Public Authorities (Fraud, Error and Recovery) Bill

Debate between Baroness Coffey and Baroness Finn

Committee stage
Wednesday 11th June 2025 Grand Committee

[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.