Prevention of Social Housing Fraud Bill
Debate between James Clappison and Robert Neill
The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
It is a pleasure to respond to the debate. May I start by warmly congratulating my hon. Friend the Member for Watford (Richard Harrington) on his success in the ballot and on introducing this valuable Bill? It is one that the Government are happy to support, and I am sure that, with support across the Chamber, it will have the fair wind that it deserves. I congratulate him personally, as my hon. Friend the Member for Hertsmere (Mr Clappison) has just done, on the way in which he has brought it forward and put his case. He made a carefully argued, powerful and deeply felt speech, which I think says a great deal about him, because he has sought to deal with this important issue in a serious and constructive manner.
I knew my hon. Friend for a long time before he became a Member, and I, too, know the qualities that he brings to the House. It is easier for some of us than for others to leave a small footprint, but I am sure that he will leave a large footprint in this place and be here a good number of years to ensure that this Bill is by no means his only achievement in the House. It is, however, a very powerful and impressive start, because he hits upon a serious issue.
I shall not dwell on the history, but I observe that the issue was recognised even before the coalition came into office, and I note my hon. Friend’s attempts to engage with a former Minister, the right hon. Member for Wentworth and Dearne (John Healey), who has always known when to be partisan and when not to be in relation to this issue.
The Government have recognised that there is a problem not only by bringing in the consultation, which was discussed prior to the general election, but by increasing grant aid funding to local authorities over four years from £4 million under the previous Administration to £19 million under this one; by setting up a team of experts, based at the Chartered Institute of Housing, to offer free, practical advice to social landlords on how to tackle fraud in their housing stock; and by setting up a framework agreement to help local authorities to use credit reference agencies and data matching more effectively and cheaply.
Practical things are already being done, but real concern remains about abuse, which all of us will have come across in our constituencies and which has been highlighted on the television and in various aspects of the media. In some cases the sums involved are quite egregious, and in others fraud is carried out on what can fairly be described as a professional or near-professional basis. That is the abuse which rightly needs to be tackled. Members on both sides of the House have observed that this is a fraud not only on the public purse, but on the vast majority of social housing and council housing tenants who are honest, and above all on the people on the waiting list, who are done out of the home that is fraudulently let. We are therefore happy to support the Bill.
There are difficulties with the current law—an issue my hon. Friend the Member for Bury North (Mr Nuttall) raised in an intervention. He is not in his place, but I must tell the House that I too was a lawyer. He was an academic lawyer before having a distinguished career in business, and I was a criminal barrister—some people say, “Aren’t they all?” but I did spend 25 years in the criminal courts of this country, so I recognise that despite the successes from time to time when using the existing legislation, there were gaps in its effectiveness. When I was a prosecutor and a defender in such cases, the difficulty seemed to be that neither the offence of obtaining pecuniary advantage by deception nor light fraud offences wholly fit these circumstances, because the deception does not operate upon the mind of the tenant—the illegal sub-tenant in this case—who parts with the money.
So making the activity fit the definition is not easy, and similarly, because the Theft Act 1968 involves the appropriation of property belonging to another, there is a difficulty in this case with the appropriation taking place at one point while the mind, or any element of dishonesty, operates on a different person—and one has to prove the intention permanently to deprive as well. The means of taking forward any such case is therefore slightly convoluted, and that is why everybody on both sides agrees that a tailor-made offence is the surest and safest way to proceed.
On the legal aspects, a point was made about the distinction between indictable and summary-only offences, and about the issues of knowledge as opposed to dishonesty. It is ultimately for the local authority, as the prosecuting authority, to take a decision on this matter. They have access to the general guidelines that the Attorney-General issues for Crown prosecutors, which are well known from Archbold’s “Criminal Pleading, Evidence and Practice”, the standard text in this regard. One would expect the lesser offence to be appropriate where a lesser gain is involved, and there is discretion to consider that. The nature of the behaviour may well affect the degree of dishonesty, and it is sensible to make that distinction. In some situations, a tenant might know that they were in breach of the tenancy agreement. Given that it is pretty standard for any tenancy agreement on which a public body lets out houses to have a clause expressly stating that sub-letting is forbidden without the written consent of the landlord, a tenant who breaches that will often do so knowingly.
In some cases, no money will have been made or the tenant will have moved out and sub-let to a friend rather than handing the keys back. However, that still deprives the social landlord—the local authority—of the ability to let the property to the person who is highest on the waiting list in terms of housing need. That is why this offence can incur a financial penalty. Where a rogue tenant goes in, that may be because the occupier’s own personal circumstances have changed so that they no longer feel in need of the social subsidised property and therefore let it out to make a profit. That is clearly a dishonest activity, and it is right that it should potentially be visited by imprisonment.
Mr Clappison
My hon. Friend is giving the House the benefit of a clear explanation of the difference between the two types of offences and what could be taken into account in determining how to prosecute. Does he agree that in order to avoid people casually letting out tenancies to friends, perhaps without great profit, and to maximise the deterrent effect on those who try to make a large profit by letting out tenancies, it should be made clear to tenants, on taking on the tenancy, that they will be committing a criminal offence and face the penalties in the Bill if they sub-let in the circumstances that it outlines?
Robert Neill
I am grateful to my hon. Friend, who makes a powerful and sensible point about deterrence. We in the Department, together with the Local Government Association, other local authority bodies and the social rented sector, will want to take this forward.
Finally, it is worth pointing out that the Bill includes provision for an unlawful profits order, which strengthens and makes more specific the provision for an order under the Proceeds of Crime Act 2002. That means that someone can not only be fined or, in a bad case, go to prison, but can have the unlawful profit taken from them and returned to the social housing provider, as well as losing their status as an assured tenant. These are powerful sanctions that have not been drawn together before, and that is a great strength of the Bill. I should point out for the benefit of anyone who is anxious about this that an honest person who lets in a lodger will not be caught because in such cases the agreement of the landlord is secured and no difficulty arises.
I hope that that is a proper argument on which the Bill can proceed and that I have made it clear that the Government want to give it a fair wind. It is by no means, of course, the only area where the Government are determined to act to improve the affordable housing situation. We inherited a lamentable record of affordable housing starts, and we have been working hard to improve that through our affordable homes programme, which will provide up to 170,000 new affordable homes by 2015. [Interruption.] Nevertheless, the Bill is a valuable piece of legislation in its own right.