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Mr Deevey: Claims On The Social Services

Volume 374: debated on Tuesday 5 October 1976

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2.53 p.m.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what lessons they have learned as a result of Mr. Deevey's fraudulent abuse of the Social Services.

My Lords, I hope that your Lordships will bear with me if my reply is rather longer than we normally give, but this is an extremely important matter. In a Statement issued on Tuesday, 21st September, which received wide publicity, my right honourable friend the Minister of State for Social Security explained that Mr. Deevey had exploited the supplementary benefits scheme—until he was caught and, as your Lordships know, sent to prison for a period of six years—by running a number of false identities over a long period. The main failing was that the visits paid to the purported homes of his fictitious claimants were not made early enough and when made—I want to be perfectly frank about this—were not effective enough. My right honourable friend made clear that staff resources are never likely to be sufficient for visits to be made to all claimants as often as would be desirable—both to look after their welfare and to check against possible fraud—but that particular attention will in future be paid to a selective follow-up of certain types of claim where there is a special risk of deception. Other corrective measures being taken include a tightening up on identity checks.

My Lords, is the noble Lord aware that there is widespread resentment among conscientious working people paying taxes on their earnings, because so many people are now able to draw tax-free social benefits which are equal to, or even greater than, other people's net earnings? Consequently will Her Majesty's Government now reconsider the intention of the Beveridge Committee, and the intention of Mr. Attlee's 1945 Government, that, at least, short-term social benefits should now be taxed so that shirkers are no better off than millions of law-abiding taxpaying working people?

My Lords, the standard and level of supplementary benefits, as the noble Lord will know, is just sufficient to meet the needs of the individual, and there is no measure which would enable them to pay tax. The noble Lord has made that suggestion, and I should like to take it back and pass it on to my right honourable friend for his comments and observations. But, certainly the present level of benefits would not bring a person into the taxpaying class.

My Lords, will the noble Lord agree that a married man with one small child earning £40 a week has a net income of some £25, and that if he becomes unemployed—taking into account tax rebates and so on—his net income will be £35?

My Lords, the noble Lord has taken one particular case, and I am not in a position at this stage to dispute what he has said. But family income supplements are payable to men who have a wife and family, when it is considered that the money they earn is not sufficient to meet their needs, and there is quite a substantial number of people drawing family income supplements.

My Lords, reverting to my noble friend's suggestion that these short-term payments should be liable to tax, is not income tax levied on the total amount of the year's income? So while accepting that the payments for any one week may be related to absolute need, should not the Government consider whether they ought to form part of the total income for the purposes of tax during a period of 12 months, like everybody else's income?

My Lords, I thought that was implied in what the noble Lord said, and that is why I stated that I would certainly pass the suggestion on to my right honourable friend.

My Lords, while no one would expect every claimant of social security to be followed up by an investigator, could it not be that anyone receiving more than, say, £35 a week for more than a month ought to be investigated? It is at that point that people are being discouraged from obtaining a job, when they are getting more from social security than they would get from a job.

My Lords, I am very grateful to the noble Lord, because that gives me an opportunity of saying that my Department is very concerned about this matter. We do not have our eyes closed. We suspect that we know what is happening. In the last four years, the number of prosecutions doubled from 7,700 to over 15,000. I am not suggesting that this is a very satisfactory result. We do not know whether we have caught the people who really matter. We have been talking about those who commit small frauds, but we are after the big fish. That is why we have set up a specialist unit consisting of a number of specialists in this field. They have produced 30 projects—I use the word "project", because I cannot think of another one—which they are going to investigate. We want to see that in future the fraud specialists—we have 500 of them at the present moment, although it may well be that we do not have enough—will know exactly what to look for, how to undertake their investigation and how to see the significance of certain things, such as certain types of behaviour. Obviously, among those cases will be those who have been drawing benefit for a considerable time.

My Lords, when my noble friend's Department carries out this review, will they bear in mind that the vast majority of the people in this country, who from time to time find it necessary to apply for the aids that are under review, are plain, ordinary, honest, decent people?

My Lords, I hope that I have not given a different impression. On the contrary, one of the reasons why we have set up this special unit is that we do not want the people who are drawing benefit to feel that we suspect every one of them. We do not. What we want to do is to strike a balance. We would rather have prevention than prosecution. Also, we want to know how best to tackle the problem. I do not say this either lightly or amusingly. I am empowered to say that if any of your Lordships feels that he has positive ideas to offer at this stage he should write to me so that I can pass on the correspondence to my right honourable friend.

My Lords, would not the noble Lord undertake to take into account the recent report of the chairman of the Supplementary Benefits Commission who, I believe, has said that the system as at present organised is far too complicated, and that not only are several people not receiving the benefits to which they are justly entitled, but also that several people have found it too complicated? Does not this show that there is a great case for simplifying the whole procedure, possibly by introducing a tax credit scheme, as proposed by the last Conservative Government?

My Lords, with regard to the latter part of the noble Earl's question I make no comment. All I would say is that one of the projects is designed to consider the early part of what the noble Earl has just said.

My Lords, does not the Minister agree that supplementary benefits are not too high but that the wages paid to many workers are far too low?

My Lords, is the noble Lord aware that the whole House appreciates his conscientiousness and the sympathetic manner in which he is dealing with the matter? Is it not a fact that the Fisher Committee found that probably only 1 per cent. of all payments were in any way fraudulent; but is it not also a fact that nowadays 1 per cent. represents £100 million a year? Therefore the sum is not negligible. In the long run, is it not true that the only way to stop this abuse is to raise the level of taxation so that the low income groups are not taxed and people are given the incentive to work conscientiously, which 99·9 per cent. of our population wish to do?

My Lords, a succession of Chancellors of the Exchequer have wrestled with this problem. With regard to the first part of the noble Lord's comments and observations about the £100 million a year, I think that we would agree that it is £100 million too much.

My Lords, the noble Lord has been very kind about inviting Members of this House to express a view. In view of the fact that at col. 574 of his reply on 30th September the noble Lord expressed such confidence in the computer, may I ask him whether he can assure the House that the computer will form part of the investigations so that illicit keying-in will not take place?

My Lords, we are exploring the possibility of using a special computer. It is not the one at Reading to which I referred.