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.
Local Authority Investigative Powers Regulatory Reform Order: A consultation document on proposed changes to the powers of local authorities to investigate and prosecute benefit fraud, Department for Work and Pensions, March 2005.