Public Authorities (Fraud, Error and Recovery) Bill

Debate between Viscount Younger of Leckie and Lord Vaux of Harrowden

Committee stage
Wednesday 25th June 2025 Grand Committee

[Lord Vaux of Harrowden (CB)]

My Lords, I hope to be even more brief. I have sympathy for this amendment, but it is backward-looking, as it relates to situations that have already happened. We also need to stop them happening in the future. These problems have arisen because of a very badly designed benefit. It has a cliff-edge threshold. Cliff-edge thresholds will always be the ones that cause problems, so I really hope that we learn the lessons from this situation and stop applying cliff-edge thresholds to benefits. It does not work and is almost guaranteed to create problems of this nature.

[Viscount Younger of Leckie (Con)]

My Lords, these amendments are well intentioned—an expression I believe I used in the last group, but I mean it. I want to acknowledge from the outset that they speak to a principle that I believe we can all support: the importance of integrating independent expert advice into the policy and operational decisions that we take, especially in areas where there have been clear signs that something has gone wrong.

The ongoing concerns around carer’s allowance overpayments are a case in point. The issue has rightly attracted attention, both inside and outside the House, in particular last year, and I believe that the decision to commission an independent review is right. Where there are systemic weaknesses, whether in communication, process or oversight, they must be identified and addressed, and we should absolutely be willing to listen to expert recommendations to improve how the DWP operates in the future.

I want to recognise the principle behind these amendments: it would be wrong to ignore serious and credible concerns raised by carers, campaigners and the public. They deserve answers and a process that ensures that the mistakes of the past are not repeated. That is why the review matters, and I hope we will all welcome it when it reports. I add to the questions raised earlier about the timing and when it will come.

However, that brings me to the core of my hesitation with these amendments. Although they stem from an entirely legitimate concern, I fear that they may go too far in how they propose to respond to it. Amendment 124, as laid out eloquently by the noble Lord, Lord Palmer, would delay all recovery of carer’s allowance overpayments until the independent review had concluded and, crucially, all its recommendations had been implemented. Amendment 127 goes even further, effectively delaying the entire Act until those recommendations have been acted on.

I am not sure that this is a workable or proportionate course of action. We must remember that the review currently under way is, as I understand it, largely focused—this is an important point—on prevention. It asks how overpayments were allowed to happen in the first place, what lessons can be drawn and how the department can ensure that this does not recur. That is vital, but it is a forward-looking exercise: it is about improving systems going forward, not about deciding whether an overpayment that has already been identified should be recovered. The Minister might want to comment on my assessment of the review.

To put it plainly, if an overpayment has been made and the department has established this through due process, that money is owed to the public purse. The review likely will not and should not change that fundamental fact. We should not conflate the need to prevent future errors with the obligation to recover public funds that have already been incorrectly distributed. We are talking about money that could and should be supporting others in genuine need—to further a theme I made in the last group. While it is essential that recovery processes are fair and humane, it is also important that the recovery duty is not unduly delayed.

--- Later in debate ---

[Lord Vaux of Harrowden (CB)]

My Lords, I add my support at least to the intentions behind this amendment. We have had a number of discussions in Committee on the potential impact of layering costs and bureaucracy on financial services providers that relate to a particular class of people. In doing that, we risk incentivising those providers to stop providing services to that class of people—in this case, benefit recipients—and thereby potentially increasing financial exclusion.

The intention behind this amendment is right and I support adding it to the scope of the independent reviewer. However, I was not totally clear whether this applies to the whole Bill or just to Part 1, because it refers to the independent reviewer under Clause 64(1), which relates only to Part 1. This should relate to the whole Bill on a cumulative basis, because the cumulative impact of all the elements of this Bill may lead to greater changes in the behaviour of financial services companies than the sum of the individual changes themselves. We need to find a way of making sure that this covers the whole Bill and the cumulative impact.

Secondly, the amendment would require only a one-off report after 12 months. I am not sure that that would be sufficient. If there are impacts, as I fear there could be, they are likely to accumulate over time as banks decide that this is more difficult and therefore stop providing services. As we have talked about before, this is a question not of active debanking but more likely of stopping providing services over time. If we are to review this, we need to look at the impact more periodically—not necessarily annually, but over a longer period. I support the intention, but the amendment may need tweaking as it stands.

[Viscount Younger of Leckie (Con)]

My Lords, I support Amendment 126, tabled by the noble Lord, Lord Palmer of Childs Hill, which would require an independent assessment of the impact of this Bill on those at risk of financial exclusion and, crucially, ensure that the findings of that assessment are made public and laid before Parliament.

The principle behind this amendment is very important. We have heard throughout the Committee’s deliberations from me, my noble friend Lady Finn and the noble Lord, Lord Vaux, about the real and pressing risk that some of the measures in this Bill could unintentionally deepen financial exclusion. As we have said several times, there is a risk that banks are made to feel concerned about their customers if they are subject to an EVN, or, as the noble Lord, Lord Vaux, has powerfully expressed previously and now, that banks could be deterred from taking on customers who are in receipt of benefits in the first place as a pre-emptive measure against the additional workload that this could demand.

As we do not yet have clarity from the Government about when and how often notices and demands will be made of banks, everyone is currently in the dark about how much of an additional workload this will mean for financial institutions. It is therefore entirely feasible that these institutions, which are, as we always need to remember, designed and operated to make money, could simply choose not to take the risks, impacting people who have not necessarily done anything wrong in the process. If we empower government to work more closely with banks to verify eligibility, recover funds and issue deductions, we must be equally mindful of the unintended consequences for those who sit at the margins of our financial system.

We appreciate that this amendment does not seek to obstruct or weaken the Bill. Quite the opposite—it offers the Government a constructive, concrete mechanism for assessing whether our enforcement framework is functioning in a way that is fair, proportionate and inclusive. This is an important measure, and I am sure that noble Lords across the Committee who have raised concerns about this issue will be somewhat reassured if the Government commit to undertaking a review as set out in this amendment.

We have heard Ministers reassure us that these powers will be used carefully and that the risk of harm is low. This amendment provides an opportunity to put those assurances to the test—not through speculation, but through evidence. Twelve months after this Bill is enacted, the independent reviewer would be tasked with producing a report examining the extent to which the measures we have passed are having an adverse impact on those already struggling to access or maintain financial stability.

In conclusion, this is not a burdensome ask; it is a safeguard. It would ensure that, as we work to strengthen our systems against fraud, we do not inadvertently erect new barriers for those who are financially vulnerable already. It would give the House and the other place the opportunity to revisit and respond to those findings, if and when action is needed. I therefore urge the Minister to consider this proposal seriously and to work with colleagues to ensure that the fight against fraud does not come at the cost of fairness or financial exclusion.

Public Authorities (Fraud, Error and Recovery) Bill

Debate between Viscount Younger of Leckie and Lord Vaux of Harrowden

Committee stage
Monday 16th June 2025 Grand Committee

[Lord Vaux of Harrowden (CB)]

My Lords, I have Amendment 89ZA in this group—I still do not understand the numbering system that the Public Bill Office uses.

Before I move on to that, I want to make a couple of comments on the two amendments that the noble Baroness, Lady Fox, just raised. I have to say that I am a bit cautious about Amendment 82, because if you tell everybody what the eligibility indications are, it becomes very easy to avoid them. There is also a massive, gaping loophole in the Bill, which is that it covers only one bank at a time. I do not know—I would be quite interested to understand from the noble Baroness—whether, having received data from individual banks, the DWP will be amalgamating and therefore will be able to track the sort of concept that, if you have £8,000 in this bank account and £8,000 in that bank account, that puts you up to the £16,000 that would trigger the eligibility indicator. But there is a gaping hole there and, if you publish everything you are looking for, it makes it so much easier to get around it. So I am a little cautious about that one.

I am much more sympathetic to at least the spirit behind Amendment 88. We had a long debate the other day around the issues of machine learning, bias, stereotyping and generalisation creeping into decision-making processes, and there is more to do in this Bill around the safeguards around the use of automated decision-making. I know that the noble Baroness will talk about the code of practice, but that is very specific. It requires a human element only where the decision could impact on benefit eligibility. So it does not include stepping into the next phase of an intrusive investigation using the powers in Clause 72, for example. So, whether or not Amendment 88 is the right way to go, there is definitely more that we need to think about in terms of safeguards around the use of algorithmic or machine learning—or AI or whatever—trawling through this, and a number of amendments later cover the same ground a bit.

Amendment 89ZA is very simple. It simply says that applicants for benefits should be informed at the time of their application that information relating to their bank accounts may be provided to the Secretary of State, and that people who are already in receipt of benefits are informed within three months of the commencement of the Bill.

The information-gathering powers that this Bill creates are a significant step, and are carried out without any suspicion of fraud, so it must be appropriate and fair that people are informed that their bank account information may be provided to the department. I cannot actually see any reason for not accepting this one; it would improve transparency and also make those who are considering fraud think twice if they are being told that their bank account details could be accessed. In fact, I mean “provided”, because technically they are not accessed but provided.

As a general principle, as set out in our data protection laws, people have the right to know where their data is going and how it is being used, and I really cannot see any reason why this situation should be any different.

[Viscount Younger of Leckie (Con)]

My Lords, I wish to speak broadly in support of Amendment 82 in the name of the noble Baroness, Lady Fox of Buckley. This amendment goes to the heart of something that we should all be able to agree on: that the public have a right to know the rules by which they may be judged and that those tasked with making assessments, such as banks, should not be left to act on unclear or unpublished guidance.

This amendment would require the Secretary of State to publish the eligibility indicators that banks are expected to use when checking their customers’ accounts under the new regime. In plain terms, it asks the Government to set out clearly, before these provisions are enforced, what criteria are being used to determine eligibility. This chimes with the opening remarks made by the noble Baroness, Lady Fox. It is difficult to see how a system of such potential consequence to individuals and to financial institutions alike can be implemented fairly, if the basis on which it operates is not published and understood in advance.

We have heard throughout the debates on this Bill about the need to balance effective fraud prevention with the protection of individual rights, proper due process, and clarity for institutions involved. Amendment 82 speaks directly to that balance. If banks are to play a front-line role in identifying accounts or individuals under suspicion, they must be given unambiguous and publicly available guidance to avoid the risk of overreach, error or unjustified intrusion. We cannot have a system where accounts are flagged or actions taken on the basis of indicators that are withheld from public view. That would be both untransparent and unjust.

We should not legislate for a regime that affects people’s access to their financial resources or that places duties on banks to act in quasi-investigative ways, without knowing exactly how those judgments are to be made. This is not a wrecking amendment—it does not oppose the broader framework of the Bill. It merely insists that, before new powers are exercised, the public and partners involved in delivery know the criteria. That is not too much to ask. In fact, it is the very least we should expect in a system rooted in fairness and good governance. Again, this echoes the remarks made by the noble Baroness, Lady Fox.

To pick up on remarks made by the noble Lord, Lord Vaux, there is a balance to be struck between not giving too much away in the interest of transparency so that fraudsters are given fuel to manipulate the system. Can the Minister say where that balance should be struck, as balance there must be?

Similarly, I speak in support of Amendment 88, also in the name of the noble Baroness, Lady Fox. I believe it represents a sensible and timely addition to the schedule. As we have discussed throughout the passage of this Bill, the use of data and automated decision-making, particularly through algorithms, is becoming an increasingly central feature of fraud detection and eligibility verification. That in itself is not a problem; it is a reflection of the complexity and scale of modern fraud threats. But it also means that we need clear and consistent standards for how these tools are developed, deployed and scrutinised. The cautionary tale from the Netherlands, highlighted by the noble Baroness, Lady Fox, is very much noted. I am sure that the Committee has noted it.

This amendment goes to the heart of the need for standards. By requiring the code of practice to include mechanisms for the scrutiny of algorithms used by those in receipt of eligibility verification notices, typically banks, it creates a shared framework for oversight. This is particularly important when algorithms are applied across several discrete institutions, each of which may have slightly different internal systems, standards or even risk profiles. Without a common baseline, we risk inconsistency, a lack of accountability and potential harm to individuals through opaque or poorly calibrated processes.

Moreover, new sub-paragraph (g) proposed in this amendment rightly extends that principle of scrutiny to the powers themselves, and we must also be willing to assess whether they are effective and 100% secure in their specified and sole objective. We must also be willing to assess whether they are proportionate to the outcomes that they set out to deliver. In short, this is a practical amendment rooted in the principles of clarity, consistency and continuous improvement—perhaps part of the test and learn. It does not obstruct the Government’s goals; it helps to make them more credible and accountable, we believe.

I express my support for Amendment 89ZA in the name of the noble Lord, Lord Vaux of Harrowden, which I believe strikes a careful and important balance between transparency, accountability and the effective operation of the powers contained in this schedule. At its core, this amendment does something quite simple but significant: it ensures that individuals applying for or receiving relevant benefits are clearly informed—that is, in writing—that information relating to their bank accounts may, under certain circumstances, be shared with the Secretary of State. This is a matter of basic transparency and fairness. I note that this is being proposed at the time the benefit is applied for, and I might describe it—perhaps putting words into the mouth of the noble Lord, Lord Vaux—as part of an induction process when one applies for any benefit in scope. In other words, fair warning is given that a benefit that comes from the taxpayers’ pocket has responsibilities attached to it. Perhaps this should also be placed in the code of practice, and I ask that question of the Minister.

If we are to entrust public authorities with powers of this magnitude—which allow for sensitive financial data to be accessed without the individual’s active consent—surely it is right that we also commit to informing individuals of the possibility that those powers might be used. This is not about compromising investigations or alerting fraudsters in advance; it is about ensuring that people understand the system that they are entering and can act responsibly and lawfully within it. Providing this information up front reinforces personal responsibility. As I said earlier, it says clearly to the individual, “If you are claiming public money, there is a legitimate expectation that your eligibility may be subject to verification”. It allows claimants to know the rules of engagement in advance, and it ensures that they cannot claim later to have been caught unawares.

At the same time, I recognise, and I think the noble Lord does as well—I hope he does—that this amendment must not inadvertently encourage more sophisticated methods of deception. It is a fine line to walk, and this chimes with my earlier question to the Minister. We must not turn transparency into a user manual for fraud, but I believe that this amendment is framed carefully enough to avoid that risk. It does not disclose when, how or under what criteria information will be requested—only that it may be. That is, I believe, a proportionate step. Ultimately, this amendment supports the legitimacy of the wider regime, and I therefore support it and hope that the Government will see it as a constructive addition to the schedule.