Serious Crime Bill [HL]

I hope to be able to reassure Members of the Committee that these are not well grounded fears, and I shall seek to explain why I say that. I take from the way in which the noble Lord, Lord Henley, moved Amendment No. 110B that he accepts that it would remove the ability of the Audit Commission to identify patterns and trends when carrying out a data-matching exercise, and that he has tabled the amendment more to explore the issue rather than necessarily to have that effect. I know that the noble Lord, Lord Burnett, sees the amendment slightly differently, and I accept the difference in the two approaches. Amendment No. 112 would remove the possibility of voluntary participation in the National Fraud Initiative by bodies not currently subject to the Audit Commission’s inspection or audit regime. Again, I have assumed for the purposes of this argument that that is not the purpose, but that we are simply looking at the way in which these structures will operate. Perhaps I should remind the Committee that these processes have already proved extremely successful and useful in the identification of fraud. The Information Commissioner has made it clear that he recognises that privacy issues must be balanced against the prevention and detection of fraud, so that is already the position. We know that fraud is a real problem in a broad spectrum of cases and areas. The last national fraud initiative cycle identified £111 million, and CIFAS reported fraud avoidance losses of £790 million in the past year. We need to keep these two issues in proper balance. The noble Lord, Lord Henley, says we could remove the definition, but we think it must stay as it is if data-matching exercises are to be fully functional and deliver the results needed. At its core, data matching is about comparisonsof sets of data to see how far they match. It isan important technique that enables individual fraudsters to be identified. However, data matching is about more than just looking at data on a micro level. It can also identify patterns and trends that are indicative of fraud which may be occurring on a systemic or organised basis; for example, a ring of actual fraudsters operating in concert across a geographic area. That can prove vital in informing affected authorities that they need to guard against a new and emerging risk and providing them with the information they need to co-ordinate their efforts in tackling the problem. That is one example of why the definition should remain as it currently is. As noble Lords know, the Audit Commission chooses data sets on the basis of its experience of those areas where fraud is prevalent or includes serious financial loss. In addition, the commission also acts where it is advised by bodies of emerging areas of risk. I should add that the identification of patterns and trends also plays a crucial role in ensuring proportionality, in that it enables the commission to monitor whether or not certain fields of data are still in fact useful in detecting and preventing fraud, and whether new risks are emerging. If matches no longer arise in relation to a particular type of data, the commission can identify that and cease to collect it. If its pilot exercises show an upward trend in actual matches, the commission will know that there is a risk area where it should be focusing its efforts. In each case, it is the trend of actual matches, indicative of a certain level of actual fraud, which informs its activities. The commission’s decisions are communicated to each participating body, with detailed guidance. That information is put on the website so we can see what is happening. The commission has no desire to collect more data than is necessary, not only in the interests of complying with data protection and human rights legislation but also because processing data unnecessarily is an uneconomic and inefficient use of its resources. That provision enables the commission to target its efforts with greater acuity. Without the ability to identify patterns and trends, it is difficult to see how the Audit Commission could discharge its duty to conduct the national fraud initiative in a proportionate way. Having said that, I am happy to reassure the Committee that the Audit Commission has no intention of using data matching for the purpose of profiling individuals likely to commit future crime, in the way that has been suggested by a number of noble Lords in this debate today and earlier. That is simply not what the national fraud initiative is about.