Prevention of Social Housing Fraud (Power to Require Information) (England) Regulations 2014

Baroness Stowell of Beeston Excerpts

Monday 24th March 2014 Grand Committee

Moved by

[Baroness Stowell of Beeston]

That the Grand Committee do consider the Prevention of Social Housing Fraud (Power to Require Information) (England) Regulations 2014.

Relevant documents: 22nd Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston)]

My Lords, the power to table these regulations is contained in the Prevention of Social Housing Fraud Act 2013, which your Lordships may recall was originally a Private Member’s Bill which was very ably introduced in and steered through your Lordships’ House by my noble friend Lady Eaton, and I am pleased to see her in her place.

Social housing is one of the most important resources we have as a nation, providing as it does so many hard-working people with the safety and security they need. While the vast majority of social housing is being used as intended, statistics show that around 98,000 of these homes are being occupied unlawfully, including those that are being sub-let without permission or that were allocated following a fraudulent application. Encouragingly, an increasing number of social landlords are recognising the importance of tackling this abuse of their stock. Yet, while the recovery rate is going up and has gone up about 50% since 2008, in 2012-13 only around 2,600 unlawfully occupied local authority-owned homes were recovered. It is clear that social landlords need more powers to tackle the problem. What they have told us is that they really need better access to data, and, when an offence is suspected, this is what these regulations will give them.

When investigating social housing fraud, it is important to be able to link the tenant or applicant to another address. I am about to explain what I mean when I say access to more data. This can show, for example, that an applicant for social housing owns a property that they have not declared on their application form, or that an existing tenant is actually living elsewhere, suggesting they are sub-letting the property that they were allocated in good faith. However, social housing fraud investigators cannot always get hold of the data that they need to prove their case. Currently, they can ask for information, but cannot compel it to be given. This means that in many cases their requests to holders of key data such as banks, building societies and utility companies are refused. These regulations will give local authorities the power to compel certain data-holders to supply them, for social housing fraud investigation purposes, with information that they hold. Local authorities already have such powers in relation to their social security fraud and council tax reduction scheme fraud investigations.

Clearly, the list of bodies that can be compelled to supply data should not be any longer than is necessary. When considering which types of organisation to include, we wanted to strike a balance between giving landlords access to the data that they have told us they need and not including those who we felt would be asked for information only very rarely. We will keep the list under review, so if it proves to be longer or shorter than is necessary we will seek to rectify matters. This Government are keenly aware of the need to protect individual freedoms, and a privacy impact assessment for this new power has been published.

The power comes with a number of safeguards. For example, requests may be made only if it is reasonable to do so. In practice this will mean that investigators must have made efforts to obtain via another route the data they need; this power will not be the first port of call. Information may be required only if there are reasonable grounds for believing that the person in question or a member of their family is committing, has committed, or intends to commit a social housing fraud offence. The protections set out in the Data Protection Act will continue to apply. These include requirements that the information obtained must be: fairly and lawfully processed; processed for limited purposes; adequate, relevant and not excessive; accurate; not kept longer than necessary; processed in accordance with the individual’s rights; and kept secure.

The intentional delay or obstruction of someone authorised to obtain data, or the failure or refusal without reasonable excuse to provide information when required to do so, will incur a maximum penalty of a fine of £1,000. Thereafter, continuing non-compliance will incur a penalty of up to £40 per day.

The Bill introduced by my noble friend Lady Eaton received generous cross-party support in both Houses before it became an Act. It gives landlords the tools they need to clamp down on the abuse of their stock. I therefore commend these regulations to the Committee, and I beg to move.

[Baroness Eaton (Con)]

My Lords, I am delighted that we are here today to see this stage in the process of tackling social housing fraud. My noble friend the Minister explained to us the amount of fraud that is still taking place, so the necessity for these powers to be made available is a very important factor. I am someone who is very much in favour of individual freedom, so I do not fit comfortably with lots of legislation forcing people to give information, but I am reassured by the safeguards that my noble friend described and the fact that the investigator should have tried all other possible routes before we get to the demand for data—and that the data protection legislation still applies.

I fully recognise the need for a penalty for those who still refuse to comply with the regulations as they are drafted and tabled. This is a really important move and I look forward very much to seeing the number of fraudulent lettings decrease enormously. As we are to have a review of what is needed and which lists of data are going to be necessary, I am sure that we will have more of an idea about how successful we have been in stamping out this unnecessary fraud.

[Lord McKenzie of Luton (Lab)]

My Lords, I again thank the Minister for introducing these regulations, which, as we have heard, are focused on facilitating investigation into social housing fraud. We support that focus and support these regulations. The Prevention of Social Housing Fraud Act 2013 introduced deterrents, additional to the right to terminate a tenancy, relating to unlawful subletting and recovery of profits. As we have heard, it was a Private Member’s Bill and was very ably steered through your Lordships’ House by the noble Baroness, Lady Eaton—we should again congratulate her on that effort.

We have common cause in tackling social housing fraud. Cheating on the system and denying those whose housing needs are thereby frustrated can in no way be condoned. This would be the same in any era, let alone that which faces us currently, with a housing crisis with, simply, too few new homes—private and social—being delivered; and notwithstanding also that those to whom social housing is unlawfully let may themselves be faced with appalling housing situations. We have heard the Audit Commission estimate that some 98,000 of the 4 million social homes are unlawfully occupied—4% of the stock in London and 2% elsewhere. Other estimates put it even higher. Whatever the actual numbers, we know that unlawful occupation prevents tens of thousands of social homes being allocated to the people who need them most. For many who let unlawfully, there are profits to be had: the difference between private sector rents and social rents. The inexorable rise of private sector rents make such letting potentially very lucrative. There is also the cost to the public purse of families being displaced into the private rented sector, with increased housing benefit bills.

As the privacy impact assessment makes clear, and in tune with what the noble Baroness, Lady Eaton, has just said, compelling certain private sector organisations to provide data to local authorities for social housing fraud investigation purposes raises important issues around privacy and data protection. It is asserted that although the key task of the social housing fraud investigation is to link the tenant to another property, through evidence of the receipt of rental income from a sublet or mortgage payments suggesting ownership of another property, the information reasonably requested should not include sensitive personal data. That analysis is one that we agree with. We accept that the powers sought in these regulations are based on the well established procedures for social security fraud and, indeed, are not as extensive in that levels of income, for example, are not needed. We understand that the fact that subletting is now a criminal offence itself enables organisations to lawfully disclose certain information but does not compel them—hence the need for new powers.

There are express safeguards surrounding these powers, which the noble Baroness, Lady Stowell, spelt out. I will not repeat them now. There are obviously, at least theoretically, robust safeguards but the issue is how they are being monitored in practice. The expectation is that local authorities will publish information through their Freedom of Information Act publication scheme—for example how often they use the gateway. There is also the expectation that they will comply with data protection principles around processing and handling the relevant data et cetera. Perhaps the Minister can just say a little more about what is expected in this regard and what local authorities’ records have been in relation to their powers in this regard to date. We will expect the Government to keep Parliament updated on how effectively the regulations are working in ensuring that social homes are reallocated, and on whether the anticipated savings are materialising, before the official departmental review in 2018. We are pleased to support these regulations.

[Baroness Stowell of Beeston]

I am very grateful to the noble Lord, Lord McKenzie, for his warm support for these regulations. I am also grateful to him for describing in some detail how the impact assessment on privacy has been carried out and what it contains. He is right—as, indeed, is my noble friend Lady Eaton—that we have to be careful that the relevant privacy issues are properly taken account of.

On that particular point, the noble Lord asked whether there was any evidence of misuse of these new powers. We certainly expect local authorities to have strong systems in place to prevent misuse. We would expect disciplinary action to be taken against an authorised officer who misused the power to require information because it is an offence to obtain unlawfully or disclose personal data. The Information Commissioner will be able to investigate complaints about the use of data by a local authority, and it will be for the Information Commissioner’s Office to investigate such claims. Should it find any failings in this area, it can, and will, give out fines for the misuse of data.

On the noble Lord’s questions about publication of the use of this power, that issue will be coming through to me and I will respond before I sit down. More generally, as I have already said and as we have acknowledged, social housing is an extremely valuable asset. While the vast majority of social tenants play by the rules, it is vital that social landlords have the tools they need to root out those who do not. Along with the other measures in the Prevention of Social Housing Fraud Act, the new power introduced by these regulations will help free up much needed homes for many of those on the waiting list who are in genuine need.

We talk a lot about the need to build more new homes but we are mindful also of the need to ensure that the existing social housing stock is being used as intended. Reducing fraud will mean that more households in genuine need will enjoy the security and stability that a decent home provides. Cracking down on that fraud will reduce the benefits bill by moving households on the waiting list from expensive temporary accommodation into the newly freed up social homes.

It is worth saying that about 90% of responses to the government consultation were in favour of the new data access power. Councils already have similar data access powers for social security and council tax fraud reduction schemes. As well as tackling fraud that is already in the system, these regulations will help to prevent fraud by stopping cheats getting into the system in the first place. The Government want social landlords to tackle fraud in their housing stock and we must give them the tools that they need to do that. I am very pleased that this power will enable them to do so.

Sadly, it does not look as though I am going to be able to provide the noble Lord with any more information at this time about how we will ensure that local authorities place their use of these powers in the public domain. However, I will ensure that I follow up that information in writing. I am slightly frustrated that I cannot find it in my brief because I know that I read something over the weekend about providing information of this kind to allow for proper accountability and scrutiny. However, I am confident that I will be able to send the noble Lord forthwith a comprehensive letter in reply.

Motion agreed.