Public Authorities (Fraud, Error and Recovery) Bill

(Limited Text - Ministerial Extracts only)

Report stage & 3rd reading
Tuesday 29th April 2025 Commons Chamber

[Madam Deputy Speaker (Ms Nusrat Ghani)]

With this it will be convenient to discuss the following:

Government new clause 18—Consequential amendments to the Social Security Fraud Act 2001.

Government new clause 19—Devolved benefits.

Government new clause 20—Powers of Scottish Ministers.

New clause 1—Recovery of overpayments of Carer’s Allowance—

“The Secretary of State may not exercise any of the powers of recovery under this Act in relation to a person who has received an overpayment of Carer’s Allowance until such time as—

(a) the Secretary of State has commissioned an independent review of the overpayment of Carer’s Allowance;

(b) the review has concluded its inquiry and submitted a report containing recommendations to the Secretary of State;

(c) the Secretary of State has laid the report of the independent review before Parliament; and

(d) the Secretary of State has implemented the recommendations of the independent review.”

This new clause would delay any payments being taken from people who the Government may think owe repayments on Carer’s Allowance until the independent review into Carer’s Allowance overpayments has been published and fully implemented.

New clause 2—Impact of Act on people facing financial exclusion—

“(1) The independent person appointed under section 64(1) of this Act must carry out an assessment of the impact of this Act on the number of people facing financial exclusion.

(2) The independent person must, after 12 months of the passing of the Act—

(a) prepare a report on the review, and

(b) submit the report to the Minister.

(3) On receiving a report the Minister must—

(a) publish it, and

(b) lay a copy before Parliament.”

This new clause would look into the impact of the Act on people facing financial exclusion.

New clause 3—Audit of algorithmic systems used in relation to Carer’s Allowance overpayments—

“(1) An independent audit of algorithmic systems used in the assessment, detection or recovery of Carer’s Allowance overpayments must be conducted at least once every six months.

(2) Any audit under subsection (1) must be conducted by persons with relevant expertise in data science, ethics and social policy who have no direct affiliation with—

(a) the Department for Work and Pensions, or

(b) any person or body involved in the development or operation of the algorithmic systems under review.

(3) An audit conducted under this section must consider—

(a) the accuracy of the algorithmic systems in identifying overpayments, and

(b) the fairness of the systems’ design, application and operation, including any disproportionate impact on particular groups.

(4) After every audit a report on its findings must be—

(a) published;

(b) laid before both Houses of Parliament within 14 days of publication; and

(c) made publicly available in an accessible format.

(5) If any audit identifies significant inaccuracies, unfairness or biases in any algorithmic systems, the Secretary of State must, within 30 days of the publication of the report outlining these findings, present an action plan to Parliament which outlines the steps which the Government intends to take to address the identified issues.”

This new clause would provide for an audit of algorithmic systems used in relation to Carer’s Allowance overpayments.

New clause 4—Inclusion of systems within the Algorithmic Transparency Reporting Standard—

“(1) For the purposes of this section, “system” means—

(a) algorithms, algorithmic tools, and systems; and

(b) artificial intelligence, including machine learning;

provided that they are used in fulfilling the purposes of this Act.

(2) Where at any time after the passage of this Act, the use of any system is—

(a) commenced;

(b) amended; or

(c) discontinued;

the Minister must, as soon as reasonably practicable, accordingly include information about the system in the Algorithmic Transparency Reporting Standard.”

This new clause would require the use of algorithms, algorithmic tools, and systems, and artificial intelligence, including machine learning, to be included within the Algorithmic Transparency Reporting Standard.

New clause 5—Duty to consider domestic abuse risk to account holders—

“(1) Before any direct deduction order under Schedule 5 is made, the Secretary of State has a duty to consider its effect on any person who—

(a) is a victim of domestic abuse, or

(b) the Minister reasonably believes to be at risk of domestic abuse.

(2) In this section “domestic abuse” has the meaning given by section 1 of the Domestic Abuse Act 2021.”

New clause 6—Review of whistle blowing processes in relation to public sector fraud—

“(1) Secretary of State must, within one year of the passing of this Act, conduct a review of whistle blowing processes in relation to fraud in the public sector.

(2) A review conducted under this section must consider—

(a) the appropriateness and efficacy of existing whistle blowing processes;

(b) barriers to reporting fraud and reasons for under reporting of fraud; and

(c) recommendations for change.

(3) The Secretary of State must publish a report containing—

(a) the findings and conclusions of the review, and

(b) a timetable for the delivery of any recommendations for change within six months of the completion of the review.”

New clause 7—Overpayments made as a result of official error—

“(1) Section 71ZB of the Social Security Administration Act 1992 is amended as follows.

(2) In subsection (1), for “The” substitute “Subject to subsection (1A), the”.

(3) After subsection (1) insert—

“(1A) The amount referred to in subsection (1) shall not include any overpayment that arose in consequence of an official error where the claimant or a person acting on the claimant’s behalf or any other person to whom the payment is made could not, at the time of receipt of the payment or of any notice relating to that payment, reasonably have been expected to realise that it was an overpayment.””

This new clause would provide that, where universal credit overpayments have been caused by official error, they can only be recovered where the claimant could reasonably have been expected to realise that there was an overpayment.

New clause 8—Offence of fraud against a public authority—

“(1) A person who-

(a) commits,

(b) assists or conspires in the committal of, or

(c) encourages the committal of,

fraud against a public authority commits an offence.

(2) A person who commits an offence under subsection (1) is liable-

(a) on summary conviction, to imprisonment for a term not exceeding the general limit in a magistrates’ court or a fine (or both);

(b) on conviction on indictment, to imprisonment for a term not exceeding 10 years.”

New clause 9—Application of the Police and Criminal Evidence Act 1984 to investigations conducted by the Department for Work and Pensions—

“(1) The Secretary of State must, within six months of the passing of this Act, introduce regulations for the purpose of applying certain powers of the Police and Criminal Evidence Act 1984, subject to such modifications as the order may specify, to investigations of offences conducted by the Department for Work and Pensions.

(2) The powers to be applied must include–

(a) the power of arrest;

(b) any other such powers that the Secretary of State considers appropriate.

(3) Regulations made under this section shall be made by statutory instrument.”

New clause 10—Liability orders—

“(1) Where a person–

(a) has been found guilty of an offence under section 1 or section 11 of the Fraud Act 2006, or the offence at common law of conspiracy to defraud,

(b) that offence relates to fraud committed against a public authority, and

(c) has not paid the required penalties or not made the required repayments,

the Secretary of State must apply to a magistrates’ court or, in Scotland, to the sheriff for an order (“a liability order”) against the liable person.

(2) Where the Secretary of State applies for a liability order, the magistrates’ court or (as the case may be) sheriff shall make the order if satisfied that the payments in question have become payable by the liable person and have not been paid.

(3) The Secretary of State may make regulations in relation to England and Wales—

(a) prescribing the procedure to be followed in dealing with an application by the Secretary of State for a liability order;

(b) prescribing the form and contents of a liability order; and

(c) providing that where a magistrates’ court has made a liability order, the person against whom it is made shall, during such time as the amount in respect of which the order was made remains wholly or partly unpaid, be under a duty to supply relevant information to the Secretary of State.

(4) Where a liability order has been made against a person ("the liable person"), the Secretary of State may use the procedure in Schedule 12 to the Tribunals, Courts and Enforcement Act 2007 (taking control of goods) to recover the amount in respect of which the order was made, to the extent that it remains unpaid.”

New clause 11—Publication of results of pilot schemes—

“Within three months of the passing of this Act, the Secretary of State must publish the results of any pilot schemes run with banks to test the provisions in Chapter 1 of Part 2.”

New clause 12—Report on cost implications for banks—

“The Secretary of State must, within three months of the passing of this Act, publish a report on the expected cost implications of the provisions of this Act for banks.”

New clause 13—Annual reporting of amounts recovered—

“(1) The Secretary of State must publish an annual report detailing the amount of money which has been recovered under the provisions of this Act.

(2) A first report must be published no later than 12 months after the passing of this Act with subsequent reports published at intervals of no more than 12 months.”

New clause 14—Impact of Act on vulnerable customers—

“(1) The Secretary of State must, within six months of the passing of this Act, lay before Parliament an assessment of the expected impact of the Act on vulnerable customers.

(2) For the purposes of this section, “vulnerable customers” means someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.”

New clause 15—Publication of an Anti-Fraud and Error Technology Strategy—

“(1) The Secretary of State must, within six months of the passing of this Act, publish an Anti-Fraud and Error Technology Strategy.

(2) An Anti-Fraud and Error Technology Strategy published under this section must set out–

(a) how the Government intends to use automated technologies or artificial intelligence to tackle fraud against public authorities and the making of erroneous payments by public authorities, and

(b) a series of safeguards to provide for human oversight of decision making that meet the aims set out in subsection (3);

(c) how rights of appeal will be protected;

(d) a framework for privacy and data sharing.

(3) The aims of the safeguards in subsection (2)(b) are—

(a) to ensure that grounds for decision making can only be reasonable if they are the result of a process in which there has been meaningful human involvement by a human of adequate expertise to scrutinise any insights or recommendations made by automated systems,

(b) to make clear that grounds cannot be reasonable if they are the result of an entirely automated process, and

(c) to ensure that any information notice issued is accompanied by a statement—

(i) setting out the reasonable grounds for suspicion that have been relied on, and

(ii) confirming that the conclusion has been formed on the basis of human involvement.”

New clause 21—Offence of encouraging or assisting others to commit fraud—

“(1) The Social Security Administration Act 1992 is amended as follows.

(2) In section 111A (dishonest representation for obtaining benefit etc), after subsection (1G) insert—

“(1H) A person commits an offence if they—

(a) encourage or assist another person to commit an offence under this section, or

(b) provide guidance on how to commit an offence under this section.

(1I) An offence under this section can be committed where the encouragement, assistance or guidance happens online.

(1J) A person who commits an offence under this section is liable on conviction on indictment to imprisonment for a term not exceeding five years or an unlimited fine.”

(3) In section 112 (false representations for obtaining benefit etc), after subsection (1F) insert—

“(1G) A person commits an offence if they—

(a) encourage or assist another person to commit an offence under this section, or

(b) provide guidance on how to commit an offence under this section.

(1H) An offence under this section can be committed where the encouragement, assistance or guidance happens online.

(1I) A person who commits an offence under this section is liable on conviction on indictment to imprisonment for a term not exceeding five years or an unlimited fine.””

New clause 22—Impact of Act on people with protected characteristics—

“The Secretary of State must, prior to making regulations under section 103 to bring into force any provision of this Act, lay before Parliament an assessment of the expected impact of the Act on people with protected characteristics who are in receipt of social security benefits.”

This new clause would ensure any impact of the Bill on people with protected characteristics in receipt of social security benefits was examined prior to the Act’s implementation.

New clause 23—Report on public sector fraud during COVID-19 pandemic—

“(1) The Minister for the Cabinet Office must, within six months of the passing of this Act, lay before Parliament a report evaluating the extent of public sector fraud that occurred during the COVID-19 pandemic.

(2) The report must include—

(a) an account of fraudulent or erroneous payments made by or on behalf of public authorities, including but not limited to the Department of Health and Social Care and NHS England,

(b) a review of how public procurement practices in place between March 2020 and December 2021, including—

(i) the use of high priority and expedited contracting for suppliers, and

(ii) the role of political appointments and personal connections in procurement decisions,

may have contributed to fraud against public authorities,

(c) the cost to the public purse of fraud against public authorities during the COVID-19 pandemic, and

(d) an assessment of the adequacy of Government oversight and other measures then in place to prevent fraud against public authorities.

(3) Where the report finds or concludes that there were—

(a) failings in Government oversight and other measures then in place to prevent fraud against public authorities, or

(b) any action or inaction by the Government which enabled fraud against public authorities,

the Minister must make a statement to the House of Commons acknowledging these findings and setting out actions planned to ensure any failings are not repeated.”

Amendment 15, in clause 3, page 3, line 10, leave out “10” and insert “28.”

Government amendments 23 and 24.

Amendment 16, in clause 4, page 3, line 33, leave out “Minister” and insert “First Tier Tribunal”.

Amendment 13, page 3, line 33, after “notice” insert

“or of the duration of the period mentioned in section 3(4)(a)”.

Amendment 80, page 3, line 34, leave out “7” and insert “28”.

Amendment 17, page 3, line 36, leave out “Minister” and insert “First Tier Tribunal”.

Amendment 18, page 3, line 38, leave out “Minister” and insert “First Tier Tribunal”.

Amendment 14, page 4, line 2, after “notice” insert

“, including by extending the duration of the period mentioned in section 3(4)(a) where satisfied that the person is reasonably unable to comply with the requirement to provide the information within the time required by the notice”.

Amendment 19, page 4, line 3, leave out “Minister” and insert “First Tier Tribunal”.

Amendment 81, page 4, line 10, at end insert—

“(7) Where a person has applied for a review of an information notice, the period mentioned in section 3(4)(a) is to be treated as beginning on the day after which the outcome of the review is notified to the person to whom the information notice was given.”

Government amendments 25 to 29.

Amendment 1, in clause 64, page 34, line 15, at end insert—

“(1A) Prior to appointing an independent person, the Minister must consult the relevant committee of the House of Commons.

(1B) For the purposes of subsection (1A), “the relevant committee” means a committee determined by the Speaker of the House of Commons.”

This amendment would provide for Parliamentary oversight of the appointment of the “Independent person”.

Government amendments 30, 31, 76, 75, 32 and 33.

Amendment 2, page 40, line 36, leave out clause 74.

This amendment removes the requirement for Banks to look into relevant claimants’ bank accounts.

Amendment 3, in clause 75, page 41, line 21, at end insert—

“(1A) Prior to appointing an independent person, the Minister must consult the relevant committee of the House of Commons.

(1B) For the purposes of subsection (1A), “the relevant committee” means a committee determined by the Speaker of the House of Commons.”

This amendment would provide for Parliamentary oversight of the appointment of the “Independent person”.

Government amendments 34 to 43.

Amendment 8, in clause 89, page 55, line 6, leave out from “unless” to the end of line 14 and insert—

“(a) the liable person agrees, or

(b) there has been a final determination by a court or tribunal that it is necessary and proportionate to exercise a power under Schedule 3ZA.”

This amendment would mean that the Secretary of State can only exercise powers to recover amounts from a person where the person agrees or where a court or tribunal has determined that such recovery is necessary and proportionate.

Amendment 10, page 56, line 16, leave out clause 91.

Government amendments 79, 78, 77, 74, 73 and 44.

Amendment 4, in clause 103, page 63, line 29, leave out from start to “following” in line 32 and insert—

“Subject to subsections (1A) and (2), this Act comes into force on such day as the Secretary of State or the Minister for the Cabinet Office may by regulations appoint.

(1A) No part of this Act may come into force until the recommendations of a report commissioned under section [Recovery of overpayments of Carer’s Allowance] have been implemented.

(2) Subject to subsection (1A), the”

This amendment which would delay the implementation of the whole Act until the findings of the independent review into Carer’s Allowance overpayments has been published and fully implemented.

Amendment 20, page 64, line 1, at end insert—

“(3A) Before bringing into force any of the provisions of Part 1 of this Act, the Secretary of State must consult with banks as to the costs which will be incurred by banks upon application of the provisions of Part 1.

(3B) Where consultation finds that the expected costs to banks are at a disproportionate level, the Secretary of State may not bring into force the provisions which are expected to result in such disproportionate costs.”

Government amendments 72 and 45.

Amendment 5, page 73, line 6, leave out schedule 3.

This amendment is related to Amendment 2 and removes the requirement for Banks to look into relevant claimants’ bank accounts.

Amendment 11, in schedule 3, page 73, line 25, leave out from “accounts” to the end of line 31 and insert—

“which belong to a person who the authorised officer has reasonable grounds to suspect has committed, is committing or intends to commit a DWP offence.”

This amendment would limit the exercise of an eligibility verification notice to cases where the welfare recipient is suspected of wrongdoing.

Amendment 22, page 84, line 12, at end insert “(d) housing benefit.”

Amendment 6, page 84, leave out line 12

This amendment would remove pension credit from being a “relevant benefit” for the purposes of the Act.

Amendment 71, page 84, line 13, leave out from “to” to end of line 17 and insert—

“remove types of benefit from the definition of”.

This amendment would mean that benefits could not be added to the list of “relevant benefits” by regulations.

Amendment 7, page 84, leave out lines 13 to 17.

This amendment ensure that the bill can only be used in relation to benefits listed in the Bill.

Amendment 21, page 84, line 25, after “money” insert

“or such an account which is held by a person appointed to receive benefits on behalf of another person.”

Government amendments 46 to 67.

Amendment 9, in schedule 5, page 98, line 10, leave out from beginning to end of line 24 on page 99.

This amendment would remove the requirement for banks to provide information to the Secretary of State for the purposes of making a direct deduction order.

Government amendments 68 and 69.

Amendment 12, page 111, line 18, leave out schedule 6.

Government amendment 70.

[The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)]

It is my pleasure to bring this Bill back to the House. I start by thanking all Members who have made contributions so far, and extend a special thanks to Members of the Bill Committee, some of whom are present today, for their detailed scrutiny.

This Government have an ambitious plan for change. To deliver everything we want to achieve, we must spend taxpayers’ money wisely, which is why we committed in our manifesto not to tolerate fraud or waste anywhere in our public services. The Bill delivers on that commitment. It is part of the biggest crackdown on fraud against the public purse in a generation. Nothing less will do, given the appalling position we inherited.

[David Davis (Goole and Pocklington) (Con)]

Does the Minister recognise that the Government’s own assessment of the effectiveness of the Bill is that it will recover a tiny 1.8% of losses?

[Andrew Western]

The right hon. Gentleman will be aware that we lose a total of £55 billion a year to fraud across the public sector; the Bill will recover £1.5 billion. However, it is part of broader measures—certainly on the Department for Work and Pensions side of the Bill —to save £9.6 billion across the forecast period. By the very nature of the changes that we are making with the Public Sector Fraud Authority, we are designing them to be scalable. As the PSFA becomes more familiar with the work it is undertaking, we think that it will be able to save a significant amount more.

As I was saying, Madam Deputy Speaker, with benefit fraud alone costing £7.4 billion in 2023-24, this is a major problem that is getting worse, not better. We cannot afford to ignore it, and we certainly do not accept it. Fraud against the public sector is not a victimless crime. Our public services, everyone who depends on them, and the taxpayers who fund them, all suffer. And they are increasingly suffering at the hands of fraudsters who use ever more sophisticated techniques to steal money meant for the public good.

The private sector has evolved and adapted its tools and tactics to respond, but, as the scale of the losses that I have just outlined make clear, the same cannot yet be said for the public sector. With this Bill, we will put that right. There will be new powers for the Public Sector Fraud Authority to investigate and deal with public sector fraud outside the tax and social security systems, and new powers for the DWP to modernise its response to fraud and error in the benefit system.

As my right hon. Friend the Secretary of State said on Second Reading, this Bill is tough and it is fair. It is tough on the dodgy business people who try to defraud our public services and it is tough on the criminal gangs and individuals who cheat the benefit system. It is fair to claimants who make genuine mistakes, by helping us to spot and prevent errors earlier. And it is fair to taxpayers, who deserve to know that every single pound of their hard-earned money is being spent wisely.

[Ian Lavery (Blyth and Ashington) (Lab)]

The Human Rights Act 1998 was one of the best pieces of legislation ever passed by a Labour Government. Can the Minister assure the House that this Bill in no way contravenes the secrecy part of the 1998 Act?

[Andrew Western]

I can give my hon. Friend that assurance and, indeed, that all of our legal obligations have been satisfied as part of the consideration of this Bill. The imperative thing for me as a Minister in the Department for Work and Pensions is that we are supporting those who need the social security safety net, not the fraudsters who pick holes in it.

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

One concern that we have is the change in the way that people conduct benefit fraud. Through the use of key buzzwords, they help people to navigate the system so that they are able to take out of it what is not theirs. Does he think that there is scope in the Bill, particularly in some of the new clauses, to include specific legislation to prevent people from using words and buzzwords, or from teaching other people how to cheat the benefit system?

[Andrew Western]

The hon. Gentleman is correct that we have a problem with so-called “sickfluencers”, but as we will hear in the debate more broadly, the Government do have existing powers through the Fraud Act 2006 and the Serious Crime Act 2007 to take action in those areas if necessary. He is right to suggest that we should be doing more, and I encourage Conservative Members to reflect on what they did in this space during their period in power. He will be reassured to know that I have commissioned work within the Department to look at what further we can do, but in legislative terms—[Interruption.] I do believe that we have somebody crossing the Floor, Madam Deputy Speaker.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Just for the record, in case Hansard did not pick that up, that was Jenny the dog crossing the Floor, not a Member of Parliament.

[Andrew Western]

I am sure the hon. Member for Torbay (Steve Darling) is grateful to you for that clarification, Madam Deputy Speaker, even if I am not, as Jenny would always be most welcome on this side of the House.

I hope that I have reassured the hon. Gentleman that we do have the legislation required to act.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

The Minister said that powers exist, but, plainly, they are not working, because we know that “sickfluencers” are doing their deeds and people are responding to them, particularly in the mental health sphere, where many of the claims are made. Indeed, we know that officials, or those acting on behalf of officials, are looking out for buzzwords, because, if there is a buzzword in there somewhere, they can bank the case and move on to the next one. Therefore, something plainly needs to be done to stop this. Will he look again at the Opposition’s new clauses 8 and 21, which would ensure that “sickfluencers” are targeted specifically, and say what, in the Government’s amended terms, they would do to deal with this particular group that are contributing significantly to the failure identified by my right hon. Friend the Member for Goole and Pocklington (David Davis) in relation to the amount of money that we are able to claim back from the huge sum that is lost to fraud every year?

[Andrew Western]

I very much agree with the right hon. Gentleman that more needs to be done; what we differ on is the need for specific legislation in that regard. Where we are falling down at present is in the scale of the activity we are undertaking. We could be doing significantly more at the moment, but as I said in response to the previous intervention, I have commissioned work to ensure that that happens. We already routinely contact social media companies to ask them to take down specific posts that could help people to commit fraud against the welfare system. I am very happy to consider practical points, but I am convinced that we have the legislative weaponry required to take the necessary action to deal with people who are encouraging others to commit fraud, both online and elsewhere.

Government amendments 23, 24, 39 and 40 bring into scope the kind of information necessary for fraud investigations and enable the PSFA and DWP to compel certain types of special procedure material, including banking records or records of employment, in line with the policy intent. Requesting this type of information is not new for DWP and occurs under its existing powers. The amendments ensure that the PSFA and DWP can compel this information to support fraud investigations, while also ensuring that important exemptions are in place, such as those for excluded material and journalistic material.

Government amendments 30 and 31 seek to address two separate issues in respect of clause 67. Government amendment 30 includes a provision in the Bill so that the powers granted to the PSFA under the Police and Criminal Evidence Act 1984—or PACE—by clause 7 of the Bill are exempt from the application of clause 67(5). This will ensure that the clause does not interfere with existing PACE provisions in relation to legal professional privilege, enabling the Bill’s PACE measures to function as intended.

Government amendment 31 removes subsection (6) in clause 67, which currently overrides existing self-incrimination protections on the PSFA’s information-gathering powers and PACE powers. This allows the common law principle of the privilege against self-incrimination to apply in the usual way—under the information-gathering powers—and ensures that the proposed PACE powers align with established PACE practices. The amendments ensure that clause 67 provides essential safeguards for the PSFA powers in the Bill related to the processing of information.

[Mr Joshua Reynolds (Maidenhead) (LD)]

I am sure the Minister will accept that there is growing concern about issues of automated decision making, artificial intelligence and algorithms. While wanting to ensure that we get the best results, is the Minister able to commit to the transparency we need when it comes to AI and algorithms in relation to the Bill to ensure that the most vulnerable in our society are not unfairly hit?

[Andrew Western]

The hon. Member will be pleased to know that I can give him that assurance and that we comply with all the Government’s required standards around the publication of such information.

Government amendments 25 and 26 relate to clause 9, which amends the Police Reform Act 2002 to extend the Independent Office for Police Conduct director general’s functions to include oversight of public sector fraud investigators, enabling them to consider PSFA’s use of PACE powers and associated investigations. Clause 9 also enables the Minister for the Cabinet Office to issue regulations conferring functions on the director general in relation to these investigations. Section 105 of the Police Reform Act 2002 sets out requirements for such regulations made under that Act.

However, section 105 only applies to regulations made by a Secretary of State. As the Cabinet Office has no Secretary of State, this section would not include the regulations that the Minister for the Cabinet Office can make under clause 9. Government amendment 26 corrects that technicality so that section 105 also applies to that Minister. In addition, Government amendment 25 simply removes reference to part 2 of the Police Reform Act 2002 within clause 9(1), as the Bill will refer to the Act more widely, rather than just part 2.

Government amendments 48 and 72 provide a clear legislative framework for how the DWP and the PSFA will handle and transfer seized evidence to the most appropriate law enforcement agency, including the National Crime Agency and the Serious Fraud Office. The amendments will ensure that evidence is handled by the organisation best equipped to deal with the specific nature of the alleged crime, fostering inter-agency collaboration and reducing delays to investigations.

--- Later in debate ---

[Dr Murrison]

The Minister is presumably keen to determine how much money is lost to fraud in Scotland, and I imagine he will require the Scottish Government to report back to the UK Government on their progress in clamping down on benefit fraud, but the same should apply in the rest of the country. That, of course, is the purpose of new clause 13, which would require an annual report on the amount of money recovered through the processes that he has outlined. Will he accept new clause 13? Will he also assure me on the point about the Scottish Government’s reporting of fraud?

[Andrew Western]

I assure the right hon. Member on his point with regard to the Scottish Government. However, I will resist new clause 13 because the publication of the DWP’s annual accounts will provide sufficient information about our performance on fraud and error.

Government amendment 42 specifies that the functions of the independent person who can be appointed by the Secretary of State in clause 87 do not apply to devolved benefits unless those are delivered by the Secretary of State under agency agreement. Government amendments 60 and 67 will amend the time required for compliance with a production order served in Scotland. That is to match normal conventions in Scotland. Government amendment 43 ensures that the new debt recovery powers taken by the Secretary of State under the Bill apply only to devolved benefits, while the Secretary of State recovers devolved debts under agency agreements.

Government new clause 18 and Government amendment 33 are consequential amendments to the Social Security Fraud Act 2001 and ensure that the powers of Scottish Ministers under the 2001 Act are unchanged by the Bill. Government amendments 36, 37 and 38 seek to clarify exemptions in the DWP’s information-gathering powers to deliver the intended policy outcome.

A key safeguard in the new DWP information-gathering powers is the exclusion of personal information about users of particular types of free services, such as advocacy and advice services that offer crisis support, for example when someone is fleeing domestic abuse. The intent of the safeguard is to ensure that nobody is deterred from seeking the support they need when they need it. However, the current drafting of that exemption in the Bill as “not for profit” is too broad. That excludes certain information that is very likely to be relevant to a DWP fraud investigation. For example, it prevents the Department from compelling information from housing associations, such as an individual’s address or tenancy, which can be instrumental in proving or disproving a suspicion of fraud.

[Siân Berry (Brighton Pavilion) (Green)]

The independent person is required to produce an annual report on the use of the new powers, which, as the Minister has just laid out, are quite extensive. However, there is no requirement for the DWP to adopt the report’s recommendations. In cases where it does not accept the recommendations, will the Government consider committing to at least explaining why they have reached that conclusion?

[David Davis]

I thank the Minister for giving way, and I hope he will forgive me for waiting till what appears to be the end of his list. When the hon. Member for Blyth and Ashington (Ian Lavery) asked him about the application of the Human Rights Act in this context, he said that the Bill did not breach it, in effect. My advice is a little different, and I waited to hear about his amendments to see whether anything in them changed that. My advice is that suspicionless financial surveillance could breach article 8, which covers the right to privacy, and article 14 on the prohibition of discrimination. Will the Minister make his legal advice on this available to the House? This is incredibly important and it is central to the major criticism of this Bill.

[Andrew Western]

I have already made clear that I am satisfied with the advice I have received. We will make available all the information we are required to make available, but the right hon. Member will appreciate that I am not able to give an undertaking to release all legal advice at this stage. What I can say to him is that I am very confident that there is no breach of article 8 in particular. That has been explored at length as we have gone through the process.

I welcome the ongoing engagement with industry and key stakeholders. We have made a significant effort to engage all interested parties and listen to their views. That feedback has been important in shaping our approach to the Bill to date and will continue to be so as it moves to the other place.

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[Rebecca Smith]

With the leave of the House, I will make a few additional comments. This is the perfect opportunity to respond to some of the points made about Conservative amendments and new clauses.

The hon. Member for Hendon (David Pinto-Duschinsky) was on a short time limit and was not able to take any interventions, but I want to speak to the points he made on including our new clauses—for example, new clause 12. He rattled off the other amendment numbers quickly, so I hope he will forgive me if I did not hear them all, but I believe that new clauses 12 and 15 were included. His implication was that the new clauses we tabled would delay the Bill being put into law. That would not be the case, because each of them is worded for after the Act comes into force. The new clauses would be additional safeguards on the cost implications for banks, annual reporting and the publication of an antifraud and error technology strategy that would make the Bill even better, rather than essentially being wrecking amendments. Regardless of the other amendments included in the hon. Member’s list, ours are certainly not in that vein.

The hon. Member for Aberdeen North (Kirsty Blackman) said that she was slightly unhappy about new clause 21 because those who genuinely help benefit claimants get what they are entitled to may inadvertently be caught by it. That is not our intention. We want only those who push people towards committing fraud to be caught. Citizens Advice and Improving Lives Plymouth, for example, which help people claim what they are entitled to, would not be caught by the new clause, because they would be involved in error only if a mistake were made, rather than through fraud. I appreciate what she said, but that was not our intention. The wording of our new clause covers that.

Concern was raised in Committee about the extent of bank account searches. In our view, other bank accounts used by those who commit fraud would not be checked under the Bill, so we probably need to go further to ensure that fraud is properly tackled. To be more light-hearted for a moment, if I may, anybody reading the report of the debate will see plenty of references to cheesecake, and I think I should explain why. Concern was raised in Committee about the fact that, under the Bill, an account’s individual transactions could be assessed and judged, so everybody would feel terrible if they bought a cheesecake from Waitrose—other shops are available—and that would be a problem in future. If anybody was wondering why we were talking about cheesecake, it related to concern about transactions being checked. At the time, the Minister kindly reassured us that the Bill would not provide for individual transactions to be checked; it would deal just with benefit payments and whether someone has capital that they should not have while claiming benefits. I hope that that is helpful.

[Andrew Western]

With the leave of the House, I thank all hon. Members for their contributions. In the time I have, I will try to respond to some of the points raised. I have listened closely to the concerns set out by Members from across the House, and I will of course ensure that they are taken forward as the Bill progresses to the other place, but today I will resist all non-Government amendments. I will make initial comments in response to several Members, before turning specifically to the nature of the amendments and new clauses.

The Opposition spokesperson, the hon. Member for South West Devon (Rebecca Smith), and the hon. Member for Mid Leicestershire (Mr Bedford), said that the Bill builds on the previous Administration’s work to tackle fraud and error. I have to say, I think that is a fairly generous interpretation of that work, not least because, as far as I can see, the previous Government introduced absolutely no powers for the Public Sector Fraud Authority to tackle fraud across the public sector, and, moreover, nothing on debt recovery. The only evidence we can find of any new powers the previous Government sought to introduce is in the eligibility verification space. I accept that they sought to do that, but they did so in a rather botched fashion, which was subject to significant criticism, and with none of the safeguards and oversight in place. We have now built those into the Bill. I absolutely agree with the Opposition spokesperson that the Government cannot be complacent in tackling fraud—and we will not be—but I say gently that, having allowed fraud and error in the welfare system to spiral to £9.7 billion at the time of the last election, the same cannot be said of the previous Government.

The Liberal Democrat spokesperson, the hon. Member for Torbay (Steve Darling), spoke of a broken welfare system. I do not want to be drawn into a debate on that, but a broken approach to tackling benefit fraud and error is certainly part of any problem that the Department faces.

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[Kirsty Blackman]

Can the Minister reassure us that no action will be taken to stop social security payments until the human investigation has happened?

[Andrew Western]

I am happy to provide that assurance; the hon. Member has stolen my next line. I can say categorically that this is a data push only. No decisions will be taken as a direct result, other than a decision to look further into an account, and potentially initiate a human investigation, if needed.

I want to say a little more about amendments 10 and 12, tabled by my hon. Friend the Member for Poole, which relate to driving licences. He rightly said that welfare recipients may not be able to engage with the Department. For the record, nobody in receipt of benefits or paid through pay-as-you-earn employment will be in scope of the debt recovery powers and therefore of the power to suspend driving licences. Where we do seek to suspend someone’s driving licence, it is worth remembering that this is after we have made at least four attempts to contact them through our debt management team, and at least four further attempts through our debt enforcement team, and we have established their ability to repay by looking at three months’ bank statements. If, when we seek to deduct from that bank account, an individual has removed the funds that we know they have, it is only then that we would look into the possibility of suspending their driving licence. Even then, because this is very much a last resort power, we would seek to agree a repayment plan with them right up until the end. The court would set repayment terms if a driving licence was suspended. It is also worth saying that it is always a suspended decision, subject to compliance with an affordable repayment plan set by the court. As I say, this is a power of last resort. I hope colleagues are reassured to hear of the many steps before we reach that point and, most importantly of all, to hear that the power does not apply to current benefit recipients or anybody paid through PAYE employment.

The right hon. Member for Tatton (Esther McVey) mentioned new clause 11 and the publication of pilot scheme results. I would like to clarify for the House that we are not proposing any further pilot schemes as a result of introducing this legislation. Two pilot schemes have already taken place, so we know that our proposals work. We will be adopting a test-and-learn approach so that we can scale things up. The question of whether this mechanism will yield information that is helpful to us in our inquiries was settled by the previous Government.

[Esther McVey]

Have all the details and all the information from the only pilot schemes that the Government are prepared to run been published in their entirety?

[Andrew Western]

Information of that nature was published prior to Second Reading and is available to Members.

I turn to the amendments and new clauses that attracted the most attention in today’s debate. New clause 1, tabled by the Liberal Democrat spokesperson, the hon. Member for Torbay, pertains to the carer’s allowance. I pay tribute to the millions of unpaid carers across the country. This Government value carers highly, and recognise the vital and valuable contribution they make every day. Like others, I see that in my constituency work, week after week, and I am in awe of all that carers do.

This Government inherited a system in which busy carers, already struggling under a huge weight of responsibility, have been left to repay large sums of overpaid carer’s allowance, sometimes worth thousands of pounds. We need to understand exactly what went wrong, so that we can set out our plan to put this right. That is why we launched an independent review of earnings-related overpayments, and we were delighted that Liz Sayce agreed to lead that review, which will investigate how overpayments of carer’s allowance have occurred, what can best be done to support those who have accrued them, and how to reduce the risk of these problems occurring in future. The independent review is under way and is anticipated to conclude this summer.

But we are not sitting back; we are taking action now. We continue to review and improve our communication with carers to make it as easy as possible for them to tell us when something has changed in their life that could affect their carer’s allowance entitlement. Moreover, this Government introduced the largest ever increase in the earnings limit since carer’s allowance was introduced; the weekly carer’s allowance earnings limit increased to £196 from 7 April this year. It is now pegged permanently to 16 hours.

[Anna Dixon (Shipley) (Lab)]

Clearly, many carers have been affected by overpayments. Overpayment comes as a shock to many who are trying to work in order to bridge the gap between carer’s allowance and their family’s costs, and it has a significant impact on their mental health. Does the Minister share my gratitude to Liz Sayce for the work that she is doing to hopefully provide clarity for the many carers who are trying to juggle unpaid family care and work?

[Andrew Western]

I absolutely agree. Liz Sayce is doing excellent work, and I look forward to seeing the conclusions of her review in due course.

Turning to new clause 1, as I have said, the independent review that has been commissioned is expected to arrive at its conclusions this summer. It would be irresponsible for me to commit in advance to implementing all recommendations. As the House will understand, the recommendations will need to be given careful consideration when they are provided to the Department. Moreover, I do not believe that the new clause would have the effect intended.

[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

Will the Minister give way?

[Andrew Western]

If the hon. Gentleman does not mind, I will not, as I am short of time. New clause 1 would prevent recovery of carer’s allowance overpayments via the new recovery powers in this Bill, but the DWP would still be able to recover carer’s allowance overpayments through deductions from benefits or through deductions from PAYE earnings. This would place carers in an unequal position in regard to overpayment recovery, with recovery depending on whether they were in receipt of benefits or in PAYE employment. Even if I believed that that was what the amendment intended, suspending recovery of all carer’s allowance overpayments until the independent review has concluded would be disproport-ionate. There are safeguards and protections for those with overpayments, including appeal rights, affordable repayment plans and, in exceptional circumstances, the option to waive the debt.

I turn to new clause 21, which the Opposition spokesperson, the hon. Member for South West Devon, spoke to, and I will refer to new clause 8, which proposes to introduce a new offence of fraud against a public authority. In my view, that is already covered by existing offences, making the amendment duplicative and unnecessary. Fraud is already an offence under the Fraud Act 2006, and the common law offence of conspiracy to defraud, regardless of whether the fraud is against public authorities or anyone else, is already in existence.

The Government amendments to clause 70 bring together the offences in sections 6 and 7 of the Fraud Act 2006 of

“possessing, making or supplying articles for use in frauds”,

with the offences of “assisting and encouraging” that are found in sections 44 to 46 of the Serious Crime Act 2007. That allows us to tackle the issue that Committee members were concerned about—influencer-style offences, in which a person provides the knowledge needed to commit a fraudulent act through internet videos or manuals.

[Dr Luke Evans]

On that point, will the Minister give way?

[Andrew Western]

I will not. I took an intervention from the hon. Gentleman on this subject earlier, but I am short of time. [Interruption.] Had he stayed for the whole debate, I might have been more willing to do so, but I responded to his earlier invention.

In my view, we simply need to enforce existing law. Similarly, new clause 21 seeks to amend the Social Security Administration Act 1992 to introduce an offence of encouraging or assisting fraud. Again, in my view this is unnecessary, because that is covered by the Fraud Act 2006 and the Serious Crime Act 2007. The hon. Member for South West Devon asked for assurance that we would use the powers that we already have. As I said in response to interventions, I have commissioned work in the Department to look at how we can further use the powers that we have; in my view, historically, we have not taken best advantage of them.

[Iqbal Mohamed]

On that point, will the Minister give way?

[Andrew Western]

I am sorry, but I will not.

Turning to new clause 10, we want to ensure that the Government have access to a wide, appropriate and proportionate range of debt recovery powers, so that we have multiple methods of recovering money from those who have the means to pay but refuse to do so. However, new clause 10 is not required, as equivalent action is already provided for through existing legislation for the DWP, and by clause 16 of this Bill for the PSFA. Clause 16 clarifies that the PSFA is able to seek alternative civil recovery through the civil courts. In addition, there are direct deduction orders and deduction from earnings orders in the Bill, which could include liability orders.

I have largely covered amendment 11. In closing, I want to make a few observations about amendments 8 and 9, tabled by my hon. Friend the Member for Liverpool Wavertree (Paula Barker), but spoken to by other Members. In my view, those amendments would reduce the effectiveness of our debt recovery powers as proposed in the Bill, so I cannot agree to them. I recognise the importance of dialogue with customers all the way through the journey of debt recovery. As I set out in response to the concerns about the revocation of driving licences raised by my hon. Friend the Member for Poole, we will seek to engage with people at all stages of the journey. If we identified any vulnerabilities, we would cease recovery, and at all stages we would look to agree an affordable repayment plan.

I hope that I have addressed the majority of the points raised by right hon. and hon. Members, and I thank them again for their contributions. I thank the witnesses who gave their time to the Committee, and those who provided written evidence. Finally, I extend my thanks to the Clerks, the House staff and civil servants who have contributed to the passage of the Bill.

For too long, too little effort has been made to get a grip on public sector fraud, resulting in the totally unacceptable levels that we see today. With this Bill, we are taking the powers needed to act and to finally take the fight to the crooks and the con artists, from criminal gangs attacking our welfare system to covid fraudsters who stole from hard-working people in a time of national emergency.

This Bill is critical. It will save us billions of pounds, and it is part of a broader package in the Department to save £9.6 billion for the DWP by 2030. I hope that all Members feel able to support it today.

Question put and agreed to.

New clause 17 accordingly read a Second time, and added to the Bill.

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18:01

Division 180

Ayes: 73

Noes: 255

New Clause 10

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18:14

Division 181

Ayes: 101

Noes: 258

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18:26

Division 182

Ayes: 95

Noes: 257

Clause 3

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18:39

Division 183

Ayes: 85

Noes: 238

Schedule 3

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[The Secretary of State for Work and Pensions (Liz Kendall)]

I beg to move, That the Bill be now read the Third time.

This Labour Government were elected on a mandate for change—to create more good jobs in every corner of the country, to drive up living standards for working people and to get our vital public services back on their feet. Delivering our plan for change means ensuring that every single pound of taxpayers’ money is wisely spent and goes to those in genuine need. That is what this legislation will help to deliver, with the biggest-ever crackdown on fraud against the public purse.

It is unacceptable that the Conservative Government allowed fraud against the public sector to spiral to £55 billion a year. That includes a staggering £7.4 billion a year of benefit fraud alone. It is unforgiveable that they failed to ensure that the Public Sector Fraud Authority was fit for purpose, or to properly update the DWP’s anti-fraud powers for 14 long years. When we think of all the new ways in which fraudsters and scam artists rip people off, including by using data and technology, that simply beggars belief. Today we say: no more.

Our Bill updates the powers of the Public Sector Fraud Authority so that it can effectively fight fraud across the public sector on behalf of Government Departments and public authorities. It also makes vital upgrades to the DWP’s fraud powers and sets out new powers to investigate fraud, so that for the first time, our serious and organised crime investigators can apply to the court for a warrant to enter and search the premises of suspected fraudsters, and can seize evidence such as computers and phones. There are updated powers to gather information, so that we can compel third parties such as airlines to give us information, and can require it to be delivered electronically, so that we can tackle fraud as quick as possible. Our new eligibility verification measure will enable us to get crucial data from banks and financial institutions to check if people are getting money they are not entitled to, and if they have more savings than the rules allow, or are fraudulently claiming benefits abroad when they should be living in the UK.

The Bill extends financial penalties to people who have fraudulently claimed any type of DWP payment, including grants and loans, not just benefits, and it gives us new powers to get money back from people who can pay but who have repeatedly failed to do so, bringing our powers in line with those of other parts of Government, such as the Child Maintenance Service and HMRC. All this is being done in a fair and proportionate way; the measures are tightly defined in the legislation, and there are strong safeguards and independent oversight, including through annual reports to Parliament and codes of practice, which we will bring forward in Committee in the other place.

I thank the Minister for Transformation and the Parliamentary Secretary, Cabinet Office, for steering the Bill through its Committee and Report stages, supported by excellent civil servants and House of Commons staff. I thank all members of the Public Bill Committee from right across the House for their detailed questions and thoughtful scrutiny of the Bill. They have done this country a good service, because this Bill provides us with the tools we need to tackle modern fraud in the benefit system and across the public sector, helping to save £1.5 billion over the next five years as part of the DWP’s wider action to save a total of £9.6 billion from benefit fraud and error.

People who work hard and play by the rules, and people who depend on our public services and vital benefits, deserve to have trust and faith in the system, and they are rightly angry when they see people abuse it. Our message is clear: if you knowingly defraud the benefit system or cheat our public services, whether you are a large or small company, a criminal gang or an individual, we will find you; we will stop you; and we will get our money back. This Labour Government will restore trust and fairness in the system and ensure that every pound of public money delivers for the British people and our country. I commend this legislation to the House.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the shadow Minister.