Northern Ireland Assembly Flax Flower Logo


Report on the
Social Security Fraud Bill
(NIA BILL 16/00)



1. The Committee for Social Development is a Statutory Committee of the Northern Ireland Assembly, established in accordance with paragraphs 8 and 9 of Strand One of the Belfast Agreement and under Assembly Standing Order No 46.

2. The Committee has a scrutiny, policy development and consultation role with respect to the Department for Social Development and has a role in the initiation of legislation.

3. The Committee has power-

4. The Committee was established on 29 November 2001 with 11 members including a Chairperson and Deputy Chairperson and a quorum of 5. The membership of the Committee is as follows-

5. All correspondence should be addressed to the Clerk to the Committee for Social Development, Room 419 Parliament Buildings, Stormont, Belfast BT4 3XX.

* Mr McClarty was removed from the Committee on 6 February 2001.
** Mr Hamilton was appointed to the Committee on 6 February 2001.



Proceedings of the Committee

Government's Approach to Combating Social Security Fraud

Social Security Fraud in Northern Ireland

Committee's Consideration of the Social Security Fraud Bill

Conclusions and recommendations

Appendix 1 - Minutes of Proceedings: Extracts relating to the Report

Appendix 2 - Minutes of Evidence

Appendix 3 - Written responses from the Department



1. This is a Report, made by the Committee for Social Development, to the Assembly under Standing Order 31(3); following the Committee Stage of the Social Security Fraud Bill [1].



2. During the period covered by this Report, the Committee held five meetings: 17th May, 21st June, 5th July, 6th and 18th September 2001. The extracts from the Minutes of Proceedings relating to this Report for these meetings are included at Appendix 1.

3. In the course of its proceedings relating to this Report, the Committee had before it: a copy of the Bill, as introduced; and the Explanatory and Financial Memorandum that accompanied it [2].

4. At its meeting on 17 May 2001, the Minister for Social Development, Mr Morrow, appeared before the Committee to brief members on the policy objectives of the proposed Bill and to take questions arising from those discussions.

5. At its meeting on 21 June 2001, the Committee considered the legislative timetable, as it affected the Bill, and agreed that it should call senior officials from the Department to give a background briefing in advance of the Committee's first reading of the Bill. The Committee agreed that its first reading of the Bill would be held after the summer recess.

6. At its meeting on 5 July 2001, senior officials from the Department for Social Development were called, and gave a background briefing to the Committee on the Bill. This was followed by a further question-and- answer session, supplemented by a written response to a number of further questions posed by the Committee.

7. At its meeting on 6 September 2001, the Committee held its first reading of the Bill and conducted an initial clause-by-clause analysis of the Bill. Again, senior officials from the Department were in attendance to offer answers to questions on technical aspects of the draft legislation.

8. Finally, at its meeting on 18 September 2001, the Committee considered the draft of this Report, proposed by the Chairperson.

9. The Minutes of Evidence for the meetings on 5th July and 6th September 2001 are included at Appendix 2 and the supplementary memorandum, submitted by the Department for Social Development, has been included at Appendix 3.



Social Security fraud occurs when someone knowingly breaks the rules of the benefit system to obtain money to which they are not entitled. [3]

10. In March 1998, the Department of Social Security published a Green Paper [4], which stated that the Government's strategy was to shift the emphasis away from detection towards preventing fraud from occurring; it also highlighted the need for sufficient resources to be dedicated to the investigation and detection of fraud.

11. This emphasis was defined in a further Green Paper [5] published in July 1998;it identified the following aims-

12. This vision was developed further in a Command Paper [6] published in March 1999 which focused on-

13. In November 1999, the Chancellor of the Exchequer, Gordon Brown, asked Lord Garbiner QC to carry out an investigation into the hidden economy. His report [7], published in March 2000, made a series of recommendations-including those to combat benefit fraud.

14. The Government's commitment to implement these recommendations resulted in the publication of a consultation document [8] in July 2000 seeking views on the implementation. Following this consultation, on 18 December 2000, legislation was introduced to the House of Lords and has subsequently received Royal Assent.



It has been estimated that in Northern Ireland about £73 million per annum is lost from public money due to benefit fraud [9]

15. It has been reported that, in Northern Ireland, a wide variety of fraud is perpetrated against the system, ranging from the small-time opportunist, such as those who intentionally do not advise the Department of changes in their circumstances, to highly organised criminal elements involved in counterfeiting, and stealing, instruments of payment and running false identity fraud.

16. The legislation which contains the principle powers relating to the claiming, payment and administration of social security benefits is the Social Security Administrations (Northern Ireland) Act 1992 [10]. This legislation is a consolidation of pre-1992 legislation and has been extensively amended since its introduction, most significantly, in relation to this Report, by the Social Security Administration (Fraud) Order (Northern Ireland) 1997 [11]. Parity with legislation in Great Britain has always been maintained.

17. Under existing arrangements, the Department for Social Development already has power to check information against that held by other government departments, such as the Inland Revenue, to detect fraud committed by people whilst claiming means-tested benefits.

18. The Department may also obtain information from independent sources, but this can only be sought after a claimant has consented and where benefit fraud is suspected. Investigating officers may also ask organisations to provide them with any information for the prevention and detection of crime under an exemption to data protection legislation [12]. However, organisations cannot be compelled to provide such information.



19. As introduced on 18 June 2001, the Bill has a total of eighteen clauses; divided into five parts. The Explanatory and Financial Memorandum identifies four main elements in the Bill, namely-

The Committee has, hence, outlined its consideration thus.

Obtaining and sharing information (Clauses 1-5)

20. These clauses make specific amendments to the Administration Act, which have been summarised in the Explanatory and Financial Memorandum as follows-

21. The Committee accepts the need that the Department has for additional sources of information to enable it to detect fraudulent claims more effectively and that the Department is committed to addressing the problem of benefit fraud. However, the Committee does have a number of concerns, relating to the safeguards against the wrongful, or frivolous, use of these new powers and the potential human rights issues that arise from their use, and wishes to draw these to the attention of this Assembly.

22. Firstly, the use of the term "reasonable grounds" in the proposed new sub-section (2C) set out in clause 1(2) of the Bill gives rise to concern. Officials from the Department indicated that this would depend very much on the circumstances surrounding each particular case and that it would be difficult to give examples of what might constitute "reasonable grounds". Subsequently, the Committee recommends:

The Assembly should seek assurances from the Minister, during the passage of the Bill through its remaining stages, that the operation of these safeguards will be subject to rigorous management checks.

23. Secondly, the Committee has reservations about a person's right to respect for private life and the potential interference with a person's presumption of innocence. Therefore, the Committee recommends:

The Assembly should seek assurances from the Minister, during the passage of the Bill through its remaining stages, that these powers of investigation, when there is only a believed intention to commit a benefit offence, are only exercised is cases of suspected organised attempts at major fraud.

24. The Committee is encouraged by, and welcomes, the provisions of clause 2-to allow the electronic access to information. The Committee hopes that this will allow the Department to make further efficiency savings and that these may be re-directed towards the Department's other initiatives, in particular, those specifically targeted at addressing the problem of benefit take-up.

25. The Committee welcomes the provision for issuing a Code of Practice on obtaining information under this Bill and notes that the Department has deposited a draft of that Code in the Assembly library. The Committee is also pleased that there are provisions for the revision of that Code and for consultation prior to its introduction. However, the Committee recommends:

The Assembly should seek an assurance from the Minister that the Code of Practice will be reviewed within three years of its publication and the outcome of the review should be reported to the Assembly.

26. In concluding its consideration of the clauses relating to obtaining and sharing information under this Bill, the Committee gives a cautious welcome to these provisions but considers that the Department must adhere to its duty to ensure that the information it obtains is only the information that it requires for the purposes of investigating any particular case.

27. The Committee is satisfied that the proposals, when used properly, will assist efforts to combat benefit fraud.

Loss of benefit provisions (Clauses 6-12)

28. These clauses provide for the introduction of powers to reduce or withdraw specified benefits where an offender is convicted twice of benefit offences within a period of three years.

29. The Committee accepts that to effectively tackle the problem of repeat offenders appropriate measures must be put in place. The Committee further accepts the principle proposed under this Bill that benefits should be withdrawn after two offences within a period of three years-provided that the safeguards, contained in this Bill, are maintained. The Committee, therefore, welcomes the fact that, contained in the regulation-making powers of this Bill, there are exceptions to what will be able to be brought into operation by a negative resolution procedure. The Committee has concluded:

That the provisions contained in these clauses, do not need to be drawn to the attention of the Assembly.

Penalties as an alternative to prosecution (Clauses 13-14)

30. These clauses, again, make specific amendments to the Administration Act, which have been summarised in the Explanatory and Financial Memorandum as follows-

31. The Committee welcomes the provisions of these clauses and has concluded:

That the provisions contained in these clauses, do not need to be drawn to the attention of the Assembly.

Offences (Clause 15)

32. This clause provides clarification of the offence of failing to notify a change of circumstances.

33. The Committee welcomes the provisions of this clause and has concluded:

That the provisions contained in this clause, do not need to be drawn to the attention of the Assembly.

Supplementary (Clauses 16-18 & Schedule)

34. The remaining clauses make provision for repeals; commencement; and the short title and interpretation, the Committee has considered these clauses and concluded:

That the provisions contained in these clauses, do not need to be drawn to the attention of the Assembly.



35. Having considered the provisions of this Bill, the Committee for Social Development is content with the over-arching, general principles of the Bill and, with regard to the concerns that the Committee has drawn to the attention of the Assembly, by this Report, is content with the detail of all the clauses.

36. The following is a schedule of the Committee's recommendations to the Assembly in respect of this Bill:

Clause 1: That the Assembly resolves: that Clause 1 stands part of the Bill.

Clause 2: That the Assembly resolves: that Clause 2 stands part of the Bill.

Clause 3: That the Assembly resolves: that Clause 3 stands part of the Bill.

Clause 4: That the Assembly resolves: that Clause 4 stands part of the Bill.

Clause 5: That the Assembly resolves: that Clause 5 stands part of the Bill.

Clause 6: That the Assembly resolves: that Clause 6 stands part of the Bill.

Clause 7: That the Assembly resolves: that Clause 7 stands part of the Bill.

Clause 8: That the Assembly resolves: that Clause 8 stands part of the Bill.

Clause 9: That the Assembly resolves: that Clause 9 stands part of the Bill.

Clause 10: That the Assembly resolves: that Clause 10 stands part of the Bill.

Clause 11: That the Assembly resolves: that Clause 11 stands part of the Bill.

Clause 12: That the Assembly resolves: that Clause 12 stands part of the Bill.

Clause 13: That the Assembly resolves: that Clause 13 stands part of the Bill.

Clause 14: That the Assembly resolves: that Clause 14 stands part of the Bill.

Clause 15: That the Assembly resolves: that Clause 15 stands part of the Bill.

Clause 16: That the Assembly resolves: that Clause 16 stands part of the Bill.

Clause 17: That the Assembly resolves: that Clause 17 stands part of the Bill.

Clause 18: That the Assembly resolves: that Clause 18 stands part of the Bill.

Schedule: That the Assembly resolves: that the Schedule stands part of the Bill.

End Notes:

[1]: Social Security Fraud Bill [NIA Bill 16/00]

[2]: Social Security Fraud Bill: Explanatory and Financial Memorandum [NIA Bill 16/00-EFM]

[3]: Rowlingson et al. Social Security Fraud: The Role of Penalties. Research Report No. 64, Department of Social Security, 1997.

[4]: Department of Social Security. New Ambitions for Our Country: A New Contract for Welfare. [Cm 3805]

[5]: Department of Social Security. Beating Fraud is Everyone's Business: Securing the Future. [Cm 4012]

[6]: Department of Social Security. A New Contract for Welfare: Safeguarding Social Security. [Cm 4276]

[7]: The Informal Economy: A Report by Lord Grabiner QC. March 2000.

[8]: Department of Social Security. Safeguarding Social Security: Getting the Information We Need.

[9]: Official Report, Vol. 11, No 8, 26 June 2001, Pg. 272.

[10]: Social Security Administration (NI) Act 1998 (c.8)

[11]: Social Security Administration (Fraud) Order (NI) 1997. [SI 1997/1182 (NI 11)]

[12]: Data Protection Act 1998, section 29 (c. 29)




THURSDAY, 17 MAY 2001.

Present: Mr F Cobain (Chairperson)
Sir John Gorman
Mr T Hamilton
Mr G Kelly
Mr E ONeill
Mr J Tierney
Mr S Wilson

Apologies: Ms M Gildernew (Deputy Chairperson)
Mr D O'Connor
Mr M Robinson

In Attendance: Mr D Martin (Committee Clerk)
Mr K Barker (Assistant Committee Clerk)
Mr L Hart (Executive Support)
Ms V Surplus (Administrative Support)

Mr Cobain took the chair at 2.05pm.

Private Session

4. Social Security Fraud Bill

Those in attendance:-

The Chairman welcomed the Minister and representatives to the meeting at 2.15pm after which the Minister made an initial statement. There followed a question-and-answer session, which is summarised in Annex A. The Chairman thanked the representatives and they left at 3.30pm.




Q. Who will take the decision as to whether to prosecute in a fraud case or whether an administrative penalty is appropriate and on what grounds? Is the Department already using these powers and under what authority?

A. A senior officer refers to policy guidance and specific criteria in making these decisions. They take into account factors such as the amount of benefit fraudulently obtained and over what period. The Department has powers in this regard at present in relation to individual claimants only - not employers.

Q. Do difficulties not occur when the system is so ad hoc? Is it not the case that discretion can be used in different ways?

A. All cases where the benefit fraudulently obtained exceeds £1500 are prosecuted. In other cases the decision on whether or not to offer an administrative penalty is taken by a relatively small number of people using the same guidelines which should ensure consistency.

Q. Are these decisions taken locally or Centrally?

A. Centrally.

Q. Is this by Fraud Section?

A. Yes. The section is known as the Benefit Investigation Service.

Q. If the partner of a claimant is aware that the claim was fraudulent can they also be prosecuted?

A. If a husband, for example, was not claiming benefit for his wife then there would be no repercussions for the wife.

Q. In relation to accessing the bank account details of claimants have you the power to do so on anonymous tip off for example?

A. Yes. We have that power but we consider other factors before deciding to investigate fully on the basis of tip offs. In addition safeguards are in place in relation to data protection law for example.

Q. Why do you propose to access bank accounts? Why, as is now the case, do you not ask claimants to produce bank details?

A. This refers to income related benefits with capital limits. Numerous benefits do not have capital limits.

NB. The point was made at this stage that the Committee felt that an inter-agency approach would be of value in fraud detection and eradication.

Q. Will there be a Code of Practice in relation to this Bill? Can you confirm that none of the powers proposed will be used until the Assembly has had a chance to consider the Code of Practice?

A. Yes. The assembly will be able to consider the Code of Practice which is likely to be produced in the autumn.

Q. Will the contents of the Bill meet the standards of the Human Rights Commission?

A. The Minister, in due course, will make a statement to the Assembly in relation to Human Rights based on legal advice. This will of course be open to challenge.

Q. Is it true that an Housing Executive official, for example, could access any bank account at the touch of a button?

A. Bulk matching only looks for general irregularities at the initial stage. Personal details are not available at this stage.

Q. Once you have accessed an individual bank account on a tip off, for example, and find that this individual is completely innocent do you advise them that you accessed their bank details?

A. No. the details will just be destroyed.

Q. This seems unfair. Would you not consider this issue again before issuing the Code of Practice? You should also consider publishing figures of, for example, how many accounts have been accessed and in how many there was no case to answer.

A. Yes. We will consider this again.

Q. In this regard how will complaints be handled?

A. Complaints will initially be referred to a Grade 7 manager but may also be referred if necessary to the senior officer with overall responsibility for these matters or to the Chief Executive.

Q. Could you provide some further clarification on the discretion to prosecute or the offer of an administrative penalty? Do the same rules apply to employers as claimants?

A. Discretion is not a licence to be inconsistent. The same criteria should be applied equally in all cases. All employers are prosecuted - the £1500 limit does not apply in their case.

Q. Can you provide figures in relation to the number of investigations and prosecutions etc?

A. Approximately there were 21000 referrals last year of which 13000 were investigated. There were 6000 successful interviews leading to changes in circumstances, 600 prosecutions and 49 offers of administrative penalty.

Q. Do you have the power to access secondary bank accounts?

A. Yes, if it is relevant to the investigation.

Q. In relation to the proposed cut in benefit to a claimant who has committed benefit fraud twice in a 3 year period - does this not effect innocent dependents?

A. In the case of a family only the portion of benefit payable to the offender is cut.

Q. In reality will dependents not suffer hardship?

A. It is for the family to decide how to use the benefit they receive.


Present: Mr F Cobain (Chairman)
Ms M Gildernew (Deputy Chairperson)
Mr J Tierney
Mr E ONeill
Sir J Gorman
Mr T Hamilton
Mr S Wilson
Mr B Hutchinson

Apologies: Mr D O'Connor
Mr M Robinson
Mr G Kelly

In Attendance: Mr S Graham (Committee Clerk)
Mr L Hart (Assistant Committee Clerk)
Ms V Surplus (Executive Support)
Miss F Douglas (Administrative Support)

Mr Cobain took the chair at 2.12 p.m.

Ms Gildernew left the meeting at 2.40 p.m.

7. Any Other Business

Social Security Fraud Bill

After discussion, the Committee agreed the provisional timetable for discussion on the Bill and to ask Departmental Officials to attend the Committee meeting on 05 July to assist in its deliberations.



Present: Ms M Gildernew (Deputy Chairperson)
Mr J Tierney
Mr D O'Connor
Mr E ONeill
Mr T Hamilton
Mr S Wilson
Mr M Robinson
Mr G Kelly
Mr B Hutchinson

Apologies: Mr F Cobain (Chairman)
Sir J Gorman

In Attendance: Mr S Graham (Committee Clerk)
Mr L Hart (Assistant Committee Clerk)
Ms V Surplus (Executive Support)
Miss F Douglas (Administrative Support)

Ms Gildernew took the chair at 2.14 p.m.

Private Session

Mr Kelly left the meeting at 3.27 p.m.

Mr ONeill, Mr Tierney and Mr Hamilton left the meeting at 4.10 p.m.

Public Session

6. The Social Security Fraud Bill

The Chairman welcomed Departmental Officials to the meeting at 4.10 p.m.

In attendance:

The presentation was recorded separately in verbatim minutes of evidence. The Chairman thanked the Officials and they left the meeting at 4.40pm.



Present: Mr F Cobain (Chairman)
Ms M Gildernew
Sir J Gorman
Mr T Hamilton
Mr M Robinson
Mr J Tierney
Mr S Wilson

Apologies: Mr G Kelly
Mr B Hutchinson
Mr E ONeill

In Attendance: Mr S Graham (Committee Clerk)
Mr L McLernon (Assistant Committee Clerk)
Mrs J McMurray (Assistant Committee Clerk)
Ms V Surplus (Executive Support)
Miss F Douglas (Administrative Support)

Mr Cobain took the chair at 2.09 p.m.

Public Session

5. Social Security Fraud Bill

The Chairman welcomed Departmental Officials to the meeting at 2.17 p.m.

In attendance:

The question and answer session and scrutiny of the Bill were recorded separately in verbatim minutes of evidence

Clause 1 - "Additional powers to obtain information"

The Committee divided Ayes 4, Noes 2.

Clause 2 - "Electronic access to information"

The Committee was content with Clause 2.

Sir J Gorman joined the meeting at 2.34 p.m.

Clause 3 - "Code of practice about the use of information"

The Committee was content with Clause 3.

Clause 4 - "Arrangement for payments in respect of information"

The Committee divided Ayes: 5, Noes 1.

Clause 5 - "Supply of information."

The Committee was content with Clause 5.

Clause 6 - "Loss of benefit for commission of benefit offences"

The Committee was content with Clause 6.

Clause 7 -"Effect of offence on joint-claim JSA"

The Committee was content with Clause 7.

Clause 8 - "Effect of offence on benefits for members of offender's family"

The Committee was content with Clause 8.

Clause 9 - "Power to supplement and mitigate loss of benefit provisions"

The Committee was content with Clause 9.

Clause 10 - "Loss of benefit regulation"

The Committee was content with Clause 10.

Clause 11 - "Consequential amendments"

The Committee was content with Clause 11.

Clause 12 - "Interpretation of sections 6 to 11"

The Committee was content with Clause 12.

Clause 13 - "Delegation of functions"

The Committee was content with Clause 13.

Clause 14 - "Colluding employers"

The Committee was content with Clause 14.

Clause 15 - "Offence of failing to notify a change of circumstances"

The Committee was content with Clause 15.

Clause 16 - "Repeals"

The Committee was content with Clause 16.

Clause 17 - "Commencement"

The Committee was content with Clause 17.

Clause 18 - "Short title and interpretation"

The Committee was content with Clause 18.

Schedule - It was agreed that it should stand as part of the Bill

The Chairman thanked the Officials and they left the meeting at 2.45 p.m.



Present: Mr F Cobain (Chairperson)
Mr T Hamilton
Mr B Hutchinson
Mr D O'Connor
Mr M Robinson
Mr J Tierney

In attendance: Mr S Graham (Committee Clerk)
Mr L McLernon (Assistant Committee Clerk)
Miss F Douglas (Administrative Support)

Apoligies: Ms M Gildernew (Deputy Chairperson)

Mr Cobain took the Chair at 12.30pm


Social Security Fraud Bill: Draft Report

The Committee considered the draft Report, proposed by the Chairperson.

Resolved: The Committee agreed the draft Report.

Resolved: The Committee ordered the draft Report to be printed.

Resolved: The Committee agreed that the Chairman could approve the minutes of this meeting without further recourse to Members.





Thursday 5 July 2001

Members present:
Ms Gildernew (Deputy Chairperson)
Mr B Hutchinson
Mr O'Connor
Mr M Robinson
Mr S Wilson

Mr John O'Neill )
Ms Doreen Roy ) Department for
Ms Sandra Lowe ) Social Development
Ms Carol McAlister)


The Deputy Chairperson: You are welcome to the Committee session.


Mr J O'Neill: The Minister has addressed the Committee on the background to the Bill and its main provisions. He also spoke at length about the general principles of the Bill at its Second Stage. I will outline those points.


There has always been parity between Great Britain and Northern Ireland in regard to social security. Northern Ireland residents pay the same national insurance contributions and taxes as people in Great Britain; they also receive the same benefits. However, rights to benefits must be matched by obligations to society. If it is right that we should enjoy the same benefits as people in Great Britain, it is equally right that we should play our part in tackling the problem of benefit fraud. Social security fraud in the UK costs at least £2 billion a year. The majority of those who claim benefit are honest, and it is unfair on them and the taxpayers who foot the bill that a minority cheats the benefits system.


The Grabiner report on the informal economy contained a series of recommendations of ways to combat benefit fraud. The Bill seeks to turn many of those recommendations into action. Fraud takes place when people lie about their circumstances to gain benefit. The main types of fraud are: working and not declaring earnings, including those of a partner; undeclared capital; undeclared income from other sources; misrepresentation of family circumstances, for example, a claimant's failure to declare that he lives with a partner; residency fraud and identity fraud.


Fraud is not, as is often portrayed, a small-time activity, or a victimless crime; it is more often a planned, calculated act. A variety of frauds is perpetrated against the benefits system, ranging from the opportunistic - such as the person who does not tell us that he has started work - to the highly organised criminal gangs involved in counterfeiting or stealing instruments of payment and running false identity frauds.


Through the Bill the Department is seeking to reduce fraud by prevention and early detection. It will use its powers to acquire data from the private sector. It will also deter potential offenders with its power to remove benefits from persistent benefit offenders and will exercise the swift, effective punishment of collusive employers.


One of the key recommendations in the Grabiner report is that the Department should have the power to take benefits away from those who persistently abuse the benefits system. That power will be used to deter hardcore benefit cheats by conveying the message that they cannot repeatedly commit fraud and expect to claim benefit again, as if nothing has happened.


The Bill provides that those convicted of benefit fraud will be warned that a further conviction within three years will mean that they lose benefits for 13 weeks. That would happen when they defraud any social security benefit, and the Department refers to those benefits as "disqualifying benefits". That sanction will only apply to a small range of benefits - the sanctionable benefits. The sanction will not apply to benefits for supporting children - such as child benefit or guardians' allowance - or to those benefits that meet the extra cost of disability - DLA and Attendance Allowance.


However the Department has included a safety net in the system to protect the vulnerable - those people and their families who rely on income-related benefits. People who are on an income-related benefit - for instance, jobseeker's allowance - will be able to apply for help under a hardship scheme if their other resources are insufficient to prevent them from reaching hardship benefit levels. The rest of the household will be unaffected. The reduction will only apply to the personal allowance of the offender.


People on income support will have automatic access to such a scheme. Housing benefit will still be granted and access to other benefits, such as milk tokens or free school meals, is maintained. The hardship scheme closely mirrors the scheme that already exists for labour market sanctions. It has been tried and tested. It aims to provide a punishment that reminds the offender that fraud will not be tolerated, but it also aims to ensure that offenders and their families do not suffer unduly.


It is a deterrent measure, and the Department does not expect that it will be applied to many people. In fact, the reverse is intended: the fewer people who are subjected to the sanction the better, because that would mean that it is having its intended effect.


The Grabiner report also stressed the need for access to details on claimants' financial, and other, circumstances as a recommendation for dealing with benefit fraud. Fraud is committed when people tell lies or conceal facts about their circumstances. If the Department wants to root out this type of fraud, it needs to be able to check claimants' details with a third party. For instance, if the Department suspects that a claimant is claiming benefit and also concealing wages, the Department would be able to cross-check information held by independent sources, for example, banks.


The Bill includes measures to allow officers authorised by the Department or the Housing Executive to acquire information from specified private and public sector organisations such as banks, building societies and credit reference agencies, where it has reasonable grounds for suspicion.


These powers are not a carte blanche to pry into people's bank accounts. The draft code of practice that I sent to the Committee following its meeting with the Minister sets out how the powers will be used. First, what constitutes "reasonable grounds" varies from case to case, and it is therefore impossible to include specific conditions in the legislation. For instance, there are reasonable grounds for suspicion if there is a basis for believing that a person was fraudulently claiming benefit.


Staff who are authorised to use those powers will be required to analyse and record their grounds for suspicion. They will have to consider in each case whether the circumstances suggest that there is an innocent explanation as opposed to fraud. Staff might have objective statistical evidence that shows that the individual is disproportionately likely to be fraudulent. People who commit benefit fraud tend to do it again and are therefore more likely to be fraudulent. Certain selected and trained officers in the Social Security Agency will use the power - it will not be available to every officer in every Social Security office.


The Bill also seeks to tackle the problem of housing benefit paid for empty properties. In some cases this constitutes calculated fraud, because the address is used to support a claim, for instance, an application for income support or jobseeker's allowance made using a false identity. Another instance is where the tenant simply abandons the property without bothering to tell his landlord or the Housing Executive. To stop that we must obtain information from the utility companies about an abnormal consumption level of electricity or gas, which might indicate benefit fraud. For instance, if a claimant states that he is living in a property at which there is no consumption of electricity or gas, one can begin to doubt whether he is living there. These levels of consumption can be checked with the utility companies.


We have looked beyond the problem of people claiming benefits while working, and have focused on one of the major facilitators of this crime: employers who are more than happy for the state to subsidise their wages and national insurance bills by colluding with their employees in committing that type of benefit fraud. They take advantage of their workforce by denying them proper terms of employment, and they gain unfair advantage in the market by paying low wages.


Prosecution of employers who have colluded in benefit fraud can be lengthy and costly, and that is not always the most effective way to tackle the problem. We will continue to prosecute the most serious cases, but for the less serious the Bill will allow for the application of a swift civil penalty, which will bring home the message that operating in the informal economy carries a high price and will not be tolerated. That will strengthen the ability of the Department and the Housing Executive to bring to book employers who collude with employees in social security fraud. We could offer an administrative penalty of £1000 to £2000 to a colluding employer as an alternative to prosecution.


A great deal of fraud - estimated at up to 70% - occurs not at the start of a claim, but during its currency, when changes of circumstance that affect benefit entitlement go unreported. Current legislation does not impose a watertight duty on claimants to report changes, and is therefore inadequate, particularly in cases where payment is made directly into a bank account and therefore there are no signed declarations of unchanged circumstances. The Bill will reform those powers to ensure that they are effective and to give a clear message that such sins of omission are nonetheless crimes, which will be punished.


There are a number of tidying-up measures in the Bill that clarify the legislation that enables the prosecution of claimants who deliberately fail to report changes in their circumstances. They allow the Department and the Housing Executive to operate together to offer administrative penalties in place of prosecution in cases involving housing benefit and benefits administered by the Department for Social Development. It will strengthen arrangements for the supply of information by the Housing Executive to the Department or to the Secretary of State for Work and Pensions by specifying in the directions, rather than in the regulations, what information is required.


The Deputy Chairperson: After reading through the explanatory memorandum, I felt that the Bill contains some draconian measures, and I am not convinced otherwise by what you have said today. As part of my work, I meet vulnerable and marginalised people who find it difficult to access benefits, and the Bill will make access more difficult. Do you have figures that support your evidence of fraud? How much money is not claimed by those who are entitled to benefit, and do problems in the system mean that people do not have access to their just entitlements?


I do not argue that people should be given an easy ride. However, in my experience, many people who are entitled to benefits do not get them. A great deal of time and money is spent in chasing fraudulent claims rather than making the system easier for the claimants, and for the elected representatives and community workers who fill out the forms on their behalf.


There needs to be a system in which anyone who can work does so. Those who cannot work should not be treated like criminals, but in many cases that is the case.


Mr J O'Neill: You must separate the problem of benefit take-up from the level of fraud. We estimate that about £73 million per year is fraudulently claimed in Northern Ireland. If there were less fraud, there would be less need to devote resources to detecting that fraud and dealing with it. Those staff resources could be devoted to making sure that people receive the benefits to which they are entitled. Public money is being paid out, and we have a duty to make sure that it is paid to those who are entitled to it, therefore we cannot ignore levels of fraud.


This Bill seeks to deal with specific kinds of fraud, particularly that perpetrated by people who receive benefits through the automated credit transfer system. Admittedly, these comprise a small number of cases, but it is difficult, if not impossible, to carry out prosecutions at the moment. When someone signs a giro cheque or an order in the order book every week they are saying that they have specific circumstances that have not changed. They receive their benefit payment on that condition. Under automated credit transfer the money is paid automatically each month into a bank account. Often there is a failure to report changes in circumstances that would result in the money not being paid, or a lesser amount being paid. The fraud can continue for a long time. We have to prove, to the court's satisfaction, that the money was paid each month, and that the circumstances had changed. We have great difficulty in doing that at the moment. The Bill will try to tackle that problem.


You describe the powers as "draconian". However, in some cases we need further evidence in order to prove that a fraud is being committed. For example, someone who is in receipt of benefit may say that they are unemployed, but they may have been seen on a building site, as a result of which we suspect that they are working. In a limited number of cases such as that, we would want to check whether a regular amount is being paid into a bank account, which would suggest that a monthly wage is being paid.


We are dealing with a limited number of cases of automated credit transfer fraud. We have identified roughly 228 cases of suspected fraud that were recently investigated, but did not result in a prosecution, because we did not have the evidence to prove that the claimants' circumstances had changed. It is impossible to apply a monetary figure, because we do not know how long the fraud had been going on in each case, or the amount of benefit involved. It could have been a small amount, over a long time, or a large amount over a short time. Prosecuting these cases is a problem.


We want these new powers because we have a deficiency in power. The new powers will not mean that in every case of suspected fraud the claimant's bank account will be accessed and examined. That would only happen in cases where there are reasonable grounds to suspect that fraud is going on. In many cases, when the bank account is examined, nothing will happen, because there is an innocent explanation for the perceived discrepancy.


The information will only be accessed by certain staff in the Social Security Agency's benefit investigation service. It will not be accessed by the investigator who is conducting the case, but by another person who is authorised and trained, and who will operate under the code of practice that we have given you. That code will be subject to public consultation. There will not be dozens of people running around the Social Security Agency, looking into bank accounts. A limited number of people would investigate those cases where it is necessary to find out more about a suspected fraud.


Mr O'Connor: Mr O'Neill, you said - although perhaps I misunderstood - that there is poor benefit uptake because so much time is spent chasing fraud. However, is it not the case that departments of the Social Security Agency do not talk to each other? The Comptroller and Auditor General's report clearly showed that the different departments in the Social Security Agency do not cross-check claimants' details to see whether they are claiming other benefits. You could do more to prevent that. I have a problem with utility companies accessing claimants' bank accounts to find out how much electricity or gas they use. Does that not infringe article 8 of the European Convention on Human Rights (ECHR), which provides for the right to a private and family life?


We know that there are various types of fraud, giro drops and that there are drug dealers who claim the dole. People want to see that stopped. Where do you draw the line between stopping that and directly infringing people's human rights? If someone is unemployed, does that mean that they have a lesser right to privacy, or that their private affairs should be more open to public scrutiny than anybody else's? Others are probably committing tax fraud involving more money than the sums we are discussing, and the same effort is not made to stop them. How do we uphold people's civil liberties?


According to your code of practice, I will not know if you check my bank account. Someone may have a grudge against me and report me out of malice, yet people can delve into my private affairs. In a way, it is like a burglar coming into your house without stealing anything. I want some reassurance from you.


Mr J O'Neill: Checking information with a private source might interfere with a person's right to a private life. However, article 8 of the ECHR allows for public authorities to interfere with that right where the interference is in accordance with the law and necessary in a democratic society for, among other criteria, the economic well-being of the country, and the prevention and detection of crime.


The powers are necessary because fraudsters lie to us, and we need to cross-check their information with that of third parties. The code of practice is there. If the Department prosecutes someone for fraud, it is perfectly proper for the person being prosecuted to argue that the code of practice was not complied with in how their bank account was accessed. While the code of practice is not legally binding, the court can take into account compliance with it, or failure to comply, when deciding the case.


Mr O'Connor: What happened to the principle of innocent until proven guilty? This Bill will allow for the invasion of privacy of people who are on the dole, who may not actually be committing fraud. This will involve looking into people's private affairs, without even telling them that you are doing it. No words that you say will convince me that you need to do that. If someone is convicted of fraud, their bank accounts and utility usage should be checked, but to delve into people's private affairs on the basis of an anonymous phone call is invasive.


Mr J O'Neill: The Department must gather evidence before a prosecution can be carried out - it cannot simply go to court and claim that an individual committed fraud. That information needs to be produced in court as evidence of the alleged fraudulent activity. The court then decides whether the Department has produced sufficient evidence upon which to make a conviction. Some of that evidence may come from someone's bank account, but there will be other evidence upon which to mount the case.


The Deputy Chairperson: There is a very genuine concern that an informer who makes a phone call does not have to produce evidence, but on the basis of that call you can delve into people's bank accounts. Can the Committee put further questions, including those asked at its last meeting, in writing to the Department?


Mr Hutchinson: I want to examine the standing of the draft code of practice. John O'Neill was present when the Minister made a bid for accelerated passage of the Social Security Fraud Bill. Several people were concerned about whether the Bill was ours or adapted from Westminster. What is your view on that, and will we be able to question that aspect?


Mr J O'Neill: The draft code of practice will be very similar to the one in Great Britain, because the Bill before you is the same as the Social Security Fraud Act 2001, which already has Royal Assent in Westminster. It is natural that this code should closely follow that, although the references to housing benefit will be changed slightly. The code of practice will be published in draft form for consultation.


Mr Hutchinson: Is that separate from the Westminster process? Will we get an opportunity to discuss the code of practice?


Mr J O'Neill: Yes. Before it issues or revises anything, the Department prepares and publishes a draft code and considers any representations that it receives about the draft. Members of the public, the Committee, MLAs - anyone can come to the Department with their views on the code and the Minister will take those into account before he decides what version of the code to publish. That is stated in clause 3 of the Bill.


Mr S Wilson: First, I accept that you have to seek this information, because interviewing someone about any crime does not imply that they are guilty even before the case comes to court. Throughout the Bill, it is stated that there must be reasonable grounds for making a request for information on someone's bank account. Can you give me a definition of the term "reasonable grounds"? Would an anonymous telephone call alone be reasonable grounds for making an inquiry about someone's bank account?


Mr J O'Neill: A member of staff at the Social Security Agency might see working on a building site from time to time someone whom they know to be a jobseeker's allowance claimant. That is direct evidence to back up the suspicion that someone is working whilst claiming benefits. Other evidence could be a tip-off or a phone call. We must take into account the way in which the suspicion of the Department is aroused. There could be evidence of previous fraudulent activity - fraudsters often reoffend two or three times.


There is also the question of how to investigate the matter. It might be possible to get the evidence you require without looking into someone's bank account - it depends on the circumstances. You could ask an employer directly whether someone was working for them, instead of checking whether money was being paid into a bank account on a monthly basis.


It is difficult to give examples, because fraud can vary depending on the case. If people are claiming housing benefit, but no one is living on the premises, you can access utility companies' records to see if there is any consumption of electricity or gas or a connected phone that is not in use. Such evidence would constitute grounds for further investigation. That may not result in a case being taken to court, but the Department would have to investigate that matter because, as custodians of public money, we cannot allow fraud to continue without investigating it.


It is not the case that people are not getting benefits because too much time is being spent on fraud investigation. We have to balance the amount of time that we spend on fraud investigation against the way that we use resources to ensure the take-up of benefit, which is a complex matter that varies from one type of benefit to another.


We are running campaigns to encourage the take-up of certain benefits. We have plans for a Bill on pension credit that will presumably be coming before the Assembly in the next session. It will deal with the problem of low take-up of benefits by pensioners. More resources are being directed towards that problem.


We must continue our efforts to deal with fraud, otherwise this money could be given to people who are not entitled to it. The Department and the Social Security Agency must spend a certain amount of their resources on investigating cases of suspected fraud.


The Deputy Chairperson: I do not mean to be pedantic, but you are probably spending the same amount of money investigating people who are defrauding the system, as those people are claiming through their fraudulent activities. I appreciate that we are only at an initial Committee stage and we will go through these clauses again and continue to work on this issue. However, you are very blasé about the low take-up of claims and benefits. If the same effort, time and resources were put into ensuring that people got their benefits as is put into efforts to stop fraud, in general, people would be better off. We will put further questions on this issue to the Department.


Mr B Hutchinson: How much money is being spent on taking people to court, and how much do those people fraudulently receive. There has been much discussion about bank accounts. I know at least two women who have been threatened with court action in the last two months, and neither can afford to open a bank account. They are out working at 6am, for about £10 per day.


Are those women typical of the people being taken to court for suspected fraud, or is action mainly taken against professional fraudsters involved in different benefits scams?


Mr J O'Neill: The Minister previously told the Committee that the Social Security Agency has a general rule of thumb. In some cases, depending on the level of suspected fraud, a caution may suffice. It is only when the fraudulent activity goes beyond a certain level that a prosecution takes place.


Mr B Hutchinson: Do you know what that level is?


Ms Lowe: If the overpayment is £350 or less, we will consider administering a caution. If it ranges from £350 to £1,500, we will consider an administrative penalty. We consider an overpayment in excess of £1,500 to be a fairly serious offence and, in such cases, we would generally prosecute. That does not mean that someone whose overpayment falls within the lower range could not be prosecuted. Each case is examined on its own merits. We take into account the nature, duration and type of the fraudulent activity and we use this system as a general guide.


Mr B Hutchinson: Is it therefore a question of how much benefit a claimant receives, as opposed to the amount that he earns in addition to that benefit?


Ms Lowe: That would be taken into account when making the decision.


Mr S Wilson: In one clause, authorisation for payment for information from an agency is sought. Do you know what the standard charges will be for fishing for information from a credit agency, a credit card company, a bank and so on?


Mr J O'Neill: That will have to be negotiated. This provision is a deterrent rather than a measure that will apply to many cases. It does not apply to those who do not have bank accounts, as we have no way of accessing information on them. It would apply in cases where somebody has bank or building society accounts that we want to examine, but only when the authorised officer within the Social Security Agency is satisfied that it is necessary to do so. The person investigating the fraud will not make that decision. Rather, the person within the benefit and investigation service will go to the bank and access the details. That information can only be used for that specific purpose and cannot be disseminated elsewhere throughout the agency. It will only relate to that specific fraud investigation.


Ms Lowe: Payment is really only an issue if we are looking for a large amount of information. That would generally only apply in the case of very major - most likely organised - fraud, and we hope that such cases would be relatively few.


Mr J O'Neill: We are damned if we do and damned if we do not. If we do not pursue fraudsters we are criticised by the Public Accounts Committee, then we are criticised for spending too much time on pursuing them and not enough on ensuring benefit take-ups. It is a matter of balancing resources and dealing with each problem as it arises.


The Deputy Chairperson: We hope to see more of you between now and the final stages of this Bill. Thank you for coming.


Thursday 6 September 2001

Members present:
Mr Cobain (Chairperson)
Ms Gildernew (Deputy Chairperson)
Sir John Gorman
Mr Hamilton
Mr M Robinson
Mr Tierney
Mr S Wilson

Mr J O'Neill )
Ms D Roy ) Departmental Officials
Mr D McCurry )
Ms S Lowe )


The Chairperson: Welcome.

Clause 1 (Additional powers to obtain information)


Mr S Wilson: Mr Chairman, perhaps I might draw your attention to the list of people in subsection (2) from whom we may seek information. It says that the officer will not exercise that right unless he has "reasonable grounds" for believing that the person to whom it relates is personally committed and so on. Are those "reasonable grounds" detailed anywhere?


Mr J O'Neill: "Reasonable" depends on the circumstances in each case. The code of practice which we are proposing is at the back of the book which you have examined already. However, it is not the final version - we cannot publish the final version for consultation until the Bill has passed through the Assembly. It is difficult to define "reasonable" since there would have to be evidence in front of the officers to suggest first that fraud was occurring and that there were suspicious circumstances. That could be evidence from observations by the Department's own staff or those of the agency - evidence of fraud committed previously and the suspicion that fraud was continuing. It is up to the officer concerned to make the assessment in each case as to whether grounds are reasonable.


Mr McCurry: Perhaps I could come in here. Subject to the passage of the legislation, we expect to have a small team of specially trained officers who will sift through all requests for information. In trying to determine whether it is reasonable to pursue a case and seek information, they will ask themselves questions such as what aroused suspicion, whether there is a case to answer and whether they can get the information from some other source in a less intrusive manner. While it is impossible to legislate for every eventuality, the code of practice which will go out for consultation when the legislation is passed and the training and guidelines to be issued to staff will provide further detail.


Mr Tierney: Previously the Committee expressed concern that some people were investigated and found to be innocent but not even aware that information about them was being sought. A phone call or a letter to the Department may lead to a person's being investigated. Who judges that? Who decides whether a phone call or a letter is sufficient evidence that a person should be investigated?


I ask this to protect departmental staff. I may query how you investigate a person. Perhaps there is not enough information to justify an investigation; perhaps a member of your staff wanted to find out about their neighbour, for instance. If a check is carried out on someone, they have the right to know and be reassured that everything is all right.


Mr McCurry: I work for the Social Security Agency. All allegations of fraud must be investigated to some degree, and they are sifted through a process which addresses some of your questions. The Social Security Agency will have a small team of authorised officers trained to ensure that the safeguards you mentioned are enforced. There will be management checks and audit trails in all the agency's work. All our work will be recorded through management checks. Customers may also ask for information.


Some information will not be released, but there will be an audit trail and management checks, and special training will be given to the authorised officers. The agency will not automatically use those powers in the first instance. It will examine alternative - perhaps less intrusive - ways of obtaining the information which will help it investigate the allegation.


Mr Tierney: I am not satisfied, for it is an intrusion. Officials have admitted to us that people have been investigated in the past and found to be innocent. You are telling the Committee that that will happen in the future, with people not even knowing they have been investigated, and that does not sound right. However, if you asked me to suggest another way to do it, I admit I should not be able to give you an answer.


The Chairperson: The only safeguard is that the Department should only investigate people when there is a bona fide case.


Mr Tierney: That is not the case. At the last meeting officials told the Committee they must investigate a case on receipt of a phone call or letter. Over the years I have talked to members of your staff who have told me that some of the cases are reported by jealous neighbours or someone who has been involved in a relationship break-up. The girl might report the fellow or vice versa - such things happen. Therefore, because someone is spiteful to you, or you have a jealous neighbour, you are open to this type of investigation, despite the fact that you are totally innocent.


Mr McCurry: Our staff will not automatically go to banks or building societies because of one piece of information; all the evidence will be gathered. Certain information concerning customers and their details is already held on benefit computer systems. We shall try to bring together all the information and make a judgement about whether we must ask a bank, building society or other financial institution to obtain the details.


Mr Tierney: Finally, could you give me an example of a lesser case than that which you would investigate? Before you would do so, the evidence would have to go beyond a certain point. I am asking a question to which I already have an answer - not the same answer you are giving now. If a letter were sent or a phone call made, would you proceed with the matter? At what stage would you say "no"?


Mr J O'Neill: If there is an allegation - be it in the form of an anonymous letter or not - that someone is claiming benefit fraudulently, it would have to be examined on the basis of its credibility, usefulness and source. If the source were in some way related to the person concerned, you would treat it as one piece of evidence rather than as the basis of a decision to seek information from a bank. You would need other collaborating evidence of some suspicion. Not every social security officer has the power to go to the bank. It would be limited to a certain number, and the evidence would have to go from a local social security office to such people before they could decide whether they wanted to go to the bank.


Mr S Wilson: The "reasonable grounds" you are talking about would be that you receive a complaint or an allegation. You examine it with regard to what your own resources will tell you. For example, if someone says that Sammy Wilson is "doing the double", you find out from your own offices whether he is signing on regularly and so on. If there is suspicion at that stage, is it only then that you would have "reasonable grounds" to investigate bank accounts or whatever?


Mr J O'Neill: You would examine whether someone were saying they were not working and look for evidence from bank accounts of regular payments of similar amounts coming in each month. You would then assume that the income was from a certain source - that is evidence. There must be logical, sound reasons ascertained by a person in the Social Security Agency before he can investigate a bank account. It is not simply a case of an officer in a local office receiving a letter and on that basis investigating a bank account.


Mr S Wilson: The first port of call is therefore not the bank but your own office?


Mr J O'Neill: If there is an allegation about someone who has already had a conviction for fraud, you will have reason to suspect something may be happening. You then consult your own evidence, and ultimately you might go to the bank or building society.


Ms Gildernew: I am very concerned about the measures proposed in the Bill. Many people relying on benefits have been almost criminalised in their attempts to claim; they find it difficult to access benefits to which they are entitled. Like other Members, I have had a number of complaints. We are always hearing about a lack of take-up of benefits. People are put off at every stage from claiming that to which they are entitled. The whole system makes it difficult for those entitled to benefits to access them. The measures for investigating fraud are very draconian, and that worries me. It seems that much more effort is put into investigating fraud than getting people the benefits to which they are entitled. There might be less fraud if the system were easier to access and people were treated properly.


I have had a quick look through the Bill. The Committee must do a great deal of work to ensure the Bill does not impinge on people's human rights and privacy. It has already gone too far.


The Chairperson: We must deal with the Bill clause by clause; otherwise we shall never get through it. I assume that it has all been proofed?


Mr J O'Neill: Yes. It has been proofed on human rights grounds. We have sought the appropriate legal advice for these circumstances, and the Minister has made a statement that, in his view, it complies with the European Convention on Human Rights.

Question, That the Committee is content with the clause, put and agreed to.

Clause 2 (Electronic access to information)


Ms Gildernew: Please record that I am not content with clause 2. I feel it goes too far regarding access to people's details.


Mr Tierney: I was not happy with the response to Sammy Wilson's question; the "reasonable grounds" did not convince me.


The Chairperson: We do not want to prolong the proceedings. We are dealing with social security fraud, and we shall have to deal with certain issues as a Committee. People will have to be given sufficient powers of investigation to reduce fraud in the system so that the money can be spent elsewhere. It is not easy, but we have responsibilities on this Committee as well.


Mr Tierney: I must respond to your remarks. Allowing them to pass would imply we were not against social security fraud; we are against it. It is a concern, and we know it must be tackled. However, that must be done in the proper way. For instance, people will be investigated without their even knowing it. However, I am totally opposed to fraud.


The Chairperson: Is this about the sharing of information between the Housing Executive and the Department for Social Development?


Mr J O'Neill: It is more to do with electronic access to information, so that rather than obtain the information in writing we can do so electronically where it is available - particularly credit references, which are mostly supplied electronically.

Question put, That the Committee is content with the clause.

The Committee divided: Ayes 4, Noes 2.


Fred Cobain, Mark Robinson, Tom Hamilton, Sammy Wilson


Michelle Gildernew, John Tierney

Question accordingly agreed to.

Clause 3 (Code of practice about use of information powers)


Mr S Wilson: At what stage will we be told the actual code of practice?


The Chairperson: After we have completed work on the Bill. We cannot discuss the code until the legislation goes through.


Mr J O'Neill: We have given you the draft code, but it will not be formally available to the public or anyone else until after the Bill has passed.


The Chairperson: We cannot discuss it until the legislation has gone through, though we have the draft.


Mr S Wilson: The clause is just giving them the power.

Question, That the Committee is content with the clause, put and agreed to.

Clause 4 (Arrangements for payments in respect of information)


Ms Gildernew: I should like clarification on the matter. The clause allows the Department to make payments for information obtained from credit reference agencies and telecommunications providers. I have heard that the Department has been considering the use of information from supermarket value cards to check the amount of money a person spends and decide whether they have been fraudulent.


Mr McCurry: That is the first I have heard of it. If it is not in the legislation, we shall not be able to enquire of those types of organisations; that much is clear.


Ms Gildernew: Will it go into the legislation that you will be able to enquire of Tesco?


Mr McCurry: No. The code of practice will be clear about the types of organisations of which we can enquire, for example banks and building societies. The list it will set out will not include supermarkets.


Ms Gildernew: I still feel that banks and building societies should not pass on information concerning people's bank accounts.

Question put, That the Committee is content with the clause.

The Committee divided: Ayes 5, Noes 1.


Fred Cobain, Tom Hamilton, Mark Robinson, John Tierney, Sammy Wilson


Michelle Gildernew

Question accordingly agreed to.

Clause 5 (Supply of information)


Mr S Wilson: What is the significance of replacing the word "prescribed" by "specified in directions given by the Department"?


Mr J O'Neill: "Prescribed" means prescribed by regulations, so each time we wish to change any of the arrangements, we must do so by means of amending the set of regulations before the Committee. Under the proposed change it will be under directions given by the Department, which are not in the form of Statutory Rules. They would therefore not be subject to the same lengthy process of change. It is quicker for it to be done by amendment rather than Statutory Rule.


Mr S Wilson: Give me an example. What could now be changed by the direction of the Department rather than having to introduce a Statutory Rule? Would there be any scrutiny of the changes the Department decided?


Mr J O'Neill: The regulations cover the manner and form in which the information is to be supplied. All we should be doing is changing the manner and form in which the information is to be supplied rather than the information itself. If we want information to come electronically from the Executive rather than in writing, it is laborious for it to be done by a Statutory Rule each time we change the method. It is therefore a direction made by the Department rather than a Statutory Rule.


Mr S Wilson: So it does not change the substance of the information you receive but the method.


Mr McCurry: You asked for an example. The type of information we currently receive includes the numbers of benefit claims determined and their outcome, information relating to overpayments and underpayments, methods of payment of housing benefit and information on anti-fraud activity generally. We already have processes in place to obtain that type of information on housing benefit. For example, we have electronic data transfer between income support, jobseeker's allowance claims and housing benefit so that, if someone makes a successful claim for income support, the housing benefit award can be granted automatically. It also lets our staff communicate more quickly with their counterparts in the Housing Executive to ensure that payments of both benefits are made promptly and ended simultaneously if a person returns to work.


Mr S Wilson: I want to be clear about the matter. Are you saying that the methods of transferring such information might change over the years and that it is to avoid having to do change Statutory Rules? Why not just include them all and say that you can do it by a, b, c, d and e? If it is so inconsequential - the way that you have described it, it sounds very innocuous - why not just have all those things prescribed so that everything is covered? The worrying thing is agreeing to something which leaves a fair amount of discretion to the Department without its having to come back. It may not matter, but it only creates suspicion when there are changes allowed which do not require public scrutiny or even public notification.


Mr J O'Neill: The regulations are about the method of transfer; they are not about what is being transferred. Previously, electronic data transfer was not possible, so it was not included in the regulations. When it became possible we had to include it. At present, a further development in data transfer would have to be provided for by an amendment to the Statutory Rule. In future, the provision would allow us to issue a direction to the Housing Executive stating that data transfer should be carried out by the new means, and we should not have to amend the Statutory Rule. This is similar to what is happening in Great Britain on the transfer of information between the housing authorities and the Benefits Agency.

Question, That the Committee is content with the clause, put and agreed to.

Clauses 6 to 12 agreed to.

Clause 13 (Delegation of functions)


Ms Gildernew: Can I clarify whether clause 13 takes into account cases where the Department or local office has mistakenly made an overpayment?


Mr S Wilson: It appears from the notes that it does. According to the clause, can you demand money back if I have not notified you that I have been overpaid, even though I might argue that I was not aware I had been paid an extra £10? Where the error is on the part of the Department, people who are on benefit and do not have a great deal of money may have received the payment in good faith. It is difficult to prove someone was aware of the mistake. The overpayment would have to be recouped from an already low level of income.


The explanatory note states

"it appears to the Department or those authorities that: the making of the overpayment was attributable to an act or omission on the part of that person."

It later says something about the part of the Department. Are you saying that you can recoup payment on those grounds?


Mr McCurry: The question of recoupment or recovery of an overpayment is a separate issue outside that of fraud per se. In all cases the decision would be taken by someone who works for the agency or for the Housing Executive if it concerns housing benefit. They would take account of the circumstances Mr Wilson outlined and make a judgement based on the circumstances of the case as to whether they should ask for recovery or recoupment. The circumstances that led to overpayment, including whether a mistake was made by either Department, would be taken into account before a decision were made. The individual customer will be notified if he or she is asked to pay the money, and the decision will be subject to appeal.


Those arrangements are normal in relation to overpayment and not peculiar to fraud. However, fraud cases also lead to overpayment of benefits that must be recovered.


Mr J O'Neill: The clause does not affect the rules relating to overpayment. If there is an overpayment in housing benefit and another benefit, it allows the Social Security Agency and the Housing Executive to operate jointly. It does not alter the law regarding overpayment of benefits. Instead it allows co-operation when there is a question of two different benefits.


Ms Gildernew: I take your point, but it says that this will mean two interviews and two sets of papers for the claimant. If an overpayment has been made accidentally by the Department and a person is dragged in for an interview, the word "offence" relating to overpayment in the explanatory memorandum implies that the person is guilty of something.


Mr J O'Neill: It is to do with fraud. There must be grounds for instituting proceedings against someone relating to an offence. In a case of offences relating to income support and housing benefit, it would allow the Housing Executive and the Social Security Agency to co-operate in imposing a penalty.


The Chairperson: An overpayment in itself is not fraud.


Mr J O'Neill: No, but this is only applicable in a case with fraud relating to two benefits. We are considering imposing an administrative penalty rather than prosecution. It deals with housing benefit, which is administered by the Housing Executive, and all the other benefits administered by the Social Security Agency. At present there is a separate administrative penalty for each. Under this provision the Housing Executive and the Social Security Agency could co-operate.


Mr McCurry: The point is that, in such circumstances, the fraud would already have been proven.

Clauses 14 to 18 agreed to.

Schedule agreed to.




Q1 What existing powers are available to the Department to combat fraud and what discussions took place between officials in Northern Ireland and Great Britain in the formulation of the Social Security Fraud Act 2001?

The existing powers available to the Department to combat fraud are contained in the Social Security Administration (Northern Ireland) Act 1992 as amended by the Social Security Administration (Fraud) Act 1997, the Social Security Administration (Fraud) (Northern Ireland) Order 1997 and the Child Support, Pensions and Social Security Act (Northern Ireland) 2000. The Act provides for:

Officials from the Department were closely involved with GB colleagues throughout the formulation and passage of the Westminster Bill. Involvement included attendance at meetings and working groups to discuss and agree proposed policy changes and offering advice and comments during the legislative process.

Q2 Is the Department satisfied that the proposed Northern Ireland Bill is in compliance with Human Rights legislation and how did it reach this determination?

Following legal advice, the Department is satisfied that the measures in the Bill comply with human rights legislation. Article 8 of the European Convention on Human Rights provides for the right to respect for a private life but allows public authorities to interfere with that right where it is in accordance with the law and, amongst other criteria, where it is for the prevention and detection of crime.

Q3 Will there be a Northern Ireland Code of Practice and how will it differ from the Code which applies elsewhere?

Yes, provision has been made for the issue of a statutory Northern Ireland Code of Practice in relation to the exercise of the powers to obtain information. As the Social Security Fraud Bill is parity legislation, the Code will be adapted from the Great Britain version to reflect any administrative differences in Northern Ireland.

Q4 How, and when, will the Northern Ireland Assembly be consulted on the Code of Practice and will it include a definition of the term 'reasonable grounds' as it appears in the proposed Bill?

Formal consultation on the Code will begin as early as possible after the Bill has completed its passage through the Assembly. As part of the consultation process, the Code will be distributed to a wide range of bodies and individuals, including members of the Assembly and a copy will also be placed in the Assembly Library. A period for response of at least 8 weeks will be provided.

The Code of Practice will address the term 'reasonable grounds' as far as is possible. However what constitutes "reasonable grounds" will vary from case to case and each case must be considered on its own merits with the Authorised Officer being wholly satisfied that there is convincing, logical information for suspecting fraud and that other less intrusive means have been considered and ruled out before making the decision to obtain information from a third party.

Q5 Under the proposed NI legislation, how does the Department intend to ensure consistency of approach amongst its staff in terms of deciding when to prosecute or apply administrative penalties?

The Department already operates a policy on sanctions for benefit claimants. The Bill extends the application of administrative penalties to employers. Guidance will be issued to ensure consistency of approach among staff involved in deciding when to prosecute or apply penalties. Such decisions will be subject to managerial checks, and mechanisms will be put in place to provide assurance on compliance with the policy and consistency of approach throughout Northern Ireland.

Q6 How will the Department determine if prosecution is a more appropriate course of action than administrative penalty and will this be included in the Code of Practice?

The Code of Practice is not about the application of sanctions - it is about how and when Authorised Officers can obtain information on claimants' bank account details. Departmental guidance will set out the conditions that must be met before an administrative penalty can be offered and the situations in which prosecution must be considered. Each case will be decided on its individual circumstances.

Q7 At what level, and where, in the organisation will the decision to prosecute be taken?

All cases are investigated by officers in the Department's Benefit Investigation Service (Social Security Agency). An interviewing officer, at Executive Officer level, makes an initial recommendation, based on all available evidence, whether or not to offer a sanction and, if appropriate, what type of sanction. This recommendation is evaluated by a Regional Team Leader in accordance with policy, guidance and instructions. The Team Leader then decides whether to prosecute or offer an alternative sanction. The case is then referred to a more specialist Prosecution Section for processing. Ultimately, the Director of Public Prosecutions decides whether or not to proceed with a prosecution.

Q8 What will be the 'Complaints Procedure' and how will it be publicised?

The Social Security Agency already has a clearly defined "complaints procedure" that is explained in the leaflet "Making a Complaint" which is available at social security offices and Post Offices. The Agency wiIl acknowledge any complaint within 2 working days of its receipt and will normally issue a full response within 10 working days.

Anyone who has a question about the way that an Authorised Officer has used the powers, or the reasonableness of the Authorised Officer's actions when obtaining information, should contact the Authorised Officer to discuss the matter. If this does not provide a satisfactory answer the complainant should contact the manager of the Benefit Investigation Service.

If the response is not satisfactory or is of a more serious nature, the complaint should then be directed to the Head of Benefit Security Services. Anyone who remains dissatisfied may write to the Agency's Chief Executive and ask him to look into the complaint.

Any member of the public can have a complaint investigated by the Independent Case Examiner. Alternatively, a complaint can also be referred to the Assembly Ombudsman.

The 'complaints procedure' will be set out clearly in the Code of Practice and addresses to where complaints should be sent will also be included. The Code will be placed on the Department's website.

Q9 Why does the Department consider it necessary to access bank accounts rather than asking those concerned to supply the information and who will be empowered to carry out this work?

Fraud occurs because people with intent to defraud misrepresent their circumstances. Obtaining information from third parties is both necessary and balanced. The powers that are now being proposed will only be used as a last resort when the information cannot be obtained by less intrusive means. The sources of information already open to the Department are not considered to be sufficient. If we ask for the claimant's consent, it is likely that those with intent to defraud will decline consent. The Department has a duty to check the information claimants give if we think that information may be wrong - if we did not, claimants with intent to defraud could continue to obtain money to which they were not entitled. Given the level of social security fraud, and the safeguards provided in the Bill, we think it is proportionate to get this information from third parties.

Only a small number of Authorised Officers centrally based in Benefit Investigation Service will be able to use these powers and then only in accordance with the published statutory Code of Practice. They will receive appropriate training in the use of the powers and in Human Rights and Data Protection legislation.

Q10 What powers will the Department have to access accounts other than main accounts?

The Bill does not differentiate between different types of accounts.

Q11 What steps will the Department take before accessing bank account details of employers or claimants?

The steps and processes will be set out in the Code of Practice. These will include:

It is not the intention that the powers will be used to make enquiries into employers' bank accounts except on those occasions where the employer is the person under investigation for fraudulently claiming benefit.

Q12 What will be the Department's policy in acting on information supplied anonymously?

The Department has a duty to investigate all allegations of fraud. All allegations are subjected to risk analysis and prioritisation before being referred for investigation. Issues concerning sensitivity and malice are taken into account when analysing allegations that are made anonymously.

Q13 Will the Department advise employers and claimants that accounts have been accessed in cases where investigations do not lead to administrative penalty or prosecution.

No. Benefit forms will be amended so claimants know that all the information they provide may be checked with third parties. Individuals are free to ask for data held by organisations about them and this includes the Department. To go beyond these safeguards would be unprecedented in law enforcement.

Q14 Will the Department publish details of the number of accounts accessed and the proportion of cases taken for administrative penalty or prosecution?

There are currently no plans for the information to be published. However, the information could be made available to the Committee if the Committee so wishes.

Q15 In pursuing fraudulent claims, will the Department treat employers and claimants in exactly the same way?

The Department will investigate all allegations of fraud in an equitable manner irrespective of whether they relate to claimants or employers.

Q16 What proportion of resources is presently dedicated to the recovery of fraud and how does this compare with:

The Social Security Agency's administration budget for 2001/02 is £154.5m of which £16.1m is contributed by the Department for Work and Pensions (GB) to support back office functions carried out in Northern Ireland. From the remaining budget of £138.4m, an allocation of £5.075m (about 4%) is dedicated to fraud prevention and detection. The total programme expenditure for benefit payment in 2000/01 was £3.059 billion. Other resources have been allocated to tackle wider incorrectness in the benefit systems but they are not specific to fraud.

It is not possible to make the comparative analysis requested. Tasks such as uptake and payment of benefit are not always assigned to specific staff but are part of the wide range of duties that all benefit staff carry out. These include providing information and advice to claimants and presentations to outside groups to raise awareness of benefit entitlements as well as assessment and payment of benefit claims.

Q17 Does the Department consider that the cost of administering the new law will be more or less expensive than the sum presently expended in pursuit of fraudulent claims?

The Department will continue to invest existing levels of resource to combat fraud and error in social security systems. It is estimated that the additional cost of administering the new measures introduced by the Bill will be about £82.5k per annum.

Q18 What action has the Department taken within the organisation to ensure greater sharing of information about the extent of claimant details in an effort to reduce the proportion of accidental fraudulent claims?

The Social Security Agency regularly data matches claimants' information held on its own computer systems to identify discrepancies. It is also working closely with a number of other organisations and government departments, for example, the Northern Ireland Housing Executive, the Training and Employment Agency, and the Inland Revenue to ensure greater sharing of information.

Q19 Over the last 5 years what has been the level of investigation, administrative penalty and prosecution (successful and otherwise), the amounts involved, the associated administrative and legal costs and the level of recovery?

Details are provided in the table below.













Successful - cases resulting in change to entitlement






Successful prosecutions






Closed after referral to DPP






Administrative penalties






Branch running costs

Not Available

Not Available




The Department has set a Public Service Agreement (PSA) target to achieve an annual 5% reduction in the level of fraud and error across benefit systems.

Q20 What steps will the Department take to ensure that dependants do not suffer hardship as a result of investigations and subsequent prosecutions?

The Bill contains provisions designed to protect the most vulnerable i.e. those people and their families who rely on income-related benefits. People on income-related Jobseekers Allowance will be able to apply for help under a special hardship scheme if their resources are insufficient to prevent hardship. They will be paid at a rate which reduces the offender's personal allowance by 40% - or 20% for cases of particular risk e.g where a member of the household is seriously ill. Benefit levels for other members of the household will be unaffected. Housing Benefit will continue to be paid in such cases and access to other "passported" benefits will remain.

Q21 What assessment has been made of the proposed powers compared with other parts of the public sector where fraud is regarded as being significant and worthy of recovery?

No formal assessment has been made to compare the powers in this Bill with those available to other organisations within the broader public sector. However, we understand that powers available to the Inland Revenue and Customs and Excise are similar to those proposed to be made available to the Department. We also understand that they are not required to operate within a statutory Code of Practice, as will be the case for the Department under its new powers.