Public Authorities (Fraud, Error and Recovery) Bill

3rd reading
Thursday 23rd October 2025 Lords Chamber

Third Reading

12:03

[Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)]

My Lords, I have it in command from His Majesty the King to acquaint the House that His Majesty, having been informed of the purport of the Public Authorities (Fraud, Error and Recovery) Bill, has consented to place his interests, so far as affected by the Bill, at the disposal of Parliament for the purpose of the Bill.

Motion

Moved by

[Baroness Sherlock]

That the Bill do now pass.

[The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, it has been a privilege for my noble friend Lady Anderson and me to take this important Bill through the House. This Government are committed to safeguarding public money and tackling fraud and waste. Public sector fraud is not a victimless crime; it damages our public services and, ultimately, it is taxpayers who suffer when they pick up the bill. Tens of billions of pounds are being lost to public sector fraud—money desperately needed by our public services. This Bill delivers on that commitment to safeguard public money and reduce fraud and overpayments resulting from errors across the public sector. It will enable the Public Sector Fraud Authority to support public sector bodies in investigating and dealing with fraud, and it will help the DWP better identify, prevent and deter fraud and error in the social security system. In doing so, this Bill will protect the public purse and deliver £1.5 billion of benefits over the next five years.

I thank all noble Lords who have given so generously of their time and wisdom in scrutinising this important legislation. Although we have not always agreed with them, my noble friend Lady Anderson and I have been grateful for the very many thoughtful and considered contributions that have prompted us at various points to improve the Bill or to clarify its provisions. This is what the House of Lords is for, and I am grateful for it.

Before I conclude, I offer some words of thanks, first, to the Opposition Front Bench. The noble Baroness, Lady Finn, and the noble Viscount, Lord Younger, have given robust but constructive challenge throughout the passage of the Bill. I am grateful for their time, both inside the Chamber and beyond. Similarly, I thank the noble Baroness, Lady Kramer, and the noble Lord, Lord Palmer of Childs Hill, from the Liberal Democrat Benches, who have been passionate advocates on issues such as whistleblowing and carers. I am grateful to the noble Lord, Lord Verdirame, and my noble friend Lady Lister for their careful engagement, both in and beyond the Chamber. I am grateful for the constructive challenge from around House, including from my noble friends Lord Sikka and Lord Davies of Brixton, the noble Baronesses, Lady Bennett and Lady Fox, and the right reverend Prelate the Bishop of Leicester.

Thanks must go to the noble Lord, Lord Vaux, who has maintained a keen interest in both parts of the Bill throughout its passage. The noble Lord has advocated for a number of different issues. We thank him for his constructive engagement and hope he welcomes the progress that has been made.

My noble friend Lady Anderson and I thank our Whips, especially our noble friend Lord Katz for his support throughout the Bill, and put on record our appreciation of all the officials and public servants who provided such dedicated support throughout this legislative process. I thank Georgia, Oliver, Alana and Ewan from our brilliant private offices, Matt, Louise and Tanya from the fabulous Bill team, and all the policy colleagues who stood behind them. Noble Lords who have met them will have been as impressed as I am with their professionalism and knowledge.

Finally, unusually, I thank my noble friend Lady Anderson’s husband for sharing her with us so extensively in the run-up to not just her wedding but her honeymoon. It is a sign of her dedication that she has given so much time to this Bill. She is the only person I know who can, while taking the content incredibly seriously, bring quite so many laughs to the subject of public sector fraud. I am grateful to so many noble Lords, and I beg to move.

[Viscount Younger of Leckie (Con)]

My Lords, I thank the Minister for her remarks. I will make a short reflection on our discussions on Report and in Committee. I speak for my noble friend Lady Finn in so doing. Despite the technical title, this is an important Bill, as the noble Baroness said. It addresses one of the most serious problems that public authorities face. Based on the Public Sector Fraud Authority’s methodology, fraud and error cost the taxpayer £55 billion to £81 billion in 2023-24. The Bill has sought to address this problem, at least in part, through the provision of extensive powers to officials in the DWP and the Cabinet Office. It is largely these that we have discussed over the past few months.

I am proud of the work that this House has done in scrutinising the Bill, identifying issues and problems, and working in the genuine spirit of collaboration to make it better, fairer and more effective. I pay particular tribute to the noble Baronesses, Lady Anderson of Stoke-on-Trent and Lady Sherlock, for the way they have engaged with Members from across the House. They have listened to concerns, shown genuine willingness to make improvements and demonstrated what responsible government should look like. I firmly believe that the Bill before us is stronger and more balanced than the one first introduced to this House. There is more to be done and areas for further improvement, but we have reflected this in our amendments. The changes that have been made are indeed welcome, and we look forward to ping-pong when it comes. I am also grateful to the noble Baronesses for following up on commitments swiftly, not least for providing the now famous flow charts, which have been genuinely useful to us and, I hope, their departments.

I thank other noble Lords for their engagement with this Bill and their support of our amendments both in Committee and on Report. We have sought to address what we see to be serious shortcomings in the Bill on questions of oversight, accountability, proportionality and fairness. I am thankful to noble Lords who supported us in the Divisions that we called. The amendments we have passed in this place advocate for greater oversight, clearer lines of accountability and a PSFA that can actively pursue fraud. I believe that these are important changes that make the Bill more effective and fairer.

I particularly thank the noble Lord, Lord Vaux, and the noble Baroness, Lady Fox, for their support of our amendments, and I certainly do not forget the noble Lord, Lord Palmer, and the noble Baroness, Lady Kramer. I thank them for their support on some of our proposals. I look forward with interest to seeing how the arrangement with the PSFA, the DWP and the banks evolves and becomes effective. We accept that it is test and learn. It is vital that the legislation to seal the agreement becomes effective in combating fraud.

Finally, I thank the officials who have worked so hard from the government side to enable this process to happen. I know from my time as a Minister that we rely on our officials for a great deal; indeed, it is often to them who we turn for advice and support. I also know that their work is often not credited because they are not visible in the way that we are during debates. I therefore thank officials from the DWP, the Cabinet Office, the PSFA and the Ministers’ private offices who have worked hard to support them and, indirectly, all of us in the discussions we have had on the Bill. Noble Lords from across the House should recognise them and their work. I pay particular tribute to and thank my assistant, Oliver Bramley, for his sterling work during this period.

I urge the Government to meet this House on the amendments that it has added to the Bill, given the extensive discussions and strong cross-party support that they command from across the House. The Bill that we return to the Commons is a better one and I urge the Government to use this opportunity to make these changes permanent.

Finally, we all leave the Bill with certain expressions ringing in our ears, such as “test and learn”, which I alluded to earlier, but particularly the tongue-twister “eligibility verification measure”. I think I can just still say that.

[Lord Vaux of Harrowden (CB)]

My Lords, this Bill is important, creating a wide range of powers for the Cabinet Office and DWP to deal with fraud and error. Until recently, it received very little attention in this House, being in Grand Committee. A small group of noble Lords have worked on it as it has gone through the stages in this House and it has been a great pleasure to work with all of them, across all parties.

I want to repeat what I said before: first, that the Bill as introduced was a much better Bill than its previous incarnation under the last Government. I am extremely grateful to both Ministers for that; they listened and acted on the concerns raised at that time and reflected many of them in the Bill as it was tabled originally. The same is true of the opposition team; I think they also heard those concerns, and it has been a pleasure that they have been so supportive of many of the changes made to strengthen the safeguards around the powers.

Equally, the engagement from the Ministers and their officials has been exemplary throughout the passage of the Bill. It has been a very good example of how this House works best and I am very grateful to all of them. They have been not only extremely generous with their time but very constructive in their engagement. Documents, such as the draft code of practice, have been published in good time, which I think most noble Lords would agree is not always the case. The detailed document that showed how the Bill would work alongside other legislation was a lot of work for somebody but incredibly helpful in enabling all of us to understand this better. As the noble Viscount, Lord Younger, just said, special mention is merited for whoever produced the famous flowcharts.

I am also grateful to all those who supported me in my efforts to strengthen the safeguards around these new powers, in particular, the noble Baroness, Lady Finn, the noble Viscount, Lord Younger of Leckie, the noble Baroness, Lady Kramer, and the noble Lord, Lord Palmer of Childs Hill, as well as the noble Baroness, Lady Fox, and others. Having said that, we were not able to find agreement on everything, as we saw on Tuesday. I say to the noble Baroness, Lady Sherlock, that I remain keen to see whether we can find a constructive solution to those remaining issues that would work for us all. I stand ready to work with her and her team to that end before we get into ping-pong. I am not trying to thwart the intent of the Bill and have tried throughout to reflect as closely as possible what the Government say they really need. I really hope that we can find something mutually agreeable during the next stages.

[The Lord Bishop of Leicester]

My Lords, I support this Bill and add my thanks to all those who have engaged so thoroughly in its detail. It has been an important learning experience for me in the processes of your Lordships’ House, an experience that I hope I can bring to bear on other business in this place.

In addition, I want to speak briefly to the amendments brought forward on Report by the noble Lord, Lord Verdirame, the noble Baroness, Lady Lister, myself and the noble Baroness, Lady Finn. Unfortunately, neither the noble Lord nor the noble Baroness, Lady Lister, are in their place today; they have asked me to speak on their behalf. We did not push our amendment to a Division because of the assurances given to us by the Minister, and I thank her for those assurances given on Report with regard to overpayment, in particular the commitments to review communications with those with debts and to explore ways of improving the clarity and timing of those communications. Therefore, is the Minister prepared to either write to the whole House or commit to giving a Written Statement to Parliament, setting out the outcome of this review in due course?

12:15

[Baroness Fox of Buckley (Non-Afl)]

My Lords, Ministers have noted in many of our exchanges that the Bill which we have discussed was a great improvement on the original Bill put forward by the previous Government. That is true, but it did not make it a perfect Bill. In fact, all sides of the House have constructively improved the content of the Bill. I really appreciate that the noble Baronesses, Lady Sherlock and Lady Anderson, put forward amendments that were not rewrites of the Bill, as we sometimes see in this House, but were based on listening to the debates that we had in Committee and so on. It is therefore much improved.

I want to note, in general but relating to this Bill, that those of us who have raised issues around civil liberties, privacy rights and transparency were not doing so to be soft on those who fraudulently take advantage of public funds in any way whatever. Those issues of civil liberties, privacy rights, transparency, accountability and so on were based on a firm belief that when the state takes more power, it is our responsibility to represent the public—not just in terms of money that is taken from them but the threat to rights that might be taken from them. I appreciate that the Government Front Bench listened to some of those concerns. I wish that they had listened to a few more but, for now, I think there was constructive engagement from all sides, and I appreciate that very much.

[Lord Palmer of Childs Hill (LD)]

My Lords, I am probably the last person to speak and mull over all that has happened. I thank sincerely the noble Baronesses, Lady Sherlock and Lady Anderson, and their team. They have been very helpful to us in answering our questions, trying to agree with us and offering a meeting to discuss the part of this Bill on carers. We appreciate and look forward to that departmental meeting, together with, I hope, one of our MPs, so that we can have a reasonable view towards ping-pong and what goes forward.

I thank the noble Lord, Lord Vaux, as everyone has, for many things that we worked closely on and supported. I also thank particularly the Conservative Front Bench, who have not been confrontational but have tried to work to get a better Bill. The Bill has been quite exemplary in the way that people have worked towards improving it in many ways. I obviously also thank my noble friend Lady Kramer, who has worked with me on the Bill, and Adam Bull, our legislative and political adviser, who has been giving me support throughout.

We have among us—the Cross Benches, the Government, the Conservative Benches, this Bench and the Bishops’ Bench—all improved the Bill. I hope that the improvements we have made will last through ping-pong and that we end up with a better Bill—not a confrontational Bill but one that will help public funds, which is obviously its aim, while protecting the vulnerable in society who are not really going to be the paymasters of dealing with errors in the past. Congratulations to all, including the staff in the background of the Government who have made this such an interesting exercise, even though I am surprised that we have got to Third Reading so quickly after Report, and in almost indecent haste. If all legislation could be so quick, it would be a great advantage to this House and the other House. I hope that the Bill passes successfully.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to all noble Lords—in fact, that was so nice that I would like it to carry on, but the Chief Whip will kick me from behind if it goes on any longer. However, I will say a couple of things. In response to the right reverend Prelate the Bishop of Leicester, we have already begun to think about how we can look at making things better in the way that I described. I will find the most appropriate way to communicate that, but I assure him that I stand by the assurances that I gave on Report—and I say likewise to the noble Lord, Lord Palmer. In response to the noble Lord, Lord Vaux, I will reflect on what has happened. Having given so much ground, I do not want to spoil the unanimity, but I will not be able to give everything. I am sure he will not be surprised to hear that.

Finally, as we send the Bill down the Corridor, it is now for the elected House to consider and respond to the changes proposed by this House. I am sure I speak for the whole House when I say that we would welcome a swift consideration to make sure that we can move quickly and get on with the important job of addressing fraud and overpayments across the public sector.

12:20

Bill passed and returned to the Commons with amendments.