Winter Fuel Payment
Andrew Western Excerpts(1 week, 2 days ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
I am pleased to respond to this important debate. This topic affects millions of pensioners up and down our country. It is one we have debated many times in recent months, and it is right that we do so. Many right hon. and hon. Members have made important contributions that I want to acknowledge.
My hon. Friends the Members for North East Derbyshire (Louise Jones), for Gateshead Central and Whickham (Mark Ferguson) and for Wirral West (Matthew Patrick), among others, talked about the inheritance that we as a Government faced when we came into office and the difficult decisions that have arisen as a result, and they were right to do so. I particularly commend my hon. Friend the Member for Makerfield (Josh Simons), who talked about the work he is doing in his community to drive pension credit take-up. I know that Members across the House are doing the same, and I thank them for doing so.
As my hon. Friend the Pensions Minister set out earlier, the decisions we have made have not been easy, but we have made sure that we have protected those pensioners who need support the most. Winter fuel payments will continue to be paid to pensioner households in England and Wales with someone receiving pension credit or certain other income-related benefits. They will continue to be worth £200 for eligible households or £300 for eligible households with someone aged 80 or over. The majority of those payments—over £1 million—were paid before Christmas.
Means-testing the winter fuel payment was a choice we had to make to protect the most vulnerable pensioners, while doing what is necessary to repair the public finances after 14 years of the wrecking ball that is the Conservative party. It is the difficult decisions we have taken that mean this Government are able to provide much-needed additional investment in the NHS, which benefits us all, including pensioners who rely on these services. The Government are working hard to reform the NHS in England through the 10-year health plan to build a health service that is fit for the future.
Wendy Morton
Does the hon. Gentleman not accept that, while he may well be putting money into the NHS, which is great, his policy towards pensioners, based on the statistics we have seen, means that more pensioners are going into the NHS and putting more pressure on the service? It just does not make sense.
Andrew Western
I dispute the right hon. Lady’s statistics. She is right to highlight that there has been an increase in hospital admissions among over-65s, but that is entirely in line with the statistics for people entering hospital in other age cohorts. That is actually a result of the collapse of the NHS on the Conservatives’ watch, which means that A&E is the only option for so many people.
As I was saying, as a first step at the autumn Budget, the Government announced a £22.6 billion increase in day-to-day health spending in England and a £3.1 billion increase in the capital budget over this year and the next. But we know that even with our long-term efforts to rebuild critical public services, pensioner poverty is a very real concern.
Andrew Western
I will make some progress first.
There will always be those who, for whatever reason, have been unable to make sufficient provision for their retirement. The benefit system provides a vital safety net for those on low incomes who need support the most. This, of course, includes help through pension credit, worth on average £4,300 a year and which tops up income, as well as unlocking access to additional support and benefits. We know there are still low-income pensioners who are not claiming pension credit but are eligible to do so and we want everyone to get the support to which they are entitled. That is why, since September, we have been running the biggest ever pension take-up campaign. Around 1.4 million pensioner households receive pension credit, but too many have been missing out. Thanks to our campaign, we have seen 235,000 pension credit applications in the 30 weeks since the end of July last year, an 81% increase on the comparable period in 2023-24. That has led to almost 50,000 extra awards over the same period.
Kirsty Blackman
I wonder if the Minister can ask his friend, the hon. Member for Makerfield (Josh Simons), to get in touch with me about how he managed to find out where the 5,000 pensioners are that he was able to write to. I have tried to get that information so I can write to pensioners and tell them about pension credit, but it has not been available anywhere. If he could ask his friend to write to me, I would really appreciate it.
Andrew Western
I thank the hon. Lady for her intervention. I am sure she is capable of contacting my hon. Friend the Member for Makerfield herself, but I recall that he did mention that he was working closely with his local authority. I am sure it has been able to assist in that campaign, which he described as a partnership rather than his own work, to drive take-up in his area.
As detailed earlier by the Pensions Minister, we are directly targeting all pensioners who make a new claim for housing benefit, bringing together the administration of pension credit and housing benefit, and we are introducing new research on the triggers and motivations that encourage people to apply for pension credit, to guide future policymaking.
I echo the Pensions Minister’s remarks on the triple lock. It is worth repeating that over 12 million pensioners will benefit from our commitment here. Over this Parliament, up to and including 2029-30, the OBR forecasts that Government spending on the state pension will rise by over £31 billion. And there is lots of other support too, including the warm home discount and the household support fund, available to pensioners.
I will turn now to some of the other specific points raised during today’s debate. Several Members raised the delays in pension credit processing. It is important for me to recognise here the sheer volume of applications the Department received during this period. We understand that pensioners expect their applications to be processed quickly and accurately, which is why we deployed over 500 extra staff to process the huge increase. The latest statistics also show a positive picture: outstanding claims have reduced from 85,500 in mid-December to just 33,700 by 23 February, which is in line with the Department’s usual number of claims awaiting processing.
Some hon. Members raised the issue of an impact assessment at the time of the policy decision. In line with the requirements of the public sector equality duty, an equality analysis was produced as part of the ministerial decision-making process. That was published on 13 September and placed in the House of Commons Library. It assessed the effects on individuals and households according to protected characteristics set out under the Equality Act 2010. They do not include impacts on the NHS.
Other hon. Members have quoted figures on the poverty impact of the changes to winter fuel payments. I simply note that yes, internal Government modelling was produced as part of routine policy advice. Given the interest from the Work and Pensions Committee and the public interest, the Department published this modelling for transparency in a letter to the Select Committee in November. However, it is essential to note that this modelling is subject to a range of uncertainties, which should be taken into account when interpreting the results, and that it does not take into account any impact of the measures we are taking to increase pension credit take-up and ensure pensioners get the benefits to which they are entitled.
Harriet Cross
My understanding is that the impact assessment showed that about 100,000 pensioners would be put into poverty. I was just wondering what range either side of that figure would be acceptable to the Minister.
Andrew Western
What I would say to the hon. Lady is that I would never want to see those numbers increase, but that number is significantly better than the 300,000 pensioners who went into relative poverty under her Government.
To those asking about Government action with respect to energy costs, I say that the Government recognise that affording energy bills is a struggle for many and that energy debt is rising. The Government have continuous engagement with energy suppliers and have discussed the support they have in place to support vulnerable consumers, including pensioner households. We are continuing to deliver the warm home discount for eligible low-income households and have recently published a consultation on its expansion, which would bring around 2.7 million more households into the scheme, pushing the total number of households receiving the discount next winter up to around 6 million.
I will turn briefly to some of the contributions from Members on the Conservative Benches, and in particular from the shadow Secretary of State for Work and Pensions, who, interestingly—given the description used by the hon. Member for South Leicestershire (Alberto Costa) of this side of the House—I felt expressed faux outrage at this decision. It is rich from a party that, as I said, pushed 300,000 pensioners into relative poverty, made pitiful efforts to address pension credit take-up, made a 2017 manifesto commitment to means-test the winter fuel payment and let the value of the winter fuel payment fall by around 50% during its time in government.
The shadow Secretary of State for Work and Pensions went on to make repeated reference to Labour Members’ consciences, which was relatively offensive, but nothing compared with being called the “nasty party” by the hon. Member for South Leicestershire. I will not accept those sorts of attacks from the Conservatives—the party of Downing Street parties, the party of the inhumane Rwanda scheme, and the party that drove so many to food banks. My conscience is clear, Madam Deputy Speaker; it is appalling to imagine that theirs is the same after what they did to this country over 14 years.
I listened very carefully to—[Interruption.] I am being chuntered at from a sedentary position about the household support fund. I remind the shadow Secretary of State that it was not fully funded by the Conservatives on a multi-year basis, and it is this Government who have provided that certainty to local authorities.
I listened very carefully to the speech from the shadow Health Secretary and, indeed, the more than dozen speeches from Opposition Members, and I am still no clearer on what their policy actually is. We had one Member standing up and saying means-test, another standing up and saying tax the winter fuel payment, but neither shadow Secretary of State present bothered to stand up and tell us what the Conservatives’ policy is. If they want to stand up now and say that they would reverse this policy decision, I would be happy to give way to either of them. Feel free. Their silence says it all, Madam Deputy Speaker.
We have made the hard choices necessary to bring the public finances back under control after 14 years of Tory misrule.
Ben Obese-Jecty
At what point would the uptake of pension credit eliminate the savings from cancelling the winter fuel payment? At what number would the uptake overtake that payment?
Andrew Western
We have never suggested that they would, and the Minister for Pensions addressed that in his opening statement. The savings put forward do take account of that. I have to say that, in accepting that intervention, I was hopeful that, finally, one Tory would come forward with an actual policy in this area—I would say that I am disappointed, but it is only to be expected. Pensioner households who need support the most will continue to get winter fuel payments. We are getting more and more people on to pension credit, so that they can get winter fuel payments and increase their weekly income.
This motion calls for an apology. The only people who should be giving an apology to pensioners and to this country are those in the Conservative party, for the mess that they left behind.
Question put.
Public Authorities (Fraud, Error and Recovery) Bill (Twelfth sitting)
Andrew Western ExcerptsTuesday 18th March 2025
(1 week, 3 days ago)
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Steve Darling (Torbay) (LD)
It is a pleasure to serve under your chairmanship, Mr Western. I support the new clause tabled by the hon. Member for Brighton Pavilion. On several occasions over recent weeks, Ministers have gone on the record to describe the DWP and the benefits system as a “broken” system. It is extremely helpful that the hon. Member highlighted the impact that that can have on people who often have chaotic lives and are on the edge.
I have served the people of Torbay in elected office for 30 years. Over that time, I am saddened that, particularly with the recent cost of living crisis, the levels of destitution have become worse, as I hear from people who provide food banks and other support for the people in need in Torbay. Whether it is Scope or the Joseph Rowntree Foundation, many of those good organisations highlight to policy developers that the levels of benefits are really tough and the levels of destitution in our communities are higher than they have been for many years. Therefore, I would welcome some thoughts from the Minister about this proposal, because sadly, recovery will often drive people into destitution and, as highlighted by the hon. Member for Brighton Pavilion, into severe ill health.
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
It is a pleasure to serve under your chairship once again, Mr Western. Before I come to my general comments on the new clause from the hon. Member for Brighton Pavilion, I will attempt to respond to some of the questions that we have heard.
On how we can assure ourselves that people could reasonably have known, this assessment is made by our specialist investigation teams, who do this day in, day out. There is a balance of probabilities that they would apply to instances such as that. It is a process that has been in place for years. On whether an appointee would be liable for an overpayment, yes, they would. How much is official error? It is approximately 0.3% of all benefit payments. About £800 million is the most recently available annual figure.
On how a repayment plan is agreed—this goes to the point that the hon. Member for Torbay made also—we again have a specialist team who calculate this. We have a vulnerability framework should that be required. All repayment requests are done on an affordable basis. As we heard last week, the specifics around the new debt recovery power make attempts, throughout the process, to agree an affordable repayment plan. The limits that the Bill would put in place would be not more than 40% in the case of an ongoing deduction and 20% in cases of error. On the point about recovery causing destitution, which the hon. Gentleman also made, he will have noted that towards the end of last year, the Department announced its new fair repayment rates, reducing the amount of deduction that can be made from benefits down to 15%. As I have just outlined, further provision is made where we are looking to take these new powers to deduct directly from bank accounts.
To return to the point that the hon. Member for South West Devon made about prevention of overpayments, the eligibility verification measure is intended to help us to identify fraud, particularly in relation to capital, and people who have been abroad longer than they should be, in terms of aligning that with their eligibility for benefits, and we think that it will enable us to identify error overpayments sooner as well. Of course, people are regularly reminded to update their circumstances also. A range of mechanisms are in place already to assist with the identification of overpayments. We are not complacent. We know that there are too many overpayments through official and claimant error, just as there is far too much fraud in the Department. That is why we are taking many of the steps identified and outlined in this Bill.
Before I turn to my comments about new clause 1 specifically, let me just make a correction to something that I told the Committee last week. I said that the minimum administrative penalty that can be offered, which receives a four-week loss of benefit, is £65. I misspoke and I would like to take this opportunity to correct the record and state that the amount is £350.
New clause 1 seeks to amend existing recovery legislation, to limit when overpayments of universal credit and new-style benefits caused by official error could be recovered. Specifically, those official error overpayments would be recoverable only where the claimant could have been reasonably expected to realise they were not entitled to the overpayments in question at the time they received them. This Government are committed to protecting taxpayers’ money and ensuring that we can recover in a fair and affordable way money owed. The debt recovery powers in the Bill apply to all debt that Parliament has determined can be pursued. Section 71ZB of the Social Security Administration Act 1992, introduced in the Welfare Reform Act 2012 under the coalition Government, made any overpayment of universal credit, new style jobseeker’s allowance and employment and support allowance in excess of entitlement recoverable. That includes overpayments arising as a result of official error.
Official error can arise for a number of different reasons. Some errors, for example, occur as a result of the flexibility of the universal credit system. Unlike the tax credit system it replaces, UC works on a monthly cycle of assessment periods. It is to be expected that on occasion, corrections or changes take place over assessment periods. The system quickly rectifies these “errors” in the next assessment period and it is vital that this functionality is maintained. In these instances, the customer is not worse off as, over the course of subsequent assessment periods, they receive the correct amount on average. It is also helpful to explain that under existing departmental processes, customers have the right to request a mandatory reconsideration of their benefit entitlement as well as the amount and period of any subsequent overpayment. Following that, they can appeal to the first-tier tribunal, should they still disagree with the Department’s decision.
We recognise that overpayments, however they arise, cause anxiety for our customers. The Department’s policy is therefore to recover debts as quickly and cost effectively as possible without causing undue financial hardship to customers. DWP’s overall approach to recovery balances the need to protect public funds by maintaining recovery levels, while providing a compassionate service to all customers regardless of their circumstances. The Department’s policy is therefore to agree affordable and sustainable repayment plans. The debt recovery measures in the Bill, however, are last-resort powers for debtors who are no longer on benefits or in pay-as-you-earn employment and are persistently evading debt recovery. These powers apply across all types of debt.
All our communications to our customers signpost to independent debt advice and money guidance, and we heard from the Money and Pensions Service in our evidence sessions about how strong the partnership working between the Department and debt sector is. DWP is committed to working with anyone who is struggling to repay their debt and customers are never made to pay more than they can afford. Where a customer feels they cannot afford the proposed rate of recovery, they are encouraged to contact the Department to discuss their repayment terms. The rate of repayment can be reduced or recovery suspended for an agreed period, and the Department may also consider refunding the higher deduction that has been made. The Department’s overpayment notifications have been updated to make sure customers are aware they can request a reduction in their repayment terms. In exceptional circumstances, the Department has the discretion to waive recovery of the debt, in line with the Treasury’s “managing public money” guidance. In doing so a range of factors are considered including the circumstances in which the overpayment arose.
Finally, I have listened to and take seriously the concerns from the hon. Member for Brighton Pavilion. As the Committee is aware, the Minister for Social Security and Disability is looking at the policy design of universal credit to ensure outcomes that tackle poverty and help people to manage their money better. I will pass the concerns raised by the hon. Lady on to him, but having outlined the reasons against it, I will resist new clause 1.
Siân Berry
I thank the Minister for taking seriously the concerns I raised. I will not press the new clause further today, but I hope that it will be looked at seriously in the next stages of the Bill, and that we can discuss this further in the House. I therefore beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 2
Offence of fraud against a public authority
“(1) A person who—
(a) commits,
(b) assists or conspires in the committal of, or
(c) encourages the committal of
fraud against a public authority commits an offence.
(2) A person who commits an offence under subsection (1) is liable—
(a) on summary conviction, to imprisonment for a term not exceeding the general limit in a magistrates’ court or a fine (or both);
(b) on conviction on indictment, to imprisonment for a term not exceeding 7 years.”—(Rebecca Smith.)
Brought up, and read the First time.
The Chair
I understand, although I was not present at the time, that all the declarations were made at the time of evidence being presented to the Committee. I thank the hon. Member for his point of order.
Andrew Western
I would like to understand how the Opposition Front-Bench team consider new clause 15 to make any provision that is not already in the Fraud Act 2006 or the Serious Crime Act 2007, which already make it an offence to encourage or assist an offence including fraud. I stress that because I am particularly concerned about sickfluencers, to whom the hon. Lady referred, but I fail to see how new clause 15 offers any provision not contained in that legislation already. It does not mention at any point that it would extend powers to what happens online, presumably because—or I can say actually because—online sickfluencers would already be covered by that legislation. I understand the intent. We have a problem with sickfluencers that we need to deal with, but I would be incredibly appreciative to understand how the new clause offers anything that is not already in that legislation.
Rebecca Smith
I beg to move, That the clause be read a Second time.
We have tabled the new clause to require the Secretary of State to publish the results of any pilot schemes run with banks to test the provisions of chapter 1 of part 2 of the Bill. We have already discussed how banks will be required to undertake ongoing monitoring work to collect the relevant information as part of eligibility verification. The impact assessment states that two proofs of concept have taken place, including one in 2017, with short summaries provided of each. Given the scale of what is being asked of the banks, however, as well as how technology has moved on in the past eight years, it is reasonable to assume that pilots will also be undertaken to ensure that the system works properly before it is fully rolled out. Can the Minister confirm that this will be the case?
In the interest of transparency, we also need to see the results of the pilots, which is why we have tabled the new clause to ensure that they are published within three months of the Act coming into force. It is regrettable that we needed to table the new clause but, as we have said several times throughout the Bill’s passage, and as we heard from witnesses before the Committee, it is extremely difficult to judge how the legislation will work in practice without seeing the code of practice and understanding what will be required of the banks. As UK Finance said in oral evidence:
“Much will depend on the mechanism through which banks will be required to share the information, the frequency of the information notices, whether the criteria we are required to run the checks against change over time and other factors that will influence how much capacity is required from the banking sector. As I say, at this stage it is challenging to do a detailed assessment.”––[Official Report, Public Authorities (Fraud, Error and Recovery) Public Bill Committee, 25 February 2025; c. 48, Q85.]
The practical implications of how to implement the Bill are not currently clear to the banks.
We also discussed the consequences of getting this wrong. As UK Finance also said in evidence,
“under the Bill banks responding to an information request or a direct deduction order, would have to consider whether there is some indication of financial crime that under POCA requires them to make a suspicious activity report. We think it is simpler to remove that requirement, not least because where there is a requirement to make a suspicious activity report there is a requirement to notify the authorities; clearly, there is already a notification to the authorities when complying with the measure. Removing that requirement would avoid the risk that banks must consider not only how to respond to the measure but whether they are required to treat that individual account as potentially fraudulent.”––[Official Report, Public Authorities (Fraud, Error and Recovery) Public Bill Committee, 25 February 2025; c. 49, Q89.]
The banks are well versed in dealing with fraud, but not so much with error. We need reassurance that there are clear expectations of the banks in delivering their duties under the Bill, that those are compatible with existing obligations regarding financial crime, and that the banks can resource them.
Andrew Western
In my view, the new clause is simply not needed. As the hon. Lady said, to demonstrate the feasibility and potential of the eligibility verification measure, the DWP conducted two proofs of concept, in 2017 and 2022, and the results have been published in the impact assessment for the Bill. Further information on the effectiveness of the measure will, of course, be available following the independent overseer’s annual review and report. No pilot schemes have or will be conducted on information notices specifically, as they are an extension of existing powers. On that basis, I resist new clause 5.
Rebecca Smith
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 7
Annual reporting of amounts recovered
“(1) The Secretary of State must publish an annual report detailing the amount of money which has been recovered under the provisions of this Act.
(2) A first report must be published no later than 12 months after the passing of this Act with subsequent reports published at intervals of no more than 12 months.”—(Rebecca Smith.)
Brought up, and read the First time.
Rebecca Smith
I beg to move, That the clause be read a Second time.
The new clause would require the Secretary of State to publish an annual report detailing the amount of money recovered under the provisions of the Bill, with the first report to be published within 12 months of its passage. The main purpose of the Bill is to crack down on error and fraud, and we support that aim. It is reasonable to ask for transparency to understand exactly how much money has been recovered thanks to the measures in the Bill, and to ensure that it is working as hoped. If it is not, further action will be needed, but at least we would know, and a discussion could be had instead of the issue being brushed under the carpet.
An annual report allows the Department enough time to produce it without being an administrative burden, while ensuring that it remains relevant and up to date. Given the large amount of money lost to fraud and error, it is important that we are all able to hold the Government to account for how effectively they are recovering it.
Andrew Western
I share and appreciate the hon. Member’s concern and interest in delivering the proposed benefits of the Bill, including the effective recovery of debt. The Bill delivers on our manifesto commitment that this Government will safeguard taxpayers’ money and not tolerate fraud or waste anywhere in public services.
Turning first to part 2 of the Bill, I do not think the new clause is necessary, given the existing routes for external scrutiny and reporting on the DWP’s fraud and error activities, including the new debt recovery powers. The Office for Budget Responsibility provides independent scrutiny of the Government’s costings of welfare measures. The Department estimates that, over the next five years, the EVM will save £940 million and the debt recovery measure £565 million. Those estimates have been certified by the OBR. In total, the Bill is estimated to deliver benefits of £1.5 billion over the next five years. In the published impact assessment, the DWP committed to monitoring and evaluation on part 2 of the Bill, including the new powers to recover debt and the EVM.
Although I understand that the hon. Member is particularly interested in scrutiny of the money recovered under the Bill, I remind the Committee that the Government have committed to the biggest welfare fraud and error package in recent history. The total DWP fraud, error and debt package, with savings from the Bill and other Budget measures, is worth £8.6 billion over the next five years.
In its annual report and accounts, the DWP already reports on the savings made from its fraud and error activities, including savings made from “detect” activity across our counter-fraud and targeted case review teams. In addition, we report on our debt recovery totals and debt stock. I think the annual report and accounts, in particular, will give the hon. Member the information in which she is interested. The Department also publishes annual statistics on the monetary value of fraud and error, including various breakdowns by benefit and type. That is another mechanism by which we can see trends over time and ensure transparency for the public.
Turning to part 1 of the Bill, the PSFA already has a published commitment in its mandate to produce an annual report that makes transparent the levels of fraud in Government and the latest fraud and error evidence base, and an annual report on its performance. Recoveries will be published in the annual report. Paragraph 12 of schedule 2 to the Bill also requires:
“As soon as reasonably practicable after the end of each financial year the PSFA,”
when set up as a statutory body,
“must prepare a report on the exercise of its functions during that financial year.”
Recoveries will be published as part of that.
For the reasons I have outlined, I resist the new clause.
Rebecca Smith
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 8
Publication of an Anti-Fraud and Error Technology Strategy
“(1) The Secretary of State must, within six months of the passing of this Act, publish an Anti-Fraud and Error Technology Strategy.
(2) An Anti-Fraud and Error Technology Strategy published under this section must set out—
(a) how the Government intends to use automated technologies or artificial intelligence to tackle fraud against public authorities and the making of erroneous payments by public authorities, and
(b) a series of safeguards to provide for human oversight of decision making that meet the aims set out in subsection (3);
(c) how rights of appeal will be protected;
(d) a framework for privacy and data sharing.
(3) The aims of the safeguards in subsection (2)(b) are—
(a) to ensure that grounds for decision making can only be reasonable if they are the result of a process in which there has been meaningful human involvement by a human of adequate expertise to scrutinise any insights or recommendations made by automated systems,
(b) to make clear that grounds cannot be reasonable if they are the result of an entirely automated process, and
(c) to ensure that any information notice issued is accompanied by a statement—
(i) setting out the reasonable grounds for suspicion that have been relied on, and
(ii) confirming that the conclusion has been formed on the basis of human involvement.”—(Rebecca Smith.)
Brought up, and read the First time.
Rebecca Smith
I beg to move, that the clause be read a Second time.
The new clause would require the Secretary of State to publish an anti-fraud and error technology strategy within six months of the Act’s passage. That must include: how the Government intend to use automated technologies and AI to tackle fraud, subsection (2)(a); safeguards to ensure human oversight of decision making, subsection (2)(b); protection of rights of appeal, subsection (2)(c); and a framework for privacy and data sharing, subsection (2)(d).
Members might be asking themselves why we tabled the new clause. In part, it is based on the evidence we received. In written evidence, the Public Law Project expressed concern that, although the impact assessment, the human rights memorandum and the statements from the Secretary of State and the Minister for transformation, the hon. Member for Stretford and Urmston, on Second Reading state that a final decision on benefit eligibility will always involve a human agent, this is not reflected in the Bill itself. In response to the Public Law Project’s concerns, the new clause would provide an audit of technology systems used to tackle fraud, ensuring accountability while addressing the risks posed by automation in decision making.
A report published by the Treasury in 2023, “Tackling fraud and corruption against government”, said:
“Public bodies can better protect themselves…by sharing data and intelligence with other public bodies and working together.”
We therefore believe the technology strategy clause recognises that sharing data is beneficial to stopping and recovering fraud, but includes additional provisions that audit its use.
The strategy must include: how the Government intend to use automated technologies or artificial intelligence to tackle fraud and error against public bodies; what safeguards exist for human oversight of decision making; how rights of appeal will be protected; and a framework for privacy and data sharing.
The safeguards must ensure that grounds for decision making are reasonable only if they are the result of a process in which there has been meaningful involvement by a human of adequate expertise to scrutinise any insights or recommendations made by automated systems. They must also make it clear that grounds cannot be reasonable if they are the result of an entirely automated process. To ensure this, any information notice issued must be accompanied by a statement setting out the reasonable grounds for suspicion that have been relied on, and confirming that the conclusion has been formed on the basis of human involvement.
We know that AI and other technologies have huge potential to improve efficiency and productivity, and they should be used where appropriate, but we cannot rely on it yet to the exclusion of people and human judgment. The strategy we propose would ensure that those points were adequately considered by the Department, ensuring that the taxpayer receives value for money while safeguarding claimants through the decision-making process.
Andrew Western
I thank the hon. Member for tabling the new clause. The Government recognise the opportunities that AI and machine learning can provide, while also understanding the need to ensure they are used safely and effectively. In January 2025, the Government outlined their response to the AI opportunities action plan led by Matt Clifford, which was commissioned by my right hon. Friend the Secretary of State for Science, Innovation and Technology. The plan outlined 50 recommendations for how the Government can leverage AI, including recommendations to improve access to data, to make better use of digital infrastructure and to ensure the safe use of AI.
Under the leadership of the Prime Minister and the Secretary of State for Science, Innovation and Technology, we have endorsed this plan, and the Government are taking forward those recommendations. As the Government work to implement the action plan’s recommendations, I do not believe that the separate anti-fraud and error technology strategy proposed by the new clause is necessary. I believe the new clause would cut across the work being taken forward under the action plan, so I reject the amendment.
As technology advances, the use of AI and machine learning will play a crucial role in detecting and preventing fraudulent activities. The Government want to make use of technology and data to tackle fraud, as the Department has a responsibility to ensure that fraud is minimised so that the right payments are made to the right people. The Government remain committed to building our AI capability, and at DWP we will take advantage of the opportunities offered by AI while ensuring it is used appropriately and safely.
Rebecca Smith
Sorry, I should have said this earlier. The new clause would make the Government’s AI strategy a statutory requirement, instead of a manifesto commitment not written into law. That is important to us because, in the case of fraud and particularly benefit fraud, we are dealing with individual people. We want to make sure that we do not inadvertently penalise the wrong people or apply something that is disproportionate. A lot has been said about ensuring proportionality and reasonableness.
I am interested in the Minister’s reflections on where else in the strategy something is applied as personally to potentially vulnerable groups of people, thereby suggesting that we do not need this protection to ensure that people are not inadvertently penalised when we use this legislation to tackle the fraud they are committing.
Andrew Western
That is a reasonable question, and clearly the AI framework is not specific to vulnerable groups in the way that the hon. Lady sets out. Decisions regarding benefit entitlement or payments within the Department are made by DWP colleagues who always look at the available information before making a decision. I would not want to make an amendment to restrict that to only the activity within this Bill; I would want it to be Departmental wide.
As I have set out a number of times at every stage and in every area of this Bill, a human is involved in decision making. There is no plan to change that. I can understand the hon. Lady’s anxiousness to see that set out in legislation, but I think it would create an anomaly between the practices within this Bill and in the Department more broadly. For instance, it is outside the scope of this Bill for a human to complete the vulnerability framework when looking at somebody in financial need who has an overpayment. I would not want to make a distinction between these powers and the rest of the Department's activities. If we were to have a broader debate, I would be happy to engage with the hon. Lady on that basis, but I would not want to create a “two-tier”, for want of a better word, description within the Department.
At every stage of model development, as we bring forward the AI opportunities action plan and our work in the AI and tech space, we ensure that checks, balances and strong safeguards are in place. I am proud of our commitment to use AI and machine learning in a safe and effective way.
To provide further assurances to Parliament and the public about our processes, we intend to develop fairness analysis assessments, which will be published alongside our annual report and accounts. These will set out the rationale for why we judge our models to be reasonable and proportionate. This reporting commitment on our fairness analysis assessment further negates the need for the new clause.
Finally, the hon. Lady mentioned the new clause’s role in ensuring reasonable grounds of suspicion when investigating fraud. I remind the Committee that, under the information gathering powers, the DWP may request information only where an authorised officer considers that there are reasonable grounds to suspect a DWP offence and that it is necessary and proportionate to obtain that information. Again, a human is fully baked into the process.
The changes made by the Bill will be reflected in the new code of practice. Updated mandatory training will be provided for staff, who will be accredited to use these new powers. Of course, with the eligibility verification measure in particular, but running throughout the Bill, the principle of independent oversight is very much in place. I hope that will provide the hon. Lady with the necessary information to show that the Government will use the information gathering powers only where there is a reasonable suspicion of fraud, and that this will have considerable human involvement. I agree that there is perhaps a broader conversation to be had about this at an appropriate time.
Rebecca Smith
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 9
Impact of Act on vulnerable customers
“(1) The Secretary of State must, within six months of the passing of this Act, lay before Parliament an assessment of the expected impact of the Act on vulnerable customers.
(2) For the purposes of this section, “vulnerable customers” means someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.”—(Rebecca Smith.)
Brought up, and read the First time.
Siân Berry
I have a lot of sympathy with both new clauses. It is really important that we look closely, as we are mandated to do, at the impact of the Bill on the people whose examples have been raised throughout the debate. The Minister should answer the questions asked by hon. Members, and if the Government will not do what is proposed in the new clauses, he should say what the Government will do instead.
Andrew Western
I begin with new clause 9, tabled by the hon. Member for South West Devon. I share her view that where the powers in the Bill are exercised, there should be a consideration of the vulnerabilities that customers may have, whether they be the customers of data holders such as banks or customers of Government —for example, DWP customers. However, I do not think that the new clause is necessary given the existing safeguards, oversight and reporting provisions in the Bill.
The Bill includes a number of protections for vulnerable people, including affordability considerations and protections for persons experiencing hardship, rights of review and appeal, and independent oversight. Those provisions have already been debated and considered by the Committee, so I will not labour the point, but I will comment on the provisions in the Bill for independent oversight, as they will play an important role here.
John Milne (Horsham) (LD)
It is a pleasure to serve under your chairmanship, Mr Western.
The DWP is making extensive and growing use of algorithms for investigation purposes. Without proper oversight, these systems threaten error, unfairness and bias, which could lead to wrongful debt collection. Our amendment therefore calls for an independent audit of these systems at least every six months, to ensure accuracy and fairness. The audit must be conducted by experts in data science, ethics and social policy with no ties to the DWP or system developers. True independence is key.
The audit look at issues such as accuracy, so whether the algorithms are correctly identifying overpayments; fairness, so whether they unfairly target certain groups or operate with bias; and, above all, transparency and accountability. After each audit, we suggest that a full report must be published, presented to Parliament within 14 days, and made publicly accessible. If serious flaws are found, the Secretary of State must respond within 30 days with a clear action plan to fix these issues. Overall, Liberal Democrats are positive about benefiting from new technology, but we do need to consider whether it offers help, not harm.
In the wider context, what work is the use of AI generating? There are already chronic staff shortages at the DWP, with 20% vacancy rates becoming routine. Disability Rights UK has commented that operational failures now permeate every layer of welfare administration. Fraud investigation teams therefore already lack capacity to address the annual £6.4 billion of overpayments. There are only four fraud advisers per regional office to handle cases flagged by frontline staff, which has created a bottleneck, so that very often 90% of suspected fraud cases go uninvestigated. In other words, one could suggest there is already plenty of fraud to investigate without trawling for more. This amendment ensures regular scrutiny, transparency and fairness. I urge the Minister to consider it.
Andrew Western
It is important that I begin by paying tribute to the millions of unpaid carers across this country. The Government recognise and value the vital contribution made by carers every day in providing significant care and continuity of support to family and friends, including pensioners and those with disabilities. The 2021 census indicates that around 5 million people in England and Wales may be undertaking some unpaid care, and many of us take on a caring role at some point in our lives. Like other hon. Members, through my postbag and at events across my constituency, I see much of the work carers do. Carers are fortunate to have some wonderful advocates, not only their MPs but organisations such as Carers UK, Carers Trust and the Learning and Work Institute, to name but three.
We inherited a system in which busy carers already struggling under a huge weight of responsibility had been left having to repay large sums of overpaid carer’s allowance, sometimes worth thousands of pounds. We needed to understand exactly what had gone wrong so we could set out our plan to put things right. This is why we launched an independent review of earnings-related overpayment of carer’s allowance. We were delighted that Liz Sayce OBE agreed to lead this review, which is now well under way; we anticipate receiving its conclusions this summer.
The review will investigate how overpayments of carers allowance have occurred, what can be done to best support those who have accrued them, and how to reduce the risk of these problems occurring in future, but we are not sitting back and just waiting for the outcome of the independent review. Right now, we want to make it as easy as possible for carers to tell us when something has changed in their life that could affect their carer’s allowance, so we will continue to review and improve communications. From this April, the weekly carer’s allowance earnings limit will pegged to 16 hours’ work at national living wage levels, so in future it will increase when the national living wage increases. The earnings limit will be £196 a week net earnings, up from £151 today. As a result, over 60,000 more people will be able to receive carer’s allowance between 2025-26 and 2029-30. That is the largest increase in the earnings limit since carer’s allowance was introduced in 1976.
As the Chancellor said at the Budget, we need to look at the current cliff edge earnings rules. A taper could further incentivise unpaid carers to do some work and reduce the risk of significant overpayments, but introducing a taper to carer’s allowance is not without challenges. It could significantly complicate the benefit, and significant rebuilding of the carer’s allowance system would be required. The DWP has begun scoping work to see whether an earnings taper might be a feasible option in the longer term, but any taper is several years away.
New clause 10 sets out four points. As I have mentioned, an independent review has been commissioned, its terms of reference have been published and it is well under way. It is anticipated that it will report its conclusions in the summer. Both the report from the independent review and the Government’s response will be published, and we will report to the House.
I disagree with the hon. Member for Torbay on two issues. It would not be responsible of us to commit in advance to implementing all and any recommendations from such a review, sight unseen. We need to consider them carefully. In addition, the proposed new clause, as I understand it, would not have the effect he desires. We would still be able to recover overpayments of carer’s allowance from benefits under the powers in the Social Security Administration Act 1992.
The new clause would prevent our recovering debts directly from bank accounts of those not on benefits or PAYE, which is one of the additional powers given in this Bill. Even if the new clause operated as intended, it would be disproportionate to suspend all recovery of carer’s allowance overpayments until after the review is concluded, as those with overpayments are already covered by the usual safeguards of appeal rights, affordable deductions and, in exceptional circumstances, waiver. Given the discrepancy this would create between those on PAYE and benefits and those with other forms of income, I hope the hon. Gentleman acknowledges the need to withdraw the new clause rather than create further unfairness in the system.
Regarding new clause 11, I re-emphasise that we will not speculate on the findings or any potential outcomes of the independent review. All recommendations will be considered when the independent review concludes. It would not be appropriate of the Department to commit to this new auditing requirement until that has happened, when we can take a holistic view of carer’s allowance and how DWP uses data. Nevertheless, it is helpful to set out how DWP currently uses data to verify eligibility for carer’s allowance. Verification of earnings and pensions alerts were introduced to carer’s allowance in October 2018 as part of a wider strategy to identify data sources, to verify information provided by the claimant, or to identify if information has not been provided by the claimant. Like all data we use for that, it is not intended to replace the legal requirement of a claimant to provide information that may change their entitlement to social security.
VEP alerts arise from HMRC payroll data. The alert service provides a notification of new earnings or pensions as they come into payment, or if amounts change during the life of the claim. The Department uses business rules to prioritise those alerts, based on data provided by the real-time earnings system. Since 2019, we have actioned around 50% of the alerts received in the Department as part of our focus on reducing the risk and level of overpayments. Having secured additional funding in the one-year spending review, we will be deploying additional resource in 2025-26,to action the alerts received from HMRC as quickly as possible. The Department is also testing an approach of using text messages to remind customers of the need to report changes in their circumstances.
Finally, I emphasise that the use of VEP alerts does not replace human decision making. If the Department processes an alert that highlights a change in earnings and a customer has not reported the change, DWP officials will contact the customer to confirm details have changed. If any overpayment is identified, it will be referred to debt-recovery teams. DWP remains committed to working with anyone who is struggling with their repayment terms, and will always look to negotiate sustainable and affordable repayment plans.
In the light of the information I have set out, and the ongoing work of the carer’s allowance independent review, I urge the hon. Member for Torbay to withdraw the proposed new clause.
Rebecca Smith
Liberal Democrat new clause 10 would delay any payments being taken from people who the Government think owe repayments on carer’s allowance until the independent review into carer’s allowance overpayments has been published and fully implemented. Liberal Democrat new clause 11 would provide for an audit of algorithmic systems used in relation to carer’s allowance overpayments. It would require that, if any audit identified significant inaccuracies, unfairness or biases in any algorithmic system, the Secretary of State must, within 30 days of the publication of the report outlining these findings, present an action plan to Parliament that outlines the steps the Government intend to take to discuss the identified issues. I am interested to know why the Liberal Democrats are singling out carer’s allowance for this treatment—namely, the review of the algorithmic systems—rather than any other allowance or benefits. Is there a reason for that?
Liberal Democrat amendment 32 is a commencement block. It specifies that no part of the Bill may come into force until the recommendations of a report commissioned under the clause “Recovery of overpayments of Carer’s Allowance” have been implemented. We would suggest that there is more holistic information that should be made public before the Bill can be commenced, and that the focus on carer’s allowance is in danger of missing the bigger picture. For example, we need to see the codes of practice, and we need to know precisely how the banks will deliver their responsibilities under the Bill. I would suggest that those things, which are sadly not yet available to the Committee as we scrutinise the legislation, and that has greatly hindered us, would provide a much more holistic assessment of whether the Government are ready to implement the Bill than the report on recovering overpayments of carer’s allowance. Would the Liberal Democrats consider an amendment at a later stage that goes wider than that?
Andrew Western
I contend that amendment 32 is simply disproportionate given the wide range of benefits that the Bill is expected to deliver to address fraud and error, not just in the social security system but in the public sector more widely. It is essential that all of Government have access to the capabilities and tools required to stop fraudsters stealing from the taxpayer. Tens of billions of pounds are being lost to public sector fraud. These losses are unacceptable, and waste enormous sums of public money, which could be put to good use. Delaying the Bill coming into force will risk £1.5 billion of savings over the next five years. These have been certified by the Office for Budget Responsibility. The Government made a manifesto commitment that we would safeguard taxpayers’ money and not tolerate fraud or waste anywhere in public services. The Bill delivers on that commitment, and delaying its delivery is unfair on taxpayers, who deserve to have confidence that money spent by Government is reaching those who need it, and not those who exploit the system.
Secondly—we have already discussed this point at length—I remind Members that the Bill introduces new, important safeguards, including provisions for independent oversight and reporting mechanisms, to ensure the proportionate and effective use of the powers. New codes of practice will be consulted on and published to govern how new measures will be exercised in more detail. That will include details of further protections. There will be new rights of review and appeal in both parts of the Bill to ensure that there are opportunities to challenge the Government’s approach. A human being will always be involved in decisions about further investigation or the recovery of any debt.
Finally, I return to my earlier point: data and information sharing are crucial when we look at fraud and error. For example, the eligibility verification measure, while it will not be applied to carer’s allowance itself, will improve the DWP’s access to important data to help to verify entitlements, ensure that payments are correct, and prevent the build-up of overpayments. That will enable the DWP to be tough on those who cheat the benefits system and fair to claimants who make genuine mistakes. It is vital that the DWP is equipped with the right tools, and delaying this Bill will only delay these benefits. In the light of that, I hope that Members will not press the amendment.
Steve Darling
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 13
Liability orders
“(1) Where—
(a) a person has been found guilty of an offence under section 1 or section 11 of the Fraud Act 2006, or the offence at common law of conspiracy to defraud,
(b) that offence relates to fraud committed against a public authority, and
(c) the person has not paid the required penalties or not made the required repayments,
the Secretary of State may apply to a magistrates’ court or, in Scotland, to the sheriff, for an order (“a liability order”) against the liable person.
(2) Where the Secretary of State applies for a liability order, the magistrates’ court or (as the case may be) sheriff shall make the order if satisfied that the payments in question have become payable by the liable person and have not been paid.
(3) The Secretary of State may make regulations in relation to England and Wales—
(a) prescribing the procedure to be followed in dealing with an application by the Secretary of State for a liability order;
(b) prescribing the form and contents of a liability order; and
(c) providing that where a magistrates’ court has made a liability order, the person against whom it is made shall, during such time as the amount in respect of which the order was made remains wholly or partly unpaid, be under a duty to supply relevant information to the Secretary of State.
(4) Where a liability order has been made against a person (“the liable person”), the Secretary of State may use the procedure in Schedule 12 to the Tribunals, Courts and Enforcement Act 2007 (taking control of goods) to recover the amount in respect of which the order was made, to the extent that it remains unpaid.”—(Rebecca Smith.)
Brought up, and read the First time.
Rebecca Smith
As we have heard, Liberal Democrat new clause 14 would require the use of algorithms, algorithmic tools, and systems, and artificial intelligence, including machine learning, to be included in the algorithmic transparency reporting standard. I have obviously just heard the comments of the hon. Member for Horsham, but I would be interested to know precisely what the Liberal Democrats are aiming to achieve with this new clause and how such reporting would better enable the Government to crack down on fraud and error. Is that the intention behind the new clause?
Andrew Western
I share the support expressed by the hon. Member for Horsham for the algorithmic transparency recording standard as a framework for capturing information about algorithmic tools, including AI systems, and ensuring that public sector bodies openly publish information about the algorithmic tools used in decision-making processes that affect members of the public. However, I do not think the new clause is a necessary addition to the Bill, and I will explain why.
First, all central Government Departments, including the DWP and the Cabinet Office, are already required to comply with the standard as appropriate. We are committed to ensuring that there is appropriate public scrutiny of algorithmic tools that have a significant influence on a decision-making process with public effect, or that directly interact with the public. We have followed and will continue to follow the guidance published by the Department for Science, Innovation and Technology on this to ensure the necessary transparency and scrutiny.
Secondly, I remind the Committee that although the DWP and PSFA are improving their access to relevant data through the Bill, we are not introducing any new use of machine learning or automated decision making in the Bill measures. I can continue to assure the House that, as is the case now, a human will always be involved in decisions that affect benefit entitlement.
Thirdly, although I do not wish to labour the point yet again, I remind the Committee that the Bill introduces new and important safeguards, including reporting mechanisms and independent oversight in the Bill, demonstrating our commitment to transparency and ensuring that the powers will be used proportionately and effectively. The DWP takes data protection very seriously and will always comply with data protection law. Any information obtained will be kept confidential and secure, in line with GDPR.
John Milne
I am content to beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 15
Offence of encouraging or assisting others to commit fraud
“(1) The Social Security Administration Act 1992 is amended as follows.
(2) In section 111A (Dishonest representation for obtaining benefit etc), after subsection (1G) insert—
‘(1H) A person commits an offence if they—
(a) encourage or assist another person to commit an offence under this section, or
(b) provide guidance on how to commit an offence under this section.’
(3) In section 112 (False representations for obtaining benefit etc), after subsection (1F) insert—
‘(1G) A person commits an offence if they—
(a) encourage or assist another person to commit an offence under this section, or
(b) provide guidance on how to commit an offence under this section.’”—(Rebecca Smith.)
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Rebecca Smith
The Conservatives—the official Opposition—share the Liberal Democrats’ view that it is vital that we use different Departments across Government to tackle domestic abuse and domestic violence. We have a really strong track record of doing that in government.
In principle, the new clause seems like a good idea. I am conscious that we need to ensure that the Bill does not exacerbate or create problems for victims and put them even more at risk. I have done a lot of work on violence against women and girls away from this place, and I am conscious of how tricky it can be to prove some of these things. I wonder whether there might be other ways to achieve the same outcome. I assume that is why the Government are not able to support the new clause.
The new clause includes language such as “potential” and “believed to be”. My gentle challenge is about whether it could be worded differently, as we go forward to other stages, to make it more achievable and deliverable, and something that would have a place in the Bill. As it stands, I am not sure that would be the case, but I am interested to see this issue debated further, because the official Opposition share the commitment to tackling domestic abuse and domestic violence.
Andrew Western
We have reached the stage in Committee at which the hon. Member for Torbay can second-guess my comments. He will be as pleased as I am that this is the last of the new clauses for debate, but it is a very serious one.
New clause 17 seeks to place a duty on Secretary of State to consider the impact of a proposed direct deduction order where a person is a victim of domestic abuse, or officials reasonably believe they are at risk of domestic abuse, and they share an account with a perpetrator of that abuse. I share the hon. Member for Torbay’s view that, where the new recovery powers are exercised, there should be a consideration of whether there is evidence of domestic abuse. However, I do not believe the new clause reflects the right approach. The DWP understands the importance of supporting victims and survivors of domestic abuse, and has existing guidance, processes and operational best practice for supporting them.
The new clause would apply to both debtors and non-debtors, and would not require the DWP to take any steps to identify possible victims. Subsection (1)(a) would place a duty on officials to consider the impact any time a person was a victim, even when the DWP did not and could not have known that that was the case. Subsection (1)(b) would imply a duty to assess whether there was reason to believe the person was at risk of domestic abuse but, as the hon. Member for South West Devon suggested, in many cases the DWP will not be in a position to make that assessment. That would put officials in a difficult, if not impossible, position.
As the direct deduction powers will be used as a last resort where multiple attempts to engage with the debtor to arrange a voluntary, affordable and sustainable repayment plan have failed, we anticipate that the DWP will know very little about the debtor’s current circumstances, unless it had been made aware previously or there were clear identifiable risk factors. We are working closely with charities, some of which the hon. Member for Torbay will have heard from, to help to identify those risks, as I will outline.
Where a joint account holder could be at risk of domestic abuse but is not the debtor, we are unlikely to have ever had direct dealings with them prior to the power being used. Unless we were directly notified, it is unlikely we would have the information necessary to form the reasonable belief that they were at risk, and much less likely that we could identify all the cases where the person was experiencing abuse. I do not, therefore, agree that a placing a legal duty on officials in this way is the right approach.
We are committed to continuing to support victims of domestic abuse whenever they interact with the Department, which is why we are working with charities such as Surviving Economic Abuse, which is dedicated to advocating for women whose partner has controlled their ability to acquire, use and maintain economic resources. SEA is supporting the drafting of the code of practice to ensure that robust safeguards are in place and to encourage engagement specifically from those who are vulnerable, including victims of domestic abuse. Although SEA works with women, the principles will apply to all victims and survivors of domestic abuse.
Frontline debt management staff already receive training for their role, including on assessing affordability, discussing hardship, and identifying and dealing with vulnerable customers. As we have heard, a specialist debt enforcement team will exercise the new recovery powers, and it will be governed by a code of practice. As explained, we will consult on the draft code of practice, and I welcome further views as part of the wider public consultation.
Finally, I note that paragraph 6(1)(b) of schedule 5 already imposes a broad duty on the Secretary of State to ensure that the amount of any deduction is
“fair in all the circumstances.”
That would include consideration of the impact on a victim of domestic abuse, as the hon. Member for Torbay seeks in the new clause, where the relevant context and circumstances are known to the Department. I hope that reassures the hon. Member that his concerns are already addressed in the Bill, and that the DWP takes domestic abuse seriously and will continue to do so when exercising the new recovery powers.
Georgia Gould
The Henry VIII power is to ensure that any other legislation is in line with this legislation. We do not expect it to be used on lots of occasions, but it will be used on some. We welcome the Opposition’s support for the extension to the limit for investigating covid fraud. I thank the Committee again for its work on the Bill, which will ensure that we take action against fraud wherever it occurs.
Question put and agreed to.
Clause 99 accordingly ordered to stand part of the Bill.
Clauses 100 to 104 ordered to stand part of the Bill.
Question proposed, That the Chair do report the Bill, as amended, to the House.
Andrew Western
I place on the record my thanks to you, Mr Western, and all the other Chairs who have supported and guided us through the Bill. I thank the Clerks and officials from the Cabinet Office and DWP for their support. I also thank my co-pilot, the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Queen’s Park and Maida Vale; the Opposition spokespersons; and all Committee members for their input. I commend the Bill to the Committee.
Question put and agreed to.
Bill, as amended, accordingly to be reported.
Oral Answers to Questions
Andrew Western Excerpts(1 week, 4 days ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Andrew Lewin (Welwyn Hatfield) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
Supporting everyone to find good, meaningful work and helping them to progress is vital for economic growth. That includes disabled people who want to work and contribute, but who are let down by the current system. Jobcentres have a key role to play in that, and through creating a new jobs and careers service, we will help more people get into work and get on at work, supporting our ambition for an 80% employment rate.
Andrew Lewin
I am fortunate in my community that we have an above average number of 18 to 24-year-olds, but when I was talking to the manager of the Hatfield jobcentre just last week, they said that the single biggest barrier to young people getting into work is their mental health, which a number of colleagues have spoken about in the Chamber today. Can the Minister say a little more about our objective of helping young people into work? Does he agree that the only way we will succeed in growing the economy is by helping those people overcome the barriers with their mental health?
Andrew Western
My hon. Friend is correct to highlight the importance of tackling economic inactivity in order to drive up economic growth. This Government understand the negative effects that unemployment can have on mental health, particularly among young people, which can impact future prospects. The youth guarantee will help address barriers faced by young people to ensure that they can access quality training opportunities and apprenticeships or help to find work, boosting their confidence and giving them the very best chance of success in the workplace.
John Glen (Salisbury) (Con)
A few weeks ago, I visited Salisbury jobcentre and I met Kirstie Reakes and George Thornley, who are helping me organise a jobs fair on Thursday 8 May. They could not have been more helpful. Their encyclopaedic knowledge of the local jobs market and businesses was impressive. Will the Minister congratulate them and thank them for the help they are giving me with the jobs fair in Salisbury Guildhall on 8 May? Will he also reflect on what incentives jobcentres could have to reach out to businesses and deepen their knowledge of local labour markets?
Andrew Western
The right hon. Gentleman is correct to raise the issue of jobcentres reaching out to local employers. We know that we have a significant issue with whether the jobcentre is the vehicle of choice to advertise local job opportunities. That is a long-standing issue that we are keen to address. I am delighted to congratulate his local jobcentre on the work it is doing to promote the jobs fair.
Mr Richard Holden (Basildon and Billericay) (Con)
Markus Campbell-Savours (Penrith and Solway) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
The Department works collaboratively with other Departments and with law enforcement agencies on investigations of benefit fraud carried out by organised criminal gangs. New powers in the Public Authorities (Fraud, Error and Recovery) Bill, which was mentioned earlier by the Minister for Employment, will strengthen our ability to tackle organised crime by modernising and enhancing our investigation powers, granting DWP officials powers of search and seizure, and ensuring that those who defraud the public sector face appropriate consequences.
Markus Campbell-Savours
I welcome the new powers in the fraud Bill, and note the huge increase in pension credit fraud in recent years. Can the Minister explain how capital fraud and fraud in which recipients stay out of the country for longer than the rules require, which together account for 50% of all pension credit fraud, will be targeted under the new rules?
Andrew Western
My hon. Friend is right to raise this issue. The eligibility verification measure in the new Bill will do just that, providing a crucial data feed to help us identify fraud that relates to pension credit as well as to universal credit and employment and support allowance. This will flag up claimants who are potentially in breach of eligibility under capital and abroad criteria, so that we can start to lower the unacceptable level of fraud and protect the public purse.
Luke Akehurst (North Durham) (Lab)
Josh MacAlister (Whitehaven and Workington) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
The Department supports care leavers aged 16 to 24 through an extensive range of interventions to help them into employment. For example, care leavers who start an apprenticeship are signposted to a £3,000 bursary from their training provider, and they can still receive universal credit if they are on a low income. More broadly, under the new youth guarantee, all young people aged 18 to 21 in England, including care leavers, will have access to support to enter employment, education or training opportunities.
Josh MacAlister
Some 39% of care-experienced young people are not in education, employment or training—three times the average rate—and that is costing the UK over £145 million a year in lost tax revenue alone. We cannot achieve the ambition of getting Britain working unless we unlock the potential of this amazing group of young people. Do Ministers agree that we need to take bold, imaginative action to radically improve the number going into work?
Andrew Western
My hon. Friend is absolutely correct to highlight those statistics. The number of care leavers not in education, employment or training is absolutely unacceptable, and he will be stunned to hear that I am in full agreement with him.
Jessica Toale (Bournemouth West) (Lab)
Vikki Slade (Mid Dorset and North Poole) (LD)
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
As the hon. Lady may know, the Department recently consulted on a range of proposals for future improvements to the child maintenance service, such as how we can protect people from financial abuse and better support victims of domestic abuse. I am obviously not familiar with the specifics of the case she references, but I would be more than happy to follow up if she writes to me about it.
Dr Simon Opher (Stroud) (Lab)
Mr Peter Bedford (Mid Leicestershire) (Con)
It is right that the welfare system supports those with disabilities. However, does the Secretary of State agree that social media influencers who are teaching people to game the Motability system in order to get free vehicles is a disgrace? If so, what does she intend to do about it?
Andrew Western
The hon. Gentleman will be aware that this issue falls under the umbrella of wider fraud. We inherited an appalling level of fraud in the welfare system under the previous Government. Our fraud Bill goes some way to tackling that, as part of a broader package of £8.6 billion—the largest ever package for tackling fraud.
Steve Witherden (Montgomeryshire and Glyndŵr) (Lab)
Given that nearly half of families in poverty have a disabled member and that without PIP an additional 700,000 disabled households could be pushed into poverty, I am concerned that the rumoured cuts will not help people into work but instead drive them further into destitution. What assurances can the Minister give me that the voices of disabled people have been heard and reflected on in the upcoming Green Paper?
Public Authorities (Fraud, Error and Recovery) Bill (Eleventh sitting)
Andrew Western ExcerptsThursday 13th March 2025
(2 weeks, 1 day ago)
Public Bill CommitteesRead Full debate Public Authorities (Fraud, Error and Recovery) Bill 2024-26 View all Public Authorities (Fraud, Error and Recovery) Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 13 March 2025 - (13 Mar 2025)
The Chair
I remind Members to send their speaking notes to hansardnotes@parliament.uk, to switch off electronic devices and to abstain from tea and coffee. It is Lent, after all.
Ordered,
That the Order of the Committee of 25 February be amended as follows—
In paragraph (1)(f) delete the words “and 2.00pm”.—(Gerald Jones.)
Clause 92
Code of practice
Question proposed, That the clause stand part of the Bill.
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
It is a pleasure to serve again under your chairship, Sir Desmond. After that remarkably collegiate agreement on the most controversial item of today’s business—I hope—I turn to clause 92.
The clause provides a vital safeguard for the new debt recovery measures. It inserts new section 80D into the Social Security Administration Act 1992, making provision for a code of practice. In the clause, we have made it a requirement that the code sets out how and when the Department for Work and Pensions will exercise its functions under direct deduction and driving disqualification powers, as well as its approach to penalties for non-compliance by banks, and how any information obtained will be used and processed. The code will also include further information on how safeguards and other provisions in the Bill will be applied, such as those on reasonable opportunity to settle the debt, and how those struggling with debt can be signposted to independent debt advice and money guidance.
We recognise the importance of transparency in the use of the new debt recovery measures. That is why, before issuing the DWP’s debt code of practice for the first time, as per our statutory obligations we will carry out a formal public consultation on a draft of the codes, to provide an opportunity for all interested parties to review them. Once finalised, all the relevant codes of practice will then be laid before both Houses of Parliament for 40 sitting days, before publication.
The clause is a key safeguard to ensure that the new DWP recovery powers are exercised proportionately, and it offers transparency for the public on their use. I commend it to the Committee.
Andrew Western
Members have asked a number of questions, which I will do my best to cover. On the broader context and content of the code of practice, I outlined a range of areas such as a reasonable opportunity to settle debt, the exercise of functions under direct deduction, driver disqualification powers, penalties for noncompliance by banks, the use and processing of information and ensuring that that is compliant with the Data Protection Act 2018 and GDPR, as one would expect.
On the broader question of how we would work with people with vulnerabilities—the hon. Member for Torbay mentioned financial abuse and learning disabilities—there are a range of existing practices through which the Department supports people, as I set out in some detail on Tuesday afternoon. We have a vulnerability management framework and assessments of an individual’s vulnerabilities at all points throughout the process are built into our existing debt recovery practices, including a specialist team who work with customers who we know to be vulnerable. I think that the Department has sufficient infrastructure in place to deal with and support people who find themselves in those circumstances, either as victims of financial abuse or because of some of the disabilities that the hon. Gentleman mentioned.
The hon. Member for South West Devon asked about the issuing of notices. The code of practice will give guidance on when notices are given and further guidance on how banks should comply. On the subject of consultees, it is important to say that we are in ongoing dialogue with banks and organisations such as the Money and Pensions Service about support for people who find themselves in debt. The public consultation will invite those who are already closely engaged with the subject to correspond with us further. That will include some of the stakeholders I have just mentioned, but we will accept evidence from anybody who wants to feed into that process.
I would not want to second-guess the cause of any future revision, but were it to become apparent that there were issues that we needed to contend with, grapple with and get right—whether they came out in discussion with stakeholders or in the practical application of the code—I imagine that that would be a sensible stage at which to do so.
I was asked about delay and when the code would be in place. We are looking at laying it before both Houses of Parliament for 40 days, so I am confident that delay will not be a particular challenge for us in recovering some of the figures that are scored against this measure. We anticipate that the draft code of practice will be available to Members before Committee stage in the House of Lords.
Question put and agreed to.
Clause 92 accordingly ordered to stand part of the Bill.
Clause 93
Rights of audience
Question proposed, That the clause stand part of the Bill.
Andrew Western
The clause inserts proposed new section 80E into the Social Security Administration Act 1992. That provision gives DWP officials right of audience and allows them to conduct litigation in the magistrates, county and Crown courts in England and Wales. New section 80E has been introduced to enable lay DWP officials to oversee civil claims and applications and appear in related court hearings on behalf of the Secretary of State in debt recovery matters. That is similar to the rights already provided to other Government Departments, such as His Majesty’s Revenue and Customs and the Child Maintenance Service, as well as local authorities.
The disqualification from driving power in clause 91 and schedule 6 of the Bill will be exercised by the court only on application from DWP, and there are other civil recovery mechanisms already available to DWP involving the courts. Those are generally routine proceedings, but, without the clause, DWP is required to instruct a solicitor in every case. However, the clause does not prevent DWP from instructing a solicitor for debt recovery proceedings where it would be appropriate to do so. That ensures that DWP can recover public money in the most efficient and effective way from those who evade repayments, thereby reducing costs for the taxpayer.
Rebecca Smith
As the Minister has just set out, clause 93 grants rights of audience and rights to conduct litigation in the magistrates court, county court and Crown court in England and Wales for, or in connection with, debt recovery proceedings to designated officers of the Secretary of State. That will allow DWP officials to be able to pursue the enforcement of debts via the court without the need to instruct solicitors, thereby ensuring cost efficiency in the recovery of public funds.
This is not particularly complicated clause, so I have just a few questions. We would like confirmation of the level of seniority of the officials signing off the decisions to bring litigation, and will the DWP officials bringing the cases have appropriate training to do so? Where court appearances are required, does the Minister anticipate a slowing down of recovery proceedings? I know he has talked about cost efficiency, but will this mean that it will take slightly longer? Will costs increase as a result, either in terms of what is owed by the person that the action has being taken against or the costs that might be necessary through the courts?
Finally, what consultation has there been with the Ministry of Justice around these new provisions in terms of capacity, the costs and the court backlogs? Will this measure create a problematic situation, or is the Minister confident that it will be okay going forward?
Andrew Western
I may have missed a question about costs, so will the hon. Lady please ask me that again if needed? The team members taking forward cases for us in the court will be HEO, or higher executive officer, level. That is the existing process, and that is the required level of authorisation for those using similar powers. This is not particularly new for us; it is just new for us in this space. A specialised DWP team will receive training in conducting litigation and appearing in court in addition to training on the new recovery powers. We already have the right to conduct and appear in similar tribunal proceedings, so we will share best practice when developing that training.
On the question of MOJ consultation and court pressures, whether we use solicitors or take them forward ourselves, the pressure on the courts will be the same, so there will not be a material impact on the court backlog. Clearly, the MOJ is aware of our intentions in this regard, but this is more about our ability to do that while minimising costs.
Rebecca Smith
My final question was about whether court appearances, regardless of whether that is with a solicitor or through DWP officers, will effectively slow down recovery proceedings. As a result, will there be some knock-on costs either for the person who the action has been taken against, if interest is being charged or anything like that, or for the Department in terms of staff and that sort of thing? I assume it will be a last resort, but it would be interesting to have an answer.
Andrew Western
It is very much the case that the power is a last resort. Where there are additional costs, we will be able to recover them. It is important to recognise the steps, as I outlined on Tuesday afternoon, that will have been gone through before the point at which we reach this process. If we were to go through a more traditional route outside these powers, it would add considerable time to the process. I remind Members that by the point at which we take somebody to court, we have reached out to them multiple times through debt management and at least four further times through debt enforcement, and we have offered at every break in the process the opportunity to agree an affordable repayment plan. That would be the case right up until this stage, so I can reassure Members that it would be a power of last resort.
Question put and agreed to.
Clause 93 accordingly ordered to stand part of the Bill.
Clause 94
Recovery of costs
Question proposed, That the clause stand part of the Bill.
Andrew Western
Clause 94 inserts proposed new section 80F into the Social Security Administration Act 1992 and relates to the recovery of costs from debtors. The clause simplifies existing legislation to ensure that the costs of court enforcement that DWP is already entitled to reclaim from debtors can be effectively recovered from the debtor, together with any costs incurred by DWP under the new direct deduction and disqualification from driving powers. The clause enables DWP to recover these costs from the debtor using any of the available recovery methods, to make sure that, as debtors’ circumstances change, the money can still be recovered. The clause ensures that the taxpayer does not pick up the burden for costs associated with pursuing debtors who refuse to repay public money, and that DWP can recover these costs from the debtor in the most effective way.
Clause 95 inserts new section 80G into the Social Security Administration Act 1992, providing technical interpretative provisions for the new debt recovery powers contained in part 2 of the Bill. First, it confirms that debt recovery provisions should always be read in a way that is consistent with data protection legislation. This is a relatively standard provision that deals with any unintended and unforeseen ambiguity or apparent conflict with normal data protection principles. Secondly, it confirms that references to “giving notice” can include, among other methods, service by post, as defined in the Interpretation Act 1978. That avoids ambiguity about how, for example, proposed deduction orders can be given to account holders for their consideration, which is a key safeguard under the new direct deduction order power.
Rebecca Smith
Clause 94 states that any costs incurred by the Secretary of State in recovering an amount under clauses 71 to 80 or schedules 3ZA or 3ZB of the Social Security Administration Act 1992 may be recovered as though they were recoverable under the same methods as the debt itself. Will it be done separately, and what might the cost to the Department be in putting that forward? Is there any limit to the costs that the Secretary of State can recoup in this way?
Clause 95 clarifies that provision does not require or authorise processing of information that contravenes data protection legislation, or the Investigatory Powers Act 2016. The final line states,
“references to giving a notice or other document…include sending the notice or document by post.”
This also came up in the debate on Tuesday, so I would like to get it on the record. I assume I know the answer, but can the Minister clarify whether this includes electronic methods of communication also, such as email? If I may ask this, as I am intrigued, then why does sending by post need separate legislation? We have debated the subject twice now, and the answer is probably really straightforward, but as it is set out on its own line, it might be a nice idea to find out why it has to be legislated for. I ask that purely because I am nosy and would like to know.
John Milne (Horsham) (LD)
It is a pleasure to serve under your chairmanship, Sir Desmond. Clause 84 states that costs incurred by the Secretary of State in taking recovery actions can be themselves recovered. Will the Minister clarify what happens in a case where the claimant is found to be not guilty? What happens to the costs then? Are they borne by the bank, the DWP or the claimant? Will he also clarify how the cost of the general trawl through all the accounts is apportioned?
Secondly, to go back to the issue of fraud versus error, and how they seem to be treated as pretty much the same throughout the Bill, will the Minister clarify whether, where it is the DWP’s error, a claimant would still end up paying the administrative charge? If that is the case, it seems quite unreasonable, so it would be great if the Minister could clarify those points.
Andrew Western
I am a little perplexed by the suggestion that somebody would be found not guilty or be charged. We are talking about debt recovery, so it is a slightly separate matter. It is not a criminal issue; it is a question of how, through civil powers, we can reclaim funding, so I am not sure that those questions arise. But if the hon. Member for Horsham wants to intervene on that, he is welcome to.
On the question of whether fraud and error are distinguishable in the reclamation of debt, the answer is no. They are treated in the same way, because this is about situations in which it has already been established that somebody owes us a recoverable amount and they have repeatedly refused to engage. I refer to my earlier comments about the number of times we would have reached out to somebody to get them to engage with the process. Parliament has previously resolved that overpayments of certain types of benefits are recoverable, and the Bill does not change that.
On the question about savings and so on, we would be able to recover all reasonable costs. There is no particular limit on what we can recover, and it is treated on the same terms as debt.
On the question of why we need to make a distinction for email, this is one of those situations in which I am grateful that I can sometimes reach out for answers. It goes back to the Interpretation Act 1978; we did not have email back then, so we need to set out separately, on a legal and technical basis, that post is specifically allowed, given provisions elsewhere. Yes, digital is still permissible, but we need to state specifically that post is acceptable as well.
John Milne
I used the word guilt, but can we forget that? I am referring to a case in which a claimant was investigated, so costs were incurred, but they were found not to be at fault, rather than guilty.
Andrew Western
I think the hon. Gentleman is referring to situations in which the court determines that the debt is not recoverable. I imagine that at that point we would bear the cost ourselves; it would not be recoverable from the individual. There is clearly some risk for us in that, as is perfectly usual, but by the point at which we decided to take somebody to court we would be able to demonstrate that a significant amount of effort had gone into attempting, through other mechanisms, to make them pay back what they owed the Department, so I hope we would have a very high success rate in that regard.
Question put and agreed to.
Clause 94 accordingly ordered to stand part of the Bill.
Clause 95 ordered to stand part of the Bill.
Clause 96
Offences: non-benefit payments
Question proposed, That the clause stand part of the Bill.
Andrew Western
The clause amends sections 111A and 112 of the Social Security Administration Act 1992 to include non-benefit payments. This will enable the DWP to charge a person with an offence under either of those sections where it relates to a non-benefit payment. This is a key clause that, in conjunction with clause 97, will enable the Department to offer an administrative penalty where there are appropriate grounds to do so.
The Government take a fair and proportional approach to tackling fraud and error. We will always be tough on serious fraud, but for less serious first-time offences it is appropriate and fair that we have the opportunity to offer an alternative to prosecution. The person will always have the choice to accept or reject an administrative penalty, should they wish to do so. I commend the clause to the Committee.
Rebecca Smith
The clause makes it an offence for a person to fraudulently claim a non-benefit payment for themselves or another person by making false representations or providing false documentation. Generally, we support this provision.
A non-benefit payment is a prescribed payment that is not a relevant social security benefit and that is made by the Secretary of State to provide financial assistance. Will the Minister provide for the record some examples of the types of payment that would fall within scope of the Bill as a result of this measure? Will he reassure us that it will cover all payments, unlike the provisions on social security benefits, which apply only to the three benefits included in the legislation? The flip question is: does the Minister anticipate any exceptions that will not be covered? If any new non-benefit payments were introduced in the future, would they automatically fall within scope of this legislation? Earlier in Committee we had a similar debate about enabling new benefits to come into scope; would the same apply to new non-benefit payments?
Steve Darling
The Minister alluded to proportionality and not wanting to criminalise people in undertaking an administrative charge. As my hon. Friend the Member for Horsham alluded to, it would be helpful if the Minister unpacked a little more for the Committee where that proportionality kicks in.
Andrew Western
Where proportionality kicks in is already established in the Department. We have trained investigators who ascertain whether we are looking at deliberate fraud, its severity, and what is therefore the appropriate mechanism to seek recourse. We are talking about administrative penalties for situations in which we consider there to be a clear case of fraud, not error, so proportionality will not really be changed by the Bill. What will change is our ability to extend the existing processes to non-benefit payments.
The example of a non-benefit payment that we use most routinely is a payment from the kickstart scheme, which came about at the end of the pandemic and which I think it is fair to say was open to abuse. We saw some particularly egregious examples of that, so we want to make sure that any similar grant schemes—as opposed to benefit schemes—are within scope of these powers.
On the point that the hon. Member for South West Devon made about only three benefits being in scope of the Bill, that is only as it pertains to the eligibility verification measure. All benefits are in scope of the Bill more broadly.
Andrew Western
The clause amends the Social Security Administration Act 1992 to expand the types of overpayments that can be considered for an administrative penalty under sections 115A and 115B to include non-benefit payments, such as the grants that were paid through the kickstart scheme. Currently, the option to offer an administrative penalty as an alternative to prosecution is not available for non-benefit payments, so the DWP is required to refer all such cases for prosecution. Extending the scope to include non-benefit payments will enable the DWP to offer those who receive a non-benefit payment an administrative penalty as an alternative to prosecution, in appropriate circumstances.
The measure gives individuals or colluding employers the choice to accept the administrative penalty or have the evidence reviewed before the courts. The change is really about fairness. It will bring equity and parity to the way the Department tackles and addresses fraud and it will offer first-time offenders or those who commit low-value fraud an alternative to prosecution. It will provide the individual or colluding employer with a choice, allow the courts to focus on the most serious crimes, and enable the Department to resolve cases more quickly where appropriate.
Rebecca Smith
The clause makes provision to allow for a penalty to be issued, instead of prosecution, if an overpayment notice has been issued in relation to a non-benefit payment. This can occur only after the review period has passed and, if a review was sought, after a decision has been made and any subsequent appeals have concluded.
We support efforts to be tough on those who have taken advantage through fraudulent methods and gained from benefits they were not entitled to receive. Will the Minister explain in what circumstances a penalty would be deemed more appropriate than prosecution, and why? That said, we also do not want to unfairly hit those who have made a genuine error, so in what circumstances would a penalty be seen as appropriate, assuming the claimant engages with the process?
Has any consideration been given to the likely timescales for the repayment of moneys obtained following erroneous claims? How long does the person have? Would a repayment be allowed before a penalty was applied? From what the Minister just outlined, the answer is likely to be yes, because an entire process would have taken place first; I seek clarification on the timetable or the process involved, particularly for those who have made a genuine error, and on how they will be able to stop the train and settle what they need to without any penalties.
Andrew Western
On when a penalty will be considered more appropriate, there are clearly thresholds for our investigators’ interpretation of when somebody has committed fraud and at what level we consider that fraud to be.
On the hon. Lady’s point about genuine error, the clause is for situations where we consider that somebody has committed fraud, not error. The administrative penalty does not arise in cases of what we consider to be error. It may be that it is a first-time offence. It would certainly need to be a low-value offence, because an administrative penalty is capped at £5,000. It is worked out as 50% of the value of the overpayment, so the amount would always need to be below £10,000. For anything beyond that we would be looking at prosecution. How long a person has to pay back will depend on a range of factors. It is clearly dependent on their ability to pay the money back, and what their means of production is and so on. That would always be considered on a case-by- case basis.
Question put and agreed to.
Clause 97 accordingly ordered to stand part of the Bill.
Clause 98
Amendments to the Social Security Fraud Act 2001: loss of benefits following penalty
Andrew Western
I beg to move amendment 36, in clause 98, page 61, line 21, leave out from “(a)” to end of line and insert “—
(i) omit the words from ‘section 115A’ to ‘or’, and
(ii) for the words ‘the corresponding provision for Northern Ireland’ substitute ‘penalty as alternative to prosecution in Northern Ireland’, and”.
This amendment updates a parenthetical description in section 6B(2)(a) of the Social Security Fraud Act 2001.
Andrew Western
This straightforward amendment is a minor and technical change that looks to update section 6B of the Social Security Fraud Act 2001 by removing the phrase “the corresponding provision”, which will no longer be needed once clause 98 is agreed, and substituting in appropriate wording.
Section 6B, as enacted, references two Acts in which a penalty is defined in legislation and which would attract the loss-of-benefit penalty. The first is the Social Security Administration Act and the second is the equivalent legislation for Northern Ireland. Clause 98 will remove reference to one of those Acts—the Social Security Administration Act 1992—to ensure that the loss-of-benefit sanction is no longer applied if an administrative penalty has been offered by the DWP and accepted by a benefit claimant. Doing so will mean there will no longer be corresponding legislation in section 6B(2)(a) of the Social Security Fraud Act 2001, as it will reference only Northern Ireland legislation. I assure the Committee that the amendment is minor and technical and will have no operational impact on the remaining provisions in the 2001 Act.
Clause 98 removes the loss-of-benefit provisions in cases where an administrative penalty has been offered and accepted as an alternative to prosecution. As it stands, the acceptance of an administrative penalty is compounded by a further four-week suspension of certain benefit payments. The suspension of benefits is made in addition to the acceptance of the administrative penalty and alongside the obligation to repay the overpayment. By removing the four-week loss of benefit in these cases, the clause allows for a more proportionate approach to less serious, lower-value fraud and to first-time offenders.
However, the loss-of-benefit penalty is not being removed in its entirety: it will still apply in cases that are convicted in court, with a potential loss of benefit of up to three years. Limiting the loss-of-benefit penalty to convicted cases will ensure that only the most serious cases of fraud face the harshest consequences, without imposing unnecessarily harsh sanctions on lower-level offenders. On that basis, I commend the clause to the Committee.
Rebecca Smith
The clause amends the Social Security Fraud Act so that if an administration penalty is accepted instead of prosecution, the individual does not lose their benefit provisions. From what the Minister said, it sounds like different scenarios are affected.
I appreciate what the Minister said about the different situations—for example, for a lower-level or first-time offence, someone might not lose their benefits—but the challenge is that this perhaps seems like a soft touch, depending on the situation. Does there not need to be a bit more discretion than just a threshold depending on each case being dealt with? What are the expected values of the penalties, and how do they compare with the typical benefits? Although we need to ensure that safeguards on affordability remain in place and that claimants can meet their essential living costs—that goes without saying —it is not clear why a penalty should automatically prevent the loss of benefits. Ultimately in these situations, there has to be a deterrent in addition to the penalty.
Government amendment 36 will update the Social Security Fraud Act 2001 to allow a penalty to be an alternative to prosecution in Northern Ireland. Our questions on that are the same as those for clause 98. I have nothing further to add.
Siân Berry (Brighton Pavilion) (Green)
It is a pleasure to speak to this minor amendment. I just wanted to point something out about the wording of amendment 36. In clause 98(2) there are two instances of the letter (a). I know which (a) the Government intend the amendment to refer to, but I wondered whether the wording could be clarified.
Andrew Western
I thank the hon. Lady for pointing that out. I will take advice on whether a further amendment may be required but, as she says, it does appear obvious what I mean when I refer to that measure.
On the comments from the hon. Member for South West Devon, we want to make a change so that only the most serious cases fall foul of the loss-of-benefit penalty. That increases hardship for people but, when it comes to our ability to reclaim money, in practical terms it means we would have to wait four weeks before we could start deducting from a person’s benefits.
To to give some reassurance about thresholds, were we to consider that somebody’s fraud, even in a lower-value case, was particularly outrageous—of course, that is a judgment for our investigators based on the sorts of things they see each and every day—we do retain the ability to go straight to prosecution, particularly if we think the fraud is part of something more serious or organised.
The value of the penalty is £65, but if someone loses four weeks’ benefit, as at the moment, the impact is clearly more significant. I accept that, but I think there is a strong question of proportionality here, and of the need to prevent somebody from falling into further poverty —and potentially as a consequence of that being pushed into wider activity that may be, shall we say, unhelpful.
Amendment 36 agreed to.
Clause 98, as amended, ordered to stand part of the Bill.
Ordered,
That further consideration be now adjourned.—(Gerald Jones.)
Public Authorities (Fraud, Error and Recovery) Bill (Tenth sitting)
Andrew Western ExcerptsTuesday 11th March 2025
(2 weeks, 3 days ago)
Public Bill CommitteesRead Full debate Public Authorities (Fraud, Error and Recovery) Bill 2024-26 View all Public Authorities (Fraud, Error and Recovery) Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 11 March 2025 - (11 Mar 2025)
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
It is a pleasure to serve under your chairship again, Sir Jeremy. Amendment 7 would introduce a new requirement for the direct recovery from account power, restricting its use to cases where the debtor agrees or where a court or tribunal determines that the exercise of the power is necessary and appropriate. I am not clear whether the amendment would do exactly what the hon. Member for Brighton Pavilion intends, which I believe is to place the restriction on all the new DWP recovery powers proposed in the Bill, but I will address the amendment as I think it was intended.
Although I share the view that there should be protections in place to ensure that the direct recovery power is used proportionately and appropriately, I do not agree that the amendment is necessary. In my view, the Bill already contains sufficient safeguards. The amendment would also introduce unnecessary burdens for courts and tribunals, create avoidable inefficiencies and, ultimately, reduce the amount of taxpayers’ money that the power would bring back into the public purse.
The Department has long-standing powers under sections 71 and 71ZB of the Social Security Administration Act 1992 to recover public money wrongly paid in excess of entitlement. Those provisions include a strong framework, including rights of reconsideration and appeal against the overpayment decision. The DWP already has powers to recover such overpayments through deduction from benefits and PAYE wages under sections 71, 71ZC and 71ZD of the 1992 Act.
The power in the clause is aimed at recovering taxpayers’ money owed by debtors who persistently evade repayment and refuse to engage with the DWP to agree affordable repayment terms, even though they have the means to do so. It is highly unlikely that those debtors, who, until this point in the debt recovery process, have ignored all reasonable requests by the DWP to work with it to agree repayment terms, would suddenly willingly agree to the DWP recovering the money they owe directly from their bank account. It is therefore highly likely that, under the amendment, the DWP would be required to seek a determination from the court or tribunal that a direct deduction order is necessary and appropriate.
The DWP can already seek lump sum recovery from a debtor’s bank account through the courts by applying for a third-party debt order. The very rationale for introducing this power is to recover more than £500 million of public money over the next five years without using court time unnecessarily. The amendment would create entirely avoidable inefficiencies.
The Bill already makes sufficient provision for a debtor to challenge a direct deduction order if they do not agree with it, first through the right to make representations concerning the terms of the order prior to any deductions being made and, following that, through a right of appeal to the tribunal. That is in addition to the debtor’s existing mandatory reconsideration and appeal rights concerning the decision that there is a recoverable overpayment that must be repaid.
In addition to those safeguards, the Bill includes sufficient provisions to ensure that the power is used appropriately and proportionately. Specifically, it provides that it is a last-resort power that can be used only if recovery is not reasonably possible by deductions from benefit or PAYE earnings. The debtor can avoid the power entirely at any point by working with the DWP to agree affordable and sustainable repayment terms.
Separately, the disqualification from driving power can be exercised only at the discretion of the court. Again, that provision includes necessity and proportionality considerations by requiring disqualification to be suspended provided that the debtor makes the payments ordered by the court, and ensuring that an order cannot be made if the court considers that the debtor has an essential need for a licence.
Lastly, the amendment would be likely to reduce the expected deterrent impact of the direct deduction power. Although the DWP will take the appropriate action, in line with legislation, to address debtors who persistently evade repayment of taxpayers’ money when they have the financial means to repay, the power is expected to encourage debtors to agree affordable and sustainable repayment with the DWP without the need to proceed with an order.
Making such an amendment would lessen the power’s effectiveness, meaning that the DWP would have to take this action more frequently than envisaged and potentially subject debtors to court proceedings where the DWP would not have as the Bill is currently drafted. I hope—but I suspect possibly not—that I have reassured the hon. Member for Brighton Pavilion that the Bill contains sufficient provisions and safeguards.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Is it fair to say, for the reasons that the Minister outlined on the removal of the deterrent, that this amendment would not only assist some who seek to commit fraud but cost the DWP in its internal legal responsibilities and duties, as well in what it has to contribute to the court process to pay for what the amendment would require, in the sum of tens of millions of pounds?
Andrew Western
I would not put a specific value on it, but my hon. Friend may well be right with the sort of figures that he suggests. Yes, there would be additional costs from the preparation in advance of court appearances, as well as the administrative costs of applying to the court itself. I think we would bear a significant burden, were we to agree to this amendment. Having outlined my reasons, I will resist amendment 7.
Clause 89 inserts proposed new section 80A into the Social Security Administration Act 1992, and it sets out which debts can be recovered by the new DWP recovery powers introduced in part 2 of the Bill. The new recovery powers are, firstly, the power to recover from bank accounts via direct deduction orders and, secondly, the power to disqualify a person from holding a driving licence.
The introduction of this clause ensures that the DWP can apply the new recovery powers to relevant social security debts. The clause is crucial to ensure that the new recovery powers in clauses 90 and 91 are used proportionately, appropriately and as intended by making them a power of last resort. By that, I mean that the DWP can use the new powers only after a debtor has been given all reasonable opportunities to repay the money owed, and only where recovery by existing powers is not reasonably possible.
The DWP debt stock stands at over £9 billion. As set out in the impact assessment, there is approximately £1.7 billion of off-benefit debt where individuals are able to avoid repayment, as the DWP is currently unable to recover effectively and efficiently in these cases. The Department’s current recovery powers are limited to deductions from benefits or PAYE earnings, meaning that those with other income streams and capital can choose not to repay their debt. The powers are vital to tackle those who repeatedly and persistently evade repayment, bringing £565 million of taxpayers’ money back into the public purse over the next five years.
These powers are expected to have a deterrent effect and to encourage many debtors to agree to repay without the powers being used. Debtors will be notified of the powers and their potential to be used to recover the money owed, should the individual continue to evade repayment. Let me be clear: where someone keeps money to which they are not entitled and repeatedly refuses to repay, the DWP will recover that money through these new powers. I commend the clause to the Committee.
Rebecca Smith (South West Devon) (Con)
It is a pleasure to serve under your chairmanship again, Sir Jeremy. Clause 89 sets out how money is to be recovered. It specifies that the Secretary of State cannot recoup the money from someone’s bank account or disqualify them from driving until they have given the liable person a reasonable opportunity to settle their liability, notified the liable person that the Secretary of State may exercise the power to recover the amount, if the liability is not settled, and the Secretary of State must also have given the liable person a summary of how the power would be exercised.
We support the recovery of money that has been fraudulently claimed, and I believe it is pretty clear that we need to do it. However, when the money has been given out in error, particularly to vulnerable claimants, as has been mentioned this afternoon, will the Minister explain how those vulnerable claimants will be communicated with? How will the DWP ensure that funds can be managed in a way that is sustainable for the individual who has to make those repayments? I hope that would also reassure the hon. Member for Brighton Pavilion.
Green party amendment 7 would mean that the Secretary of State can exercise powers to recover amounts from a person only where the person agrees or where a court or tribunal has determined that such recovery is necessary and appropriate. We in the official Opposition question why the Secretary of State should be prevented from recovering amounts that have been fraudulently claimed, unless the person in question agrees. The amendment seems to us to entirely frustrate the purpose of clause 89, which may well be its intent.
Rebecca Smith
In terms of the Cabinet Office powers that we debated under part 1 of the Bill, I think we are not comparing apples and apples; we are comparing apples and pears. I am not the Government, so it is not my Bill, but ultimately we have heard the figures—indeed, I have shared the significant amount of fraud we are talking about—and if I were in the Minister’s shoes, I would say that the number of cases is not comparable. I continue with my view that this is different from the first part of the Bill.
I would be interested to hear an explanation from the hon. Member for Brighton Pavilion about why she does not believe that money that has been fraudulently claimed from the DWP should be paid back. However, I have a question for the Minister off the back of amendment 7, which is similar to the question I asked him about clause 89. Regarding the concerns about the definition of hardship and vulnerability that the hon. Member for Brighton Pavilion mentioned, what might those levels be? I appreciate that that is potentially difficult to include in the Bill, but it would be interesting to know what is defined as a level of hardship that would have an impact on repayment, and how that would be determined.
Andrew Western
I will spend a moment setting out the process around the establishment of communications prior to deduction from a bank account and the affordability considerations that we undertake.
A person who is not paid under PAYE, or is in receipt of benefits, is identified and referred to the DWP’s debt management team initially to recover the debt. The debt management team makes multiple attempts, by letter or phone, to contact the person over at least four weeks to agree a voluntary repayment plan. If no contact can be made at that point, the case is referred to the DWP debt enforcement team, who will make at least four further separate attempts at contact, by letter or phone. That will include, at a minimum, two written notifications setting out the debt amounts owed, how the DWP may enforce the recovery of the debt, and with signposting to debt support to ensure that support is offered to vulnerable people.
If there is still no contact made, the person has repeatedly refused to engage and agree a voluntary plan. At that point, the DWP will check that the person has not made a new claim for benefit or entered PAYE employment, to check the person is suitable for this sort of recovery action. The person’s bank can then be contacted by the DWP to provide three months of bank statements from their accounts to check the affordability for any deduction, and to help the DWP work out the right amount, and frequency, of any deduction. The deductions must be line with caps in legislation. For regular deductions, that must not exceed 40% of the amounts credited into an account over the period for which bank statements are obtained. This will ensure that no one is forced to repay more than they can afford, so no one is pushed into financial hardship due to the recovery of debt.
Once that affordability assessment is complete, the DWP must write to the person to outline the debt that is being recovered—in other words, what has been overpaid and what is owed—the amount and frequency of the deduction, and how the deduction will be made, which in this case is from their bank account. The letter must outline the opportunities for the person to make representations to the DWP about any circumstances that the Department should consider before making the deduction, and it must also outline their right for the deduction decision to be reviewed. The person has a month to make representations or request a review. The letter must also outline appeal rights, including that if a person has made representations or asked for a review and the deduction order has been upheld, they may appeal the decision to the first-tier tribunal.
If there is no contact, one month after notifying the person of the proposed deduction the DWP will instruct the bank to deduct money, and repayments will be made directly to the DWP from the person’s bank account until the debt is repaid. That shows that it is quite a rigorous process, with a number of attempts to make contact with the person and a number of safeguards in rights to object and rights to appeal. In addition, for particularly vulnerable people, we have the vulnerability framework; part of that process supports people through referrals to advice services. We work with the Money and Pensions Service in particular, and frequently refer people to its services frequently.
For specific vulnerabilities and in particular cases, there is discretion to consider waiving the debt. That is unusual, but it is clearly an important safeguard for extreme cases—for instance, where domestic violence or financial coercion is involved. That is applied very much on a case-by-case basis; it is not a power or a policy that we would expect to use regularly.
I hope I have given the Committee an indication of the support and process for vulnerable people, and the number of humps in the road, as it were, before we get to the point at which we make a deduction.
Siân Berry
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 89 ordered to stand part of the Bill.
Clause 90
Recovery from bank accounts etc
Question proposed, That the clause stand part of the Bill.
Andrew Western
Clause 90 inserts proposed new section 80B into the Social Security Administration Act 1992, adding the direct deduction order power to recover public money owed to the DWP directly from a debtor’s bank account. Direct deduction orders are vital to recovering funds owed by debtors who have the means to repay a debt but refuse to do so. This is essential to bolster the DWP’s ability to recover more of the public money owed by those who persistently evade repayment, to minimise losses to the taxpayer and to redirect the funds recovered to essential public services.
The powers also make DWP debt recovery fairer. At present, the DWP can recover debt directly from people on benefits by making deductions from benefits; it can also recover debt directly from those on PAYE through a direct earning attachment, but for those who are neither on benefits nor on PAYE, the DWP has limited options for recovery if they refuse to pay. That cannot be fair. For those not on benefits or PAYE, where all attempts to agree an affordable and sustainable repayment plan have failed, the option available to the DWP is to seek a third-party debt order via the court. Such action is restricted to lump-sum recoveries and can lead to debtors facing challenges securing credit due to the court judgment. Introducing the new power will allow the DWP to return taxpayers’ money to the public purse more effectively through affordable and regular deductions, without using court time.
There are important safeguards. First, the powers are to be used only as the last resort; multiple attempts at contact must be made, and those must be of different types—for example by letter and telephone. Secondly, all direct deduction orders will be subject to an affordability assessment based on the three months’ bank statements obtained. Thirdly, before any recoveries are made, individuals must be notified of the proposed action; they will have the right to present information to the DWP about their circumstances and the proposed terms of the order, in response to which the DWP may vary or revoke the order. Fourthly, if an order is still upheld after a review or consideration of information presented, the individual has a right of appeal to the first-tier tribunal. These are important safeguards to ensure deductions do not cause undue hardship. In addition, the Department will always signpost to debt management advice. In the oral evidence session, we heard from the Money and Pensions Service about how well that partnership is operating.
Direct deduction orders are essential to increasing the amount of debt that the DWP can recover. They are balanced measures, with robust safeguards to protect those who are vulnerable or experiencing financial hardship. Having outlined the main provisions in clause 90, I commend it to the Committee.
Rebecca Smith
Clause 90 makes provision for recovery of social security debts directly from the liable person’s bank account. That power is broadly similar to powers contained in the Child Support Act 1991 and the Finance (No. 2) Act 2015, which enable deductions to be made directly from the liable person’s bank account without a court order. We support the inclusion of the power in the Bill, but further to our debates on part 1, I should be interested to know whether any other measures beyond bank account recovery and disqualification from driving were considered. Reference was made earlier to the ability to seize assets, particularly in relation to part 1 and the Public Sector Fraud Authority, but as that is not on the face of the Bill I would be grateful for further details about if and where that is allowed for within part 2.
John Milne (Horsham) (LD)
It is a pleasure to serve under your chairmanship again, Sir Jeremy. I am again raising concerns about a serious power to make direct deductions from people’s bank accounts.
Life does not always come in neat paragraphs; it is messy. I have had a number of letters from constituents in Horsham setting out the kind of errors that can happen. A lady called Marianne, who is a universal credit recipient, received a small inheritance, which she tried to report by phone and email, but that still resulted in her wrongly losing her UC for a period. Another constituent, Hannah, said:
“I have zero hours contract and work between 9-11 hours a week at just over minimum wage. At times I have had a back dated pay rise which pushed me over the allowance limit (I wasn’t informed in advance this was happening). I’m also at the mercy of someone else submitting my hours, so if they aren’t submitted on time they roll over to the next pay period causing me to exceed the allowance limit.”
At no time did she ever come anywhere near the allowance limit in real earnings; nevertheless, she was caught up in the rules.
Does the Minister feel that we have sufficient safeguards to avoid that kind of inadvertent administrative error? Mistakes have happened in the past and will continue to happen, but this is a very strong power that could cause real distress.
Andrew Western
We have not considered the seizure of assets under this Bill; nor are we are looking at forcing the sale of a home. We want to ensure that the powers we take are proportionate. We are not seeking to cause further hardship, and clearly the loss of their home would likely move a person into that category. Those decisions would ultimately remain with the court were we to take particularly serious case through the courts.
The hon. Member for Horsham raised some examples from his casework of people in receipt of universal credit who found they were inadvertently in receipt of overpayments. If they are still in receipt of universal credit—I think they are, going by what the hon. Gentleman said—they would be out of scope for the debt recovery powers that we are considering, so this provision would not apply in those specific examples.
If someone tells us of a change of circumstances, we always seek to action that as swiftly as possible. In cases such as the second example that the hon. Gentleman cited, where the mistake was the employer’s, there is not a tremendous amount that the Department can do. I have sympathy with his constituent, but it does not sound like that case would fall under the umbrella of departmental error. I assure him, however, that as both his constituents were still in receipt of benefits, they would not face a deduction from their bank accounts. That does not mean that an overpayment would not be recovered through other means, but recovery would be out of scope of this power. The treatment of overpayments from universal credit as recoverable was determined by Parliament a long time ago—I believe in 2012.
Question put and agreed to.
Clause 90 accordingly ordered to stand part of the Bill..
Schedule 5
Recovery from bank accounts etc
Siân Berry
I beg to move amendment 8, to schedule 5, page 98, line 10, leave out from beginning to end of line 24 on page 99.
This amendment would remove the requirement for banks to provide information to the Secretary of State for the purposes of making a direct deduction order.
My amendment 8 is related to our debate about direct deduction orders and safeguards for people with social security debts. The amendment would remove the requirement for banks to routinely provide information to the Secretary of State for the purposes of making a direct deduction order. It is important to note that before the Secretary of State can make a direct deduction order, they must submit an account information notice to the bank with which the debtor has an account requesting copies of the debtor’s bank statements covering a period of at least three months prior to the notice being issued.
I understand that the disclosure’s intended purpose is for the Secretary of State to consider whether the debtor can afford to have the funds deducted, but the schedule states that the bank must not inform the debtor or joint account holders if it receives an AIN. I am concerned that powers to request granular information from banks about their customers, without the customers’ knowledge, to decide whether an individual can afford to pay back an overpayment are intrusive and potentially authoritarian. Bank statements can reveal sensitive and private information about an individual’s movements, associations, political opinions, religious beliefs, sex life, sexual orientation and trade union membership. Since an AIN can also apply to joint accounts, individuals who are not themselves benefit recipients can have their private financial information disclosed to the DWP in a similar way.
The powers will affect individuals who have been overpaid because of mistakes and oversights. The Secretary of State should not be able to covertly demand a person’s financial records without suspicion that the person has committed any criminal offence. I sincerely hope that the Minister will consider amendment 8. It would remove the powers that require banks to hand over bank statements and account information, and thus it would prevent direct deduction orders being issued on the basis of covert financial surveillance. As with amendment 7, I hope we will come back to the issues raised by amendment 8 at a later stage, and that we will see some changes in this area.
Andrew Western
I will resist amendment 8. It is challenging to receive an amendment such as this after a conversation about what we are doing to protect vulnerable people. Having stressed the need to do that and to ensure that debts can be repaid in a way that is affordable, it would be wrong of me to agree an amendment that would entirely remove our ability to ascertain that.
The amendment seeks to remove the requirement for banks to provide information to the Department in response to an account information notice and a general information notice for the purpose of making a direct deduction order. That removes a critical safeguard on direct deduction orders.
Siân Berry
Will the Minister consider the covert aspect of the requirement? The information is not given voluntarily by the person concerned. That is the authoritarian surveillance aspect and that is what concerns me the most; it is not merely that the Secretary of State is seeking useful information.
Andrew Western
The challenge is that, by that time, we will have made repeated and sustained attempts to contact the person to ask them to engage with us to agree an affordable repayment plan, to assess their ability to agree that plan and to encourage them to pay back what has already been established as a recoverable debt. The requirement is part of a power of last resort. I am not convinced that we would be able to secure engagement from such a person, as the power applies in relation to someone we have repeatedly tried to contact. Without it, I fail to see how we could both have a conversation with someone whom we have not previously been able to contact and assure ourselves that we would not be putting somebody in a particularly challenging financial position.
Neil Coyle
Is it fair to say that the impact of this amendment, if made, would be to require the DWP to ask people that they suspect of committing fraud for their permission to investigate whether they are committing fraud? Is it not likely that the number of potential fraudsters willing to give that information would be the roundest of round numbers?
Andrew Western
Not quite. We would not be contacting banks to establish whether fraud had been committed under the amendment. We would already have established that a debt is owed, so that investigation would already have been completed. The debt, whether it was the result of fraud or error, has been established. However, I agree with my hon. Friend on the number of people who, having previously not engaged with us at all, will concur on the need to check bank statements to assess affordability. That may well be the roundest of round numbers.
Under the Bill, before any direct deduction order is actioned, the DWP must issue an account information notice to a bank to obtain bank statements. The AIN must contain the name of the debtor and identify the targeted account. This is a necessary and important safeguard so that the DWP can gather sufficient financial information to make informed decisions on fair and affordable debt recovery. Obtaining this information is also vital to the effectiveness of the direct deduction power, as the Bill is clear that a deduction cannot be made until this information has been acquired. Without the information from bank statements, the DWP will not understand a debtor's financial circumstances and will not be able to establish an affordable deduction rate and commence recovery.
I remind the hon. Member for Brighton Pavilion that the reason the information is not known is the sustained lack of engagement by the debtor in efforts to agree a voluntary and affordable repayment plan, and that the power is aimed at recovering taxpayers’ money from debtors who persistently evade repayment and refuse to engage with the DWP. The information gathered will make it clear whether they have the means to do so. Finally, I remind the Committee that these powers will be used as a last resort, and that by working with the DWP to agree affordable and sustainable repayment terms, debtors can avoid the application of the powers altogether.
Siân Berry
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Rebecca Smith
Amendment 22 is self-explanatory and I assume it is not something the Minister will be interested in, but we thought it was worth seeing what conversation could be had around it. Ultimately, it is as it is written and we are interested to hear the Minister’s response.
Andrew Western
Amendments 48 and 22 seek to limit the amount that can be deducted via a direct deduction order in any month to 20% of the amount credited to the account in the relevant period in non-fraud cases, and to set no limit in cases where the Department considers it more likely than not that the debt is the result of fraud.
The hon. Member for South West Devon will know I have sympathy with the idea of quickly collecting debts that arise due to fraud, but the measures in the Bill already allow the Department to collect higher amounts through a lump sum deduction order, rather than through a regular deduction order. This important flexibility in the application of these powers will allow us to seek a higher level of deductions. A lump sum deduction order can also be followed with a regular deduction order, if deemed appropriate.
The Bill currently states that, where recovery is made under a regular deduction order, the deduction must not exceed 40% of the amount credited into the account during the relevant period. Forty per cent is the maximum and is in line with other maximum rates for the DWP’s existing recovery powers, such as the direct earnings attachment power and the Child Maintenance Service’s deduction from earnings order power.
Mike Wood (Kingswinford and South Staffordshire) (Con)
Perhaps the Minister can correct me if I have misunderstood, as the drafting obviously relates to the parallel provisions we debated in clause 22. My understanding is that, as currently drafted, if the Minister or the Public Sector Fraud Authority is satisfied that a loss is the result of fraud, they can impose a lump sum deduction up to 100% of the credited amount in an account. However, if they were to use a regular deduction order, each sum can be only 40%. Is there any reason, in principle or for welfare, why it is okay to take 100% of someone’s account on day one but not okay to take 50% today and 50% the following month?
Andrew Western
Put simply, my understanding is that if an individual debtor has sufficient money in their account to pay 100% on day one without financial hardship, we will apply that power. Where that is not possible—for example, if a person’s debt exceeds their means to repay it in one go—we will look at a regular deduction order. It is on that basis that we came to the 40% figure, which is based on the income going into an account each month.
We have set the cap to ensure that ongoing living costs can still be met on a month-by-month basis. It may not be that the figure used is 40%. We are simply seeking to give ourselves flexibility up to that amount. We are not saying that we will never recover more than that. If someone has £10 million in a bank account and owes the Department £1 million, it is reasonable to assume it will not cause them undue hardship to recover all of it in one go through a lump sum deduction.
The two powers are complementary but separate—one deals with ongoing recovery from a person who does not have sufficient means for recovery in one go, and the other deals with people who have savings or means significant enough to do just that. I hope that answers the question. I am happy to take another intervention if not.
The Bill currently states that when a recovery is made under a regular deduction order, deductions must not exceed 40% of the amount credited into the account during the relevant period—month by month is the obvious example. Forty per cent is the maximum and is in line with other maximum rates for the DWP’s existing recovery powers. The Department intends to set lower rates for regular deductions in non-fraud cases, allowing those rates to remain in line with existing recovery powers. Paragraph 24 of proposed new schedule 3ZA to the Social Security Administration Act 1992 therefore makes provision for regulations to be brought forward to set a maximum percentage deduction that is less than 40% in these cases.
Andrew Western
My argument is that the amendment is not required. The intention is to align deduction rates with other recovery methods used by the Department, and therefore the maximum rate of deduction is expected to be limited to a maximum of 20% in non-fraud cases.
I stress that these are maximum regular deduction rates; the actual deduction rate will depend on the level of income and other affordability considerations, based on the Department’s experience when applying deduction caps using existing recovery guidance outlined in the benefit overpayment guide, which can be found on gov.uk. In non-fraud cases, the amount regularly deducted will likely range between 3% and 20%. Similarly, not all fraud debt will be recovered at 40%. Regular deductions in fraud cases will range between 5% and 40%, depending on the debtor’s circumstances.
How the new debt measures operate will be clearly set out in the forthcoming statutory code of practice. These powers will enable the Department to apply the most appropriate debt recovery method to ensure efficient recoveries are made. Having outlined why I feel amendments 48 and 22 are unnecessary, I will therefore resist them.
Rebecca Smith
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Andrew Western
I beg to move amendment 6, in schedule 5, page 107, line 2, leave out from “review” to end of line 7.
This amendment leaves out provision that is not needed; paragraph 13(5), (6) and (8) of new Schedule 3ZA of the Social Security Administration Act 1992 (as inserted by Schedule 5 of the Bill) makes the necessary provision.
Andrew Western
This amendment seeks to remove unnecessary repetition in the Bill, specifically removing part of paragraph 18 of proposed new schedule 3ZA to the Social Security Administration Act. This concerns the provision for the Secretary of State to notify the bank, the liable person and any other account holders, where appropriate, of the outcome of a review where a direct deduction order has been varied by the DWP.
This amendment does not change or remove that provision, as the DWP has a key obligation to ensure that all affected parties are notified of any changes to a direct deduction order following a review. This amendment simply removes a provision that is not needed; paragraphs 13(5), (6) and (8) of proposed new schedule 3ZA already makes the necessary provision. This amendment will simplify the Bill and prevent unintended confusion and duplication.
Schedule 5 introduces proposed new schedule 3ZA, which contains the substantive provisions of the new direct deduction orders, introduced in clause 90. The ability to recover directly from bank accounts is vital to recover public money owed to the DWP by those who have the means to repay but refuse to do so. As I outlined in my speech on clause 90, these powers will bring greater fairness to DWP debt recovery. At present, the DWP can recover debt directly from people on benefits only by making deductions from their benefits, and from those on PAYE through a direct earnings attachment.
For those who are on neither benefits nor PAYE, the DWP has limited options for recovery. Currently, there are an estimated 885,000 debtors off benefit who are not in repayment, with an estimated £1.74 billion not in recovery from this group. This schedule outlines powers to make lump sum and regular direct deductions from bank accounts through the use of a direct deduction order, as outlined in paragraph 1 of proposed new schedule 3ZA. Paragraph 3 outlines the information notices that the DWP can give to a bank, how the bank must comply, the information it must provide and how this information can be used.
To determine whether to make a direct deduction order, the DWP can give a bank an account information notice or a general information notice. An account information notice must be given to a bank, prior to any direct deduction order, to obtain bank statements. It must contain the name of the debtor and identify the targeted account. It is a necessary and important safeguard so that the DWP can gather sufficient financial information to make informed decisions on fair and affordable debt recoveries. A general information notice can be issued at any time for the purpose of determining whether to make a direct deduction order. It requires the bank to provide information on all the bank accounts held by the debtor, including any joint or unincorporated business accounts.
A bank must comply with an information notice, and may be liable to a penalty for failure to comply without a reasonable excuse. The information provided by the bank is necessary and proportionate to ensure that the DWP considers a debtor’s financial situation before making a direct deduction order. As set out in paragraph 4, the schedule also requires the DWP to presume that any moneys in a joint account belong equally to the debtor and the other account holder, unless there is evidence to the contrary. That ensures that only the portion of funds reasonably attributable to the debtor can be recovered from joint accounts, protecting the rights of other account holders.
Before seeking to recover debt, the DWP must give the debtor notice. The notice must identify the account to be subject to the proposed order, state the terms of the order and identify the recoverable amount to which the order relates. It must also invite the debtor to make representations. It must set the time for representations to be made, which must be at least one month. The Secretary of State must consider those representations and uphold, vary or revoke the order. Only after any representations have been considered can the direct deduction order be made. If no representations are received, the order can be made but the account holders are given a further month to request a review.
To ensure that funds necessary for debt recovery are not deliberately concealed or withdrawn, a bank may be required to take steps, in response to the notice, to ensure that the amount proposed to be deducted is not removed while the account holders are given time to make representations or request a review. That is vital to ensure that funds necessary for debt recovery are available in the debtor’s bank account so that the direct deduction order cannot be evaded.
If an order is made, it must be given to the bank and account holders. If the account holder is still dissatisfied, having made representations or sought a review, they can appeal to the first-tier tribunal, as I outlined previously. That allows disputes between the DWP and the debtor to be worked through quickly, while providing fair opportunities for the use of the power to be challenged.
When making a direct deduction, a DWP official will assess the bank information and determine the most appropriate deduction. As set out in paragraph 6, the schedule limits regular direct deductions to no more than 40% of the funds entering the account over the period in which the bank statements have been supplied. Regulations can lower, but not raise, the maximum percentage in some or all cases. That safeguards against excessive deductions and brings the powers in line with existing DWP recovery method legislation.
There is no legislative cap on lump sum deductions, as we expect to use them only where someone has large available savings. However, the DWP must be satisfied that neither lump sum nor regular deductions will cause the debtor, the other account holder or their dependants hardship in meeting essential living expenses. The Secretary of State may also vary direct deduction orders in the light of a change of circumstances—for example, if the debtor has a change of income or makes a new benefit claim.
In addition, paragraph 8 includes provision for a bank to deduct from the debtor’s account the administrative costs it has reasonably incurred by complying with a direct deduction order. That provision is essential to ensure that banks are compensated for the administrative efforts required to comply with the orders, thereby facilitating the efficient operation of debt recovery processes while protecting account holders from undue financial strain.
The schedule also contains provisions to ensure flexibility in direct deduction orders. Paragraphs 12, 13 and 16 allow the Secretary of State to vary, suspend or resume a regular direct deduction order. That provides the Secretary of State with the necessary flexibility to take appropriate action in relation to an order where a debtor’s circumstances change. Paragraph 9 requires that no deduction be made where the amount in the account is lower than the amount to be deducted. It is an important further safeguard to ensure that no one is pushed into hardship by a direct deduction order. Paragraph 17 makes provision to revoke a direct deduction order upon notification that the debtor has died.
Overall, the measure represents a significant part of the Bill, enabling the recovery of public money owed from those who persistently refuse to repay effectively, proportionately and fairly. Through this measure, the DWP estimates that it will realise benefits of £565 million in recovered debts over the forecast period.
Rebecca Smith
Schedule 5 makes provision regarding direct deduction orders from bank accounts. These can be regular or lump sum. The Secretary of State may make a direct deduction order in respect of a joint account only if the liable person does not hold a sole account in respect of which a direct deduction order may be made that would likely result in the recovery of the recoverable amount within a reasonable time. I would be grateful if the Minister explained what criteria will be used to decide whether a person has such an account. This came up last Thursday in relation to the main bank account of a claimant and the fact that the DWP will not be able to ascertain what other bank and savings accounts may be held. Is the same true here? Is this relevant only if the joint account is the account into which the benefits are paid? For the record, I am referring to column 238 of Hansard on 6 March.
The schedule will give the Secretary of State a power to request bank statements that is not time limited. It will also give the Secretary of State the power to request from banks details about the accounts that a person holds with that bank. The Secretary of State can set out how and when the bank must comply with the notice, and explain that the bank may be liable for a penalty under it if it fails to do so without a reasonable excuse. Can the Minister reassure the Committee about his planned engagement with banks—indeed, has he already had such engagement? Do banks think that this is a manageable requirement, and what will the costs of administering it be? Should that engagement with banks be due to happen, what might be done to reflect their views?
We have discussed that there is quite an onerous expectation on banks. The Parliamentary Secretary, Cabinet Office, the hon. Member for Queen’s Park and Maida Vale, made a comment, in terms of the Cabinet Office powers, that it was almost the banks’ civic duty to make sure that they do this. I am intrigued to know whether they agree with that. It would be interesting to know what engagement Ministers have had, and what they will do about it. Lastly, how long will banks have to comply with notices, and what level of penalty will be levied on them if they do not comply? I think those are fair questions.
Andrew Western
On the question raised by both the Opposition spokesperson and, substantively, the hon. Member for Horsham on the amounts that banks will levy in administrative charges on customers who are subject to a deduction order, paragraph 8 of schedule 5 makes provision for banks to deduct sums from an individual’s account for the purpose of meeting reasonable costs. Paragraph 23 makes provision for the Secretary of State to make regulations to set and maintain a cap on the charges that the banks may deduct. That is in line with the approach taken by the Child Maintenance Service, which sets maximum rates that the debtor can be charged for lump-sum or regular deductions.
To give an indication of the maximum amounts, that is £55 for a lump-sum deduction and £10 that the bank may charge for each regular deduction. It is worth stating, for the benefit of Members, that banks do not necessarily charge that amount; it can be significantly lower, but that is the most that someone can expect to pay.
On banks more generally, the exact costs to banks of this are still being worked through, for obvious reasons, but they have the ability to claim back administrative costs, as we have just discussed. On engagement, I have met UK Finance and a number of banks on a number of occasions. I think that the overarching theme of those conversations is that they would not want anything too onerous placed on them, but that they welcome the thrust of what we are trying to achieve and want to be helpful in working with us to achieve that. Speaking of costs to banks is probably a natural point for me to mention the penalty that can be placed on banks for not complying, which is £500.
On the question of multiple accounts and the determination of which accounts to look into and so on, we would make multiple orders if we wanted to look at more than one bank account. We would send information notices to each of those. We can use those notices to see other accounts that are held and relevant. Were someone to have a number of accounts, they would not be able to evade this provision, as was the case perhaps when we were discussing the eligibility verification measure.
I think I have probably answered everything that I had noted. Please let me know if there is anything else. I was about to repeat myself—
The Chair
No need for that.
Amendment 6 agreed to.
Schedule 5, as amended, agreed to.
Clause 91
Disqualification from driving
Question proposed, That the clause stand part of the Bill.
Andrew Western
The clause inserts proposed new section 80C into the Social Security Administration Act 1992 to enact the disqualification-from-driving power. The introduction of the clause will allow the DWP to apply to the court to disqualify temporarily a person from driving, if they persistently and deliberately fail to repay their debt. The power is vital to boost the DWP’s ability to recover public money.
In accordance with clause 89, the power will be used as a last resort in the most serious cases, where the outstanding debt is at least £1,000 and where the debtor has persistently and deliberately evaded repaying their debt, such as by moving their capital out of reach of a direct deduction order, introduced under schedule 5, despite having the financial means to repay.
Schedule 6 inserts proposed new schedule 3ZB into the 1992 Act and it contains the substantive provision of the disqualification-from-driving power introduced under clause 91. The schedule sets out when the power may be used and how it will operate, including rules on the operation of suspended and immediate disqualification orders, variation and revocation of orders, as well as the grounds on which an order may be appealed. Appeals may be made to the appropriate appellate court on points of law, including the terms of an order or the court’s decision to make, not make, vary or revoke an order.
Only when all attempts at recovery, including the new direct deduction power, have failed will the Department for Work and Pensions be able to apply to the court for a suspended DWP disqualification order. If the court agrees that the debtor had the means but did not repay without a reasonable excuse, it will order the debtor to make what it assesses to be affordable repayments. The debtor can avoid being disqualified by making those repayments; it is only if the debtor does not comply with the court’s repayment terms that the DWP can apply for an immediate DWP disqualification order. It is at that point—again, only if the court agrees—that the debtor can be disqualified from holding a licence for up to two years.
Before either a suspended or immediate order can be made, the debtor will have opportunity to be heard by the court. We recognise that stopping someone from driving is a serious step, so my Department has built in several safeguards to give debtors every opportunity to avoid that. For example, missing a single instalment will not result in an immediate disqualification order. Even when someone is disqualified, they can get back the right to drive when they start making the repayments and the court considers that repayments are likely to continue.
However, persistent evaders who have the means to pay their debts will no longer be able to evade paying; it is against them that we would utilise this power. It is important to note that the court cannot make either a suspended or immediate order if it considers that the debtor has an essential need for their licence, such as if they need to drive as part of their job or to care for a dependant. That important safeguard in schedule 6 ensures a balance between taking robust action against those who deliberately evade recovery and preventing undue hardship.
The powers are key to recovering funds from those who deliberately evade repayment of public money owed to the DWP. Having outlined the main provisions in clause 91 and schedule 6, I urge the Committee to support them.
Siân Berry
As we have been discussing, schedule 6 and clause 91 make provision that, where all other methods of debt recovery have failed, including the direct deduction order measures we have been discussing, the DWP may apply to a court to have the debtor disqualified from driving. Like the hon. Member for Horsham, I have real concerns about these new powers. I cannot see how this specific novel civil penalty of removing a driving licence is at all appropriate to the particular group of people we are discussing, nor do I see the equivalence to the people being enforced upon by HMRC and the Child Maintenance Service, which have similar powers.
Legitimate benefit claimants who are overpaid through error, make a mistake or for any other reason owe money to the DWP are, almost by definition, in need of help. They might often make mistakes or fail to disclose information through an oversight, and their failure to engage with the DWP to date might be due to genuine incapacity and health issues. I am therefore very concerned that there are ineffective safeguards in the court process for these powers.
Although the DWP must apply to the court for the disqualification order, the court does not have discretion to refuse unless the debtor needs a driving licence to earn a living or has another essential need for one. It is unclear the extent to which this will protect vulnerable benefit claimants who have not engaged with the DWP due to incapacity, illness or mental ill health, or for whom driving is not essential for their work, but may be essential for their wellbeing or family life. I am not sure that the proposed legislation is clear enough about what will be deemed essential or what will be reasonable for the court to object to.
I also have concerns, as outlined a moment ago, that these powers cannot be exercised unless the people concerned have tried every other method, from benefit deductions or deductions from earnings to the direct deductions from bank accounts—the measure we have just discussed, which is extraordinarily intrusive on people’s financial information and privacy. Given that these powers would only be used where it appears that those other powers cannot be, is it not true that they are basically only for when a debtor cannot physically pay back what they owe? In effect, this measure of removing the driving licence is a punishment. It is a poverty penalty for those who do not have the means, despite all the intrusion that Ministers have gone through to establish that, to return what they have been overpaid.
I cannot support this power. It is incredibly punitive. I do not think it will create the conditions in which debtors are encouraged to engage with the DWP, but it could create dire consequences for individuals who are already struggling and least able to afford repayments.
Andrew Western
I will attempt to answer those questions, and hon. Members are free to intervene if I have missed anything. The Opposition spokesperson, the hon. Member for South West Devon, asked whether this would be a power that is implemented in response to just fraud, or fraud and error. Because it is in response to a failure to repay a debt, it could be utilised for either. The criteria for its use is not how the overpayment came about, but whether the person has engaged to pay it back.
The safeguard around whether somebody is disqualified unnecessarily is all the various measures that we have attempted previously, plus the determination of the court. Responsibility for enforcement would lie with the Courts and Tribunals Service and the DVLA. However, if somebody was driving without a licence, that would clearly also be a legal issue. On the question whether we would advertise that somebody had had their licence suspended, we would not, because no crime has been committed; the suspension is just as a result of somebody failing to repay a debt. That is distinct from somebody who has had their licence removed because they have broken the law through drink-driving or some such crime.
John Milne
In the light of the Minister’s confirmation that this power does refer both to error and fraud, I am all the more concerned. Removing a driving licence can mean the removal of a means of income. It is almost like the old-fashioned debtors’ prison: someone is in debt, so they are put in prison, and then they cannot get out of their debt. It is a Catch-22 situation.
I understand that the power has been used regarding the Child Maintenance Service. I have a case in Horsham where a constituent feels that he is being unreasonably demanded of; he is in trouble because he will potentially lose his job because of just such an order. Therefore, this power could be applied inaccurately or incorrectly—it is inevitable that in a large organisation there will be mistakes—so I am concerned that the power seems both very extreme and, as I said before, not generally applied. It should be generally applied in order to be legitimate.
Andrew Western
On the point about a debtors’ prison, if somebody requires their vehicle for work, that is a criterion that a judge can consider in terms of whether a licence should be disqualified. It is also worth remembering that, in all cases, the initial move would be to suspend the suspension of the driving licence to give somebody the time to engage with us and start to pay. While, as I say, this is baked in as a last resort, we have put a number of break points in this process for people to engage. Indeed, even after we have suspended the licence, if somebody starts making repayments, they can have their licence reinstated. However, we have explicitly stated that caring responsibilities and the need for a car for employment purposes are criteria that would mean that we would not look to pursue that suspension.
Turning to the comments from the hon. Member for Brighton Pavilion, I understand where she is coming from. She is consistent in her view of an erosion of civil liberties coming about as a result of many aspects of this Bill. However, I must say to her that the idea that we have exhausted everything, including deductions from benefits, fundamentally misses the point about the cohort of people who would be in scope for this power. Benefit claimants and people who are paid through PAYE would not be in scope of the driving licence power; it would be people who are no longer on benefits. Indeed, if they were on benefits, we would be able to deduct from those benefits directly, without needing recourse to such actions.
I therefore take a fundamentally different view from the hon. Lady on whether this amounts to a poverty penalty. Clearly, the poorest people would not be impacted by this power; it is for people who we know have the means to pay. Usually, we know they have the money, but they have moved it out of our reach, so we have ascertained their ability to pay, but it is not possible to lay our hands on those funds. This power—like wider mechanisms for people who do not drive, such as charging orders—is the initial lever to bring people to the table.
As I said in response to the hon. Member for Horsham, before we suspend a licence, we will ask people to engage with us. After agreeing the right to suspend that licence, we will give somebody a further opportunity to engage with us and to begin making regular repayments. After the licence has ultimately been suspended, there will again be the opportunity to commence regular payments and have the licence reinstated. All that is a power of last resort.
I will give the Child Maintenance Service statistics for context. The CMS utilised this power on seven occasions last year; six of those were suspensions of suspension and only one was an actual suspension of a driving licence. That tells us that this power is important as much as a deterrent as in practice. It is for that reason that it forms a part of this Bill.
Question put and agreed to.
Clause 91 accordingly ordered to stand part of the Bill.
Schedule 6 agreed to.
Ordered, That further consideration be now adjourned.—(Gerald Jones.)
Public Authorities (Fraud, Error and Recovery) Bill (Ninth sitting)
Andrew Western ExcerptsTuesday 11th March 2025
(2 weeks, 3 days ago)
Public Bill CommitteesRead Full debate Public Authorities (Fraud, Error and Recovery) Bill 2024-26 View all Public Authorities (Fraud, Error and Recovery) Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 11 March 2025 - (11 Mar 2025)
Rebecca Smith (South West Devon) (Con)
It is a pleasure to serve under your chairmanship this morning, Mr Western. As we have just heard, Liberal Democrat amendments 37 to 42 would mean that, before appointing an independent person, the Minister had to consult a Committee of the House of Commons nominated by Mr Speaker. Amendments 38 to 42 seek to replace an independent person with an independent board, and therefore to allow the Secretary of State to appoint persons to, and confer functions upon, the board.
I have a couple of questions for the hon. Member for Torbay. What greater independence do the Liberal Democrats think will be gained by changing the requirement, given that both the independent board and the independent person would be appointed by the Secretary of State? What practical difference will the amendments make to improve the review process and ensure that it is high quality?
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
It is a pleasure to serve under your chairship, Mr Western. With your permission, I will speak to amendment 37 before speaking to amendments 38 to 42. I will then speak to why the unamended clause 75 should stand part of the Bill.
Before I begin, I will respond to a couple of the comments made by the hon. Member for Horsham on the relatively small amounts of fraud and error we see. With this particular measure, as he is aware, we are initially targeting the three benefits with the highest levels of fraud and error. To take universal credit as an example, it is £1 in every £8 spent, which is a tremendously high number and one we must do everything we can to bring down. However, it is worth recognising and explaining to colleagues that the measures in the Bill are part of a broader package to tackle fraud, which reached £8.6 billion across the relevant period. This is not the beginning and end of the Department’s work on fraud across that period, but it is the part of that overall package that requires legislation.
Returning to my substantive notes on the question of a “board” versus a “person”, I think there may be some misunderstanding of definitions here. Amendment 37 seeks to oblige the Secretary of State to consult a relevant Committee of the House of Commons before appointing the independent overseer of the eligibility verification measure. I believe that the amendment is unnecessary and I will be resisting it.
We recognise the importance of appointing the right person or body to oversee the use of the eligibility verification measure. That is why we have made it a requirement that the overseer report annually on the use of the power directly to the Secretary of State, who will then lay the report before Parliament. We have included that key safeguard to ensure the effective and proportionate use of this power and to introduce greater transparency in the use of it. The person or body will be appointed following a fair and public recruitment process, which will be carried out under the guidance of the Commissioner for Public Appointments.
I assure the Committee today that we will abide by the governance code on public appointments throughout the process. Whether this role is subject to pre-appointment scrutiny will be governed by the code, and we will follow its guidance at all times. The final decision on who will oversee this measure will, in all cases, be made by the Secretary of State. That is because the governance code on public appointments points out:
“The ultimate responsibility for appointments and thus the selection of those appointed rests with Ministers who are accountable to Parliament for their decisions and actions.”
We will keep the House informed about the process at all key stages, including when the process is set to begin and on the proposed final appointment.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Am I right in thinking that the Work and Pensions Committee will be entitled to call any witness, including whoever is appointed to this role, to give evidence to it and to be scrutinised by its members?
Andrew Western
My hon. Friend is entirely correct. The Select Committee always has that power, and were it to have any concerns whatever, it would look to exercise that power at the earliest opportunity.
I recognise that the amendment has been tabled with good intentions. However, because of our commitment to an open and transparent recruitment process, and because we will be abiding by the requirements of the governance code on public appointments, it is unnecessary and I will resist it.
I will now turn to amendments 38 to 42, which seek to remove the term “person” and insert the term “board” in reference to the appointment of an independent reviewer of the eligibility verification measure, as set out in clause 75. I recognise the intent behind the points raised, but the amendments are unnecessary and I will resist them. It is probably useful to clarify that, legally, the term “person”, as referred to in the clause, can refer to an individual person, a body of people or a board, as per the Interpretation Act 1978. I therefore reassure the Committee that any reference to “person” in the Bill includes a body of persons, corporate or incorporated, that is a natural person, a legal person or, for example, a partnership.
I reassure the Committee that the Secretary of State will appoint the most appropriate and suitable independent oversight for the measure. That might be an individual expert, which is consistent with the approach taken for oversight of the Investigatory Powers Act 2016, or it might be a group of individuals who form a board or committee. As the Cabinet Office’s governance code on public appointments clearly sets out, Ministers
“should act solely in terms of the public interest”
when making appointments, and I can assure the Committee that we will do just that.
To offer further reassurance, I confirm that the appointment process for the independent person or body will be open, fair and transparent, adhering strictly to the governance code on public appointments, which ensures that all appointments are made based on merit, fairness and openness. The Government will of course notify the House of the appointment. I therefore resist these amendments.
I will now turn to clause 75. Independent oversight is one of several safeguards for the eligibility verification measure, and I remind the Committee of the others that we discussed on Thursday. First, we are initially pursuing the measure with just three benefits in scope. Others can be added by regulations, but not, in any circumstances, the state pension, which is specifically excluded from the Bill. Furthermore, limits on the data that can be collected are set out in the Bill. For instance, no transactional data or special category data can be shared. Finally, as we discussed at length on Thursday, a human decision maker will be in place to determine whether any fraud has been committed.
Clause 75 provides a vital safeguard for the eligibility verification power. By inserting proposed new sections 121DC and 121DD into the Social Security Administration Act 1992, it establishes a requirement for independent oversight of the power, to ensure accountability, compliance and effectiveness. We recognise the importance of safe and transparent delivery of the eligibility verification measure, which is why we are legislating to make it a requirement for the Secretary of State to appoint the independent person to carry out annual reviews.
As per proposed new section 121DC(2), the person must prepare a report and submit it to the Secretary of State. And as per new subsection (3), the Secretary of State must then publish the report and lay a copy before Parliament. New subsection (4) outlines that the first review must relate to the first 12 months after the measure comes into force, and new subsection (5) outlines that subsequent reviews must relate to each subsequent period of 12 months thereafter. Those annual reviews and reports will ensure transparency in the use of the measure and its effectiveness.
To ensure that the eligibility verification measure is exercised in a responsible and effective manner, in accordance with the legal framework, new section 121DC further details what each review must consider during the review period. That includes compliance with the legislation and the code of practice, and actions taken by banks and other financial institutions in complying with eligibility verification notices. The review must also cover whether the power has been effective in identifying, or assisting in identifying, incorrect payments of the benefits covered during the review period. In new subsection (7), there is provision for the Government to bring forward regulations to provide relevant functions to the independent reviewer to enable them to perform their duties under the clause.
In order to ensure that the independent reviewer is able to fulfil their duties, clause 75 also provides a legal gateway for the Secretary of State to disclose information to the independent reviewer, or a person acting on the reviewer’s behalf, for the purposes of carrying out the review. That can be found in new section 121DD, which is inserted by clause 75. Data protection provisions in new sections 121DD(2) to (4) make it clear that such sharing must comply with data protection legislation and other restrictions on the disclosure of information.
In conclusion, the clause represents a key safeguard in relation to the new power and confirms a previous commitment to Parliament to establish oversight over it and ensure its proportionate and effective use. On that basis, I propose that clause 75 stand part of the Bill.
Rebecca Smith
Apologies, Mr Western, because I probably should have spoken to clause 75 stand part when I made my earlier remarks—it was just 9.20 am. Thank you for letting me speak now.
As we have discussed, clause 75 amends the Social Security Administration Act 1992, adding provisions for a review of the powers given through clause 74, which we debated last week. The Secretary of State must appoint an independent person to carry out the reviews, and a report must be submitted, published and laid before Parliament. I am grateful to the Minister for his assurances that, by definition, a “person” could be a body, a board or a panel. That has precluded quite a lot of the notes I was going to read out this morning, but it is good to hear that that definition is included in the Interpretation Act 1978.
However, it is worth again putting on record some of the evidence that we heard, and the fact that that definition caught the attention of some of those who gave evidence during our initial sittings. Some experts were concerned to have the eligibility verification reviewed by, potentially, a panel to ensure that it was both sustainable and auditable and that an unbiased viewpoint could be presented. Dr Kassem said:
“Personally, I would recommend a board rather than an individual, because how sustainable could that be, and who is going to audit the individual? You want an unbiased point of view. That happens when you have independent experts discussing the matter and sharing their points of view. You do not want that to be dictated by an individual, who might also take longer to look at the process. The operation is going to be slower. We do not want that from a governance perspective—if you want to oversee things in an effective way, a board would be a much better idea.” ––[Official Report, Public Authorities (Fraud, Error and Recovery) Public Bill Committee, 25 February 2025; c. 13, Q15.]
Clearly, the Minister addressed that in his comments, but it does raise the question of what volume of work he envisages the independent person, panel or body having to assess. I appreciate that that could well be a “How long is a piece of string?” exercise at this point, but does it have any bearing on whether the Secretary of State will appoint one person or several people at the point at which this body is instituted? I ask that question to reflect the concerns about volume, speed and the ability to get the review produced in the right amount of time, and also to provide clarification to those who gave evidence.
Finally, we heard from Helena Wood that she had concerns that the Bill is a “very blunt instrument”, specifically in relation to its powers on eligibility verification. What consideration has the Minister given to those comments, especially about the proportionality and reasonableness of the measures in the Bill, to ensure that it does not get used as the blunt tool it appears to be? What more information about how the powers in the clause are to be exercised will be set out in the code of practice in due course?
Andrew Western
I acknowledge what the hon. Lady said about the evidence we heard and the preference for a board. If I am being absolutely transparent with the Committee—as I would be expected to be—I am entirely open-minded at this point about where we may end up. I do not have a person, body or group in mind. That is why I hope that the open and transparent process yields the best possible result in terms of the qualifications and specialisms of the individual or individuals who may ultimately be appointed. A range of skills would be of use to us—specialisms in data and human rights, and in welfare, obviously—so I am open-minded about where we end up in relation to who takes this work forward for us.
On the question as to the volume of work, the hon. Lady is correct that it is something of a “How long is a piece of string?” question. However, in terms of the bare essentials, the requirement is to produce an annual report to be laid before Parliament, so I would not expect the volume of work to be at the extreme end in terms of how onerous it would be.
Steve Darling
I am pleased to have had the debate. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 75 ordered to stand part of the Bill.
Clause 76
Entry, search and seizure in England and Wales
Andrew Western
I beg to move amendment 34, in clause 76, page 43, line 38, leave out from “the individual” to end of line 1 on page 44 and insert
“is an official of a government department and—”.
This amendment clarifies that to be an authorised investigator an individual must be an official of a government department and be of the specified grade.
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Clause 77 stand part.
Government amendments 4, 5 and 33.
Schedule 4.
Clause 78 stand part.
New clause 3—Application of the Police and Criminal Evidence Act 1984 to investigations conducted by the Department for Work and Pensions—
“(1) The Secretary of State must, within six months of the passing of this Act, introduce regulations for the purpose of applying certain powers of the Police and Criminal Evidence Act 1984, subject to such modifications as the order may specify, to investigations of offences conducted by the Department for Work and Pensions.
(2) The powers to be applied must include—
(a) the power of arrest;
(b) any other such powers that the Secretary of State considers appropriate.
(3) Regulations made under this section shall be made by statutory instrument.”
Andrew Western
Clause 76 will insert a new section 109D to the Social Security Administration Act 1992 to make provision for specialist DWP staff to apply to the courts for a warrant to enter a premises for the purposes of search and seizure. That is one of the five overarching powers that we are looking at in the Bill. It is a new power for the Department, but not uncommon across Government more broadly. These actions may be exercised only by an authorised investigator—an individual who has received authorisation from the Secretary of State and completed industry standard training.
As drafted, subsection (6) of proposed new section 109D could be interpreted as requiring an authorised investigator to be either an official of a Government Department or of at least higher executive officer grade. Amendment 34 makes it explicit that an authorised investigator must be both an official of a Government Department and an HEO, for the purpose of these powers in England and Wales. That is an important clarification and is in line with our original policy intent. I trust that the amendment is welcome, as it ensures that there are clear criteria in place and that only those who hold the right office and grade may be authorised to exercise the powers in clause 76 and schedule 4.
I turn to clause 76 itself, and the substance of the powers of entry, search and seizure for the DWP. The clause will insert new section 109D and schedule 3ZC into the Social Security Administration Act 1992, which will provide DWP-authorised investigators with the power to apply for warrants, enter a premises, search it and seize items. It will also give authorised investigators power to apply for an order to gain access to certain types of materials that refer to business or personal records, defined in the Police and Criminal Evidence Act 1984 as “excluded material” under section 11 or “special procedure material” under section 14.
The ability to undertake this activity will play a crucial role in gathering and securing evidence to bring serious and organised benefit fraudsters to justice. Currently, DWP investigators must rely on the police to undertake all this activity—securing the warrant from the court and exercising it—on their behalf. The clause changes that. It means that DWP-authorised investigators will be able to apply directly to a court for a warrant to enable them to enter, search and seize items from premises, but only during a serious and organised criminal investigation.
I can assure the Committee that DWP-authorised investigators will be required to meet the same legal requirements when submitting an application as the police. That includes undertaking all activities in compliance with the Home Office code of practice on entry, search and seizure. In addition, independent inspections of the DWP’s use of the power may be conducted by His Majesty’s inspectorate of constabulary and fire and rescue services in England and Wales or by His Majesty’s inspectorate of constabulary in Scotland. That is addressed in clause 87, which we will consider later, and will be in addition to the internal safeguards, including clear processes for signing off warrants, that the DWP will have in place to ensure that the powers are used appropriately, safely and lawfully.
Clause 77 will insert new section 109E and new schedule 3ZD into the Social Security Administration Act 1992, and will provide equivalent entry, search and seizure powers for DWP-authorised investigators carrying out investigations of serious and organised fraud in Scotland. The powers enabling entry, search and seizure in England and Wales are primarily provided by PACE, and that is addressed in clause 76; however, there is no equivalent Act in Scottish law to provide the basis for these powers, so the powers in relation to Scotland are set out in this Bill. New schedule 3ZD to the 1992 Act —inserted by clause 77 and schedule 4 to the Bill—provides the basis for applying for a warrant for entry, search and seizure and exercising that warrant in Scotland. Those powers are similar to those set out in clause 76 and schedule 4 for England and Wales.
Clause 77 enables a DWP-authorised investigator to apply for and execute a warrant or a production order—a court-authorised directive requiring an individual to promptly disclose information relevant to a criminal investigation—in Scotland. It also provides for the DWP to search premises and seize items when that action is authorised by a sheriff in Scotland. The clause is intended to achieve parity between the nations, and I commend it to the Committee.
Government amendments 4 and 5 are minor and technical and aim to deliver the original policy intent of schedule 4, relating to entry, search and seizure for the DWP in Scotland. Their effect is to provide that where an authorised investigator who is exercising a search warrant identifies materials or items that have a bearing on any offence under investigation, they should seize them only if taking a copy or record, such as a photograph, is deemed to be not appropriate. That will ensure that items or materials are seized only where necessary, and will apply the same safeguard in Scotland as is currently the case in England and Wales.
As the Bill is drafted, the requirement to take a copy where possible, rather than seizing something, would apply only to an item and not to material. The amendments will deliver the original policy intent, which was not to differentiate. They will also ensure that no seizure, copies or records should be made where an item or material is subject to legal privilege or defined as “excluded” or “special procedure” material. I hope that my explanation assures Members that the amendments are minor and technical, and will ensure that schedule 4 works correctly and is in line with the existing approach taken by the police. I commend Government amendments 4 and 5 to the Committee.
Government amendment 33, which is very similar to Government amendment 34, makes it clear that an authorised investigator must be both an official of a Government Department and of HEO grade, but this time in relation to the use of these powers in Scotland, under schedule 3ZD, which is set out in schedule 4 to the Bill. I trust that the amendment will be welcomed like amendment 34.
Schedule 4 outlines modifications to the Police and Criminal Evidence Act 1984 for entry, search and seizure operations in England and Wales, and includes equivalent legislation for operations that take place in Scotland. The schedule sets out the essential modifications and practical details needed for DWP-authorised investigators to fully execute powers of entry, search and seizure. It outlines new schedule 3ZC to be inserted into the Social Security Administration Act 1992, to modify certain provisions in PACE to provide the relevant policing powers to DWP-authorised investigators in England and Wales.
The schedule sets out the minimum grade required to be an authorised investigator, which is the minimum civil service equivalent of a police constable. The DWP will require 250 authorised investigators to be trained to industry standards, and they will be subject to internal management checks. The schedule also restricts the use of the powers so that they are exercisable only for the purpose of investigating a DWP offence, as defined in clause 84 of the Bill. It permits others to accompany an authorised investigator on to the premises named in the warrant and limits a DWP-authorised investigator’s authority so that they can conduct searches only of “material” and not of people. The schedule also makes technical modifications to PACE, to allow the DWP to carry out entry, search and seizure activity in the same way as the police.
Schedule 4 also outlines new schedule 3ZD to the 1992 Act, which makes provision for entry, search and seizure in Scotland. As far as possible, this replicates the approach taken in England and Wales, except where an alternative approach is needed to account for the different legal system in Scotland. The primary differences between schedule 3ZC and 3ZD are the process that must be followed when executing a warrant in Scotland, which includes providing a copy of the warrant to persons on the premises; the process for issuing receipts for items seized; the legal requirements for making applications for Scottish production orders and Scottish warrants for special procedure material.
Clause 78 replicates the approach taken in legislation governing police actions in respect of the Crown and Crown premises. It sets out how the law applies in the unlikely event that the DWP needs to obtain a warrant to enter Crown premises. It provides for a DWP-authorised investigator to apply for a warrant to search the locker of a suspect who works in, for example, a Government Department, but it prohibits the use of these powers in the interests of national security once the Secretary of State has certified that this is the case, and with regard to any private estates belonging to His Majesty and the Houses of Parliament. The package of measures in the Bill will leave very few places for organised criminals and the gangs who attack the DWP to conceal the evidence of their crimes, but clause 78 keeps us in line with other similar legislation.
Rebecca Smith
The DWP has fewer powers than other organisations, such as His Majesty’s Revenue and Customs and the Gangmasters and Labour Abuse Authority, which are tasked with investigating economic crime. We know that it does not have the power to arrest or to conduct search and seizure. Clause 76 will allows DWP-authorised investigators to apply for and execute a court warrant with or without police involvement in England and Wales. The aim is to help the DWP investigate and disrupt serious and organised fraud by giving investigators the power to make searches and seizures. That will allow them to deal with, for example, cases where universal credit claims are made using false identity documents.
We in the official Opposition want the Bill to work and the DWP to be able to successfully identify and tackle benefits fraud. DWP estimates of fraud and error in the welfare system exceeded £8 billion in each financial year from 2020-21 to 2023-24, with a combined total of £35 billion overpaid. For the financial year 2023-24, the DWP’s central estimate is that benefit overpayments totalled £9.7 billion, which is 3.7% of all benefit expenditure. Of that overpayment figure, £7.4 billion, or 76%, was due to fraud, £1.6 billion, or 16%, was due to claimant error, and £0.8 billion, or 8%, was due to official error, or 8%. It is clear that fraud costs the DWP the most, yet we worry that the Bill will be more effective at tackling error than fraud. We therefore support the powers in clause 76 to tackle fraud.
Steve Darling
The power to seize items, down in the weeds of an investigation, is essential to ensuring that we hold the right people to account. However, I am alive to the fact that seized items are often kept for a long time. Our mobile phones often contain our whole lives. Not that long ago, a resident in Torbay who was accused of a criminal offence and was under investigation had his mobile phone seized by Devon and Cornwall police for a very long time—a matter of months. What assurance can the Minister give that when the power of seizure is used—particularly when it is used to seize a mobile phone—items will be returned in a timely manner? What timescale does he plan to set for civil servants to return such items?
Andrew Western
Let me begin with some of the questions from the Opposition spokesperson, the hon. Member for South West Devon. Her comments setting out the challenge and her commitment to wanting the Bill to work are incredibly welcome. She is right to set out the scale of the challenge. That is why we are taking the powers that we are proposing.
On whether the requests and the use of the powers of search and seizure will be reserved to members of our staff working in serious and organised crime only, the answer is yes. On the level of seniority of team members executing those powers, it is HEO-grade officers that do that. In terms of salary equivalent, salary can be quite a crude comparison for a number of reasons. Police officers undertake shift work and an element of their salaries is higher as a result. Obviously, as members of the emergency services, there is a level of risk to their work. The National Crime Agency suggests that an HEO grade is the equivalent of a police sergeant, although in salary terms, it is probably more akin to a police constable.
On training, they will receive the industry standard training, equivalent to the training that police receive in this area. On safeguards more broadly, for the power in the Bill, a lot of the safeguards in place relate to the fact that a warrant is granted by a judge. There is always that specialist person making a determination in terms of appropriateness and proportionality. All warrant applications and all warrants would be exercised in compliance with the Home Office code of practice for entry, search and seizure. That is specifically limited to serious and organised crime only—that is multiple people working together to commit complex fraud, typically resulting in higher value overpayments.
As I said, everybody executing this power would be of HEO grade. They would have had the industry standard training. Investigations will also be subject to independent inspections, which will report on the DWP’s use of the powers, and any serious complaints can be reported to the Independent Office for Police Conduct. A range of safeguards is built into the proposals.
If I may, I will come later to the question from the hon. Member for Torbay about the return of information. There are specific provisions to enable us to keep items for as long as is needed, but there is a desire to return things as soon as possible. Elsewhere in the Bill, we speak to the specific powers that would be required were we wanting to go further and not return an item. There is a commitment to return, unless specific powers are required to prevent further criminality based on evidence found on phones. I cannot give a specific timeline—something would be kept for the length of time necessary for the purposes of the investigation—but I hear the point, particularly about mobile phones.
I stress again that this is about serious and organised crime. If I think of some of the cases I have seen—Operation Volcanic, for example—we are talking about going into buildings where there are several dozen, if not hundreds, of pay-as-you-go mobile phones set up expressly for the purposes of fraudulent activity and criminality. I would perhaps be less sympathetic to the swift return of those phones, and I hope the hon. Gentleman understands why.
I turn to new clause 3. I appreciate the explanation of the rationale from the hon. Member for South West Devon, but I do not share her view. I gave great consideration to the question of whether to take powers of arrest when first having discussions about the scope and shape of the Bill. The Bill enables trained DWP investigators to apply for a search warrant to enter a premises, search it and seize items or material that may have a bearing on the DWP case being investigated. Put bluntly, it gives us the right tools to do the job effectively.
Crucially, it enhances police efficiency by allowing the DWP to handle warrant applications and carry out search and seizure activity, freeing the police from those administrative and investigative tasks that they currently undertake for the DWP. No longer will DWP investigators always need to rely on the police for search warrants, take up police time briefing them on the specifics of the warrant applications or always be restricted to simply advising the police as to what items may be relevant during a search, only for them to then be seized by the police and later transferred to the DWP.
On efficiency, we are taking the powers we need to smarten up our processes. The current process is clearly imperfect. It is inefficient for both the DWP and the police, as well as burdensome in terms of resource, and the Bill resolves that situation. There is a clear rationale for the powers set out in the Bill, but the same cannot be said for the amendment.
To close, I will explain why it is not appropriate for the DWP to undertake arrests as well. I am concerned about the safety impacts; the police have expertise that equips them to carry out arrests. The policy intent is to facilitate more effective investigations and smoother administration, striking the right balance between activities undertaken by the DWP and the police. A power to arrest would require the DWP to take on roles that go beyond those that are administrative and evidence gathering in nature.
Not only that, but it is common for a serious organised DWP offence to involve other types of serious and organised crimes. As a result, a suspect is likely to be involved in wider criminality than just a DWP related offence, such as firearms, drugs or being involved in people trafficking. It makes sense that the police would conduct the arrest in such a situation and, after that, DWP investigators could focus their time on searching the scene for relevant evidence related to the DWP offence.
In addition, for the DWP to be able to operate independently of the police would require the DWP, for example, to have appropriate vehicles for transporting an arrested person and custody suites for detaining them. Currently that is not the case and, to be clear, we are not moving in that direction. We do not operate extensively in that area and allocating resources there is unlikely to be efficient or make sense.
The powers in the Bill promote effective collaboration between the DWP and the police, bring some genuine efficiencies and allow each team to focus on its strengths, which is the right approach. This amendment would not serve the same purpose and it would add a layer of complexity to the DWP’s work that we are not equipped to deal with, either in terms of the expertise of our team or the equipment that we have. For this reason, I must resist new clause 3.
Amendment 34 agreed to.
Clause 76, as amended, ordered to stand part of the Bill.
Clause 77 ordered to stand part of the Bill.
Schedule 4
Social security fraud: search and seizure powers etc
Amendments made: 4, in schedule 4, page 91, line 28, after “item” insert “or material”.
This amendment clarifies that paragraph 2(3) of new Schedule 3ZD of the Social Security Administration Act 1992 (as inserted by Schedule 4 of the Bill) applies in relation to any item or material.
Amendment 5, in schedule 4, page 91, line 31, after “item” insert “or material”.
This amendment clarifies that paragraph 2(4) of new Schedule 3ZD of the Social Security Administration Act 1992 (as inserted by Schedule 4 of the Bill) applies in relation to any item or material.
Amendment 33, in schedule 4, page 93, line 32, leave out from “individual” to end of line 33 and insert
“is an official of a government department and—”.—(Andrew Western.)
This amendment clarifies that to be an authorised investigator an individual must be an official of a government department and be of the specified grade.
Schedule 4, as amended, agreed to.
Clause 78 ordered to stand part of the Bill.
Clause 79
Offence of delay, obstruction etc
Question proposed, That the clause stand part of the Bill.
Andrew Western
I am sure colleagues will be pleased to know that this speech will be brief.
Cases of serious and organised fraud against the DWP can amount to millions of pounds being stolen from the taxpayer. Clause 79 provides for consequences when those suspected of serious and organised fraud intentionally attempt to delay or obstruct an investigation. A suspect can be prosecuted if they intentionally try to frustrate a DWP investigation, and if convicted, they can be fined up to £1,000. Without this important provision, DWP fraud investigations into serious and organised criminal attacks on the social security system could be wilfully manipulated by those suspected of carrying out the fraud, which would be an untenable situation.
Rebecca Smith
I am sure the Committee will be pleased to hear that I will also be brief.
It is an offence under section 111 of the Social Security Administration Act 1992 to intentionally delay or obstruct an authorised officer, and conviction for a failure to comply may result in a fine of up to £1,000. Clause 79 means that obstructing an authorised investigator will be treated in the same way as obstructing an authorised officer, which means that obstructing an authorised investigator will be a criminal offence carrying a fine of up to £1,000. We are happy for the clause to stand part of the Bill.
Question put and agreed to.
Clause 79 accordingly ordered to stand part of the Bill.
Clause 80
Disposal of property
Question proposed, That the clause stand part of the Bill.
Andrew Western
This clause gives the DWP a clear legal path to seek court approval to dispose of property that has come into its possession when executing a search warrant. In most cases, the seized items will be returned to their rightful owner as soon as they are no longer required by a criminal investigation. However, as I alluded to in responding to the hon. Member for Torbay, there are certain circumstances in which this may be either not possible or not desirable.
An order may be sought when a seized item does not belong to the suspect and where it is not possible to identify the rightful owner, where there is a high risk that returning the seized item means it could be used for the furtherance of crime or where information needs to be deleted before the item is returned to prevent a further offence. This will prevent the risk of, for instance, returning a seized smartphone that contains data relating to hijacked or stolen identities that may enable fraud and the distribution of information that could be used for criminal gain. With the increasing use of technology, it will be ever more critical to ensure this does not happen. This clause allows the DWP to act in the same way as the police.
To avoid the risk of incorrect disposal of seized items, applications for any action of this kind must be made to, and must be approved by, a court. In addition, there are restrictions on how quickly seized material can be disposed of. In all cases, six months must elapse from the approval of an application by a court before a seized item can be destroyed.
Finally, any person with an interest in an item can make an application to the court. This could be the DWP, the item’s rightful owner or the person from whom it was seized. The clause sets out specific criteria in relation to any challenges that may be brought and the procedures that apply. If an order has been given for the item to be destroyed, the order cannot be revoked. However, the timeframe for the item to be destroyed may be challenged.
This clause creates a legal and proportionate gateway for the DWP to deal with seized items appropriately. This ensures that the DWP can act in the same way as the police when concluding fraud investigations.
Rebecca Smith
Where DWP investigators seize items from a premises, they will generally be returned to the owner if they are no longer needed for an ongoing investigation. As we have heard, it may not be appropriate to return an item in certain cases, such as if the person from whom the item was taken is not the actual owner or if the owner cannot be traced. In some cases, there may be a risk that a seized item could be used for a criminal purpose if it were returned. We acknowledge that clause 80 gives the DWP a lawful basis for disposing of the items. Clause 80 stipulates that items cannot be destroyed until six months have passed from when the magistrate approved the application to destroy them. Why is six months the chosen timeframe, and what are the precedents for other evidence seized in criminal investigations?
We support the provision allowing someone with an interest in the item to request the court to alter an approved action in relation to the item. We believe that is sensible. Can the Minister give an example of the sort of scenario that might refer to, just for the benefit of the Committee? What will the timeframe be for such applications? Finally, how will interested parties be made aware of items they may wish to take court action over? I assume it will not be a police lost property office, but ultimately it is one of those questions of how someone will know that there is something in which they might have an interest.
Andrew Western
I will briefly answer those questions. The period of six months is the same as set out in the Police (Property) Act 1897. We want to ensure alignment where we can to make the process between the police and the DWP as seamless as possible, so that serious and organised fraudsters do not recognise any difference.
On the question of how someone will know if we were intending to destroy their items, the clause does not require the DWP to inform any relevant person of any intended action in relation to the seized item. That is commensurate with how the 1897 Act works for the police in similar circumstances, but anyone who has an interest in the seized goods will have the same access right as the Secretary of State to apply to a court for a particular course of action to be taken. That could include seeking an extension before the seized item is destroyed. In all cases, a notice to occupier information notice will be left at the property, which will provide information about the search, the items seized and relevant points of contact.
Question put and agreed to.
Clause 80 accordingly ordered to stand part of the Bill.
Clause 81
Amendments to the Criminal Justice and Police Act 2001
Question proposed, That the clause stand part of the Bill.
Andrew Western
Clause 81 applies only to Scotland and amends the Criminal Justice and Police Act 2001 to enable DWP-authorised investigators to seize an item from a premises and scrutinise it off site to determine its relevance to the investigation. This will apply in circumstances where it is challenging or even impossible to determine the relevance of an item to an investigation while on site. In some cases, large volumes of documents could be found that may comprise valuable evidence, but that will take a long time and need detailed scrutiny to assess. A locked electronic device may be found that could have evidence stored on it. This clause gives DWP-authorised investigators the ability to deal with those kinds of situations in the same way as the police by seizing items and taking them off site for sifting or further examination elsewhere. Without the authority granted by this clause, vital evidence could be missed, lost or even destroyed if left on site. In all instances, the DWP will seek to return seized items as soon as possible to the owner, where they are no longer needed or found to be irrelevant to an ongoing investigation. Those are the main provisions in clause 81, and I commend it to the Committee.
Rebecca Smith
Clause 81 amends the Criminal Justice and Police Act 2001 to deal with situations where authorised investigators cannot ascertain whether an item or material contains information relevant to that search, such as when dealing with large volumes of materials or files or electronic devices. That material therefore may need to be taken to be examined elsewhere, and we recognise that the clause allows for material to be seized and then sifted, rather than sifted and then seized. For that reason, we are happy for the clause to stand part of the Bill.
Steve Darling
I seek the Minister’s guidance as to how DWP officers, when they undertake these acts, will ensure that seize and sift will not be the standard modus operandi and that it is used only in appropriate cases. When will the Government publish a code of conduct? What guidance will be given? It might be tempting to undertake trawling operations for information rather than taking the spear-fishing approach that would garner the evidence more easily. I would welcome the Minister’s reassurance on that.
Andrew Western
I am grateful to the hon. Member for South West Devon for her support and to the hon. Member for Torbay for his questions. By way of reassurance, the DWP cannot just seize anything and everything from a place it has entered with a warrant; it can seize only items that are directly relevant to the investigation. Other oversight is built in, given the ability to make complaints to the IOPC and the oversight powers we are affording to HMICFRS, and people will be trained to the industry standard and so on, but fundamentally they must be able to demonstrate that a seizure is directly relevant to the investigation.
Question put and agreed to.
Clause 81 accordingly ordered to stand part of the Bill.
Clause 82
Incidents etc in England and Wales
Question proposed, That the clause stand part of the Bill.
Andrew Western
Clause 82 amends part 2 of the Police Reform Act 2002 and will insert proposed new section 26H, which provides for the IOPC to investigate any serious complaints or serious harm related to the use of the powers of entry, search and seizure. There are multiple safeguards—including industry-standard training for all authorised investigators—to minimise the risk of the Bill’s entry, search and seizure powers being used incorrectly. I assure Members that the likelihood of a serious complaint, particularly anything that involves death or serious harm, is extremely unlikely. However, an effective and independent complaints process is essential when it comes to powers of this nature.
Whenever a search warrant is executed, information will be provided setting out how to raise a complaint and what to do in the unlikely event that the complaint is serious or involves death or serious harm. The clause aligns the DWP’s approach to serious complaints and incidents relating to entry, search and seizure with that of other bodies with similar powers, including the police. That is why we have agreed with the Police Investigations and Review Commissioner that they will investigate serious incidents that occur in Scotland related to the use of the powers of entry, search and seizure by the DWP under clause 83.
If a complaint is not of a serious nature, as defined in IOPC guidelines, it can still be raised via the existing departmental complaint procedures. It will be investigated internally, and if an individual is not happy with the complaint response, they can ask for their complaint to be reviewed by a more senior manager. If an individual remains dissatisfied with the Department’s final response, they may escalate their concern to the independent case examiner.
Clause 83 amends articles 2, 3 and 4 of the Police and Fire Reform (Scotland) Act 2012 (Consequential Provisions and Modifications) Order 2013. It mirrors the provisions of clause 82, which applies to England and Wales, and provides for similar independent investigation arrangements for serious incidents in Scotland. I again reassure Members that robust safeguards will be in place, including investigators having comprehensive training, robust internal governance with clear processes for signing off warrants, and the external independent authorisation of all warrants by the courts.
In the very unlikely event that a fatality is associated with the DWP’s use of the powers, the Police Investigations and Review Commissioner can be directed to investigate by the Crown Office Procurator Fiscal Service, which is Scotland’s public prosecution service and death-investigation authority. We expect that, in almost all cases, incidents relating to the DWP’s use of the powers will fall outside of the scope of being serious in their nature. In such cases, the Department’s existing complaint procedures will be used, as I set have out.
It is crucial to build trust in the Department, especially when serious incidents happen. The public must know that their concerns will be handled with importance and impartiality. Clauses 82 and 83 provide that assurance by establishing a transparent and accountable investigation process that is independent of the Department. Having outlined their main provisions, I commend the clauses to the Committee.
Andrew Western
On the question of funding for the IOPC and the PIRC, we are in ongoing discussions with them about what the exact costs will be. We clearly do not expect the costs to be excessive because it is not a massive shift from the work they undertake already.
On the question of what modifications are required to the IOPC role, the regulations will set out how the functions will work for the DWP. It is important to remember that we envisage that the IOPC will look at cases only where there have been serious complaints and deaths, so we are not talking huge numbers.
There could be a range of ways in which people can refer. It may even be that we would self-refer if there has been a death. One of the principal reasons why I did not consider it prudent to take the power of arrest is that that minimises the likelihood of our finding ourselves in that position. Where arrests are undertaken, clearly the police will be on site with us and responsible for that.
I do not envisage the process for making the complaints to be set out explicitly in the code of practice, but clearly if someone contacted the Department and wanted to make a complaint of that nature about something very serious that was outside the scope of internal complaints—for instance, if there had been harm or death—we would immediately refer the person and the case to the IOPC. As I say, the costs are not expected to be excessive, but we would expect to meet them ourselves.
Question put and agreed to.
Clause 82 accordingly ordered to stand part of the Bill.
Clause 83 ordered to stand part of the Bill.
Clause 84
DWP offence
Question proposed, That the clause stand part of the Bill.
Andrew Western
The clause creates a new definition of “DWP offence”, expanding on the existing definition of “benefit offence” set out in the Social Security Administration Act 1992. The DWP must have the power to respond to the different types of fraud we find. We know that, for example, the misuse of national insurance numbers can be a gateway to wider fraud. If criminals steal the identities of honest people and misuse their details to make false benefit claims, that is unacceptable and we need the power to act.
Fraud is not just contained to the most claimed benefits, like universal credit—as we saw with kickstart, grant payments intended to support people when they need extra help can also be abused—yet DWP investigative powers are limited when investigating other types of crime. By providing a new definition of a DWP offence, the clause ensures that fraudulent activity relating to grants, loans, national insurance numbers and other financial support issued by the DWP is explicitly captured in the law. It allows any offences linked to the payments to be met with firm action. The new definition works hand in hand with our enhanced investigation and entry, search and seizure powers in the Bill, thereby giving the DWP the ability to obtain critical evidence needed to prove or disprove allegations of fraud, in a fair and proportionate way.
The clause is about ensuring that every pound lost to fraud, and taken away from those who genuinely need support, is pursued with all the powers we have, whatever the nature of the payment may have been. I commend the clause to the Committee.
Rebecca Smith
I thank the Minister for outlining the plans around the clause, which would establish the definition of a “DWP offence” to allow any offence relating to a benefit payment, credit or grant that the DWP administers to be included under the new information-gathering powers. It would also include offences related to national insurance numbers.
We support the clause, which should hopefully allow DWP to gather information more holistically and lead to more successful prosecutions, but I have a couple of brief questions. What assessment has been made of the scale of prosecutions that could be made? What assessment has been made of the cost of exercising the new power?
Andrew Western
I thank the hon. Lady for her support and her questions. I would not want to put a specific number on the prosecutions—as I said, we have not had the powers to investigate these crimes in full before—but we think that by bringing these areas it into scope not only will we find significant offences that we need to clamp down on but there will be a deterrent effect. Having both levers together makes this an important tool to have in our arsenal.
On the costs, they would be broadly similar to those we already bear for investigating any other type of offence. They would not be materially different in terms of the implications for our budget.
Question put and agreed to.
Clause 84 accordingly ordered to stand part of the Bill.
Clause 85
Disclosure of information etc: interaction with external constraints
Question proposed, That the clause stand part of the Bill.
Andrew Western
The clause is an important safeguard for the DWP’s information-gathering powers. It sets out the kinds of information that a DWP-authorised officer cannot compel from an information holder. The exemptions are similar to those set out in the Social Security Assistance (Investigation of Offences) (Scotland) Regulations 2020. They are designed to prevent information from being obtained that is particularly sensitive, or if it would be inappropriate for the DWP to do so. For instance, as with the existing legislation, exemptions apply to legally privileged material and to information that could lead to the self-incrimination of the person or their spouse or civil partners.
In addition, the clause sets out exemptions for excluded material and certain special procedure material, as defined in the Police and Criminal Evidence Act 1984. This includes material such as medical records, records about counselling that an individual may have received, and journalistic material. The clause also prevents information notices from being issued for personal information about the use of organisations that provide free advice and advocacy services—including, for example, charities that provide refuge from abuse—thereby ensuring that vulnerable people can seek help without fear that their information will be disclosed.
Any use of the powers must be compliant with obligations set out in data protection legislation, which requires that personal data is kept secure and is not misused. The powers cannot be used to obtain communications data. If the DWP seeks communications data as part of its investigation, it must follow the authorisations and processes under the Investigatory Powers Act 2016. Further detail on the safeguards will be in our code of practice, which will be consulted on before being laid before Parliament, and to which all authorised officers will be required to adhere. Having outlined the main provisions of clause 85, I commend it to the Committee.
Rebecca Smith
Clause 85 sets out that DWP’s actions under part 5 of the Social Security Administration Act 1992 must comply with existing laws relating to the use of data and with the existing protections to protect confidential data and data prohibited under the Investigatory Powers Act. I have a brief question before I move on to subsection (8). Does the Minister envisage that clause 85 will provide much practical constraint on how the DWP is able to share information?
Subsection (8) states:
“A person who provides services on a not for profit basis in relation to social security, housing (including the provision of temporary accommodation) or debt, may not be required under the provision to give personal data about the recipients of the services.”
I acknowledge what the Minister just said about the particularly vulnerable, who may be in refuges or places like that, but the provision feels quite broad, particularly in relation to debt recovery and support. Many organisations might have quite a lot of information that would be helpful to the DWP—I think particularly of, for example, Citizens Advice, which sees the records of quite of a lot of people. Why has that carve-out been included and what purpose does it serve, beyond protecting particularly vulnerable groups that we do not want to put in danger?
My other question is about whether the provision excludes local authorities, which often provide temporary accommodation, for example. Does the subsection mean that local authorities will not be part of the group that could be asked for information?
Andrew Western
First, I am not of the view that the protections overly constrain our ability to gather the information we need and execute fraud operations as effectively as possible. The provision significantly broadens the overarching information-gathering package, the number the organisations from which we can compel information and the nature of the information that we can receive, but it is important that we take the steps needed to rule out some of the obvious kinds of information that people would expect us to remove, such as medical records and journalistic material.
It will probably help if I clarify the matter of the special protection status for certain organisations—I apologise if I was not clear when I said this before. The clause does not exempt charities or any specific organisations; it exempts certain types of information, such as that from organisations that provide services free of charge in relation to social security, housing or debt. We can still ask them for information, but not in relation to the advice they have provided. The measure is therefore perhaps not as restrictive as it may seem. It is not that the organisations can never be asked for information; it is just that certain types of information, of the nature I outlined in my principal contribution, will be protected.
Local authorities are not exempt, and they will have a part to play in much of our investigatory work, as the hon. Member for South West Devon suggested.
Question put and agreed to.
Clause 85 accordingly ordered to stand part of the Bill.
Clause 86
Giving notices etc
Question proposed, That the clause stand part of the Bill.
Andrew Western
The information-gathering powers set out under clause 72 will be amended to ensure that information can be compelled from third parties digitally. That is an important step forward for us. The updated information-gathering powers create a single, clear legal gateway so that the DWP can compel information from third parties, it is more straightforward to respond, and that information can be provided digitally.
The Department must ensure that provisions are in place so that, in the event of a failure of digital systems, investigations are not impacted. Therefore, under such rare circumstances, the DWP will retain the power to compel information in writing, as set out in clause 86 —[Interruption.] I think Jennie likes this one. The clause also confirms that the DWP giving an administrative penalty notice by post is sufficient to effect service, and also applies to the eligibility verification measure, enabling the DWP to issue a notice to financial institutions by post, if necessary.
Rebecca Smith
Clause 86 inserts the provision for the DWP to retain the ability to issue an information notice and receive relevant documents by post. The Minister will be pleased to hear that he has answered my questions. The only thing I would ask is: how often does he expect information notices to be issued digitally? I suppose the flip question is: are you expecting the system to work perfectly and the post option to be used very rarely? For example, with vulnerable and older groups, might the post option need to be used more broadly than digital in certain cases?
Andrew Western
Clearly, in individual cases, if someone were to request contact by post, we would want to bear that in mind, but without wishing, as the Minister for transformation, to sound over-confident about the digital capability of some of our systems, in my view we would need to use these powers extremely rarely. It would be digital by default, except in the instance of, for example, system failure.
Question put and agreed to.
Clause 86 accordingly ordered to stand part of the Bill.
Clause 87
Independent review
Question proposed, That the clause stand part of the Bill.
Andrew Western
Clause 87 introduces an important safeguard by providing that all the criminal investigation powers in the Bill are independently inspected. As the Committee would expect, the DWP will make every effort to ensure that its criminal investigations are carried out to the letter of the law—through effective training, internal guidance and, for our entry, search and seizure powers, independent authorisation by the courts. However, it would not be right for the Department to simply mark its own homework. That is why the clause provides for an independent person to be commissioned by the Secretary of State to undertake inspections. This will ensure that there is a formal provision in place to establish that arrangement, and that it can be done in a way that is suitable for both the DWP and the independent person.
The independent person will be responsible for impartial inspection of the Department’s effectiveness, and compliance with relevant codes of practice and guidance in its criminal investigations. That aligns with other Government bodies such as His Majesty’s Revenue and Customs, the Gangmasters and Labour Abuse Authority and the National Crime Agency, which also use investigatory powers at different levels and are also subject to independent inspections.
I am pleased to say that the independent person the DWP intends to commission is His Majesty’s inspectorate of constabulary and fire and rescue services for matters relating to investigations in England and Wales, and His Majesty’s inspectorate of constabulary in Scotland for investigations in Scotland. Those well-established bodies are experts in conducting such inspections and independently assessing the use of criminal investigation powers. Their reports will be published and laid before Parliament, including any recommendations for improvements.
The clause ensures that the Department’s criminal investigations will be conducted with transparency and accountability, demonstrating its commitment to fairness and transparency when exercising its criminal powers.
Rebecca Smith
Clause 87 provides for DWP investigation activity to be inspected and evaluated by an independent person or body. The Secretary of State will be able to appoint someone to inspect DWP criminal investigations, and to provide written reports and recommendations to the Secretary of State, which must be published and laid before Parliament. That review will also consider the DWP’s compliance with the codes of practice, which we have not yet seen, as was much discussed in earlier sittings.
We welcome the transparency that clause 87 will bring to how the DWP is using these powers; however, unlike clause 75, the clause does not state how often reviews would have to be conducted. Is there a reason for that? The Secretary of State would give “directions” as to the period to be covered by each review, having first consulted the independent person. Can the Minister confirm how frequently the Secretary of State will ask the DWP investigation activity to be reported on, and will the independent person or body be able to carry out reviews on their own initiative or will they have to wait until directed to do so by the Secretary of State?
The Minister has already given the Committee an indication of who may be appointed to lead those reviews, and I assume the layout of the police and fire authorities relates to that particular question, so I will not restate that for the record, but can I also ask the Minister how quickly reviews are expected to be concluded once they have been initiated—referring back to the wording of clause 75? For these reviews to be meaningful, there must be a way for the DWP to learn lessons and improve practice, so how can the Minister reassure the Committee that there will be a process in place for that to happen?
Siân Berry (Brighton Pavilion) (Green)
It is a pleasure to serve under your chairship, Mr Western. I want to raise the comments made by the Information Commissioner in relation to the Bill and the updates to the previous Government’s proposals. I understood that they were more content with this Bill than the previous Bill. They were pleased that it brought data protection more tightly within the measures, and that it talked about data protection in a much more consistent way with the law. They said that the Bill more tightly scopes the types of information that can and cannot be shared. I understand that our debate on clause 85 covered some of those improvements.
However, at the end of their comments, the Information Commissioner talked about the review process, and said very clearly that they would like to explore with the Government the role that the Information Commissioner’s Office can play in assisting with the review process. This clause does not set out the different offices and people with whom the independent reviewer needs to liaise in preparing their report. I wondered whether Ministers could comment on their thoughts surrounding that process, and consider setting out in the code of practice or further guidance how the independent reviewer might engage properly with data protection in their review.
Andrew Western
There were a number of questions there—I was scribbling at pace—so if I miss anything, please intervene. In terms of when and how often investigations will happen, it is expected that the period for each review will be set and carried out in mutual agreement with each of the bodies. On whether they can ask to undertake a review, it would need to be in consultation with the Secretary of State, but it is fair to say we would be doing ourselves no favours by refusing to bear their request in mind. Likewise, on timescales, it is all in collaboration with the Secretary of State.
On when we can expect to see the codes of practice, for search and seizure the Home Office’s existing codes of practice will apply, but for information-gathering powers it will be the updated code of practice, which will be consulted on and laid in Parliament before being used. We anticipate that new codes of practice will be available before Committee stage in the House of Lords.
In relation to the response to inspections and how we would learn from them, once the independent body has produced its report the Secretary of State must publish it and lay it before Parliament. Although no legal obligation is placed on the Secretary of State to implement recommendations, we will respond to all recommendations promptly and, as a learning organisation, always look to make continuous improvements.
Rebecca Smith
I thank the Minister for answering those questions. The lack of stipulation on timeframe, frequency and so on begs the question of why this provision is in the Bill. Ultimately, what will trigger a review? That is the bit we probably have not touched on. Who will say to the Secretary of State, who no doubt is an incredibly busy woman, “This is what we need to be doing at this time”? I appreciate that it would be her officials, but this provision is buried in the middle of the Bill and there is no stipulation that a review has to happen after a 12-month period, every six months or whatever. How do we ensure that this transparency, which we welcome, will actually take place, and that the benefits of having a review come to pass?
Andrew Western
That is a reasonable question. Clearly, if there are incidents such as those that would bring into scope the IOPC powers, that would attract significant attention and it would be obvious and—dare I say it?—necessary for the Secretary of State to refer there. In relation to timescales and so on, much of that would depend on what has happened in a period. Were we to say that this was something that will be done every year or every other year and then something happened immediately, we would lack the flexibility to utilise the powers in the agile way we hope to do so. I appreciate that it may appear vague when compared with some powers that we have previously discussed, but that is so we can respond to events, rather than seek to dodge the use of the power.
Clearly, to an extent we will always work in collaboration. As I say, I would not intend at any point to resist a request from HMICFRS or any other body to look into work that we had undertaken, in particular in response to anything that may be considered controversial, not least because search and seizure powers are totally new for the DWP. We need to land them appropriately and build trust that we are able to execute the warrant powers properly.
The Information Commissioner’s comments related primarily to the eligibility verification measures, as they pertain to a direct comparison to the third-party data powers in the Data Protection and Digital Information Bill. Obviously, the Information Commissioner has fairly wide-ranging powers to involve himself in any investigations. It is not something that we would look to resist. I think the channels are already in place for him to engage wherever he feels that it is appropriate.
Question put and agreed to.
Clause 87 accordingly ordered to stand part of the Bill.
Clause 88
Enforcement of non-benefit payments
Question proposed, That the clause stand part of the Bill.
Andrew Western
Clause 88 sets out the details of how an overpayment of a non-benefit payment, such as under the kickstart scheme that was used after the pandemic, will be made recoverable. This is necessary if we are to use the administrative penalty in connection with such cases to enable us to improve fairness, allowing the Department to address fraud wherever it occurs in the welfare system. As the Bill specifically seeks to extend the use of the administrative penalty—a penalty that is considered only after a criminal investigation of a suspicion of fraud—we are specifically extending the recovery of overpayments to cases of fraud against a non-benefit payment.
This means that, before we can recover overpayments of non-benefit payments, the DWP will need to have completed a thorough criminal investigation into a suspicion of fraud and either an administrative penalty is accepted or there is a court conviction. Once that has happened, the process for recovery of non-benefit overpayments will be the same as the long-established processes for social security overpayments. As with social security overpayments, a notice must be sent to the person who received the non-benefit overpayment. The notice sets the right to challenge the overpayment decision.
The overpayment decision can be challenged first by requesting a review by the Secretary of State, and if the decision is maintained, they can appeal to the first-tier tribunal. Individuals have one month to apply for a review and one month after the notification of the outcome of the review to appeal, as outlined in proposed new subsections 71ZK(2) and 71ZK(6). These time limits are the same as those for challenging benefit overpayment decisions. If the decision is not disputed or is upheld following a review or appeal, the non-benefit overpayment becomes recoverable in the same way as social security overpayments.
Clause 88 is fundamental. It ensures that there is fairness in the DWP’s response to fraud, meaning our investigators and decision makers treat cases of fraud against any DWP payment in the same equitable way.
Rebecca Smith
I was hasty in putting down my notes and I realised I left out a bit, so thank you for humouring me, Mr Western. Clause 88 also sets out that there is a right of appeal to the first-tier tribunal against the notice, unless it has been revoked on review. We welcome the ability to appeal to the first-tier tribunal, but can I ask the Minister whether any amounts recoverable will be paused during the appeal process? Again, there is only one month to appeal to the first-tier tribunal, so can he explain on what benefit this timeframe was chosen?
Andrew Western
On whether notices will be sent in the post, it will be a mixture, as in the case for benefits rather than grants. The means of communication may be electronic or by post—there is always a blend. When we follow up in instances where debt recovery is required, we always use a range of mechanisms, such as telephone, digital and post, to attempt to get hold of somebody when we need to.
On the question from the hon. Members for South West Devon and for Torbay regarding how we came up with the one-month period either side of the appeal, that is the existing practice in the case of benefits, and we feel that it is therefore appropriate for non-benefit grants. To give some assurance on flexibility and vulnerability, the characteristics of claimants that might make them vulnerable, such as mental health difficulties, disabilities and other mitigating circumstances, will always be factored in by the decision maker when deciding whether to opt for an administrative penalty in the first place. At present, that happens in the case of benefits, and we would be extending that practice to grants and other non-benefit issues.
If the customer is suspected of being vulnerable at any stage of the investigation, the team leader or higher-investigations leader, in consultation with the investigator, will decide on the appropriate next steps. On the question of the timeliness of recovery, recovery will not start before an appeal was made. If there is an appeal, there will have been no recovery.
Question put and agreed to.
Clause 88 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Gerald Jones.)
Public Authorities (Fraud, Error and Recovery) Bill (Eighth sitting)
Andrew Western ExcerptsThursday 6th March 2025
(3 weeks, 1 day ago)
Public Bill CommitteesRead Full debate Public Authorities (Fraud, Error and Recovery) Bill 2024-26 View all Public Authorities (Fraud, Error and Recovery) Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 6 March 2025 - (6 Mar 2025)
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
It is a pleasure to serve under your chairship, Sir Jeremy. In commencing debate on clause 72, my hon. Friend the Parliamentary Secretary, Cabinet Office, passes the baton to me, to discuss part 2 and the elements of the Bill that pertain to the Department for Work and Pensions. This part sets out reforms of the Department’s approach to five key areas: information gathering, the eligibility verification measure, debt recovery, search and seizure, and penalties reform,
Clause 72 inserts proposed new section 109BZA into the Social Security Administration Act 1992. The new section grants DWP authorised officers powers to issue information notices to any information holder as part of a DWP criminal fraud investigation. When I say “authorised officers”, I mean DWP staff who have been authorised by the Secretary of State on completion of training and receiving accreditation, and can therefore issue notices. “Information holders” may include businesses or employers; a useful illustration of the sort of organisation from which we may request information is a travel agency. This kind of information can be vital in proving or disproving fraud.
The DWP already has powers to compel information in the Social Security Administration Act 1992. The Act sets out a list of information holders from which the DWP can request information, but that list is restrictive. New section 109BZA will update the powers to enable the DWP to obtain relevant information from any information holder in respect of all payments and investigations made by the Department; it also includes the ability to compel it electronically, which is a vital updating mechanism. These updates enable the DWP to take an approach similar to the one already adopted by the Scottish Government for their own criminal investigations into social security fraud.
The DWP takes its responsibilities in handling personal information very seriously. That is why new section 109BZA is constructed with a number of safeguards to ensure the appropriate use of the powers. First, per subsections (1) and (2), the power may be used only by an authorised officer where there are reasonable grounds to expect that a person has committed fraud. Reasonable grounds are established by an objective review of available facts, intelligence and evidence. This is the same principle on which the police also determine reasonable suspicion. Reasonable grounds cannot be supported by personal factors or a hunch. In addition, subsection (1)(b) stipulates that all the information requested must be “necessary and proportionate” for the purposes of investigating the fraud allegation. This determination will be made on a case-by-case basis. Mandatory training in the use of this power will be undertaken by all authorised officers.
New section 109BZA will make it easier for information holders to understand and respond to requests for information. It requires that the information notice must identify the individual concerned, and set out how the information should be returned and by when; it must also set out the consequences of non-compliance.
The clause will help to make the DWP’s fraud investigations more effective in both proving and disproving fraud. I understand that the Opposition will be interested in the code of practice, but I urge them to hold their comments until we consider clause 73, in which the code of practice is discussed at length. Having outlined the main provisions in the clause, I commend it to the Committee.
Rebecca Smith (South West Devon) (Con)
It is a pleasure to serve under your chairmanship, Sir Jeremy. As it was to the Minister, the baton has been passed to me from our Cabinet Office spokesperson, my hon. Friend the Member for Kingswinford and South Staffordshire, as part 2 sets specifically how the Bill applies to the DWP.
We recognise that there is a huge amount of work to be done, given the increasing levels of fraud and error against the Department for Work and Pensions in recent years. We broadly support the details of part 2, but unsurprisingly, we will have some questions in the coming sessions, and we are tabling a number of amendments too.
Clause 72 amends the Social Security Administration Act 1992 to provide powers to require information related to fraud. An authorised officer can give a written notice requiring information where they have reasonable grounds to suspect that the person has committed or intends to commit fraud, and where it is necessary and proportionate to do so. The Minister spoke about how this will enable organisations outside the DWP to be required to provide information. It would be useful to understand better the Social Security Administration Act and what it is currently used for, to make sure that we have covered specifically why it needs to be amended in addition to the provisions of this legislation. I recognise what the Minister is saying, but is there a problem now? Are we not able to take its provisions far enough, and so need these changes to be made? Why are existing information-gathering powers insufficient? This is quite a broadening of the current powers, so some clarification would be great.
I have another question on clause 72 and the changes proposed to the 1992 Act. When we talk about a “person”, is this just the person the information is being requested of—an estate agent or whoever it may be—or does the term also relate to the person being investigated? Are we talking about the person who is suspected of committing a fraud, a person in possession of information about that person under suspicion, or both? In effect, who is the written notice intended for? I am sure that is probably straightforward, but it would be useful to have it outlined clearly.
I note what the Minister said about the code of practice, which I was not planning to mention in this speech. I was saving my comments on that for clause 73—we are learning as we go in this. Can the Minister confirm whether there are any limits on the non-financial institutions that will have to provide information under the verification notices? Does this include institutions such as education institutions, insurance companies, water agencies and others that people receiving benefits might be paying bills to? Where do the limits lie around the types of organisations that will be contacted? I appreciate that is done in other legislation at the moment, but it is quite a big move. We may well cover this later, but are they subject to the same sort of time restrictions as other organisations? If a school that has never had to do this before is contacted, and they have no idea of what is expected of them, how are we going to ensure that they are not penalised? This could be the first time that anything like this has come in their direction.
Steve Darling (Torbay) (LD)
It is a pleasure to serve under your chairmanship this afternoon, Sir Jeremy. Liberal Democrats believe, as do all members of the Committee, that fraud is bad. It clearly impacts on the ability of the state to support people and our communities. It is important to put that on the table. I will give a small overview as we start debate on part 2 of the Bill, but as a liberal, the idea of mass surveillance within this part of the Bill causes me grave concern on a number of levels. This will be unpacked over the next few sessions.
I would welcome the Minister commenting on why this piece of legislation is being rushed. The rush poses a danger to our communities. The fact that the Government commissioned a review into the carer’s allowance overpayments is to be welcomed. We Liberal Democrats called for that, but we are gravely concerned that the Government are bashing ahead with this legislation without being able to take into account any lessons that could be learned from the carer’s allowance debacle.
Although the vast majority of the challenges that we face are error and fraud, my and my colleagues’ concern is that the Government need to fix the Department for Work and Pensions, which is effectively broken. I could wax about that for England, but I will not. When the machine is not fit for purpose, we need to fix it before adding more bells and whistles; simply adding to a broken machine will not fix it. I would welcome some explanation of why we are dashing ahead when we do not have the findings from the carer’s allowance overpayments review. I would also welcome a deeper explanation of what reasonable grounds for suspecting fraud will be. Putting a bit more colour on the palette would be extremely helpful.
Andrew Western
I welcome the broad support from the Opposition spokesperson, the hon. Member for South West Devon, for the overall intent of the Bill. She asked a number of questions about the usage of the 1992 Act. It sets out the information-gathering options available to the Department where fraud is suspected. When we want to compel information for whatever reason—it may be a referral, or data or evidence may be suggesting that there has been fraudulent activity—there is the ability to request, as part of an ongoing investigation, any information that may be useful.
There are two principal reasons why we need changes. The first is modernisation, as I said in my opening comments. I am sure all Members can see how being able to request information via digital means will add speed and simplicity to the process. That is a basic modernisation. There is a more significant change in the shift towards an exclusion list rather than an inclusion list of organisations, which broadens the range of organisations that we can request information from.
The hon. Lady asked whether institutions such as schools or utilities companies may be in scope. In essence, anybody is in scope for this power—for a request for information—unless they are withholding exempted information. There is a range of things that would be specifically exempt. Legally privileged material is an obvious example, as is information that could lead to self-incrimination for recipients and their spouses or civil partners.
It is worth saying for clarity that organisations that provide no-cost advice and advocacy services will not be compelled to share personal data about their service users. That will maintain trust, which is an important principle of their work, and allow individuals to seek help without fear of their information being disclosed. There is also an exemption from providing excluded or special procedure material as defined under the Police and Criminal Evidence Act 1984. That includes personal records, including records relating to physical or mental health, human tissue and confidential journalistic materials. Those are the types of information that would be exempt. With the exception of the organisations providing advice and support, all organisations are essentially in scope if they hold other relevant information to help with an ongoing inquiry.
The person in receipt of the notice is the person or organisation we are compelling the information from, rather than the person about whom it is compelled. So the person receiving the notice is the one we are asking for detail from.
Andrew Western
With permission, before turning to clause 73, I will take the opportunity to make a few general points about the approach to codes of practice for this Bill more generally, as that has become a recurrent theme in the line-by-line scrutiny and was in the evidence-gathering sessions last week. The codes of practice issued under the Bill do not contain statutory provisions. That means that they do not have any particular legal effect; they will simply outline how the measures will be operationalised in more detail. The Bill, and particularly its associated schedules, set out a baseline for that operation. In my view, that gives us more than enough opportunity to understand how the Bill will work in practice.
As the codes of practice do not contain statutory provisions, the guidance, as previously referred to in the evidence sessions, does not say that we must provide them alongside the legislation. The guidance even goes so far as to say that it is “unnecessary” to make it a statutory requirement to provide these codes at all, but we have done so as we believe that is the right thing to do. It is the legislation itself, as I said, that should be considered and scrutinised. There is considerable detail within the Bill, and it clearly sets out the legal obligations that the Government are creating that Parliament must consider, as we are doing in Committee.
As I have said, however, we want to be more transparent with the House, because we recognise that these codes are of interest, even if they are not wholly relevant to the legal obligations that the Bill will create. As such, as my hon. Friend the Parliamentary Secretary has done on part 1, I will provide an outline of what the codes will cover as the relevant clauses are debated. We have committed to provide drafts of the relevant codes as soon as they are available. That is not a requirement, but it recognises the interest of Members. We are going above and beyond what is required in the spirit of transparency.
The “Guide to Making Legislation”, which the hon. Member for Kingswinford and South Staffordshire may be interested to know was reissued this week—I assure him that it will be my bedtime reading this weekend—outlines that codes are not to be used as a substitute for legislation. That is why we have made a conscious effort to include lots of detail in the Bill about how the powers will work in practice.
The clause amends section 3 of the Social Security Fraud Act 2001 to require a new statutory code of practice for authorised officers accredited by the Secretary of State to exercise the information-gathering powers under the proposed new section 109BZA of the Social Security Administration Act 1992. Beyond the detail already included in clause 72 and other parts of the Bill, the code will set out more detail on the limitations of the powers and how they must operate, and clear conditions for their use. That includes detail on the meaning of a reasonable suspicion of fraud, as set out in clause 72.
The code will also include additional detail to help guide information providers. It will provide further detail on the timeframes for compliance and how an information request must be complied with—including how to comply with requirements under subsection (5), which includes the power for the DWP to request that information be provided in a specified form, and for the DWP to require an information holder to state where the information may be held if they do not have it and to explain why it cannot be provided.
The code will also include further details on the consequences of non-compliance. Under existing legislation, information providers who fail to comply with an information notice may be subject to prosecution, which can result in a fine of up to £1,000. If they continue to refuse to provide the requested information, they may be liable to a fine of up to £40 for every day that they fail to provide the requested information. That approach will apply to the new information-gathering provisions. There will also be further detail in the code about the consequences for information providers who repeatedly fail to comply with information requests, and about what may be considered a reasonable explanation for why the information provider is not able to comply with an information notice.
Before issuing the code of practice for the first time, we will carry out informal consultation with stakeholders on a draft code, to ensure that their views are reflected in the drafting. Once finalised, the code of practice will be laid before both Houses of Parliament and published.
Rebecca Smith
I thank the Minister for setting out that information. This is a short clause, so my comments will not be long. It amends section 3 of the Social Security Fraud Act 2001 to add a code of practice on the use of information powers exercised by an authorised officer.
As has been said, much has been made of the lack of a code of practice. We maintain our view, and I am sure other Opposition Members will agree. I have heard the reassurances of the Minister and, earlier today, of the Cabinet Office Minister, but the Minister’s indication of what will be in the code gives me an opportunity to ask a couple of questions.
I welcome that there will be a consultation on the code, although I appreciate that it could slow down the introduction of the legislation. Had the code of practice been developed in tandem with the Bill, or even beforehand, we could have implemented the Bill much more quickly after its passage to crack on with recouping some of the fraudulent costs and highlighting any errors being made. However, we are where we are and, even so, I welcome the consultation.
The Minister has reassured me that we will continue to hear about the code of practice, but my other question goes back to what I said on clause 72 about additional non-financial organisations that might be contacted, and to what the Minister has just said about the fines to be levied for non-compliance. A huge amount of responsibility is being placed on the people who receive these notices. This will be new to them as it is a new Government power, particularly as it pertains to the DWP.
What will be in the code of practice to ensure that we remember the people about whom we seek information are not necessarily the ones at fault? How do we communicate with them so that they want to co-operate, and so that they do not end up in a non-compliant position? This may not be within the scope of the Bill, but how do we communicate to the general public, in layman’s terms, what is expected of them? For example, if this lands on the desk of a primary school headteacher, how will the Department ensure that they understand what has been done and are not terrified by the process? How will it ensure that we achieve the process and outcomes we all seek?
Steve Darling
The Minister will not be surprised that I return to the fact that the Bill has been rushed. I respectfully remind him that we are a very refreshed House of Commons. This is fresh information for the vast majority of Members. Although Parliament may have a corporate memory, this Bill has moved at great pace since First Reading and we remain very concerned that this may result in errors.
The Minister has assured us that the code of conduct will be available in due course, but can he identify by what date or by when in the legislative programme? That would give us some comfort. Although positive words have been said about the code of conduct, it drives the culture of an organisation, and culture is extremely important. I look forward to some words of reassurance from the Minister.
Andrew Western
I am not sure that I agree with the assertion of the hon. Member for South West Devon that the time it takes to pass the code will significantly slow down the Bill. As she is aware, we are currently working with a range of organisations and stakeholders, and we are gathering information and ideas for a draft of the code.
To answer the hon. Member for Torbay, we hope to share the draft of the code before Committee in the House of Lords. I am happy to put that on the record, as it is an important point that applies to all codes of practice in the Bill, both for the Public Sector Fraud Authority and the DWP.
I am not sure I fully agree with the hon. Member for South West Devon that we could have saved time by having already drafted and consulted on the code. If there were any amendments to the Bill, the code would have to be rewritten, at least to some extent, to reflect them.
I was asked which organisations are anticipated to be called upon to provide information, as well as their willingness to do so and our ability to maintain a positive relationship. They want to engage with this, because tackling fraud is important and has a clear public benefit. We want to make the information notices as clear as possible. People will have at least 14 days to comply with an information request, and they will have the right to appeal should they have any particular issues. We would look to work with them wherever possible to ensure that they are able to provide the information needed. Clear communication is important, and we want to be certain that we achieve it.
I have dealt with the question about the code of practice, and I hope that is helpful to the hon. Member for Torbay. I struggle rather more with his suggestion that our being a new Parliament means the Bill has been rushed. A number of Bills have already made their way through the House since July. The machinery of government must be able to continue at the pace required to react to change, particularly for a Bill such as this where we are responding to evermore challenging and complex types of fraud. The Department for Work and Pensions alone lost £9.7 billion to fraud and error last year, which suggests to me that urgency is required. On that basis, I see no issues with the timings of the Bill.
Question put and agreed to.
Clause 73 accordingly ordered to stand part of the Bill.
Clause 74
Eligibility verification
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Amendment 30, in schedule 3, page 84, leave out line 12.
This amendment would remove pension credit from being a ‘relevant benefit’ for the purposes of the Act.
Amendment 25, in schedule 3, page 84, line 12, at end insert “(d) housing benefit”.
Amendment 29, in schedule 3, page 84, leave out lines 13 to 17.
This amendment would remove the provision for regulations to change the list of qualifying benefits.
Amendment 35, in schedule 3, page 84, line 13, leave out from “to” to end of line 17 and insert
“remove types of benefit from the definition of ‘relevant benefit’”.
This amendment would mean that benefits could not be added to the list of “relevant benefits” by regulations.
Amendment 24, in schedule 3, page 84, line 25, at end insert—
“or such an account which is held by a person appointed to receive benefits on behalf of another person.”
Schedule 3.
Andrew Western
Before I address this group, may I make a brief correction? I confused my information notices earlier: it is 10 days to comply, with no right of appeal, but we are happy to have conversations with those who, for whatever reason, are unable to provide the information that we require, and to work with them to ensure that they can.
I will speak to clause 74 and schedule 3, and then colleagues can speak to the various amendments. Clause 74 inserts proposed new section 121DB and proposed new schedule 3B, which is outlined in schedule 3 to the Bill, into the Social Security Administration Act 1992. The proposed new clause and schedule contain provision for the eligibility verification measure, and they must stand part of the Bill so the Secretary of State can issue a bank or other financial institution with an eligibility verification notice, which will help the DWP to identify incorrect payments in the social security system.
Ensuring that a person is eligible for the benefit they are receiving will help to prevent fraud and genuine errors so that people do not accidentally build up large debts, with all the worry and distress that causes. The measures before us are tough on fraud, but they are also about: fairness to those who play by the rules and rely on the social security system; fairness to those who make errors, by helping to identify potential errors sooner; and fairness to taxpayers, by ensuring that every pound is spent wisely, responsibly and effectively on those who need it and are legally entitled.
Fraud and error in the welfare system were responsible for the overpayment of almost £10 billion in 2023-24. Since the pandemic, £35 billion of taxpayers’ money has been incorrectly paid to those not entitled to that money. These measures alone will save £940 million over the next five years, up to 2029-30—a figure that has been certified by the independent Office for Budget Responsibility.
An eligibility verification notice issued under schedule 3B will require a bank or other financial institution to look within its own datasets and to provide data to help the DWP identify where someone might not meet the eligibility criteria for a particular benefit. To do that, the notice will contain defined criteria that the bank or other financial institution must use to detect accounts that might not meet the eligibility rules for a certain benefit—for instance, accounts that receive universal credit but have over £16,000 in capital, which is above the normal limit to remain eligible.
Only then, if there is an indication that an individual may not be eligible for the benefit they are receiving, will the bank or other financial institution share limited information about the account to allow the DWP to undertake further inquiries, as necessary. We know that a customer might hold money in more than one account, and not necessarily in the one that receives the benefit payment. For that reason, schedule 3B requires a bank or other financial institution to look at all the accounts it provides to the individual, and to compare them with the criteria set out in the notice.
The measures also contain important safeguards to protect benefit recipients and associated individuals, to protect their data, and to ensure that it is not unduly onerous for a bank or other financial institution to comply with an eligibility verification notice. Those safeguards, which are extensive, include clearly restricting who the DWP can collect information on, and for what purpose; clearly restricting how the DWP can use the information gathered under these powers; tightly limiting the accounts in scope, including the sharing of data on UK accounts; limiting the type of information that can and cannot be requested, with clear provisions that certain data, such as information on transactions, cannot be shared; and showing that a human will always be involved in decisions that affect benefit entitlement. A code of practice must be produced, providing guidance for financial institutions on their obligations under this legislation.
To protect the privacy of our customers and associated individuals, such as appointees, we must take steps to ensure that limited information is shared with the DWP—the minimum to enable further inquiries, where necessary. That is why part 2 of proposed new schedule 3B outlines provision for a comprehensive penalties regime to prohibit banks or other financial institutions from sharing information that is not permitted to be shared under the measure, as outlined in paragraphs 1(4) and (5). This can include information about individual transactions and special category data, such as data about an individual’s health, ethnic origin or political opinions.
If a financial institution wishes to dispute a notice, it has recourse under proposed new schedule 3B. Specifically, it will have access both to a process to ask the DWP to review the decision to issue a notice, as set out in part 3 of proposed new schedule 3B, and to an appeals process to formally dispute the requirements of a notice, as set out in part 4. Part 5 will mean that the Secretary of State must publish a code of practice to govern the use and operation of the measure, including data received under it.
I said I would spend a moment on codes of practice where appropriate, so I will now speak to this in more detail. The code of practice for EVM will provide further guidance for banks and other financial institutions on complying with notices, and information for those who may be affected by the measure. It will include detail on the eligibility of verification notice and its purpose, including how it will be sent, who should comply with it, and further details on the accounts in scope, such as linked accounts and appointees. It will specify further the type of information that the DWP will request from financial institutions, and the type of information that is prohibited, such as transaction and special category data. It will also set out how the DWP will use the data received in response to a notice, beyond what is in the Bill.
The code will also set out more detail on the safeguards to ensure that the measure is exercised in a proportionate and measured manner, along with the mechanisms embedded to ensure accountability. This includes safeguards for individuals, financial institutions and the data itself, as well as the independent oversight of the measure. It will explain how data must be handled and treated once received, along with the confidentiality and security requirements and compliance with rules and provisions set out in the Data Protection Act 2018 and the UK general data protection regulation. It will also set out clear avenues for compliance concerns to be raised.
The eligibility verification measure is projected to save £940 million over the next five years, and it is a vital part of a package of measures that will save up to £1.5 billion over the next five years.
The Chair
Before I call the shadow Minister, it would be immensely helpful if Members could say whether, at this stage at least, they intend to press their amendments to a vote. They will, of course, have a chance to change their mind if the Minister persuades them otherwise when he winds up.
Damien Egan
I really appreciate the point, but I think if hon. Members were to spend time and speak to work coaches—as they may have done—they would find that work coaches want, and are asking for, more of that information to be shared. It is also about trying to prevent people from committing fraud.
Andrew Western
I will make a few general comments on the thrust of hon. Members’ contributions, beyond the comments that they made about their amendments, and then I will speak to the amendments as one at the end of my contribution.
The Opposition spokesperson, the hon. Member for South West Devon, talked about people who bank with more than one financial institution, and asked what happens if their benefit is paid into one institution and they have savings in another. She is right that we will not have full sight of somebody’s accounts if they bank with more than one institution. That is by design, specifically because of the concerns we heard from other Members about the scope of the Bill. Were we to take the power to check every single account in the country, there would understandably be significant outcry about proportionality; indeed, we have heard some of that with regard to what I would call the limited scope of what we are putting forward.
I would be especially concerned were we to attempt to narrow the scope by sharing the details of benefit recipients only. That would breach an important safeguard that we have built into the eligibility verification measure: namely, that we will not share data directly with banks. I do not think there would be a way to do that for somebody who banks with more than one institution without either checking every single bank account in the country—which would not only be a mammoth undertaking, but would lead even me to use words such as “mass surveillance”—or sharing data in the other direction, which I am incredibly keen to avoid.
This is a question of scope. We have gone a considerable way in narrowing the scope of this eligibility verification measure. It most obviously compares to the third-party data measure that the previous Government put forward in the Data Protection and Digital Information Bill. That did not make the same interventions to narrow scope—for instance, removing the state pension—nor would there have been independent oversight of the process.
The hon. Lady is correct that there is a question about what happens when somebody banks with more than one institution. I assure her—this is a really important point from a fiscal perspective—that the savings that we have earmarked against the Bill and the eligibility verification measure are based on the principle of checking only the institution into which the benefits are paid. That does not mean that we would check only that account, however, so if the person had more than one account—a current account, a savings account and so on—that would be in scope, albeit business and charity accounts are explicitly ruled out.
The hon. Lady also asked about the capacity to better protect older and vulnerable people. That is incredibly important. Clearly, there is already a range of safeguards across the Department to work with people who present to us as vulnerable. We have specialist staff who work with those people and a vulnerability management framework within the Department to ensure we work as best we can with people who need additional help and support. She is right that that may manifest more in cases involving pension credit, and we will do all we can to work with people in need of additional assistance.
That does not mean that we get everything right, but we have made strides in our day-to-day support for vulnerable people, both when they apply for benefits in the first place, and when they owe debt to the Department for whatever reason. When we come to the debt recovery powers in the Bill, I will say significantly more about the vulnerability protections that we have built into the Bill and have more generally across the Department.
That brings me to the general comments that the hon. Member for Torbay made. I will avoid some of the more hyperbolic language—“Orwellian”, “mass surveillance”—and go straight to one of my favourite things: a Waitrose cheesecake. I assure him that, as expressly set out on the face of the Bill, transactional data will not be shared with the Department for Work and Pensions under the eligibility verification measure. He says that people are saying that that should be of concern to benefit recipients; I suggest that those of us in this House have a particular responsibility not to peddle those sorts of myths.
I am compelled to address the overarching accusation that the DWP is not fit for purpose. We are not a perfect organisation and do not claim to be, but we support millions of people, week in and week out, pay out billions of pounds, week in and week out, and provide a vital safety net for people up and down this country. I am proud of the work that we do. That does not mean that we do not need to strive to make improvements or that we are in any way beyond reproach. But I have to say that the role we play in supporting the most vulnerable people in society is absolutely critical for this Government.
Siân Berry
I hope the Minister will not take this the wrong way, but I hope that he is able to understand that the stigma that people feel about applying for benefits is partly to do with the attitudes people have towards those who receive benefits. The idea of the Government applying a privacy invasion measure against that cohort of people as a whole feels like discrimination to them. It adds to the stigma; it speaks to the fact that they feel that they are not treated as well as other people in society. They are not believed when they say that they do not have £16,000. Those are all parts of the same package of discrimination, are they not?
Andrew Western
They would be, were the powers entirely unique. However, as we heard in the evidence of the representative from HMRC, there is a long-standing power—introduced, I believe, in the Finance Act 2011—for HMRC to routinely and regularly check all interest-bearing bank accounts in the country. I have not looked at the cohort of people who are fortunate enough to have interest-bearing bank accounts, nor have I ever been in such a position myself, so I plead ignorance here. However, I suspect that there is not the same over-representation of vulnerable groups.
The important point—this comes back to the broader point around automated decision making, AI and so on that the hon. Member for Brighton Pavilion made—is that we are looking to better improve our access to data, not take decisions as a direct result of the information we have received. Indeed, we have built in human decision making at every stage of the five areas where we are taking new or updated powers on the DWP side of the Bill.
Steve Darling
I referred to the proposals as Orwellian, and my concern goes back to “Animal Farm” where the notice was amended to read:
“All animals are equal, but some animals are more equal than others”.
We have this perverse situation with the legislation where for some sections of society it is appropriate for the Government to use AI to go through their bank accounts, and for other sections of society it is not appropriate to use AI to go through people’s bank accounts. How does that lead to a society that is cogent and speaks together? Or is this just sowing division around our communities?
Andrew Western
It is incredibly important to reiterate for anybody who may be watching our proceedings that the Government will not be going through anybody’s bank accounts. We will be asking banks and financial institutions to do that, and to share information with us only where there is a potential breach of eligibility verification. The information that is shared with us will be specifically related to identifying the bank account and the potential breach of eligibility. It will not be, for instance, special category data or transactional data.
To return to my point about the use of AI and automated decision making, when a flag comes back on the eligibility verification measure, a potential breach of eligibility will immediately be passed to a human investigator to take that forward. It will not at any point trigger a penalty or a prosecution for fraud without a human intervening and, as they do at present, establishing that there is potentially fraudulent activity or, indeed, an error that warrants a reclamation of overpayment.
Amendment 30 seeks to stop the DWP from being able to use the eligibility verification power in respect of pension credit. We have had quite the debate about that already, and the hon. Member for South West Devon made many of the points that I would have made.
Mike Wood (Kingswinford and South Staffordshire) (Con)
According to the House of Commons Library, one of the biggest factors in that 10% of pension credit expenditure that is lost to fraud and error is payments to people who are abroad. How will the measures on eligibility verification help to identify people who do not actually live in the country so would not be eligible for pension credit?
Andrew Western
I am grateful beyond belief to the hon. Gentleman, because he highlights why this provision is so important. More than 50% of the fraud and error that we see in pension credit comes from two principle sources, which the eligibility verification measure specifically seeks to address. One is the issue of capital fraud, where there is a relatively easy indicator—for example, in respect of universal credit, was the individual in receipt of capital in their account of more than £16,000?
The provision also has the benefit of helping us to establish when somebody has been out of the country for longer than their benefit entitles them to be. For instance, it would provide a flag on an account when somebody’s bank account suggested they had been making purchases abroad and so on. We would not receive the transactional data or know specifically where the purchases were made—or, indeed, whether it was cheesecake or some other item—but it would give us specifically the date that somebody left the country, and thereby show whether they were in breach of the length of time they are allowed to be away. This is not, then, just a tool to deal with capital fraud, although that is the most straightforward example to articulate and, therefore, the one I use most readily; it will also be useful to identify people who have been abroad for longer than their eligibility suggests they should be allowed to be while continuing to receive benefits.
It is important to recognise—I touched on this when I set out the human safeguard that is in place—that a flag would not necessarily mean that someone has done anything wrong, or that they are no longer entitled to benefits. On capital fraud, it might be because someone has received, perfectly legitimately, a Government compensation payment, such as for infected blood, which would be out of scope. That is why a human would check that. The person would therefore not lose benefits or receive an overpayment.
On someone being out of the country for longer than they are entitled to be—if they have been taken ill, or if there has been an environmental catastrophe, humanitarian disaster or some such, that means they are unable to leave the country they are in—again, that would be investigated. The person would not face action as a result. I hope I have set out exactly how the eligibility verification measure is useful not only for capital fraud, but for allowing us to notice and receive indications about when someone has been out of the country for longer than they are entitled to be while still receiving benefits.
As I said, on amendment 30, the hon. Member for South West Devon touched on many of the comments that I would have made about why pension credit is included. The change would not explicitly exclude pension credit, as with the state pension, because the legislation still enables Ministers to lay regulations for its inclusion at a future date. My intention, however, is to use the power for pension credit payments from the outset, because unfortunately the rising trend in overpayments of pension credits demonstrates that pension-age benefits are not immune from fraud and error.
In 2023-24, £520 million in pension credit was overpaid, and pension credit has one of the highest rates of capital fraud and error, with £198 million lost in 2023-24 alone. The rate of fraud in pension credit increased by more than 50% in 2023-24, as against the previous year, so we have a clear problem. The under-declaration of financial assets and claimants staying abroad for a longer period than is allowed remain the two main causes of pension credit overpayments in ’23-24. As I said previously, they accounted for more than 50% of all overpayments.
Equally, it is important to ensure that people receive the right payments. The eligibility verification measure is not about removing pension credit payments from anyone; it is about confirming that claimants meet the conditions of entitlement. The measure also enables the Department to help to prevent individuals from unknowingly accruing overpayments, pension credits or any other benefit in scope, which could lead to financial stress if later they need to repay money they were not entitled to.
Overall, the measure and the inclusion of pension credit will help the DWP to ensure that public funds are used responsibly while maintaining confidence in the benefit system. On that basis, I will resist amendment 30.
Rebecca Smith
Before we move on from pensioners, throughout the debate there has been a valid concern about pensioners potentially being alarmed at or feeling vulnerable about what might happen. Will the Minister clarify something? Any pensioner who is not involved with pension credit is not likely to fall within scope of having their bank accounts checked, so only those people who are interacting with the Department in one shape or another are likely to have their bank accounts searched, and only in relation to those benefits. Every single pensioner out there will not have their bank accounts scrutinised; only someone of whatever age or bracket who is, or seeks to be, in receipt of benefits will fall within the scope of the Bill. Am I correct in believing that? That would at least reassure a proportion of pensioners—although not all—that they are not, as we said, going to get snooped on for buying a cheesecake. They will fall in scope only if they end up interacting with the Minister’s Department.
Andrew Western
I am happy to confirm that the situation is as the hon. Lady articulated. Only someone in receipt of one of the three benefits initially in scope would face use of the eligibility verification measure.
Steve Darling
Will the Minister confirm whether, once the Bill has passed, he could choose to increase the scope to include all pensioners?
Andrew Western
That brings me to amendment 25, which seeks to include housing benefit, and to later amendments on the affirmative procedure regulations that we propose for being able to bring other benefits in scope. We would need to do that to reflect the changing nature of fraud and the fact that fraudsters, unfortunately, change their behaviour and the benefits they target depending on the safeguards in place and the extent to which they are effective. Therefore the answer to the question is yes, and I will say more on that when we come to the specific amendments in that space.
Child Maintenance Service
Andrew Western Excerpts(1 month ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
Let me begin by congratulating the hon. Member for St Neots and Mid Cambridgeshire (Ian Sollom) on securing this debate, which is incredibly important to him and his constituents. I hope that I will assure him in my contribution that it is important to the Government too.
Far too many children are growing up in poverty. A key priority for this Labour Government is to reduce that number as soon as possible. That is why child maintenance is incredibly important. It is estimated that child maintenance payments keep around 160,000 children out of poverty each year. That has involved the CMS arranging around £1.4 billion in child maintenance payments in the 12 months to September 2024.
Tackling child poverty is an urgent priority for the Government, which is why we have already announced our commitment to triple investment in breakfast clubs to over £30 million, to roll out free breakfast clubs at all primary schools, to create 3,000 additional nurseries and to increase the national living wage to £12.21 an hour from April to boost the pay of 3 million workers, many of them parents.
The ministerial child poverty taskforce, to which the hon. Gentleman referred, is working to publish a child poverty strategy later this year, which will deliver lasting change. In developing the strategy, the taskforce is exploring all available levers for reducing child poverty across four key themes: increasing incomes, reducing essential costs, increasing financial resilience and better local support, especially in the early years.
Tom Gordon (Harrogate and Knaresborough) (LD)
The Minister mentioned that the taskforce would look at all options. Would that include scrapping the two-child benefit cap?
Andrew Western
The hon. Member will have heard me say that we are looking at all available levers across those four areas. We rule nothing in and nothing out, but I understand his point.
We are aware of the challenges that the CMS faces and recognise that there is scope for improvement. The ministerial team as a whole is committed to making those improvements. On what we are doing about those issues, I will turn to the recent direct pay consultation, which the hon. Member for St Neots and Mid Cambridgeshire referred to, and offer some background to the proposed reforms. My party has long called for reforms to the direct pay service, stating that it does not work for all parents. For that reason, this Government extended the direct pay consultation launched by the previous Government, with the express purpose of gathering as much feedback from stakeholders as possible. We are looking closely at the feedback received and will publish the Government response in due course. I appreciate that the hon. Member for St Neots and Mid Cambridgeshire would ask for a more specific timeline, but I hope he will appreciate that in what is an incredibly delicate area—dealing with vulnerable children, vulnerable families and strained relationships—we want to take our time and ensure that we get the changes right.
Josh Fenton-Glynn
My hon. Friend will know that getting it right for the most vulnerable children is important, but we are increasingly seeing post-separation abuse and post-separation financial abuse coming to light. Indeed, the report from Gingerbread that I cited earlier said that 45% of people who report post-separation financial abuse say that it gets worse when the CMS is involved. I hope that any report into the work of the CMS and supporting vulnerable families will look at that question and help us get some answers on that issue.
Andrew Western
I thank my hon. Friend for his intervention. He has a long history of working not just on CMS issues but on child poverty more broadly, and his expertise is of great value to the House. I will say a little more about domestic abuse and financial abuse later in my contribution, but I reassure him that the focus we had in the consultation on the proposed abolition of direct pay was intended as a specific response to that issue. I have seen appalling examples in cases that have crossed my desk as a Minister of people who can message their former partner in the form of a comment on a bank transaction. They will transfer a penny—they have a direct payment in place—along with an abusive term or some form of triggering harassment of a former victim of theirs. That shows that while a parent may have moved away from that unsafe and dangerous environment, they are never fully away when direct pay is engaged.
Andrew Western
I can see the hon. Member for Strangford (Jim Shannon) trying to come in. I will beat him to it and give way.
Jim Shannon
I thank the Minister. I expect that we will have a positive response from him to the hon. Member for St Neots and Mid Cambridgeshire (Ian Sollom) and all the queries, because that is what we get from the Minister we have in front of us.
One of the things that really frustrates me—it frustrates us all—is whenever one of my constituents comes to me and says, “I get a different person every time I phone up. I have to tell them the same story over and over again, and then you go back two weeks later and the person you were speaking to is away as well.” There must be some way in the Department for Work and Pensions that we can have a specific case officer who looks after something, and they need to respond to that person. I know that the Minister understands these things, but, honestly, it is so simple to sort out—at least, it seems to me to be simple. We really need something on behalf of all our constituents.
Andrew Western
I absolutely understand the point that the hon. Gentleman is making. With specific reference to named caseworkers, initially for victims of domestic abuse, I will have something further to say that I think he and all hon. Members will welcome, but I take his more general point.
If I may make some progress, turning to direct pay and domestic violence, financial abuse and so on, the proposals also sought views on collection fees and explored how victims and survivors of domestic abuse can be better supported. That is so important given the issues raised by the hon. Member for St Neots and Mid Cambridgeshire and the case he cited of his constituent. Overall, work is ongoing to establish the steps needed to really improve the service, taking account of the views of parents. Those will be set out in the response to the consultation. I appreciate that he would like that to be as soon as possible; I will take that away.
To drill down on the issue of domestic abuse, the scale of violence against women and girls in our country is intolerable, and the Government will treat it as the national emergency that it is. Our manifesto included the mission to halve violence against women and girls in a decade—we were right to do so—and I and all Ministers are focused on making that a reality. If I may, I will therefore say a little about the support that should be available. If the hon. Member wants to share specific details of the case that he referenced with me, I will take that away. The support that should be available is extensive and runs contrary to what clearly happened in the case that he outlined.
We have overseen progress in providing support, with the continued roll-out of an operational team to deliver targeted support to parents subjected to the most challenging and complex domestic abuse. The team provide a tailored and discrete service to customers, which is incredibly important, giving regular progress updates. They can and do assign a named caseworker to prevent customers having to re-tell their story at each interaction. As the hon. Member for Strangford (Jim Shannon) was saying, that can be incredibly stressful for parents using the service. Caseworkers are trained to identify and refer appropriate cases within the collect and pay service to that team. More generally, the CMS consulted on a diverse range of stakeholders to review its domestic abuse training for all frontline CMS staff to ensure that caseworkers understand, recognise and respond appropriately to customers who are experiencing domestic abuse or who are survivors of domestic abuse.
Adam Jogee (Newcastle-under-Lyme) (Lab)
I am very grateful to the Minister for giving way and I congratulate the hon. Member for St Neots and Mid Cambridgeshire (Ian Sollom) on securing the debate. Like him, I have had a number of people come to me with stories of being ignored, let down or left behind by this agency. The sooner the failures of the agency are dealt with, the better for people not just in my constituency but up and down the United Kingdom. With that in mind, will the Minister find time to meet me to talk about the specific examples faced by my constituents? He touched on the point that this is an equality and safety issue. That is very much the situation in my patch for the people who come to my surgery. I would therefore be grateful, in the spirit he has approached the debate so far, if he could find time to meet me to discuss those points.
Andrew Western
I should have known that my hon. Friend would be in his place. He is keen on an Adjournment debate—we all know that. This is where I out myself as an imposter, because I am not the Minister with direct responsibility for the CMS, but I am very happy to put him in touch with the Department’s Minister in the House of Lords, who I am sure would be happy to have a conversation with him.
Turning back to the hon. Member for St Neots and Mid Cambridgeshire and the points he made about calculation reforms, a broad review of the child maintenance calculation is being conducted. It is examining the scope for change and improvements, while maintaining the simplicity of the calculation. It can be very frustrating for paying parents who are waiting to have income reassessed, and for receiving parents when they are aware that a paying parent has received a substantial income increase. The calculation at present generally looks at income from the previous tax year and it is only when somebody’s income has changed with a divergence of more than 25% in either direction that it triggers an in-year evaluation. We are looking at ways we can change that, while recognising that we need to encourage payment compliance and more sustainable arrangements in all that we do.
The hon. Gentleman will be pleased to hear that the £20 application fee he referred to was removed in 2024, getting rid of a financial barrier to parents wishing to access the CMS. Proposals to include more types of taxable income held by HMRC within the standard maintenance calculation are being considered, alongside the review of the child maintenance calculation.
Turning to enforcement—my hon. Friend the Member for Congleton (Mrs Russell) also raised this issue—I can understand that for some receiving parents there are frustrations with how quickly the CMS secures payment from non-compliant paying parents. We have seen significant improvements to speed up action when payments first break down and to target enforcement action more effectively. We are changing the process at present to make direct deductions something we can do more swiftly where issues emerge. We have a range of strong enforcement powers that can be used against those who consistently refuse to meet their obligations to provide financial support to their children, and in the past year to September 2024 the CMS has collected £16.8 million from paying parents with civil enforcement actions in process. Collections through civil enforcement have followed a general upwards trajectory in recent years. For comparison, the equivalent figure in 2021 was £10.3 million.
I would like to finish by talking about the improvements to customer experience and digital services that the Department has been introducing. Since 2020, as part of the DWP service modernisation programme, the Department has transformed the ways in which customers can interact with the CMS, providing customers with the choice to make contact with digital routes and reducing the time taken to action change of circumstances. We continue to develop our digital offer, evaluating through user research and customer feedback, but we are committed to retaining a non-digital telephony service to ensure that no customer is excluded.
As I said earlier, I recognise that the hon. Gentleman is rightly impatient, as are other Members, to see change and to see the details of our reform package following the conclusion of the recent consultation, but getting the right solution will take a little time. It is right that the changes that we make are properly considered and robust so that the CMS can continue to play not just an important role but an ever-more effective and increasingly important role in supporting children and tackling child poverty.
Question put and agreed to.
Public Authorities (Fraud, Error and Recovery) Bill (Second sitting)
Andrew Western ExcerptsTuesday 25th February 2025
(1 month ago)
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The Chair
Do you want to add anything, Mr Las?
Richard Las: On the covid side of things, we have not stopped our efforts, but we have recognised that we are not going to pursue it as a lead subject. However, we are conducting other inquiries and looking to other taxes. We will be looking at whether there was fraud under the covid schemes, and we will still be pursuing that. I still have a large number of cases going through the courts or heading towards prosecution in relation to the scheme. A bit like Joshua, I am certainly not giving up on it—we will keep pursuing it—but, in a decision on how we deploy our resources, we are saying, “We’ll look to what we think are the higher risks, and we will pick up the covid risks as and when we come across them at the same time.”
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
Q
Joshua Reddaway: Specifically, do you mean the EVM—eligibility verification measure—stuff?
Andrew Western
All the powers pertaining to the DWP—the five principal areas in the DWP’s proposals—so information gathering, debt recovery, penalties reform, powers of search and seizure, and EVM.
Joshua Reddaway: Okay. To step back, we have been looking at a general trend of rising levels of benefit fraud for a few years. Actually, it has come down a little since covid, because there was a blip then, but if we take covid out, the levels were rising anyway. Currently, it is more than £10 billion, if you include the bit of benefits that HMRC pays—obviously, that is coming down with universal credit.
I do not think that what is in the Bill will solve that; what is in the Bill will support tackling it. This is about adding a few tools to the DWP toolkit. The key thing is that prevention is better than recovery. DWP is really good—one of the best in the world, as far as we can see—at knowing how much fraud is occurring; I am afraid it is not very good at saying why it occurs. In particular, DWP is not great at saying what it is about the way in which it administers benefits that enables fraud to occur or error to happen.
For some time, we have been advocating for DWP to get a much more granular view of its control environment. I think that, given how I interpret the capital rules here—it is an EVM exercise—it is doing that. This is one of the places where DWP said, “Actually, our control over capital at the moment is, frankly, to ask people how much capital they have,” which left it fairly exposed to the risk that people did not tell them the truth. Several times, the Public Accounts Committee asked DWP if it had the powers it needed, and several times has said, “The one area we need to explore is capital.” The challenge for this Committee is to work out whether that proposal is reasonable and includes enough oversight, given the privacy issues. In terms of there being a real problem behind it, however, I can confirm that there is a control-level issue that DWP is trying to resolve.
The other issues that the Bill tries to deal with on enforcement are similar. If we look at the impact assessment, the EVM was £500 million a year when fully rolled out and operational—that is a significant dent, but only a dent, in the £10 billion. I want to be clear: yes, I do think that there will be an impact. Is it sufficient? No. Is it meant to be sufficient? I doubt it. I think that DWP knows that, and that it has a very hard slog ahead of it. I will try to hold it to account—I am afraid it is your Department—on that hard slog of understanding where fraud is coming in and where error is happening, and put in controls step by step to improve it. There are no shortcuts in that.
Richard Las: My reflection is that fraud is inherently difficult to identify and potentially more difficult to investigate at times. How do you identify fraud? If I think about HMRC, you need information and to be able to triangulate information to understand the risks in front of you so that you can identify the highest risk. Sometimes you will not know what that risk is, or whether it is fraud or error, but it will point you in a direction. I feel that as an agency, if you have fraud, you need a good bedrock of information to understand the environment and to identify risk. A lot of that information can be information you gather from your customer—in our case, a taxpayer—or third party information. It is information that we can use to triangulate and verify. We do that regularly with lots of different information sets.
Once you come to investigate and deal with fraud, it is obvious to everybody, but people do not always co-operate, so you need powers that allow you to compel people to co-operate or powers that allow you to secure information and evidence in a way that you otherwise would not be able to do, because people would not do that. On the general framework, we are always looking to improve our basis for powers and our ability to use them. Certainly I feel that much of what is included in the Bill is powers that HMRC already has in many respects. We use those powers, we would argue, in a proportionate and necessary way, and there are controls and safeguards about how we do that. It is a difficult business with fraud. If you do not have some of those tools at your disposal, you are working with one arm behind your back.
Andrew Western
Q
Joshua Reddaway: Is there an alternative? I am aware that DWP is thinking about open banking as an alternative, but that, of course, would have wider implications and at the moment is on a voluntary basis. You have got that.
I honestly think that it fundamentally comes down to this: if you want to be able to detect, and if Parliament has set an eligibility criterion of capital as part of universal credit and some other benefits, DWP can either use that as a kind of symbolic deterrent so that you can opt out by owning up that you have that capital—that has a use—or if you want it to actually be enforced, you have to provide DWP with a tool that goes a bit further than just asking. There are various ways that you can get data matching from various different partners. This is the one that the Government have come up with.
Andrew Western
Q
Richard Las: It is the Finance Act 2011 that you refer to, which allows us bulk data gathering powers on information that we believe will support our functions. I guess it is not just the banks, but we do get the information on interest-bearing accounts. It is an annual exercise, not a real-time exercise. It is clearly timed in such a way that it helps us understand whether the right amount of tax has been paid on interest that has been accrued. We are talking about large accounts because in most cases people’s interest is quite small, but there will be some people who get a lot of it. We have a huge amount of controls over how we manage that information and how we use it and protect it; they are our normal requirements as with any other taxpayer data.
We gather other information from third parties. We have information from merchant acquirers on transactions that businesses might make, for example. We also have information that we get from online platforms in terms of sales and things like that. It is all part of bringing that information together. HMRC very much respects taxpayer confidentiality and manages that data responsibly. I guess those safeguards can exist in other organisations.
Andrew Western
Q
Richard Las: I do not know, if I am honest, whether there is. I can look that up for you.
The Parliamentary Secretary, Cabinet Office (Georgia Gould)
Q
Joshua Reddaway: I think you are referring to the report we did in March 2023, after the PSFA had just been established. We very much wanted it to be a baseline for the challenges it was trying to deal with. We basically said that there needed to be a cultural change across all of Government, that 84% of the resources were in DWP and HMRC, and that covid really exposed that the Government did not have the capability in other Departments. I have to say that, from our point of view, we saw fraud as essentially a welfare and tax issue for many years, so it was a bit of a surprise to start bringing it out to the other Departments a bit more.
I would interpret the Bill as being about giving the powers, particularly on the enforcement side, and in the meantime, the PSFA has been doing quite a lot on the prevention side. The prevention side is primarily where I would be focused because that is where the biggest gains are to be had in dealing with the cultural changes that are needed across all of Government. Mind you, I do not read the Bill as being against that; I see it as supplementary.
We would be very disappointed if the PSFA became exclusively an investigation and enforcement-type agency. The impact assessment thinks it can get roughly £50 million over 10 years from enforcement. Like I say, every million counts, but that is very tiny compared with the challenge that the PSFA is trying to meet. Is that the sort of thing you are interested in?
Neil Coyle
Of course.
Joshua Reddaway: Secondly, I would suggest to them that they can establish a baseline, because this is pretty transparent within their published statistics. You have got a breakdown there of how much fraud is caused by people mis-stating their capital. The reason DWP is able to do that is because when you apply for a benefit, you do not have to provide your bank statements, but when you are subject to an inquiry that informs the statistics, you do have to provide your bank statements. The statistic is generated by the difference between those two processes. That will continue to be the case after this power is enacted.
Andrew Western
Q
Joshua Reddaway: I think that is a fair comment, given that I said it does not really deal with error. I was really referring to the enforcement powers under PSFA. I think PSFA do other stuff that is in the error space, but the enforcement stuff is not. The enforcement stuff for DWP also will not really be in the error space. However, you are quite right that any data matching is an opportunity to detect error, and DWP are used to that. For example, when they are doing targeted case reviews, that will be detecting error as well as fraud. What we know from the statistics is that DWP believes there is more fraud than error in that space, but I entirely accept the premise of your question, and I should have made that part clear.
Andrew Western
Q
Richard Las: Ultimately, it allows us to operate immediately and with real clarity. We would be under the same kind of governance and restrictions as the police would be, in terms of having to go to a court to get those warrants, but, in terms of our ability to—
The Chair
Order. We have come to the end of the allotted time. I thank the witnesses for their evidence, and we will move on to the next panel.
Examination of Witness
John Smart gave evidence.
Mike Wood
Q
John Smart: I think weeks is reasonable. A small number of weeks is a reasonable number to look for, rather than days or months. Months is far too long, and days is probably a little too short in relation to the ability of organisations to respond.
Andrew Western
Q
John Smart: At the risk of echoing what has been said before, I think it is critical that we modernise the approach to fraud, and the Bill is a good step towards that modernisation. The critical part of a lot of investigations now—and of identifying, preventing and detecting fraud—is the use of data. Getting that data and information quickly and effectively is critical. I think the Bill will go a long way towards speeding up and broadening the available information that can be used to prevent, detect and prosecute fraud. That is a really valuable thing that we should be pushing for, because relying on pieces of paper to seek information from organisations is crazy in this day and age, when you can do it electronically and get an answer relatively quickly. If you are turning up with a piece of paper, it can take weeks or months.
Rebecca Smith
Q
John Smart: Having worried about this for a number of years, I think there are a lot of steps that the Government—the PSFA—can take over time, but we are on a ladder to get to a position that is constantly moving because the fraudsters are developing all the time. One critical thing that I have been concerned about for a number of years is the use and sharing of data across Government. Government have so much data available to them, and third parties have a lot of data available to them. There is clearly a privacy question that rapidly comes into play, but from my perspective, if the data is available to Government, they should use it. They should use it proportionately: they should not exploit those powers to use that data on some sort of phishing trip, but if there is evidence that fraud is being or has been committed, getting that evidence in the hands of investigators quickly is critical to preventing the fraud from continuing and to identifying and recovering any money that has been lost. To my mind, there is quite a lot of work still to be done on data sharing across Government.
Mike Wood
Q
Daniel Cichocki: Given that the eligibility verification measure is one of the more extensive powers in the Bill, we think that it may be appropriate to require the Minister to attest that its use is proportionate, as is required with the other measures in the Bill. That is just because of that particular power’s scale in requiring banks to share information on both potential fraud and potential error. As it includes the sharing of information of customers who may not be suspected of any crime whatsoever, we think that it would be helpful if the Government were to articulate that their use of the measure is proportionate, as is the case with the others.
It would also be helpful if the Bill were to replicate the very effective Proceeds of Crime Act 2002 exemption, which exists within the eligibility verification measure, in the other measures across parts 1 and 2 of the Bill. That is simply because we do not think that it is necessarily proportionate or helpful for banks to be considering, in complying with legislation, whether they should also be undertaking a suspicious activity report for the authorities. One of the constructive conversations that we have been having with Government is how we delineate our responsibilities to comply with this legislation and our responsibilities to comply with financial crime measures. We will be writing on this in more detail, but we suggest that the exemption under the eligibility verification measure, which is very helpful, should be replicated in other elements of the Bill.
Andrew Western
Q
Daniel Cichocki: We are making this suggestion because under the Bill banks responding to an information request or a direct deduction order, would have to consider whether there is some indication of financial crime that under POCA requires them to make a suspicious activity report. We think it is simpler to remove that requirement, not least because where there is a requirement to make a suspicious activity report there is a requirement to notify the authorities; clearly, there is already a notification to the authorities when complying with the measure. Removing that requirement would avoid the risk that banks must consider not only how to respond to the measure but whether they are required to treat that individual account as potentially fraudulent. We are trying to manage risk out of the system more broadly with financial crime compliance, so we think it is much more proportionate and effective to simply apply the same exemption across all the measures in the Bill.
Andrew Western
Q
You briefly mentioned direct deduction orders. I know you have some concerns about the debt recovery power, and this is an opportunity for you to set them out. Is there anything you want to elaborate on beyond what you have just said about that element of the powers we are proposing?
Eric Leenders: There are two or three key areas for us. First is the affordability assessment. I think you have heard previously that the use of the standard financial statement would be helpful in outlining essential monthly expenditure. I will come back to that point.
Secondly, I believe the caps differ between the PSFA and the DWP. We think that they should be aligned, with the PFSA’s 40/20 split also applied to the DWP. It is also quite important that there is some form of de minimis, so that individuals do not find themselves without any funds whatsoever. Our thinking is something aligned to the £1,000 threshold that there is in Scotland. HMRC has a threshold of about £5,000, or £2,000 for partners paying child maintenance. We think there should be a floor, but more essential is consideration of one month’s essential expenditure. That would allow the individual to readjust their expenditure in the period when they need to consider making the payments under the deduction order, or indeed the period in which the balances are withdrawn.
Andrew Western
Q
Eric Leenders: We would like to consider a specific de minimis. There are probably two approaches: an absolute amount or a relative amount, dependent on the individual’s essential expenditure—not their lifestyle expenditure. That is why we feel that the standard financial statement would be a useful tool.
Siân Berry
Q
Going back to Daniel’s earlier comment, can you clarify that you do not yet have a clue regarding the volume of requests? Have you been given some sort of estimate by the Government?
Daniel Cichocki: Let me take that first. The Government set out two broad criteria pertaining to the eligibility verification measure: the capital check and the check against abroad fraud, through assessment of transactions abroad. It is difficult at this stage, because the industry has not undertaken any detailed collective analysis of the criteria against the current book of customers. That work has not yet been done. We anticipate it being done through the development of the code of practice, but key for us is understanding exactly what criteria we will be required to run, and then banks can start to build an assessment of how that looks against their current book. That detailed work has not yet taken place.
Rebecca Smith
Q
Ellen Lefley: Reassurance cannot be the word, unfortunately, given the moment we are in, which is one of increasing automation and increasing investment in data analytics and machine learning across government. Last month, I think, we had a Government statement about mainlining AI into the veins of the nation—that includes the public sector. Knowing that that is coming and having a clear focus on how the functions in the Bill will be operationalised need to be a key concern.
The preservation of human intervention in decision making might have been a statement that has been made, but it is not on the face of the Bill. Indeed, we need to remember that the Data (Use and Access) Bill, which is also before Parliament, is removing the prohibition on fully automated decision making and profiling. That is happening concurrently with these powers. In addition, over the years, there have been numerous Horizon-like scandals that have happened in the benefits area. One, quite close to home in the Netherlands, was a childcare benefit scandal, which Committee members will know of. In that scandal, recipients of childcare benefit allowance in the Netherlands were subject to machine-learning algorithms that learnt to flag a fraud risk simply because of their dual nationality. So there is a problem here. Even with the powers that are subject to reasonable grounds, we need to have a wider discussion as to what reasonable means and what it definitely does not mean when we talk about reasonable grounds of suspicion, when suspicion is an exercise that is informed in a tech-assisted and technosocial decision-making environment.
Justice has some suggestions as to how reasonable grounds can be better glossed in the Bill in relation to generalisations and stereotypes that a certain type of person, simply because of their characteristics, is more likely to commit fraud than others. Perhaps it could be recorded in the Bill that that definitely is not reasonable.
Some useful wording from the Police and Criminal Evidence Act code of practice A is not in the Bill because it relates to the power to stop and search, which is not being given to DWP officers, probably rightly and proportionately, but some explicit paragraphs in the code of practice for stop and search for police officers say that they cannot stop and search someone based on their protected characteristics. Under the Equality Act 2010, they cannot exercise their discretion to stop and search someone due to generalisations and stereotypes about a certain type of person’s propensity to commit criminal activity. Amendments like those could strengthen the Bill against unreasonable, but perhaps not always detectable suspicions being imbued by machine-learning algorithms. Of course, if there will always be a human intervention in the decision-making process, perhaps that could be explicitly recorded in the Bill as well.
Andrew Western
Q
Ellen Lefley: They make up a larger number of the cohort, so we would analyse a prima facie indirect discrimination potential risk there, which would then need to be justified as being necessary and proportionate. The proportionality assessment of course is for Parliament, but we consider that a significant amount of scrutiny is required not only because of the privacy impacts, but because there is that clear indirect discrimination aspect. I am not alleging direct—
Andrew Western
Q
Ellen Lefley: Raising the risk of indirect discrimination when you have cohorts of the population that are disproportionately reflected in any subcommunity of the population that will be exposed to any power is a relevant consideration, so yes in that respect. When it comes to the eligibility-verification measures, the proportionality analysis is, in our view, strained because there is not that threshold of reasonable suspicion. The mere fact that benefits recipients are in receipt of public funds makes them subject to this power. Of course, that could go further; all the public servants and MPs in this room are in receipt of public funds. If that is the threshold that we as a society are happy with, some real scrutiny of its proportionality is required, because it is a power that can require private financial information.
Andrew Western
Q
Ellen Lefley: When I speak about proportionality, the degree of loss is relevant, but there is no question but that the economic wellbeing of the country is a legitimate aim. On whether measures are proportionate to achieving that aim, we must consider not only whether there is any reasonable suspicion, but the degree of external oversight. The Bill includes that consideration, and there are various ways in which some of the powers are subject to independent review.
We have some suggestions as to how those independent review mechanisms can be a stronger safeguard and therefore make the measures more proportionate. For example, the independent review mechanisms seem to have the ability to access information but no power to demand it. That raises a query as to transparency and the full ability of the independent reviewer in different circumstances to meet their objectives. Also, when an independent reviewer lays their report before Parliament with recommendations and those recommendations are not going to be adopted, it might be helpful for there to be an obligation on the Department to provide reasons why not. That would be a more transparent way of ensuring that the oversight measure is as effective as intended.
Sally Jameson (Doncaster Central) (Lab/Co-op)
Q
Ellen Lefley: On the £35 billion figure, I think the benefits fraud and error figure was around £10 billion, and I think £7 billion can be shown to be fraud. I am sorry if I have got that wrong.
Andrew Western
Q
Ellen Lefley: I am grateful. It is a difficult one. For example, we could have almost zero crime in this country if everyone’s house had 24/7 surveillance installed. There will always be a way of decreasing privacy to increase state surveillance and therefore reduce unwanted behaviour, but the balance needs to be struck. Justice’s view is that when the state is getting new powers to investigate people’s private affairs, the balance is struck by having that reasonable suspicion threshold, which requires reasonable grounds for believing that a crime has been committed. That ensures that the powers given to the state in any primary legislation are not open to abuse or arbitrariness. Of course, the laws in the statute book must be written narrowly so that they protect rights on the face of it, rather than being written broadly and relying on the self-restraint of future Administrations to exercise them proportionately.
Charlie Dewhirst (Bridlington and The Wolds) (Con)
Q
Ellen Lefley: We continue to have concerns, acknowledging that there are two key oversight mechanisms in the Bill that were not in the previous one: this independent reviewer role and the code of practice. It would be far easier for Justice, but more importantly for Parliament, to be assured of the proportionality of any human rights infringement if that code of practice were before us.
Paragraph 79 of the human rights memorandum to the Bill notes that the code of practice will significantly impact whether the EVN measures are proportionate and prevent arbitrary interference with people’s privacy. It would therefore be very helpful to see that detail in order for Parliament to be confident about the content of that code of practice and how these powers will actually be used.
Mike Wood
Q
Mark Cheeseman: There will be case-by-case review, but you are right; it will be more, “Here is an issue that should be dealt with, and here’s how”.
Andrew Western
Q
Mark Cheeseman: My view is that the Bill does strike that balance, and it tries to strike the balance. It is difficult, because you need to balance the ability to take action against someone who has committed fraud against the state with having fair and reasonable processes for looking at someone who has not. The purpose of an investigation is not to find fraud; it is to find fact. That is why we have professionals who are trained and have a code of ethics around objectivity; their role is to find fact, not fraud. The Bill tries to strike that balance both by having authorised officers and by having the oversight that is in place. The Government structure, in having the counter-fraud profession, provides some of that as well. My view of the Bill is that there is a fair amount of independent oversight—that is a good thing—to increase how well things are done.
Michael Payne (Gedling) (Lab)
Q
Mark Cheeseman: Of course. When we estimate fraud, we estimate fraud and error, as the NAO has done. The NAO used the methodology that we have used previously. We have not repeated that yet, because it has gone ahead of us in the cycle. I have no reason to indicate that its estimate is incorrect, but that is its estimate, and Joshua was here earlier.
We estimate fraud and error as a whole, rather than fraud separately, but what we have seen in the fraud data is that detected fraud in the public sector has risen over the past few years. We have published that. Some was due to covid, but some is in other spaces. Earlier witnesses indicated that the threat has risen and that there are some changes in the perception of fraud and of how people may approach it.
My perspective is that the level of fraud and error in the system is high. There is waste there, and Parliament itself has challenged the Government on what more they can do to deal with it. The threat is rising, and therefore in my position, I think that the powers will help to take action on that. There is more to do to drive down waste and to reduce fraud in the system.
Rebecca Smith
Particularly in relation to bank account details and information on spending, and that sort of thing, which you just used as an example.
Jasleen Chaggar: On the eligibility verification measures—what we are calling the bank spying powers—we are recommending that they be removed in their entirety. They really are unprecedented financial surveillance powers. There are no other laws like this in this country. The powers would permit generalised mass surveillance of everybody’s bank accounts. It is not just benefits claimants who will be targeted; it is everyone’s accounts, including yours and mine. They will be scanned using algorithmic software to make sure that the eligibility indicators are not met. Even if you are a benefits recipient, you can appoint an individual—a parent, a guardian, an appointed person or your landlord—to receive the benefit on your behalf, so those people will also be pulled into the net of surveillance. We do not really see a way in which these measures could ever be proportionate.
Andrew Western
Q
Jasleen Chaggar: What is really important about the Bill is the conflation of fraud and error. It is not just people suspected of serious crime, or even low-level crime, who are pulled into the net of surveillance. It is also people who, while navigating the complexities of the benefits system, may have found themselves on the wrong side of making a benefits claim and made a mistake. It also involves DWP’s own errors, which make up one in 10 errors. What is critical when we are thinking about the Bill is that it is suspicionless surveillance that applies to everyone.
Andrew Western
Q
Jasleen Chaggar: There is another difference between HMRC recovering money and the DWP recovering money. When you think about the types of individuals these powers will be recovering money from, they are among some of the most vulnerable in our society. There are people living on the breadline, disabled people, elderly people and carers, who will all be dragged into this surveillance. The risk of errors caused by the automated system that is proposed will, therefore, have a dispro- portionate effect on those groups of people. There is a difference, if that is the case, between the powers being used by HMRC and the DWP.
Andrew Western
Q
Jasleen Chaggar: I am not aware of powers that are similar to eligibility verification notices that are exercised by the DWP. I am aware that they have similar powers in relation to direct deduction orders, and maybe that is the distinction that the witnesses earlier were making.
Andrew Western
Q
You talk about the inclusion of error, as well as fraud, in what we are attempting to do here. Do you accept that there is the potential, through the effective use of the eligibility verification measure, to detect overpayments through error sooner, thereby reducing any overpayment because it would come to light earlier?
Jasleen Chaggar: Yes, and to stop people getting into debt is an incredibly laudable aim. The question is whether we are willing to infringe the privacy rights of the entirety of the population to do that. Perhaps a more proportionate solution would be to make it easier for those benefits claimants who are making mistakes to navigate the system in the first place.
Coming back to your previous point, if you were happy to send me information about those powers, I would be happy to get back to you with our position on those.
Andrew Western
Q
Jasleen Chaggar: I accept that the Government are purporting that this is a sufficient safeguard, but I propose that it is not, because of that circularity.
Andrew Western
Q
Jasleen Chaggar: Absolutely. We believe as much as anyone that fraud and error need to be tackled in this country. Our position is that the best way to do that is through intelligence-led policing, where there is suspicion of fraud and not just of error, that is well resourced. In relation to error, as I have said, we think that making the benefits system easier to navigate in the first place, and the DWP getting its own house in order to avoid its own errors, are far better, more proportionate and privacy-preserving solutions than the ones proposed in the Bill.
Andrew Western
Q
Jasleen Chaggar: I think that it is important that suspicion has already arisen before those policing powers can be enacted. The police already have powers to request that granular financial information where there is suspicion of fraud.
Andrew Western
Q
Jasleen Chaggar: I think that there are ways to address this. We are a civil liberties organisation, and our job is to be a watchdog and to ensure that privacy rights are preserved. I do not have a solution for how the police should find out whether someone is suspicious, but we should not sacrifice the privacy rights of us all just to find out whether we should be suspicious of someone when no suspicion exists. As I said, it is a disproportionate power.
Siân Berry
Q
Jasleen Chaggar: Our view is that the powers will only ever be proportionate if they uphold the presumption of innocence, due process and judicial oversight, and any privacy infringements are set out in law and are necessary and proportionate. We feel that a code of conduct would be insufficient, because it would just defer those legal protections to some other time. Also, if an individual has a problem as a result of the use of the powers, they are unable to enforce their rights through a code of conduct. Setting out the protections in legislation would create a far more rights-preserving framework, with which we would definitely feel more comfortable.
Rebecca Smith
Q
Geoff Fimister: I should say, first of all, that the Campaign for Disability Justice was launched relatively recently—a few months ago—by Inclusion Barnet. We now have a substantial number of individuals—several hundred—supporting us, as well as a substantial number of organisations, ranging from large charities to grassroots disabled people’s organisations, so we get quite a lot of feedback.
I suppose our concern with the Bill include a broad aspect, but also a very specific aspect as to how it may impact disabled people. The broad aspect is that, because it focuses very much on means-tested benefits, it will, by definition, disproportionately affect people on low incomes, and disproportionately affect disabled people, because they are more likely to be on low incomes than others.
The practical issue, which I think has attracted the most concern, from the conversations I have had, is false positives, as the previous witness, Jasleen Chaggar, mentioned. We are all familiar with a world in which we have problems with malfunctioning technology. Every few months, my internet provider locks my inbox because of “suspicious activities”, which have included sending an email to an MP’s researcher or one to Mencap. Every now and then, my bank freezes my wife’s and my bank accounts because of “suspicious activity”, such as, on one occasion, purchasing a sandwich from a Marks and Spencer in Deptford.
That might sound entertaining, but it is a serious business; this tech goes wrong, and I think the previous witness made the point that, if large numbers of people are embraced by this kind of trawl, it will go wrong for a percentage of them. We do not know whether that will be a large or a small percentage, but even a small percentage of a big number is a lot of people. People being left without any income if technology triggers the cessation of their benefit is a serious business. Not having any income can cause hardship, debt and stress. In extreme cases, there can be serious health and safety issues. Disabled people are concerned about that kind of eventuality.
As to what we can do about it, I understand the thrust of the Bill and where it is coming from. In parliamentary terms, it has widespread backing, although a number of reservations have been expressed. We would like to see some sort of safeguard whereby benefits could not be stopped unless and until it was established that there was an overpayment—not that the DWP thinks that there might have been because the tech spotted something. We do not want to see a “shoot first and ask questions” later approach. If we could have some protection along those lines, that would be helpful.
Rick Burgess: I stress that I am from the Greater Manchester Coalition of Disabled People. The panel is something we do, but I am not speaking in that role today.
There are particular worries about how this affects people living with mental distress, particularly those with diagnoses of paranoia, schizophrenia, depression or anxiety. This adds to the feeling of being monitored, followed and surveilled, because you literally are being surveilled by your bank on behalf of the Government. So it will necessarily reduce the wellbeing of disabled people who are claiming benefits that are monitored by the system. There is no getting away from that.
On the potential risks, when you enter a trawling operation, you are not targeting it in any way; you are simply looking at everyone. So the error rate becomes extremely important. We do not know exactly what the technology is. We have not seen the equality impact assessment, but even if it had a failure rate of 0.1%, which would be a quite respectable systemic failure rate—it is pretty acceptable in a lot of these areas—that is still 1,000 people per million scanned. If you are talking about even the means-tested benefits, that is going to run to thousands of people getting false positives. If you think about the entire DWP caseload, which is 22.6 million people, that is over 22,000 people. Bearing in mind that the Post Office scandal involved fewer than 1,000 people, you are at the inception stage of something that could be the greatest miscarriage of justice in British history, if you go ahead with this with untested technology that has not had proper impact assessments.
I stress, though, that we are against this measure in its totality because it treats disabled people as a separate population who should have lower privacy rights than the general population. In that respect, given that the United Nations has condemned the UK twice in a row for grave and systemic human rights abuses, this is going further in the wrong direction and failing to address the failures identified by the UN. It is further marking disabled people for additional state oppression and surveillance, which, as I said, will necessarily be harmful to a great many of the people under the surveillance regime.
Andrew Western
Q
Rick Burgess: Because we are over-represented in those classes. If you choose to target it at those cohorts, you are accepting an additional level of targeting towards disabled people, which is discriminatory.
Andrew Western
Q
Rick Burgess: I think it does edge into that. There is certainly established thinking and case law that begins to establish that. The Equality and Human Rights Commission need to be brought into this urgently. There need to be public and transparent equality impact assessments, because I do not see how this does not breach a right to privacy and represent discrimination against groups who are over-represented in these cohorts.
Andrew Western
Q
Rick Burgess: It is about where that measure is one of a number of additional enforcement measures, rules or laws that would have negative consequences. The key to this is the trawling nature of the technology; it is not targeted, beyond being aimed at everyone on UC, everyone on ESA and so on. When you trawl, you do not target, and then you have a huge cohort. If, in that cohort, you have over-representation, without even thinking about it, you have then enacted a level of discrimination, because of the trawling nature of this approach.
If this approach applied to everybody on benefits, that would also be slightly questionable, because you are applying a different level of privacy to people who get an award from the DWP versus people who do not. If it applied to the whole country, I suppose that would be fairer in one respect, but it would also be a breach of everyone’s privacy, which goes to another question.
In terms of this measure being important for Government revenue, the amount lost to the tax gap is more than four times more—we are talking about £9.1 billion, but the tax gap is over £39 billion. You would recover more money if you subjected the whole country to this measure, but I would suggest that the reason you do not subject the whole country to it is that there would be outrage, because people would find their rights to privacy being completely abused.
Applying this measure in these targeted ways suggests a level of, “Well, these are people who perhaps have less rights to privacy than the general population.” If you are happy to have your bank account monitored in this way, fine, but you have not suggested that this should apply to the general population. You have suggested that it should apply to a population who receive benefits, and within that population there is an over-representation of disabled people, who are already exhaustively monitored, reviewed and tested and having to provide proof, whether that is for a blue badge, personal independence payment, ESA, universal credit or a concessionary pass on public transport.
The life of a disabled person is to be constantly tested and examined and having to produce proof, and this is another step in that. That is why this is germane to the United Nations report on the convention on the rights of persons with disabilities. We have continued down the road of removing rights, not respecting them, and of subjecting disabled people to greater scrutiny, greater surveillance and greater tests of their basic rights to be a citizen of this country. It is really quite distressing for disabled people to be in this position.
Not only have we had two really damning reports from the United Nations, but the new Government is actually adopting old policies of the previous Government and continuing on that road. The level of anger and distress in the disabled community is absolutely enormous. It is really difficult to explain to people that this is not an obvious attack, or one motivated by ableist assumptions about how disabled people run their lives or whether they are more or less honest, or more or less genuine, than people who are not disabled. It is really hard going for us—I have to tell you that. Disabled people in Britain have had a decade and a half of being the scapegoat of this country, and it has to stop. This measure is actually making it worse, as opposed to stopping that scapegoating.
Geoff Fimister: I just want to add something to a point that Rick made. We both made the point that the discriminatory aspect relating to disabled people arises, in the immediate sense, from the fact that these means-tested benefits are primarily in scope at the moment, and disabled people are disproportionately likely to be on low incomes. It is worth adding that if this measure were to be extended at a future stage to a wider range of benefits, potentially bringing disability benefits into scope, that would be even more sharp discrimination against disabled people.
They are not theoretical points that Rick has been making—there is a really raw feeling among disabled people that they are being targeted. In the context of quite a lot of negative media publicity around the interface between employment and unemployment among disabled people, there is an unpleasant atmosphere for disabled people. That is certainly the feedback that we are getting.
Andrew Western
I will not ask any more questions, but I just say to Rick that I think it might be helpful for a follow-up conversation to take place. Without wishing to get into a protracted argument, there were some things that I did not recognise as part of the Bill, but clearly that is how people are feeling and how the people you represent are feeling. I am very happy to ask officials to pick up a conversation to go through the detail.
The Chair
There being no further questions, I thank the panel for their evidence, which was robustly delivered.
Examination of Witnesses
Andrew Western and Georgia Gould gave evidence.
Public Authorities (Fraud, Error and Recovery) Bill
Andrew Western ExcerptsMonday 3rd February 2025
(1 month, 3 weeks ago)
Commons ChamberRead Full debate Public 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 Read Debate Ministerial Extracts
Kirsty Blackman (Aberdeen North) (SNP)
I want to comment on a number of speeches that have been made. As the Scottish National party tabled a reasoned amendment, which unfortunately did not get selected, it will not surprise anyone that we have a number of significant problems with the Bill.
Part 1 of the Bill relates to recovering the covid moneys and the services and goods that the Government received that were substandard, for which organisations need to pay the Government back. Since its scope does not extend to Scotland, I will not add many comments, except to note that I have a long track record of bringing up covid fraud, particularly PPE frauds, in this Chamber. I will support the Government’s work to recoup the money that was fraudulently taken in Government contracts that did not deliver.
I oppose the DWP elements of the Bill, which are not what social security should be about. As my friend, the hon. Member for Brighton Pavilion (Siân Berry), said, the social security system should be built on dignity and respect. Very few Members have said that we should have a social security system that works. Members have talked about tightening up eligibility criteria. Last week, people talked about the number of scroungers that there are—people not in work who are claiming social security benefits—and how desperately we must get them back to work. People should have opportunities, but it is also important that we have a social security system that catches people and supports them when they are not able to access those opportunities, because they are struggling with their physical or mental health or have learning difficulties. We need a social security system that works.
I have asked the Minister on a couple of occasions about co-production, which an hon. Member also mentioned. Co-production is needed when it comes to changes to disability benefits. If the Government are to reduce the amount of money being paid out for disability and sickness benefits, they must work hand in hand with disabled people. They must not just say, “We are going to reduce it by this amount.” They need to sit round the table with disabled people to have those conversations and to make clear what changes they want.
In Scotland, we have reformed the previous PIP system to create the adult disability payment and child disability payment. I used to get a number of emails and people walking through my door who were terrified about their upcoming PIP assessment—having to fill in those forms again, and sit and write a long list of the normal things that their child cannot do, on an annual basis. We have changed that in Scotland. We do not have regular assessments. If someone has a longer-term condition, they do not have to go through that awful situation on an annual basis. The Government need to focus on dignity, respect and co-production. That should be way ahead of conversations around fraud.
It is important that the social security system, the procurement system and the tax system do not propagate fraud. As has been mentioned a number of times by Members from across the Chamber, the tax system creates a huge amount more fraud and a huge amount more could be recouped from that than from the social security system.
I have major concerns about how the Government are approaching the issue. Why are they introducing this Bill before the child poverty strategy? Why is this more of a priority than cancelling the two-child cap and taking kids out of poverty? Why are the Government talking about nearly £10 billion a year owed to the DWP? Just to be clear, that is not what they intend to recoup. According to the impact assessment, at least 30% will be written off, so £10 billion is a misleading figure. It might be the total amount of fraud and error, but it is not what the Government expect to get back. It does not take into account that they will spend £420 million over the next few years just to increase the number of staff or the costs of the eligibility criteria. It is also not a net figure—it is just the headline figure right now. All the work being done on the legislation is to recoup a fairly insignificant amount of money, but it will put people through absolute hell.
As has been said, the Bill will treat people as guilty rather than begin from the point of view that they are innocent. Potentially, it will put every person applying for benefits through an eligibility check through their bank. It will put them under surveillance in a way that is not compatible with the human rights that we should all expect. Let us remember that we are talking about people who, in some cases, are incredibly vulnerable, and may have their driving licence taken away.
The hon. Member for Normanton and Hemsworth (Jon Trickett) talked about two of his constituents who found themselves in a difficult situation and who did not have a huge amount of literacy. It is possible that one of those people could have had a driving licence. For disabled people, a car can be an lifeline—the most important thing. For people with mental health problems, opening letters can be really difficult. People might not engage with the DWP through no fault of their own, but because they are not getting the mental health support that they need.
That £10 billion or however much will be recouped will not fix mental health services to ensure that everyone is capable of getting up in the morning, having their breakfast, having a shower and opening the letters in scary, big writing that have come through the door. It will not ensure that people can engage in that system. It will not teach them to read and write—they may not be capable of that. I share the concerns of other Members that, for some individuals, the powers of recouping and of revoking a driving licence are entirely inappropriate. We have not had enough reassurances on that.
My concerns about the Information Commissioner are still extant. The Secretary of State said that she has had a letter from the Information Commissioner. I understand that it is probably not her fault, but I am really disappointed that we have not seen that letter in advance of today—[Interruption.] I am being told that it is being published.
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
It is on the ICO website.
Kirsty Blackman
Unfortunately, I have not seen it because I was not aware of its publication until the Secretary of State stood on her feet. It would have been helpful for Members to have been given that information beforehand, so that we could have read the Information Commissioner’s comments in advance of Second Reading, given a number of us have mentioned the significant concerns of the Information Commissioner in relation to the previous Bill.
The Secretary of State said that the Bill is tough and fair. Another Member talked about tax and benefit fraud, and the issue with the DWP making overpayments. They suggested that this new system will ensure that overpayments are caught earlier. I suggest that that is a tad over-optimistic. The DWP makes mistakes and makes overpayments, and now we are giving it another place to make errors. The DWP can now see into people’s bank accounts and say, “You don’t meet the eligibility criteria, so you won’t be getting the social security payment.” Until we have built up much a higher level of trust, most people will assume that these powers will create more errors in the system, rather than reduce them.
Lastly, on a subject that I mentioned earlier, a massive number of disabled people have no trust in the social security system. They are massively concerned about the cuts coming down the line and concerned in particular that they will bear the brunt of those cuts, given the comments from so many politicians, using the word “scroungers” and talking about people fraudulently claiming benefits.
Despite the fact that the hon. Member for Hendon (David Pinto-Duschinsky) very helpfully laid out the figures on every pound claimed fraudulently, which I genuinely thought was very helpful, disabled people feel that they are being lumped in with the entire group of people claiming fraudulently—whether they can or cannot work, whether they are being paid universal credit or PIP to assist them with their work, and whether they have a helpful employer or have not been able to find one.
People feel they are being demonised by politicians simply for claiming social security, which they are entitled to. Until that trust is rebuilt, making the decision to look at their bank accounts, as in these measures, is the absolute wrong decision. The Government need to do what they can to put dignity and respect at the heart of the social security system and rebuild people’s trust in it before they introduce these sweeping, disproportionate powers.
The hon. Member for Brighton Pavilion mentioned the fact that there are so many unclaimed benefits. Surely ensuring that people have the money they are entitled to, ensuring that they have enough to live on, reducing child poverty and ensuring that not one child grows up in poverty should be more of a priority for the Government than introducing eligibility criteria and demanding that banks provide financial information on social security claimants.
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
I hope that the House will bear with me; I have binned my original closing speech, given the number of contributions that we have heard, and some of the legitimate questions and concerns that colleagues have set out. I thank those colleagues who rightly highlighted the scale of the challenge, and why the Government must act to tackle fraud against the public sector. My hon. Friends the Members for Burnley (Oliver Ryan), for Clwyd North (Gill German), for Hendon (David Pinto-Duschinsky), for Doncaster Central (Sally Jameson), for Bassetlaw (Jo White) and for York Outer (Mr Charters) all set out the scale of the challenge, and the views of their constituents on this issue, in very robust terms.
I agree with my hon. Friend the Member for York Outer about the risk of unintended consequences, particularly on the issue of violence against women and girls. We are looking at that closely and will continue to do so. A number of Members referred to the alleged lack of an impact assessment, or the publication of one. An impact assessment has been published, alongside the view of the Regulatory Policy Committee, and is available for colleagues to view.
Let me turn to specific concerns about the Bill, starting with those of the shadow Secretary of State, the hon. Member for Faversham and Mid Kent (Helen Whately). I welcome the tone of the Conservatives, and their broad support for a number of the principles in the Bill. She is correct that it is incumbent on the state to get its money back. It is part of the unwritten contract that she referred to. I felt there was a slightly tenuous justification for the escalation in benefit fraud that we have seen in recent years: the war in Ukraine. I know that we are happy to blame Putin for many things, but that was a new one on me. She rightly pointed to an escalation in benefit fraud and error as a result of covid, but that does not explain why the level of fraud and error in the Department for Work and Pensions was higher in 2023-24 than in any of the years from 2021-22 onwards—£9.7 billion last year, a record level. The issue is getting worse, not better, and that happened on the Conservatives’ watch.
The shadow Secretary of State suggested that the contents of the Conservatives’ fraud plan would have solved all these problems, and that we are copying much of what was in it. It is fair to say that the Conservative party legislated only on the third-party data measure in that plan. The Conservatives never mentioned debt recovery powers, and made no efforts to get a grip on public sector fraud with the new powers that we are introducing by putting the PSFA on a statutory footing. Overall, their appalling record hardly comes as a surprise.
The shadow Secretary of State went on to say that she was concerned about the amount of information being shared by banks. Just to be clear, we will not be sharing any information with banks. The information that will come back to us will have very strict criteria, and we are taking a specific power to fine banks for oversharing information that is out of scope. She asked what testing has been done on this; two trials have been undertaken, so we know that the proposal will work, as it pertains to the eligibility verification measure.
The shadow Secretary of State went on, with some audacity, in my view, to challenge whether the debt recovery powers go far enough—powers that the Conservative party refused to take, and never put forward when they were in government. She mentioned the number of AI schemes that have been set aside. Test and learn is perfectly normal in the AI space. I remind her that some of the schemes that had not been taken forward are now moving through under different names. She mentioned the PSFA, and raised concerns about the right to compel information. The powers have independent oversight to ensure that their use is proportionate, so although no organisations are exempt, all actions are considered within a robust legal framework.
We then heard from the Conservatives, astonishingly, that there is nothing in the Bill to get a grip on the benefits bill. What cheek, when the benefits bill spiralled by some £20 billion on their watch! As for their so-called plan, I remind the shadow Secretary of State that they made a hash of it and that we lost a judicial review on their failed plan just a few weeks ago, so we will take our time to bring forward the proposals and will consult on them, and we will get this right.
I am grateful for the support of the Conservatives, but I hope that it will manifest itself in the voting Lobby later because, with the exception of the hon. Member for Mid Leicestershire (Mr Bedford), who I believe is the Parliamentary Private Secretary, we have not had a full speech from a single Conservative Member—just one intervention. If that does not show the lack of seriousness with which they take this issue, the appalling record and position we have inherited should do just that.
I want to spend a little time on the comments of the Chair of the Select Committee, my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), who is a champion for vulnerable people. I particularly want to speak to the measures we are taking to assure ourselves of the appropriate support for vulnerable people, both within the scope of the Bill and more generally, because that is important and relates to a number of comments from Members. It is always the Department’s priority to set repayment plans that are affordable and sustainable; that we make use of the debt respite service, Breathing Space, which allows for a temporary protection from creditors; and that we provide additional support to help customers manage their money. We work with the Money and Pensions Service under its brand name “Moneyhelper”, which offers free, independent and impartial money and debt advice. Indebted customers are routinely offered a referral, with the majority who meet the criteria taking up that offer.
In addition, a DWP debt management vulnerability framework has recently been introduced to provide guidance for advisers on how to support customers at risk of becoming vulnerable, including signposting to specialist support. That is embedded across debt management, and part of that involves advisers undertaking annual refresher training on identifying and supporting customers experiencing vulnerability. Within the scope of the Bill, it is important to recognise that the power of debt recovery will not be used on benefit claimants. It extends only to those who receive their income through means other than benefits or through payrolled employment.
There are also important safeguards in the Bill that govern the process of debt recovery and the new enforcement powers. There will be repeated efforts at contact before any enforcement action is taken, and there will be affordability checks before any deductions are taken from bank accounts. There will be limits on the size of those deductions, a right to require deduction orders and a right to appeal deduction orders beyond that. Also, the DWP can vary or suspend the deduction order following a change in circumstances.
Kirsty Blackman
I appreciate that the Government have made changes around affordability, but they still do not assess either benefit clawbacks or the deductions on the basis of whether they are actually affordable for the people having to pay them back. Are the Government planning to put that in place at some point in future?
Andrew Western
The hon. Lady will forgive me if I have not understood her correctly, but there is specific provision in the Bill on the debt recovery powers to limit the amount that can be clawed back to 40% of anybody’s capital, but if I have misunderstood that, I am happy to have a conversation with her afterwards. I hope that I have set out some of the steps we are taking in the Bill and more broadly to ensure support for vulnerable people.
The Liberal Democrat spokesperson, the hon. Member for Torbay (Steve Darling), was right to highlight the scale of covid fraud and the lack of safeguards in place to protect the public purse. He highlighted the carer’s allowance review, which will report this summer, not next, but we are already learning the lessons of that. Much like the proposals in the Bill, data is key, so we have secured funding to extend the verify earnings and pensions service system of alerts from HMRC to 100% of claims. We will ensure in this Bill that the eligibility verification measure information is processed quickly to reduce large overpayments, and to avoid a repeat of what happened on the last Government’s watch with carer’s allowance.
The hon. Member for Torbay raised the use of AI, as did my hon. Friend the Member for Oldham East and Saddleworth. There will always be a human decision maker on each of these powers, so where decisions are made, a human—not AI—will make that call. For EVM, a flag would be passed to a human to establish benefit eligibility. For debt recovery, it would be passed to a human to assess vulnerability and the ability to pay. For information gathering, it would be passed to a human for investigation where there is a suspicion of fraud. For search and seizure, a warrant would be granted by a judge. At all times, a human is making those decisions, as is right and proper, given the powers that we are talking about.
According to the hon. Member for Mid Leicestershire, there is no doubt that had the Conservatives had longer, their policies would have driven fraud down further and faster than our proposals will. Thankfully, we do not have the opportunity to test that theory. Given their appalling record—with fraud and error escalating every year since the pandemic and standing at £9.7 billion last year—I dread to think what they would have done when they turned their attention to these matters.
The hon. Member for Mid Leicestershire went on to ask whether the independent person would report on the use of powers. Yes, and those reports—on both the PSFA side and the DWP side—will be placed before Parliament annually. He asked about non-drivers and the point of suspending licences when not everybody drives. Well, short of taking the power to prevent somebody from walking, I fail to see how much further we could have gone in that regard. However, I recognise—as I hope he does—that that is only one of a suite of measures that we are considering to move us forward in the powers available to us.
Of course, it is important to recognise that the introduction of an independent person was not considered necessary by the Conservative Government in the third-party data measures that they proposed under their Data Protection and Digital Information Bill. We are introducing that measure not just for the PSFA powers or the eligibility verification measures, but for information-gathering powers and powers of search and seizure.
I understand that the hon. Member for Brighton Pavilion (Siân Berry) is concerned, but I fundamentally disagree with the idea that it is conservative to want to tackle benefit fraud, and that we should ignore the £7.4 billion-worth of welfare fraud last year. I certainly do not think that it is conservative to go after public sector fraud; in fact, if it were slightly more conservative, we might not be in the terrible position we are in now.
My hon. Friend the Member for Normanton and Hemsworth (Jon Trickett) raised a number of important questions. Time prevents me from running through them all now, but I would be delighted to meet him to discuss them further. I was especially concerned by the case that he raised. One potential benefit of the eligibility verification measure is that it will allow us to detect overpayments earlier, but clearly we want to ensure that the DWP is handling such issues correctly first time. The ICO was mentioned by a number of Members, including my hon. Friend. Just to clear that up, it was not a letter received into the Department; the ICO published on its website today its findings and thoughts on the Bill at this stage. It recognises the steps that we have taken on proportionality, and I welcome those comments.
The hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick) has concerns about banks and the potential erosion of data protection powers—that is not my view. The Bill will involve very limited data sharing. The Department for Work and Pensions is not monitoring accounts, and we will fine banks if they overshare in that space.
The hon. Member for Aberdeen North (Kirsty Blackman) made an important contribution. To clarify, the Bill is not predicated on saving £10 billion in welfare fraud; it sets out to save £1.5 billion over five years, but it is part of overall measures to save £8.6 billion over that period, because we do not accept the level of fraud in the system at present.
The hon. Member for Coventry South (Zarah Sultana) suggested that the Bill subjects millions of people to unwarranted financial surveillance. To give Members absolute clarity, we will not receive transactional information from banks, we will not look in bank accounts directly, and we will not ask banks to take decisions on whether somebody has committed fraud.
The hon. and learned Member for North Antrim (Jim Allister) raised the question of clause 50 on the PSFA side of the Bill and asked what constitutes fraud. For clarity, it is standard for powers to be taken by the Secretary of State—or a Minister in this case—but in practice, qualified and experienced decision makers will consider cases as authorised officers.
The hon. and learned Gentleman went on to raise clause 91 and the removal of driving licences. I would gently say to him that this is an existing power held by the Child Maintenance Service. The question of liable persons and whether removal is proportionate would be a matter for a judge; it would only happen after repeated attempts to secure repayment, and before any disqualification occurs, an individual will always be given the opportunity to agree a repayment plan. This is a power of last resort, but I assure the hon. and learned Gentleman that if he has specific concerns about the pursuit of fraud in Northern Ireland, I am happy to follow them up.
As always, the hon. Member for Strangford (Jim Shannon) spoke from the heart about the plight of his constituents and the challenges they face. I want to assure him that this is not a Bill that is intended to focus on the low-hanging fruit of vulnerable people; that is why it includes some of the protections I set out earlier, and it is why we are putting in place independent oversight for the debt recovery and eligibility verification measures. He asked about the right of appeal, and I can confirm that the rights of review and of appeal against a ruling in the debt recovery space are written into the Bill.
The important question of appointees is one that I want to address directly, given the point that the hon. Gentleman raised about his constituent’s sister. To be very clear, that is something we had significant concerns about after the previous introduction of the third-party data measure, and the system will remove appointees. There may be circumstances in which those bank accounts need to be checked if the appointee receives benefits themselves, but if they do not, they will be screened out.
Kirsty Blackman
The individuals who are going to do the independent assessment will be appointed by the Secretary of State. Would it not be better for Parliament to agree the appointment of those individuals, so that we can be assured that they are actually independent?
Andrew Western
Clearly, we will inform Parliament as to who that will be, but we will go through a proper recruitment process. If the hon. Lady is talking about the independent person to be appointed for the eligibility verification measures, we will go through a thorough recruitment process to ensure they have the expertise needed. They will report every year to Parliament, and it is right and appropriate that they do so.
I thank my right hon. Friend the Member for Hayes and Harlington (John McDonnell) for his support for part 1 of the Bill, but I understand his concerns about the powers as they pertain to the Department for Work and Pensions. One of his principal concerns was about banks perhaps being unable to exercise those powers appropriately; what we are proposing is not intended as a decision-making action, but as a data push. Banks will not make decisions—a human within the DWP will carry out that investigation. He has raised concerns about potential errors in the system, and to be clear, we acknowledge that this is a new power. We intend to scale it up in a “test and learn” phase, doing so gradually so that we can get it right, but we simply cannot ignore the problem and not look to take these powers when we had a £7.4 billion problem with fraud in the DWP last year.
Turning to the hon. Member for Horsham (John Milne), I think I have already dealt with the issue of carer’s allowance overpayments and how we are starting to put that right. To clarify again, we are not accessing bank accounts; banks will be doing that for us, but they will not be taking decisions as to somebody’s benefit eligibility. The hon. Gentleman said that we should look at the efficacy of existing powers to request information. We are doing that through the updating of information-gathering powers and the right to compel information digitally. We will be moving to a list of excluded organisations, rather than a list of organisations from which we are able to compel information.
My hon. Friend the Member for Liverpool Wavertree (Paula Barker) raised a series of concerns, which I know come from a good place. I am very happy to meet her to discuss some of these powers—it is important that we get this right—but on the particular question of the legal advice and article 8, although she is correct that Big Brother Watch did commission some legal opinion, we are confident that the powers in the Bill are compatible with the European Convention on Human Rights. They are different powers, distinct from the third-party data powers put forward as part of the Data Protection and Digital Information Bill, and we do think that they are compatible with the ECHR, including the right to a private life under article 8. That is specifically because the third-party data elements are now narrower, and because we have included the safeguards that I have set out. We think the measures are justified in accordance with the law and are proportionate.
The final speech was from the Opposition spokesperson, the hon. Member for South West Devon (Rebecca Smith). Again, I felt it was constructive, if slightly fantastical at points, and I may disagree about the extent to which the Conservatives had more sensible plans that have since been abandoned by this Government. On the question of public sector fraud, I note that she pointed to action to be taken to try to claw back public money. Can I suggest to her that they seek to put that in a press release? If they are not enough of a laughing stock because of their previous behaviour, they would be after seeking to claim that they had a positive story to tell in that space.
I will finish by reiterating the comments of my right hon. Friend the Secretary of State: whoever you are—big businesses, covid fraudsters, organised criminal gangs seeking to defraud the system or individuals knowingly cheating on their benefits—it is not acceptable. We have a major problem, and we are taking the powers needed to act.
Question put, That the Bill be now read a Second time.