not on individual names but on addresses. When we have searched for them in that bulk manner, it will be up to the DSS to check names with addresses to check whether properties are being used as giro drops, or for another purpose. The Committee should know that the measure about searching for information does not imply a bulk exchange of names and addresses.

Jacqui Lait (Conservative, Beckenham)

I absolutely accept the assurances that the utilities will provide addresses rather than names. However, it is possible to match names and addresses simply by looking at the land register or the electoral register, which may be done by computer. Although fishing expeditions are officially frowned on, they remain possible under the code of practice and, owing to concerns about that point, we are keen that the House should debate the code of practice when it is finally agreed. We will discuss another group of amendments about the seniority of the authorised officers. That is another issue that will need to be resolved before the code of practice is published in its final form.

We shall want an affirmative resolution debate on the code of practice to ensure that all the issues that we have raised in Committee, on Report and Third Reading have been legitimately agreed to. The Government have been generous in amending the Bill to allow such a debate in the Lords. The easiest and most generous way in which they could deal with the matter would be to allow an affirmative resolution debate on the code of practice and any subsequent amendments.

Peter Atkinson (Conservative, Hexham)

I seek from the Minister an illustration of how the bulk transfers of information would work. She referred to utility companies; does the DSS propose to hit whole cities and have a vast amount of information transferred on a regular basis? Is that something that could involve several utility companies providing power in a particular place, or does it work on individual addresses or streets, like a TV Licensing operation?

Angela Eagle (Labour, Wallasey)

Amendments Nos. 39 and 40 would make the draft code of practice subject to affirmative parliamentary approval before it could come into force. This is a familiar debate. I must tell the hon. Member for Beckenham (Mrs. Lait), however, that the affirmative parliamentary procedure would not necessarily prevent court action from being taken. I am not sure that the lawyers who watch such matters closely would necessarily regard an affirmative parliamentary debate as a reason why they should not try their hand in the courts, but time will tell.

When we were asked to provide a statutory code of practice in the other place, we moved our position considerably in response, as the hon. Lady generously acknowledged. We produced the draft code and are already, in an informal way, consulting on that. If Parliament decides to enact the Bill, we shall hold a formal consultation, which we anticipate will take three months, on the contents of the draft code.

Clause 3 states that the code

``shall be admissible in evidence in any civil or criminal proceedings.''

That is an important provision, which gives the code a lot of clout. Under the clause, the Secretary of State is required to consult on the draft code of practice and revisions to it. He must consider all representations made to him on the draft, from all interested parties. We want to create a reasonable and workable code. The code is intended not to be draconian but to present more detail than can be provided sensibly in primary or secondary legislation about how the provisions work. It also provides, as do many other codes of practice, the day-to-day detail that enables citizens and the organisations or authorities involved to know in more detail what will be required of them, when it will be required, and how it will be required.

The opportunities to comment on the information-gathering provisions and how they will be operated are already substantial. An affirmative procedure, which creates inflexibilities of its own, would not add to that. Many other codes of practice are laid before the House under the negative procedure. That does not prevent Parliament commenting on or debating such codes of practice. If Parliament wants to debate a draft code of practice, parliamentary time can be made available in a variety of ways. I am not saying that there should not be parliamentary debate on such matters. The code, and the provisions in the Bill on the consultation and agreement that must be sought before the powers can be commenced, are adequate and substantial.

I shall give the hon. Member for Beckenham a couple of examples of codes of practice that have been laid before the House in the same way. Neither the code that accompanies the Terrorism Act 2000 nor the code that accompanies the Immigration and Asylum Act 1999 requires Parliament to approve them using the affirmative procedure, although there is provision for consultation in relation to both. I ask the hon. Lady to accept that that is adequate. I am not sure whether she will do so; we shall find out in a minute.

I want to comment on a couple of the hon. Lady's observations on the code of practice, which may be helpful to the Committee. Her first example, which is from page 6 of the code, was about what types of information will be requested. That refers to clause 1, which deals with information and how it will be requested. Her second example, which is on page 18 of the code, refers to clause 4 on payment for information. The hon. Lady is not comparing like with like. Clause 4 is about how we will pay for information that we require, whereas clause 1 is about the types of information that we will request. Therefore, some of her comparisons were not analogous.

I hope that the hon. Lady will accept my assurance that we are not trying to sneak anything into the code hoping that no one will notice it. There will be many opportunities to have a substantial and meaningful consultation on the code, without adopting the affirmative procedure. We cannot commence the powers in the Bill without having the code consulted and agreed on.

I hope that the hon. Lady will accept that the arrangements, which we made following strong representations in the other place, are more than adequate. They are set out clearly in clause 3 and are analogous to many other codes of practice, which are changed and updated by Government, without any affirmative parliamentary procedure, in consultation with many of the organisations on which they have a bearing. I hope that she will recognise that the Government have made a serious and substantial attempt to answer some worries that first surfaced in the other place. I also hope that she will accept that we are not trying to sneak anything past any of the organisations that have been involved in drawing the code of practice, and that we have provided an adequate and substantial response to those criticisms.

Steve Webb (Liberal Democrat, Northavon)

I am sure that, before she sits down, the Under-Secretary will respond to the hon. Member for Hexham, who raised utilities and trawling. I am puzzled, because the Government's attempt to reassure us by saying that they will target roads, streets and towns, not named individuals is supposed to be good news. On the face of it, that seems rather alarming. Will the Minister clarify the criteria for deciding which streets, villages or whatever will be chosen? In other parts, the Bill refers to reasonable suspicion, so how does that concept apply to blanket searches?

Angela Eagle (Labour, Wallasey)

I thank the hon. Gentleman for reminding me to deal with that point, because I must admit that it had slipped my mind, not because it is not a reasonable question to ask but because I was getting carried away with the code of practice.

We will begin with pilot exercises and pay the utilities for their costs. Hon. Members know about the problem of houses used as giro drops. They are a potential source of fraud; people claim that they are living on their own when they are living in substantially different circumstances. The searches are a way of checking and putting a stop to the fraud. The Government have tried in other ways, with some success, to prevent the growth of giro drops, for example by the ``do not redirect'' arrangements that were agreed with the Post Office. However, we know that such abuse still happens, so the pilot exercises will find out whether the proxy, which is abnormally high or low usage of the utility, will be an accurate way of plugging the leaks and stopping the frauds that are well known in our communities. We will not immediately launch huge bulk searches in every major city; we will use pilots to see what is successful, and then decide which areas to target.

Steve Webb (Liberal Democrat, Northavon)

Will it be the case that, for example, a local authority will identify that a single address is being used for several claims and then ask, or get the Department to ask, the utility company for the relevant bills? Such methods will be speculative and statistical. Linked to that is another concern that we expressed in the other place. We believed that the Bill had a generality—it identified people who were more likely than average to commit fraud—and that aspect was taken out. Why has that not been removed from this part?

Angela Eagle (Labour, Wallasey)

We are speaking about a substantial abuse of the benefit system and a main method of fraud. If one takes away identity fraud as a category, the misuse of property addresses for giro drops and misreporting of living arrangements are two other categories of substantial fraud. The information that we would use is available in other organisations; for example, the water utilities know which properties in their areas have the water switched off. We will get a list of such properties, run it past our information on claims, and, if we find that people are claiming benefits from properties at which there is no water supply, send somebody along to check what is happening.

One could conceive of instances in which people are living without water supplies—I hope not. It may be that they have some other arrangement and are not defrauding the benefits system. We would check, once we had matched up the two bits of information. That is the idea of the bulk transfer. The information exists and is held as public knowledge. We are merely data matching to provide an extra safeguard against fraudulent use and stealing of benefits. In such circumstances, our use of the bulk transfer powers in the Bill is justified.

Peter Atkinson (Conservative, Hexham)

We all agree that such a system is useful, but the hon. Member for Northavon (Mr. Webb) and I are trying to determine its scale. After piloting the programme, do the Government intend to roll it out across the whole country? Will it operate in a manner similar to the television licensing service, which concentrates on houses without a TV licence?

Angela Eagle (Labour, Wallasey)

I do not know the answer to that, because we have not done the pilot exercises. If they involve a huge amount of trawling but do not close any loopholes, we may decide that we do not want to proceed. However, if they prove to be effective in detecting giro drops and inconsistent benefit claims that we can then check, my guess is that we would proceed to the extent of our capacity to go out and do the checks. Collecting and matching data is of no use if we do not then go in person and check it.

Until we have been able to evaluate the pilot exercises to determine whether such a system is a good or bad way of finding the fraud that we know exists, I cannot give the hon. Gentleman any more details about how we would subsequently use the information. However, it will not be a secret. Such powers are intended to deter fraud, as well as to detect it. To reassure the hon. Gentleman, if it proves to be fertile ground for discovering benefit fraud, we will let everybody know that we are doing the checks to deter as many people as possible from thinking that they can get away with such fraud.

Jacqui Lait (Conservative, Beckenham)

I am grateful to the Under-Secretary for that clear exposition of how the system will work, but it has actually caused me greater concern. In the best of all possible worlds, it would act as a deterrent but, as I am sure that she and every member of the Committee knows, more and more people are now buying timing devices. When we go canvassing, we hear dogs barking and televisions coming on, but no one is in. Timing devices even turn lights on in one room and then another.

If someone is seriously organising the sort of fraud that the Under-Secretary is hoping to deter—I completely agree with her; we want to deter it as well—it is not beyond the wit of man to buy a timing device that would pay for itself in illegal benefits before long.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

Does the existence of the timing devices that the hon. Lady referred to demonstrate that there is no length to which people in this country will not go to avoid Tory canvassers? [Laughter.]

Jacqui Lait (Conservative, Beckenham)

Well, they install the timing devices to prevent illegal entry into their homes by—we hope that it is not by Department of Social Security fraud investigation officers. The crucial point is that the technology exists. It is unlikely that the pilot schemes will reveal such sophistication immediately, but it will not be long before people involved in organised fraud are creaming off a lot of money from the state. With new technology, it may be unnecessary to gain information from the utilities.

If the Government decide that that form of information is useless, fundamental changes will be necessary to the code of practice—referring to which allows me to come back in order, Mr. Maxton. The Secretary of State should consult not only the industry and all affected, but the highest court in the land, which is Parliament. That strengthens the case for introducing the code of practice by affirmative resolution, and any amendments to it should be made by the same procedure.

The Under-Secretary rightly says that there are many opportunities to raise the relevant issues in Adjournment debates in Westminster Hall and elsewhere, but if the Government are as concerned as we are about fraud, they should be positively approaching Parliament to seek its approval for changes to the code of practice. The hon. Lady may like to think further on the matter. I am happy to withdraw the amendment on that basis, but we may reintroduce it on Report.

Angela Eagle (Labour, Wallasey)

I doubt whether anyone has yet invented a timing device that can turn taps on.

Jacqui Lait (Conservative, Beckenham)

It will come—it is called computers.

Angela Eagle (Labour, Wallasey)

I accept what the hon. Lady says. In the future it may be possible to make a property appear that it is lived in when it is not, but that should not stop us from closing any loopholes now. In respect of tax evasion, we need to assume powers to deal with current abuses. We know that the people whom we are fighting will become increasingly sophisticated and devise other ways of continuing their evasion. Anti-fraud work is similar; one closes the loophole in the present and we have to deal with what may emerge later when we get there. We will not know for sure until the pilots are completed, but we believe that bulk transfer on abnormally low and high usage of utilities is a fertile area for closure of loopholes, and I hope that the hon. Lady agrees.

The hon. Lady and I have a slightly different approach to affirmative debates on the code. If substantial change were required, consultation would take place. The new code would be sent out to all groups of people affected by it. The Secretary of State would consult and Parliament could, if it wanted, debate it. There may not be that much between us. The Government's intentions are clear, and I hope that the hon. Lady will accept that we want an open, two-way process to secure the best possible support for the code.

Jacqui Lait (Conservative, Beckenham)

We all have people coming to our surgeries to raise this matter, so the hon. Lady should accept that Parliament is one of the most concerned groups. The Secretary of State will be at the very least ungenerous if he does not consult by means of an affirmative resolution.

Angela Eagle (Labour, Wallasey)

As a result of some modernisation in Parliament, we have more than 200 extra debates in which to discuss such issues. That gives a greater chance for Back Benchers to instigate debates, even if some conspiracy of silence between Front Benchers prevents the matter from reaching the Floor of the House. I suspect that if Parliament really wanted a major debate about the code, it would instigate one.

Jacqui Lait (Conservative, Beckenham)

In a sense, the Under-Secretary makes my point for me. Since there are all those extra opportunities for debate, it would be generous of the Government to provide one in their own time. An affirmative resolution would be the easiest way to do that.

Angela Eagle (Labour, Wallasey)

Clearly, our not accepting the hon. Lady's amendment would not preclude such a debate, as and when necessary. We have introduced substantial changes in clause 3, which creates the code and have given substantial chances for consultation. The code can be used in evidence in civil and criminal proceedings. The powers in the Bill cannot be commenced until the code has been consulted on and agreed. The hon. Lady has been generous enough to accept that substantial moves were made in the other place in this area. I hope that she will also accept that this process is similar to those relating to many other codes, issued not only by Parliament, but by the Data Protection Commissioner. We believe that that is an adequate way of dealing with the matter.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

I should like to follow up the point about the identification of empty properties. Would the information thus obtained be shared with local authorities where it is needed to avoid fraud against the public? I am thinking of circumstances in which someone argues that he was living in a house in order to succeed to a tenancy, which he then buys and sells, when he had not in fact been living there at all. An old person could have been in hospital, and one of his relatives might claim the right of succession.

Angela Eagle (Labour, Wallasey)

Yes, we intend to share information with local authorities in areas where it is relevant to what they are doing. I was thinking more of housing benefit, however. Frauds against housing benefit include ghost tenancies and collecting money, as well as ghost identities. The Bill's powers apply only to social security purposes, and so could not be used in my hon. Friend's example of succession to tenancies.

Jacqui Lait (Conservative, Beckenham)

As I have said, I am happy to withdraw the amendment on the grounds that we may return to it on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Jacqui Lait (Conservative, Beckenham)

I beg to move amendment No. 38, in page 7, line 34, at end insert—

`(6A) The exercise of powers under subsection (1) shall be subject to the oversight of the Data Protection Commissioner, or such other body as the Secretary of State may by order designate, and it shall be the responsibility of the Commissioner (or such other body) to put in place such arrangements as they think appropriate for—

(a) monitoring compliance with the Code of Practice; and

(b) advising on any disciplinary action that should be taken in instances where they are satisfied that an authorised officer has not complied with the Code of Practice.'.

First, I must apologise for a slight technical mistake in the amendment: we refer to the Data Protection Commissioner, who is now the Information Commissioner. Should the Government be minded to accept our amendment, we would be happy to amend that. I hope that we can be fairly brief here.

I thank the Minister of State for writing to me to explain the discussions that his officials have had with the Information Commissioner. We originally tabled the amendment because a number of people had expressed concern about the Bill. The Information Commission wrote some cogent comments and sent a copy to my noble Friend Lord Higgins on 17 January. Many of the concerns were dealt with in the discussions in the House of Lords. We shall not pursue them, but we were concerned about being blandly told on Second Reading that the Information Commissioner now agreed with the Bill. As some of the original strictures were pretty tough, it seemed reasonable to try to tease out from the Government where the points of agreement were and how agreement had come about.

Last night, the Minister of State kindly sent me an extensive letter that went through all the points and reassured me quite significantly. The Minister has copied the letter to the Information Commissioner, and I hope that he will make it available to other Committee members, because it deals with crucial points and is quite reassuring. I hope that he will place a copy in the Library and ensure that organisations that had concerns following the Information Commissioner's original comments can benefit from it. In a sense, I suppose that I shall seek to withdraw the amendment on the basis of that letter.

Jeff Rooker (Labour, Birmingham, Perry Barr)

Before the hon. Lady seeks to withdraw the amendment, which will stop the debate, I owe you, Mr. Maxton, and the rest of the Committee an apology, because I failed to copy the letter, which was born out of our proceedings, to you and other Committee members. That will be done immediately.

Jacqui Lait (Conservative, Beckenham)

I give way to the hon. Member for Northavon.

Steve Webb (Liberal Democrat, Northavon)

May I encourage the hon. Lady not to conclude her remarks by seeking to withdraw the amendment, so that we may continue the debate?

Jacqui Lait (Conservative, Beckenham)

I was minded to withdraw the amendment, but I have not sought leave do so. Since the hon. Gentleman wants to say a few words, I shall decide after the debate whether to withdraw it.

Steve Webb (Liberal Democrat, Northavon)

May I encourage the hon. Lady not to seek leave to withdraw the amendment at the end of the debate and embolden her to stick to her guns? Our experience shows that the Information Commissioner has a very different mindset from that of the Department of Social Security. That is not a surprise or a criticism, but simply an observation. Indeed, in some cases and in the interests of public policy, I might almost side with the DSS.

For example, the Information Commissioner is nervous about data matching, but there are cases in which that would make sense, on one hand for detecting fraud and on the other for encouraging take-up. On a number of occasions, I have brought before Ministers—and been fobbed off—the fact that half the pensioners who do not claim income support give all the relevant information to their local authorities. The Information Commissioner discourages information sharing, but it could be beneficial and the DSS should do more of it. I am not saying, therefore, that the Information Commissioner is always right, but it is clear that she and the DSS consider matters through different lenses.

That is just the sort of independent scrutiny of the process of obtaining data that we have sought in earlier stages of our discussions. The amendment would provide an opportunity for outside scrutiny by someone whose role in life is to keep an eye on the way in which official bodies use information about private citizens. The Information Commissioner should be keeping an eye on such activity—that is what she is there for. Why not accept the amendment and give the Information Commissioner a formal role in checking that the code of practice, which is about the way in which information on private citizens is used, is being implemented properly?

The Department's assurances that ``You can trust us, we are the Department'' do not wash, because even the best Departments need independent scrutiny. Apart from the technicality about the Commissioner's name, the amendment would serve ideally to achieve that objective, so I encourage the hon. Lady to persist with it.

Jeff Rooker (Labour, Birmingham, Perry Barr)

I shall do my best, although I will be unable to satisfy the hon. Member for Northavon. To be honest, he may think that he has been fobbed off, but I have never knowingly done that in answering a parliamentary question or letter. If he asked more precise questions, he might get answers. I answer the questions that he asks; I cannot second-guess the ones that are in his mind.

The amendment would place operational control of the powers in clause 1 in the hands of the Information Commissioner, but it is not the function of the Information Commissioner to get involved in policy. We are talking about social security fraud, which has nothing to do with the Information Commissioner. We are responsible for policy on social security fraud; the Information Commissioner's responsibilities involve data protection, the protection of privacy and the misuse of data. The Department was the first in Whitehall to have a code of practice on data matching. It was approved by the Information Commissioner, who wrote the foreword to the second edition. As far as I know, there have been no complaints about its operation.

We work in partnership with the Information Commissioner on issues relevant to her responsibilities, which she accepts. I am rather putting words in her mouth, as meetings with the Information Commissioner were conducted by my right hon. Friend the Secretary of State, as I stated in the letter to which I referred earlier.

The Information Commissioner has a role, which we respect, and we shall do what we can to assist her. That is why substantial changes were made to the Bill in the other place. We have undertaken consultation on the matter already, and there will be a continuing programme of consultation. I do not know why the hon. Member for Northavon wants to put day-to-day operational control in the hands of the Information Commissioner. She must conduct her own inquiries. If there are problems with the working of the code of practice or any misuse of it, she will rightly come down like a ton of bricks on the Department and the local authorities. For a start, she will receive complaints and review how the Department acts in that respect. She is entitled to make inquiries about how the code of practice is working, and we will co-operate with her inquiries.

As I said, we will review the operation of the powers in the Bill three years after its enactment. We will not pass legislation and then just walk away from it. These are new powers, and a modest extension of the powers given to the Department by the 1974 measure. We have bent over backwards to ensure that no misuse by Government is built into the proposal and have done our best to respond to matters raised in the other place and in this House, albeit to a lesser extent because of time constraints. We shall take into account all the points made by business and civil liberties groups and by right hon. and hon. Members. The Department is working with the code of practice on matters such as the matching of computer records to uncover inconsistencies, and is cross-checking occupational pensions and income support to discover errors, whether by the Department or the claimant or whether they involve fraud. That is the purpose of the exercise: we are not keeping quiet about it.

The foreword of the second edition of the code of practice states:

``This is the second edition of the DSS Code of Practice on data matching and I am pleased to report that since welcoming the first edition a year ago I have received only a very few inquiries about the Department's data matching exercises. In other words the code seems to be achieving two twin goals of setting out for DSS staff the standards, which they must follow, and of explaining to benefit claimants the nature of the checks that are carried out and the safeguards. I hope that this new edition, reflecting the strengthening of Data Protection legislation over the last year, will be equally successful.''

That is what the data commissioner said about the data matching that is already being done. I hope that she will in due course say—there has not, as far as I know, been any discussion on the matter—that the code of practice is as successful as the Department's data matching operation. I hope that the hon. Lady will withdraw her amendment—although it is obviously in the Committee's gift, rather than hers, to do so.

Jacqui Lait (Conservative, Beckenham)

I am grateful to the Minister of State for that explanation. As I was the lucky recipient of his letter—he has generously promised to send it to all members of the Committee, and I am sure that he will circulate it to interested outside bodies—it is only fair to say that I am prepared to withdraw the amendment, on the grounds that we shall return to the matter on Report once people have had a chance to comment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Jacqui Lait (Conservative, Beckenham)

I beg to move amendment No. 36, in page 7, line 40, leave out from ``officer'' to end of line 41 and insert

`means a representative of the Benefits Agency or a local authority who has been authorised by the Secretary of State to undertake investigative work'.

John Maxton (Labour, Glasgow Cathcart)

With this it will be convenient to take new clause 1—Seniority of authorised officers—

`—(1) Subject to subsection (2), an authorised officer allowed to undertake investigative work under this Act shall hold the rank of higher executive officer or above in the relevant department.

(2) An authorised officer obtaining information under this Act from any person providing a telecommunications service shall hold such office, rank or position, and shall be subject to such restrictions, as are prescribed by orders made under section 25 of the Regulation of Investigatory Powers Act 2000.'.

Jacqui Lait (Conservative, Beckenham)

I am grateful to you, Mr. Maxton, for selecting new clause 1 to be debated with the amendment because it allows us to consider the issue of authorised officers, to which we have referred extensively, particularly in regard to the numbers with which outside organisations could deal. I want to explore the real difficulty that many outside organisations face.

The proposal is that many authorised officers will be of executive officer level. To question that is in no way an attack on their ability, quality or probity but Liberty, for one, has voiced its concern that authorised officers should be people operating at a higher level. BT, which has been speaking on behalf of the telecommunications industry, sent my hon. Friend Lord Astor an interesting e-mail in which it compared its management structure with that of the civil service. BT states that, despite the fact that it has been privatised for more than 15 years, it

``has its roots in the Civil Service from which it has derived its ranking system. An Executive Officer in BT would be equivalent to an MPG2 manager''--

I am afraid that I must leave that to BT to elucidate. The communication goes on:

``This is the first level of management within the company and does not carry significant responsibility. Many managers at this level would be relatively inexperienced young graduates.''

It continues:

``The issues surrounding the disclosure of communications data have been well documented during the passage of the Regulation of Investigatory Powers Act (RIPA) . . . The Secretary of State has not yet issued an order under section 25(2) and (3) of RIPA specifying the offices, ranks and positions of designated persons authorised to obtain certain communications data.''

It then points out that the orders in SI No. 2417 deal with the authority levels for directed surveillance.

The argument put by, among others, the British Bankers Association—which is particularly concerned about local authorities where authorised officers administering housing benefit can, under the Social Security Administration Act 1992, be employees of a contractor—is that it is difficult to envisage officers of sufficient seniority being available in smaller authorities. It believes that officers should be of a higher level.

Through amendment No. 36, we are trying to clarify the system of authorisation and the rank of the authorised officer. However, in new clause 1 we are specifically focusing on the effect of RIPA. We are concerned about a clash between the Bill and RIPA on the information that can be acquired and the level of officer who can acquire it. RIPA states that the officer will be higher executive officer rank or above. BT points out that for information such as name and address reverse search—clearly, very technical—the authority of a higher executive officer will be required. The authority of a senior executive officer is required for other information, as defined by section 21(4)(b) of RIPA. Potential conflicts exist between the requirements of the different measures.

The concern in the telecommunications industry, which seems to be industry-wide--in addition to BT, I have heard from Orange, One 2 One, Worldcom and ntl—is that that inconsistency of approach might lead to confusion, civil litigation and violations of the RIPA, the Data Protection Act 1998 and the Telecommunications Act 1984. Will the Minister explain why he believes that the Bill is not inconsistent, and why inconsistency will not expose the telecommunications industry to possible litigation? I hope that he will reassure me that the Government will continue to discuss the issues with the various external agencies that are involved, so as to arrive at an agreed position between the industries and the Government.

Jeff Rooker (Labour, Birmingham, Perry Barr)

It may be helpful to the hon. Lady if I deal with amendment No. 36 and new clause 1 separately. As she said, amendment No. 36 seeks to clarify who can be authorised for the purposes of the provisions. The words ``authorised officer'' in the Bill have the same meaning as in the Social Security Administration Act 1992. The definition in the 1992 Act was updated in the Child Support, Pensions and Social Security Act 2000, and is currently:

``(a) an official of a Government department;

(b) an individual employed by an authority administering housing benefit or council tax benefit;

(c) an individual employed by an authority or joint committee that carries out functions relating to housing benefit or council tax benefit on behalf of the authority administering that benefit; or

(d) an individual employed by a person authorised by or on behalf of any such authority or joint committee as is mentioned in paragraph (b) or (c) above to carry out functions relating to housing benefit or council tax benefit for that authority or committee.''

There is no doubt that amendment No. 36 would very much narrow the scope of the definition, because it would limit it to a representative of the Benefits Agency or the local authority who had been authorised by the Secretary of State. The code of practice provisions would relate to a definition of authorised officer other than that which applies in the rest of the Bill. The amendment on its own would make the Benefits Agency officers authorised by the Secretary of State subject to the code of practice, but not the officers authorised by local authorities. That is a major contradiction. In case the hon. Lady contemplates coming back to this on Report, I stress that there is no real need to do so.

The powers in new clause 1 are the meaty bit, and would result in a large upgrade of DSS officers who could use these powers. That would add another £2.6 million a year to the wages bill. Some might say that that is being generous towards the staff in my Department, particularly when the Conservatives have pledged to cut £8 billion of public expenditure--it does not say that in my brief: I have added that bit. In any case, the executive officer is the appropriate grade for these powers. It is the first grade of management within the Department.

I cannot speak for BT. I do not know anything about the company, except that it has borrowed £30 billion, which people have only just found out about, and it is causing a bit of a problem in the board room. We are not in that situation. The Government are paying back billions of pounds of debts. Our executive officers perform an important role within the organisation. Investigators in Customs and Excise are also executive officers. They are the officers whom we want to authorise. They have direct supervisory responsibility for staff of the grades of administrative assistant and administrative officer. They have responsibility for the routine management of much of the Department's work in its local offices. They are the equivalent of a sergeant or an inspector in the police service.

Executive officers also conduct specialist roles within the Department. They are responsible for accepting cases for investigation and deciding the best way of progressing them. They prepare cases deemed suitable for prosecution to an acceptable standard in court. They are expected to give evidence in court. As I have said repeatedly, our people are being trained to a nationally recognised standard--professionalism in security. There are seven foundation and 14 specialist modules, including legislation, liaison intelligence, organisation and planning, the rules of disclosure, investigative interviewing, basic surveillance, photographic video evidence and court procedures. There are several stand-alone courses on top of those first seven modules. They are not all provided by the DSS: some are provided by outside contractors through competitive tendering.

Executive officers conduct cases for the Department at appeals tribunals. Since the 1940s, they have been using those powers to get information from employers about employees. It is nonsense to suggest that we are using low-level kids who are just out of college and are untrained, uncommitted and inadequately supervised. The hon. Member for Beckenham may want to step up the wages bill for the Department, but I cannot accept the amendment. I do not dismiss the amendment out of hand, but the powers under the Regulation of Investigatory Powers Act 2000—they must have had a job saying that all the time in Committee—have not finally be laid. I know what was said during its passage, but the orders have been laid. We certainly do not intend to cause difficulties for business, whether it be BT, Orange or anyone else. We will arrive at an amicable solution for the powers in this Bill.

While I am on my feet, I should like to wish our Whip, the hon. Member for Dudley, South (Mr. Pearson), a happy birthday. Perhaps he is one of the new breed of 30-year-olds who will be let loose on the unsuspecting private sector from whence he came after giving distinguished service.

I hope that I have said enough. I will not satisfy the Opposition on this point, as it has been raised on more than one occasion. Obviously, it is up to them to raise further issues, and more time will be available on Report. I make a robust case for ensuring that officers meet the requisite high standards of professionalism and training. We do not intend to cause hassle and put extra burdens on business by letting loose untrained, unqualified or unprofessional officers from the Department.

Jacqui Lait (Conservative, Beckenham)

First, I am happy to add my good wishes to the Govt Whip: it is always hard when people have to work on their birthdays. I am also happy to accept the Minister of State's strictures on the poor drafting of amendment No. 36. The issues can always be dealt with again on Report if necessary.

I was pleased to hear the Minister of State say that the negotiations may end with agreement. They are not yet ended. We do not expect the executive officers to be young, inexperienced or improperly trained. I accept the Minister's assurances that the officers will be of the highest calibre. I said so in my remarks.

The right hon. Gentleman said that the orders under RIPA had not yet been laid, so he could not comment. Potential problems stemming from the read-across remain. I hope that agreement between the Department and the industry will have been reached by the time we consider the Bill on Report and Third Reading. I withdraw the amendment on that basis, with the proviso that we may return to the matter on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 ordered to stand part of the Bill.

Clause 4 - Arrangements for payments in respect of information

Jacqui Lait (Conservative, Beckenham)

I beg to move amendment No. 41, in page 8, line 2, leave out from `by' to end of line 21 and insert

`all persons who fall within subsection (2A)'.

The amendment is designed to ensure that any organisation that has to respond to inquiries under the Bill is recompensed. In the House of Lords regulatory impact assessment, the estimated cost to business was between £2.5 million and £7.6 million. Under the assessment from the Commons, the estimate was reduced to between £2.3 million and £7 million. Why? Irrespective of that reduction, a huge gap of £4.7 million remains in the estimate.

I have already referred to the £205,000 to £300,000 cost to Orange of upgrading only one system. The British Bankers Association estimates that the cost could reach £500,000 a year. The Secretary of State, however, believes that many costs will be marginal. He said on 5 March this year that

``the cost to a bank . . . in an entire year is estimated to be equal to just one hour's profit''—[Official Report, 5 March 2001; Vol. 364, c. 4.]

It is always easy to take a swipe at the banks. [Hon. Members: ``Hear, hear.''] It is also often popular, as we can hear from Labour Members. Not paying for this information is equivalent to a stealth tax on the banks. That brings the number of stealth taxes imposed by the Government—leaving aside the Finance Bill—to 46.

The credit reference agencies will be paid because they exist specifically to sell information. The Secretary of State can also make payments to telecommunications providers where they are asked to perform a unique processing service. Can the Minister give an assurance that Orange's fees would be met?

We have already discussed payments to the utility companies for the bulk information that they provide, and it seems sensible to us that the Government should be prepared to pay when they require such a service. It is easy to say that large institutions have the internal infrastructure to manage the processing and can therefore absorb the costs, but that approach, if taken across government, would mean that even the largest, most profitable and tightly managed company would eventually drown in Government demands and be deflected from its main purpose, which is to provide services to customers for which it is paid. The Government seem to be demanding a tailor-made service; therefore, they should pay, which the amendment would make them do.

Jeff Rooker (Labour, Birmingham, Perry Barr)

I will deal first with the hon. Lady's point about the difference between the figures in the Commons and the Lords regulatory impact assessments. The figures were changed from £2.3 million to £7 million to £2.5 million to £7.6 million by Lords amendments. In other words, the Bill changed when it left the Lords; clause 1 was amended, and proposed new subsection (2C)(c) was removed, which was the last part that could be construed as involving fishing.

We will pay credit reference agencies because they are in the business of selling information. That is fair; it would wholly unreasonable for the Government not to do that. We will also pay utilities when they supply information in bulk, because they will incur extra costs in doing so, but not when we make a personal inquiry about an individual, which we are entitled to do under clause 1. Hon. Members must appreciate that the utilities will be contacted in two different ways. There will be the bulk transfer of information on abnormally low usage based on addresses, and, as with banks, we will have the power to ask the utilities about individuals—how they pay their bills, for example. We will also pay telecommunications companies, because they have put in place special technology to meet Government requirements, such as the reverse searching of telephone directories. Other than that, organisations will not be paid; indeed, the Inland Revenue and Companies House are not paid now for supplying information to the Government or the Information Commissioner.

Steve Webb (Liberal Democrat, Northavon)

Table 3 on page 10 of the regulatory impact assessment shows that the utilities will have to do 60,000 searches for the DSS, while the banks will have to do 225,000 searches. I might be misunderstanding the terms, but one would have assumed that bulk searches and information would be easier to provide than individual information. That suggests that the banks have a stronger case for being paid than the utilities because they provide individually tailored information. Secondly, the banks are being asked to answer three times as many inquiries, all of which are individual, so they have an even stronger case for being paid.

Jeff Rooker (Labour, Birmingham, Perry Barr)

I shall take advice on that, but table 3 does not show figures on bulk information inquiries. Hon. Members should separate the utilities as a parallel issue. We will take separate powers to ask for information from the utilities on abnormally high usage of gas, water and electricity, which will enable us to data match our records based on addresses. That power has nothing to do with individuals and does not relate to individuals, bank accounts and credit reference agencies. Also, the table does not contain the number of inquiries, but our estimate of individual inquiries related to people for whom we have reasonable grounds to believe that they have committed, are committing or are about to commit social security fraud. The two are separate.

The Government require various bodies to provide information—for example, VAT returns from Customs and Excise. The banks must give information to the Inland Revenue in bulk on interest paid on savings, but are not paid for that, and the utilities must provide information to the regulator. Since the 1940s, the DSS has had powers to require information from employers about their employees, and we do not pay for that. Fraud is theft from the taxpayers; businesses are taxpayers and we are trying to reduce their taxes and ensure that we do not waste public expenditure.

I do not want to upset anyone, but we know that the Tory party is the bankers' friend. I do not want to goad members of the committee into getting up and making their election hustings speeches, but Barclays, for example, has made a 42 per cent. increase in profits, with profits before tax of £3.5 billion. Our estimate of the cost of this measure for Barclays is about 75 minutes of profit. Other banks have reported huge increases in profits, which caused the Bankers Association to publish a special briefing defending what people might think to be excessive profits.

Even if banks made less generous profits, however, the arguments would still apply, as they apply to everyone else who gives the Government information. Organisations such as Companies House and the Inland Revenue give information to the Information Commissioner in the normal course of events. We do not seek to put extra burdens on those organisations, although there will be a cost. We are using our best endeavours to reduce the high levels of social security fraud without being oppressive or imposing onerous burdens; one can never eradicate such things, and keeping up to speed is a constant job. We are making only modest demands on those organisations and, when a company exists in business to provide information, it is only right that we should pay for that information when we obtain it.

Steve Webb (Liberal Democrat, Northavon)

On a brief point of clarification, I had not understood that the bulk request for information was not included in the table in the regulatory impact assessment. That prompts two questions. First, will the utilities be paid for the bulk information alone, not for the 60,000 inquiries referred to in the table? Secondly, the Minister implied that he did not know how many bulk requests would be made because the pilots had not happened, but the table states a figure of 60,000 for individual requests. Does the Under-Secretary have any idea of the scale of the bulk information? Are we talking in millions, for example?

Jeff Rooker (Labour, Birmingham, Perry Barr)

I draw the hon. Gentleman's attention to paragraph 21 of the regulatory impact assessment, which contains bullet points in relation to the

``estimate of the costs of obtaining information in bulk from utility companies . . . the cost of extracting data from utility companies . . . the cost of investigating additional referrals''.

That represents our best estimate at present, based on the fact that we have not done the pilots. It is true that the numbers may run high because, when the utility companies trawl their accounts and build a computer programme, someone will have to work out a definition of abnormally high or low usage for a series of dwellings, so that we are given the information that we will match within parameters agreed by all parties. Those figures represent our best estimate.

The companies may have to trawl millions of accounts to find abnormally low and high usage. Off the top of my head, I think that there are 27 million dwellings in this country. They do not all have gas, especially dwellings in the old mining villages that were prevented from having gas in the old days. Those issues must be considered, and we will base our decisions on the information that is agreed. We must be reasonable in that respect, so we will do the pilots to check the parameters.

Jacqui Lait (Conservative, Beckenham)

As I said, it is easy to take a pop at the banks. We shall probably return to the matter on Report, but for now I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till Monday 9 April at half-past Four o'clock.