Welfare Reform Act 2007

Benefit fraud

Sections 46 and 47: local authority powers to investigate and prosecute benefit fraud

239.Section 110A of the Social Security Administration Act 1992 allows local authorities to investigate fraud against local benefits (i.e. housing benefit and council tax benefit). However, significant doubt has arisen as to whether this allows them to investigate fraud in connection with national benefits administered by the Department for Work and Pensions. In particular, the doubt exists where entitlement to a national benefit means that a claimant automatically satisfies some eligibility conditions to a local one. This reduces the scope for effective joint working between local authorities and the Department for Work and Pensions to investigate and prosecute fraud cases that involve more than one benefit. The Government estimates that around 50% of fraud against a local benefit also involves fraud against a national benefit.

240.On 10th March 2005, the Government published a consultation paper(8) setting out proposals to remove the doubt by using powers in the Regulatory Reform Act 2001. Forty eight responses were received, the overwhelming majority of which were in favour of the proposals. However it became clear that the use of a Regulatory Reform Order would not be able to deliver an effective set of powers for local authorities. Therefore the Government announced to Parliament in a written Ministerial statement on 18th July that it had decided not to proceed with the Regulatory Reform Order, and instead to seek to address the issue in this Act.

241.Most cases of national benefit fraud will continue to be investigated by the Department for Work and Pensions. However, the Act provides local authorities with clear powers to investigate and prosecute offences in relation to national benefits where they already have power to investigate and prosecute offences concerning local benefits.

242.While it is proposed that Scottish local authorities be allowed to investigate offences against national benefits, the power to prosecute would not apply in Scotland, where the Procurator Fiscal is responsible for the prosecution of all criminal offences.

243.Section 46 sets out the scope of the new provisions which give local authorities administering housing benefit or council tax benefit a wider power to investigate benefit fraud. The measures in this section permit them to investigate offences concerning social security benefits administered by the Department for Work and Pensions.

244.Section 46 extends the powers of local authority authorised officers to permit them to obtain information from persons such as employers, pension providers, financial service companies, utilities and educational organisations for "relevant purposes" that relate to:

• the entitlement to social security benefits;

• whether benefit legislation has been contravened; and

• the prevention or detection of benefit offences.

245.This brings the investigative powers of local authorities generally into line with those available to the Department for Work and Pensions and allows them to obtain information relating to national social security benefits in addition to housing benefit and council tax benefit. However, local authorities will not be able to obtain information about the circumstances of accidents or injuries giving rise to claims for benefit, because such a power would be unnecessary for the investigation of benefit fraud. The measures will not add to the list of persons who may be required to provide information.

246.Subsection (3) gives the Secretary of State power to prescribe in regulations that certain conditions must be satisfied in order for an authority to make use of these powers. These "prescribed conditions" enable him to limit the powers in a way that ensures that only certain benefit offences may be investigated and to provide safeguards against misuse. Subsection (3) also gives the Secretary of State power to impose prescribed restrictions on the authorisation or to prescribe conditions in which an authorisation is invalid, again providing safeguards against misuse.

247.Section 47 creates a new power for local authorities administering housing benefit or council tax benefit to prosecute offences concerning "relevant social security benefits" as defined in section 121DA of the Social Security Administration Act 1992. It will do so by the insertion of a new section 116A into that Act.

248.Subsection (3) of new section 116A gives the Secretary of State power to prescribe in regulations that certain conditions must be satisfied before an authority can prosecute offences against national benefits. These conditions allow safeguards to be put in place to ensure that the authority's powers are not misused. The Secretary of State can also issue a direction preventing authorities from bringing prosecutions in certain types of cases, or directing a particular authority not to bring prosecutions (or a prosecution in a particular case) for example, where he considers that the authority has misused, or are likely to misuse, those powers. In situations where the local authority ceased to satisfy the prescribed conditions, or where he has issued a direction, the Secretary of State will have a power (see subsection (4)) to continue with the prosecution himself rather than see the charges dropped. Subsection (5) provides that, in exercising its prosecution powers under the new section 116A(2), a local authority must have regard to the Code for Crown Prosecutors.

249.Subsection (7) of new section 116A clarifies that the powers would apply in England and Wales only, because the Procurator Fiscal is responsible for the prosecution of all criminal activity in Scotland.

Section 48: Local authority functions relating to benefit: information

250.This section provides for a number of changes to the information sharing provisions contained in the Social Security Administration Act 1992 by giving local authorities access to information relating to national benefit offences as well as allowing the Secretary of State to obtain information from them relating to those offences. These changes are of a consequential nature, in that they are necessary to allow the new investigation and prosecution powers to function effectively.

251.Currently, section 122C of the Social Security Administration Act 1992 permits the Secretary of State to disclose information to local authorities for purposes relating to the administration of, and offences against, housing benefit and council tax benefit. Restricted in such a way, local authorities will not have access to information and evidence held by the Department for Work and Pensions relating to national benefit offences. Subsection (1) amends section 122C so as to allow the Secretary of State to disclose to local authorities information relating to national benefit fraud investigations and prosecutions. This extension applies to the investigation and prosecution of benefit offences only, and does not extend his power to supply information to local authorities for administrative purposes more generally. This information may include details about the award and payment of benefits as well as copies of claim forms and other signed declarations.

252.Section 122D of the Social Security Administration Act 1992 allows the Secretary of State to require an authority to provide him with certain information relating to social security or benefit policy. As a result of the measures in the Act, authorities will be able to obtain information relating to national benefit fraud investigations that would be relevant to the Secretary of State in preparing future policy and expenditure estimates for national benefits, but which the Secretary of State could not currently obtain. Subsection (2) amends section 122D so as to permit the Secretary of State to require a local authority to provide him with information it had obtained during the investigation or prosecution of a national benefit offence.

253.Section 122E of the Social Security Administration Act 1992 currently contains a power allowing local authorities to share information amongst them, so long as it is information relating to housing benefit and council tax benefit. Unless this restriction is removed, local authorities will not be able to share information relating to national benefit offences in the same way that they are permitted to share information relating to local benefit offences creating a number of anomalies for the way that local authorities investigate fraud. For example, local authorities could continue to conduct joint investigations into housing benefit fraud but could not work jointly to investigate national benefit offences because they would be prevented from sharing information relating to those offences. Subsection (3) amends section 122E so as to remove this restriction by extending the powers of local authorities to share information with other local authorities for purposes relating to benefit offences more generally. However, they will not be permitted to share such information for general administrative purposes. Subsection (4) makes a consequential amendment to section 126A(8) of the 1992 Act (power to require information from landlords and agents) so that it reflects the provisions of sections 122D and 122E as revised by subsections (2) and (3).

Section 49: Loss of benefit for commission of benefit offences

254.Subsection (1) would amend section 7 of the Social Security Fraud Act 2001, which enables benefit entitlement to be removed or reduced where a person is convicted of benefit fraud twice and the second offence was committed within three years of the date of conviction for the first offence. This amendment will extend the period between the date of conviction in the earlier proceedings and the date of commission of the offence in the later proceedings from three to five years. This will have the effect that a person’s benefit may be withdrawn or reduced if they commit a benefit offence, of which they are later convicted, within five years of a conviction for a previous benefit offence.

255.Subsection (2) provides that this amendment should be disregarded when considering whether an offence committed before the date that this section comes into force was committed within the relevant period. Where an offence was committed before the date this section comes into force, the relevant period will remain three years.