Public Authorities (Fraud, Error and Recovery) Bill

Debate between Lord Vaux of Harrowden and Baroness Finn

Report stage
Wednesday 15th October 2025 Lords Chamber

[Baroness Finn (Con)]

My Lords, I began by thanking the noble Baronesses opposite for their constructive engagement with us on the Bill. Our meetings with the Ministers have been genuinely useful, and I welcome the spirit of good faith and collaboration with which the Minister has approached our discussions. Tackling fraud against the public purse is a shared ambition across this House and it is in that constructive spirit that we have brought forward the amendments in this group.

As drafted, Clause 2 provides that the Minister may

“investigate or take enforcement action in respect of suspected fraud against another public authority … only at the request of that public authority”.

In other words, the Public Sector Fraud Authority can act only if invited to do so; indeed, that was the word used by the noble Baroness in Committee. This is an extraordinary limitation to place on an organisation whose very purpose is to root out fraud across government. The Bill seeks to confer considerable powers of investigation and enforcement upon the Cabinet Office, yet the exercise of these powers is ultimately hamstrung by the restriction in Clause 2. The effect is to create a PSFA that is at once empowered and yet toothless: an authority that has wide-ranging powers on paper but which cannot use them unless those potentially under scrutiny choose to permit it.

It cannot be right that a public authority suspected of fraud has the power to decide whether to be investigated. To rely on departments or agencies to invite in the PSFA to look at themselves or their work is, frankly, far too weak. There are obvious disincentives: the reputational risk, the potential embarrassment and the possibility of drawing attention to failings that might otherwise have gone unnoticed. As my noble friend Lord Maude of Horsham notably observed in Committee, assuming that departments will voluntarily expose their own shortcomings is a triumph of hope over experience.

If we are serious about protecting the taxpayer, the PSFA must be able to act proactively—to initiate investigations where credible concerns arise and not to wait passively for a polite invitation that may never come. I have been in government and I know how these things work. We cannot rely on good will; we must be both forthright and proactive in tackling this issue, which is an offence against every single person in this country.

Fraud against the taxpayer is not a matter to be settled or not by an informal phone call between Permanent Secretaries, as we were told could currently happen. Such a situation must be backed up by a statutory mechanism that ensures action is taken swiftly and decisively. Of course, such discussions can and should happen in the first instance, but there needs to be a way to compel such action if necessary. Our amendment would therefore enable the Minister for the Cabinet Office, through the PSFA, to undertake proactive investigations or recovery actions in respect of suspected fraud against a public authority on their own initiative, where it is in the public interest to do so. It would preserve the authority’s own internal fraud functions under subsection (5) but would finally give the PSFA the power it needs to do its job properly.

This amendment is not about centralising control or creating a culture of interference. It is about closing a glaring loophole, one that every complacent official and every fraudster will otherwise see coming a mile off. It is about ensuring that when the PSFA becomes aware of fraud that awareness marks the beginning of an investigation and not the point at which the system grinds to a halt while waiting for consent to be granted.

Alongside this, and in the same spirit of strengthening accountability, we have tabled a second amendment—one which we raised in Committee and return to today—as we believe the Government should take this opportunity to outline how they are working to create a counterfraud duty and culture across public authorities. Amendment 19 would require that, where a recovery made under Clause 10 exceeded £50,000,

“the public authority on whose behalf the amount was recovered must conduct an internal review into the circumstances giving rise to that recovery”

and provide that review to the Minister within three months of completion.

This is a practical, proportionate proposal to ensure that public bodies learn from their mistakes. It seeks to prevent the creation of a pass-the-buck-to-the-PSFA mentality. The PSFA cannot and should not become a convenient dumping ground for departmental failures. Fraud and error often originate within the systems and processes of individual departments. Responsibility for preventing and detecting it must therefore remain with them. I hope, in her remarks on this Amendment 19, that the Minister can set out to this House how this culture is being created, and how authorities are going to be held accountable for the mess in their own houses without simply leaning on the PSFA.

This is a big opportunity for us to get this right. If we want to tackle fraud, then we cannot create a mighty but toothless body with expansive powers on paper but which has no power to go after fraud when it should. We risk creating a situation in which the PSFA is legally unable to tackle fraud, and where it goes unchecked when it is known about but not formally referred to the PSFA. The noble Baroness may stand up and say that she expects many cases to be referred to the PSFA, but this misses the central point, which is that the PSFA must be able to tackle all fraud of which it becomes aware and can have a role in stopping. It is not a question of which cases are referred to the PSFA, but which cases will be missed because the PSFA was not invited to go in after it. This is simply not good enough. We must be really clear now in giving the PSFA the power to tackle wrongdoing proactively. I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, I speak very briefly in support of Amendment 2. Before I start, I would like to echo the words of the noble Baroness, Lady Finn, about the exemplary engagement on this Bill, which has been extremely constructive. I am very grateful to both noble Baronesses for that.

The Bill as it is currently written creates a range of powers for the Minister of the Cabinet Office to investigate fraud against public authorities and to recover amounts, but the Minister can use those powers only in relation to other public authorities if requested to do so by that public authority. That does seem somewhat perverse. It is not uncommon for those who manage organisations to hide the fact that they have been subject to fraud, because they could be criticised for allowing that fraud. We could have a situation where the Minister has reason to believe that a public authority has been the victim of fraud—perhaps a whistleblower has tipped them off, as in the last group—but, despite having reasonable suspicion, the Minister would not be able to use these new powers. I do not see how that makes sense. If these new powers are to be effective in reducing fraud, it must make sense that the Minister can use them in any situation reasonably considered to be in the public interest, not only when the public authority requests them.

--- Later in debate ---

[Baroness Finn (Con)]

My Lords, I will speak to Amendments 3 and 4, tabled in my name and that of my noble friend Lord Younger of Leckie. Both concern the information-gathering and information-sharing powers in this Bill, and both are designed to ensure that those powers are exercised with fairness, clarity and restraint.

The first amendment to Clause 3 would require that any information notice issued to a bank or financial institution includes a clear statement that the person named or described in that notice is not necessarily guilty of the suspected fraud. This is an important safeguard. As noble Lords will recall, Clause 3 enables investigators to issue information notices to banks when there is a reasonable suspicion of fraud. That is a proper and necessary power which is central to the operation of the Bill, and we do, of course, accept that. However, it is equally vital that the use of that power does not inadvertently imply culpability on the part of the individual concerned. Particularly in the early stages of implementation, when departments and financial institutions are still adjusting to these new processes, there is a real risk that an information notice could be misinterpreted as a formal accusation of wrongdoing. A simple, clear statement of non-culpability within the notice would prevent that risk. It would protect innocent individuals from reputational harm, ensure that they are not subject to debanking or any action from the side of the bank, ensure transparency in the use of investigatory powers, and demonstrate that the Government are determined to act fairly as well as firmly in the pursuit of fraud.

This is a small addition, but one with significant practical effect. What may seem a technicality in legislation can have a tangible effect on people in the real world—those who will be affected by the words we use and that we approve in this Bill. Clarity on this question would be a small change for the Government, but it could avoid risking some serious and damaging circumstances for those outside this place who have done nothing wrong, but who may nevertheless be presumed to have done so without the sort of clarifications we are suggesting. We therefore hope the Government will look closely at how such a clarification might be built into the final version of the Bill.

The second amendment, to Clause 5, concerns the disclosure of information once it has been gathered. As the Bill stands, Clause 5 allows the Minister to disclose information to another person for the purposes of exercising the powers in the Bill, but it gives no definition of or limitation as to who that other person might be. That is an extraordinarily broad formulation. Our amendment would simply require the Secretary of State to specify, by regulations, the persons or categories of persons to whom such information may be disclosed. This would provide a transparent and accountable framework that allows for flexibility but still ensures that Parliament has visibility of how and where sensitive data can be shared.

We are not seeking to obstruct the legitimate flow of information between public bodies. On the contrary, we recognise that effective information exchange is essential to combat fraud across the public sector, but we must ensure that these powers are not open-ended. We trust the present Minister to use them responsibly, but as noble Lords have often reminded us, we are legislating for future Ministers and Governments, and the safeguards we build in now will protect individuals for years to come.

These are not amendments on which we intend to divide the House. We bring them back to ensure that these important issues are not lost as the Bill progresses, that the Government meet the challenge they raise, and that appropriate assurances or refinements are provided before the Bill leaves this House. Both proposals are constructive. One protects individuals from being unfairly stigmatised when information about them is sought; the other ensures that personal information, once obtained, can be shared only within clear, regulated limits. Together, they speak to a single principle: that strong powers must always be matched by strong safeguards. We therefore hope that the Minister will take these concerns in that spirit and consider how best to address them as the Bill moves forward. We look forward to hearing her response. I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, I rise briefly to add my support for Amendment 3, which would require any information notice to include a statement that the notice does not imply that the person named is guilty of fraud. This is important because a bank that believes a person is guilty of fraud must take actions that may include closing or freezing accounts, issuing suspicious activity reports, and so on.

This has been an area of much discussion as the Bill has gone through Committee, and I know that the financial services industry has raised a number of concerns. Many of those concerns have been dealt with by amendments tabled by the Minister, but this amendment would put it beyond doubt. It adds no onerous obligations, so I urge the Minister to accept it.

Public Authorities (Fraud, Error and Recovery) Bill

Debate between Lord Vaux of Harrowden and Baroness Finn

Committee stage
Wednesday 18th June 2025 Grand Committee

[Baroness Finn (Con)]

My Lords, Amendments 99A to 99C have been tabled, as ever, in the spirit of constructive scrutiny and with the aim of strengthening one of the more significant accountability provisions in the Bill: the independent review process set out in Clause 88.

These amendments are modest, reasonable and necessary. They are not designed to undermine the intention of Clause 88 but quite the opposite: to give that clause the clarity, independence and rigour that an effective review mechanism surely must demand. Fundamentally, they seek to correct the text in the Bill as drafted, as this would not provide for a proper independent review process of the exercise of powers under this part of the Bill. As we have been clear throughout these days in Committee, having a proper, full and independent review mechanism is an essential requirement to balance the powers granted.

Let me begin with Amendment 99A. As currently drafted, new Section 109J, to be inserted by Clause 88, allows the Secretary of State to direct the independent person to review only certain timeframes, saying in subsection (1):

“The Secretary of State may give the independent person appointed … directions as to the period to be covered by each review under section 109I”.


This, in our view, strikes at the heart of the independence that the clause is meant to enshrine.

If the Secretary of State can determine the scope of the review in such a narrow and discretionary fashion, deciding what is in and what is out, we risk reducing the entire review process to something partial and predetermined. An independent reviewer must have the freedom to examine the full timeline of events, decisions and outcomes as they see fit, not just the periods that a Minister deems relevant. This amendment would remove the power for the Secretary of State to constrain that scope. It would ensure that the independent person can review what needs reviewing, not merely what it is convenient to review.

Further to this, Amendment 99B addresses another area in which we believe the clause falls short of its intended purpose. As present, new Section 109J(3) states:

“The Secretary of State may disclose information to the independent person”.


We do not think this is adequate. For a review to be meaningful, the reviewer must be empowered to access all relevant material. It cannot be left to the Minister to determine what relevant information may or may not be disclosed to the independent person for review. By replacing “may” with “must”, this amendment would impose a basic but essential duty for the Government to co-operate with their own independent review mechanism. This should not be controversial. If the review is to be credible both in substance and perception, the provision of relevant documents, data and records must be a legal obligation, not a voluntary gesture. Our amendment would ensure that the independent reviewer could operate with true independence and without the bias that the discretionary drafting currently in the Bill implies.

We must appreciate that if the Secretary of State can direct the scope and scale of these independent reviews, they cannot truly be called independent. As noble Lords across the Committee will know, the outcome of such a process is only as good as the information that is put into it. I am sure that this Minister would not allow biased information or timeframes or seek to direct the independent reviewer. But, as noble Lords have previously made clear in Committee, we must legislate for the future and future Ministers. This cannot be done on the basis of guarantees alone. I trust the Minister implicitly, but I do not know—indeed, none of us in this Committee knows—that we could always say the same about her successors. It is important that we ensure that this independent review process is independent from day one and there is no risk of it becoming a rubber-stamping body used to sign off favourable reviews on the back of limited information and narrow timeframes.

Finally, Amendment 99C would compel the appointment of independent persons to carry out reviews in England, Wales and Scotland. The Bill in its current form allows the Secretary of State to do so but does not require it. We think that is a mistake. Public sector fraud is not a phenomenon confined to one part of the United Kingdom. If we are serious about building a coherent and credible national response, it follows that there must be consistent independent scrutiny across all three nations. Leaving this to ministerial discretion opens the door to uneven practice and potential political selectivity. By making the appointment of independent reviewers mandatory across the nations, we would create a consistent framework for accountability —one that reflects the devolved landscape while still holding the centre to account.

Taken together, these three amendments seek to reinforce what I believe the Government want to achieve: an independent, well-informed and effective review mechanism. They would ensure that reviews are not unduly limited, that reviewers are not kept in the dark and that all parts of the UK are covered by the same standards of transparency. In short, these amendments would close the gaps that could otherwise turn an accountability provision into an optional exercise. I hope the Minister will reflect carefully on their intent and consider how they might help deliver a stronger, fairer and more credible oversight process. I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, I rise briefly to add my support to the first two amendments in this group. While I agree with removing the discretion of the Secretary of State, Amendment 99A does not say what the period of the review should be. I suggest that it should be the same as the period of the review for the eligibility verification notices, which is annual, and that that is what should be in the Bill. It would be useful to hear from the Minister what the Government are proposing in that respect.

Public Authorities (Fraud, Error and Recovery) Bill

Debate between Lord Vaux of Harrowden and Baroness Finn

Committee stage
Monday 9th June 2025 Grand Committee

[Baroness Finn (Con)]

I apologise to your Lordships. The Committee will be fed up with hearing from me before the afternoon is out. No? Excellent.

We all agree that fraud against the public purse is wrong and must be tackled, but we must also be honest about who is being asked to do the work and at what cost. Banks are expected under the provisions in the Bill to dedicate staff, systems and time to support public sector fraud investigations or enforcement efforts. This may be in the form of complying with information notices, processing and applying deduction orders, or liaising with government departments. These activities are not core business functions for a commercial bank. They are not revenue generating. They do not serve the bank’s shareholders or contribute directly to its customers’ financial well-being. They are, in essence, a form of public service being performed by a private entity.

Here is the crux of the matter: every hour a member of the bank staff spends assisting with a public fraud case is an hour that they are not spending on risk management, product development, client service or revenue generation. That is a real and measurable opportunity cost: the bank is being asked to sacrifice its own commercial objectives to achieve a government policy goal. Regardless of the fact that this is a goal with which we all agree, we need to recognise that this is a burden on banks, even if it is in pursuit of a good objective.

Of course, banks have legal and moral obligations to help prevent criminal activity—and they do. However, we must be cautious about crossing the line between reasonable regulatory compliance and the outsourcing of state enforcement functions to private firms, without proper consideration of the attendant costs and effects that this could have.

It is also worth considering the cumulative effect. Banks are not only being asked to support fraud detection but simultaneously are dealing with sanctions enforcement and a growing raft of compliance burdens. The more we demand of banks in public service roles, the more we divert their resources away from their essential commercial purpose: financing the economy. So, while the fight against public sector fraud is essential, we must be alive to the costs that we are placing on others to carry it out.

Our Amendments 32, 38 and 54 would demand that the Minister has due regard to the costs that they are imposing on banks as a result of the exercise of their powers. We return to our core theme of proportionality: building into the Bill a regard to the cost burden on banks is a way that the imperative of tackling fraud is sensibly and responsibly balanced with the attendant costs that it imposes on private entities.

Further to this, our Amendment 33 would require the Minister to undertake a review of the costs being imposed on banks within 12 months of Clause 19 coming into effect. This amendment works alongside our Amendments 32, 38 and 54 in establishing the principle that the Minister must have due regard to the costs imposed on banks, and furthers this by demanding that the Minister undertakes a review of these costs a year after the provisions in the Bill come into force. In creating a duty to have due regard and combining it with the requirement for a review after a year, we have proposed sensible amendments which impose on the Minister an important obligation to the banks on which the Bill so heavily relies. We must make sure that, in our efforts to tackle fraud, we work alongside partners in the banking and financial sectors, not against them. These amendments will ensure that the Bill does that.

Finally, our Amendment 40 would ensure that the relevant bank is involved in determining the amount of money that it could recover to cover the costs incurred by complying with the demands under the Bill. At present, the Minister is able to unilaterally determine what a bank’s reasonable costs are. As I have outlined in my remarks, in complying with the Bill banks will incur not just an operational cost but an opportunity cost. Banks understand the complexity of their own systems; they know what it takes to divert staff from commercial roles to public service tasks. They are best placed to quantify the impact of compliance on customer service, internal risk management and technical infrastructure. To exclude them from this process of determining costs, to impose obligations without consultation or a mechanism for cost recovery, would be to create an asymmetric relationship in which the state demands and the private sector simply absorbs.

We are not asking for a blank cheque or for banks to name any figure they please, but there must be a structured and collaborative process, grounded in evidence, in which banks have a say in what their involvement truly costs and in how those costs are acknowledged and, where appropriate, reimbursed. This is therefore a sensible amendment which seeks to create that relationship between the Cabinet Office and the banks on which it relies. I hope the Government will consider it as a reasoned improvement to the Bill.

In conclusion, it is important that we do not overlook the practical realities of who is being asked to shoulder the burden of implementation. The provisions in this Bill place real and ongoing demands on the banking sector—not only in staffing and systems but in opportunity costs that affect banks’ ability to serve customers and grow the wider economy.

Our amendments do not seek to weaken the fight against fraud but to ground it in a framework of fairness, partnership and proportionality. By requiring that Ministers have due regard for the costs imposed, that those costs are reviewed and that banks have a say in assessing what they are owed, we introduce essential balance and accountability into this regime. These are moderate, practical and constructive proposals. If we are to maintain the willing co-operation of the banking sector in delivering the public good, we must also treat banks as genuine partners, not simply as instruments of policy. I hope the Government will take these amendments seriously, and I urge noble Lords to support them. I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, I have amendments in later groups on the EVM section of the Bill with a similar effect to these, looking at the costs to the banks. This is not just about the impact on the banks, however. As many of us know from the experience of being politically exposed persons, when you put onerous responsibilities and costs on the banks that relate to a particular class of customers, you can create a disincentive for the banks to provide services to them. Most of us have probably had the experience of being PEP-ed, and it is not terribly pleasant. Here, if we are putting a load of costs on the banks that relate to benefit recipients, we make it less likely that those vulnerable people will be able to access banking services. The Government need to think about this quite carefully.

Public Authorities (Fraud, Error and Recovery) Bill

Debate between Lord Vaux of Harrowden and Baroness Finn

Committee stage
Wednesday 4th June 2025 Grand Committee

[Baroness Finn (Con)]

My Lords, the powers granted in this part of the Bill are necessary in principle, although the core principle of proportionality, which guides our approach on these Benches, means that we have some suggestions for improvement. We need to make sure that this system has adequate safeguards, protections and balance. I want to reiterate the view that in pursuit of a legitimate objective, we do not succumb to a temptation for overreach or powers which are too sweeping.

Our Amendment 9 introduces a reasonableness threshold, which has to be met before an information notice can be submitted. This amendment is designed to ensure that the information notice, which imposes a duty on the relevant person to provide information to the Minister, is imposed on that person only if there is a reasonable belief that the information notice would be proportionate.

We need to bear in mind throughout these discussions that the Bill establishes a substantial array of duties and responsibilities, and we need to make sure that when powers are exercised, they are done so with those burdens in mind. Our proposal that these powers can be exercised only when seen as reasonably proportionate incorporates this balance and will ensure that additional operational burdens are not imposed unless thought necessary.

Further, Amendment 10 seeks to protect the person to whom the information notice relates from unfair treatment ahead of any final conclusion about their liability. Banks and financial institutions, particularly when the Bill first comes into effect, will naturally be concerned that they are being asked to provide information about one of their customers in relation to fraud. It is feasible that the said bank may want to withdraw some banking services from the person in question, and it is therefore a reasonable demand that the Government make clear that the person in question is not necessarily guilty of the suspected fraud. We need to make sure that the verdict is not inadvertently passed on the person before a conclusion is reached, and this amendment would ensure that an investigation does not end up constituting a sentence.

Our Amendments 11, 12, 13 and 14 all address the technicalities of the review mechanism and seek to probe the Government on why they have set up the review mechanism in the way that they have in the Bill, Amendment 11 questions the Government on why they have defined 10 working days as the lower limit for the period in which the person to whom the information notice is given has to comply with the demands in the notice. Can the Minister assure the Committee that this period has been set based on a discussion with relevant persons to whom this duty will apply? Again, we need to recognise that this is a duty being imposed on third parties, and we need to balance it with the other activities undertaken by those persons.

Amendment 12 seeks to clarify how a review process could be initiated by the person to whom an information notice is given, which, alongside Amendment 13, seeks to make it easier for the person to review this decision with a longer timeframe. Amendment 14 would oblige the reasons for any decision reached following a review to be set out in writing, placing an additional duty of responsibility and accountability to the Minister for the steps they decide to take.

Alongside the reasonableness test outlined in our Amendment 9, these provisions work to make sure that the powers under the Bill are exercised proportionately and that they are balanced alongside adequate provisions for review, which will promote the sensible application of these notices.

Finally, Amendments 15 and 16 seek to protect the information of a person which has been shared with the Minister by limiting the people with whom that information can be shared. Defining in law that only specific people can have sight of personal, sensitive information is a proportionate check on the power of the Minister and will have the twofold benefit of protecting people who, we must remember, are not actually necessarily guilty of fraud, with the need to check their information to ascertain this fact.

The principle of obtaining information about a person is necessary for the provisions in the Bill to work and the objectives we all share to be met. Our amendments seek to nuance and improve the exercise of these powers by adding a reasonableness test, a clarification of the review process and additional controls on data sharing to protect those to whom the information notice relates. We hope that the Government and noble Lords across the Committee will recognise these improvements to the provisions currently set out in the Bill on information notices and the relevant review processes, and that these will be supported as measured and balanced proposals. I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, I will very quickly make a couple of comments on Amendments 9 and 10. First, on Amendment 9, I have an amendment later in Committee that inserts a reasonableness point in a similar way, so I support this. However, I wonder whether this amendment is actually in the wrong place; I suggest that it ought to be in the initial line—“the Minister should reasonably consider”—as opposed to “reasonably proportionate”, but that is a small issue. I support the concept of Amendment 9.

Amendment 10 is quite important. This issue has been raised by the banking industry, and there is a very real concern that the receipt of a notice might provide reasonable grounds for the financial services firm to know or suspect that the customer has defrauded the public sector. In that situation, the failure to take action, for example to close or restrict the account, might conflict with wider anti-money laundering obligations and, possibly—I am not sure this is right—the corporate criminal offence of failure to prevent fraud. That might include having to exit customer relationships and so on.

So there is a very real concern from the financial services industry here. I am sure that that is not the intention of the Government in this situation but it is something that we need to think about, as the receipt of a notice cannot be seen as reasonable grounds to suspect fraud, because that would set all sorts of hares running against people who might be entirely innocent.

--- Later in debate ---

[Baroness Finn (Con)]

My Lords, it is me again. Our proposal in this group is that Clause 7 and the corresponding Schedule 1 do not stand part of the Bill. The powers granted to civil servants under the provisions in this clause are sweeping, and we believe that they are better exercised by those with adequate training and experience—namely, police officers.

I will cover in a little more depth what this clause is proposing. Clause 7 would allow junior civil servants in the Cabinet Office—relatively junior, at HEO level—to apply to a Justice of the Peace for a warrant to enter and search premises for material relevant to an indictable offence. These civil servants can enter the property whether the relevant person is present or not, and they will have the power to seize anything if they have reasonable grounds for believing that it has been obtained in consequence of the commission of an offence or is evidence in relation to an offence. Section 20 would grant these civil servants the power to seize computerised information, and Section 22 would allow PSFA investigators to retain seized property for as long as necessary in all circumstances.

These are police powers, yet under this clause they are to be exercised not by police officers but by civil servants who, however well intentioned, are under no legal obligation to have the legal training or operational experience that should be required to exercise such powers responsibly. We believe that if an intervention required as part of an investigation is serious enough to justify a search warrant and serious enough to justify entering a person’s private premises and removing their belongings, it is serious enough to require the presence of a police officer, who is recognised as the proper legitimate authority who should bear the responsibility for exercising these powers.

There is a practical point here too. If the Government believe that fraud against the state requires this level of intervention, they should work with law enforcement to build capacity, not bypass it. It is the job of the police to investigate crime, including fraud; that is the basis for their training. That is the established legal framework in which they operate and that is what the public expect. We should not seek to empower civil servants to do the job of police simply on the basis of current operational capacity. Once again, we return to our maxim of proportionality: we need to make sure that the necessary powers in the Bill are exercised responsibly and in a way that is both balanced and effective.

I want to be clear that what we are proposing will not prevent the PSFA undertaking its investigations. Once the threshold for the exercise of these powers has been met, the investigation itself will have had to progress considerably if a warrant is to be issued. Given the way these powers are set out in Clause 7, the Government are obviously certain that investigations will be able to proceed substantially without the need for these powers. Our proposal that they be removed from the remit of civil servants and held instead by the police, which is the established, recognised authority that largely wields these powers at present, will therefore not infringe on the capacity of the PSFA to investigate fraud, as recognised by the Government.

This is therefore another exercise in balance. We believe that our suggestion that Clause 7 and the corresponding Schedule 1 do not stand part of the Bill balances the need to counteract fraud with the imperative that we do not grant sweeping powers to civil servants who are not sufficiently trained, experienced or recognised to exercise them in the proportionate, measured and sensible way we need to be able to guarantee in the Bill. For those reasons we do not believe that Clause 7 and Schedule 1 should stand part of the Bill. We urge the Government to reconsider this approach and to ensure that powers of this magnitude are exercised only by those with the proper training, the proper accountability and the proper role: our police services.

[Lord Vaux of Harrowden (CB)]

My Lords, the noble Baroness, Lady Finn, has said it all, so I will be very brief. I have to say that I am extremely uncomfortable with giving these sorts of police powers to civil servants and others. We have an example in the recent past of powers being used inappropriately by a non-police agency in the Post Office Horizon situation. I am very uncomfortable about it. I am interested to hear why we should not allow the police to deal with these things and why we should give them to civil servants, but I will take some convincing.