Arrangement of Business
The Deputy Chairman of Committees (Lord Haskel) (Lab)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Public Authorities (Fraud, Error and Recovery) Bill
Wednesday 11th June 2025
(2 days, 14 hours ago)
Grand CommitteePublic 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: HL Bill 96-I(a) Amendments for Grand Committee (Supplementary to the Marshalled List) - (3 Jun 2025)
Baroness Finn
Member’s explanatory statement
This would permit the applicant to request a review into the existence/value of the payable amount.
Baroness Finn (Con)
My Lords, our amendments in this group seek to strengthen the rights of the liable person in the review process, incorporate further consideration of the cost burden we are asking banks to shoulder and ensure that parliamentary scrutiny can be applied to any further changes the Minister makes by regulations to direct deduction orders. As has been the spirit of all our amendments, we have an ambition to work with the Government to make suggestions for improvement on the provisions they have set out. We believe that our amendments in this group are an effective way of ensuring that oversight, parliamentary accountability and collaboration with partners in the banking sector are made a firm part of the Bill, which will make it more effective in achieving our common aim.
Our Amendment 60A would leave out Clause 35(5). As noble Lords will know, Clause 35(5) as currently drafted restricts the ability of an applicant to request a review into the existence or value of the amount they are said to owe. This amendment seeks to remove that restriction and, in doing so, restore a basic principle of fairness and accountability in the administration of public funds.
It is an established principle of public law that individuals should have the right to challenge the basis of a financial demand made upon them by the state, not just how it is enforced but whether it is rightly due at all. Yet, as things stand, Clause 35(5) precludes that possibility. It denies the applicant the right to request a review of either the existence of the debt or the amount allegedly payable.
Let us consider the potential consequences of this. An individual could be told that they owe a significant sum without any meaningful opportunity to question the underlying calculation or whether the liability even exists. That is not the mark of a fair or just system. It may be argued that efficiency or administrative simplicity requires limits to review rights, but this must not come at the expense of natural justice.
In matters of financial liability, particularly when imposed by the state, a person must surely be entitled to ask, “Is this right? Is this fair? Can I see how this was calculated?” This amendment simply ensures that the door is not closed on those reasonable questions. Moreover, transparency and accountability benefit not only the individual but the public authority itself. The ability to request a review can act as a safeguard against error, build public trust and ensure that determinations are robust and evidence-based. It supports better administration, not weaker enforcement.
To summarise, this amendment does not seek to open the floodgates to frivolous challenges. It simply allows a person the right to question whether a debt exists and whether the amount is correct—rights that are fundamental in any fair system. I urge the Minister and noble colleagues to support this modest but important change.
Our Amendment 61A seeks to add proposed new subsection (2A) to Clause 37. The amendment is straightforward, modest in scope but essential in purpose. It would require that any regulations made by the Minister under subsections (1) and (2) which relate to the operation of direct deduction orders be accompanied by an impact assessment. This assessment would focus specifically on the projected cost and the operational capacity of the banks tasked with implementing these orders, and would require that this assessment be laid before Parliament.
The rationale for this amendment is simple: regulatory clarity, economic realism and operational accountability. When these powers are exercised through regulations, it is vital that that is done with clear regard for the third-party organisations that will be shouldering the cost. Banks and financial institutions play a crucial role in the administration of direct deduction orders, acting as the operational arm of the enforcement process. They must identify accounts, verify balances, execute deductions and respond to any errors or disputes. These are not trivial tasks. They involve significant back-office effort, compliance oversight, system changes and, crucially, legal liability.
I and noble Lords across the Committee made our thoughts and concerns on this matter clear at the previous Committee day earlier this week, although I should reiterate that we are asking banks to dedicate serious resources to undertake functions on behalf of the public sector. If we are asking banks to do this, we must commit to working with them, not despite them. Yet, under the current drafting of Clause 37, the Government are empowered to make potentially significant changes to the rules around these orders without any obligation to assess or disclose the impact those changes may have on the very institutions expected to carry them out. This amendment does not block those powers; it merely introduces a duty to consider and explain the consequences. In doing so, it reflects good regulatory practice and ensures Parliament can properly scrutinise whether such changes are proportionate, practical and economically viable.
Let us remember that unintended consequences are often the product of insufficient consultation and opaque regulation. Requiring an impact assessment is not burdensome red tape; it is a basic tool of sound policy-making. It gives banks the foresight they need to prepare and adapt their systems responsibly, and it gives Parliament and the public confidence that the Government have weighed the risks and costs before acting. To summarise, Amendment 61A is not about resisting enforcement or shielding account holders. It is about ensuring that the infrastructure behind enforcement is fit for purpose, and that the decisions taken in Whitehall do not create avoidable burdens in the banking system, which could ultimately impact consumers as well.
Finally, our Amendment 61B proposes the insertion of a new subsection (6A), requiring that the outcome of the consultations carried out under subsection (6) be laid before Parliament prior to the coming into force of any regulations made under Clause 37. This amendment seeks to strengthen parliamentary oversight and transparency in the regulatory process. Currently, Clause 37 allows for regulations to be made following consultation but does not explicitly require that the results or finding of those consultations be presented to Parliament before the regulations take effect. This risks creating a situation whereby Parliament and, by extension, the public have limited visibility into the views expressed by stakeholders during consultation and how those views have influenced the final regulatory decisions. The amendment would ensure that Parliament is fully informed of the consultation outcomes before regulations are implemented.
This is vital for several reasons. First, it supports the principle of accountability. Parliament should have the opportunity to scrutinise not only the content of new regulations but the process by which they were developed, including the concerns, evidence and recommendations raised by those consulted. Secondly, it promotes transparency. Stakeholders, including financial institutions, consumers and civil society, can see how their input has been considered and can hold the Government to account if the consultation appears to have been perfunctory or to have ignored key issues. Thirdly, this measure will encourage better-quality consultations by ensuring that the Government give proper weight to responses before finalising regulations. In short, this amendment is a commonsense safeguard to enhance democratic oversight, improve policy-making and build trust in the regulatory process concerning these important financial regulations.
These amendments collectively serve to reinforce fairness, transparency and accountability at every stage of the process, from ensuring individuals have the fundamental right to challenge financial liabilities to safeguarding that banks are neither overburdened nor overlooked, and guarantee that Parliament exercises proper scrutiny over any regulatory changes. The amendments embody a commitment to responsible governance and collaboration with all parties involved and improve the Bill’s effectiveness in delivering its goals while protecting the rights of those affected. I respectfully urge all noble Lords to support these sensible and necessary amendments so that this legislation can proceed, strengthened by clarity, oversight and justice. I beg to move.
Baroness Coffey (Con)
My Lords, I support my noble friend Lady Finn, particularly on Amendment 60A, because as we go through this process it feels as though the Government are trying to be judge and jury on whether the existence of an order should apply at all. I am conscious that it is important that the Government be allowed to get on and have this more straightforward way of collecting money that they are due, but it strikes me as pretty draconian that the question of whether a debt exists cannot be challenged—it cannot go for review. I appreciate we are debating the amendment, but I say by the way, in reference to the Explanatory Notes for Clause 34 on the process for review, that the legislation does not point to the fact that it is supposed to go to a higher-grade person; I am sure that it will be set out in guidance, which I hope will have statutory standing. It strikes me as odd that, having not been able to even challenge whether the order should exist, you cannot go to a tribunal about it, either. Ministers will know that I wish that parts of the Bill would go further in trying to get money back from people in a variety of ways, but in this area I do not agree with the approach of the Government and certainly agree with that of my noble friend.
Lord Vaux of Harrowden (CB)
My Lords, I was not going to speak on this group, but, as the noble Baroness, Lady Anderson, proved the other day, Amendment 60A is not necessary because Clause 12 sets out clearly that these orders can be used only where there has been a final determination of the amount owing by the court or where it has been agreed.
However, I support Amendment 61A. Frankly, it is becoming a bit of a weakness in an awful lot of areas that the impact assessments that come with legislation are regularly quite poor. It is incredibly important that, when we make regulations that will have impacts on people, we understand what those impacts are.
I have one other question that I probably should have dealt with by means of an amendment, but I have only just spotted something. Why are regulations made under Clauses 37(2)(c) to (f) subject to the negative procedure and not the affirmative procedure?
Lord Palmer of Childs Hill (LD)
My Lords, the amendments tabled by the noble Baroness, Lady Finn, and the noble Viscount, Lord Younger of Leckie, raise important considerations about procedural fairness and transparency in the implementation of the Bill. Amendment 60A, which would allow applicants to request a review into the existence or value of the payable amount, would provide a valuable safeguard, ensuring that individuals have an accessible means to challenge decisions where there might be uncertainty or dispute. This aligns well with the principle of natural justice and could help prevent errors going uncorrected.
Amendments 61A and 61B focus on the mechanisms surrounding direct deduction orders, emphasising the need for accountability and parliamentary oversight. Requiring an impact assessment to accompany any changes to the processing of these orders, as proposed in Amendment 61A, would encourage transparency about the potential costs and effects on banks’ operational capacity. Similarly, Amendment 61B’s provision that consultation outcomes must be laid before Parliament prior to implementation would ensure democratic scrutiny. Together, these amendments would contribute to a more open and considered approach, balancing the efficient recovery of public funds with the need for oversight and due process, and I support them.
Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, this has been a helpful and constructive debate. I shall just clarify some points that have been made and respond directly to some of the questions. I think I can answer them all; if not, I will reflect on Hansard.
Amendment 60A would enable the liable person to appeal against the existence and value of what they owe as a result of fraud or error as part of the appeal process for direct deduction orders. I remind noble Lords that direct deduction orders are used only if a liable person has opted not to come to the table and negotiate. This is not the first way in which we would have engaged; it is at the end of a process.
Baroness Finn (Con)
I thank the Minister for her response. As we draw this discussion to a close, I will return to the core principles that underpin the amendments: fairness, accountability and proper parliamentary scrutiny. We are dealing here with significant powers that affect people’s financial lives and impose responsibilities on third-party institutions. They must, at all times, be exercised with care and transparency. These amendments are about balance—ensuring the systems that we design to serve the public also protect the public.
Amendment 60A restores a basic yet essential right to question whether the debt exists and whether the amount is correct. However, I take note of the comments from the noble Lord, Lord Vaux, that this is potentially duplicative.
The Minister referred to Clause 66 and the authorised officer of a higher grade carrying out a review. The clause does not stipulate the level of the higher-grade official. I know that that is possibly nitpicking, but I think that it is still relevant.
Amendment 61A asks that, when regulatory powers are used to place operational burdens on banks, those impacts are first assessed and made transparent. It is a modest ask, but an important one. Banks are not silent agents of the state; they are commercial entities with obligations to their customers and regulators. As such, they deserve clarity, predictability and due regard from the institutions asking them to take on these roles. I disagree with the Minister that this is duplicatory, as the consultations with the banks are still ongoing. Therefore, we cannot say that we have reached any firm conclusions on what is going on.
Amendment 61B ensures that consultation is not merely a procedural check box but a meaningful process, the outcomes of which inform Parliament and shape decision-making. If we are to legislate well, we must know not just what is proposed but what has been heard and how that has shaped the result.
Together these amendments promote a better Bill that is robust, yet fair, efficient and accountable. They do not add unnecessary bureaucracy; they add safeguards. I end where I began—in the spirit of constructive improvement. These are reasonable, carefully framed proposals that aim to strengthen the legislation, not frustrate it. I hope that the Minister will reflect on them with that spirit in mind, and I urge the Committee to support the principle of these amendments as practical measures to ensure that the Bill works not just in form but in fairness. On that basis, I beg leave to withdraw.
“Deputies(1) This section applies where a person (a “deputy”) acts on behalf of an account holder (including a liable person) in relation to their account by virtue of—(a) a power of attorney, or(b) an appointment by, or an order of, a court.(2) The following provisions apply in relation to the deputy of the account holder as they apply in relation to the account holder—(a) section 17(7);(b) section 19(5)(b) and (c);(c) section 19(9);(d) section 19(9A);(e) section 21;(f) section 26(1);(g) section 28;(h) section 29(3), (6) and (8)(b);(i) section 30(3);(j) section 31(3);(k) section 32(2);(l) section 34;(m) section 35.(3) Section 29(7)(a) and (b) applies in relation to the deputy of the account holder instead of the account holder.”Member's explanatory statement
This new clause, together with my amendment to clause 27, page 17, line 12, ensures that the provisions about direct deduction orders in Part 1 of the Bill operate effectively where a person acts on behalf of an account holder by virtue of a power of attorney or an appointment by, or an order of, a court.
Baroness Finn
“(4A) The decision reached by the Minister under subsection (4) must be communicated to the liable person, with the reason given by the Minister provided in writing, as soon as is practicable.”Member’s explanatory statement
This would ensure that the liable person is provided with the outcome of the review of their representations by the Minister in writing.
Baroness Finn (Con)
My Lords, the amendments that we have tabled in this group seek to ensure greater clarity and communication between the liable person and the Cabinet Office; to ensure that costs are determined in conjunction with those who actually incur them; and to ensure that a suspended deduction order cannot be restarted over an unlimited period. These are principles that we outlined and argued for in our previous day in Committee, but they are important maxims and the only way in which we can construct in the Bill a system in which the public can trust.
Our Amendment 61C to Clause 40 seeks to insert proposed new subsection (4A), which would require that any
“decision reached by the Minister under subsection (4) must be communicated to the liable person … in writing”,
along with the reasoning for that decision. It would also require this to be done
“as soon as is practicable”.
This is a modest but important amendment. It would not alter the substance of the powers contained in Clause 40, nor would it constrain the Minister’s discretion. What it would do is place a clear duty of communication and explanation on the Minister once a determination has been made, ensuring that the person subject to that decision is properly and promptly informed.
This is not merely an administrative nicety; it is a matter of basic procedural fairness. If a person has exercised their right to make representations in response to enforcement action, often in situations of personal or financial vulnerability, it is entirely right and reasonable that they should be told in clear terms what decision has been reached and on what basis. Without such a provision, there is a risk of individuals being left in a state of uncertainty, unaware of whether their representations have been considered or why a particular outcome has been reached. This would not only be frustrating for the individual but could undermine confidence in the integrity and transparency of the process.
This amendment supports good administration. Providing a written decision with reasoning ensures that a decision is recorded, understood and open to further challenge if appropriate. It encourages clarity in decision-making and helps to avoid disputes or misunderstandings later down the line. It is also consistent with wider principles of public law. The right to be informed of decisions that affect one’s rights and obligations, as well as to understand the reasons for those decisions, is fundamental to administrative justice. Indeed, it is hard to see how meaningful accountability or the right to further appeal could exist without such a provision.
Let us not overlook the practical benefit. A timely written explanation provides certainty. It tells the liable person where they stand, where further action may be necessary and what their next steps, if any, might be. This amendment would not impose an onerous duty on the Minister; it would simply codify what many would consider to be best practice. It would bring clarity, transparency and fairness to the process. For that reason, I hope that the Government will consider this amendment and that noble Lords across the Committee will support it.
Our Amendment 61D is related to this principle of accountability and transparency. It would require the Minister to demonstrate in writing their consideration of a liable person’s wider circumstances upon request. At first glance, this may appear to be a procedural point, but, in reality, it speaks to a deeper principle: the right of an individual to know that their personal circumstances have been properly considered when a decision is made about them, particularly in a context where that decision could have serious financial and legal consequences.
Clause 41 rightly requires that the Minister be satisfied
“that the terms of the order … will not cause the liable person or a person within subsection (2) to suffer hardship in meeting ordinary living expenses, and … are otherwise fair in all the circumstances”
before authorising a deduction order. This is a welcome provision. It recognises that enforcement powers must be exercised proportionately and with an understanding of individual context. However, it is not enough to say that consideration will be given; there must also be a means of demonstrating that it has been. This amendment would address precisely that by ensuring that, where a liable person asks for confirmation of how their wider circumstances were assessed, the Minister is obliged to respond, in writing, setting out the outcome of that assessment.
The Minister might ask why this is necessary. The answer to that is because, without such a duty, the obligation to consider a person’s circumstances risks becoming a purely internal exercise—one that is neither visible nor verifiable to the person it affects. This undermines both transparency and trust. If the individual has no way of knowing how or whether their situation has truly been taken into account, the provision risks becoming hollow.
This amendment does not require a detailed statement of reasons in every case, nor does it impose an undue administrative burden. It says simply that, if the liable person asks, they are entitled to know how their situation was considered. That is not a radical notion; it is a matter of basic fairness, and it also supports better decision-making. When decision-makers know that they may be asked to justify their reasoning, they are more likely to give genuine and careful consideration to the facts, and when individuals receive that explanation, they are more likely to accept the outcome, even if it is not in their favour, because they can see that they were treated seriously and with respect. Moreover, it is consistent with principles of natural justice and administrative accountability. People should not be kept in the dark about decisions that affect them, especially when those decisions involve the exercise of coercive state powers over their finances.
Lord Palmer of Childs Hill (LD)
My Lords, Amendments 61C and 61D in the names of the noble Baroness, Lady Finn, and the noble Viscount, Lord Younger, seek to ensure that liable persons receive clear written communication regarding the outcomes of reviews and that Ministers demonstrate due consideration of wider circumstances when requested. This kind of transparency is crucial in practice, as it helps individuals to understand the basis of decisions affecting their finances and provides reassurance that their personal situations are being taken into account. For many people facing recovery actions, receiving clear, accessible information can make a significant difference in navigating the process and seeking further recourse, if needed.
Amendments 61E and 61F, alongside Amendments 62A and 62C, address important procedural and operational details that could impact on both individuals and employers. For example, limiting the scope of regulations as proposed in Amendment 61E may prevent regulatory overreach, providing clearer boundaries for those affected. Consulting employers on costs regarded as reasonably incurred, as proposed in Amendment 61F, encourages dialogue and can help to avoid disputes over financial responsibilities. Meanwhile, the provisions to restrict the restart of suspended deduction requirements after 24 months, as proposed in Amendment 62B, and to ensure written reasons for revocation of deduction orders, as in Amendment 62C, introduce important safeguards that promote fairness and clarity. In practical terms, these measures help to reduce uncertainty for both liable persons and employers, fostering greater trust and smoother administration. I support these amendments.
Baroness Fox of Buckley (Non-Afl)
My Lords, I wanted to reiterate my particular support of Amendments 62A and 62B, even though they do not go as far as my amendment in relation to suspended orders. The sense of a sword of Damocles hanging over people is something that we could do with getting rid of. That would be an easy thing for the Government to accept without in any way compromising the aims of the Bill.
In relation to the other amendments, which I broadly support, I want to emphasise something that I keep thinking as I read the Bill and sit through Committee. Many aspects of the legislation can create an atmosphere of fear, uncertainty and sometimes even paranoia about what is going on if there is a sense of secrecy. This could be alleviated with the opening up of human communication to explain reasoning. These are difficult situations. We are talking, in some instances, about people who have committed wrongdoing of some sort, but it is important that liable persons have a sense of understanding the process. Very often, the way that the process gets stuck behind closed doors has created all sorts of problems in parallel situations.
I want to emphasise how, if things are left to internal processes, it can reduce them to hollow box-ticking. Civil servants or whoever knowing that they can be answerable will ensure that better work is carried out. It will also help to smooth the way for people to take this Bill seriously and not see it as some grand state surveillance conspiracy. It is important, in order to give credibility to the fraud recovery at the heart of the Bill, that the Government are seen to be as flexible as possible about all parties being held to account for what would otherwise be seen as some quite draconian powers.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, all these amendments pertain to deduction from earnings orders—or DEOs, as I shall refer to them from here. DEOs are a mechanism by which the PSFA can instruct an employer to make deductions from the liable person’s salary in order to recover the money owed as a result of fraud or error. This power can be exercised only after the amount owed has been agreed by the liable person, a court or tribunal, or if the penalty appeal period has lapsed or an appeal has been finally determined. People can avoid their employers being contacted if they simply engage with us and pay what they owe.
DEOs are an established mechanism used by the courts, the DWP, the Child Maintenance Service and some local authorities. We have sought to emulate best practice and established processes to make it straightforward for the employers that have to implement them. There are safeguards for the liable person, such as a protected earnings amount of 60% and the requirement for deductions to be affordable and fair, as set out in Clause 41.
Before an order is made, the liable person will have the opportunity to make representation on the proposed terms. Amendment 61C would create an obligation for the PSFA to provide the reasoning behind its decision to proceed with a DEO following these representations. Amendment 61D would create a similar obligation for the PSFA to demonstrate that it has taken the liable person’s wider circumstances into account when determining the level of affordable and fair deductions. Both these amendments are duplicative as the PSFA would be doing this anyway, as a matter of good public law. As I outlined previously, guidance will also be published detailing what information will be supplied to the liable person as part of the wider decision-making processes.
Amendment 61E would limit the regulation-making powers in Clause 41(7) to establishing affordability considerations. We have striven to put as much detail into the Bill as possible, but there are elements where it is valuable to have a degree of flexibility so that further conditions or restrictions can be added to the measures to reflect wider societal, economic and technological changes. This amendment would severely limit the Government’s ability to adapt to these changes and impact the efficacy of this recovery method, thus potentially reducing the money lost to fraud that could be recovered in the future.
Amendment 61F would require that the PSFA consults with employers on the level of admin costs that they can charge the liable person for implementing a DEO. There are standard charges of £1 per deduction period allowed by the courts and other organisations that use DEOs. It is not for the PSFA to set up a different regime single-handedly, as it will be following established processes already used across government. If it is felt that changes to this charge should be made, they would need to be done in conjunction with the other bodies.
Amendments 62A and 62B would prevent a suspended DEO from being restarted after 24 months. We discussed the same matter on Monday, in relation to direct deduction orders. I confirm that I am still reflecting on the points raised by the noble Baronesses, Lady Fox and Lady Finn, and the noble Lord, Lord Vaux, which also apply to DEOs, and I am having meetings with officials on them. It is important that the PSFA has discretion in how it can react to individual circumstances counterbalanced against its duty to recover money lost to fraud and error in the most appropriate way. There is a balance to be struck and I shall report back on my reflections in due course.
Finally, Amendment 62C would require that, when the PSFA revokes a DEO, it provides the reasoning to both the liable person and their employer. In practice, this would be shared with the liable person as a matter of good public law to safeguard the public law duty of fairness in decision-making for the individuals subject to the orders. However, there are serious privacy considerations that could be undermined by providing such information to the employer. Upon the establishment of a DEO, the employer is not told anything about the DEO other than what is to be deducted from the liable person’s salary. This is the only information of relevance to the employer. Any other information would be a breach of privacy.
Regarding some of the other points raised, particularly by the noble Baroness, Lady Finn, I think it would be helpful to your Lordships if I assist them with some more information on safeguards. Regarding the safeguards in place for the use of DEOs, including preventing hardship, the Public Sector Fraud Authority has committed to the following safeguards: vulnerability assessments, maximum deduction amounts, opportunities for representation, reviews and appeals, and the ability to notify a change of circumstances. The PSFA will continue to utilise best practice from across government.
On the question of who determines the amount of debt owed, the Public Sector Fraud Authority’s investigation will calculate the debt owed to the Government as a result of fraud or error following an investigation into suspected fraud. The liable person will be notified of the recoverable amount. If they do not agree, a firm and final determination will be sought by a court or tribunal.
The noble Baroness, Lady Finn, asked what is meant by “among other things” in Clause 41. Clause 41(6) gives the Minister powers to
“make further provision about the calculation of amounts to be deducted”
in respect of DEOs. To be clear, to make further provision would not allow the Minister to qualify or change the provision, only to add specific conditions or restrictions that can be taken into account when calculating the amount to be deducted. As given as an example in Clause 41(7), the key consideration will be hardship and defining what constitutes hardship. It is important that the definition of hardship is not fixed, as what constitutes hardship today may look very different in, say, 10 years’ time.
The term “among other things” could also include other items that can be taken into account when calculating DEOs that are not so immediately obvious. For example, the regulations could be used in allowing for a different deduction rate around the Christmas period, when the liable person might have other outgoings that would not be reasonably foreseeable when the order was first given.
I hope that goes some way to assuring noble Lords about our safeguards and that the noble Baroness will feel able to withdraw her amendment.
Lord Vaux of Harrowden (CB)
My Lords, I listened to the Minister, and I listened to her the other day on the same subjects regarding DDOs. A question occurs. In many cases, the amount owed is set by the court. Why, then, does the court not decide how that amount should be repaid? Why do we have to go through all these processes and decisions by the departments rather than the court?
Baroness Anderson of Stoke-on-Trent (Lab)
The noble Lord makes a very interesting point, on which I will have to reflect and come back to him, if that is okay.
Baroness Finn (Con)
I thank the Minister and look forward to her reflections. In closing, I return to the core principle running through each of the amendments in this group: public confidence in enforcement powers depends not just on the ability to cover funds but on the manner in which those powers are exercised. The noble Baroness, Lady Fox, was also emphatic in this regard.
Whether they concern ensuring that decisions are properly communicated, that personal circumstances are demonstrably considered, that employers are consulted on the burdens placed on them or that enforcement is time-bound and proportionate, our amendments seek to build a framework that is seen as being as fair and accountable as it is effective.
We have not sought to unpick the intent of the Bill or to weaken the Government’s ability to recover what is owed. But we have sought to refine it responsibly and constructively, so that those affected by its provisions are treated with clarity, respect and procedural justice. We have argued, with these amendments, that decisions should be explained in writing, circumstances must be considered and shown to be considered, and powers must be bounded by purpose, not open-ended phrasing. I take the Minister’s points on “among other things”, but it is a rather clumsy way to write legislation. The fact that she introduced “among other things” and gave some examples shows that this should be more tightly drawn.
Baroness Sherlock
(a) the period of 28 days beginning with the day after the day on which the liable person was notified of the outcome of the review, or(b) such longer period (if any) as the Tribunal considers reasonable in all the circumstances.”Member’s explanatory statement
This amendment means that the tribunal can extend the time limit for bringing an appeal in relation to a deduction from earnings order.
Baroness Finn
“(2) “Help” is defined in this section as the provision of any information, advice or support which could reasonably be assumed to be intended to acquire payments which are, or, if the payment was not made, would have been, a recoverable amount, or with the result that a public authority is entitled to claim any other recoverable amount.”Member’s explanatory statement
This amendment would ensure that those seeking to aid fraud through the provision of any information, advice or support could be subject to a penalty.
Baroness Finn (Con)
My Lords, our amendments in this group seek to clarify definitions with a view to combating those who seek to encourage and facilitate fraud, and to incorporate further checks on the exercise of powers in this part of the Bill. Our Amendment 63A seeks to define “help” for the purposes of this clause, clarifying that it includes the provision of any information, advice or support that could reasonably be assumed to be intended to obtain fraudulent payments from the public purse.
This amendment may appear, at first glance, to be a matter of drafting, but it goes to the very heart of a growing, pernicious challenge that we face in safeguarding public funds—namely, the rise of individuals and groups who use online platforms to encourage, facilitate or instruct others on how to commit fraud against public bodies. These individuals do not necessarily commit the fraud themselves but they profit from or promote the circumvention of rules, frequently offering guides, tips or templates for making false claims for benefits, grants or other forms of public support. Some go further still by sharing videos, creating paid content or selling advice designed to enable abuse of the system. This is organised dishonesty masquerading as financial empowerment, and it is costing the taxpayer dearly.
Yet, as the law currently stands, there is a grey area around the liability of such actors. If they do not physically submit the fraudulent claim themselves, their role in enabling or encouraging fraud can be harder to pin down, unless we are clear about what constitutes help in this context, and that is precisely what this amendment would do. It defines “help” broadly and practically as
“the provision of any information, advice or support which could reasonably be assumed to be intended to”
secure a fraudulent payment or assist in one being made. Crucially, it also covers situations where the advice or support would, if acted on, result in a recoverable amount being owed to a public authority.
This is a necessary clarification—one that would put would-be facilitators of fraud on clear legal notice that their conduct is within the scope of enforcement. It would help to bring the architecture of the Bill into line with the realities of modern digital fraud, where facilitation often takes the form of social media content, forums or online transactions, rather than backroom collusion. It would also serve as a strong deterrent function. By defining the provision of such support as within the scope of a penalty, it would allow for enforcement against not only those who commit fraud directly but those who empower others to do so, whether for financial gain, notoriety or both.
Fraud against the public sector is not a victimless crime. It deprives vital services of much-needed resources and undermines public confidence in the integrity of our welfare and support systems. Tackling this threat requires more than good intentions; it requires clear definitions, enforceable powers and a willingness to adapt to new forms of criminality. This amendment would deliver precisely that by ensuring that Clause 50 is not hampered by ambiguity and that those who seek to game the system from the sidelines cannot hide behind the veil of plausible deniability. I urge the Minister and noble Lords to support this amendment as a practical, proportionate and targeted step toward a more robust framework for defending the public purse.
Amendment 63B is based on the simple principle that there should be a balance of oversight and determination when it comes to the exercise of these powers. We propose that the decision to impose a penalty under Clause 52, specifically in cases where no payment has in fact been made, should not rest solely with the Minister but should instead be made by the First-tier Tribunal. This amendment is founded on a straightforward and essential principle: where the Executive are empowered to impose penalties of potentially significant financial consequence, there must also be a mechanism of independent oversight. Determination and discretion must be balanced with transparency and accountability.
Clause 52(2) allows for a penalty to be imposed where no payment has been made based on what the Minister believes the person would have received had the conduct not been intercepted. In other words, the clause enables a financial penalty to be levied on the basis of a hypothetical amount determined solely in the opinion of the Minister. That is a considerable power. It allows for punitive action on the basis not of actual harm or financial loss but of a projection—that is, a judgment from the Minister as to what might have happened under different circumstances.
This is precisely where judicial oversight is most important. If a penalty is to be imposed based on counterfactual reasoning on what could have occurred but did not, surely the case for an independent expert body to assess that reasoning is overwhelming. This amendment would simply substitute the First-tier Tribunal for the Minister in this context. The tribunal already has competence and infrastructure to assess evidence, weigh intention and determine appropriate sanctions. It is an established part of our administrative justice system and is well equipped to adjudicate in complex or borderline cases where intent, probability and public harm are at issue. It also has a legitimacy in the eyes of the public that the Minister does not possess.
Such an approach has several benefits. First, it enhances procedural fairness. Individuals who face serious penalties, especially in cases where they did not actually receive any funds, should be entitled to a hearing before an impartial body rather than be simply the recipient of a notice based on ministerial opinion. Secondly, it promotes consistency and accountability. Tribunal decisions are subject to precedent and scrutiny. Ministerial discretion, by contrast, may vary from case to case and lacks the transparent reasoning that accompanies judicial decisions. Thirdly, it safeguards public trust. The public must have confidence that enforcement powers are being used fairly and not arbitrarily. Independent oversight gives legitimacy to the exercise of those powers.
This is not an argument against penalties, nor against enforcement; it is an argument for fair process and proper checks. The power to punish, even when no actual loss has occurred, must be subject to more than internal ministerial judgment. In short, where the Government propose to act based on what might have been, we must be particularly careful. The wider the discretion, the stronger the need for oversight. This amendment achieves that balance. It leaves the Government able to pursue wrongdoing but does so in a way that is consistent with our traditions of fairness, due process and independent adjudication.
Amendments 63C and 63D work together to incorporate the principle that the Minister sets out in writing the reason behind a decision reached, following a review. As we have stated several times, this mechanism is vital in ensuring that we establish clear lines of communication between the Cabinet Office and the liable person, allowing them to access information which they are legitimately and reasonably entitled to. It also allows the Minister to be held accountable for the reasons behind his decision when reached. These are principles that I have emphasised in earlier remarks, but this is a simple but important mechanism that would ensure clear communication, clarity and accountability at a minimal cost. I hope that the Minister and noble Lords consider this a reasoned improvement to the Bill as it stands.
Finally, our Amendment 64A seeks to incorporate greater parliamentary oversight of any changes made to the appeals process—a fundamental safeguard in the Bill that must be protected through proper oversight. Our amendment seeks to strengthen the safeguards around how changes may be made to the appeals process relating to penalty notices issued under the Bill. As the clause currently stands, subsection (6) provides the Minister with the power to make further provision about appeals against a penalty notice through regulations made at the Minister’s own discretion. Our amendment would remove that sweeping discretion and instead require that any further changes to the appeals process may be made only following an independent review and with the approval of a parliamentary committee of any recommendations arising from that review.
The justification for this change is both principled and practical. The power to levy financial penalties under the Bill is significant. Given the potential consequences for individuals and organisations, the integrity of the appeals process is absolutely central to the fairness of the regime. It is vital that those who are subject to penalties under the Bill feel confident that the means of challenging or appealing those penalties is robust, independent and protected from politicisation or erosion. That confidence depends in part on ensuring that the rules governing the appeals process are not liable to unilateral change by the very Minister responsible for enforcing the penalties.
This is not about casting doubt on the current Minister’s intentions but about future-proofing the system. Power should never be unchecked simply because we trust those who currently hold it. This amendment would put in place a sensible and proportionate safeguard whereby, before changes are made to the appeals framework, an independent review must be carried out and Parliament must have a meaningful role in assessing and approving those changes. When the state is empowered to impose penalties, it must accept the responsibility of making sure that appeals are independent, accessible and fair, and that the framework governing them cannot be rewritten without scrutiny. This amendment helps to ensure just that. It does not prevent change but ensures that change is evidence-based and democratically accountable. I therefore urge the Minister and noble Lords to support this amendment as a modest but essential safeguard for one of the most important pillars of any enforcement regime: the right to appeal.
In conclusion, the amendments we have brought forward in this group are united by a common theme: the need to balance effective enforcement with clarity, fairness and oversight. We recognise the importance of rooting out fraud and protecting the public purse. We support the Government’s efforts to ensure that those who abuse public funds, whether through direct claims or the encouragement of others, face appropriate consequences. However, our concern and the focus of these amendments are to ensure that, in pursuing that goal, we do not sacrifice the core principles of accountability, due process and democratic scrutiny.
Amendment 63A ensures that we face the modern reality of fraud facilitation head on, by clearly defining what it means to “help” to commit fraud. In doing so, it brings much needed clarity and enables enforcement agencies to act against those who profit from spreading dishonest tactics.
Baroness Fox of Buckley (Non-Afl)
My Lords, I will be very brief. I have a lot of sympathy with most of the amendments in this group, apart from Amendment 63A, which fills me with dread. Fraud facilitation sounds as though it is a new crime, but I do not think this is the right place to bring it in. I appreciate that it does not necessarily have a criminal penalty, but it is also not entirely clear what it is.
I know that the Opposition have been pushing the problems of “sick influencers” in another Bill—this is a bit of a theme—but I get very nervous about requiring the authorities to trawl through people’s social media accounts yet once more to see what they are saying, then to blame them for things that happen. When I think of examples that I have been shown of “sick influencers”—but there are others—there is a thin line between people who are trying to give hacks to individuals on how to fill in labyrinthine forms and cope with the welfare system and people who show them how to cheat. I therefore urge against this: it is a can of worms, which I would keep well away from.
There is also a danger that you will allow individuals to abdicate responsibility by saying, “I did it only because I was told to by the influencer who I saw on Instagram”. This goes against the spirit of due process and of taking responsibility.
Lord Palmer of Childs Hill (LD)
My Lords, Amendment 63A addresses the important issue of those who facilitate fraud by providing information, advice or support. It proposes that such individuals could be subject to penalties. I believe that this measure helps to close potential loopholes and hold accountable not only primary offenders but those who enable wrongdoing. From an individual’s perspective, this could strengthen the integrity of the system and act as a deterrent against abuse.
Amendment 63B seeks to prevent the Minister from unilaterally determining penalties for persons who have not received a payment, which is crucial to protecting individuals from unfair or arbitrary penalties that could cause undue financial or reputational harm.
Amendments 63D and 64A focus on transparency, accountability and procedural fairness—elements that directly affect the experiences of those subject to the Bill. Providing written reasons for decisions following a review, set out in Amendment 63D, would ensure that individuals fully understand the outcomes and the rationale behind them, enabling them to respond appropriately, or seek further recourse if necessary. Amendment 64A would remove the Minister’s sole authority to change the appeals process and would instead require independent review—we have discussed in previous sittings what “review” and “independent” mean—and parliamentary oversight. It would introduce vital protections for individuals and guarantee that any changes to how appeals are handled are thoroughly scrutinised, preserving fairness and maintaining public confidence in the system’s impartiality. On that basis, I support these amendments.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, these amendments all pertain to the scope, application and oversight of the civil penalties measures. The measures have been designed using established cross-government best practice so that the PSFA may effectively deter and recuperate money lost to fraud and include numerous safeguards for individuals and businesses.
I find myself in the unique position, so far in this Committee, of agreeing with the noble Baroness, Lady Fox, although maybe not for the reasons that she set out, on Amendment 63A, which would unnecessarily extend the legislation by adding a definition of “help” to Clause 50. The Fraud Act 2006 establishes the fraud offence, which includes an individual making
“a gain for himself or another”.
The Fraud Act does not define “help” in terms of making a gain for another. This is because the Act focuses on the “dishonest intent” of a fraudulent act. Under Clause 70(1)(c), the offence at common law of conspiracy to defraud is already punishable under the Bill. Clause 70(1)(b) includes and covers Sections 6 and 7 Fraud Act offences. This allows for penalties to be issued against the fraud “influencers” we have already discussed during the Bill’s passage. The offence at common law of conspiracy to defraud is also already included in our definition of fraud. It is therefore unnecessary to define “help” in order to use either the Fraud Act or this Bill, although I was very tempted to quote Beatles lyrics—that may just be the time of day.
Amendment 63B would amend Clause 52 by replacing the Minister with the First-tier Tribunal in cases where a fraudster attempts to take public money but is stopped before they receive the payment. There is existing precedent for not using the First-tier Tribunal as the first-instance decision-maker: for example, in the Home Office for the employment of illegal workers. The legislation also includes the right to appeal a decision to the appropriate court following the receipt of a final penalty notice—I will come on to that.
Amendment 63C seeks to broaden the requirement of Clause 58(4) beyond Clause 58(2)(c) so that it may apply to Clause 58(2)(a) and Clause 58(2)(b). This is unnecessary, as Clause 58(3) already requires the Minister to give notice to an individual if the penalty is upheld. While I recognise its intent, it is unnecessary to include Amendment 63D in the Bill. While there is no obligation under common law to provide an explanation for a positive decision—that is, to amend or cancel the penalty—authorised officers will do so as part of the review process. They will also provide an explanation for a decision to amend or cancel the penalty as part of the review process. The civil penalties code of practice and further guidance will support authorised officers.
Amendment 64A would add additional unnecessary complications to the legislation. It is the intent of the legislation not that regulations may be made to reduce or abolish the appeals provisions for penalty notices but that any further regulations may improve, streamline or make the appeal process more efficient. For example, appeals for civil penalties may be heard at the same time as appeals against debt recovery notices.
I turn to the specific points raised by noble Lords. In response to the noble Baroness, Lady Finn, I remind the Committee that the tribunal appeal is already in the process at a later stage, that of determining the penalty. Bringing the tribunal in earlier would add time and burden. I think that I have covered the other points in my speech, and the noble Baroness, Lady Finn, will remind me if I have not—she may be about to—but I hope that my explanations reassure noble Lords and that the noble Baroness will therefore withdraw her amendment.
Baroness Finn (Con)
I thank the Minister for giving answers to most of my questions, even if they were not entirely to our satisfaction. In closing, I return to the central purpose of this group of amendments: to ensure that the enforcement powers granted under this part of the Bill are clear in scope, fair in operation and subject to meaningful oversight.
Before I continue on to the other amendments, I will address the concerns of the noble Baroness, Lady Fox. The Minister states that the existing law is sufficient, but there is quite a lot of evidence, and anecdotal evidence, that sickfluencers, as they are called—sick influencers—are active and busy. How many people have ever been pulled up or—
Baroness Anderson of Stoke-on-Trent (Lab)
This is a point where I should say that there are two parts of the Bill. I am sure that, as Committee progresses, we will discuss sickfluencers. This part of the Bill is making sure that the PSFA has the powers to deal with similar online influencers—I do not think we can call them sickfluencers in relation to fraud—who are leading the charge. Obviously, the PSFA is seeking new powers and we hope to be able to use them. Therefore, I cannot provide the noble Baroness with the data for what prosecutions may or may not have been made up until this point. But we hope that, with new powers for the PSFA, that will be part of the work going forward.
Baroness Finn (Con)
I thank the noble Baroness. When we were seeking to introduce this definition of “help”—I take on board the concerns of the noble Baroness, Lady Fox—we were trying to presage the fact that this would come up in a later part of the Bill. I deliberately, in my opening remarks, did not reference sickfluencers, but the noble Baroness, Lady Fox, obviously understood where I was going with that. I am just not convinced about how effective the law currently is in this area.
Our other amendments respond directly to the challenges posed by modern forms of fraud and the expanding reach of administrative enforcement. Whether we are seeking to define what it means to help commit fraud in an online age, requiring that penalties based on hypothetical harm are assessed by an independent tribunal or ensuring that decisions and processes are explained clearly to those affected, these are not procedural niceties; they are essential guarantees of accountability and trust. We cannot afford to leave grey areas for those who seek to exploit the system from the sidelines and we also cannot allow the exercise of significant powers, particularly those that impact people’s livelihoods, to proceed without checks, explanation or independent scrutiny.
This group of amendments does not frustrate the aims of the Bill; it strengthens the Bill. It ensures that public funds can be protected in a way that is not only effective but proportionate, just and transparent. We are asking for three simple things: definitions that are clear so that enforcement can be targeted where it is needed most; penalties subject to oversight, particularly when no actual loss is concerned; and decisions and appeals processes that are robust, explainable and open to democratic scrutiny. These are reasonable, moderate and constructive proposals. They do not undermine the Bill’s purpose; they help it to stand on firmer constitutional and ethical ground. I urge the Minister and all noble Lords to consider them seriously and to support a set of changes that would not only improve this legislation but help to secure public confidence in the integrity of its application. On that basis, I beg leave to withdraw the amendment.
Baroness Sherlock
(a) the period of 28 days beginning with the day after the day on which the person is given the penalty notice, or(b) such longer period (if any) as the appropriate court considers reasonable in all the circumstances.”Member’s explanatory statement
This amendment means that the tribunal or court hearing an appeal against a penalty imposed by the Minister for the Cabinet Office under Chapter 5 of the Bill (penalty relating to fraud or penalty for failing to comply with requirements) can extend the time limit for the bringing of that appeal.
“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.”
Lord Palmer of Childs Hill (LD)
My Lords, Amendment 65 in my name would require the Minister for the Cabinet Office to,
“within six months of the passing of this Act, lay before Parliament a”
comprehensive
“report evaluating the extent of public sector fraud that occurred during the COVID-19 pandemic”.
The Liberal Democrats have long championed transparency, accountability and robust oversight of public funds. This amendment aligns with those values by ensuring that Parliament receives a clear, detailed assessment of how fraud had an impact on public resources during an unprecedented crisis. Without such transparency, we risk missing critical lessons that could inform future safeguards and improve the resilience of our public sector. The pandemic presented unique challenges that, unfortunately, created opportunities for fraud on a scale not previously seen. It is only right that we fully understand the scale and nature of the issue, not to assign blame but to strengthen our systems and protect taxpayers’ money.
This amendment reflects the Liberal Democrat commitment to evidence-based policy and open government. By requiring this report, we would promote accountability and ensure that future emergency responses are better equipped to prevent fraud, protecting public trust and ensuring that resources reach those who genuinely need them. There will be other events; we want to set the scene so that they can be dealt with. That is what this amendment seeks to do. I beg to move.
Baroness Coffey (Con)
My Lords, I rise to speak to this amendment because I was at the Cabinet table when Covid-19 hit this country. I am very conscious of the arduous activity that went on among brilliant civil servants but, of course, mistakes were made, as well as successes.
It is interesting to try to understand why the noble Lord, Lord Palmer of Childs Hill, wants to go into this matter further, recognising that, in Parliament, there have already been several Select Committee inquiries; one was specifically done on fraud. Of course, we also have the public inquiry that is under way, to which the Government are contributing. I am trying to understand the purpose of this amendment and this extra report, recognising that the Government will in no way make any comments until the inquiry has concluded.
My understanding is that the inquiry is still going to take evidence in 2026. For what it is worth, as I am sure the Ministers here will be relieved to know, I am absolutely convinced that this Bill will become an Act of Parliament well before the end of 2025. So there is something here of an odd overlap. I understand that this will continue to be a subject of interest.
This is quite a wide ranging-element. I know that fraud happened. There is no doubt of that. However, we also averted fraud in the DWP. We managed to stop £1.6 billion going out on one particular weekend by intervening. There were plenty of attempts at fraud and, unfortunately, there were successes. Some of those people who committed that fraud are now in jail, thanks to the endeavours of the Government.
The noble Lord, Lord Palmer of Childs Hill, talks about resources that the country may have been deprived of when addressing the issues of Covid. I can honestly say to your Lordships that no resources were set aside at all. This is one of the reasons why there have been considerable challenges on aspects of needing to repay the debt that may have been acquired due to spectacular extra financing, whether that was through businesses or about people who had never claimed benefits in their life before, making sure that they got the money that we believe they were entitled to. That was while recognising that some of the easements initially may have been subject to some fraud, but we also made every effort to try to stop it. I have already given an example of where, in one weekend, £1.6 billion was averted.
For that purpose, the amendment genuinely is unnecessary. The statutory inquiry, I hope, will not be the longest-running statutory inquiry because that is not what the country needs to consider. It would not be the best use of government resources to initiate their own further inquiry and honour this amendment.
Baroness Bennett of Manor Castle (GP)
My Lords, I am slightly torn. Yes, we have the Covid inquiry but we also have a country that faces ongoing risk. I was, entirely coincidentally, speaking this morning to someone who was expressing concern about stocks of medical supplies that the Government were holding or not holding. They are being told that the Government were waiting for the Covid inquiry to report and then would look at what might happen. I am afraid that the reality is, of course, that we do not have an influenza virus out there saying, “Just wait until the Covid inquiry has reported and then we can think about attacking Britain”. I am not sure that this is the right way forward, but we need to hear from the Government more generally—I understand that that may not be within the Minister’s portfolio—and maybe the noble Baroness could write to me at a future date. However, we need to think about being ready, in this age of shocks, for all the threats that could potentially hit us—particularly health threats. We should learn from the mistakes that were undoubtedly made under the previous Government. That is an important issue. We need to see more urgency from the Government. The answer of waiting until the Covid inquiry reports really does not hack it in this age when we are facing so many threats.
Baroness Coffey (Con)
Before the noble Baroness sits down, it is important to stress, when thinking of prevention of issues and being ready for them, that I am quite confident that the Government have continued a lot of the activity of the previous Government. I will give an example. Although it was for a short time, when I was Secretary of State for Health and Social Care we were being asked to write off hundreds of millions of pounds on Covid vaccines because we had, in effect, anticipated what could have happened. In the end, thankfully that was not needed. That is not a case of fraud, but the noble Baroness was stretching us into preparedness for the future. That is still a key module of the statutory public inquiry now under way. But it would be worth looking at some of the Select Committee investigations that happened, perhaps much more quickly, and some of the government responses that had been provided to them.
Baroness Finn (Con)
My Lords, while I recognise the concerns that underpin this amendment in the name of the noble Lord, Lord Palmer, it is both unnecessary and potentially duplicative, given the extensive scrutiny already taking place through existing and robust channels, as my noble friend Lady Coffey made clear. First and foremost, we must acknowledge that a comprehensive public inquiry is under way into the Government’s response to the Covid-19 pandemic. That inquiry, established under the Inquiries Act 2005 and chaired independently, has broad terms of reference, including examination of procurement processes, ministerial decision-making and the use of public funds. The amendment risks pre-empting, duplicating or even undermining that process by imposing a parallel and more narrowly framed exercise before the formal inquiry has concluded its work.
Let us be clear: the Covid-19 pandemic presented an unprecedented national emergency. Ministers, civil servants and public bodies were called on to make swift, high-stakes decisions in the face of an unfolding crisis. They did so with little warning, under extraordinary pressure and with the primary objective of protecting lives and livelihoods. In that context, decisions were taken at pace to ensure that vital supplies were sourced, support was distributed rapidly, and services could continue to operate. Was the system perfect? No—but to assume that those who contributed to the effort to tackle Covid were doing so for malign reasons is inaccurate. However, that is not to say that we should not seek to recover money where errors were made, and it is of course right that we take steps to realise this outcome, which has been the guiding principle of all our engagements with the Bill: public money should be recovered.
We should therefore make full use of the mechanisms that already exist to assess and recover losses. The National Audit Office, the Public Accounts Committee and internal departmental review bodies have all examined pandemic-related spending and made a series of recommendations, many of which are already being implemented. Indeed, the Public Sector Fraud Authority continues to track and pursue recoveries on this matter. To impose an additional reporting requirement through the Bill, especially one that compels Ministers to publicly acknowledge failings before the full picture is known, would not serve the cause of accountability; rather, it risks creating a politicised and partial process, which may generate more heat than light and overlap confusingly with the broader inquiry now under way.
Let us not lose sight of the bigger picture. The Bill is about strengthening the framework to combat public sector fraud going forward; it is not the right vehicle for relitigating decisions taken in the darkest days of a national emergency. The public inquiry will give us the full breadth and depth of insight that is needed, with the benefit of time, evidence and impartial examination. In the meantime, let us not cast unfair aspersions on public servants and Ministers who, in the face of enormous uncertainty and unimaginable pressure, acted on the whole with integrity, urgency and a profound sense of duty.
I urge noble Lords to recognise that the proper process is already in place and that we must allow it to do its job without prejudging its conclusions. For these reasons, I respectfully oppose the amendment.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I find myself agreeing with the sentiment behind the amendment in the name of the noble Lord, Lord Palmer. The Government are committed to investigating and combating cases of fraud and error in Covid-19 spending. If I touch on some of the things that the Government are already doing, perhaps he will be reassured that we are already taking this seriously.
The Bill will give the Public Sector Fraud Authority powers to conduct investigations, levy civil penalties and recover money. It also doubles the time limit for civil claims against Covid fraud from six to 12 years to ensure that we can continue to investigate. Although the proposed amendment to mandate a report on public sector fraud during the Covid-19 pandemic underscores the importance of accountability, it is unnecessary given the existing frameworks already in place. The question is whether appropriate reporting processes on Covid-19 spending have already been established—and I would argue that they have.
A dedicated Covid Counter-Fraud Commissioner has already been appointed to review losses of public money to fraud, error and underperforming contracts during the Covid-19 pandemic. Working collaboratively with departments and agencies such as the Public Sector Fraud Authority, His Majesty’s Treasury and the Department of Health and Social Care, the commissioner is focused on public funds lost to fraud, error and underperforming contracts during the Covid-19 pandemic.
The commissioner’s remit includes: assessing recovery efforts to date to determine where additional recoveries can be made and ensuring they are vigorously pursued; ensuring that maximum recovery efforts have been made and providing assurances on this to the public and Parliament; reviewing individual contracts to provide additional attention and reassurance on spending that is disputed; and, from this work, generating lessons and making recommendations for the future. By placing this responsibility with an expert dedicated commissioner who reports directly to the Chancellor and works in close co-ordination with key departments, the Government have ensured a clear and strategic approach to addressing pandemic-related fraud.
Given the breadth and focus of this work, introducing an additional ministerial reporting requirement would be duplicative and could divert resources away from ongoing recovery efforts. It risks creating unnecessary bureaucracy and delaying outcomes. We genuinely believe that the outcome the noble Lord seeks is already in place within government.
To touch on the debate, which was about the wider lessons to be learned from the Covid-19 pandemic, the Bill is specifically about fraud, but I am more than happy to meet the noble Baroness, Lady Bennett, to discuss resilience in the round and the work that the Government are currently doing, as I believe a private meeting would be a more appropriate forum. I hope that that these assurances reassure the noble Lord, Lord Palmer, and that he therefore feels able to withdraw his amendment.
Baroness Coffey (Con)
Before the Minister sits down, let me say that Tom Hayhoe, is, I think, six months through his contract. Do the Government intend to extend it beyond the fixed one year, and when does the Minister anticipate that he might share reports—he may already do that with Ministers, but when they will be shared with Parliament?
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, this is what I can say currently, but if there is additional clarification, I will come back to the noble Baroness. Mr Tom Hayhoe’s appointment is a fixed one-year appointment. He will be required to provide a report to Parliament, which will present lessons and recommendations for procurement in future during a time of national crisis, so he will be reporting on his efforts outside and within the Treasury.
Lord Palmer of Childs Hill (LD)
My Lords, I have a rearguard action on this amendment, because it seems strange to me—and it may seem strange to anybody among the public—that we can have a Bill called the Public Authorities (Fraud, Error and Recovery) Bill, but we do not recognise within that Bill one of the biggest efforts of fraud that occurred in this country during Covid-19. Those still rumble on—those billions of pounds. For a Bill called the Public Authorities (Fraud, Error and Recovery) Bill not to include those is a grave error.
There may be some crossover and duplication, but if there is, it does not matter, because it is in the Bill and the Government will not have to pursue things if they are being dealt with elsewhere. They may be dealt with elsewhere, but there has to be a backstop, and the backstop should be in this Bill. It will do no harm in future to have it in the Bill, even if other things may address the problems that occurred and could, sadly, occur again when another event takes place. Having said that, I beg leave to withdraw the amendment.
Baroness Finn
“Annual reporting: use of powers(1) The Minister must prepare and publish a report on the use of powers conferred on them under this Part within 12 months of the day on which sections 1 and 2 come into force, and annually thereafter.(2) Any report published under subsection (1) must be laid before both Houses of Parliament within seven days of its publication.”Member's explanatory statement
This amendment requires the Minister to publish an annual report on the use of powers conferred on them by Part 1 of the Bill, which must then be laid before Parliament within seven days of publication.
Baroness Finn (Con)
My Lords, our Amendments 67 and 68 in this group work together to introduce new clauses on annual reporting obligations under the Bill: first, on the use of powers conferred by Part 1 and, secondly, on the extent of fraud against public authorities. These are, on their face, modest amendments: they do not alter the structure of the Bill; they do not restrict the powers being granted; and they do not place unreasonable burdens on Ministers or departments. They are grounded in a principle that is both simple and fundamental to good governance: that Parliament and the public have a right to know how powers are being used and whether those powers are making a measurable difference.
Amendment 67 would introduce an annual reporting requirement on the use of powers conferred under Part 1. This part confers significant powers: powers to impose penalties, to recover funds, to compel the provision of information and to act across a broad range of public authorities. These are substantial tools in the Government’s arsenal against fraud and error, and we all agree that public money must be protected and those who exploit or defraud the state must be held to account.
But power must always be accompanied by oversight. The public has a legitimate interest in how these tools are used, how often, in what context and with what effect. An annual report will provide that vital lens of scrutiny. It will allow Parliament to see whether the powers are being exercised proportionately and effectively and whether any patterns or concerns are emerging that warrant further attention. Without such reporting, we risk creating a system where power operates behind closed doors: not necessarily abused, but unexamined; not necessarily misused, but not explained. That, over time, can erode public trust not just in anti-fraud enforcement but in the fairness and accountability of public administration itself.
This amendment would simply require the Minister to prepare and publish an annual report on the use of the powers granted under Part 1, beginning within 12 months of the commencement of Clauses 1 and 2 and continuing annually thereafter. The report must then be laid before both Houses of Parliament within seven days to ensure that this information is not only collected but promptly placed in the public domain.
This is not bureaucratic clutter; it is democratic hygiene. It provides Parliament with the tools that it needs to track the implementation of this legislation and to hold the Executive to account. It allows Select Committees, Members of both Houses and the public to ask informed questions and pursue necessary follow-up, where appropriate.
The second amendment, Amendment 68, complements the first by requiring an annual report on the estimated scale of fraud against public authorities, based on the Government’s internal estimates. We have heard repeatedly, both in this Committee and outside it, that public sector fraud is a serious and growing challenge, yet it remains notoriously difficult to quantify. Estimates vary, methodologies differ and the scale of undetected fraud, by its very nature, is hard to pin down.
Nevertheless, if we are to take the fight against fraud seriously, we must begin by being honest about the scale of the problem. This amendment would compel the Government to do just that—to report annually on their internal estimates of fraud against public authorities and to lay those findings before Parliament. Without a clear sense of the scale of fraud, we cannot effectively assess the return on investment in anti-fraud measures, we cannot identify which sectors are most at risk and we cannot hold departments to account for their own controls and responses.
Just as importantly, regular public estimates create pressure for improvement. When departments know that the levels of detected or suspected fraud will be publicly disclosed, they have a strong incentive to strengthen internal controls and to invest in fraud detection systems. The result is not only transparency but improvement in practice. This principle speaks to the heart of another one of our goals: that public authorities take increasing responsibility and ownership for identifying and tackling fraud internally. This amendment is a mechanism that would promote this.
It is worth emphasising that this amendment does not require, unfortunately at present, perfect precision. It does not ask the Government to do what is not feasible; it asks for a summary of internal estimates informed by the Government’s data, audits and risk assessments. That is both reasonable and achievable. However, I take this opportunity to call out that data should be improved. The variances in the estimates currently produced by the Government are massive, and it is clear that the Government themselves do not have a particularly accurate view of the challenge that we face. The Government must achieve more accurate data reporting in this area and make this available. We need to strive for a situation in which good, accurate data is provided to Parliament, not the wildly varying estimates that we currently see.
Ultimately, we cannot allow the state to hide behind averages, yet that is precisely what it does. It is all too easy for the Government to delay publication of the annual fraud landscape report; when it does appear, it risks being only the most convenient version of the truth—aggregated figures, smoothed-out estimates and numbers stripped of detail with no departmental breakdown, timeline or accountability. That is not transparency; it is evasion. A Government who lose billions to fraud cannot be allowed to drip-feed the facts on their own terms.
Together, these two amendments serve a broader purpose. They ensure that this legislation not just empowers the state to act but commits the state to account for how it acts and to explain whether its actions are having the intended effect. They are not burdensome or oppositional; they are the kind of clear, regular reporting obligations that should be part of the design of any legislation that grants wide-ranging enforcement powers and seeks to solve systemic problems. Let us remember that the effectiveness of anti-fraud efforts cannot be judged solely by the strength of powers on paper; it must be measured by their use in practice and by the visibility of that use to those whom the powers are ultimately meant to serve—the taxpayer and the public.
Transparency is not a hindrance to enforcement; it is an essential condition of its legitimacy. These amendments would not hinder the Government’s ability to act. On the contrary, they would enhance its credibility in doing so. They would signal to the public that the Government are not only determined to tackle fraud but willing to be open about their efforts and accountable for their progress. They would allow Parliament to play its rightful role in monitoring implementation, asking the right questions and proposing further refinements when necessary. In an age when public trust in institutions must be earned and re-earned, these small acts of transparency are the building blocks of that trust.
I urge the Minister and noble Lords across the Committee to support these amendments as practical, principled and proportionate contributions to a more transparent and effective anti-fraud regime. I beg to move.
Lord Palmer of Childs Hill (LD)
My Lords, these amendments are very close to my party’s heart. I warmly welcome Amendments 67 and 68, which would place an important emphasis on transparency and accountability by requiring the Minister to publish annual reports on the use of powers under Part 1 of the Bill, as well as on the estimated scale of fraud against public authorities. Too often, no one knows about the scale.
These measures represent a vital step forward in ensuring that Parliament and, by extension, the public, receives regular, detailed information about how these powers are exercised and the ongoing challenges faced in tackling fraud. Such openness is essential because it is openness that solves these problems, builds trust in the administration of public funds and allows for informed scrutiny and debate. From my party’s perspective, these amendments align closely with our long-standing commitment to open government and evidence-based policy-making. By mandating annual reporting, they would help to illuminate the practical impact of the Bill and provide the data that is necessary to assess whether these powers are effective, proportionate and fair. This ongoing oversight will be invaluable in refining approaches to fraud prevention and recovery and ensuring that public authorities are both empowered and held accountable.
I look forward to supporting these amendments as the Bill goes forward, as well as to continuing to work to strengthen transparency and public confidence in this important area.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I thank the noble Baroness, Lady Finn, for raising the important issue of the annual reporting of the PSFA on both the use of the powers conferred on it in the Bill and the extent of fraud against public authorities.
Under Clause 64, an independent person will be appointed through the office of the Commissioner for Public Appointments as a regulated appointment to oversee the use of the powers that this Bill conveys on the PSFA. We will appoint someone with the right skills and demonstrable independence. The independent person will proactively review the PSFA’s investigative functions and use of powers, which will culminate in regular reports being produced on an at least annual basis for the Minister for the Cabinet Office.
I know that the noble Baroness cares about ministerial oversight and accountability. The powers granted to the Minister for the Cabinet Office will be delegated to trained authorised officers; I can assure her that there will continue to be strong and regular ministerial oversight of their safe and effective use. Once the Minister has reviewed the report, it must be laid before Parliament. Reports will both provide assurance on where powers are being used appropriately and challenge where improvements could be made, ensuring that civil servants are using the powers in this Bill as intended. They will provide assurance that suspected cases of fraud are being investigated in accordance with the legislation, codes of practice and guidance; and that that is being done effectively in the pursuit of the intentions of the Bill.
The findings or summary of any and all independent oversight, including the independent person’s report, will be published on an annual basis in the interests of transparency. External oversight bodies will also report on the use of powers by the PSFA following inspections. These reports will be made publicly available. With regard to annual reporting on the extent of public sector fraud, the PSFA oversees the counterfraud performance of ministerial departments and public bodies. It already publishes a report on the extent of fraud against public authorities: the Fraud Landscape Report. I hope that that reassures noble Lords.
I want to address one point made by the noble Baroness, Lady Finn, on how the Government estimate the level of unknown fraud and error. The best available evidence suggests that the level of fraud and error in unexamined areas of government activity is between 0.5% and 5%. This is based on a Cabinet Office review of around 50 fraud and error estimates that includes every major department. Methods used across government to estimate the extent of fraud and error include statistical sampling, modelling and benchmarking. More detail can be found in the NAO report.
There are already provisions to review the use of powers the Bill conveys on PSFA and reporting relating to counterfraud activity across government. I hope that this explanation reassures noble Lords and that the noble Baroness, Lady Finn, will withdraw her amendment.
Viscount Younger of Leckie (Con)
The noble Baroness might expect one of us to intervene. I understand where she is coming from in terms of reports, because these amendments are basically focusing on the laying of reports. However, outside the Room I have asked in the past about the current level of fraud. The noble Baroness alluded to it, but perhaps she could confirm that at the moment, the estimated level of public sector fraud stands at £55 billion. I know that I have asked for this before but it would be very helpful to have a breakdown of how much public sector fraud there is when it comes to the DWP aspects of the Bill. I think I am asking about the same issues, but it would be extremely helpful to know where we stand right now as a base, in terms of the level and quantity of fraud, and any breakdowns.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I am more than happy to write to the noble Viscount.
Baroness Finn (Con)
My Lords, I thank the Minister for her response. In closing this group, I return to the central theme that underpins Amendments 67 and 68: that transparency is not an optional extra in the fight against public sector fraud but an essential condition of legitimacy, accountability and effectiveness. We are granting significant powers under the Bill, powers to recover, to penalise and to compel, but the exercise of those powers must not exist in a vacuum. The public, and indeed Parliament, must be able to see how those powers are being used and whether they are making a real, measurable difference.
Amendment 67 would ensure that the use of these new powers is reported on annually. It would allow us to track how these tools are deployed, where they are having an impact and where further improvement or scrutiny may be required. It would give Parliament, committees and the public a vital feedback loop, not to micromanage but to hold the system to account and ensure that it continues to serve its intended purpose.
Amendment 68 would complement that by shining a light on the scale of the challenge itself. If we are to treat fraud with the seriousness it demands, we must start by being clear-eyed about the extent of the problem. I am sure that internal estimates are already being produced within government; this amendment simply asks that they be published regularly and in good faith, so that we can judge our progress, measure impact and direct resources more intelligently.
I take the point the Minister made about the estimates ranging from 0.5% to 5%, but I am sure she will agree that, given the enormous amounts of these figures, that that 0.5% to 5% is a rather wide range of figures of billions of pounds. Would she like to expand on that and give me what the actual amounts in 0.5% to 5% might be?
Baroness Anderson of Stoke-on-Trent
It is suggested to me that the actual amount, as touched on by the noble Viscount, is at least £55 billion, but I will be writing to all members of the Committee who are present.
Baroness Finn (Con)
I thank the noble Baroness for her answer. Is that the 5% or the 0.5%? Anyway—
These amendments would not add bureaucracy for bureaucracy’s sake. They would build confidence, encourage departmental responsibility and improve operational performance. They would not be constraints on ministerial power, but a scaffolding of legitimacy around its use. Crucially, they would reflect the truth that we have heard echoed throughout the passage of the Bill, that public trust is hard won and easily lost. If we are to strengthen that trust, we must show not only that we are serious about tackling fraud but that we are equally serious about demonstrating how we are doing so and being accountable for the results.
Once again, these are reasonable, proportionate and practical amendments, and I hope the Minister will reflect on them not as additional burdens but as meaningful opportunities to improve the transparency, responsiveness and long-term success of this legislation.
I emphasise that I am not being a total nuisance in pushing on the quality of data. It is not a new phenomenon; I spent many years in the Cabinet Office tearing my hair out about the quality of data. The one thing that I learned when I was working for the noble Lord, Lord Maude of Horsham, when he was the Minister in the Cabinet Office, was that the quality of the data improves by greater transparency. I just make that point; it is not a criticism of the Government, but a criticism of the data process within government.
In conclusion, I urge noble Lords across the Committee to support the principles in these amendments and, in so doing, to support the kind of open and accountable government that underpins any effective public policy. I beg leave to withdraw my amendment.
Baroness Finn
“(A1) Investigatory and enforcement powers under sections 3 (information notices), 7 (entry, search and seizure powers), 17 (direct deduction orders), and 38 (deduction from earnings orders) of this Act shall not be exercised except as provided for in this section.”Member’s explanatory statement
This amendment, together with others to this Clause in the name of Baroness Finn, would ensure greater ministerial and parliamentary oversight when the powers provided for in this Bill are exercised by authorised officers on behalf of the Minister for the Cabinet Office.
Baroness Finn (Con)
My Lords, our amendments in this group seek to ensure accountability, oversight and the responsible exercise of powers under this part of the Bill. We have heard a great deal about the importance of tackling fraud, but powers alone do not constitute a policy. What matters is how those powers are used, by whom and under what form of oversight. In the current draft of the Bill, those questions are either ignored or answered in ways that place too much discretion in the hands of too few officials with too little scrutiny. It confers far-reaching authority: powers to compel private financial disclosure, to seek warrants for entry and seizure and to deduct directly from earnings or bank accounts. Yet these powers are not tethered to ministerial decision; they are to be exercised by civil servants of no higher rank than that of a higher executive officer, without public record or the consent of Parliament.
Amendment 68A seeks to begin to correct this. It would draw a clear line in statute that no investigatory or enforcement power of this kind may be exercised unless the conditions set out in the new clauses are met. This is the legal threshold that the original Bill failed to define. It would prevent the casual use of extraordinary authority and ensure that the powers granted are used only under procedures that meet the standards expected in a democratic state. Indeed, this amendment goes to the heart of a fundamental principle: where Parliament grants the Executive new and significant powers, particularly powers that interfere with individuals’ rights, privacy or property, those powers must be subject to robust oversight, clear safeguards and direct ministerial accountability.
Clause 66 deals with authorisation—that is, how investigatory and enforcement powers conferred by this legislation are to be exercised and by whom. But, as currently drafted, the clause does not go far enough to ensure that these powers are exercised only within the bounds of proper oversight and democratic legitimacy. Our amendment would make that explicit. It states that:
“Investigatory and enforcement powers”,
specifically those under Clauses 3, 7, 17 and 38,
“shall not be exercised except as provided for in this section”.
In other words, Clause 66 would become the gatekeeper. The amendment would make it clear that powers cannot be exercised by default; they must be authorised and controlled in line with the procedures set out by Parliament.
These are substantial powers. In the right hands, they may be justified to combat fraud, but without proper controls they are powers ripe for misuse or, at the very least, for eroding public trust in the system, and that is why this amendment is necessary. It would draw a clear line in statute that these powers must not be exercised outside the confines of Clause 66. It would anchor the use of those powers in a transparent and accountable framework, where Parliament and Ministers remain answerable for how they are applied.
Furthermore, it would ensure that responsibility for these powers remains with the Minister for the Cabinet Office—a Minister of State answerable to this House and the other place—and that they are not simply delegated indefinitely to a body of authorised officers operating with limited scrutiny or constraint. This amendment would not obstruct the Government’s efforts to recover public funds lost to fraud. It would ensure that, in pursuing that goal, we do not short-circuit the vital checks and balances that underpin good governance.
We have seen in other contexts what happens when enforcement powers are granted without sufficient parliamentary guard-rails: mistakes are made, trust is lost and legal challenge follows. This amendment is designed to avoid that fate by ensuring that Parliament retains a hand on the tiller and that those acting in the name of the state do so under lawful, accountable and proportionate authority. It is a modest and constructive amendment, but it speaks to a bigger principle: the rule of law demands not only power but control, not only action but accountability.
Amendment 68B works in the same spirit as Amendment 68A in locking in ministerial oversight and a clear line of accountability when these powers are used. It requires that the most serious powers—those involving seizure of property, disclosure of personal finances or deductions above £10,000—must be explicitly authorised by a Minister of the Crown. That is not bureaucracy but responsibility. It makes Ministers answerable for the exercise of power in their name. For lesser powers, the amendment requires sign-off by a senior civil servant—no longer a junior official, invisible and unaccountable.
The amendment then goes further still. It compels the Public Sector Fraud Authority to maintain a public register of every instance that these powers are used: who authorised them, when they were used and why. The register must be laid before Parliament. The result is not an illusion of scrutiny but real institutionalised oversight. This amendment seeks to introduce three essential safeguards. The first is ministerial sign-off for the most intrusive or high-stakes enforcement actions. The second is senior Civil Service oversight for all other investigatory powers under this legislation. The third is the creation of an annual publicly accountable register detailing when and how these powers are used.
Let us be clear: the Bill grants significant new powers to officials, including the ability to compel disclosure of personal financial data, to enter and search private premises, and to order the direct deduction of funds from individuals’ bank accounts or wages. These are not powers to be taken lightly; they go to the heart of personal privacy, financial autonomy and, potentially, due process. We have mentioned this a lot during these days in Committee, but we must always remember that these are real powers that will be used against real people in the near future.
Under this amendment, certain especially intrusive powers, such as requiring disclosure of personal financial records, applying for search and seizure warrants, or imposing deduction orders above £10,000, would require explicit approval from a Minister of the Crown. That is not bureaucracy for bureaucracy’s sake; it ensures that decisions with the potential to impact individuals lives in a profound way are not made lightly or by junior officials acting in isolation. This is a proportionate safeguard. It does not stop these powers being used, but it ensures that they are used only when a Minister is satisfied that the action is lawful, necessary and justified—and, crucially, is willing to stand behind that decision in Parliament if challenged. This line of accountability is vital for proper oversight, but it also protects the Minister.
Given the extent and scale of the powers we are discussing, civil servants operating in the name of the Minister but without their knowledge or explicit authorisation is not a responsible set-up. When decisions of this influence are being made on behalf of the Minister, it is also, for the Minister’s sake, vital that they have oversight of what is being done in their name. With this amendment, we avoid the possible scenario of a Minister being hauled before a committee or inquiry and being asked to justify actions of which they had no knowledge. This is important for oversight and accountability, but it is also surely a protection that the noble Baroness would welcome.
For all other enforcement powers, the amendment would require authorisation by an official at senior Civil Service grade or above. This ensures that decisions are taken not at a junior level without experience or understanding of the risks involved but by someone who can weigh up the public interest, the risks of error and the rights of the individual. This is a safeguard that ensures that decisions of this gravity are, rightly, taken by those with experience, and it prevents junior civil servants from falling victim to genuine mistakes that, regardless, have life-altering impacts for those affected.
The third part of this amendment proposes something equally important: a transparency register maintained by the Public Sector Fraud Authority. This register would document the use of these powers, who authorised them, when and on what grounds, and it would be laid before Parliament annually. This is not just an administrative measure but a mechanism of democratic scrutiny. It allows Parliament and the public to see how often these powers are used, by whom and with what justification. It helps to ensure that the powers are used proportionately, not indiscriminately. It provides a deterrent against misuse and it strengthens the legitimacy of the very fraud prevention system we are seeking to bolster.
I support the Government’s ambition to tackle fraud and error in the public sector but, in doing so, we must never forget the old truth: power without accountability breeds mistrust. If we are to ask the public to accept stronger enforcement powers, we must meet that with stronger transparency and oversight. This amendment does just that. It enables action but ensures that action is always tied to accountability. It protects individual rights while enabling the state to recover public money. Above all, it reflects the principle that, where significant powers are exercised by officials, someone at the highest level must be answerable for their use.
Baroness Fox of Buckley (Non-Afl)
My Lords, I consider these three amendments as probably three of the most important amendments that have been tabled so far. I congratulate the noble Baroness, Lady Finn, for explaining why so well. They reflect a number of other concerns—it is not as though we have not heard them before—and articulate well the sense of responsibility that we should all have in this Room, as we scrutinise the Bill, in terms of the enormous amount of power that this legislation gives the state. It is why ministerial and parliamentary oversight is important and cannot, in any way, be neglected.
An astounding amount of power has been created in the name of tackling fraud. I sometimes think that it is disproportionate. Regardless, one would be much more reassured if there was at least the knowledge that this was always done by and answerable to Ministers and Parliament. Parliamentary oversight of something as powerful as this is essential and has been reflected in a number of amendments.
I have some other quick points. I thought that the noble Lord, Lord Palmer of Childs Hill, made a compelling argument for the Covid inquiry. It is true that, when I tell people that I am working on a fraud Bill, without exception they say, “The Covid stuff?” I say, “Possibly not; it is not there”. I listened and heard what the noble Lord said about why it is not appropriate, but I wanted to note that.
Of course, it was an extraordinary period for all the reasons that have been explained, but it has become almost impossible since to work out who said and did what to whom. In other words, there is little in the way of tracing accountability and being clear about ministerial sign-off, so I think the transparency register is a brilliant idea. It is clear; if you have these powers, let us see who signed off. No Minister should be frightened of that, because it is important for public accountability and, as has been said, is a way of ensuring that you are not held accountable for things that you did not sign off. It is a much clearer way of understanding it.
I am rather bemused by the final amendment, Amendment 68C. In my background reading, I have read a lot about the crisis in people who are sceptical about the Bill, who are worried that there are no people who are suitably qualified to see its powers through, so the way that this amendment has been posed seems sensible to me.
It is ironic, because there is an argument familiar to those who have been following the schools Bill about whether everybody who stands in front of a group of pupils needs to be qualified or not. “Not always” is my opinion, as somebody who was a teacher for many years. We should not be too rigid, because that is the nature of teaching. I was qualified, but that did not necessarily guarantee that I was a brilliant teacher. I know that qualifications do not necessarily guarantee anything but, in an instance like this, it seems absolutely right that the people entrusted to carry out these powers have the appropriate qualifications for what are complicated, complex financial matters. I therefore support all three amendments, which I think are very important.
Lord Palmer of Childs Hill (LD)
My Lords, I am also pleased to express support for Amendments 68A, 68B and 68C, which collectively strengthen ministerial and parliamentary oversight of the powers exercised under the Bill by authorised officers on behalf of members of the Cabinet Office, as other noble Lords have said. Ensuring that robust oversight mechanisms are in place is essential to maintaining public confidence in how these significant powers are deployed. By enhancing scrutiny, these amendments help to guarantee that such powers are used appropriately and proportionately, reducing the risk of misuse or error.
Amendment 68C, which requires investigators to hold professional qualifications comparable to those of officers in the Department for Work and Pensions Fraud Investigation Service is particularly welcome. They need professional qualifications. This commitment to professionalism and expertise safeguards the integrity of investigations and reinforces trust in the system. From our perspective, it is crucial that those entrusted with such important responsibilities are properly trained and qualified, ensuring fairness and consistency in enforcement. Together, these amendments produce a more transparent—we always come back to transparency—accountable and professional framework for combating fraud within public authorities.
Let it see the light and, when it does, there is a way of controlling it. Too often, whoever are in government think they know best and ask, “Why do we have to make ourselves open to scrutiny?” But it is that scrutiny, that existence of light from beyond, that makes the legislation fit for purpose. I support these amendments.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, all the amendments in this group relate to Clause 66, which defines an authorised officer. It would be a fair assessment of the position of the noble Baroness, Lady Finn, that she does not trust that, in her words, “junior civil servants to use these powers appropriately”. I will reassure her and the Committee that, first, it is not seniority that is key; it is professionalism and experience. The PSFA has already committed to training its authorised officers, who will utilise powers as set out in Clause 66, and authorised investigators, who will use the PACE powers in Clause 7, to predefined standards as set out by the government counterfraud profession investigator standard guidelines. This will align the PSFA with those using similar powers in other government departments such as HMRC and the DWP.
The team at the PSFA are serious people. Current members of the PSFA’s enforcement unit include former police officers and civil servants who have worked in investigatory roles across a number of government departments. They have experience of conducting counterfraud investigations and bring with them a wealth of relevant experience, skills and knowledge. I was tempted to get all their CVs to read out, but I thought that that may prolong Committee a little.
First, the powers in Clause 7 can be used only by authorised investigators specifically authorised to use the PACE powers and not authorised officers. The amendment requiring that those powers can be exercised only as provided in Clause 66 would render Clause 7 unusable.
Secondly, although the Minister will delegate the operation of these powers to authorised officers, the Minister will retain accountability and strong oversight. There will, of course, be strong ministerial interest in the effective, safe and value-for-money use of these powers. Noble Lords will know that I cannot speak for all future Ministers, but the current Minister meets individually with the chief executive of the PSFA very regularly.
Thirdly, the proposed delegation of powers in this Bill to authorise officers follows precedent elsewhere, including in HMRC and the DWP.
Fourthly, the amendment also calls for records of decision-making. In criminal investigations, the PSFA is already bound by legal obligations to record decisions and will do so through a dedicated case management system and the internal review process. The PSFA will have similar processes for civil cases.
Finally, the powers in the Bill are subject to review by an independent person as specified under Clause 64, and will be subject to inspections by His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services. Inspection reports will be publicly available and those by the independent person will be laid before Parliament.
I think it would be helpful if I gave some additional clarity on some issues raised by noble Lords. The Civil Service grade that an authorised officer would be required to hold has been a theme of some debate in your Lordships’ Committee, so I think some clarity will be helpful. The Bill does not stipulate a grade that an authorised officer needs to hold. The grade is less critical than the training they undertake. However, the PSFA anticipates that, in practice, all authorised officers will be of at least HEO grade. This is comparable to other organisations such as HMRC and the DWP. Clause 66 does, however, stipulate that a review must be conducted by an authorised officer at least one grade senior to the officer involved in the initial decision.
Baroness Finn (Con)
I thank the noble Baroness for her response. In closing, I will return to the core proposition that underpins the three amendments that we have brought forward in this group, that the legitimacy of power lies not in its breadth but in its accountability. The Bill seeks to equip the Government with the means to tackle a serious and evolving threat to the public purse, but the scale and sensitivity of the powers it confers demand that we legislate not only for action but for responsibility. I am very grateful for the support of the noble Baroness, Lady Fox, and the noble Lord, Lord Palmer.
I will correct one thing before I continue. I did not mean to imply that I do not trust relatively junior officials to exercise these far-reaching powers properly. The nature of what I am concerned about, and what these amendments seek to address, is the accountability of those civil servants for their actions to the Minister and therefore to Parliament. I am concerned that not enough direct accountability is built into the PSFA. I know we referenced the independent reviewer, but the independent reviewer is looking at the actions afterwards and is not directly accountable to the Minister for the actions of the officials. We are all aware of what happened with the Horizon scandal, and it is that sort of that scenario that we are seeking to avoid.
Amendment 68 would establish a clear statutory foundation for the exercise of investigatory and enforcement powers, ensuring that these are not left to broad discretion or quiet delegation but are explicitly bound by the structures and intentions set out by Parliament. That clarity matters. It protects the integrity of the system but also protects those within it from the charge, or the risk, of acting beyond their mandate.
Amendment 68B would strengthen that structure by ensuring that certain intrusive or high-stakes decisions are subject to senior oversight, and that those decisions are visible to Parliament and, where appropriate, to the public. It is a safeguard for the individual, but also a protection for Ministers, who ought not to be asked to account for actions they neither authorised nor even knew of. The transparency register it proposes is not simply a record-keeping tool but a mechanism of democratic accountability and a signal to the public that these powers will not be exercised in darkness.
Amendment 68C would complement both previous amendments by insisting on professionalism. It asks, quite reasonably, that those entrusted with powers to investigate, search, seize and compel be qualified to do so. These are serious, often life-altering powers; they must be wielded by people who understand not just the legal thresholds but the ethical and human responsibilities that come with them.
Together, these amendments would provide the structure and safeguards that the Bill so plainly lacks. They do not remove powers; they make those powers defensible. They do not oppose the work of the Public Sector Fraud Authority but would give it legitimacy. If Parliament is to authorise intrusion into personal records, entry into homes, seizure of property and the imposition of financial penalties, it must be satisfied that those powers are used lawfully, proportionately and by people who are properly trained to use them. These amendments are not decorative; they are the minimum requirement for a just and serious law.
The state must be equipped to confront fraud, but it must do so in a way that preserves trust in the institutions it seeks to defend. That trust is not automatic; it is earned through transparency, proportionate action and clear lines of accountability. These amendments offer a constructive, proportionate and carefully designed way to embed those principles into the fabric of the Bill. They do not oppose the Government’s aims; they reinforce them by ensuring that enforcement is not only strong but legitimate in the eyes of those it affects.
When we grant the Executive the tools to act on our behalf, we also assume the duty to ensure that those tools are used wisely, lawfully and with proper scrutiny. These amendments are our opportunity to meet that duty, and I urge the Minister and noble Lords across the Committee to support them. I beg leave to withdraw.
Baroness Finn
“Fraud risk management duties for public authorities(1) This section applies to public authorities responsible for spending schemes or programmes involving total annual payments or disbursements exceeding £100 million (“relevant spending schemes or programmes”).(2) A public authority to which this section applies shall—(a) register each relevant spending scheme or programme with the Minister for the Cabinet Office via the Public Sector Fraud Authority before the start of each financial year;(b) conduct and submit to the Authority a fraud risk assessment for each registered scheme, detailing identified fraud risks and planned mitigations;(c) prepare an annual fraud measurement plan specifying the methods by which fraud rates will be determined, including representative sampling or comparable statistically valid methods, to ensure robust estimation of fraud and error rates.(3) The Authority shall—(a) independently verify each public authority’s reported fraud rates annually, employing rigorous audit, sampling, or comparable statistically robust methods;(b) publish annually, in a dedicated report laid before Parliament—(i) the fraud rates reported by each public authority;(ii) the independently verified fraud rates determined by the Authority;(iii) an assessment of the accuracy and effectiveness of each public authority’s fraud risk management measures.(4) Each public authority shall publish in its annual accounts—(a) its submitted fraud risk assessment;(b) the fraud rates as determined independently by the Authority;(c) an evaluation rating (Red-Amber-Green) assigned by the Authority reflecting the public authority’s compliance with and effectiveness of its fraud risk management duties.(5) The evaluation rating assigned by the Authority under subsection (4)(c) shall assess—(a) adequacy and accuracy of fraud rate measurement methodologies;(b) effectiveness of implemented fraud risk mitigations;(c) compliance with statutory duties set out in this section.(6) Where the Authority finds significant discrepancies between reported fraud rates and independently verified fraud rates, or otherwise finds significant inadequacies in the public authority’s fraud management practices, it shall issue a notice requiring the public authority to—(a) submit within 30 days a detailed action plan specifying corrective measures;(b) implement corrective measures as directed by the Authority within a timeframe specified in the notice.(7) Compliance by public authorities with their obligations under this section shall be subject to audit by the Comptroller and Auditor General, and the findings shall form part of their reports to Parliament.”Member’s explanatory statement
This new Clause seeks to impose stricter fraud risk management duties on public authorities that oversee spending schemes exceeding £100 million annually, by requiring these authorities to register schemes, conduct fraud risk assessments, measure fraud using robust methods, and publish findings. The Public Sector Fraud Authority would verify reported fraud rates, publish comparisons, assign performance ratings, and enforce corrective actions for poor performance. Compliance would be subject to independent audit and parliamentary scrutiny.
Baroness Finn (Con)
My Lords, if Amendment 68 demands that the Government publish the scale of the fraud, Amendment 68D goes further. It would require public authorities to understand where fraud risks actually lie. Without that, any national figure is a guess: unverified, unanchored and easily manipulated.
The reason that this matters is not theoretical. It has already gone wrong. HMRC once claimed that just 3.6% of R&D tax credit claims involved error or fraud. After proper scrutiny, the truth emerged: 16.7% of all claims were in fact fraudulent or incorrect, costing the taxpayer over £1.1 billion a year. This was not an isolated failure. The National Audit Office found that of 63 official fraud and error assessments conducted since 2014, nearly half were unreliable. That covered £224 billion of public spending. No Government can claim to be serious about fraud while tolerating this level of ignorance in their own accounts.
Amendment 68D would stop all that. It would impose specific legal duties on every public body that spends more than £100 million a year. It would introduce a new clause placing clear, enforceable fraud risk management duties on public authorities responsible for major spending programmes. It would set out a practical and proportionate framework for improvement in the Bill, improving fraud risk management in public authorities and allowing clearer oversight of how departments are working to counter fraud in their own operations. This builds on the principle that we made clear on the first day in Committee: that the Bill should encourage public authorities l to develop their own counter-fraud capabilities and cultures. The PSFA should be a mechanism through which this process is facilitated, not offloaded.
Our amendment seeks to further incorporate this purpose in several ways. First, it would introduce a registration requirement. All public authorities overseeing schemes with annual disbursements over £100 million would be required to register those schemes with the Public Sector Fraud Authority at the start of each financial year. This would ensure visibility and that large, high-risk schemes do not fall through the cracks. Secondly, it would require each public authority to assess fraud risks involved and submit those assessments, which would be a detailed analysis, to the Public Sector Fraud Authority. This practice would work to further a public authority’s appreciation for the risks it faces and the measures it is obliged to take, and would share out the workload of the PSFA by allowing risks to be identified early and early intervention to occur.
Thirdly, the amendment would require authorities to prepare an annual fraud measurement plan, using statistically valid methods, not guesswork or unverified assumptions. If we are serious about reducing fraud, we must be serious about measuring it properly. What gets measured gets managed.
Fourthly, and crucially, the amendment would give the Public Sector Fraud Authority the power to independently verify each public authority’s reported fraud rates and to publish its findings side by side with the authority’s own figures. That transparency is vital. Parliament and the public deserve to know not only what departments say about their fraud levels, but what an independent review actually shows. It must evaluate the quality of the public authority’s fraud risk controls, and then assign them a green, amber or red rating. These ratings will need to be published annually in each authority’s accounts. This drives accountability and allows Parliament to see at a glance where strong practice is in place and where urgent action is needed. When there are significant discrepancies or poor performance, the amendment would empower the authority to require corrective action and brings in the Comptroller and Auditor-General to provide independent audit and scrutiny.
This is about embedding a whole-system approach to risk, from the point of registration to external audit. This holds public authorities to account not only for the fraud they suffer, but also for the action they take to identify and prevent it. These are clear and reasonable demands, and they should be welcomed by the Minister as a complementary system which would make the work of the PSFA easier and more effective.
This is not red tape; this is basic stewardship of public money. If a private sector organisation with £100 million in outgoings failed to properly assess risk, measure loss or independently verify results, we would call it negligence. Why should the public sector be held to a lower standard? This amendment offers a road map to real improvement, not through centralisation or command and control, but through transparency, accountability and independent oversight. It would create a clearer line of sight from fraud risk to fraud response, helping us to target prevention, improve data and strengthen public confidence.
In conclusion, Amendment 68D seeks to deliver something that the Bill must ultimately be judged by—not the breadth of powers granted to central government but the clarity and strength of the systems we put in place to prevent fraud in the first place. This amendment is not about adding burdens; it is about embedding responsibility. It would ensure that public authorities responsible for large-scale spending schemes take ownership of their fraud risks and are held accountable for how they assess, monitor and manage them.
Lord Palmer of Childs Hill (LD)
My Lords, I warmly welcome Amendment 68D, which proposes a comprehensive and rigorous approach to fraud risk management for public authorities overseeing significant spending schemes. The amendment reflects a proactive commitment to safeguarding public funds by requiring authorities managing more than £100 million annually to register their schemes, conduct thorough fraud risk assessments and use robust methods to measure and report fraud. Such measures are vital to identifying vulnerabilities early and taking meaningful action to prevent loss, which aligns closely with my party’s values of transparency—which I keep coming back to—and responsible stewardship of public money.
Moreover, the role assigned to the Public Sector Fraud Authority in verifying fraud rates, publishing comparisons and enforcing corrective actions would introduce a much-needed layer of independent oversight and accountability. The requirement for independent audit and parliamentary scrutiny would further strengthen this framework in ensuring that these responsibilities are not only carried out diligently but openly reported and reviewed. The amendment offers a significant opportunity to improve fraud prevention at scale, protect taxpayers and build public trust in how government spending is managed.
I fully support this proposed step forward. I relate this to my time on Barnet London Borough Council, when I chaired the audit committee. The idea that audit can make things work better and that scrutiny and bringing things into the open will form better department management as well as better control of finances was the premise of the world I lived in when I chaired the committee for eight years. I therefore support the amendment proposed by the noble Baroness, Lady Finn.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, tackling public sector fraud is a foremost priority for this Government. Amendment 68D raises interesting points. It seeks to put some of the work that the PSFA does with departments and public bodies to improve their management of fraud on a statutory basis, and to explicitly have it cover all government schemes or programmes over £100 million.
While we have been debating the fraud investigation activities of the Public Sector Fraud Authority, for which we believe there is a very strong case, we have understandably not given as much time to the wider responsibilities the PSFA already holds, as detailed in its published mandate—which is wonderful bedtime reading, as per my theme; I like to give bedtime reading on each day in Committee. This is not part of the Bill, but it might be useful for noble Lords if I spend a moment to update the Committee on the other work of the PSFA.
The PSFA works with departments to improve their understanding of fraud and to improve their action on the risk of fraud through a range of modern techniques. Fraud investigation is, of course, only one part of this. Alongside this, public bodies need effective capabilities to understand and reduce the risk of fraud, through tools such as fraud risk assessment and fraud measurement, which this proposed amendment covers, and also through intelligence, fraud prevention, deterrence, process design, the use of data and analytics, fraud detection and the shaping of an organisation’s culture.
I would like to set out some key principles around how the Government approach fraud risk. Accounting officers within departments are responsible for managing public sector organisations’ risks, including fraud. Each organisation faces a range of fraud risks specific to its business, from internal and external sources. Managing Public Money—also a fascinating read—already sets out that, for any new major area of spend with high fraud risk, departments shall assess the risk of and impact from fraud at the outset. This identifies the potential for fraud and the different impacts that fraud could have for the spend area.
In high-risk areas, once spending is approved, this results in the development and continued maintenance of a detailed fraud risk assessment. High-risk areas would be the highest areas of government spending where fraud measurements are not yet in place and which have been identified as high risk by a mandatory initial fraud risk assessment process. The PSFA was introduced with a published mandate that openly sets out how it will work with departments and public bodies and what is expected of all parties. Government departments and public bodies must comply with this mandate. The mandate sets out that public bodies must use initial fraud impact assessments, in line with Managing Public Money, submit quarterly data returns on the levels of fraud and error they find and report on their progress against their action plans and key metrics.
Departments and public bodies are also required to ensure that they adhere to the counterfraud functional standard. This is independently assured by the Public Sector Fraud Authority on a rolling basis. The functional standard outlines the expectations for managing counterfraud, bribery and corruption activity. It clarifies the basics that public bodies should have in place, promoting efficient, coherent and consistent management across the public sector. The PSFA’s published mandate enables it to conduct expert reviews on public bodies’ fraud work. To date, the PSFA has reviewed 31 public bodies against the counterfraud functional standard. The PSFA’s mandate also requires it to publish a report on fraud across government annually. This includes the levels of detected fraud and corruption and associated error in departments and public bodies—excluding tax and welfare, as these are published elsewhere. Fraud measurement exercises are used as a tool to understand fraud risk in the highest areas of loss.
The Government have also created a high fraud risk portfolio, in line with the PSFA’s mandate, that details the highest risk areas of government spending where there are not yet fraud measurements in place. The Government decided that schemes on this portfolio should undertake fraud measurement exercises and report these to the centre. This is currently being tested with the current schemes on the portfolio, where it is operating on a “comply or explain” model, enabling us to assess the burden and impact of this approach. The PSFA will continue encouraging and supporting departments to do more targeted measurement. Just last year, the government counterfraud profession launched its first qualification for fraud measurement practitioners.
The amendment also recommends that all the findings are reported to the National Audit Office, in the form of the Comptroller and Auditor General. The PSFA’s mandate already enables the PSFA and the NAO to work very closely to share information on public body performance in dealing with fraud:
“The PSFA will openly and regularly update on its activities and the data it holds to the National Audit Office (NAO). This will include performance data and the compliance with mandatory processes and data requests”.
In addition, this is an area that the Public Accounts Committee has paid keen attention to, and the PSFA has committed to share the high fraud risk portfolio with the committee on reading-room terms.
I hope that the collective measures I have outlined reassure noble Lords that the Amendment 68D would serve only to replicate responsibilities and duties that already exist and that the noble Baroness will therefore withdraw the amendment.
Baroness Finn (Con)
My Lords, as we close the debate on this amendment, let us return to first principles. Public money must be protected, not just recovered after it is lost. That protection starts not with more powers but with stronger systems—systems that encourage responsibility, enable scrutiny and reward transparency.
Amendment 68D would be a practical, proportionate step towards that goal. It sets out a clear set of duties for public authorities that manage major spending schemes—duties that mirror the kind of basic risk management we would expect from any serious organisation handling significant funds. It is not, as I have emphasised, about adding layers of bureaucracy but about lifting the standard of governance across government. It is about saying to departments and public authorities, “If you are entrusted with large sums of public money, you must also be prepared to demonstrate how you protect that money from fraud, and you must do so in a way that is transparent, measurable and independently verifiable”.
This amendment is not just good policy; it is good practice. It would ensure that those with front-line responsibility for major schemes understand and own their risk landscape. It would support the PSFA by creating a consistent baseline of risk information and freeing up its capacity to focus on oversight and intervention, rather than firefighting. It would give Parliament and the public a clear view of where fraud controls are working and where they are not.
The red/amber/green system offers not just transparency but motivation. It highlights good performance, surfaces areas of concern and gives departments an incentive to improve. That is how you change behaviour: not by wishful thinking or ministerial Statements but by law. If a department reports low fraud rates and the authority finds something very different, it must act. It must issue a notice, demand an action plan and ensure that changes are made. If no action is taken, the Comptroller and Auditor-General can audit compliance and report to Parliament. That is what proper fraud prevention looks like. It does not wait for the scandal; it creates a system that sees the risk before the damage is done.
Amendment 68D is not an optional refinement; it is the core of the Bill’s purpose restored. Without it, we will once again be left with false confidence, unreliable data and billions lost in plain sight. In short, this amendment is a road map for better practice—one that I believe both Parliament and the Government should support. I beg leave to withdraw.
Baroness Finn
Member’s explanatory statement
This amendment seeks to probe the Government’s openness to specifying that the chair of the Public Sector Fraud Authority should be independent.
Baroness Finn (Con)
My Lords, our amendments in this group seek to probe the Government on how the PSFA is constituted; they will, we hope, allow some greater clarity on what sort of body the Government are trying to construct. We seem to have a halfway house between an arm’s-length body—an ALB—and an internal team, which fails to meet established appointment practices and to incorporate clear lines of accountability and oversight. I emphasise at this stage that these are probing amendments because I am perplexed about the status of the PSFA—that is, whether it has the status of an executive agency, an ALB or what—and about what the definition might be.
Amendments 68E and 68F seek to clarify that the chair of the Public Sector Fraud Authority should be not merely a non-executive member but an independent non-executive member. This touches on a question that goes to the very heart of the authority’s credibility: who watches the watchdog? The Public Sector Fraud Authority is being established to play a leading role in detecting, deterring and recovering fraud against the public purse. It will hold a range of enforcement powers and a remit that spans across Whitehall and beyond. For such a body to command confidence, not just among Ministers and departments but in Parliament and with the public, it must be seen to operate with integrity and impartiality, and that starts at the top.
This amendment probes the Government’s willingness to state, in the Bill, that the chair of this powerful body must be independent. Here, independence does not mean hostility to government, nor an automatically dissenting voice; it means freedom from internal departmental influence and the credibility to challenge poor practice where it may occur, including within the Cabinet Office itself.
As currently drafted, Schedule 2 states that the Minister is to appoint non-executive members, but that does not guarantee independence. By inserting the word “independent”, this amendment would send a clear signal that the Government recognise the importance of public trust and that scrutiny is not a threat to good governance but a precondition of it. Other public oversight bodies set a useful precedent: the National Audit Office, the office for Budget Responsibility and the Financial Conduct Authority. All of them understand that independence at the top is essential to their authority. If the PSFA is to live up to its remit, particularly when it may need to challenge entrenched practices or politically sensitive departments, then it, too, must have that independent leadership accountable to a Minister who is accountable to Parliament.
Lord Davies of Brixton (Lab)
My Lords, my noble friend Lord Sikka very much regrets not being here today, for totally understandable personal reasons.
Lord Davies of Brixton (Lab)
Could the noble Lord wait, please?
As the noble Lord has reminded me, my noble friend’s amendments are in the next group. My noble friend Lord Sikka will not be here and the lead amendment will not be moved; however, the issues raised in those amendments are directly relevant to this group. In order for us obtain further clarification, it would be helpful to the Committee if my noble friend the Minister could, in our discussion on this group, give a broad indication of the response that would have been made to the following group so that those Members who are interested can consider what has been said and take a view on whether the specific issues that would be raised in the next group, but are germane to this group, should be raised on Report. I think that it would be helpful to have the matter that would be raised in the following group clarified in answer to this group because, to be honest, they totally overlap.
Baroness Bennett of Manor Castle (GP)
My Lords, I will speak now, as I think it is probably the appropriate moment; I am sorry if I have jumped in over the noble Viscount, Lord Younger. On the next group, I was going to apologise to the noble Lord, Lord Sikka, and say that I would have signed his amendments had I seen them and organised myself in time; however, the noble Lord, Lord Davies, is absolutely right that the two groups fit together.
There are just a couple of things that I want to say in relation both to the amendments addressed by the noble Baroness, Lady Finn, and to those tabled by the noble Lord, Lord Sikka. Independence is absolutely crucial but I am not sure that writing in the word “independent” is quite the right way to approach this. I am not a lawyer but how you define whether someone is independent strikes me as a difficult task; it might exclude someone who has donated a large amount of money to a political party in order then to be appointed to that job, for example, but there are a lot more finer cases than that. This is why I preferred the amendments put down by the noble Lord, Lord Sikka, which would allow a review by the Treasury Committee; to me, that is genuinely independent oversight of a body to ensure that it is independent. None the less, I will address this group of amendments, together with those from the noble Baroness, Lady Finn.
I will pick up the points made earlier by the noble Baroness, Lady Fox, who is not currently in her place, about the level of public distrust that has arisen since the situation with Covid procurement. I was recently on LBC television talking about defence procurement—a subject that is very much in the news at the moment—when I was quite surprised to see, across a broad political spectrum of people, the level of distrust that there is around government defence procurement and the issues that have arisen in that space. As the noble Baroness, Lady Finn, said, these are really important issues of public trust. We know that we have a huge problem with public trust in our institutions at the moment.
Lord Palmer of Childs Hill (LD)
My Lords, I am pleased to support these amendments, which, once again, seek to enhance the independence, transparency and accountability of the Public Sector Fraud Authority. By probing the Government’s openness to specifying that both the chair and the non-executive members of the authority should be independent—whatever that means—Amendments 68E and 68F reinforce my party’s commitment to ensuring that public bodies operate free from undue political influence. Independence at these levels is crucial for maintaining public trust and guaranteeing impartial oversight of fraud prevention and recovery efforts.
Furthermore, Amendments 69A and 71A, which seek to clarify and limit ministerial powers around appointments and eligibility criteria, would strengthen the governance framework of the authority, promoting fairness and transparency in its leadership. The requirements in Amendments 74A and 74B for timely publication of annual reports and controls on authorising authentication would help to ensure openness and proper organisational integrity.
Finally, Amendments 74C and 74D would confirm that the Minister retains responsibility for functions even when extended to the authority, which would balance operational independence with necessary political accountability. Collectively, these amendments embody my party’s values of good governance and robust oversight, which are essential to protecting public funds and enhancing the effectiveness of fraud prevention. I heartily support these amendments as part of the transparency to which we are committed.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I thank noble Lords for raising the important issues of independence, recruitment, reporting and powers should the PSFA become a statutory body. The purpose of creating a statutory body is to place individual enforcement decisions at arm’s length from Ministers, but we have been clear that, while the PSFA enforcement unit is small, creating a new statutory body is not proportionate, so the Government will not commence Schedule 2 in the immediate future.
The approach in Schedule 2 adheres to published guidance in the Public Bodies Handbook. It follows the same approach used elsewhere, such as Schedule 1 to the Victims and Prisoners Act, which established the Infected Blood Compensation Authority. Amendments 68E and 68F seek to insert “independent” before the description of the chair and non-executive directors. These are ministerial appointments, but I remind your Lordships that the Government have been clear that, should the PSFA be established as a statutory body, its enforcement decisions would be fully independent of the Minister. To ensure this, the chair and non-executives will be public appointments and will follow the Cabinet Office Governance Code on Public Appointments, which is overseen by the Commissioner for Public Appointments. This will ensure that their recruitment is transparent and includes an independent member on the recruitment panel. This is similar in approach to the Infected Blood Compensation Authority, which uses the same legislative language. Amendment 69B seeks to insert words to a similar effect in respect of the chair appointing the chief executive and executive board members, so it is linked to these amendments.
In respect of Amendments 71A and 74B, which seek to remove the Minister’s power to make regulations on the eligibility rules for members of the PSFA and to prevent the PSFA from authorising a person who is not a board member of the authority authenticating its seal, it is important to note these are common provisions in the creation of public bodies. The seal is the means by which the PSFA will be able to enter into deeds and contracts, such as leasing property, and authenticating the seal just means signing next to it to show that the deed has been approved. Although authentication would usually be done by a board member of the PSFA, we have built in a degree of flexibility so that it can be delegated, for instance to its legal officers, should the need arise. As noted, the Infected Blood Compensation Authority and other public bodies such as the independent monitoring authority, established in the European Union (Withdrawal Agreement) Act 2020, have similar provisions. They serve to improve the efficacy and administrative efficiency of such public bodies.
As to Amendments 74C and 74D, which would see the Minister retain responsibility for the exercise of functions in the Act after they have been extended to the PSFA, and Amendment 69A, which would make the chief executive and other executive members’ ministerial appointments, I refer your Lordships to my earlier point. One essential reason in setting up the PSFA as a statutory body would be to remove any perception of potential political interference. These amendments would be counter to that policy intention.
Finally, Amendment 74A would require the PSFA to publish its annual report within three months of the end of the financial year. The Bill currently stipulates, in paragraph 12 of Schedule 2, that this should be as soon as reasonably practicable after the end of each financial year. That is for good reason. The accounts will need to be reviewed by the Comptroller and Auditor-General, whom we would then need to commit to this timeline. Additionally, Erskine May, our own guidance on reporting, notes that accounts, together with an NAO report, must be laid no later than the following January. A statutory PSFA would follow Erskine May, as well as His Majesty’s Treasury’s guidance on Managing Public Money and the annual Government Financial Reporting Manual, to ensure that its report follows best practice.
I turn to the specifics of the points that have been touched on. The noble Baroness, Lady Finn, asked why eligibility regulations under paragraph 6(1) of Section 2 are useful. The ability for a Minister to lay eligibility regulations in respect of a board’s membership is a common feature in setting up public bodies. They can be used, for example, to safeguard independence, ensure expertise at its inception, or improve public trust by excluding certain individuals or demanding certain attributes. Examples might include barriers against those who are currently politically active, or have conflicts of interest or criminal convictions.
With regard to powers being exercised on a Minister’s behalf and safeguarding, there are numerous safeguards built into the Bill, such as independent oversight of all the provisions by external bodies. There are also obligations to obtain the permission of the courts for debt recovery and rights of appeal to the First-tier Tribunal. Furthermore, authorised officers will be civil servants, obliged to follow the Civil Service Code, which requires that they act solely according to the merits of the case.
In response to my noble friend Lord Davies, I am more than happy, especially given the circumstances with our noble friend Lord Sikka, to write to him with all the points of the speech I would have responded with, and I am happy to share that with all Members of the Committee—that pertains to group 9.
I take the opportunity to reassure the noble Baroness, Lady Bennett. Will any roles be outsourced? No—we are clear that they have to be authorised officers as defined in Clause 66: they have to be civil servants.
I hope that, with those reassurances, noble Lords will not press their amendments and we can move forward to the next group.
Baroness Finn (Con)
My Lords, as I emphasised at the outset, across this group our amendments have been probing in nature, and I am grateful for some of the clarity that the Minister has given. We are seeking clarity, not confrontation. We are trying to establish whether the Government see the authority as a truly independent body with the authority to challenge where needed, or simply as a well-staffed extension of the Cabinet Office. In seeking those answers, we are also pressing for a model of governance that ensures effectiveness, credibility and accountability from day 1.
At the heart of our amendments is a simple but critical question: how do we make sure that the watchdog has teeth and is not quietly tethered by ministerial influence? Amendments 68E and 68F speak to the need for independence at the top through a chair who is genuinely independent, free to challenge, credible in doing so and accountable to the Minister. We know from other public oversight bodies that institutional trust starts at the top so, if the Government truly believe in empowering the PSFA to be a fearless voice in the fight against fraud, they should have no hesitation in embracing the modest strengthening of the governance framework.
Likewise, Amendments 69A and 69B ask fair and important questions about how the PSFA’s executive leadership will be chosen. We are not seeking to strip the chair of responsibility; we are asking whether there is a clearer, more robust process that would enhance the authority’s legitimacy and avoid the risk of it becoming either too insular or too directed from above. Ensuring that executive appointments are overseen by a group of independent non-executives, rather than a single individual, is possibly an act of good governance. I am grateful to the Minister for clarifying that the independent non-executive appointments will follow the guide for public appointments.
Amendment 71A, meanwhile, takes on a different but equally significant concern: the breadth of ministerial regulation-making powers over eligibility for authority membership. In a body designed to scrutinise government spending and investigate fraud, the power of a Minister to decide who is eligible to serve—and more worryingly, who is not—is a red flag. The Government may never intend to use this power in order to silence critical voices or to manipulate the composition of the authority, but the mere fact that such a power exists could undermine confidence in the PSFA’s independence. This amendment seeks simply to close that door before it becomes a problem; it should not really be necessary if the full OCPA guidance is being followed.
The final amendments in the group, Amendments 74A to 74D, reinforce the need for clarity, transparency and constitutional responsibility. Whether it is ensuring the timely publication of reports, safeguarding who may speak for the authority with the official seal or distinguishing between operational delivery and retained ministerial accountability, these changes are about shoring up the credibility of the entire framework. Together, these amendments ask the Government to take seriously the institution that they are creating.
I know that the noble Lord, Lord Sikka, did not move his amendments; I am grateful for the comments from the noble Lord, Lord Davies of Brixton. I want to take the liberty, if I may, of saying that a lot of what the noble Lord said chimes with the need for public accountability and transparency, as well as with a number of the points that we have been making. Although we recognise the vital importance of oversight, we have concerns that some of the amendments might create an unnecessary, burdensome framework that might impede the PSFA’s operational effectiveness; for example, the requirement for all meetings to be open to the public could present a significant operational concern. However, we understand the purpose and principle behind what the noble Lord, Lord Sikka, is trying to do.
Turning back to this group, these amendments ask the Government to take seriously the institution that they are creating. If the Public Sector Fraud Authority is to succeed—we all want it to—it must be allowed to operate with genuine independence, proper oversight and clear lines of public accountability. That is not bureaucracy or delay; it is simply how we build a body that the public can trust and on which Parliament can rely. We offer these proposals not to frustrate the Government’s ambition but to strengthen it by ensuring that this new authority is not only operationally capable but constitutionally sound. I urge the Minister to reflect on the questions asked and to work with us to ensure that the governance of the PSFA lives up to the seriousness of its mission. I beg leave to withdraw.
Lord Vaux of Harrowden
““reasonable grounds” do not include generalisations or stereotypes of certain categories of people, for example that members of a particular social group are more likely to be involved in fraudulent activity than others, irrespective of whether they are made through entirely automated, partially automated, or non-automated processes;”Member's explanatory statement
This amendment, and another in the name of Lord Vaux of Harrowden, clarifies that people cannot be investigated for fraud based on stereotypes and generalisations, be this through the use of algorithms, human assessment, or a combination.
Lord Vaux of Harrowden (CB)
My Lords, we have been debating Part 1, which gives substantial powers to the Cabinet Office when the Minister has reasonable grounds to suspect fraud, and we are about to kick off on Part 2, which gives substantial powers to the DWP. Those include police-style powers to enter private premises, search them and seize property, as well as powers to demand information. Those are potentially very intrusive powers, so it is essential that they can be exercised only when it is genuinely appropriate to do so.
The two amendments in this group cover both Parts 1 and 2, and they provide essential clarification as to how the DWP and PSFA should interpret the legal threshold for most of the investigative powers in the Bill, which is the requirement to have “reasonable grounds” of suspicion of fraud.
The amendments are intended to ensure that, when the DWP and PSFA are exercising their investigative powers under this Bill, reasonable grounds do not include generalisations or stereotypes of certain categories of people—for example, that members of a particular social group are more likely to be involved in fraudulent activity than others. Investment in data analytics and other emerging technologies, such as AI, for fraud risk detection is inevitably, and probably rightly, increasing. The Government have signalled their intention to turbocharge AI and to mainline AI into the veins of the nation, including the public sector.
The Government are, as we speak, trying to pass the Data (Use and Access) Bill, which would repeal the current ban on automated decision-making and profiling of individuals. The DWP has invested heavily in artificial intelligence, widening its scope last year to include use of a machine-learning tool to identify fraud in universal credit advances applications, and it intends to develop further models. This is despite a warning from the Auditor-General in 2023 of
“an inherent risk that the algorithms are biased towards selecting claims for review from certain vulnerable people or groups with protected characteristics”.
The DWP admitted that its,
“ability to test for unfair impacts across protected characteristics is currently limited”.
There are real concerns about the inaccuracy of algorithms, particularly when such inaccuracy is discriminatory, when mistakes disproportionately impact a certain group of people. It is well evidenced that machine-learning algorithms can learn to discriminate in a way that no democratic society would wish to incorporate into any reasonable decision-making process about individuals. An internal DWP fairness analysis of the universal credit payments algorithm, which was published only due to a freedom of information request, has revealed a “statistical significant outcome disparity” according to people’s age, disability, marital status and nationality.
This is not just a theoretical concern. Recent real-life experiences in both the Netherlands and Sweden should provide a real warning for us, and are clear evidence that we must have robust safeguards in place. Machine-learning algorithms used in the Netherlands’ child tax credit scandal learned to profile those with dual nationality and low income as being suspects for fraud. From 2015 to 2019, the authorities penalised families over suspicion of fraud based on the system’s risk indicators. Tens of thousands of families, often with lower incomes or belonging to ethnic minorities, were pushed into poverty. Some victims committed suicide. More than a thousand children were taken into foster care. The scandal ultimately led to the resignation of the then Prime Minister, Mark Rutte.
In Sweden in 2024, an investigation found that the machine-learning system used by the country’s social insurance agency is disproportionately flagging certain groups for further investigation over social benefits fraud, including women, individuals with foreign backgrounds, low-income earners and people without university degrees. Once cases are flagged, fraud investigators have the power to trawl through a person’s social media accounts, obtain data from institutions and even interview an individual’s neighbours as part of their investigations.
The two amendments that I have tabled are based on paragraph 2.2 of Code A to the Police and Criminal Evidence Act 1984, in relation to police stop and search powers, which states that:
“Reasonable suspicion cannot be based on generalisations or stereotypical images of certain groups or categories of people as more likely to be involved in criminal activity”.
These amendments would not reduce the ability of departments to go after fraud. Indeed, I argue that by ensuring that the reasonable suspicion is genuine, rather than based on stereotypes, they should improve the targeting of investigations and therefore make the investigations more effective, not less so.
The Bill extends substantial intrusive powers to the Cabinet Office, the PFSA and the DWP, and those powers must be subject to robust safeguards in the Bill. The use of “generalisations or stereotypes”, whether through automated systems or otherwise, should never be seen as grounds for reasonable suspicion. I hope the Minister will see the need for these safeguards in that context, just as they are needed and exist in relation to stop and search powers. I beg to move.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to follow the noble Lord, Lord Vaux of Harrowden, and to speak in favour of Amendments 75A and 79A, to which I have attached my name and which noble Lords will see have rather broad support in political terms—perhaps not the broadest I have ever seen but it is certainly up there. I must also pay tribute to Justice, a cross-party law reform and human rights organisation that is the UK section of the International Commission of Jurists, which has been most determined in ensuring that these issues are raised in this Bill, in this context.
I have already addressed these issues in the Chamber in a number of amendments to the Employment Rights Bill that I tabled and spoke to. I am not going to repeat all that I said there, but I cross-reference those amendments. If noble Lords want to find out more about this issue, there is an excellent book by the researcher Shannon Vallor, The AI Mirror, which is a useful metaphor for understanding the risks whereby we live in a biased society in which those biases risk being reflected back to us and magnified by the use of artificial intelligence and algorithms. That is very much what these two amendments seek to address.
The noble Lord has already given us two international examples of where using AI, algorithms, stereotypes and generalisations in investigations has gone horribly wrong. I have to add a third example, which is the infamous case in Australia of “Robodebt”. That was an automated debt recovery and assessment programme, from the rough equivalent of the DWP, that was exercised in Australia. There was controversy before and through its implementation, and it was an unmitigated disaster. I point the Minister and others to the fact that there was a Royal Commission in Australia which said the programme had been
“a costly failure of public administration in both human and economic terms”.
I note that the House of Representatives in Australia passed a public apology to the huge number of people who were affected.
In a way, I argue that these amendments are a protection for the Government, that this will be written into law: there is a stop that says, “No, we cannot allow things to run out of control in the way we have seen in so many international examples”. I think these are truly important amendments. I hope we might hear positive things from the Minister but, if not, we are going to have to keep pursuing these issues, right across the spectrum. I was very taken: Hansard will not record the tone of voice in which the noble Lord, Lord Vaux, said that the Government wish “to mainline AI”, but it is important to note that a concerning approach is being taken by the Government to the whole issue of artificial so-called intelligence.
Baroness Fox of Buckley (Non-Afl)
My Lords, as part of the unusual alliance, I think that now is a good time to reflect on where we are in the Bill. We are now talking about powers targeted at recipients of universal credit, employment and support allowance, and pension credit. Relevant accounts that can be flagged to the Government include any account
“into which a specified relevant benefit is paid”.
Approximately 9.4 million people are in receipt of a benefit currently specified by the Bill—one in eight people in the UK. This already risks creating a two-tier society in and of itself, in which certain groups are subjected to intrusive financial monitoring by the state while others are not.
I was very pleased to see these two amendments because I worry when I consider that, last year, two-thirds of claims flagged by a DWP algorithm as potentially high-risk were, in fact, legitimate. We are now talking about the use of algorithms in relation to the group of people I talked about, so I am happy to support the noble Lord, Lord Vaux, and the noble Baroness, Lady Bennett of Manor Castle, on Amendments 75A and 79A.
The key thing here is to stress something that has already been discussed at great length throughout our debates on the Bill, which is what we consider “reasonable grounds”. The noble Lord, Lord Vaux, has raised reasonability throughout. Generally, but not consistently, the investigator powers in the Bill are exercisable only when there are reasonable grounds for suspicion that, for example, fraud has been committed. Reasonable grounds are a safeguard to protect individuals from baseless state interference and fishing expeditions. They uphold the rule of law by preventing arbitrary state power but “reasonable” requires clarification once we go into the context of the role of technology, which is at the heart of the Bill; that is one of the reasons why I have put my name to these amendments and will raise other amendments in relation to algorithms later on in Committee.
These amendments are safeguards to ensure accountability; to ensure that we are clear about the basis on which algorithms are used; and to ensure that we do not allow them to become the basis of lazy caricatures and stereotypes. Examples have been given by other speakers on this group, but I anticipate that it is possible that the Government might well cite the Equality Act as a guard against such discrimination. However, it is important to note that, although the Equality Act does lots of very good things, it will not necessarily help us here because not all prejudice is reducible to protected characteristics. In fact, attitudes to people on benefits in general and sections of the white working class do not fit into the Equality Act, so it is important that we do not just rely on another piece of legislation here.
Also, if we are going to say that AI algorithms, into which a potential discriminatory nature can be built—as has already been explained—were to make mistakes and discriminate against any group that is covered by the Equality Act, we would be clogging up the Equality Act with lots of legal challenges based on this Bill. I think that using the “reasonable” test for algorithms and ensuring that there is a commitment to no discrimination on the face of the Bill is a very valuable way of countering that.
Viscount Younger of Leckie (Con)
My Lords, as the noble Lord, Lord Vaux, said, we are moving towards the DWP elements of the Bill, although I suggest that these particular amendments are more of a hybrid between the Cabinet Office and the DWP. As I think the noble Baroness, Lady Fox, indicated, the DWP elements in scope are universal credit, the ESA and pension credit.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, it does not look as though we are ending on an easy group for me. Amendments 75A and 79A, tabled by the noble Lord, Lord Vaux of Harrowden, and the noble Baroness, Lady Bennett of Manor Castle, cover the same ground in Parts 1 and 2. The amendments would add a definition of what cannot constitute “reasonable grounds” in the legislation, setting out certain factors that will not constitute reasonable grounds for suspicion.
Although I understand the intention behind the amendments, I want to assure your Lordships that stereotypes and generalisations would not be considered reasonable grounds for starting an investigation or issuing an information notice. Under the information powers, an information notice may be sent only when an authorised officer has reasonable grounds to suspect that a relevant offence has been committed. An authorised officer must genuinely suspect that the fraud has been carried out by the individual, and that belief will be based on an objective assessment of facts, information and/or intelligence. “Reasonable grounds” are a standard test used by other organisations, including the police, and it is clear that they cannot be based on a hunch or the types of personal factors listed in the amendments.
The DWP has well-established safeguards to ensure that this test is applied properly in practice, with authorised officers documenting all reasoning for their decisions, including the basis for their suspicion, and through the Bill the PSFA will implement comparable safeguards. Management checks provide further internal assurance, and both the PSFA and the DWP intend to appoint His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services to independently inspect the use of these powers.
Finally, DWP guidance for authorised officers is also included in the new draft code of practice, which has been made available to noble Peers as a working draft prior to consultation. The PSFA will draft guidance on the lawful use of its information powers, which will cover this issue.
I will review the specific points made, especially regarding automated processes, and will probably end up writing to noble Lords on the questions I do not cover, but I will give a flavour of the Government’s thinking. Do the PSFA or the DWP use automated processes that enable generalisations and stereotypes when gathering information about individuals? No, we do not. The DWP does not use automated processes to decide whether an information notice will be issued, and the PSFA will not do so when the power is granted. An information notice may only ever be issued by an authorised officer, who must carefully consider whether it is necessary and proportionate to do so and document their reasons.
Regarding artificial intelligence in fraud and error, given what is being debated in the Chamber, I feel that we have two AI conversations going on. The DWP has a responsibility to ensure that fraud is minimised so that the right payments are made to the right people at the right time. Fraud controls are vital to reduce waste and protect taxpayers’ money. Advanced analytics, including machine learning, will play a critical role in tackling fraud, error and debt.
There is currently one fraud error and error machine-learning model in full deployment on universal credit advances, and others are at various stages of testing and development, designed to prevent fraud in the highest areas of loss. We have been careful to implement a supervised machine-learning approach and incorporate human intervention to consider the case and make further inquiries if necessary. Our use of advanced analytics does not replace human judgment. The Bill does not introduce automated decision-making.
To improve our approach and assure Parliament and the public of our processes, we intend to develop fairness and analysis assessments, which can be published through the annual report and accounts process. We will ensure that the fairness analysis assessment sets out the rationale for why we judge the models to be reasonable and proportionate, but without divulging the detail of our fraud and error controls, which would put the department’s security at risk.
The noble Viscount will know better than me that two proofs of concept were completed by the last Government on this issue. So there is proof of concept on EVM, but we are clear, especially from the PSFA side, that we will continue with a test and learn approach to this, and will report back with any other developments. As I said, DWP decisions on fraud and error will be made by a human. I will review his other questions to see whether I need to write to him. I hope that that gives a level of reassurance to noble Lords, and that the amendment can be withdrawn.
Viscount Younger of Leckie (Con)
I appreciate the answers that the Minister has given. I also appreciate that there are more answers to come, but could she add to the answer in writing about the timing for the remaining proofs of concept: when they are going to be completed? I see that as being germane to the rolling out of this process.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I will add that to the list of things to write to noble Lords about, if that is okay.
Baroness Fox of Buckley (Non-Afl)
It is very reassuring, of course, to hear the Minister, absolutely correctly, insist that individual officers will not choose who to discriminate against. When I supported this, I was not thinking that the officers of the state would necessarily be wandering around with their own prejudices and saying, “nick them” or “investigate them”. I would want to imagine that that would not be the case.
What I think we are talking about here—and this is because the use of technology is so profoundly important to what the Government want to do—is the latent biases in the training data. The connections made between data points are notoriously inaccurate and can be arbitrary, so we are seeking some reassurance here, and I will come back on this in another group. In relation to the accuracy and inaccuracy of algorithms, as I said, last year, two-thirds of the claims flagged by the DWP algorithm as high risk were legitimate in the end, so this is not a foolproof method. Consequently, I am not entirely convinced or satisfied that the Minister has quite answered what the concerns were—certainly that I was raising.
Baroness Anderson of Stoke-on-Trent
I am so sorry to have disappointed the noble Baroness, but I will be writing to all Members to answer the questions I have outlined.
Baroness Bennett of Manor Castle (GP)
My Lords, I am sorry for the Minister’s knees: I apologise in advance. But before she theoretically sits down, in her response, she said that the DWP is essentially relying on existing practices and that this is going to be a continuation of practices that exist in the DWP. In that context, it is important to raise the fact that the Equality and Human Rights Commission has opened an investigation into the treatment of disabled and chronically ill people by the DWP, which suggests that there are real issues here. I note in this context that the EHRC had been going to come to an arrangement with the department, but then decided that the situation was so serious that it had to open a formal investigation. I guess what I am asking is: can the Minister assure me that what is being proposed in the Bill is going to take into consideration previous issues and, hopefully, correct them?
Baroness Anderson of Stoke-on-Trent
The noble Baroness will be very aware that we now have several days of Committee before us on stage 2 of the Bill, and I look forward to discussing this and many issues with her as the Committee stage progresses.
Lord Vaux of Harrowden (CB)
My Lords, I thank all noble Lords who have taken part in this short but informative debate. I seem to be getting a bit of a track record. I thought my previous record was managing to get an amendment signed by both the noble Baroness, Lady Bennett, and the noble Baroness, Lady Noakes. I might even have surpassed that with this one. I am not sure quite what that says.
I am partially reassured by what the Minister has said, and obviously I am sure that she and her team will follow the safeguards that she has talked about. But those safeguards are not in statutes. For example, she talked about decisions being taken only by humans in relation to putting out information requests. That is not the case. The code of conduct refers only to decisions that will affect benefits, not the information request side of things, and it is only in the code of conduct, which can be changed at will. I am uncomfortable here.
We are talking, particularly with the eligibility verification process, about very large amounts of data, potentially on 9.9 million people. Who knows how many will flag up eligibility indicators? But without a shadow of doubt, the department will be using some form of algorithmic or AI tool to decide which of those are the ones the department wants to concentrate on. If that is the case, that is where the bias can creep in. If bias creeps into the algorithm or the machine learning tool and comes up to a person, it is easy to say “computer said yes” or “computer said no” and not to question the data coming to you.
I am not totally comfortable that there really are the safeguards at the moment. We are going to come to the human interaction at a later stage of the debate, so I will not go further into that. To be honest, I suspect that the Netherlands, Sweden and Australia probably had similar safeguards. They did not work. I cannot say for certain, but most departments believe that they are doing the right thing and that the safeguards are working. But they did not in those cases, and real problems were caused to vulnerable people.
I will withdraw the amendment but this is something that we will definitely come back to. Just in passing, I also welcome the noble Viscount, Lord Younger, to the right side of the fence with us. I beg leave to withdraw the amendment.