Public Authorities (Fraud, Error and Recovery) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateMonday 3rd February 2025
(1 day, 18 hours ago)
Commons ChamberPublic Authorities (Fraud, Error and Recovery) Bill 2024-26 Read Hansard Text Watch Debate
20:50 - The House divided: - Ayes: 343 / Noes: 87 - Question accordingly agreed to.
This text is a record of ministerial contributions to a debate held as part of the Public Authorities (Fraud, Error and Recovery) Bill 2024-26 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
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The Secretary of State for Work and Pensions (Liz Kendall)
I beg to move, That the Bill be now read a Second time.
This Bill will help deliver the biggest ever crackdown on fraud against the public purse, which has now reached an astonishing £55 billion a year. That includes fraud against our public services, such as by those who abuse the tax system; fraud by dishonest companies that use deception to win public contracts and manipulate invoices; and benefit fraud by criminal gangs and individuals, which now stands at a staggering £7.4 billion a year.
There have always been people who commit fraud against the state—tragically, this is not a new problem—but at a time when families across the country are working so hard to pay their bills and put food on the table, when more than 7 million people are stuck in pain and discomfort on NHS waiting lists, and when a shameful 4.3 million children in Britain are growing up poor, it is simply unforgiveable that the Conservatives allowed fraud to spiral out of control. During their 14 long years in government, they failed to put in place a proper plan to crack down on fraud, and there is no better symbol of this than their failure to update the powers of the Department for Work and Pensions to properly crack down on benefit fraud. Just let that sink in for a moment.
Over the last decade, fraudsters have become increasingly sophisticated in the techniques that they use to steal people’s money, using data, technology and all manner of scams. In response, banks and other companies have transformed their ability to spot and stop fraud, and to protect their customers’ money, but the last Government completely failed to do the same for taxpayers. In all their time in power, and with all the developments in technology and the ability to share data and information, they failed to update the DWP’s powers. The Conservatives will no doubt claim that they did introduce measures, but, in truth, they put forward one poorly thought-through measure that was tagged on to another Bill at the tail end of the last Parliament, without any of the proper safeguards or oversight in place. Today, all that changes with our new fraud Bill.
This Bill is tough and it is fair. It is tough on the large companies and dodgy businessmen who try to defraud our public services, it is tough on the criminal gangs and individuals who cheat the benefit system, and it is fair to claimants who make genuine mistakes, by helping us to spot and prevent errors earlier. Taxpayers deserve to know that every single pound of their hard-earned money is being spent wisely and that benefits are there only for those who need them, not fraudsters who take advantage.
Richard Burgon (Leeds East) (Ind)
The Secretary of State is absolutely correct to say that we need to pursue criminal gangs that are engaged in widespread organised theft. I put a written question to the Department for Work and Pensions to ask about the amount lost through personal independence payment fraud, and I was told that only 0.2% of such claims were fraudulent in 2022-23. Does the Secretary of State agree that as we pursue organised criminal gangs, it is really important that we make it clear that there cannot be a hostile approach to disabled people claiming PIP or disabled people more widely who are using the benefits system as they deserve to?
Liz Kendall
People who are genuinely entitled to claim benefits have nothing to worry about from this Bill, but we believe that the £7.4 billion wasted every year through benefit fraud must be cracked down on.
To the corrupt companies with their dodgy covid contracts, to the organised criminal gangs and to every single individual knowingly cheating the system, our message today is clear: we will find you, we will stop you and we will get our money back.
Jim Shannon (Strangford) (DUP)
No one denies that there are those who are blatantly cheating the system, as I referred to in my oral question to the Secretary of State earlier today. On her point about fair play, however, can she give an assurance to me and to the House? I am concerned that if officials in the Department seek out low-hanging fruit, people who have a genuine disability could be denied their rights. I am concerned about the anxiety, the depression and the physical effects that that might cause.
Liz Kendall
Actually, the Bill will do the precise opposite. Through the measures relating to the Public Sector Fraud Authority, we are saying to the large companies and corporations and to the individuals cheating, “We will treat you equally. We do not allow fraud against the public purse. We want to stop it and get our money back.”
Several hon. Members rose—
Liz Kendall
I will make a bit of progress.
I want to start by setting out the measures in the Bill that give the Public Sector Fraud Authority the powers that it needs—further to the point that the hon. Member for Strangford (Jim Shannon) rightly raised—to fight modern fraud across the public sector on behalf of Government Departments and public bodies.
Liz Kendall
I will set this out first. The Bill will provide the authority with new powers to obtain search warrants, to enter premises and seize evidence as part of fraud investigations, to compel businesses and individuals to provide information where there is a suspicion of fraud, and to enable it to better detect and prevent payments made as a result of fraud or error. It will also bring in new debt recovery powers, so that we can get public money back for taxpayers, and new financial penalties that the PSFA can use as an alternative to often lengthy criminal prosecutions.
What happened during the pandemic was completely unacceptable, with billions of pounds squandered by the Conservatives on dodgy deals with their covid cronies. This Bill will help us to get that money back. It will double from six to 12 years the time limit for civil claims to be brought in alleged cases of covid fraud, giving the PSFA and our new covid counter-fraud commissioner more time to investigate complex cases relating to those who exploited a national emergency for personal profit.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I have spent more than a decade studying fraud and error in the DWP. The Secretary of State is right that levels of fraud have been intransigently high, but my concern is about where there are errors. Quite often, they are made by the Department. My constituent received a £5,000 overpayment. Will the Secretary of State make it clear to the House that people in that situation will not have money taken out of their bank account, and that they will be treated properly if there is a small error on their side or a big error by the Department?
Liz Kendall
I will come on to that point in a moment, but I have the utmost respect for my hon. Friend. In fact, I think that the measures in the Bill will help us to spot such errors and prevent them from happening in the first place. People make genuine mistakes. We do not want them to build up errors and build up debt that they have to repay. I think that the Bill is part of solving that problem. I will say more about that in a moment.
I turn to fraud and error specifically in our welfare system. The Bill will modernise and extend the DWP’s anti-fraud powers, bringing it into line with other bodies such as His Majesty’s Revenue and Customs, so that we can use technology and data to find and prevent fraud more quickly and effectively; so that our serious and organised counter-fraud investigators have the powers they need to search premises and seize evidence, including from criminal gangs, and bring offenders to justice; and so that we can ensure that when people owe us money and, crucially, when they can pay, we get that money back for taxpayers. That all comes with strong and new safeguards and with independent oversight on the face of the Bill, as I will set out in detail.
David Pinto-Duschinsky (Hendon) (Lab)
As my right hon. Friend mentioned, the Conservatives did not do much on this issue except tagging on a Bill at the very end of their tenure. The Information Commissioner’s Office was very critical of the approach taken in that fraud Bill. Can she reassure the House that she has addressed those concerns?
Liz Kendall
I can indeed reassure the House. The Information Commissioner was rightly critical of the last measure introduced by the Conservatives—the third-party data measure. He has written to us today, and we will make sure that his letter is published. He says that he has reviewed our proposals and is very clear that the current measure more tightly scopes the type of information that can and cannot be shared; specifies much more clearly those in the power’s scope; requires a statutory code of practice before measures are taken; and includes a requirement for the Secretary of State to appoint an independent person to carry out reviews of these functions. I am more than happy to publish that and share it with the House, because I think it shows the changes this Government are making.
We are serious about getting these measures through. We understand people’s concerns, and we have addressed them. The Information Commissioner’s letter should reassure the House.
Andy McDonald (Middlesbrough and Thornaby East) (Lab)
My right hon. Friend has the House’s wholehearted support in pursuing the recovery of funds taken by fraud and error. The National Audit Office estimates that, in the last financial year, £39 billion of tax revenue was not received due to fraud and error, compared with £7 billion in overpaid benefits classed as fraud, which we want to pursue. Can she reassure the House that an appropriate level of resources will be targeted at recovering this large sum of money, which will bring better dividends back to the Treasury?
Liz Kendall
My hon. Friend is right to raise this issue, which he knows the Chancellor and the Treasury team are looking at seriously. The clear message from this Government is, “If you are getting money to which you are not entitled or owe money to the taxpayer through either unpaid taxes or fraud, that is wrong.” We treat everything the same, large or small. We believe in our public services and our social security system, and we want people to know that every single penny of their money is wisely spent and goes to those in the greatest need.
Rachel Gilmour (Tiverton and Minehead) (LD)
As a Member of the party that introduced the state pension, I am behind the Government on this Bill because we all want to cut down on tax fraud and evasion. But I am concerned that pensioners are included under this blanket of Government scrutiny, and it seems that the only thing they have done to deserve it is to get a bit old.
Liz Kendall
One of the new measures introduced by the Bill, the eligibility verification measure, explicitly excludes the state pension. I reassure the hon. Lady on that point.
Shaun Davies (Telford) (Lab)
In places like Telford, it is a basic principle that people pay into the system and then take out of the system, or their neighbours do, when they are in need. The companies and individuals that are defrauding national benefits are often also defrauding local authority benefits and schemes. Will we extend these powers so that local government is able to work with national Government to pursue this fraud?
Liz Kendall
I reassure my hon. Friend that local authorities will be able to put examples to the Public Sector Fraud Authority for scrutiny. The new powers introduced by the Bill will enable the PSFA to crack down on precisely those issues.
Liz Kendall
I will crack on a little, and then I will be happy to take an intervention.
I will now spell out each of the Bill’s measures in turn. First, there are powers to investigate potential fraud. The Bill will mean that, for the first time, the DWP’s serious and organised crime investigators will be able to apply to a court for a warrant to enter and search the premises of suspected fraudsters and criminal gangs to seize items for evidence, such as computers and phones. At the moment, our investigators have to rely on the police to do this. The Bill will enable us to act much more quickly to gather evidence, to take control of and speed up investigations, while also freeing up police time. These powers will be used only when approved by the courts, and the police will continue to be responsible for arresting suspects.
Secondly, the Bill will update the DWP’s information-gathering powers for investigating fraud. At the moment, we have the power to require information from only a limited list of third parties. This does not include key organisations and sectors that could help to prove or disprove suspected fraud, such as airlines.
To add to that, there is limited ability to require responses to requests to be sent electronically. Instead, quite unbelievably, they have to be sent in writing or physically collected, which is time consuming and cumbersome, to say the least. That limitation on our powers completely underlines how the changes in the Bill are long overdue, and the lack of action by the previous Government. The Bill widens who the DWP can compel information from, and it will enable us to require the information to be provided digitally by default.
Thirdly, our new eligibility verification measure will enable us to require banks or other financial institutions to provide crucial data to help identify incorrect benefit payments people might be getting, including fraudulently, such as if someone has too much in savings, making them ineligible for a benefit, or if they are fraudulently claiming benefits abroad when they should be living in the UK. People should not be getting benefits they are not entitled to, and the alerts will make the process of identifying potential fraudsters much simpler, quicker and easier.
However, we know that people lead busy lives and sometimes genuine mistakes happen. The measure will help there too, by finding and putting errors right quickly, preventing people from building up large debts that they then need to repay. I am absolutely determined to reduce benefit mistakes by stopping them from happening in the first place and to avoid debts building up, with all the worry and distress that causes. That is why I have launched the independent investigation into the overpayment of carer’s allowance, in order to learn lessons about what went wrong and ensure that does not happen again.
I want to stress to the House that, under our eligibility verification measure, the DWP will not be able to access people’s bank accounts or look at what they are spending. We will not share any personal information with banks. Once an alert has been issued, any final decision about someone’s benefits will always be taken by a human being and the state pension will be excluded from the measure. There will also be independent oversight of the power on the face of the Bill, with the requirement to produce reports and lay them before Parliament, which I will say more about in a moment.
Sammy Wilson (East Antrim) (DUP)
The Minister is outlining the actions she intends to take to ensure that errors do not happen and that humans will conduct any reviews. However, once a decision has been made—whether the error was genuine or not, the person should not have received the money—the Bill sets out that the person is still subject to all the measures that would be imposed on people who have deliberately engaged in fraud. That is the real worry. Despite the Secretary of State’s assurances, errors will still be made. Judgments will have to be made about whether the money, given in error, is recoverable, and if it is recoverable, it will be treated as if that were fraud.
Liz Kendall
No, it will not be treated in the same way. There is much more we can do to use technology to prevent genuine mistakes and errors building up in the first place, but we also have to use all the technology and information-sharing abilities we have to crack down on fraudsters who will use anything they can to try to defraud the system. I will come to the wider safeguards in the Bill towards the end of my speech, but my hon. Friend the Minister for Transformation and I will be more than happy to talk to the right hon. Gentleman in more detail about any other concerns he may have.
Ben Maguire
I am interested to hear about the measures in the Bill relating to local authorities and public authorities. Has the Secretary of State considered expanding remit of the Public Sector Fraud Authority to investigate cases of serious mismanagement of funds by local authorities, such as the recent botched sale of Newquay airport by Conservative-controlled Cornwall council, which reportedly cost Cornish taxpayers over £1 million in consultancy fees and the like?
Liz Kendall
The hon. Gentleman has made his point simply and clearly. The Bill is about tackling fraud and people who have defrauded the public purse. I am sure his local newspaper will write his comments up very clearly.
The fourth chapter of part 2 of the Bill is about widening our ability to punish fraudsters using a financial penalty as an alternative to seeking prosecutions. At the moment, we can issue financial penalties only in cases of benefit fraud. The Bill extends our ability to use them in cases of fraud against any type of DWP payment—for example, if we had any future scheme like the kickstart employment scheme. That will ensure that more fraudsters committing a wider range of fraud can be dealt with swiftly without going to court.
Last but not least, the Bill gives the DWP more power to get back public money that someone owes in cases where they can repay it but repeatedly refuse to do so. This power does not cover people on benefits or in payrolled employment, because money can already be recovered through the social security or pay-as-you-earn systems, but for people who have moved off benefits and are not on PAYE—for example, because they are self-employed or now living off savings—the Bill will enable the DWP to request the bank statements of people we know owe us money but who have repeatedly refused to engage with us, to verify that they have sufficient funds to repay. We can then recover the money from their bank account through either a one-off lump sum or regular deductions. That will be done in a fair and manageable way, with time for the person to make any representations and the right to appeal.
As a last resort, if someone owes us more than £1,000 and continues to repeatedly refuse to engage with us and agree how they will pay the money back, we can go to court and get an order to disqualify that person from driving for up to two years. This is the same power that the Child Maintenance Service has been able to use for the last 25 years in cases where a parent repeatedly refuses to make payments to support their child. In considering a disqualification order, a court will always check whether the person needs a driving licence for work, because taking it away would be totally counterproductive if they do, and look at other reasons why a license may be essential, such as if the person is disabled or a carer. The measure is for people who have repeatedly refused to engage with the system. It is an important power that the DWP should have to bring people to the table for a discussion about how they will repay the money that they owe. We are clear that someone keeping public money to which they are not entitled is serious, and will result in serious consequences.
Ben Lake (Ceredigion Preseli) (PC)
I am grateful to the Secretary of State for outlining some of the Government’s thinking behind clause 91. Will she elaborate on whether the Government have considered the fact that such a disqualification would have a disproportionate impact on somebody living in a remote area, compared with those in more urban areas, where there is much greater access to public transport?
Liz Kendall
As I said, the court will always look at whether the person needs a car for their job, but we cannot say that people are allowed to get away with fraud in different parts of the country. This is about getting money back. The measure is for people who have repeatedly refused to engage with us, and who we know have the money to repay what they owe. We can bring them to the table and have a discussion about that repayment. I think that most members of the public would think that that is totally reasonable and fair, and that is the new power that we will have.
Let me turn to the strong new safeguarding measures in the Bill. First, as I have said, there will be independent oversight in the Bill for the eligibility verification measure, and new powers for the DWP and the Public Sector Fraud Authority to investigate fraud. I will appoint an independent person to oversee how the EVM is being used and its effectiveness. The Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Queen’s Park and Maida Vale (Georgia Gould), will also appoint an independent person to review the use of the PSFA measures. Both will be required to provide reports to the Government, which will be published and laid before Parliament. His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services will oversee the investigation powers of the DWP and the Public Sector Fraud Authority. Any complaints about the use of the new search and seizure powers in the Bill will be referred to the Independent Office for Police Conduct.
Kirsty Blackman (Aberdeen North) (SNP)
This is a genuine question on the power to request information: will the DWP be able to request information from charitable organisations that are perhaps providing support to people, or from Members of Parliament, who may be providing support to constituents who come through our door?
Liz Kendall
The eligibility verification measure is for banks and financial institutions. It has been tightly defined, which is one of the reasons the Information Commissioner has written his response now. The last Conservative Government just referred to third-party data. That was not a serious proposal, narrowly defined with proper independent oversight. We want the legislation to pass and be used proportionately and effectively. That is why we have included the proposals as drafted.
The second important point is that there will be a statutory code of practice on how the powers can be applied, which we will consult on during the passage of the Bill, to clearly define the scope and limitations. Thirdly, there will always be vulnerability checks for each individual under the new debt recovery powers to ensure that people are not forced to pay back money that they cannot afford. Last, but by no means least, final decisions affecting benefit entitlement will always be made by a human being. Those decisions will sit alongside the right to reviews and appeals—no ifs, no buts. Put together, I believe that those new safeguards will provide the reassurance that the public and some Members of this House need that the Bill’s powers are proportionate, safe and fair.
The Bill delivers the biggest upgrade to the DWP’s anti-fraud powers in more than 14 years. It brings in new powers to tackle fraud right across the public sector by empowering the Public Sector Fraud Authority, and not before time. Our approach is tough but fair: tough on criminals who cheat the system and steal from taxpayers; tough on people who refuse to pay back money; fair on claimants, by spotting and stopping errors earlier, helping to avoid people getting into debt; fair on those who play by the rules and rely on the social security system; and fair on taxpayers, by ensuring that every pound is spent wisely, responsibly and effectively on those who need it. We were elected on a mandate for change, and that is what the Bill will deliver.
Madam Deputy Speaker (Caroline Nokes)
I call the shadow Secretary of State.
Kirsty Blackman (Aberdeen North) (SNP)
I want to comment on a number of speeches that have been made. As the Scottish National party tabled a reasoned amendment, which unfortunately did not get selected, it will not surprise anyone that we have a number of significant problems with the Bill.
Part 1 of the Bill relates to recovering the covid moneys and the services and goods that the Government received that were substandard, for which organisations need to pay the Government back. Since its scope does not extend to Scotland, I will not add many comments, except to note that I have a long track record of bringing up covid fraud, particularly PPE frauds, in this Chamber. I will support the Government’s work to recoup the money that was fraudulently taken in Government contracts that did not deliver.
I oppose the DWP elements of the Bill, which are not what social security should be about. As my friend, the hon. Member for Brighton Pavilion (Siân Berry), said, the social security system should be built on dignity and respect. Very few Members have said that we should have a social security system that works. Members have talked about tightening up eligibility criteria. Last week, people talked about the number of scroungers that there are—people not in work who are claiming social security benefits—and how desperately we must get them back to work. People should have opportunities, but it is also important that we have a social security system that catches people and supports them when they are not able to access those opportunities, because they are struggling with their physical or mental health or have learning difficulties. We need a social security system that works.
I have asked the Minister on a couple of occasions about co-production, which an hon. Member also mentioned. Co-production is needed when it comes to changes to disability benefits. If the Government are to reduce the amount of money being paid out for disability and sickness benefits, they must work hand in hand with disabled people. They must not just say, “We are going to reduce it by this amount.” They need to sit round the table with disabled people to have those conversations and to make clear what changes they want.
In Scotland, we have reformed the previous PIP system to create the adult disability payment and child disability payment. I used to get a number of emails and people walking through my door who were terrified about their upcoming PIP assessment—having to fill in those forms again, and sit and write a long list of the normal things that their child cannot do, on an annual basis. We have changed that in Scotland. We do not have regular assessments. If someone has a longer-term condition, they do not have to go through that awful situation on an annual basis. The Government need to focus on dignity, respect and co-production. That should be way ahead of conversations around fraud.
It is important that the social security system, the procurement system and the tax system do not propagate fraud. As has been mentioned a number of times by Members from across the Chamber, the tax system creates a huge amount more fraud and a huge amount more could be recouped from that than from the social security system.
I have major concerns about how the Government are approaching the issue. Why are they introducing this Bill before the child poverty strategy? Why is this more of a priority than cancelling the two-child cap and taking kids out of poverty? Why are the Government talking about nearly £10 billion a year owed to the DWP? Just to be clear, that is not what they intend to recoup. According to the impact assessment, at least 30% will be written off, so £10 billion is a misleading figure. It might be the total amount of fraud and error, but it is not what the Government expect to get back. It does not take into account that they will spend £420 million over the next few years just to increase the number of staff or the costs of the eligibility criteria. It is also not a net figure—it is just the headline figure right now. All the work being done on the legislation is to recoup a fairly insignificant amount of money, but it will put people through absolute hell.
As has been said, the Bill will treat people as guilty rather than begin from the point of view that they are innocent. Potentially, it will put every person applying for benefits through an eligibility check through their bank. It will put them under surveillance in a way that is not compatible with the human rights that we should all expect. Let us remember that we are talking about people who, in some cases, are incredibly vulnerable, and may have their driving licence taken away.
The hon. Member for Normanton and Hemsworth (Jon Trickett) talked about two of his constituents who found themselves in a difficult situation and who did not have a huge amount of literacy. It is possible that one of those people could have had a driving licence. For disabled people, a car can be an lifeline—the most important thing. For people with mental health problems, opening letters can be really difficult. People might not engage with the DWP through no fault of their own, but because they are not getting the mental health support that they need.
That £10 billion or however much will be recouped will not fix mental health services to ensure that everyone is capable of getting up in the morning, having their breakfast, having a shower and opening the letters in scary, big writing that have come through the door. It will not ensure that people can engage in that system. It will not teach them to read and write—they may not be capable of that. I share the concerns of other Members that, for some individuals, the powers of recouping and of revoking a driving licence are entirely inappropriate. We have not had enough reassurances on that.
My concerns about the Information Commissioner are still extant. The Secretary of State said that she has had a letter from the Information Commissioner. I understand that it is probably not her fault, but I am really disappointed that we have not seen that letter in advance of today—[Interruption.] I am being told that it is being published.
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
It is on the ICO website.
Kirsty Blackman
Unfortunately, I have not seen it because I was not aware of its publication until the Secretary of State stood on her feet. It would have been helpful for Members to have been given that information beforehand, so that we could have read the Information Commissioner’s comments in advance of Second Reading, given a number of us have mentioned the significant concerns of the Information Commissioner in relation to the previous Bill.
The Secretary of State said that the Bill is tough and fair. Another Member talked about tax and benefit fraud, and the issue with the DWP making overpayments. They suggested that this new system will ensure that overpayments are caught earlier. I suggest that that is a tad over-optimistic. The DWP makes mistakes and makes overpayments, and now we are giving it another place to make errors. The DWP can now see into people’s bank accounts and say, “You don’t meet the eligibility criteria, so you won’t be getting the social security payment.” Until we have built up much a higher level of trust, most people will assume that these powers will create more errors in the system, rather than reduce them.
Lastly, on a subject that I mentioned earlier, a massive number of disabled people have no trust in the social security system. They are massively concerned about the cuts coming down the line and concerned in particular that they will bear the brunt of those cuts, given the comments from so many politicians, using the word “scroungers” and talking about people fraudulently claiming benefits.
Despite the fact that the hon. Member for Hendon (David Pinto-Duschinsky) very helpfully laid out the figures on every pound claimed fraudulently, which I genuinely thought was very helpful, disabled people feel that they are being lumped in with the entire group of people claiming fraudulently—whether they can or cannot work, whether they are being paid universal credit or PIP to assist them with their work, and whether they have a helpful employer or have not been able to find one.
People feel they are being demonised by politicians simply for claiming social security, which they are entitled to. Until that trust is rebuilt, making the decision to look at their bank accounts, as in these measures, is the absolute wrong decision. The Government need to do what they can to put dignity and respect at the heart of the social security system and rebuild people’s trust in it before they introduce these sweeping, disproportionate powers.
The hon. Member for Brighton Pavilion mentioned the fact that there are so many unclaimed benefits. Surely ensuring that people have the money they are entitled to, ensuring that they have enough to live on, reducing child poverty and ensuring that not one child grows up in poverty should be more of a priority for the Government than introducing eligibility criteria and demanding that banks provide financial information on social security claimants.
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
I hope that the House will bear with me; I have binned my original closing speech, given the number of contributions that we have heard, and some of the legitimate questions and concerns that colleagues have set out. I thank those colleagues who rightly highlighted the scale of the challenge, and why the Government must act to tackle fraud against the public sector. My hon. Friends the Members for Burnley (Oliver Ryan), for Clwyd North (Gill German), for Hendon (David Pinto-Duschinsky), for Doncaster Central (Sally Jameson), for Bassetlaw (Jo White) and for York Outer (Mr Charters) all set out the scale of the challenge, and the views of their constituents on this issue, in very robust terms.
I agree with my hon. Friend the Member for York Outer about the risk of unintended consequences, particularly on the issue of violence against women and girls. We are looking at that closely and will continue to do so. A number of Members referred to the alleged lack of an impact assessment, or the publication of one. An impact assessment has been published, alongside the view of the Regulatory Policy Committee, and is available for colleagues to view.
Let me turn to specific concerns about the Bill, starting with those of the shadow Secretary of State, the hon. Member for Faversham and Mid Kent (Helen Whately). I welcome the tone of the Conservatives, and their broad support for a number of the principles in the Bill. She is correct that it is incumbent on the state to get its money back. It is part of the unwritten contract that she referred to. I felt there was a slightly tenuous justification for the escalation in benefit fraud that we have seen in recent years: the war in Ukraine. I know that we are happy to blame Putin for many things, but that was a new one on me. She rightly pointed to an escalation in benefit fraud and error as a result of covid, but that does not explain why the level of fraud and error in the Department for Work and Pensions was higher in 2023-24 than in any of the years from 2021-22 onwards—£9.7 billion last year, a record level. The issue is getting worse, not better, and that happened on the Conservatives’ watch.
The shadow Secretary of State suggested that the contents of the Conservatives’ fraud plan would have solved all these problems, and that we are copying much of what was in it. It is fair to say that the Conservative party legislated only on the third-party data measure in that plan. The Conservatives never mentioned debt recovery powers, and made no efforts to get a grip on public sector fraud with the new powers that we are introducing by putting the PSFA on a statutory footing. Overall, their appalling record hardly comes as a surprise.
The shadow Secretary of State went on to say that she was concerned about the amount of information being shared by banks. Just to be clear, we will not be sharing any information with banks. The information that will come back to us will have very strict criteria, and we are taking a specific power to fine banks for oversharing information that is out of scope. She asked what testing has been done on this; two trials have been undertaken, so we know that the proposal will work, as it pertains to the eligibility verification measure.
The shadow Secretary of State went on, with some audacity, in my view, to challenge whether the debt recovery powers go far enough—powers that the Conservative party refused to take, and never put forward when they were in government. She mentioned the number of AI schemes that have been set aside. Test and learn is perfectly normal in the AI space. I remind her that some of the schemes that had not been taken forward are now moving through under different names. She mentioned the PSFA, and raised concerns about the right to compel information. The powers have independent oversight to ensure that their use is proportionate, so although no organisations are exempt, all actions are considered within a robust legal framework.
We then heard from the Conservatives, astonishingly, that there is nothing in the Bill to get a grip on the benefits bill. What cheek, when the benefits bill spiralled by some £20 billion on their watch! As for their so-called plan, I remind the shadow Secretary of State that they made a hash of it and that we lost a judicial review on their failed plan just a few weeks ago, so we will take our time to bring forward the proposals and will consult on them, and we will get this right.
I am grateful for the support of the Conservatives, but I hope that it will manifest itself in the voting Lobby later because, with the exception of the hon. Member for Mid Leicestershire (Mr Bedford), who I believe is the Parliamentary Private Secretary, we have not had a full speech from a single Conservative Member—just one intervention. If that does not show the lack of seriousness with which they take this issue, the appalling record and position we have inherited should do just that.
I want to spend a little time on the comments of the Chair of the Select Committee, my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), who is a champion for vulnerable people. I particularly want to speak to the measures we are taking to assure ourselves of the appropriate support for vulnerable people, both within the scope of the Bill and more generally, because that is important and relates to a number of comments from Members. It is always the Department’s priority to set repayment plans that are affordable and sustainable; that we make use of the debt respite service, Breathing Space, which allows for a temporary protection from creditors; and that we provide additional support to help customers manage their money. We work with the Money and Pensions Service under its brand name “Moneyhelper”, which offers free, independent and impartial money and debt advice. Indebted customers are routinely offered a referral, with the majority who meet the criteria taking up that offer.
In addition, a DWP debt management vulnerability framework has recently been introduced to provide guidance for advisers on how to support customers at risk of becoming vulnerable, including signposting to specialist support. That is embedded across debt management, and part of that involves advisers undertaking annual refresher training on identifying and supporting customers experiencing vulnerability. Within the scope of the Bill, it is important to recognise that the power of debt recovery will not be used on benefit claimants. It extends only to those who receive their income through means other than benefits or through payrolled employment.
There are also important safeguards in the Bill that govern the process of debt recovery and the new enforcement powers. There will be repeated efforts at contact before any enforcement action is taken, and there will be affordability checks before any deductions are taken from bank accounts. There will be limits on the size of those deductions, a right to require deduction orders and a right to appeal deduction orders beyond that. Also, the DWP can vary or suspend the deduction order following a change in circumstances.
Kirsty Blackman
I appreciate that the Government have made changes around affordability, but they still do not assess either benefit clawbacks or the deductions on the basis of whether they are actually affordable for the people having to pay them back. Are the Government planning to put that in place at some point in future?
Andrew Western
The hon. Lady will forgive me if I have not understood her correctly, but there is specific provision in the Bill on the debt recovery powers to limit the amount that can be clawed back to 40% of anybody’s capital, but if I have misunderstood that, I am happy to have a conversation with her afterwards. I hope that I have set out some of the steps we are taking in the Bill and more broadly to ensure support for vulnerable people.
The Liberal Democrat spokesperson, the hon. Member for Torbay (Steve Darling), was right to highlight the scale of covid fraud and the lack of safeguards in place to protect the public purse. He highlighted the carer’s allowance review, which will report this summer, not next, but we are already learning the lessons of that. Much like the proposals in the Bill, data is key, so we have secured funding to extend the verify earnings and pensions service system of alerts from HMRC to 100% of claims. We will ensure in this Bill that the eligibility verification measure information is processed quickly to reduce large overpayments, and to avoid a repeat of what happened on the last Government’s watch with carer’s allowance.
The hon. Member for Torbay raised the use of AI, as did my hon. Friend the Member for Oldham East and Saddleworth. There will always be a human decision maker on each of these powers, so where decisions are made, a human—not AI—will make that call. For EVM, a flag would be passed to a human to establish benefit eligibility. For debt recovery, it would be passed to a human to assess vulnerability and the ability to pay. For information gathering, it would be passed to a human for investigation where there is a suspicion of fraud. For search and seizure, a warrant would be granted by a judge. At all times, a human is making those decisions, as is right and proper, given the powers that we are talking about.
According to the hon. Member for Mid Leicestershire, there is no doubt that had the Conservatives had longer, their policies would have driven fraud down further and faster than our proposals will. Thankfully, we do not have the opportunity to test that theory. Given their appalling record—with fraud and error escalating every year since the pandemic and standing at £9.7 billion last year—I dread to think what they would have done when they turned their attention to these matters.
The hon. Member for Mid Leicestershire went on to ask whether the independent person would report on the use of powers. Yes, and those reports—on both the PSFA side and the DWP side—will be placed before Parliament annually. He asked about non-drivers and the point of suspending licences when not everybody drives. Well, short of taking the power to prevent somebody from walking, I fail to see how much further we could have gone in that regard. However, I recognise—as I hope he does—that that is only one of a suite of measures that we are considering to move us forward in the powers available to us.
Of course, it is important to recognise that the introduction of an independent person was not considered necessary by the Conservative Government in the third-party data measures that they proposed under their Data Protection and Digital Information Bill. We are introducing that measure not just for the PSFA powers or the eligibility verification measures, but for information-gathering powers and powers of search and seizure.
I understand that the hon. Member for Brighton Pavilion (Siân Berry) is concerned, but I fundamentally disagree with the idea that it is conservative to want to tackle benefit fraud, and that we should ignore the £7.4 billion-worth of welfare fraud last year. I certainly do not think that it is conservative to go after public sector fraud; in fact, if it were slightly more conservative, we might not be in the terrible position we are in now.
My hon. Friend the Member for Normanton and Hemsworth (Jon Trickett) raised a number of important questions. Time prevents me from running through them all now, but I would be delighted to meet him to discuss them further. I was especially concerned by the case that he raised. One potential benefit of the eligibility verification measure is that it will allow us to detect overpayments earlier, but clearly we want to ensure that the DWP is handling such issues correctly first time. The ICO was mentioned by a number of Members, including my hon. Friend. Just to clear that up, it was not a letter received into the Department; the ICO published on its website today its findings and thoughts on the Bill at this stage. It recognises the steps that we have taken on proportionality, and I welcome those comments.
The hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick) has concerns about banks and the potential erosion of data protection powers—that is not my view. The Bill will involve very limited data sharing. The Department for Work and Pensions is not monitoring accounts, and we will fine banks if they overshare in that space.
The hon. Member for Aberdeen North (Kirsty Blackman) made an important contribution. To clarify, the Bill is not predicated on saving £10 billion in welfare fraud; it sets out to save £1.5 billion over five years, but it is part of overall measures to save £8.6 billion over that period, because we do not accept the level of fraud in the system at present.
The hon. Member for Coventry South (Zarah Sultana) suggested that the Bill subjects millions of people to unwarranted financial surveillance. To give Members absolute clarity, we will not receive transactional information from banks, we will not look in bank accounts directly, and we will not ask banks to take decisions on whether somebody has committed fraud.
The hon. and learned Member for North Antrim (Jim Allister) raised the question of clause 50 on the PSFA side of the Bill and asked what constitutes fraud. For clarity, it is standard for powers to be taken by the Secretary of State—or a Minister in this case—but in practice, qualified and experienced decision makers will consider cases as authorised officers.
The hon. and learned Gentleman went on to raise clause 91 and the removal of driving licences. I would gently say to him that this is an existing power held by the Child Maintenance Service. The question of liable persons and whether removal is proportionate would be a matter for a judge; it would only happen after repeated attempts to secure repayment, and before any disqualification occurs, an individual will always be given the opportunity to agree a repayment plan. This is a power of last resort, but I assure the hon. and learned Gentleman that if he has specific concerns about the pursuit of fraud in Northern Ireland, I am happy to follow them up.
As always, the hon. Member for Strangford (Jim Shannon) spoke from the heart about the plight of his constituents and the challenges they face. I want to assure him that this is not a Bill that is intended to focus on the low-hanging fruit of vulnerable people; that is why it includes some of the protections I set out earlier, and it is why we are putting in place independent oversight for the debt recovery and eligibility verification measures. He asked about the right of appeal, and I can confirm that the rights of review and of appeal against a ruling in the debt recovery space are written into the Bill.
The important question of appointees is one that I want to address directly, given the point that the hon. Gentleman raised about his constituent’s sister. To be very clear, that is something we had significant concerns about after the previous introduction of the third-party data measure, and the system will remove appointees. There may be circumstances in which those bank accounts need to be checked if the appointee receives benefits themselves, but if they do not, they will be screened out.
Kirsty Blackman
The individuals who are going to do the independent assessment will be appointed by the Secretary of State. Would it not be better for Parliament to agree the appointment of those individuals, so that we can be assured that they are actually independent?
Andrew Western
Clearly, we will inform Parliament as to who that will be, but we will go through a proper recruitment process. If the hon. Lady is talking about the independent person to be appointed for the eligibility verification measures, we will go through a thorough recruitment process to ensure they have the expertise needed. They will report every year to Parliament, and it is right and appropriate that they do so.
I thank my right hon. Friend the Member for Hayes and Harlington (John McDonnell) for his support for part 1 of the Bill, but I understand his concerns about the powers as they pertain to the Department for Work and Pensions. One of his principal concerns was about banks perhaps being unable to exercise those powers appropriately; what we are proposing is not intended as a decision-making action, but as a data push. Banks will not make decisions—a human within the DWP will carry out that investigation. He has raised concerns about potential errors in the system, and to be clear, we acknowledge that this is a new power. We intend to scale it up in a “test and learn” phase, doing so gradually so that we can get it right, but we simply cannot ignore the problem and not look to take these powers when we had a £7.4 billion problem with fraud in the DWP last year.
Turning to the hon. Member for Horsham (John Milne), I think I have already dealt with the issue of carer’s allowance overpayments and how we are starting to put that right. To clarify again, we are not accessing bank accounts; banks will be doing that for us, but they will not be taking decisions as to somebody’s benefit eligibility. The hon. Gentleman said that we should look at the efficacy of existing powers to request information. We are doing that through the updating of information-gathering powers and the right to compel information digitally. We will be moving to a list of excluded organisations, rather than a list of organisations from which we are able to compel information.
My hon. Friend the Member for Liverpool Wavertree (Paula Barker) raised a series of concerns, which I know come from a good place. I am very happy to meet her to discuss some of these powers—it is important that we get this right—but on the particular question of the legal advice and article 8, although she is correct that Big Brother Watch did commission some legal opinion, we are confident that the powers in the Bill are compatible with the European Convention on Human Rights. They are different powers, distinct from the third-party data powers put forward as part of the Data Protection and Digital Information Bill, and we do think that they are compatible with the ECHR, including the right to a private life under article 8. That is specifically because the third-party data elements are now narrower, and because we have included the safeguards that I have set out. We think the measures are justified in accordance with the law and are proportionate.
The final speech was from the Opposition spokesperson, the hon. Member for South West Devon (Rebecca Smith). Again, I felt it was constructive, if slightly fantastical at points, and I may disagree about the extent to which the Conservatives had more sensible plans that have since been abandoned by this Government. On the question of public sector fraud, I note that she pointed to action to be taken to try to claw back public money. Can I suggest to her that they seek to put that in a press release? If they are not enough of a laughing stock because of their previous behaviour, they would be after seeking to claim that they had a positive story to tell in that space.
I will finish by reiterating the comments of my right hon. Friend the Secretary of State: whoever you are—big businesses, covid fraudsters, organised criminal gangs seeking to defraud the system or individuals knowingly cheating on their benefits—it is not acceptable. We have a major problem, and we are taking the powers needed to act.
Question put, That the Bill be now read a Second time.