Public Authorities (Fraud, Error and Recovery) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateTuesday 11th November 2025
(1 day, 11 hours ago)
Lords ChamberPublic Authorities (Fraud, Error and Recovery) Bill 2024-26 View all Public Authorities (Fraud, Error and Recovery) Bill 2024-26 Debates Read Hansard Text Watch Debate Amendment Paper: HL Bill 145-I Marshalled List for Consideration of Commons Reasons and Amendments - (10 Nov 2025)
Baroness Anderson of Stoke-on-Trent
That this House do not insist on its Amendment 1 and do agree with the Commons in their Amendments 1A and 1B in lieu.
“(1) The Minister may—
(a) investigate or take enforcement action in respect of suspected fraud against another public authority, or
(b) recover money on behalf of another public authority, only at the request of that public authority or if the Minister considers that it is necessary in the public interest to do so.”
Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, I beg to move Motion A and will speak also to Motions B and D. I want to start by thanking this House once again for the constructive debates and meticulous scrutiny that the Public Authorities (Fraud, Error and Recovery) Bill has received throughout its passage. It has undoubtedly been strengthened, and I am grateful for the time noble Lords have put into engaging with the Government.
I believe that the Bill, as agreed by the House of Commons, makes a significant step in delivering this Government’s manifesto commitment to safeguard public money and ensure that every pound is wisely spent. At the same time, the Bill now contains further significant safeguards on the use of the new powers for the DWP and PSFA, strengthened by the scrutiny and insights of your Lordships’ House.
In moving Motion A, I will, with leave of the House, speak also to Motions B and D, which are grouped together. I turn first to Amendment 1 and the government amendments in lieu, Amendments 1A and 1B. As I said on Report in the Lords, the Government were unable to accept the original drafting of this amendment. However, we have listened to the desire of your Lordships’ House and, with some technical changes, are happy to propose these alternatives. I am grateful for the constructive discussions on these with the noble Baroness, Lady Finn, and the noble Viscount, Lord Younger—to whom I wish a remote happy birthday.
The amendments will give the Minister for the Cabinet Office the power to initiate an investigation when they consider it necessary in the public interest. As my colleague, the Minister for Transformation, set out when proposing this amendment in the other place, the Government believe it will almost never be necessary for the Minister to exercise this new power, due to the collaborative approach of the normal working of government, but it will be available if there is genuine necessity. It is the Government’s intention to create a fraud investigation service and this amendment is compatible with that continued intention.
Our amendments in lieu also make some consequential changes to Clause 2 to preserve the intention that the PSFA should not take on matters assigned to the Secretary of State with responsibility for Social Security, or His Majesty’s Revenue & Customs, for the reason which has remained unchanged throughout the passage of the Bill: that those departments already have considerable resources and powers to tackle tax and social security fraud.
I now turn to Lords Amendments 30 and 31. As I set out on Report, the Government support the principle behind these amendments. However, we could not accept the drafting as it stood. We agree that staff must be appropriately trained before they are able to use these powers and that robust oversight, both internal and external, is essential. I am therefore grateful for the constructive and rewarding discussions with the noble Baroness, Lady Finn, and the noble Viscount, Lord Younger—who is very young today—and propose the alternative government Amendments 31A, 31B and 31C. They have indicated their support and I hope that other noble Lords will also support them. The amendments mandate statutory guidance and a new reporting requirement and set internal recording requirements. They strike the right balance of ensuring strong ministerial and parliamentary oversight of the powers, without unnecessarily involving Ministers in operational decisions.
First, the statutory guidance will detail how the Minister will exercise the function of investigating suspected fraud against public authorities. It will outline governance arrangements, delegation of powers to authorised officers and authorised investigators, standards for the training and appointment of authorised officers and investigators and how the Minister will collaborate with an independent reviewer. Secondly, a report will be prepared following the end of each financial year and will be laid in Parliament by the Minister, stating how many times investigation and enforcement powers in Part 1 of the Bill have been used. This ensures regular ministerial and public visibility without compromising operational details. Lastly, there is now a requirement for the PSFA to keep internal written records of the exercise of the powers, which will be made available for scrutiny by an independent reviewer.
These records will specify the power exercised, date, reason for use and by whom, ensuring internal accountability. They will be made accessible to the independent reviewer, who will assess the use of the powers and produce a report which the Minister will publish and lay in Parliament. This addresses the need for a written record without public disclosure of sensitive information. Together, these amendments underscore our commitment to transparency, oversight and accountability, which we have maintained over the passage of this Bill.
We further committed during Committee in the Commons to adhering to the Cabinet Office governance code on public appointments, which is overseen by the Commissioner for Public Appointments; adding the independent reviewer to the Order in Council; following the established process for agreeing posts that should be subject to pre-appointment scrutiny by Select Committee without the need for legislative provision in the Bill; and compiling a list of all the concerns raised in both Houses to put before the independent reviewer, who will also meet with parliamentarians who have raised areas where they think their work should be focused.
I have also agreed with the noble Baroness, Lady Finn, that, because she really enjoys debating with me at the Dispatch Box, the initial statutory guidance will be subject to a take-note debate in Grand Committee after it is laid in Parliament. Together, the amendments ensure that Ministers are accountable for the use of the powers in Part 1 of the Bill and show how they are delegated. In places, they build on processes that would already have been in place but that we have brought forward into the Bill. I am grateful for the constructive discussions with the noble Baroness, Lady Finn, on these amendments and I am pleased to put in place these commitments. I hope this is sufficient to address the concerns of noble Lords and that they will agree to the Motions not to insist from the other place.
Finally, I turn to a minor and technical amendment the Government made to Lords Amendment 75 to Schedule 2. Amendment 75A simply ensures that authorised investigators are captured within the regulation-making power set out by Schedule 2, if or when the powers conferred under Part 1 of the Bill are transferred to another public authority that is not within the scope of the Ministers of the Crown Act 1975, or if the PSFA is set up as its own statutory body. It does not change the use of any powers laid out within the Bill. I hope noble Lords will support the Motion from the other place and I beg to move.
Lord Palmer of Childs Hill (LD)
My Lords, I thank the Government for listening to some of the points made by the noble Baroness, Lady Finn, myself and others. We are dealing here with Motions A, B and D, so let me deal with Motion A first. The Lords amendment aimed to give more powers to Ministers to take investigatory or enforcement action and we voted against it in the Lords due to it giving, in our view, too many powers to the Minister.
The Government have, to some extent, listened, and the amendment in lieu reaches what I would describe as a middle ground. That seems to be, as far as I know, acceptable to other people who will be speaking in this debate, I believe—coming first, I cannot be certain of that. On that basis, on these Benches, we are willing to accept the amendment in lieu in Motion A.
Turning to Motion B, Lords Amendments 30 and 31 relate to limiting the extent that powers can be used and ensuring that, when powers are used, they are properly reported. As noble Lords will know, we supported the amendments in the Lords and have noted again what the Government’s reaction has been. I am reasonably pleased at the reaction. The amendments reach, as I said on the other amendment, a middle ground, and from these Benches we are minded to accept the amendments in lieu.
Turning to Motion D, the powers to establish the PSFA and transfer functions, the Lords amendment created the Public Sector Fraud Authority. The amendment in lieu is a tidying-up amendment, as the noble Baroness said, and is uncontroversial. On these Benches, we accept that amendment in lieu. I look forward to the other amendments in due course.
Baroness Anderson of Stoke-on-Trent (Lab)
I thank the noble Lord, Lord Palmer, and the noble Baroness, Lady Finn, for what I will take as wholehearted support for what we have done. I am grateful for their contributions and for the constructive engagement that led us to this point, both on these issues and in our earlier discussions with regard to whistleblowing. I genuinely believe that collaboration has got us to a good place with this legislation, and of course very much look forward to our ongoing discussions in Grand Committee.
Baroness Anderson of Stoke-on-Trent
That this House do not insist on its Amendments 30 and 31 and do agree with the Commons in their Amendments 31A, 31B and 31C in lieu.
“Guidance on exercise of investigatory functions
(1) The Minister must publish guidance about how the Minister will exercise the Minister’s function in section 1(1)(a) (investigating suspected fraud against public authorities). (2) The guidance must include guidance about— (a) how authorised investigators and authorised officers are to be appointed, (b) the training which individuals must undertake before being appointed as authorised investigators or authorised officers, (c) governance arrangements in relation to how authorised investigators and authorised officers are to exercise their functions for the purpose of the function in section 1(1)(a), and (d) how the Minister will work with an independent reviewer appointed under section 64. (3) The Minister may revise or replace guidance published under this section. (4) The Minister must publish any revised or replacement guidance. (5) The Minister must lay a copy of guidance published under this section (including revised or replacement guidance) before Parliament.”
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I have already spoken to Motion B. I beg to move.
Motion B agreed.
Motion C
Baroness Sherlock
Moved by
That this House do not insist on its Amendment 43, to which the Commons have disagreed for their Reason 43A.
The Minister of State at the Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, I will also speak to Motions E and F, with the leave of the House. I thank the noble Lord, Lord Vaux, for his continued constructive engagement on these issues. I hope that today we will reach a resolution with the amendments in lieu and assurances that I provide.
I start with Motion E and Lords Amendment 84 on the treatment of information obtained using an eligibility verification notice, or EVN. As drafted, this amendment carries three key risks: first, it risks DWP not being able to use EVM information properly, even in those cases where it might be a strong indicator of potential fraud; secondly, it risks legislating for a person’s state of mind; and thirdly, it risks undermining the existing public law principle that staff at DWP take decisions on behalf of the Secretary of State. Government Amendments 84A and 84B in lieu are therefore presented as a substitute. These amendments address those risks, build on the amendments I tabled on Report and reflect the Government’s stated policy intent throughout; namely, that EVM information considered in isolation cannot constitute reasonable grounds for suspicion or indicate wrongdoing.
These amendments focus on the actions which DWP staff must take following receipt of EVM information and clarify that where DWP has received it, staff must also have regard to all other relevant information held before taking further action. This approach would, first, require an authorised officer to consider all information held which is relevant to the question of whether to issue an information notice under new Section 109BZA of the Social Security Administration Act 1992, as well as the relevant EVM information. As a reminder, an information notice under that new section can be issued only where the authorised officer has reasonable grounds to suspect that a person has committed or intends to commit fraud, and the authorised officer considers the notice necessary and proportionate for the purposes of investigating that suspicion. The amendments in lieu make it clear that where EVM information is relevant to those considerations, the authorised officer must also consider non-EVM information that is relevant to the question of whether to issue the notice.
Secondly, it requires that before a DWP staff member can suspend benefit payments, they must consider all information held which is relevant to the question of whether to do so, as well as the relevant EVM information. Finally, it requires that before a DWP staff member can make a change to an earlier benefit decision, they must consider all information held which is relevant to the question of whether to change that earlier benefit decision, as well as the relevant EVM information.
DWP will always hold at least some further information on benefit claims, such as the presence or absence of relevant capital disregards, claimants’ declarations about capital or known vulnerabilities. This amendment provides the necessary assurance that DWP staff will consider this context carefully before taking further action. I think this reflects the intent of the original amendment from the noble Lord, Lord Vaux, as well as the Government’s stated policy intent. I am grateful for his engagement on this matter and hope that these government amendments in lieu offer the necessary reassurance.
I turn to Motion C and Lords Amendment 43 on the requirements of the independent reviewer. The noble Lord, Lord Vaux, knows that I cannot accept his amendment; I shall go through each part to explain why. Officials in my department have discussed its proposed paragraph (d) with the finance industry, which agrees that it may place a significant burden on financial institutions if they are asked to report on costs every year. However, I have put it on record before, and reassure the House again today, that the Government are committed to keeping costs associated with this measure proportionate.
I can assure the House that we will continue working closely with businesses as we implement these measures to ensure it is done in the most efficient and effective way. I have also previously committed to publishing a further, updated impact assessment within 12 months of Royal Assent, taking into account the ongoing work with industry through our test-and-learn period. I am happy to reaffirm that commitment to the House today.
As for proposed paragraph (e), there is no reason for individuals to lose access to banking services solely because of information shared under EVM. We have been clear that this information does not imply any wrongdoing, and we have worked closely with the finance industry to provide clarity in the draft code of practice to prevent any such problems. The role of the independent EVM reviewer is not to review every process which DWP carries out; rather, it is to review the exercise and effectiveness of that specific data-gathering power and to consider the Government’s compliance with the legislation.
I have stressed often before that DWP has strong support in place for vulnerable people. For example, all DWP front-line operational colleagues are trained to help identify and support our most vulnerable customers. This includes mental health training and the ability to provide reasonable adjustments.
Amendments 84A and 84B reaffirm that further decisions will not be taken without considering all relevant information, in addition to EVM information. This would of course include any available information on vulnerabilities.
Government amendments made on Report also introduced a specific requirement that the Secretary of State be satisfied that it is necessary and proportionate to issue an EVM, and clarified that the purpose for which an eligibility notice can be issued is to assist in identifying incorrect payments. As such, the independent reviewer can assess the Government’s actions against these requirements as part of their consideration of compliance with the legislation. We will work closely with the independent reviewer, especially in the test and learn phase, to identify any issues quickly and take steps to prevent or mitigate them.
Turning to subsection (f), Government amendments tabled on Report address this point. They require the Secretary of State to provide the independent EVM reviewer with all reasonably required material. I hope that this duty, alongside the Government’s commitment to work constructively with the reviewer, is sufficient.
My noble friend Lady Anderson made a commitment that Members will have an opportunity to meet with the PSFA’s independent reviewer. Today, I offer the House a parallel commitment that there will be opportunities for Members of this House to meet with the EVM independent reviewer, once they are appointed, and share their views with them.
I turn to Motion F, and Amendment 97 from the noble Lord, Lord Vaux, which concerns DWP-authorised investigators’ use of reasonable force. As I have made clear to the House, the powers of search and seizure, including warrant applications and production orders, are drawn from the Police and Criminal Evidence Act 1984. This also includes the power of reasonable force, as set out in Section 117 of PACE. These powers will be used by expert DWP staff, trained to industry standards, to tackle only serious and organised crime against DWP.
As I outlined on Report, I am not able to accept Lords Amendment 97 as drafted, although our stated policy intent is that DWP-authorised investigators would not use reasonable force against a person. The reason I cannot accept the amendment is that we cannot break down Section 117 of PACE to make the distinction between property and persons, and there is no precedent for specifying in PACE where or on what reasonable force may be applied. The Government’s preferred approach is for DWP to take powers of reasonable force from PACE, following precedents from other government departments.
However, I have listened to the concerns expressed in the House and looked for another way to reflect the stated policy intent in the Bill. The Government have therefore introduced, as amendments in lieu, Amendments 97A, 97B and 97C to Clause 76, and Amendments 97D, 97E and 97F to Schedule 4. These reflect our stated policy intent and draw a distinction between the power of reasonable force, exercisable by DWP-authorised investigators, and police officers or others with constable powers. These amendments remove the power of reasonable force that was derived from Section 117 of PACE and instead create a stand-alone provision on reasonable force in this Bill. This provision restricts DWP-authorised investigators’ use of reasonable force to force against property only, while retaining the police’s power to use reasonable force where necessary against people and property. This delivers our stated policy intent but brings DWP’s power of reasonable force outside of PACE. I believe this reflects the intent behind Lords Amendment 97, and I hope that the noble Lord, Lord Vaux, will welcome it.
However, this is a bespoke approach, and it is important that we maintain the same safeguards when DWP-authorised investigators exercise reasonable force. My department is working closely with the Home Office on this. To ensure that DWP-authorised investigators will still operate in the same way as others with powers of reasonable force under PACE, we will maintain compliance with PACE Code B, which governs the exercise of powers of entry, search and seizure.
The Home Office has confirmed that, when parliamentary time allows, secondary legislation will be brought forward to ensure that the stand-alone provision in the Bill will be subject to PACE Code B. My department has also worked swiftly to secure assurances that inspection of the use of this stand-alone provision will be provided by HMICFRS and the IOPC. The other relevant powers of entry, search and seizure, beyond reasonable force, will still be drawn down from PACE, and are subject to the safeguards and operational standards I have outlined over the passage of the Bill.
A different approach has been adopted for the provisions in Schedule 4 which apply to Scotland. These broadly replicate PACE search and seizure provisions to achieve parity but make some small, necessary adaptations for Scots law. Therefore, Amendments 97D to 97F make equivalent changes to powers of reasonable force in Scotland.
I hope this reassures noble Lords and puts this question about the use of reasonable force beyond doubt, as DWP-authorised investigators now cannot use reasonable force against people. I hope that the House will support this Motion. I beg to move.
Baroness Finn (Con)
My Lords, as we come to this final group of government amendments on the DWP section of the Bill, I begin by recognising the real progress that has been made on the DWP use of PACE powers and eligibility verification provisions—progress that has been driven by this House’s detailed scrutiny and the persistence of Members from all sides, not least the noble Lords, Lord Vaux of Harrowden and Lord Verdirame, and the noble Baroness, Lady Fox of Buckley. Throughout, we on these Benches have sought to ensure that the Bill strikes the right balance—strong on fraud prevention but fair, proportionate and mindful of its impact on vulnerable people. We therefore welcome the Government’s concessions in several areas, which have come about as a result of the sustained pressure applied by this House.
Amendment 43 concerns the eligibility verification mechanism. Our overriding concern has been the impact on vulnerable individuals and those at risk of financial exclusion. The system must not lead to people being debanked, subject to excessive deductions or left unable to access essential services. We are pleased that the Government have now committed to an assurance that Parliament will be able to engage with the independent reviewer after Royal Assent to explore these issues, and that the concerns that we have raised here and in the other place will be formally shared with the reviewer.
I am grateful that the Minister in the other place claimed the may/must change as a government initiative—imitation, after all, is the sincerest form of flattery—but it was in fact first proposed from these Conservative Benches. That is another example of the constructive scrutiny that has improved the Bill, and I am sure that the Minister will be keen to correct this on the record.
We welcome the Government’s concession in Amendments 84A and 84B. These make it clear that human decision-makers must have regard to all relevant information and ensure that human judgment remains embedded in the process. This protects against the risks of mechanistic or AI-driven decision-making, not only now but into the future as these technologies evolve and become more widespread. This is a sensible safeguard and a direct result of arguments advanced in your Lordships’ House.
Regarding PACE powers, I am pleased that the Government have finally accepted that DWP investigators should not be able to use reasonable force against individuals. This corrects a serious drafting flaw in the text of the Bill and aligns its provisions with the Government’s stated policy. It makes the law safer, clearer and more coherent. I really thank the Minister for her valiant efforts in this area. However, it is surprising, especially given that it protects the integrity of the Government’s stated policy, that it should have required so much persuasion from your Lordships’ House for the Government to get to this position.
As a result of the changes made to the Bill in this House, the Public Sector Fraud Authority and the DWP will be better equipped to act against frauds while operating within a framework of stronger safeguards. Because of efforts on these Benches and others, the PSFA will be proactive but also more accountable and transparent. As a result of the work of the noble Lord, Lord Vaux, and other noble Lords, vulnerable people will be better protected and represented in the independent review, and the use of artificial intelligence will be subject to clearer human oversight. Fundamentally, the use of PACE powers will be strictly limited to property, not people.
Having said all that, there are still gaps in the Bill. The Government have yet to engage seriously with the growing problem of sickfluencers, online figures who use their platforms to encourage and advise people to make fraudulent benefits claims. Unless the Government begin to analyse and address this issue, they risk falling behind and missing the opportunity to tackle a significant driver of future fraud risk. We welcome the progress achieved, but we will continue to raise the issues we have championed during the passage of this Bill and keep a watchful eye on how its provisions are enacted. The Bill now better reflects the need to protect the public purse from fraud and the duty to safeguard the public. It leaves your Lordships’ House in a far better place than when it arrived and demonstrates once again, as the noble Lord, Lord Vaux, has said, the constructive and vital work of this House.
Baroness Sherlock (Lab)
My Lords, I thank all the noble Lords who have spoken in this debate. I am grateful that all noble Lords who have contributed have conceded that we have reached a point where we are all now content to move forward with this important Bill.
On the specifics, the noble Lord, Lord Vaux, asked whether we would move forward without any other information. DWP will always hold some other information on benefit claims, but it is crucial that appropriate weight can be given to EVM information if necessary. That is the reason we took the approach we did in the new amendment, because it makes clear that, where EVM information is relevant to a question, DWP must also consider non-EVM information that is also relevant. That other information could take different forms; it could be about the presence or absence for disregard or other information, as I went through. I hope that helps.
Baroness Sherlock
That this House do agree with the Commons in their Amendment 75A.
“(4) In this paragraph, “authorised officer” includes “authorised investigator”.”
Baroness Sherlock
That this House do not insist on its Amendment 84 and do agree with the Commons in their Amendments 84A and 84B in lieu.
“(2) Sub-paragraph (3) applies where—
(a) an authorised officer is considering whether to give an information notice under section 109BZA in relation to a person, and
(b) the Secretary of State has been given EVM information that is relevant to the question whether to give the information notice.
(3) The authorised officer must have regard to all information that the Secretary of State has that is relevant to the question whether to give the information notice, including information that is not EVM information.
(4) Sub-paragraph (5) applies where—
(a) the Secretary of State is considering whether to suspend payments of a benefit to a person in accordance with regulations under section 21 or 22 of the Social Security Act 1998, and
(b) the Secretary of State has been given EVM information that is relevant to the question whether to suspend the payments.
(5) The Secretary of State must have regard to all information that the Secretary of State has that is relevant to the question whether to suspend the payments, including information that is not EVM information.
(6) Sub-paragraph (7) applies where—
(a) the Secretary of State is considering whether a decision taken under section 8, 9 or 10 of the Social Security Act 1998 in relation to a person (“the earlier decision”) should be revised or superseded, and
(b) the Secretary of State has been given EVM information that is relevant to the question whether the earlier decision should be revised or superseded.
(7) The Secretary of State must have regard to all information that the Secretary of State has that is relevant to the question whether the earlier decision should be revised or superseded, including information that is not EVM information.”
Baroness Sherlock
That this House do not insist on its Amendment 97 and do agree with the Commons in their Amendments 97A, 97B, 97C, 97D, 97E and 97F in lieu.