Public Authorities (Fraud, Error and Recovery) Bill (Twelfth sitting)

Debate between Andrew Western and Rebecca Smith

Committee stage
Tuesday 18th March 2025 Public Bill Committees

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

Public Authorities (Fraud, Error and Recovery) Bill (Eleventh sitting)

Debate between Andrew Western and Rebecca Smith

Committee stage
Thursday 13th March 2025 Public Bill Committees

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

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[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

--- Later in debate ---

[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.

Public Authorities (Fraud, Error and Recovery) Bill (Ninth sitting)

Debate between Andrew Western and Rebecca Smith

Committee stage
Tuesday 11th March 2025 Public Bill Committees

[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.

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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?

--- Later in debate ---

[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.

--- Later in debate ---

[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 (Tenth sitting)

Debate between Andrew Western and Rebecca Smith

Committee stage
Tuesday 11th March 2025 Public Bill Committees

[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.

--- Later in debate ---

[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.

[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.

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[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.

--- Later in debate ---

[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.

Public Authorities (Fraud, Error and Recovery) Bill (Eighth sitting)

Debate between Andrew Western and Rebecca Smith

Committee stage
Thursday 6th March 2025 Public Bill Committees

[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.

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[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.

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[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.

Public Authorities (Fraud, Error and Recovery) Bill (First sitting)

Debate between Andrew Western and Rebecca Smith

Committee stage
Tuesday 25th February 2025 Public Bill Committees

[Andrew Western]

Q May I come back in on the specific point of independent oversight as it pertains to the DWP element? Obviously, we intend to put in place an independent person to oversee the eligibility verification measure and then HMICFRS on both search and seizure and information gathering. Are you satisfied with that proposal for independent oversight on the DWP side, or are there things that you would ask us to consider beyond that?

Dr Kassem: 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.

Professor Button: The only thing I would add on the DWP is that it is likely to be much more resource-intensive. There are likely to be a lot more cases. Having an appropriate capacity is important for that.

Professor Levi: I agree with that. Historically, in relation to asset forfeiture, say, the problem has been one of excessive caution rather than too much activity. A lot of legal challenges remain. I was on the Cabinet Office Committee that set that up, and there can be too much governance of that, so there is a tension between having a lot of governance in place and saying, “Look, can we get on with it?”

[Rebecca Smith]

Q I will come in briefly, because I am conscious of the time. I was interested in what Professor Button was talking about—encouraging people to commit fraud, and the rise of online videos, TikTok and all that sort of thing—and I wonder whether you think that the Bill does enough to allow for going after people who choose do that. In essence, that is a fraud in itself. Also, is this a good example of where the distinction between fraud and error blurs? If there is no education about what fraud is, and people are watching lots of social media videos on how to defraud things, does that become error or is it fraud? I am interested in whether we are, inadvertently, not tackling the root issues through the Bill, and whether there is anything that we could do to make it tougher.

Professor Button: It is important to tackle those areas. I am not sure whether it is something that needs to go in the Bill. I think it is more an issue of giving the body the capacity to go after those types of individuals and to work with other relevant policing agencies— I suspect that that would need to be the case—to deal with it, rather than saying such things in law. We have the Online Safety Act 2023, which covers a lot of areas. Is that useful enough? Are the Fraud Act 2006 and the historical offence of conspiracy to engage in fraud appropriate, or do we need to create a new, specific offence of, say, promoting social security fraud online? I would not like to comment on that; it is probably something that needs more thought. The key thing is more enforcement, and disrupting forums where that kind of discussion is taking place.

Professor Levi: There is also the issue of signalling to people where the boundaries lie. This is an issue not so much for the Bill, but for enforcement practice across the board. We need some condign activities that communicate to people via social media, as well as in the old media that we may read, what is acceptable, and what is and is not legal. The National Crime Agency has been pretty good about that in the cyber-crime area, in trying to educate people and to divert them away from crime. There are some good lessons across that. It is also a question of resource and how many such things people can deal with.

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[Andrew Western]

Q I will ask one more question about the systems that we have in place. What do you perceive as the principal weaknesses in the DWP’s current powers to detect fraud?

Helena Wood: A really good point was made, and others who follow me in this Committee’s evidence sessions will make it as well: fraudsters rarely simply defraud the public sector or the private sector. It is often the case that those with a propensity towards fraud will look at any channel through which they can gain financial benefits.

This is very much a narrow-facing Bill, but we have to look at it in its broader context. I would question whether DWP could be doing more to share information with the private sector, using existing powers to do so. There are plenty of voluntary information and data-sharing schemes available to which DWP is not plugged in. It would complement this particular power to be able to layer the data picture and the intelligence picture, and not just look at this single piece of information in isolation. There will be a number of data points across the private sector that you could gain through voluntary data-sharing schemes that DWP is currently not engaging with.

[Rebecca Smith]

Q We just heard that serious organised fraud is considered to be only 10% of what is taken from the Department at the moment. Do you think that the measures to give DWP investigators power of entry, search and seizure are the right approach to tackling that 10% of serious organised fraud that exists?

Helena Wood: Absolutely; the point was well made in previous evidence that the police simply do not have the resources to look at fraud against consumers, never mind to support DWP, so I think it is entirely necessary to extend those powers of search and seizure to DWP as well. Again, I keep coming back to the broader context: there are other powers. We should not assume that this Bill is the sole answer. It has taken a very civil lens, quite necessarily, on what is a huge-volume crime, which cannot be dealt with simply through a criminal justice response alone. We have to save that criminal justice response for use in a surgical way, for the really high-end cases, particularly in an organised crime sense. We should not be seeing it as an either/or.

What I would not like to see from this is the replacement of the necessary deterrent of a criminal investigation and prosecution with pure use of civil measures. We need to use that full suite of powers beyond this Bill, including those in existing legislation, such as the Proceeds of Crime Act 2002, and standard issue fraud criminal prosecutions. Something that I would like to see from the independent oversight is that we do not lose that criminal thread. We have to keep prosecuting where necessary, and providing that necessary deterrent through all the available means, not just the ones available in this Bill.

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[Rebecca Smith]

Q This question is on a slightly different tack. One of the powers in the Bill would disqualify a debtor from holding a driving licence. Is that likely to be an effective tool in getting people to engage and comply? Also, do you think the amount of time that that is for is long enough? It does not feel very long to me, given that it is supposed to be a deterrent. Do you think it is too long or too short, or should we just not look at this and use something else instead?

Anna Hall: One thing that we know quite a lot about at the Money and Pensions Service is how people in debt behave. They do not always behave in a particularly rational manner, or in the way that you might expect people to behave, as with all people interacting with systems.

It can be incredibly overwhelming to have multiple debts. If you draw an analogy to other types of debts that people might owe—say, mortgage arrears or rent arrears—the fact that you might lose your home if you do not pay it is obviously an effective deterrent. For some people, those kinds of consequences are an effective deterrent. But we see day in, day out in the services we fund that people leave it right to the last minute before they seek help, and some people do not seek help at all. There can be all kinds of reasons for that. It could be something to do with them—they may struggle with literacy; they may have really overwhelming mental health issues; or it could be that they just do not know what to do. It could also be that they do not know where to seek help from. So I am sure it will be a deterrent for some people, but for other people, deterrents are not really the reason that they do not engage with the system.

We think it is really important that the systems that are set up once a debt has arisen are encouraging and supportive and help people to engage with the Department, so that they can set up an affordable and sustainable repayment plan. That will minimise the number of people who get to that point. We have experience of working with the finance sector and with other Government Departments that are trying to recover debt. If you really focus on being supportive, encouraging and creating the environment where frontline staff are people that you would want to disclose information to, set up income and expenditure, get a signpost to debt advice from and those kinds of things—if that is inherent in the system—you will not need the deterrent very often. There are huge numbers of people who are very vulnerable who have multiple debts, and deterrents are not really the thing that will impact on their ability to engage.

[Andrew Western]

Q Anna, on your final point about engagement with customers, could you talk a bit about the partnership that the Department has with you and the MoneyHelper service, and the work that is done there to ensure that we seek to wrap appropriate advice and support around those who are indebted to the Department?

Anna Hall: We work with the Department in a number of ways. One of the most recent initiatives is working with Jobcentre Plus colleagues to embed the Money Adviser Network referral system into that. That means that where people present at Jobcentre Plus for a variety of reasons and are identified as having some kind of debt or money difficulty, they can either be referred to the MoneyHelper website—that is the Money and Pensions Service website—which has a variety of information on money, debt and pensions, or they can get a referral through the Money Adviser Network to one of our funded debt-advice providers. It is as seamless as possible and it really enables someone who presents perhaps not realising that there is help out there. When someone interacts with a system that they have to interact with, it is great if we can offer a real range of support that allows them to get to debt advice as quickly as possible.

I probably would say this, wouldn’t I, but debt advice can be absolutely life-changing for people? Its impact is huge. One thing we know is that people often do not know that debt advice exists. A huge number of people would benefit from debt advice. They do not know where to look or how to find it and think that is maybe is not for them, and they do not know what will happen when they get debt advice. If you have someone reassuring at the jobcentre saying, “This is a really independent, trusted service and it can help you sort out your financial affairs, and here is a seamless transfer through to that debt advice service,” that can be incredibly effective.

We are working with the Department, in Jobcentre Plus and across the board, on where people are particularly vulnerable and where they really need that support before they can even start to think about finding work or engaging with other things. If you are worried about whether you have food, whether you have money coming in and what you are going to do about the bailiff who is coming to knock on your door, you really need to deal with that before you can look at your long-term future.

The Department and all the officials we have been working with have been prioritising that. Being an arm’s length body of the Department for Work and Pensions is really helpful to make those connections, and embedding debt advice into all those systems has been really welcomed by the Department.

Public Authorities (Fraud, Error and Recovery) Bill (Second sitting)

Debate between Andrew Western and Rebecca Smith

Committee stage
Tuesday 25th February 2025 Public Bill Committees

[Andrew Western]

Q I have a very general question to open with. You will be more aware than I am of the changing nature of fraud and the increasing sophistication that we see from perpetrators. Do you agree, in general, that the DWP’s powers would need to be modernised in order to cope with that shift? Also, what are your views on the general provisions within the Bill, where it pertains to the DWP, to detect and prevent fraud?

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 Based on your experience and the work that you are already doing with the PSFA, are there any gaps in the Bill? Is there anything that you think is not there that would help us to tackle fraud against public authorities, or do you think that as it stands, it is about as complete as you would want it to be?

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.

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[Rebecca Smith]

Q On eligibility verification, the Government have said that the final decision will always be made by a human. There is an aim to automate some things, which is not necessarily a bad thing, but do you feel reassured by the human element at the end of the process, so that people are not adversely affected by automation, or are you concerned that that will still not be far enough or good enough?

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 Your last point about stop and search and decisions being made purely based on protected characteristics speaks to what you said earlier about the perceived impact on disabled people. Are you suggesting that the eligibility-verification measure would directly discriminate against disabled people, or is it merely that disabled people make up a larger number of the cohort?

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—

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[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 Thank you for joining us. I have a couple of initial questions. You have neatly set out your position that there is no circumstance in which you would support the eligibility verification measure. I was interested when you said there are no other laws like this in the country. We heard from HMRC today about its ability to receive bulk data with regard to every interest-bearing bank account in the country, and it does that on a regular basis. How do you consider this power to be different from that one?

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.

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[Rebecca Smith]

Q Thank you, Chair, and thank you, gentlemen. We have heard quite a lot of concerns already this afternoon about the potential disproportionate impact on disabled people. It would be good to hear from you as disability campaigners—because we have kind of heard people talking on your behalf so far—about how you think the measures will affect disabled people, and what could be done to address the impacts that may result from the Bill.

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 Could I come back on the last point you made, Rick, and the suggestion that this treats disabled people as a distinct part of the population under different rules and measures. The Bill targets the three benefits that have the highest levels of fraud and error at present: universal credit, pension credit and employment and support allowance. I would accept that there is a higher prevalence of people who are disabled in those cohorts, but this is not restricted exclusively to disabled people. Can you elaborate a little on how you feel that disabled people, in isolation, would be treated as a separate entity?

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.