A report sent to Tony Blair by the inter-departmental ministerial group on fraud, recommends drastic changes to the law to give Whitehall departments sweeping new powers to compare files and obtain private information.
Ministers want officials to be able to cross-check computer databases in different government departments and local authorities so they can identify fraudulent benefit claims and tax returns. They are also discussing giving inspectors access to individuals' bank and building society accounts so they can catch people who lie about how much money they have.
The proposals, which would almost certainly involve rewriting the Data Protection Act, will infuriate Labour left-wingers and civil liberties campaigners who will see them as an unacceptable invasion of privacy. The Government is already under fire for watering down its commitment to release its own documents to the public through the Freedom of Information Act.
The plans are also being fiercely resisted by the Inland Revenue which fears that they will encourage people to fiddle their tax returns to prevent details of their income being used against them by other Government departments.
However, ministers at the Department for Social Security and the Treasury are determined to "think the unthinkable" in their battle to combat fraud, which is costing the taxpayer billions of pounds a year. "The exchange of information poses no threat to the law abiding citizen," one senior Government source said.
Legislation introduced by the last Conservative Government in 1997 allows some cross-checking between the Department for Social Security, the Inland Revenue and Customs and Excise in certain narrowly-defined cases. But there are very strict criteria about the conditions in which facts can be passed on and information can only be released if there is a suspicion of fraud.
Ministers want to change the law to allow much more proactive investigations and extend data-matching across Whitehall. For example, they want to give the Benefits Agency access to claimants' medical records, so it can identify people wrongly claiming incapacity benefit, and to their tax files so it can go on "fishing expeditions" to identify those lying about their income.
More controversially still, the Government is considering extending the principle to the private sector by giving the Department for Social Security access to bank and building society accounts. Although ministers admit this would be politically sensitive, they believe there is a strong case for pressing ahead.
The target would be income support claimants who become ineligible for the benefit if they have more than pounds 8,000. "We depend on their honesty to declare this and some are not honest," one DSS source said.
The Inland Revenue could also use the access to financial details to clamp down on black market workers who fail to declare their earnings in full.
The aim of the drive to extend data matching is to effectively create a single Government "file" for each person by cross-checking claims made to different departments.
There is a growing problem of people defrauding the system by creating multiple identities and claiming benefits under different names. "The idea is that we should be able to look at people's applications to different arms of Government to see if they add up and are consistent," one ministerial source said. "That could apply to anything from medical records to applications for fishing licenses."
Civil liberties campaigners reacted furiously to the proposals last night. John Wadham, director of Liberty, said they were a "fundamental breach of the right to privacy". "Information that we are all forced to provide belongs not to the Government but to us and they have no right to pass it on," he said.Reuse content