Public Authorities (Fraud, Error and Recovery) Bill (First sitting)
Tuesday 25th February 2025
(1 day, 21 hours ago)
Public Bill CommitteesPublic Authorities (Fraud, Error and Recovery) Bill 2024-26 View all Public Authorities (Fraud, Error and Recovery) Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 25 February 2025 - (25 Feb 2025)
The Chair
We are now in public session and proceedings are being broadcast. Before I begin, I remind Members to switch their electronic devices off or to silent. Tea and coffee are forbidden. Date Time Witness Tuesday 25 February Until no later than 10.10 am Professor Mark Button, University of Portsmouth; Dr Rasha Kassem, Aston University; Professor Michael Levi, Cardiff University Tuesday 25 February Until no later than 10.30 am Cifas Tuesday 25 February Until no later than 11.00 am Kristin Jones; NHS Counter Fraud Authority Tuesday 25 February Until no later than 11.25 am Money and Pensions Service Tuesday 25 February Until no later than 2.30 pm National Audit Office; HM Revenue & Customs Tuesday 25 February Until no later than 2.50 pm John Smart Tuesday 25 February Until no later than 3.10 pm UK Finance Tuesday 25 February Until no later than 3.30 pm JUSTICE Tuesday 25 February Until no later than 3.50 pm Public Sector Fraud Authority Tuesday 25 February Until no later than 4.10 pm Big Brother Watch Tuesday 25 February Until no later than 4.40 pm Campaign for Disability Justice; Greater Manchester Coalition of Disabled People Tuesday 25 February Until no later than 5.00 pm Department for Work and Pensions; Cabinet Office
We have three motions to consider: the programme motion on the amendment paper; a motion to enable the reporting of written evidence for publication; and a motion to allow us to deliberate in private. In view of the tight timetable, hon. Members may wish to take those motions formally, without debate.
The Minister will move the programme motion standing in his name, which was discussed by the Programming Sub-Committee yesterday.
Ordered,
That—
1. the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 25 February) meet—
(a) at 2.00 pm on Tuesday 25 February;
(b) at 11.30 am and 2.00 pm on Thursday 27 February;
(c) at 9.25 am and 2.00 pm on Tuesday 4 March;
(d) at 11.30 am and 2.00 pm on Thursday 6 March;
(e) at 9.25 am and 2.00 pm on Tuesday 11 March;
(f) at 11.30 am and 2.00 pm on Thursday 13 March;
(g) at 9.25 am and 2.00 pm on Tuesday 18 March;
(h) at 11.30 am and 2.00 pm on Thursday 20 March;
2. the Committee shall hear oral evidence in accordance with the following Table:
3. proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 7; Schedule 1; Clauses 8 to 69; Schedule 2; Clauses 70 to 74; Schedule 3; Clauses 75 to 77; Schedule 4; Clauses 78 to 90; Schedule 5; Clause 91; Schedule 6; Clauses 92 to 98; new Clauses; new Schedules; Clauses 99 to 104; remaining proceedings on the Bill;
4. the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 20 March.—(Andrew Western.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Andrew Western.)
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Andrew Western.)
The Chair
We are now in public session and proceedings are being broadcast. Before we hear from the witnesses, do any hon. Members wish to declare interests that are pertinent to the Bill?
Michael Payne (Gedling) (Lab)
I would like to declare an interest as a member of both Nottinghamshire county council and Gedling borough council, which are both responsible for administering benefits.
Michelle Welsh (Sherwood Forest) (Lab)
Mine is exactly the same: I am a member of Gedling borough council and Nottinghamshire county council, which have responsibility for administering benefits.
Rebecca Smith (South West Devon) (Con)
In the same vein, I am a member of Plymouth city council.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
I am a trustee/director of Southwark Charities, which provides accommodation for some older people who may be affected by the provisions of the Bill—a cursory reference, really.
Examination of Witnesses
Professor Mark Button, Dr Rasha Kassem and Professor Michael Levi gave evidence.
The Chair
Q
Professor Button: Good morning, everybody. My name is Professor Mark Button. I am co-director of the Centre for Cybercrime and Economic Crime at the University of Portsmouth and I have been researching fraud-related issues for nearly 20 years.
Dr Kassem: Good morning, everyone. I am Dr Rasha Kassem, senior lecturer and leader of the fraud research group at Aston University. Like Mark, but probably for fewer years, I have been researching all aspects of fraud.
Professor Levi: I am Michael Levi. I am professor of criminology at Cardiff University and I have been researching fraud for 53 years, so I think I win on that score, although that may mean I am very out of date.
Mike Wood (Kingswinford and South Staffordshire) (Con)
Q
I will start by asking the panel a reasonably general question. What, in your experience, are the main limiting factors in investigating public sector fraud?
Professor Button: There is a number of factors. Obviously, the first challenge with dealing with social security fraud and a lot of the rest of public sector fraud is that you have no choice but to deal with those people. It is not like a bank or a private company, which have the opportunity to decide whether to do business with that particular person. In the case of someone making a claim for a benefit, the public sector body has to deal with that person.
You are obviously dealing with increasingly highly organised fraudsters that often operate across borders. That poses significant challenges, particularly for many public sector fraud agencies, particularly when the police themselves have very limited resources. Fewer than 2,000 officers are dedicated to economic crime. They simply do not have the time to help public sector bodies deal with these things. When you look at those particular challenges, having professional capacity within government to investigate fraud with the appropriate powers is a sound basis for dealing with these problems.
Dr Kassem: The capabilities and skills of public authority staff would be a main challenge for me. Do they have the same understanding about what fraud means, its impact, the methodologies and typologies of fraud and the limitations of each type? I ask that because when you talk about fraud, you are talking about fraud committed against the public sector by individuals as well as organisations. The procedures cannot be the same in each case, and the motivations and the resources will not be the same in each case, so they have to have this understanding.
Equally, there has to be an understanding about the differentiation between fraud and error; the element of intent to deceive is the main differentiating factor. Do we have criteria that tell staff in the public sector how to differentiate between fraud and error? Is that agreed upon criteria to ensure that errors are not happening? Are they trained and do they have the proper skills to enable them to investigate without accusing, for example, innocent people and impacting adversely vulnerable individuals? That would be the main challenge, in my view.
Professor Levi: I have one final, quick point, because I know that there are a lot of questions. At one extreme, there is the point that Mark made about organised crime groups and so on, but it is a question of identifying when something is an organised crime activity, which you can only do easily either by getting intelligence or by correlating claimants’ data to build up a pattern, as in covid-19 fraud schemes. At the other extreme, there is what is probably the majority—failure to notify a change in circumstance. This has always been the most common part of the area covered by the Department for Work and Pensions. As far as the Public Sector Fraud Authority goes, I think it is a question of identifying a lot of internal cases from people that you would not ordinarily suspect.
Mike Wood
Q
Professor Button: One of the key things is always resources. If you look at the size of the PSFA at the moment, in terms of the scale of fraud, and look at some of its estimates, you see that this is substantially more than the estimates of fraud in the DWP, so having a relatively small unit, as proposed, is, I think, a limitation. For me, the key thing is having the appropriate resources within that unit to have a real impact on fraud. That question, “Is there enough there at the moment?”, is a key one.
Dr Kassem: Although I believe that this is a very positive step and definitely will enhance accountability, several things need to be considered. To start with, the definition of fraud can be a bit limiting in the current Bill, because, first, it assumes that fraud is happening for financial reasons when that is not necessarily the case. There are non-financial motives. Let us consider insider fraud—fraud committed by insiders, people working for the public authorities—which is one of the most common threats not just in the public sector, but across other sectors. A disgruntled employee can be as dangerous as someone with a financial motive. So I would stick with the Fraud Act 2006 definition of fraud, because it mentions personal gain full stop. It can be financial and it can be non-financial. That has to be clarified.
There is also the difference between fraud and error. I know that intent is mentioned—rightly so—as the main differentiating factor between fraud and error. Again, however, we have to be very clear about the criteria that would enable public sector staff to differentiate between fraud and error, because you do not want them to make mistakes and accuse innocent individuals of committing fraud, just like what happened in the Post aOffice scandal. That would cause further reputational damage to the Public Sector Fraud Authority and the public sector in general, so they have to be very careful about the criteria, which have to be agreed upon.
This is the second area that I want to talk about: because there is a difference between fraud and error, the recovery and the procedures, in terms of perpetrators committing fraud versus those committing an error, need to be clarified in the Bill. I do not think that that is clear enough at the moment.
The third point is about understanding the very nature of fraud—the fact that fraud can be committed by individuals and organisations. The policies and procedures that will be followed when you deal with fraud committed by individuals should not be the same as those that are followed when you deal with organisations. For example, if you were to take preventive measures, the procedures would be different for organisations versus individuals. With organisations, you are talking about controls, compliance measures and so on. That has to be clarified in the Bill—how fraud committed by organisations will be dealt with versus fraud committed by individuals.
Lastly, I would like to raise the possibility of abuse of power. Again, although the PSFA has greater intentions of preventing fraud, you want it to appear to the public that there is less risk of abuse of position. The oversight board will be very important there as an independent body, and perhaps it could be a board independent from the PSFA staff who oversee the work. For this to work, there have to be proper governance structures, including independent board members who have proper fraud expertise and understand the limitations and the mission of the public authorities. It will be very important for public authorities to report on their operational performance to enable that independent board to oversee properly.
Professor Levi: I do not quite agree with all those comments. Some of those measures do not need to be in the Bill, but they obviously need to be part of the structure. The Bill will hopefully last for a long time, and I am sure that you are all familiar with changes.
I think the point about the resource is important, but you also need to allow time for bedding in. There is the issue of where they will recruit staff from, and how experienced they are in actually dealing with stuff. I remember the Assets Recovery Agency, which was a stand-alone body. It was closed down because it did not recover as much as it cost at that time, as there were so many appeals. This is not quite analogous with that agency, but one needs to remember that it takes years to develop skills in actually handling cases. I do not think that is so much a question of the limitations of the Bill but a warning about not expecting too rapid results. Obviously, the practitioners and policymakers may offer a different view from mine, but I think it takes quite a long time. When I reviewed the Serious Fraud Office for the royal commission in 1992, I saw that gaining expertise in actually dealing with stuff takes quite a while, and some would argue that it has not yet done that.
Mike Wood
Q
Professor Button: With any kind of initiative like this, you will always get a degree of displacement. The clever fraudsters will find new means to get around the rules. Obviously, a lot of these measures are directed at the more opportunistic individuals who are not as well organised and probably do not invest as much time in looking for means to get around some of those measures. For that client group of offenders, the Bill will be quite effective. However, for the more organised offenders, particularly the more organised crime elements, they will find ways to get around some of these measures.
Professor Levi: I am not clear about the provisions for international linkages in the Bill. Perhaps that is something that just needs to be sorted out afterwards, but people need to be able to chase money overseas. The question about who does that, and what they need to do before they are able to do that, is pretty important. This is not so much in covid-19 frauds, because that has already happened, but a lot of these things are time critical. The asset-freezing orders that were granted to the police in 2017 have proven very effective, so we need to think about what processes there are for dealing with stuff rapidly.
Dr Kassem: I have one final point. I raised the issue of differentiating between fraud committed by individuals and by organisations. I think that needs to be sorted in the Bill, not afterwards. For example, from a governance perspective, the Bill says that you can access banks accounts and freeze assets, but whose? Are you going to take the assets from the organisation, the directors running the organisation or the fraud perpetrators inside the organisation? This has to be sorted, because you will face another issue, at least in courts, about who is the controlling mind in the organisation. The organisation has a mind of its own legally, and therefore cannot be treated in the same way as when you deal directly with individuals. If that is sorted, there will hopefully be a higher probability of recovery and fewer loopholes in the Bill.
Professor Levi: There is also the question of legal aid for those suspected or accused who have to take some measures to appeal. I was not clear about that, although it may be my fault.
Neil Coyle
Q
Professor Levi: I am not sure that it needs to be in the Bill. Definitions of what we mean by “organised” are typically vague. An act committed by three or more people for the pursuit of profit is a very low bar for organised crime. A fraud by one person can be perfectly well organised, but they are not part of an organised crime group. In policing, we talk about organised crime activity and people normally think about organised crime groups. That is a definitional problem that may be too much for the Bill in its present form, and indeed for Governments. They certainly need to think about what conditions apply to which people, and I am sure they have. I am not sure whether that constraint needs to be in the Bill, but Dr Rasha may have a different view.
Dr Kassem: For me, when I talk about fraud committed by organisations, it does not have to be organised crime. It could be a legitimate organisation defrauding the public sector. Again, the Bill mentions things around recovery, such as accessing bank accounts and seizing assets—how would they apply in cases of organisation versus individual? That needs to be thought about carefully in the Bill. Again, when you think about the nature of fraud and who is committing it, you are talking about different powers and different motives for individuals versus organisations. There are different assets and different ways of recovery. They are not the same, and therefore that has to be clarified in the Bill.
Neil Coyle
Q
Dr Kassem: It depends on whether they have knowingly done that, because the differentiating factor between fraud and error is the intent.
Neil Coyle
Q
Dr Kassem: Yes, in terms of the intent, because errors could happen. The differentiating factor between fraud and error is the intent to deceive. The example you mentioned could be error or fraud, depending on the intent to deceive. There must be clear criteria in the Bill to at least guide staff in the public sector to differentiate between fraud and error.
Neil Coyle
Q
Dr Kassem: It could be, yes.
Professor Levi: I agree.
Neil Coyle
So does that distinction need to be in there—that there needs to be the flexibility to treat this on an individual basis?
Professor Button: I was just going to say that my son recently reached 18 and went to university, and my wife received a letter saying something like, “Unless you have these circumstances, you have to positively say that they are staying on in further education.”, so there would be a clear misrepresentation there, I think. There would not be any opportunity for an error in that particular example, based on my experience with my son.
Neil Coyle
But what if the 18-year-old went into work? The point is that the onus is on the individual to make clear the change in circumstances to the Department, but the Department also has the opportunity to question. In your case, you are showing that the Department has done that.
Professor Button: They sent a letter, and you had to fill in a form to say that your son was staying on in further education in order to continue receiving payments.
Professor Levi: Yes, to reduce the fudge. It is sometimes difficult to see how there can be a legitimate explanation in the case that you are rightly using, but there must be a possibility of arguing. I am not sure myself that that needs to be in the Bill—that is a matter of criminal law, which the Bill does not seek to change in this case—but, in most departmental behaviour, they will adjust. Mark’s son’s case is a perfect example; the Department has clarified so that, if the family had continued claiming under those circumstances, it would be clear that they had committed an offence.
Neil Coyle
Q
Professor Levi: I am enthusiastic about the extension of the 12-year limitations; I think that is very sensible, particularly in view of the length of time that has elapsed since covid-19. But I am not sure how you would insert something in the Bill that would enable it to be varied. Presumably Parliament would like to see those proposals before they are approved, but there is an issue about parliamentary time—or it could be done through supplemental issues.
But I think it is right. Very few people can envisage the future. Look at the impact of technologies in our time. People will find ways of getting around things that you have not thought of yet, so that is pretty normal.
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
Q
Dr Kassem: There are lots of definitions talking about fraud, including lies, cheating and misrepresentation for personal gain, but my point is that personal gain can be financial or non-financial. The Bill specifically mentions financial gain, but what would you do if you had a staff member working for a public authority who, for example, allowed unauthorised access or shared information out of revenge? There is no financial gain in that case. Would you treat that as fraud?
Andrew Western
Q
Dr Kassem: Yes, I have seen that in the literature, but not in practice yet. I think the way to go forward with that is by education and raising awareness about fraud and its impact, because those individuals committing fraud do not see the harm there. They see the Government as having lots of money in a rich country. They see themselves as entitled as well—more than others—and they take their fair share, or they might do it out of revenge, ideology or coercion, perhaps. There are lots of motivations for them to do that. Educating them about why this is wrong and what would be the consequences of committing fraud can help to reduce fraud over the long term and raise awareness about it. Equally important is training staff in public authorities about fraud, what it means and how to detect it. Prevention is better than a cure. Again, those have to go hand in hand. Yes, there has to be an investigation and a deterrent to discourage people from doing it, and this Bill is an excellent step in doing so.
However, if you produce the Bill, with untrained staff members who are not able to identify fraud criminals individually or organisationally, it will not really work. Preventing fraud requires a holistic approach. You cannot focus on prevention alone or on enhancing accountability alone, or on deterrence or investigation. Everything needs to work together, and education plays an important part internally in public sectors and externally across the public.
Professor Button: I have recently done some research where we replicated a study from 10 years ago. We sought a representative sample of the population and their attitudes to various deviant behaviours, including benefits fraud, and we found there was a significant decline in honesty. I think there are changes that are particularly pronounced among younger people. It has been driven by a whole range of factors, not least it is much easier to be dishonest now. If you go back 20 or 30 years, if you wanted to apply for a loan or a credit card you had to go to a bank. Now you just do it online on a computer. It is much easier to engage in dishonest behaviours in those types of ways.
The other thing is that social media and different types of forums provide opportunities for people to discuss how to engage in dishonest behaviour. I am doing some research at the moment about online refund fraud. We have been going into forums where a wide range of individuals discuss how to defraud retailers and get refunds for stuff that they have bought online. I strongly suspect that that kind of thing is probably also going on for benefits fraud. All of those factors are making it much easier, so I think there is a much more significant challenge for not just the public sector, but private sector organisations in dealing with fraud because of that.
Professor Levi: There is a lot of scope for unchallenged behaviour. Who gets challenged by people? If you do not have face-to-face relationships, the opportunities for moral education are much fewer. Personally, I think there needs to be a lot more in schools, but there is a lack of capacity in the schools curriculum for that kind of thing. Also, there should be more about how to avoid being a victim and discussions about money muling and so on. There is a broader spectrum of behaviours where people can get involved in fraud that we need to look at collectively.
The Parliamentary Secretary, Cabinet Office (Georgia Gould)
Q
Professor Button: If you look at this in the broader context of hybrid policing bodies, which is one of my areas of study—non-police bodies that engage in a whole range of enforcement functions—what is being proposed in terms of the accountability of this body compared with, say, the Health and Safety Executive, the Gangmasters and Labour Abuse Authority and some of the many other different types of enforcement bodies is certainly on a par with, if not better, than some of those organisations, with the inspection, the complaints body that people have access to and the additional measures in place.
One of the crucial areas is obviously when you get to prosecutions. With the Post Office scandal, we have seen the challenges if you have too much control over prosecution as well. The Department for Work and Pensions does use the Crown Prosecution Service, but with the lesser sanctions, it might be an issue to have more accountability, where you have that situation, to avoid excessive use of those penalties in a very negative way. That is possibly the only area where I would see an issue. Otherwise, the accountability measures are very similar to the many other hybrid enforcement bodies that central Government have.
Georgia Gould
Q
Professor Button: Yes, I think that does. That is fine.
Professor Levi: His Majesty’s inspectorate of constabulary and fire and rescue services has been pretty tough on fraud policing by the police, so I am personally encouraged by the proposal for accountability and review by them. It is reasonably rigorous and scientific, and there is the National Audit Office as well. Following on from Professor Button’s comments, sampling behaviours at all levels is a good methodology for testing. The question that Dr Kassem was raising earlier about the internal stuff and the supervision of that is a more complex example.
Dr Kassem: My suggestion was more about having an independent oversight board—independent from the PSFA—to review the work and also perhaps to support an independent audit of the operation and see whether the Bill is actually working in terms of recovery and of transparency and fairness. Someone might say, “Okay, we need someone from the PSFA on the board to feed back about operational tasks and challenges and so on.” That is fair enough, but that could slightly reduce the independence that we are talking about. It can still produce a report to describe the work, the performance and the challenges that it met, and a completely independent board can then oversee the work and challenge and scrutinise it if needed.
Georgia Gould
Q
Dr Kassem: Yes.
Georgia Gould
It is really reassuring to hear that because oversight is incredibly important to us. I have one more question, but I am happy to give way to others.
Andrew Western
Q
Dr Kassem: Personally, I would recommend a board rather than an individual, because how sustainable could that be, and who is going to audit the individual? You want an unbiased point of view. That happens when you have independent experts discussing the matter and sharing their points of view. You do not want that to be dictated by an individual, who might also take longer to look at the process. The operation is going to be slower. We do not want that from a governance perspective—if you want to oversee things in an effective way, a board would be a much better idea.
Professor Button: The only thing I would add on the DWP is that it is likely to be much more resource-intensive. There are likely to be a lot more cases. Having an appropriate capacity is important for that.
Professor Levi: I agree with that. Historically, in relation to asset forfeiture, say, the problem has been one of excessive caution rather than too much activity. A lot of legal challenges remain. I was on the Cabinet Office Committee that set that up, and there can be too much governance of that, so there is a tension between having a lot of governance in place and saying, “Look, can we get on with it?”
Rebecca Smith
Q
Professor Button: It is important to tackle those areas. I am not sure whether it is something that needs to go in the Bill. I think it is more an issue of giving the body the capacity to go after those types of individuals and to work with other relevant policing agencies— I suspect that that would need to be the case—to deal with it, rather than saying such things in law. We have the Online Safety Act 2023, which covers a lot of areas. Is that useful enough? Are the Fraud Act 2006 and the historical offence of conspiracy to engage in fraud appropriate, or do we need to create a new, specific offence of, say, promoting social security fraud online? I would not like to comment on that; it is probably something that needs more thought. The key thing is more enforcement, and disrupting forums where that kind of discussion is taking place.
Professor Levi: There is also the issue of signalling to people where the boundaries lie. This is an issue not so much for the Bill, but for enforcement practice across the board. We need some condign activities that communicate to people via social media, as well as in the old media that we may read, what is acceptable, and what is and is not legal. The National Crime Agency has been pretty good about that in the cyber-crime area, in trying to educate people and to divert them away from crime. There are some good lessons across that. It is also a question of resource and how many such things people can deal with.
Georgia Gould
Q
Professor Levi: The Americans used to be better at this than may have been the case in the past few weeks. The General Accounting Office and some of the inspectorates general in the US have been pretty active, but the US still had a huge amount of covid-19 fraud. Australia is getting better. Clearly, the head of the Public Sector Fraud Authority is part of this group of people trying to improve things, but I would say we are starting at a pretty modest level, in terms of numbers of people. In terms of the DWP, it is a struggle for everyone. We have to look at it in relation to general welfare. I remember going to a meeting and talking to some French delegates who said to me that it was about—
The Chair
Order. That brings us to the end of the allotted time for this panel. I thank the witnesses very much for their evidence. We will move to the next panel.
Examination of Witness
Helena Wood gave evidence.
The Chair
We will now hear evidence from Helena Wood, director of public policy and strategic engagement at Cifas and a fellow of the Royal United Services Institute.
Mike Wood
Q
Helena Wood: I find it quite difficult to comment on that, given that we are yet to see the code of practice. A lot of burden has been placed on that code of practice as it stands to build in some of that proportionality. I know the Government have committed to consulting on that code of practice forthwith, but without seeing that, a lot hinges on how those powers will be used in practice. Without that being known to me at present, I would quite like to see something pulled up on to the face of the Bill to build in proportionality by design.
Both on the PSFA side and the DWP eligibility verification powers, the Bill is a very blunt instrument, as it stands, and I think the law would do well to pull up those proportionality measures on to the face of the Bill. We have to look at this Bill in its broader context: very much unintentionally, it stands at that ideological debate between the rights of the individual to privacy and the rights of society as a whole to benefit from the funds that are available to fund essential public services. We have to deal with both of those arguments with due caution and due respect. As it stands, the Bill tends to be quite blunt in the way things are proposed on its face, and I would like to see a lot more from that code of practice and how it will be built in.
Beyond that, I would like to see a lot more about the people who will be using these powers. Again, we trust the police to use their coercive and intrusive powers based on their skills, experience and training. At the moment, there is a reasonably low bar set in the legislation, which is merely to be a higher executive officer or senior executive officer—a very entry-grade civil service officer. Other coercive powers that we can see across areas I have studied over the course of a 20-year career, particularly the Proceeds of Crime Act 2002, require some professional skills: where one is not a police officer, one must be a trained financial investigator. It is a trained and accredited role that is overseen by statute. Here, the competence of the individuals using that power, and the trust we can thus place in them to use those powers proportionately, is quite limited.
Mike Wood
Q
Helena Wood: It depends which part of the Bill we are talking about. This is a game of two halves: some of the PSFA powers, for example, mirror powers that are used almost as standard across the landscape of counter-financial crime, and I think we can be more comfortable about the use of those powers. The power I have more concerns about is something that is very new and incredibly intrusive, and without limitation to it being a civil or criminal investigation: the DWP eligibility verification powers. There, we need to proceed with more caution about how they are used, given that this is very much at risk of being a blanket, phishing-style power without any recourse to the limitations and the bars that others have to reach to use other powers that would be either a civil or criminal investigation. I think that part of the Bill requires a little more thought and proportionality pulling up front, unless the Government can bring forward that code of practice to allow those of you around the room judging this Bill to see what will be in the code to limit the use of those powers to the highest risk of high-end investigations, rather than making it a blanket power.
Mike Wood
Q
Helena Wood: Absolutely. The concerns I have around those powers are about collateral intrusion. We can all agree that the quality of data both on the DWP side and on the part of financial institutions is not always as good as it could be. I completely agree with the need to minimise the level of information that those institutions give back to the DWP, to caution against unnecessary intrusions upon privacy, but I would like to see a minimum standard of data match that would be required to take action on that data. If the banks are only giving a minimum amount of information back into the DWP, how do we know that that is an absolute specific match on the individuals they have on their system? Without seeing information about how that will be acted upon in the code of practice, I am slightly cautious. We need to see that detail earlier rather than later, for you to be able to make that judgment about the risk of unintended consequences of this legislation.
Let us again look at this in its broader context. This is a very intrusive power, but it sits in a suite of other measures and powers available to investigators across the system. What we do not want to do with this power is to bring those other powers into disrepute. We have to apply it with due caution, making sure that a match is a match. I would like to see which specific data points will be available to the DWP investigator to ensure this is a match and to minimise the risk of collateral intrusion.
Andrew Western
Q
Helena Wood: That is a very good question. It goes back to the balance between individual rights to privacy and society’s rights as a whole. Only you can make the decision about where that balance falls. Going back to the previous question, I would like to see built into the oversight of the use of the power a specific requirement for the independent reviewer to look at instances of collateral intrusion and where mistakes have been made, and to report on those to Parliament. If we can build that into the code of practice—forgive me for keeping on going back to that code, but I think a lot of the use of this power hinges on how it will be used in practice and by whom. We need to build some significant guardrails against that.
The second point I would make is that to my knowledge, this is an unprecedented power internationally, so how can we be sure it is going to be effective in practice? We know, for example, that individuals rarely have one bank account in one institution any more. In fact, numerous pieces of research—forgive me; I do not have the figures in my head, but I can refer those back to the Committee—show that individuals now have masses of bank accounts across five, six, seven and up to 10 or 20 institutions. By targeting one institution, are you really going to get a full picture anyway? If this is to be proportionate, we have to be clear that intrusion is proportionate and is going to be effective in practice. I am yet to see the evidence that it is, if it is used in a scattergun way. That is why it would be great to build into the code of practice something much more targeted around risk. For example, high-risk postcodes coming through in intelligence around organised crime attacks on the benefits system might be one way to look at this.
Andrew Western
Q
My concern is about broadening the scope. We have taken significant steps, when set against previous proposals in this area, to narrow the scope of the Bill. For instance, we are initially looking only at the three benefits where we see the highest levels of fraud and error. Universal credit is obviously principal among those.
Does the work that we have done to narrow the scope reassure you at all when you look at the Bill—for example, the removal of the state pension and the restriction to only one financial institution? Clearly, without that, we would have to look at every single bank account in the country in detail and investigate why every single person in the country has £16,000, if we are unable to see across the full range of bank accounts that they have.
Helena Wood: Absolutely, and I will answer that question in two parts. If we compare this Bill with the predecessor Bill that was put forward by the previous Government, the concerns have been listened to. There is much more significant oversight and much more limited scope. If we look at that in comparison with the predecessor Bill, that is absolutely true.
On the second part of your question, you make a very good point that this is not always organised crime. I would build on the point made by my predecessors in giving evidence that this is absolutely what we would refer to as a first-party fraud-driven approach. At Cifas, we run a fraud behaviours survey every year, questioning individuals about their general attitudes to fraud—individual-level fraud—and we see those numbers ticking up year on year about what individuals deem acceptable. Your point is well made and fully made about the rising levels of first-party fraud. We do have to look at it as both a first-party fraud and an organised fraud response.
Andrew Western
Q
Helena Wood: A really good point was made, and others who follow me in this Committee’s evidence sessions will make it as well: fraudsters rarely simply defraud the public sector or the private sector. It is often the case that those with a propensity towards fraud will look at any channel through which they can gain financial benefits.
This is very much a narrow-facing Bill, but we have to look at it in its broader context. I would question whether DWP could be doing more to share information with the private sector, using existing powers to do so. There are plenty of voluntary information and data-sharing schemes available to which DWP is not plugged in. It would complement this particular power to be able to layer the data picture and the intelligence picture, and not just look at this single piece of information in isolation. There will be a number of data points across the private sector that you could gain through voluntary data-sharing schemes that DWP is currently not engaging with.
Rebecca Smith
Q
Helena Wood: Absolutely; the point was well made in previous evidence that the police simply do not have the resources to look at fraud against consumers, never mind to support DWP, so I think it is entirely necessary to extend those powers of search and seizure to DWP as well. Again, I keep coming back to the broader context: there are other powers. We should not assume that this Bill is the sole answer. It has taken a very civil lens, quite necessarily, on what is a huge-volume crime, which cannot be dealt with simply through a criminal justice response alone. We have to save that criminal justice response for use in a surgical way, for the really high-end cases, particularly in an organised crime sense. We should not be seeing it as an either/or.
What I would not like to see from this is the replacement of the necessary deterrent of a criminal investigation and prosecution with pure use of civil measures. We need to use that full suite of powers beyond this Bill, including those in existing legislation, such as the Proceeds of Crime Act 2002, and standard issue fraud criminal prosecutions. Something that I would like to see from the independent oversight is that we do not lose that criminal thread. We have to keep prosecuting where necessary, and providing that necessary deterrent through all the available means, not just the ones available in this Bill.
Georgia Gould
Q
Helena Wood: This is a really necessary approach. However, I would caution that we are holding off from establishing the PSFA as a statutory body for now, and I completely understand the reasons for that: we are in a very tight fiscal environment, the cost of setting up a new agency is substantial, and we need to test the competence of the PSFA in doing so. However, I think in due course we need a more fixed timeline to move the PSFA off into a statutory body, to at least remove any perception—if not actual political interference—in investigations. That is really important—we need a stronger timetable. I know that will happen when the time is right, but I would like to see a stronger timetable towards it. I think there will be at least a perceived risk of Executive overreach if the PSFA does not move in that direction more quickly.
Georgia Gould
Q
Helena Wood: There is a question of “Who guards the guards?” in some respect. This Bill has significantly built in oversight; I think at every step we see that. However, it depends who the independent chair is, and a question would be whether that individual could be subject to a parliamentary approval process, as other oversight positions are—particularly if we look at the National Audit Office model, for example. It might be good to build in a parliamentary approval process for the individual who will take that role.
Georgia Gould
Q
Helena Wood: That is a really good question, which deserves more considered thought. These are people who have not gone through the police training process, for example.
I wonder if it is worth considering whether we make use of the powers contingent on being a financial investigator, as accredited under the Proceeds of Crime Act. However, I make that suggestion with some caution, knowing that in a practical sense there is a national shortage of financial investigators across the country. We are haemorrhaging these individuals; we train them up in the public sector and they go straight out to be poached by the financial sector, and probably to respond to some of these measures set out in the Bill. I say this with some caution, however, as that is a properly accredited and overseen process of skills. We need to look carefully about who exercises those powers and whether they need to do an analogous police training programme. I think there is some consideration of the professionalising investigations programme, although they cannot be officially credited over time—they will not be using the powers as frequently as that process would require.
Those are the parts of the Bill I would like to see strengthened in some way. It is perhaps incumbent on the Government to look at what the other routes are beyond a financial investigator to ensure the right level of competence in using what are very intrusive powers.
Andrew Western
Briefly, on the question of efficacy and scale, His Majesty’s Revenue and Customs has powers at the moment to request information from banks en masse. Given the experience we have within Government of doing that, and from what I can see, the lack of problem with it, I wonder whether you feel—
The Chair
Order. Alas, that brings us to the end of the allotted time for the Committee to ask questions. On behalf of the Committee, I thank Helena Wood for her evidence. We will move on to the next panel.
Examination of Witnesses
Kristin Jones and Alex Rothwell gave evidence.
The Chair
We will now hear evidence from Kristin Jones, formerly of the Serious Fraud Office and the Crown Prosecution Service, and from Alex Rothwell, chief executive of the NHS Counter Fraud Authority. For this panel, we have until 11 o’clock.
Mike Wood
Q
Kristin Jones: I am sure I have the same answer as Helena. Until we see the codes of practice and the operational guidance, it is difficult to tell. Obviously, I have operated in very regulated situations where there has been accountability, but without that extra information, I cannot really say at the moment. But I think it is important that when you interfere with the rights of the individual, decisions are taken at a sufficiently high level by people with sufficient experience.
Mike Wood
Is that your view as well, Alex?
Alex Rothwell: I would echo Kristin’s thoughts. I suppose there is not necessarily anything novel in the Bill. Those powers exist elsewhere, so we have seen them in operation. The ability to test and learn, which is baked into the proposals, is very helpful. Importantly, it addresses a need.
Mike Wood
Q
Kristin Jones: Not on the face of the legislation necessarily, but I would perhaps expect certain commitments in debate that the code of practice will cover certain areas.
Mike Wood
Q
Kristin Jones: I do have some reservations about dealing with corporate organisations, as was expressed earlier, because a corporate cannot speak itself; it can speak only through its officers. The Bill only talks about notices; it does not talk about answering questions. It is quite difficult if you are not able to ask an officer of a corporate questions and you have just written answers through notices. I wonder whether there are sufficient powers for dealing with the more serious, top end of public sector fraud.
Mike Wood
Q
Alex Rothwell: Perhaps a good example is that although we believe we are losing something in the region of £1.3 billion a year to fraud, the amount of fraud that is actually identified is relatively low, because a lot of the value we get is from future prevention. For example, in 2023-24, the figure was something like £5.2 million, but we only recovered 12% of that figure. There is a lot more value to be had. The Bill will be incredibly helpful for us to recover more money from people who have been suspected of fraud. When it comes to pursuing criminal justice outcomes in relatively low value cases—perhaps individuals who have taken £5,000 or £10,000, who have been exited through human resources processes or who have simply left the organisation—the Bill gives us an incredible opportunity to recover more funds, and I think we would use it extensively.
Mike Wood
Q
Kristin Jones: My career has been dealing with fraud in the public and private sector, and I think it is important that when fraud is investigated and you discover something that is not in your scope, you are able to communicate it so that fraudsters are tackled, whether that is in the private or public sector. That is my only concern.
Alex Rothwell: The Bill seems pretty comprehensive in terms of our requirements. There are things that I have concerns around, including training—not just of individuals who are exercising the powers, but of those who manage them and set the culture and tone of an organisation and how it is built in. I echo Kristin’s comments about private sector providers. For example, we are increasingly seeing private sector providers providing NHS services, so how would that be exercised? From my point of view it is more about the exercise of the powers than the extent of the powers.
Kristin Jones: The other thing I think is missing compared to when other organisations have been established is that we only talk about investigators. I am a great believer in a multidisciplinary team, with early legal advice, accountancy advice as necessary and financial investigators, but we have an organisation at the moment in which we only define the role of the investigators.
Andrew Western
Q
Alex Rothwell: I certainly echo your thoughts in terms of attitude. We have seen that expressed in a number of different ways through surveys and transparency—the international transparency index, for example. In terms of statistics, we have seen our fraud prevalence rate remain fairly steady over the last five to seven years, but it is a complex picture because I think that we have been increasing our fraud protection measures as well. What we have seen across the board are bitter pay disputes and a sense that contracts do not pay enough. We have extensive provider assurance programmes that are recovering funds through what we classify as error. I do not see any change in that climate necessarily. Opportunities to strengthen prevention, for us, are the most important factor to influence people’s decision making before they commit fraud. So it is a huge concern to me, but not necessarily in terms of statistics.
Kristin Jones: During my career, I have seen sentences for fraud increase dramatically and that sends a clear message but, over my career, instead of only a few people being exposed to fraud, when you answer your telephone, there is a good chance you have a scammer at the other end; it could happen once a week, if not several times a day. If you are being targeted, it could be every mealtime, with the scammer hoping that while you are distracted you will fall for some con. The worry is that the public are exposed so much to fraud that its seriousness gets watered down in their mind. You have these forums where you can recommend how to claim various things from the Government and how to hit sweet spots to get that benefit or grant. So it has changed and perhaps people are not as shocked by fraud as they used to be.
Andrew Western
Q
Alex Rothwell: Data sharing is critical to our ability to prevent fraud. We have a particular challenge in the NHS in that medical records are in a particular category, so we are exempt from the Digital Economy Act 2017. Perhaps I would focus in the first instance on the rich data sets that the Government actually hold and our ability to communicate inter-Department. Those data sets are critical, yet it is still challenging to obtain data. In many ways, the data protection legislation already provides the ability to share information, particularly where fraud is concerned, although the application of it is often quite risk averse. I wish it had been called the Data Sharing Act and not the Data Protection Act, quite frankly.
Kristin Jones: I come from a slightly different angle on this. Having prosecuted for many years and had to deal with the Criminal Procedure and Investigations Act 1996 and the responsibility to gather material and go through it, I think it is important, if you have data, to decide what you are going to do with it. In preparing for this Committee, I looked at the National Audit Office report on carer’s allowance. There you have a lot of data being gathered, passed and, if it is not addressed, discarded. For me it is important, if you gather data, to do something with it. There has been a lot of discussion about error. It is important for the public that, when they apply for something that they may not be entitled to, if that information is held, they can rely on that. If you apply for a passport and you fill the form in wrongly, you do not get your passport. It should be the same in other parts of government. You should be able to rely on the information the state already holds on you. This relates to the point about child benefit.
Siân Berry (Brighton Pavilion) (Green)
Q
Alex Rothwell: In terms of search warrants and physical access?
Siân Berry
Yes. The other powers that you mentioned already exist and are being transferred to a new place where things are conducted. Eligibility verification in the form that it is written is quite novel.
Alex Rothwell: Does His Majesty’s Revenue and Customs not have the ability to conduct those inquiries?
Siân Berry
As inquiries, but the difference is that we are talking about routine use.
Alex Rothwell: More extensive use.
Siân Berry
Yes. Would you care to comment on the eligibility-verification powers more specifically?
Alex Rothwell: I can see why there is concern. People have complex lives—perhaps it is not as straightforward as how much capital is in a bank account at a particular time. I think the powers need to be exercised very carefully. I am reassured by the opportunity to test and learn from the process through oversight, but I do recognise the concerns.
Kristin Jones: I used to be in charge of international assistance when I was at the Serious Fraud Office. One of the difficulties is that whereas other countries have a central bank register or building where you can tackle that and find out all the accounts and individual holes, here we do not. It is more tricky to try to verify financial information because there is no central register.
Alex Rothwell: We were speaking before about whether it is flexible enough to cover future events. The way that we use cash or funds is changing in terms of digital currencies and so on, and the way that people hold value is changing.
Siân Berry
Q
Alex Rothwell: Yes.
Michael Payne
Q
“It is very unlikely that most of the losses due to fraud and corruption”
during the pandemic
“will ever be recovered.”
How far do you agree with that statement? Do you think the new powers for the Public Sector Fraud Authority change the prospects?
Alex Rothwell: I absolutely do think they change those prospects. I was still in law enforcement when covid-19 was happening, and there was an extensive discussion about the police’s ability to support investigations. Frankly, policing had significant challenges with fraud, and still does, in terms of the volume of attacks against individuals and businesses, which made supporting the public sector almost an impossible ask, so I certainly welcome the ability to strengthen the public sector fraud response.
On whether the money will be recovered, there are significant challenges, as I am sure you are aware. It is right to apply a cost-benefit approach as well; although there is a moral imperative, we increasingly look at things in a commercial sense and at whether there is financial value in recovering funds.
Kristin Jones: It is very difficult to get money back from fraudsters, especially where it is organised, because the money disappears into different accounts in different names, and overseas through lots of corporate bodies, so it will be a big challenge. The important thing about this piece of legislation is whether we are future-proofing it so that, looking forward, we can learn from what has happened in the past and not repeat the mistakes.
Rebecca Smith
Q
Alex Rothwell: If we take the view that fraud has already happened—I have spoken about prevention, but once a fraud has happened and we have discovered it—there are increasingly limited opportunities to pursue criminal investigations. Although we maintain a strong investigative capability that deals with more serious types of criminality, we know about the challenges in the criminal justice system—the disclosure burden is high, it is incredibly expensive to run criminal investigations, and often they take eight years or longer to reach fruition—so we are increasingly looking at how else we can deal with fraud when it is presented to us.
In many ways, it is the low-value, high-volume cases that we see that are more challenging, where we are perhaps seeking to recover funds from someone who has taken £5,000, as I mentioned earlier. This is where I have the most interest in the Bill, because I think we would seek to use those powers extensively, and of course every penny that we recover is money that will be well spent in the NHS. I do not necessarily see any gaps in this particular legislation. There are elements of the work that we do in the national health service where we would benefit from some more powers, but the focus here is obviously on the Bill, rather than on our own ability. A lot of that would apply to how we access medical records, for example.
Georgia Gould
Q
Alex Rothwell: If we look across other international jurisdictions, we see that law enforcement agencies often have quite distinctive public sector fraud or crime functions—for example, the FBI has an extensive healthcare fraud capacity. The way policing has evolved over the last 20 or 30 years, particularly with an emphasis on drug supply, knife crime and firearms, has meant there is little capacity in policing to tackle public sector fraud, and of course there is an ever-present terrorism threat, which is changing rapidly. There is also safeguarding, with the National Crime Agency having quoted publicly the figures in terms of people who are a risk to children, for example.
One of the challenges is that even if you invest more in fraud capability, when a crisis happens, whether that is because of public order or some other form of crisis, policing has to flex more than other investigations. Inevitably, crimes like fraud are perhaps easier to put on hold for a time. Certainly since 2018 we have seen a gradual professionalisation and an increasing capability in the public sector, which I endorse. We could invest more in the police, but my concern is that there will continue to be crises that affect policing that will impact the ability of policing to support the public sector in the way that is required.
Kristin Jones: I agree with everything that Alex just said. The same applies to prosecution: if you have specialist prosecutors, where the resource is ringfenced, they do not get dragged away, but if you have them in with other prosecutors, it depends on what the pressure is at any particular time as to what resource is going to be given to fraud prosecutions.
Gill German (Clwyd North) (Lab)
Q
Alex Rothwell: One thing that we have always struggled to do is put a value on deterrence, because it is quite hard to say categorically that someone has not done something because of a change in approach to something. However, it is my view that, once it is known that there are increased powers in this space and that individuals will be pursued for funds, we will see some behaviour change. We could potentially quantify that, but the challenge is directly relating it to the Bill, particularly if you introduce other measures at the same time. I think there will be a powerful deterrent effect if it is exercised correctly and at scale and the public can see the benefits.
Kristin Jones: I agree. If people know there is an increased likelihood that they will be detected, that will have an effect. It is also important to use similar means to get the right narrative across about what you should and should not be doing.
Georgia Gould
Q
Kristin Jones: We have to plan for emergencies—they will, inevitably, occur—and the work on that should be kept up to date so that you can refer back to one you prepared earlier. That is so important because when there is an emergency, everybody is doing their best to get through it as fast as they can, and that is not the time for slow consideration, whereas having been through that experience, now is the time to reflect and document what we are going to do in future.
Alex Rothwell: Fundamentally it is about the loosening of controls, our understanding of the impact of the loosening of controls, and the friction that is or is not introduced when you are addressing an emergency. We also now have a much better understanding of how that can manifest itself. But I am confident that the Bill would enable an effective response.
Georgia Gould
Q
Alex Rothwell: From my perspective it is the digital footprint that is left and our ability to analyse that at scale. Very few transactions, if any, take place that do not have a digital or electronic footprint of some kind. The data sharing and our capability to analyse that data is the most important factor. The Bill goes some way to addressing that, but obviously elements of the Bill are about responding to fraud once it has happened. That, for me, is the biggest challenge. But on top of that are the safeguards that we put in place to ensure that our interpretation of that analysis is also correct.
Georgia Gould
So the other half—the prevention side—has to accompany this.
Alex Rothwell: Absolutely.
Georgia Gould
I very much agree.
Kristin Jones: Increasingly in society today knowing what the truth is, with the amount of data and false information out there, can be the problem.
Andrew Western
Q
Alex Rothwell: Data analysis has been particularly effective, as has getting better at recording and reporting—for example, we now have a ubiquitous case recording system that exists across the national health service. The greatest value we have seen so far has been in improved data analysis on large datasets that exist on, for example, national contracting. That is where the value lies in future.
Georgia Gould
Q
Alex Rothwell: Yes, it is. As I mentioned, the professionalisation of fraud specialists has made huge inroads in terms of the acceptability of fraud professionals, particularly in a finance environment—we deal with audit committees and so on—and there is also the recognition that the Government are taking fraud seriously. That is not just this Government but the previous one as well. The direction we have had from the Cabinet Office—
The Chair
Order. That brings us to the end of the allotted time for the Committee to ask questions. I thank the witnesses for their evidence. We will move on to the next panel.
Examination of Witnesses
Anna Hall and Christy McAleese gave evidence.
The Chair
For our final session this morning we will hear oral evidence from Anna Hall, corporate director of debt, and Christy McAleese, debt advice strategy and policy lead, both at the Money and Pensions Service.
Rebecca Smith
Q
Anna Hall: A lot of the operational detail of how the powers will work needs to be worked through, and the code of conduct will clearly be extremely important. Already existing in government are the debt management vulnerability toolkit and the public sector economic abuse toolkit, both of which have been set up by the cross-Government and cross-debt advice sector fairness group. We would like to see those existing systems tailored for the Bill and the recovery powers, to make sure that the code is implemented fairly.
There is lots of detail in the debt management vulnerability toolkit. It is about making sure that every individual is treated fairly, no matter how the debt has arisen. Once a debt is owed to Government, we are interested in how someone is able to set up a sustainable repayment plan. How are they able to access free debt advice and get the support they need? Regardless of how the debt has arisen, there is their ongoing expenses, their family, the need to make sure that there are no unintended consequences for wider society and their family, and how that debt is recovered.
Christy McAleese: I agree with Anna. There are possibly also opportunities in the code of conduct to build on some of the good work that the Department for Work and Pensions has already been doing on its ways of working with the debt sector. That includes good and consistent signposting and referrals through to free debt advice if, as seems reasonable, someone who has perhaps been contacted by the Department seeks advice from the sector. There are also some things around the acceptability of the debt sector—the advice worker being able to act on behalf of the person, so third-party forms of authority—and we could look at that. That would streamline the process for the person in debt and make it much easier for the debt sector to work with the Department. There are probably other things in that area.
Rebecca Smith
Q
Anna Hall: We can talk about who should be consulted. Debt advice organisations and consumer groups are important, because they will be the ones that interact with and support individuals in how they set up repayment plans and interact with the debt they owe to Government. At the Money and Pensions Service, we have an adviser panel, whereby we convene the debt advice sector, creditors and everyone who interacts in the ecosystem of debt advice. We can certainly support with that.
We are pleased with how DWP officials have engaged with us so far. They are clearly prioritising the people who are likely to be vulnerable. We work with them on an ongoing basis and expect to continue that through the development of the code of conduct.
Christy McAleese: To add to that briefly, we have a track record of doing consultation exercises in this area, and we have been sharing some of those learnings with colleagues at the DWP. In particular, as Anna mentioned, our debt adviser panel, which is made up of frontline advice workers from right across the sector, has been a valuable forum for us to understand how particular aspects of work that we are doing, and wider Government work, impact on the sector, and particularly on people in debt. Colleagues at DWP have been discussing how they can interact with that panel as part of the process as well, which we would really welcome.
Rebecca Smith
Q
Anna Hall: One thing that we know quite a lot about at the Money and Pensions Service is how people in debt behave. They do not always behave in a particularly rational manner, or in the way that you might expect people to behave, as with all people interacting with systems.
It can be incredibly overwhelming to have multiple debts. If you draw an analogy to other types of debts that people might owe—say, mortgage arrears or rent arrears—the fact that you might lose your home if you do not pay it is obviously an effective deterrent. For some people, those kinds of consequences are an effective deterrent. But we see day in, day out in the services we fund that people leave it right to the last minute before they seek help, and some people do not seek help at all. There can be all kinds of reasons for that. It could be something to do with them—they may struggle with literacy; they may have really overwhelming mental health issues; or it could be that they just do not know what to do. It could also be that they do not know where to seek help from. So I am sure it will be a deterrent for some people, but for other people, deterrents are not really the reason that they do not engage with the system.
We think it is really important that the systems that are set up once a debt has arisen are encouraging and supportive and help people to engage with the Department, so that they can set up an affordable and sustainable repayment plan. That will minimise the number of people who get to that point. We have experience of working with the finance sector and with other Government Departments that are trying to recover debt. If you really focus on being supportive, encouraging and creating the environment where frontline staff are people that you would want to disclose information to, set up income and expenditure, get a signpost to debt advice from and those kinds of things—if that is inherent in the system—you will not need the deterrent very often. There are huge numbers of people who are very vulnerable who have multiple debts, and deterrents are not really the thing that will impact on their ability to engage.
Andrew Western
Q
Anna Hall: We work with the Department in a number of ways. One of the most recent initiatives is working with Jobcentre Plus colleagues to embed the Money Adviser Network referral system into that. That means that where people present at Jobcentre Plus for a variety of reasons and are identified as having some kind of debt or money difficulty, they can either be referred to the MoneyHelper website—that is the Money and Pensions Service website—which has a variety of information on money, debt and pensions, or they can get a referral through the Money Adviser Network to one of our funded debt-advice providers. It is as seamless as possible and it really enables someone who presents perhaps not realising that there is help out there. When someone interacts with a system that they have to interact with, it is great if we can offer a real range of support that allows them to get to debt advice as quickly as possible.
I probably would say this, wouldn’t I, but debt advice can be absolutely life-changing for people? Its impact is huge. One thing we know is that people often do not know that debt advice exists. A huge number of people would benefit from debt advice. They do not know where to look or how to find it and think that is maybe is not for them, and they do not know what will happen when they get debt advice. If you have someone reassuring at the jobcentre saying, “This is a really independent, trusted service and it can help you sort out your financial affairs, and here is a seamless transfer through to that debt advice service,” that can be incredibly effective.
We are working with the Department, in Jobcentre Plus and across the board, on where people are particularly vulnerable and where they really need that support before they can even start to think about finding work or engaging with other things. If you are worried about whether you have food, whether you have money coming in and what you are going to do about the bailiff who is coming to knock on your door, you really need to deal with that before you can look at your long-term future.
The Department and all the officials we have been working with have been prioritising that. Being an arm’s length body of the Department for Work and Pensions is really helpful to make those connections, and embedding debt advice into all those systems has been really welcomed by the Department.
Andrew Western
Q
Can you reflect on the way that we have structured the process for people to engage with the Department when they are notified that they owe us a debt? We have done everything that we can to structure that as a power of last resort. Do you think that that is as robust as it can be with the multiple points of contact, the attempt to agree a sustainable and affordable repayment plan, and the ability, even after we have agreed a deduction, for somebody to come back to the table and negotiate that with us? Is there anything else that you would like to see in that space, or do you think that that is robust in reassuring ourselves that it is a power of last resort?
Anna Hall: It certainly looks that way from the detail in the Bill. As others have said, the code of conduct will be the critical thing. One of the things is that if frontline staff are not picking up vulnerabilities, or they are not trained in how to sort out affordability, in empathic listening or in all the protocols about how to have different types of conversations with people in different types of vulnerable situations—if those things are not in place—some of the processes in the Bill will not be as effective. It comes down to the training for frontline staff, and the capacity and processes to then follow up on what has actually been disclosed, that will enable those repayment plans to be put in place before those later processes. If those are not in place, that could cause some real issues. How successful this Bill is will come down to the code of conduct, as many have said.
Christy McAleese: I agree with what Anna has said. There are probably parallels with what has happened in the financial services sector and changes due to consumer duty and other requirements there. They have found that it is about embedding that culture in frontline staff and recovery staff, and making sure that they are trained effectively. The process on paper needs to be brought to life. We have been assured by the colleagues we have been speaking to at DWP so far that that is in their thinking. They have really demonstrated a willingness with us to learn what they can from how this is approached in the debt advice sector as well. We are reassured on that.
Andrew Western
Q
Anna Hall: We understand the DWP’s intent to ensure that debts can be recovered across all the different groups of people who might owe money. We are really focused on what happens when that debt arises and how people are treated in that situation. It is probably slightly outside our remit to comment on some of what you just outlined, but once the debt has arisen, we would look at how people are treated fairly in that situation across the board.
Christy McAleese: I have nothing to add.
The Chair
There being no further questions, I thank the witnesses for their evidence.
Ordered, That further consideration be now adjourned. —(Gerald Jones.)