Public Authorities (Fraud, Error and Recovery) Bill

Baroness Fox of Buckley Excerpts

2nd reading
Thursday 15th May 2025 Lords Chamber

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I am sympathetic to the Government’s aspirations to tackle fraud and to reclaim money, in effect, ripped off from the public purse. Whether it is those grants for fake community schemes mentioned by the noble Baroness, Lady Anderson of Stoke-on-Trent, at the beginning or the more mundane benefits cheats, there is nothing more galling for the public than people who exploit the system. For those who work their guts out and struggle to make ends meet to see a minority claiming benefits that they do not have a right to and yet seeming to have a better standard of living than the people who are working so hard, it can be and is infuriating.

Yet I have some serious reservations about how the Government are approaching this, and parts of the Bill, at least, feel like a sledgehammer to crack a nut. There is a nagging feeling that the Government are going after low-hanging fruit and that it has become a distraction from the real culprits and deeper problems—indeed, some dodgy schemes created or allowed by the DWP. In the recent furore about the apparent ease with which some could use the Motability scheme to access fancy cars, for example, and to get state-paid insurance, excise duties, servicing and breakdown cover, the upset was, of course, not about a scheme that allows those with disability to access transport to aid their independence—the British public are fair like that; they want that. Rather, it seemed to me that the upset was because legitimate systems were set up by the private company that ran Motability that were there to be played. It was not fraud, but there were lax assessments and a management who never queried why its customer base swelled by 14.7% in the last year, and executives who were awarded eye-watering pay bonuses and who boasted that their scheme was the largest car buyer in UK and doing a public service by promoting electric vehicles to help deliver the transition to greener transport. Maybe that is why the Government turned a blind eye to what obviously needed to be tightened up. I therefore think that there is more going on when it comes to welfare being exploited than this Bill sometimes allows.

When I first heard about the Public Authorities (Fraud, Error and Recovery) Bill, no disrespect, but it sounded a bit dull, technical, workmanlike, and I thought, “I won’t bother with that; I’m not going to get involved.” The problem was that I then read it. There is a good reason why it has been labelled a Big Brother deal, a snoopers’ charter allowing mass surveillance of those who get means-tested benefits—we heard some of the concerns from the noble and learned Lord, Lord Garnier. I agree that one of the most contentious parts of the Bill, as we have heard from other noble Lords, is the eligibility verification measures, which, frankly, I find quite worrying.

The Government seem, however, to be quite matter of fact about this new requirement ensuring that banks and financial institutions trawl through their datasets to highlight where someone may not be meeting the specific eligibility criteria for certain benefits. Apparently, the attitude is that if it helps the DWP identify incorrect payments and verify or otherwise claimants’ entitlement to public money, it is okay—that is the justification—but I feel queasy. I also think that it is peculiar that we think it is okay for the DWP to outsource the dirty work to private third parties that are, first, unaccountable to the public but also being forced to do a job the DWP should be doing itself. Coercion is involved; the banks do not have a choice. They are not being asked whether they want to do this. They will be served with a special eligibility verification notice setting out the specific information that the DWP requires, and there will be penalty notices for non-compliance. This seems an example of huge state overreach. It will also mean that banks, building societies, et cetera will have to trawl through all account holders’ databases to identify which match search criteria supplied by the DWP—criteria, by the way, which are not available to us as legislators to scrutinise, nor, in fact, to the banks.

Therefore, I understand why Big Brother Watch, Privacy International and other civil liberties organisations have invaluably raised the alarm about what have been labelled “bank spying powers”. Ministers have responded by suggesting that this is alarmist hyperbole—a kind of “Nothing to see here”.

I appreciate that this Labour Government have drafted this Bill more tightly than the previous Conservative Government’s version. Yes, it is good that the Bill limits the powers of eligibility verification notices to request only information about accounts in receipt of three named benefits—that is good. However, from reading the Explanatory Notes it is clear that, while initially only those benefits will be looked at, the Bill contains the authority for the Secretary of State to expand the range of benefits covered at any time in the future, with Parliament reduced to a nodding-dog status rather than us being able to debate it.

I am sure that all these details will be subject to debate and amendments in Committee, but for now we should take a step back and note that, whatever smoke and mirrors the Government deploy, the fact is that some people on benefits—as well as, by the way, people with associated accounts, who may be their carers or guardians; that is, account holders who are not even on benefits—will be subject to having their private financial data pre-emptively monitored, intruded on by banks and other financial institutions, in case they are involved in fraudulent activity, all without their knowledge and all because of coercive orders given out by the state.

In the other place, there was an interesting amendment tabled by Labour MP Neil Duncan-Jordan. He sought to limit the exercise of an EVM to cases where the welfare recipient was suspected of wrongdoing and expressed concerns about

“the slippery slope of compelling banks to act as an arm of the state”.

The Government’s rebuttal of that amendment was revealing. Mr Duncan-Jordan was told that this would “undermine the measure entirely”, as powers in the Bill are not intended to deal with suspected fraud but to

“help check that claimants are meeting the criteria for their benefit and to detect incorrect payments at an earlier stage before any suspicion of wrongdoing has arisen”.—[Official Report, Commons, 29/4/25; cols. 243-251.]

This is suspicionless surveillance, which I do not think is a good answer to the problems that we are trying to tackle.

I argue that the Government should note that, on principle, we should not intrude on citizens’ bank accounts without very good reason. It risks an important commitment to the “innocent before proven guilty” point by treating all those on certain benefits as would-be criminals by default. Some might say, “Civil liberties be damned: it is all worth it to crack down on cheats and reclaim all that misappropriated money”. However, we must remember that, even by the Government’s own analysis, if this measure works—this unprecedented bank intrusion—it is expected to recover less than 3% of the estimated annual loss to fraud and error.

Beyond bank spying, there are parts of the Bill that also make me gulp. I will not go into most of them, but does the Minister think that boasting about the use of non-criminal penalties is appropriate? It is explained as a benign way of reducing the burden on the courts, which can be costly and time-consuming, and that civil penalties will show that there are meaningful consequences for breaking the law, as we heard at the beginning, even when criminal prosecution is not achievable—that is, there is not sufficient evidence to get a conviction. Should we be welcoming this non-optional use of civil penalties because they have a lower burden of proof, being on the balance of probabilities rather than beyond reasonable doubt? It is easier to convict and find someone guilty if due process is sidelined.

Other people have mentioned the danger of aligning fraud and error. Even though the Government go to great lengths to distinguish between them, when it comes to detection and recovery they are indistinguishably punitive. Also, too often, as we have heard from others, overpayment errors are the fault of the DWP, yet little attention is paid to this failure in the Bill. A freedom of information request has revealed that, in 2023-24, nearly 700,000 of the new universal credit overpayment debts entered on to the DWP’s debt manager system were caused by government agency mistake. Yet this Bill’s powers focus on making claimants pay the price. In an insightful article, Siân Berry MP quotes—someone whom I do not usually agree with—the CEO of the Public Law Project:

“No one is expecting the DWP not to make any mistakes. However, it is incumbent on the department to take responsibility for those mistakes, rather than pushing that burden onto people it should in fact be supporting”.


While this Bill is keen to punish even those who make unintended errors—perhaps not supplying the correct paperwork or missing deadlines—the Government could be accused of equal negligence.

In reply to lots of the issues raised today, the Government will tell us that much of the detail on safeguards, procedures, appeals and fines will be contained in three key codes of practice, yet not even drafts of those codes of practice were published before the Bill finished in the other place, and we will not get them—if we do—until Committee. This breaches the spirit of the official Guide to Making Legislation, which sets out the procedures by which a code of practice should be made available in order to properly consider the appropriateness of statutory provisions. We do not have them. I say to look to ourselves before we start overpunishing the most vulnerable.

I hand noble Lords over to someone far more edifying. I am delighted that I will be followed by the noble Baroness, Lady Spielman. I have long admired her and often agreed with her from afar. I hope that her credibility will not suffer from my endorsement, by the way—she may feel free to distance herself. I look forward to hearing her maiden speech and many speeches that she will make in the future.

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[Baroness Sherlock (Lab)]

It is a percentage of the amount of fraud that was recognised. Clearly, we do not have figures for the amount of fraud of any kind that has not been identified or recognised. That was the figure for the amount we have on our books as organised fraud.

The reality is that, whether it is done by organised criminals or by individuals, this is not okay. It is not fair to taxpayers who fund social security, nor to the vast majority of people who claim only the benefits to which they are entitled. In my job, when money is as tight as it is now, I want every penny available for social security to go to the people who need it most.

This Government are determined to tackle the issue head-on with a Bill that will provide the right tools to protect public money and fight modern fraud, coupled with the right safeguards. The Bill is tough on those who commit fraud against our public services or our welfare state. In doing so, it gives reassurance to taxpayers. One of the side effects is that it will be helpful to DWP claimants who make genuine mistakes, by helping to spot errors earlier so they can avoid getting into lots of debt.

I thought the point made by the noble Baroness, Lady Spielman, about reciprocity was there. If people do not have confidence in our welfare state and the underpinning mutual shared obligations, that challenges our ability to maintain confidence and carry on supporting people in the future. We need to get this right, but we do not need to demonise people to do that. We just need to make it clear that people should get what they are entitled to, and, if they are not getting that, we should address it.

We believe this Bill strikes the right balance, giving the Government new powers proportionate to the problem we are tackling while ensuring that those powers are wrapped around with effective safeguards and protections to give confidence to Parliament and the country. Having said that, and having listened to the debate, I recognise that it is just possible that not everybody agrees with us—or, at least, not yet. We have some way to go. I have every confidence that, once I have fully explained this, there will be unanimity across the House—or near-unanimity at least, being a realist.

Having listened to the debate, it seems to me that there are a number of challenges. First, I offer a couple of truisms. There is no silver bullet to fraud. If there were one single thing to do, the previous Government would have tackled this, or some other Government would have done it. Tackling fraud is an accretion of a series of small decisions which, between them, add up to make a difference. Therefore, this Bill does what it does and does not do other things: it does not tackle bank robbers or tax evasion. It is a contribution, and I think it is an appropriate one.

Secondly, we have to be a bit careful that the best is not the enemy of the good. What is in front of us is action that this Government will take that has not been done before, and I commend it to the House. The challenges that we have seem to come in three broad categories: we are not going far enough, we are going too far, or there are some challenges in the way that we are doing this. I will briefly look at each in turn.

I start with the challenges that we are not going far enough, which have come from a number of noble Lords. The noble Baroness, Lady Stedman-Scott, and I have great respect for one another, but I say very gently that some of the critiques she has made of the Bill strike me as a little ironic, given that the last Government were in for 14 years and had all that time to take action. What did we get? We got one predecessor of one of these measures, which was put in at the fag end of the last Government and dropped into the other place after Committee, with none of the information that the noble Baroness is demanding from me—nothing at all, not even a requirement to produce a code of practice, never mind actually producing one, and absolutely none of the safeguards or protections. Now she is in opposition, I fully respect that it is the job of the Opposition to demand things of the Government, and she does a fine job of doing that. She also will not mind if, in turn, I occasionally throw back at her what her own Government failed to do. In this area, I think we are doing rather better.

Having got that off my chest, let us move on. It is worth saying that this Government are actually doing something. We committed to the biggest-ever savings package on fraud, error and debt at the Autumn Budget. Along with the Spring Statement, DWP fraud and error measures are estimated to achieve £9.6 billion of savings by 2029-30, of which up to £1.5 billion will be generated by this Bill. So this Bill is not all that we are doing, but it is an important thing that we are doing.

The noble Baroness, Lady Stedman-Scott, asked about cost. In the end, the costs of DWP working through these measures will be dependent on the munificence of the Treasury at the spending review, which I am not allowed to pre-empt. The impact assessment sets out our estimate and shows that around four times the benefit of every pound of our departmental spending will come back on scored measures to 2029-30.

On not doing enough, the noble Baroness asked about “sickfluencers”. She is right—it is the view of this department that we have the powers to deal with these crimes at the moment. We think the Bill will help the PSFA to do that at the same time. But, if she has ideas about other ways in which that could happen, I look forward to hearing them, along with her many other ideas for tackling fraud, which I have no doubt Committee will give us every opportunity to discuss.

While I am on the point, the noble Baronesses, Lady Kramer and Lady Stedman-Scott raised the question of whistleblowing. We absolutely agree; we want people to pass on information about fraudsters who are taking from our public services. We are open to keep looking at the best way to do that. We are working with partners such as Action Fraud to make it simple and easy for the public.

In the case of DWP, benefit fraud can be reported by the public online, by phone or by post—and, trust me, it is. But also, DWP staff have clear channels to report. On top of that, the PSFA will look into the possibility of being listed by the Department for Business and Trade as a body with which individuals can raise concerns around public sector fraud. That will help on that side.

While we are on the PSFA, concerns were raised by the noble Baroness, Lady Finn, the noble and learned Lord, Lord Garnier, and others about whether it is doing enough and about the scale. The PSFA’s enforcement unit is relatively new in what it does. The noble Baroness, Lady Finn, was a little a little bit harsh on test and learn. When the enforcement unit is as new as it is and will only with the passage of the Bill get the powers it needs to do any of these things, surely testing and learning is the right thing to do. If it can demonstrate clearly that results come from that, the possibility for scaling will be significant. I promise I am not making any assumptions of the Treasury.

The noble and learned Lord, Lord Garnier, asked whether the Government audit the work of the PSFA and whether the powers in the Bill will add anything. The PSFA publishes annual reports and has benefits audited by the Government Internal Audit Agency. Examples were given in my noble friend’s opening speech of where the PSFA currently cannot make the desired progress because it has not got the powers it needs. The Bill will give them to it.

That is, briefly, the case for not going far enough. Let us now do the going too far case. A number of noble Lords, including the noble Baroness, Lady Fox, to a degree, the noble and learned Lord, Lord Garnier, my noble friends Lord Davies and Lord Sikka, and the noble Lord, Lord Vaux, are concerned about possible infringements on the right to privacy or other aspects of the reach of the Bill. I am grateful to the noble Lord, Lord Vaux, for acknowledging the improvements made by the Bill. I raised a number of reservations when the last Government introduced their third-party data measure, because I felt that the powers were simply not proportionate and that there were not enough safeguards around them.

While I am here, I say to my noble friend Lord Davies that the fact that that we provide safeguards does not mean the powers are wrong. That is what safeguards are for. There are safeguards in all aspects of life. I will come back to that. It means that we want to be transparent and show people that powers the state is taking are used appropriately. That is what they are for. The noble Lord explained the limitations.

We are now limiting the benefits in scope. For all the measures there will be clear limits about what information can be requested, for what purpose, and how the PSFA and DWP will use it. That is all new, and the Bill introduces considerable oversight and reporting requirements.

I believe the Bill strikes the right balance and, in answer to my noble friend Lord Sikka, I am confident that it is complying with the Government’s duties under the ECHR. The Government’s detailed analysis on compatibility is set out in the published ECHR memorandum.

I need to take on a couple of noble Lords who have suggested that this is a sort of broad trawling expedition. It has been described as DWP going out there and trying to have access to everybody’s bank accounts—suspicion-snooping. That is a simple misunderstanding of the nature of the powers. Let me try to explain why. DWP will not be given access to people’s bank accounts by this measure, which is about banks being asked to examine their own data, which they already have and can already look at. They have been asked to provide DWP with the minimum amount of information necessary to highlight whether there is a possibility that someone may not be meeting a specific eligibility rule for a specific benefit. At the point the information is shared with DWP, no one is suspected of having done anything wrong. The presumption of innocence is still there.

[Baroness Fox of Buckley (Non-Afl)]

It is clear that the DWP does not want to see that data, but it will be telling the banks to trawl for the data. The Minister says that they already have the data, and that they would not be trawling for a government-mandated outcome before the DWP told them to do it. As the Minister was about to say, and I have stressed this before, it is true that there is no suspicion of anyone. The only reason the bank would be doing it is that a person is in receipt of a particular benefit. The bank therefore has to check whether the person is in receipt of that benefit—because it does not necessarily know that—by going through its databases on the eligibility criteria the Government are going to give it. So no one is saying that the Government are spying, but the banks are being asked to “spy”—it is a phrase, just a slogan. We understand the point; we just do not think you are satisfying us.

[Baroness Sherlock (Lab)]

I have heard accounts of people saying that disabled people will worry that DWP will know that they go to Pret and therefore cannot really need the money, et cetera, so it is important to make it clear that DWP will not have access to their bank accounts through this EVM.

DWP knows the bank accounts into which benefits are paid, so DWP will tell the banks to look specifically at the bank accounts into which those benefits are paid. It will tell them specifically the criteria they are looking for, and all they are being asked to provide is enough information to identify accounts which may, on the face of it, be in breach. Then, that information will be used along with other information that DWP holds, and it will be examined by—to reassure the right reverend Prelate the Bishop of Lichfield—a human being, who will make a decision on whether to investigate. There could be a number of outcomes. The outcome could be that the person may have had, for example, more money in their account than the benefit allows, but for one of the many acceptable reasons. There could be a perfectly good reason. The person may have made a genuine error, and that will be dealt with in a different way, or in some cases there may be evidence of fraud, and that might move into a fraud investigation.

I accept that some noble Lords may not think this proportionate. We believe it is proportionate, with those safeguards wrapped around it, but I want to be clear that we are arguing about the same thing, not about different understandings of what is going on at the time.

Public Authorities (Fraud, Error and Recovery) Bill

Baroness Fox of Buckley Excerpts

Committee stage
Wednesday 25th June 2025 Grand Committee

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I too rise very briefly. A number of us have raised this scandal throughout Committee and the Minister has rightly said, “Well, there’s an independent review, I really can’t comment until we get the findings”. I say, “If we can’t comment until we get the findings of the independent review, the Government shouldn’t be taking money from the carers. That would seem obvious to me. Let’s wait until we’ve got the findings of the independent review”.

However, this speaks to the moral dilemma that was very well articulated by the noble Baroness, Lady Lister of Burtersett. It is something that has been troubling many of us throughout Committee: the Bill fails to distinguish between the ways people are treated for error and for fraud. Through no fault of their own, they end up in some instances being criminalised and certainly subject to some quite severe powers. That has always felt morally unjustifiable.

Another point this raises is that, although we constantly say that the moral case for this is that the money must be reclaimed, many instances of error seem to be due to errors made by the DWP, yet there is never any clarity about how, morally, it might be asked to pay. I am not suggesting that it pays financially, but if we are saying that those who make an error must pay, I do not understand why the DWP has not, as part of the Bill, made it clear which errors made by the department or state bodies the public will be able to hold them to account for when they are made. The scandal of the carers has cut through with the public: people know about it and are discussing it, and they in no way think that these people are welfare scroungers, frauds or doing anything wrong. So I urge the Government in this instance to be very clear that they will not act, as this amendment rightly argues, at least until the inquiry has brought its conclusions into the public arena.

[Lord Vaux of Harrowden (CB)]

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

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We believe, as I said at the beginning, that this is a very serious matter, and I urge the Minister accept the amendment, or to work with colleagues to bring forward a similar provision at a later date, perhaps on Report. We have a duty not only to recover fraudulently claimed funds but to stop that fraud happening in the first place. This is one step that will help us do just that. Going forward to tackle this issue, any steps that the Government take now to understand the scale of the problem will be most welcome. I beg to move.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, as we approach the end of Committee, it has been refreshing, even though we are not in the main Chamber, that there has been so much general consensual, constructive discussion. We have had a lot of interesting, erudite, probing amendments—erudite inasmuch as they have been thoughtful and have tried to get to the heart of what we think is happening with this Bill and what we need to see changed. It has been enjoyable working across parties, including the Front Bench, the Opposition, Back-Benchers, Cross-Benchers, non-affiliated Peers and so on.

I have got that out of the way so that I can say that I do not know why on earth the main Opposition are obsessed with sickfluencers and have tabled this amendment, and I therefore want to speak to it. One of the reasons is because I think the amendment misses the target completely and draws together some of the issues around why I have had some worries about the Bill in general. Let me explain. I am speaking against Amendments 125A and 129A, which focus on the problem of sickfluencers and those using electronic communications and the internet to help people “circumvent eligibility checks”.

This should not be made into any kind of criminal offence—with, according to the amendment, a threat of up to one year in prison—but we do have a cultural problem of encouraging and inciting increasing numbers to identify themselves as sick and in need of state support. I think that is where the focus should be, not on these malevolent so-called sickfluencers corrupting the nation. I am worried that these amendments miss the target and potentially distract our gaze from where we should be targeting.

For example, in relation to circumventing eligibility checks, I am sure noble Lords are aware of a recent story from Oxford University, which has admitted that, because of a long waiting list and a logjam for diagnosis in relation to ADHD, it has decided that it will use as supporting documentation a referral to a GP or to an NHS assessment service as sufficient for students to get special concessions in exams and assessments. This is one of our top academic institutions allowing young people to circumvent the eligibility checks that were there until recently. They can gain benefits from this much lower eligibility check, which is inevitably likely to incentivise self-diagnosis among those students. It is in that context that we have seen the growth of sickfluencers.

Videos with the hashtag “#mentalhealth” have amassed something like 17 billion views on TikTok over recent years, according to an academic study. But they have been about self-diagnosis, not about how we can rip off PIPs. They are, broadly, a cultural problem. My worry is that we are seeing the growth of what one psychiatrist has labelled the “mental health industrial complex”: increasing numbers of people prepared to enter into this discussion about what mental health is beyond the medical profession. That often comprises a plethora of therapists, who are unregulated, well-being experts and even mental health charities with huge budgets—some from government contracts—that have got us into a situation where increasing numbers of people are culturally incentivised to view the trials and tribulations of life and feelings of unhappiness and depression through the pathologised prism of medical labels. This is something that Tony Blair talked about last year, on which I uncharacteristically agreed with him.

These sickfluencers are leading to a huge spike in numbers adopting an identity of mental fragility and illness and creating an increasing cohort of citizens demanding official diagnosis statements, NHS interventions, pharmacological and therapeutic treatment and, of course, welfare support. That is fuelling and feeding into some of the controversies around personal independent payments, increasing the numbers on disability living allowance and so on.

I am trying to avoid that particular row about cuts in welfare, which are causing such consternation for the Government at the moment. My point is that it is not online sickfluencers—it is such a stupid word—who have created this culture of encouraging people to view themselves as in need of support. I have a lot of sympathy with the Health Secretary, Wes Streeting, who conceded that mental health conditions are being overdiagnosed, meaning that the number of working-age adults who we officially designate as incapacitated and in need of various forms of state support are being effectively written off as young people. It is to do with overdiagnosis. That is where all our energy should be. One of the reasons why I have kicked back against a lot of Part 2 of this Bill, some parts of which are draconian overreach, as a sledgehammer to crack a nut is that there is a much deeper problem in why the welfare bill is so huge that goes beyond people acting fraudulently in relation to benefits.

I would be more sympathetic if the Opposition had taken on the real problems here. Governments of all parties, the previous one and this, have pushed official awareness campaigns, which encourage ever greater numbers of people to see themselves as in need of welfare and provide a script for people to follow. I have written extensively about this in a different context. Children in playgrounds use the therapeutic language of mental ill health. They got that from adults. We have to ask what is going on.

Dr Alastair Santhouse, a neuropsychiatrist at Maudsley and author of a new book called No More Normal: Mental Health in an Age of Over-Diagnosis, notes that

“the more people are aware of a particular illness, the more people start to identify with the symptoms”.

Officially backed awareness campaigns are really problematic. I have just written the foreword to a new pamphlet entitled Suffer the Children: Why Having a ‘Mental Health Professional’ in Every School is not the Answer, brilliantly written by Lucy Beney. She notes that schools now have a veritable army of educational mental health practitioners, emotional literacy support assistants, mental health first-aiders and so on, and the outcome of this is more and more pupils describing themselves as suffering from mental ill health.

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[Viscount Younger of Leckie (Con)]

My Lords, we come to the final group, which I am pleased to open. I thank noble Lords who have participated in this Committee, particularly the noble Baronesses, Lady Sherlock and Lady Anderson, on behalf of my friend Lady Finn, and all the officials for their answers to remarks and questions. I know that spending hours in Grand Committee is not a massively appealing prospect, particularly on these rather hot and stuffy days. We probably all deserve a drink after this.

Over the course of these days, we have raised some important questions and concerns that we have for the Government on a Bill that, despite its technical title, is quite important. I feel that the Committee has come together on several key issues around safeguarding, proper independent oversight of these powers and the costs, as I said a moment ago, that we will impose on banks.

We have outlined areas of the Bill that could threaten the well-being of and access to services for benefits claimants, we have raised concerns over the powers granted to the PSFA and we have brought our remarks not only on these Benches but across the Committee back to the principle of that important word “proportionality”. While we need to tackle the issue of public sector fraud robustly, we must do so in a way that is nuanced, safe and effective. This is a significant Bill in respect of the problem that it is trying to tackle and the powers that it is seeking to grant. It deserves our full attention and scrutiny for that reason, and I feel that much of the debate that we have had reflects that point.

Amendment 131 is a sunset clause, requiring that the net benefit of provisions in the Act must exceed £500 million per annum at the end of a period of five years. Its basic purpose is to set a standard for the performance and return on investment made as a result of the provisions in the Bill. We have heard many times about the scale and scope of the challenge that we are facing with respect to public sector fraud. Amendment 131 seeks to bring us back to the fundamental principle that our purpose should be the recovery of public money in a way that genuinely benefits the taxpayer.

We have spoken a lot about costs over the past few weeks and today. It is important that we pursue this policy in a way that is cost effective and recovers money in a meaningful and tangible way. This is about being responsible with taxpayers’ money, and we must ensure that we get a return on investment to approach this issue sensibly and pragmatically.

We have agreed pretty unanimously on the principle of returning to the taxpayer money that has been gained fraudulently, but there is no point in pursuing the policy if it does not give us a sufficient return on that investment. In other words, this would set a benchmark for efficacy and cost-effectiveness. If these powers are delivering real value for money, then they would remain. If they are not, then Parliament must revisit them—hence the amendment.

The public rightly expect that the powers we grant to Ministers and departments are not only proportionate but demonstrably effective. They do not want systems that are costly to administer and burdensome to operate and yield little in return, nor should they be expected to accept them. This amendment would simply create a clear feedback mechanism. It asks that the Government show their working and provide an evidence-based justification for retaining powers that intrude on privacy, create obligations for banks and place additional burdens on both government departments and third parties. If the system is working and recovering public money effectively and efficiently, then, as I said earlier, there is no difficulty in meeting that threshold, but if it is not then we should have the courage and accountability to stand back and reassess.

Let us also be clear: the amendment would not automatically repeal the Act in five years’ time. It would allow for its continuation if and only if the system works. It would not constrain the Government’s ambition but demand proof of delivery—and what is wrong with that? At a time of tightening public finances and growing digital scrutiny, it is more important than ever that new powers are not just well intentioned but demonstrably worth while, and this sunset clause would help to ensure that. It would build a clear and measurable standard, and it would respect Parliament’s duty to monitor the impact of the legislation that it enacts. I beg to move.

[Baroness Fox of Buckley (Non-Afl)]

I shall say a few words despite my earlier promise and add to this moment of harmony. This is an interesting amendment to finish off Committee. I talked earlier about sledgehammers and nuts. I am concerned about civil liberties being constrained by the Bill. There are huge invasions of privacy and things that I worry about in terms of overreach of state power, but we can be assured all the time that this is about protecting public money.

When we describe everything from organised crime to fake charities getting money from the state and so on, understandably, we then think, “Are we trying to balance this out? Is it proportional? Do we have to make compromises on freedoms in order to crack down on it?” I am not yet convinced that that proportionality exists, and I know that we will pursue some of that on Report. What will remain of this Bill are those powers, but I am not convinced that the money accrued back will justify the kind of powers that the Government are giving themselves.

Public Authorities (Fraud, Error and Recovery) Bill

Baroness Fox of Buckley Excerpts

Committee stage
Wednesday 4th June 2025 Grand Committee

[Lord Palmer of Childs Hill (LD)]

My Lords, I apologise; to some extent I moved onto what sounded more like a Second Reading speech, but it comes out of the comments that the noble Lord made. Not just central government bodies but other public bodies must use the investigatory powers, where they are already there, and bring in the heavy guns only when needed. So I accept what the noble Lord, Lord Maude, says.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I feel rather inadequate after hearing the last few speeches, which were excellent in their expertise and in making me think about the issues, and after the earlier discussion led by the noble Baroness, Lady Kramer, on whistleblowers. I feel as though I am going to learn a lot from these debates, so I apologise, as I am raising just a few simplistic issues in this group on the chapter that has been labelled “Key concepts”.

As we start Committee, I draw attention to how the Government have been explicit that the powers in the Bill are designed to target error in addition to fraud. Error does indeed account for substantial losses of public money, so I have no problem with the Bill doing both but, too often, it seems that its powers—many of which are too draconian—are applied equally to fraud and error without distinction.

I am broadly in favour of looking at Amendment 4, which seeks to probe the circumstances in which a public authority would recover an amount paid in error, as we need to make a distinction between error and fraud. In general, many of my concerns, although largely confined to the section of the Bill dealing with the DWP and welfare, are on the dangerous conflation between fraud and error. If we do not keep them distinct, there will be unintended consequences from this Bill, and I am very worried about disproportionality in justice and so on. I would be interested to hear how the Minister responds to Amendment 4.

I am also very sympathetic to Amendment 7, which requires that:

“the Minister is satisfied that there are reasonable grounds to suspect that fraud or attempted fraud … has occurred”.

That notion of reasonable grounds is very important for this Bill and, sadly, it is too often absent. I think it can lead, for example, to suspicionless surveillance, which we will be talking about later in Committee.

I want to quote the written evidence given to the Public Bill Committee by the cross-party law and human rights organisation Justice. It emphasised that:

“This requirement for reasonable grounds is a well-known legal requirement in the context of state investigations: it is a safeguard to protect individuals from baseless state interference and fishing expeditions”.


It is very important that the requirement for reasonable grounds is taken very seriously throughout our discussions, so I was glad to see Amendment 7.

Although it is now completely after the effect, and I feel like this is a cliché, I will say congratulations to the noble Baroness, Lady Anderson. I kind of feel like the moment might have passed, but I have to say that her announcement at the start of the debate cheered me up.

Public Authorities (Fraud, Error and Recovery) Bill

Baroness Fox of Buckley Excerpts

Committee stage
Monday 9th June 2025 Grand Committee

Moved by

[Baroness Fox of Buckley]

27: Clause 17, page 10, line 19, leave out “make” and insert “apply to the appropriate court for”
Member’s explanatory statement
This amendment removes the power of the Minister to make direct deduction orders and instead provides for direct deduction orders to be made only by a court following an application by the Minister to the court.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, in moving Amendment 27, I will speak also to Amendments 29, 62 and 75, which relate to debt recovery and concerns about the proportionality, even constitutionality, of the Bill’s use of direct deduction orders. I thank the noble Lord, Lord Palmer of Childs Hill, for his support in this endeavour.

The purpose of these amendments, and those in the later group starting with Amendment 102, is to transfer the powers of the Minister in Part 1 and of the Secretary of State in Part 2 to make direct deduction orders and deduction from earnings orders to relevant courts, whether the county court in England and Wales or the sheriff court in Scotland.

Before I look at the substance of this issue, I note that Amendment 29 addresses Clause 19(2) and paragraph 3(2) of new Schedule 3ZA, inserted by Schedule 5 to the Bill, whereby the Minister or the Secretary of State are required only to believe that a person holds the bank account in question. Other provisions require such belief to be reasonable, so inserting the word “reasonably” before “believes” would impose a reasonableness test. Not having such a test removes the balance of proper scrutiny and any threshold for a belief. This needs to be addressed to prevent unscrupulous intrusion. Meanwhile, Amendment 62 probes the circumstances in which orders can be restarted where they have been suspended, because I am confused about why that is necessary.

To return to the fundamental principles at stake in Amendments 27 and 75 in particular, and the broad theme, for centuries the rule of law and the separation of powers have ensured that a person is innocent until proven guilty and cannot be punished by political diktat. The Executive cannot arbitrarily take action against a person, even a debtor, in the manner that the Bill gives the relevant Minister. The Bill allows the Minister to order a bank to supply sensitive information for the purposes of debt recovery, without either judicial oversight or individual knowledge.

On our first day in Committee, we heard from the noble Baroness, Lady Finn, the shocking details of how Clause 7 allows relatively junior civil servants in the Cabinet Office to apply for a warrant to enter and search premises and seize anything they have reasonable grounds to believe has been obtained in the commission of fraud. If handing police powers to civil servants was not chilling enough, here are powers that facilitate the state raiding bank accounts.

--- Later in debate ---

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, a garnishee order is used to obtain money directly from a third party. That is not the process that we are undertaking; we are regaining money directly from an individual, as opposed to a third party. I am happy to write to the noble Lord with more guidance on that, but that is my understanding.

I move on to Amendment 29, which would necessitate a “reasonable belief”, rather than a “belief”, that a bank account is held by the liable person prior to the PSFA requesting bank statements from the bank to inform decisions on direct deduction orders. In practice, the PSFA will already be operating at this level as it will already, through the course of its fraud investigation, have developed an overview of the liable person’s financial information.

In addition, having thrilled the Committee with my recitations from Managing Public Money last Wednesday, I am excited to be able to quote from another government page turner, The Judge Over Your Shoulder. All “public law powers” must be exercised with

“reasonableness or rationality—following a proper reasoning process and so coming to a reasonable conclusion”.

Making a Minister’s belief a “reasonable” belief therefore has no effect, because they are already subject to it.

In addition, Clause 19 lets the PSFA issue a general information notice to banks, which provides confirmation of the accounts that a liable person holds. The amendment is therefore not adding anything new.

Amendment 62 seeks to remove the ability to restart a deduction from earnings order once it has been suspended. For some context, a deduction from earnings order is a mechanism by which public funds lost to fraud and error can be recovered directly from a liable person who is not in PAYE employment. Having listened to the debate, I have some sympathy with noble Lords; however, it is important that the PSFA remains able to issue, vary, suspend and restart, or revoke a deduction from earnings order, for very human reasons.

We need to be able to suspend and restart a deduction from earnings order due to a temporary change in the liable person’s circumstances; for example, if they were temporarily hospitalised. People’s lives, as we know, can be messy; it is important that we have the flexibility to recognise that. Where it is more appropriate to revoke the order altogether, this is provided for in Clause 47.

The purpose of the amendment therefore overlaps with existing provision which gives the necessary flexibility while maintaining clear communication with both employers and liable persons, maintaining a fair and transparent debt recovery process. If this provision was adopted, an unfortunate consequence would be the end of such flexibility and the reluctance of anyone to suspend payments due to having to restart the process.

I hope that this explanation reassures noble Lords and that the noble Baroness will withdraw Amendment 27.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I have a number of points. It was very interesting that the Minister concluded in relation to one of these amendments that “people’s lives can be messy”. It is precisely for that reason that in saying that DDOs will be issued only due to a lack of engagement, without any consideration of why that lack of engagement might happen, it might well be because people’s lives are very messy, to quote the Minister. So I am not convinced by that at all.

[Baroness Anderson of Stoke-on-Trent (Lab)]

To reassure the noble Baroness, efforts to engage with a liable person would not be just a one-off hit. There would be over a dozen attempts, under my understanding of the Act. So it is not just a one-time effort to engage with each liable person. By the time we got to the process of a direct deduction order, there would have been multiple efforts to engage with the liable person.

[Baroness Fox of Buckley (Non-Afl)]

It is quite feasible that I have missed the multiple efforts in the reading of the Bill. Maybe it is there—it might be another bit that I have missed. But I do not think that is clear, so maybe that could be clarified.

I am sure that this is the intention—the problem is the principle. We were given the explanation that I thought we would be given: we are doing this directly and not going for judicial authorisation because the courts just have too much work on. I always worry about an explanation that says that it will cause too much work for the courts. On this basis, we may as well cut out sending anyone to a court and put them into prison—because that court process is so darned long-winded for everything, is it not? But we do not say that, because the court system sets in place safeguards to ensure that people are not unfairly treated. We do not have a direct situation where a Government of the day simply decide that the courts are dispensable with. That is the principle that I was trying to raise here, so I do not think that is a satisfactory answer.

I was also unconvinced by the argument, which I will go through, that HMRC already has powers to deduct money directly from bank accounts under Schedule 8 to the Finance (No.2) Act 2015. Actually, there are statutory safeguards, including the requirement that HMRC retains £5,000 in the debtor’s accounts, and guidance about who HMRC should deem as at a particular disadvantage. That is not in this Bill. It is part of that Bill, which was cited as a reassurance to me.

The comparison with child maintenance is also a false comparison. Child maintenance is money owed by one parent to ensure provision for their dependant who does not live with them. That differs greatly from an individual claiming money from, for example, the social security system, who potentially has been overpaid—as I keep pointing out, through no fault of their own. I do not think those two things count as equivalences at all.

I was grateful to the noble Baroness, Lady Finn, for the amendment on stop-starting DDOs. I have some sympathy with her approach in terms of them being permanently never allowed to start again. My nervousness with it is that it feels so arbitrary. The explanation given was that people have messy lives, which is fine, but I do not want to be in a situation whereby I am nodding through a system that means that people could keep having their direct deduction orders stop and start because of the messiness of government. We are told that it is the messiness of people’s lives, but it is not clear that that would be the only reason why this would occur; it is not in the Bill.

Of course, I shall not press my amendments, but I imagine that I will return with some of them on Report.

Amendment 27 withdrawn.

--- Later in debate ---

[Lord Vaux of Harrowden (CB)]

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

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I was going to make a very similar point. We have to consider the serious consequences of the Government, in effect, turning banks into de facto government inspectors, as well as the unintended consequences such as those for politically exposed persons. Goodness knows that that has not gone well. It has created all sorts of chaos. I am very anxious about private institutions, in effect, being asked to do the Government’s dirty work in many instances.

I want to query, though, banks being able to charge for the hard work they do via new paragraph 8 in Schedule 5, in which there is a provision for the bank to be able to deduct a fee from the debtor’s account to meet its reasonable costs in complying with the order, which is a ridiculous situation. It amounts to state-backed approval of funds being taken directly from the bank accounts of private customers to deal with administrative retrieval of overpayments. By the way, the maximum amount that banks could charge would be set by the Secretary of State via regulations, which is also not reassuring. Although I do not want the banks to be used, I also do not want them to be able to charge their own clients to do the job that the Government have demanded they do. I feel very queasy about all this.

On the discrimination point, if these measures identify a range of types of bank clients who are causing more trouble than they are worth, the obvious decision will be to debank. It makes perfect sense that they would think, just like every other private sector organisation, “Do I really want people on benefits living in my house?” We have seen this discrimination time and again. There is a serious danger of unintended consequences here that the Government have to take seriously.

[Lord Verdirame (Non-Afl)]

My Lords, I did not speak at Second Reading, but the Bill has attracted my interest for the reasons a number of noble Lords have pointed out about procedure and due process. I share the concern about the risk of debanking en masse a group of individuals whom banks will view as not particularly good customers in terms of the money they deposit and as they now come with greater risks. I would also like to know what the Government’s thinking is on that issue.

Looking at this from the point of view of the bank, I am a bit concerned about the relationship between Clause 19(4) and Clause 19(10). Clause 19(4) says:

“The Minister may give an account information notice relating to an account only for the purpose of determining whether to make a direct deduction order in respect of the account”.


If the bank receives such a request for an account information notice, but for some reason considers there may be a different purpose in that request, what is the bank supposed to do? Clause 19(8) says:

“The bank must comply with a notice given under this section”.


However, Clause 19(4) puts a clear limit in terms of the lawfulness of giving an account information notice. Who is to assess whether there is any doubt as to the purpose of that account information notice?

In Clause 19(10), it says:

“Information given to the Minister in response to a notice under this section may be used by the Minister for the purpose of exercising the core functions but not for any other purpose”.


Of course, the core functions are wider than the purpose identified in Clause 19(4), which says that you can give an account information notice only for the purposes of determining whether to make a direct deduction order. But then, in Clause 19(10), that information may be used for wider purposes than enabling the taking of that decision.

That puts the bank in a bit of difficult position. It is told that it must comply with a notice but also that the notice must be only for the purposes of determining whether to make a direct deduction order. If it has any doubt, presumably it owes a duty to its customers and will have to consider how to behave in that situation. Further, it is also told that the information it will be providing may be used for wider purposes than simply the making of a direct deduction order. I would like to hear from the Government how they see the relationship between these various provisions in Clause 19, and where that leaves the bank in that kind of scenario.

--- Later in debate ---

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, it would be inappropriate for me to speak on behalf of the banks, and I do not think that noble Lords would want me to do so. But as far as I am aware—having said I will not speak for them, I am now going to—the banks are supportive of the approach we are taking. In terms of fraud, we are working very closely with them. The banks, however, want us to be as similar to HMRC as possible, and we are trying to do that. Given that those are regulations they currently work with in day-in, day-out, that is what we are trying to emulate. I think that is as far as I can go. The noble Viscount should be reassured that we are engaging directly with UK Finance regularly, and he might want to reflect on the evidence that it gave in Committee stage in the other place about how comfortable it was with this section of the Bill.

[Baroness Fox of Buckley (Non-Afl)]

I think it is fair to say that UK Finance and the banks, in terms of all the evidence that I have read, are obviously happy to sit down with Ministers to try and negotiate their way through this Bill. I do not think that is entirely fairly or accurately described as them being happy with this. They are being asked to do things by coercion in this Bill. I am not saying that word to be offensive. I mean they have not chosen to do it—the Government have told them they have to do it. In many instances, banks are required to do what the Government tell them in relation to their own customers or face penalties if they do not. Consequently, they are trying to negotiate the best of a bad deal. That is not quite the same as an enthusiasm for the Bill. I think that is worth noting, as we would not want to mislead.

[Baroness Anderson of Stoke-on-Trent (Lab)]

I remind the noble Baroness, Lady Fox, that what I actually said was that I did not want to speak on behalf of the banks. However, I find the word “coercion” a complete exaggeration and unnecessary. Just to clarify as well, the banks will not face penalties at any point in the Bill, unless I am to be corrected—and if I am wrong, I will correct the record. This is a process of trying to recoup government funds—taxpayers’ funds—to make sure that we get the money back. That is what we are trying to do and that is why this legislation is in place. We are working with the sector to make sure we can get our money back.

--- Later in debate ---

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I welcome the spirit of this group of amendments. I am not clear that I understand entirely how the independent review process might work, but I do understand the importance of having an independent review process; the case for this was made convincingly by the noble Baroness, Lady Finn.

Despite the fact that we are whizzing through these amendments at great speed, I do not think that it would be right to underestimate the huge amount of power that this Bill gives the Cabinet Office. There appears to be an atmosphere of consensual camaraderie, which it is pleasant to be involved in—it may be an atmosphere I am less used to—but I emphasise the amount of concern outside this Committee about the implications of this Bill. The people who are concerned are not all hucksters or fraudsters: they are ordinary people who have genuine fears around the possibilities of the absolutely unintended consequences of the Bill if we do not have adequate safeguards. So I am keen on anything that strengthens safeguards.

I hope, therefore, that the Government will consider these amendments seriously. I think that they are very helpful. I am particularly keen, of course, on the idea that liable persons, as they are described, deserve to have somewhere they can go to make an appeal. They deserve to know, as was suggested, that, if they have legitimate concerns, they will be heard. So much of what appears to be in this Bill happens behind the backs of liable persons, which creates an atmosphere of fear, suspicion and nervousness.

I do not think that people are just being paranoid here. Consider—this has been mentioned before and will no doubt come up again—the Horizon scandal. There is nothing more frustrating than feeling as though you have been treated badly somehow but you do not know where to go. You have nowhere to appeal to. It may be that you have a perfectly legitimate explanation for something. What we saw in Horizon was “computer says no”. What we could have here is the Cabinet Office, which has just imposed something on you, not taking any notice if you should go and complain. That is a very important part of this: people deserve to know that their concerns can be heard, and so on.

There is a danger in this discussion sometimes. I fear that, if one raises concerns about this Bill, there will be an inference that one is not taking fraud seriously. That is absolutely not the case. I have constantly made the point, for example, that I worry about the conflation of error and fraud. This does not mean to say, though, that, where there is genuine fraud, we should not want to clamp down on it as hard as we can.

But it is also fair enough that we need to have a system in which there is public confidence. To clamp down on fraudulent activity, we need a watertight, safeguarded Bill that targets fraud and does not pick up any number of non-fraudulent issues, which will undermine public confidence. The intention of these amendments is to help enhance public confidence that there is a mechanism through which an independent body can review a process that could be corrupted inadvertently by a department having the capacity to mark its own homework, and, in that instance, not always see the wood for the trees when people raise concerns.

[Lord Verdirame (Non-Afl)]

My Lords, I, too, have a few comments to make on these amendments. I very much support the intention behind them. I would like to understand a bit more about Clause 34 and how it will operate. Paragraph 219 of the Explanatory Notes says:

“This clause introduces a process for review of deduction orders by an authorised officer of a higher grade than the original decision maker upon application by relevant parties”.


As far as I can see, there is no mention in the legislative text of the authorised officer who conducts the review being of a higher grade. Perhaps I have missed it, and it is somewhere else; if so, I would be grateful to know where. If it is not somewhere else, it may be that the Explanatory Notes made that point on the basis of general principles of administrative law. Either way, it would be useful to know where that comes from.

My second point concerns the grounds for review, which are very narrow. Clause 34(4) says:

“An application for a review under this section may not be made on, or include, any ground relating to the existence or amount of a payable amount (unless the amount is said to be incorrectly stated in the order)”.


The grounds for appeal in the following clause are equally narrow. Is my understanding correct that the reason these grounds are so narrowly drawn is that there has already been a final determination of the payable amount by a court or tribunal—which was the reference to Clause 12 that we were given earlier on? Can the Minister give us some examples of grounds for review, given how narrowly drawn that provision is in Clause 34(4)?

Finally, I note that there is no time limit imposed on the Minister for carrying out the review. The applicant would have to put in an application within 28 days, but they might just sit and wait for the outcome of that review for an indefinite period. Would it not be a good idea to include a clear time limit on the reviewer—ideally the independent reviewer—or the authorised officer for that review to be concluded?

--- Later in debate ---

With regard to the appointment of an independent—

[Baroness Fox of Buckley (Non-Afl)]

Maybe I should just clarify. I am not suggesting that the Cabinet Office is full of malign people out to behave badly, and I was not suggesting that they all need to be punished. I was more suggesting that the reason why it would be useful to have an independent review body was for exactly the reasons that fellow noble Lords have pointed out—that if people wish to challenge decisions that are made, it is very important they feel they can go to a body where they will not necessarily be working directly with the people who made the original decision, as has been described. No one is suggesting that there is an evil, scheming group there.

The comparison with the Horizon scandal that I was trying to make was about the sense of intimidation and fear when someone feels that they have been wrongly treated, then when they appeal or try and go to a body to sort it out and it ends up being the same people who punished them in the first place. Maybe I misspoke before, but it is this that I am concerned about—so I would like this independent review body to exist so that those who are liable have somewhere independent to appeal to, straightforwardly.

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, in response to the noble Baroness, I state that there is the First-tier Tribunal opportunity, in terms of there being an independent process to go to. That is why we have put in place the additional safeguards with regard to the independent person who will be appointed to review all cases at their discretion, not at that of the Cabinet Office, as well as HMICFRS—so there is someone who has oversight. That is also why we are making ourselves subject to the IOPC for matters of complaints, as outlined in the Bill.

The noble Baroness raises a very important point about Horizon. I assure noble Lords that the Horizon scandal and how we ensure that it is not repeated has been central to this Government’s thinking on safeguarding. In light of the seriousness of events, the Government wish to proactively ensure the highest levels of oversight in new legislation, and that is why they exist in this Bill.

With regard to one of the points raised by the noble Baroness, Lady Finn, on the appointment of the independent person subject to a parliamentary pre-appointment hearing, the Government cannot commit to this at this stage. Cabinet Office guidance states that it should be discussed between the relevant Secretary of State and the chair of the relevant Select Committee. The Government want to make sure that the independent person is demonstrably independent and are exploring all available routes to achieve that. I hope that we will be able to discuss that further in due course, but with these explanations I hope that I have reassured noble Lords and that therefore they will not press their amendments.

Public Authorities (Fraud, Error and Recovery) Bill

Baroness Fox of Buckley Excerpts

Committee stage
Wednesday 11th June 2025 Grand Committee

[Lord Palmer of Childs Hill (LD)]

My Lords, Amendments 61C and 61D in the names of the noble Baroness, Lady Finn, and the noble Viscount, Lord Younger, seek to ensure that liable persons receive clear written communication regarding the outcomes of reviews and that Ministers demonstrate due consideration of wider circumstances when requested. This kind of transparency is crucial in practice, as it helps individuals to understand the basis of decisions affecting their finances and provides reassurance that their personal situations are being taken into account. For many people facing recovery actions, receiving clear, accessible information can make a significant difference in navigating the process and seeking further recourse, if needed.

Amendments 61E and 61F, alongside Amendments 62A and 62C, address important procedural and operational details that could impact on both individuals and employers. For example, limiting the scope of regulations as proposed in Amendment 61E may prevent regulatory overreach, providing clearer boundaries for those affected. Consulting employers on costs regarded as reasonably incurred, as proposed in Amendment 61F, encourages dialogue and can help to avoid disputes over financial responsibilities. Meanwhile, the provisions to restrict the restart of suspended deduction requirements after 24 months, as proposed in Amendment 62B, and to ensure written reasons for revocation of deduction orders, as in Amendment 62C, introduce important safeguards that promote fairness and clarity. In practical terms, these measures help to reduce uncertainty for both liable persons and employers, fostering greater trust and smoother administration. I support these amendments.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I wanted to reiterate my particular support of Amendments 62A and 62B, even though they do not go as far as my amendment in relation to suspended orders. The sense of a sword of Damocles hanging over people is something that we could do with getting rid of. That would be an easy thing for the Government to accept without in any way compromising the aims of the Bill.

In relation to the other amendments, which I broadly support, I want to emphasise something that I keep thinking as I read the Bill and sit through Committee. Many aspects of the legislation can create an atmosphere of fear, uncertainty and sometimes even paranoia about what is going on if there is a sense of secrecy. This could be alleviated with the opening up of human communication to explain reasoning. These are difficult situations. We are talking, in some instances, about people who have committed wrongdoing of some sort, but it is important that liable persons have a sense of understanding the process. Very often, the way that the process gets stuck behind closed doors has created all sorts of problems in parallel situations.

I want to emphasise how, if things are left to internal processes, it can reduce them to hollow box-ticking. Civil servants or whoever knowing that they can be answerable will ensure that better work is carried out. It will also help to smooth the way for people to take this Bill seriously and not see it as some grand state surveillance conspiracy. It is important, in order to give credibility to the fraud recovery at the heart of the Bill, that the Government are seen to be as flexible as possible about all parties being held to account for what would otherwise be seen as some quite draconian powers.

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, all these amendments pertain to deduction from earnings orders—or DEOs, as I shall refer to them from here. DEOs are a mechanism by which the PSFA can instruct an employer to make deductions from the liable person’s salary in order to recover the money owed as a result of fraud or error. This power can be exercised only after the amount owed has been agreed by the liable person, a court or tribunal, or if the penalty appeal period has lapsed or an appeal has been finally determined. People can avoid their employers being contacted if they simply engage with us and pay what they owe.

DEOs are an established mechanism used by the courts, the DWP, the Child Maintenance Service and some local authorities. We have sought to emulate best practice and established processes to make it straightforward for the employers that have to implement them. There are safeguards for the liable person, such as a protected earnings amount of 60% and the requirement for deductions to be affordable and fair, as set out in Clause 41.

Before an order is made, the liable person will have the opportunity to make representation on the proposed terms. Amendment 61C would create an obligation for the PSFA to provide the reasoning behind its decision to proceed with a DEO following these representations. Amendment 61D would create a similar obligation for the PSFA to demonstrate that it has taken the liable person’s wider circumstances into account when determining the level of affordable and fair deductions. Both these amendments are duplicative as the PSFA would be doing this anyway, as a matter of good public law. As I outlined previously, guidance will also be published detailing what information will be supplied to the liable person as part of the wider decision-making processes.

Amendment 61E would limit the regulation-making powers in Clause 41(7) to establishing affordability considerations. We have striven to put as much detail into the Bill as possible, but there are elements where it is valuable to have a degree of flexibility so that further conditions or restrictions can be added to the measures to reflect wider societal, economic and technological changes. This amendment would severely limit the Government’s ability to adapt to these changes and impact the efficacy of this recovery method, thus potentially reducing the money lost to fraud that could be recovered in the future.

Amendment 61F would require that the PSFA consults with employers on the level of admin costs that they can charge the liable person for implementing a DEO. There are standard charges of £1 per deduction period allowed by the courts and other organisations that use DEOs. It is not for the PSFA to set up a different regime single-handedly, as it will be following established processes already used across government. If it is felt that changes to this charge should be made, they would need to be done in conjunction with the other bodies.

Amendments 62A and 62B would prevent a suspended DEO from being restarted after 24 months. We discussed the same matter on Monday, in relation to direct deduction orders. I confirm that I am still reflecting on the points raised by the noble Baronesses, Lady Fox and Lady Finn, and the noble Lord, Lord Vaux, which also apply to DEOs, and I am having meetings with officials on them. It is important that the PSFA has discretion in how it can react to individual circumstances counterbalanced against its duty to recover money lost to fraud and error in the most appropriate way. There is a balance to be struck and I shall report back on my reflections in due course.

Finally, Amendment 62C would require that, when the PSFA revokes a DEO, it provides the reasoning to both the liable person and their employer. In practice, this would be shared with the liable person as a matter of good public law to safeguard the public law duty of fairness in decision-making for the individuals subject to the orders. However, there are serious privacy considerations that could be undermined by providing such information to the employer. Upon the establishment of a DEO, the employer is not told anything about the DEO other than what is to be deducted from the liable person’s salary. This is the only information of relevance to the employer. Any other information would be a breach of privacy.

Regarding some of the other points raised, particularly by the noble Baroness, Lady Finn, I think it would be helpful to your Lordships if I assist them with some more information on safeguards. Regarding the safeguards in place for the use of DEOs, including preventing hardship, the Public Sector Fraud Authority has committed to the following safeguards: vulnerability assessments, maximum deduction amounts, opportunities for representation, reviews and appeals, and the ability to notify a change of circumstances. The PSFA will continue to utilise best practice from across government.

On the question of who determines the amount of debt owed, the Public Sector Fraud Authority’s investigation will calculate the debt owed to the Government as a result of fraud or error following an investigation into suspected fraud. The liable person will be notified of the recoverable amount. If they do not agree, a firm and final determination will be sought by a court or tribunal.

The noble Baroness, Lady Finn, asked what is meant by “among other things” in Clause 41. Clause 41(6) gives the Minister powers to

“make further provision about the calculation of amounts to be deducted”

in respect of DEOs. To be clear, to make further provision would not allow the Minister to qualify or change the provision, only to add specific conditions or restrictions that can be taken into account when calculating the amount to be deducted. As given as an example in Clause 41(7), the key consideration will be hardship and defining what constitutes hardship. It is important that the definition of hardship is not fixed, as what constitutes hardship today may look very different in, say, 10 years’ time.

The term “among other things” could also include other items that can be taken into account when calculating DEOs that are not so immediately obvious. For example, the regulations could be used in allowing for a different deduction rate around the Christmas period, when the liable person might have other outgoings that would not be reasonably foreseeable when the order was first given.

I hope that goes some way to assuring noble Lords about our safeguards and that the noble Baroness will feel able to withdraw her amendment.

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Together, these amendments strike a fair balance. They do not obstruct enforcement; they strengthen legitimacy. They do not undermine ministerial authority; they anchor it within a system of checks and transparency. Above all, they ensure that those subject to these powers are treated with clarity, fairness and respect. I hope that the Minister will reflect on the spirit in which these proposals have been brought forward constructively and with a genuine desire to strengthen the Bill. I urge noble Lords across the Committee to support these amendments, which provide a proportionate and practical means of reinforcing integrity in both our legislation and the public systems that it seeks to protect. I beg to move.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I will be very brief. I have a lot of sympathy with most of the amendments in this group, apart from Amendment 63A, which fills me with dread. Fraud facilitation sounds as though it is a new crime, but I do not think this is the right place to bring it in. I appreciate that it does not necessarily have a criminal penalty, but it is also not entirely clear what it is.

I know that the Opposition have been pushing the problems of “sick influencers” in another Bill—this is a bit of a theme—but I get very nervous about requiring the authorities to trawl through people’s social media accounts yet once more to see what they are saying, then to blame them for things that happen. When I think of examples that I have been shown of “sick influencers”—but there are others—there is a thin line between people who are trying to give hacks to individuals on how to fill in labyrinthine forms and cope with the welfare system and people who show them how to cheat. I therefore urge against this: it is a can of worms, which I would keep well away from.

There is also a danger that you will allow individuals to abdicate responsibility by saying, “I did it only because I was told to by the influencer who I saw on Instagram”. This goes against the spirit of due process and of taking responsibility.

[Lord Palmer of Childs Hill (LD)]

My Lords, Amendment 63A addresses the important issue of those who facilitate fraud by providing information, advice or support. It proposes that such individuals could be subject to penalties. I believe that this measure helps to close potential loopholes and hold accountable not only primary offenders but those who enable wrongdoing. From an individual’s perspective, this could strengthen the integrity of the system and act as a deterrent against abuse.

Amendment 63B seeks to prevent the Minister from unilaterally determining penalties for persons who have not received a payment, which is crucial to protecting individuals from unfair or arbitrary penalties that could cause undue financial or reputational harm.

Amendments 63D and 64A focus on transparency, accountability and procedural fairness—elements that directly affect the experiences of those subject to the Bill. Providing written reasons for decisions following a review, set out in Amendment 63D, would ensure that individuals fully understand the outcomes and the rationale behind them, enabling them to respond appropriately, or seek further recourse if necessary. Amendment 64A would remove the Minister’s sole authority to change the appeals process and would instead require independent review—we have discussed in previous sittings what “review” and “independent” mean—and parliamentary oversight. It would introduce vital protections for individuals and guarantee that any changes to how appeals are handled are thoroughly scrutinised, preserving fairness and maintaining public confidence in the system’s impartiality. On that basis, I support these amendments.

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I hope that the Minister considers these proposals in the constructive spirit in which they were brought forward—as tools to enhance legitimacy, fairness and the long-term success of this important legislation. I beg to move.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I consider these three amendments as probably three of the most important amendments that have been tabled so far. I congratulate the noble Baroness, Lady Finn, for explaining why so well. They reflect a number of other concerns—it is not as though we have not heard them before—and articulate well the sense of responsibility that we should all have in this Room, as we scrutinise the Bill, in terms of the enormous amount of power that this legislation gives the state. It is why ministerial and parliamentary oversight is important and cannot, in any way, be neglected.

An astounding amount of power has been created in the name of tackling fraud. I sometimes think that it is disproportionate. Regardless, one would be much more reassured if there was at least the knowledge that this was always done by and answerable to Ministers and Parliament. Parliamentary oversight of something as powerful as this is essential and has been reflected in a number of amendments.

I have some other quick points. I thought that the noble Lord, Lord Palmer of Childs Hill, made a compelling argument for the Covid inquiry. It is true that, when I tell people that I am working on a fraud Bill, without exception they say, “The Covid stuff?” I say, “Possibly not; it is not there”. I listened and heard what the noble Lord said about why it is not appropriate, but I wanted to note that.

Of course, it was an extraordinary period for all the reasons that have been explained, but it has become almost impossible since to work out who said and did what to whom. In other words, there is little in the way of tracing accountability and being clear about ministerial sign-off, so I think the transparency register is a brilliant idea. It is clear; if you have these powers, let us see who signed off. No Minister should be frightened of that, because it is important for public accountability and, as has been said, is a way of ensuring that you are not held accountable for things that you did not sign off. It is a much clearer way of understanding it.

I am rather bemused by the final amendment, Amendment 68C. In my background reading, I have read a lot about the crisis in people who are sceptical about the Bill, who are worried that there are no people who are suitably qualified to see its powers through, so the way that this amendment has been posed seems sensible to me.

It is ironic, because there is an argument familiar to those who have been following the schools Bill about whether everybody who stands in front of a group of pupils needs to be qualified or not. “Not always” is my opinion, as somebody who was a teacher for many years. We should not be too rigid, because that is the nature of teaching. I was qualified, but that did not necessarily guarantee that I was a brilliant teacher. I know that qualifications do not necessarily guarantee anything but, in an instance like this, it seems absolutely right that the people entrusted to carry out these powers have the appropriate qualifications for what are complicated, complex financial matters. I therefore support all three amendments, which I think are very important.

[Lord Palmer of Childs Hill (LD)]

My Lords, I am also pleased to express support for Amendments 68A, 68B and 68C, which collectively strengthen ministerial and parliamentary oversight of the powers exercised under the Bill by authorised officers on behalf of members of the Cabinet Office, as other noble Lords have said. Ensuring that robust oversight mechanisms are in place is essential to maintaining public confidence in how these significant powers are deployed. By enhancing scrutiny, these amendments help to guarantee that such powers are used appropriately and proportionately, reducing the risk of misuse or error.

Amendment 68C, which requires investigators to hold professional qualifications comparable to those of officers in the Department for Work and Pensions Fraud Investigation Service is particularly welcome. They need professional qualifications. This commitment to professionalism and expertise safeguards the integrity of investigations and reinforces trust in the system. From our perspective, it is crucial that those entrusted with such important responsibilities are properly trained and qualified, ensuring fairness and consistency in enforcement. Together, these amendments produce a more transparent—we always come back to transparency—accountable and professional framework for combating fraud within public authorities.

Let it see the light and, when it does, there is a way of controlling it. Too often, whoever are in government think they know best and ask, “Why do we have to make ourselves open to scrutiny?” But it is that scrutiny, that existence of light from beyond, that makes the legislation fit for purpose. I support these amendments.

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[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to follow the noble Lord, Lord Vaux of Harrowden, and to speak in favour of Amendments 75A and 79A, to which I have attached my name and which noble Lords will see have rather broad support in political terms—perhaps not the broadest I have ever seen but it is certainly up there. I must also pay tribute to Justice, a cross-party law reform and human rights organisation that is the UK section of the International Commission of Jurists, which has been most determined in ensuring that these issues are raised in this Bill, in this context.

I have already addressed these issues in the Chamber in a number of amendments to the Employment Rights Bill that I tabled and spoke to. I am not going to repeat all that I said there, but I cross-reference those amendments. If noble Lords want to find out more about this issue, there is an excellent book by the researcher Shannon Vallor, The AI Mirror, which is a useful metaphor for understanding the risks whereby we live in a biased society in which those biases risk being reflected back to us and magnified by the use of artificial intelligence and algorithms. That is very much what these two amendments seek to address.

The noble Lord has already given us two international examples of where using AI, algorithms, stereotypes and generalisations in investigations has gone horribly wrong. I have to add a third example, which is the infamous case in Australia of “Robodebt”. That was an automated debt recovery and assessment programme, from the rough equivalent of the DWP, that was exercised in Australia. There was controversy before and through its implementation, and it was an unmitigated disaster. I point the Minister and others to the fact that there was a Royal Commission in Australia which said the programme had been

“a costly failure of public administration in both human and economic terms”.

I note that the House of Representatives in Australia passed a public apology to the huge number of people who were affected.

In a way, I argue that these amendments are a protection for the Government, that this will be written into law: there is a stop that says, “No, we cannot allow things to run out of control in the way we have seen in so many international examples”. I think these are truly important amendments. I hope we might hear positive things from the Minister but, if not, we are going to have to keep pursuing these issues, right across the spectrum. I was very taken: Hansard will not record the tone of voice in which the noble Lord, Lord Vaux, said that the Government wish “to mainline AI”, but it is important to note that a concerning approach is being taken by the Government to the whole issue of artificial so-called intelligence.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, as part of the unusual alliance, I think that now is a good time to reflect on where we are in the Bill. We are now talking about powers targeted at recipients of universal credit, employment and support allowance, and pension credit. Relevant accounts that can be flagged to the Government include any account

“into which a specified relevant benefit is paid”.

Approximately 9.4 million people are in receipt of a benefit currently specified by the Bill—one in eight people in the UK. This already risks creating a two-tier society in and of itself, in which certain groups are subjected to intrusive financial monitoring by the state while others are not.

I was very pleased to see these two amendments because I worry when I consider that, last year, two-thirds of claims flagged by a DWP algorithm as potentially high-risk were, in fact, legitimate. We are now talking about the use of algorithms in relation to the group of people I talked about, so I am happy to support the noble Lord, Lord Vaux, and the noble Baroness, Lady Bennett of Manor Castle, on Amendments 75A and 79A.

The key thing here is to stress something that has already been discussed at great length throughout our debates on the Bill, which is what we consider “reasonable grounds”. The noble Lord, Lord Vaux, has raised reasonability throughout. Generally, but not consistently, the investigator powers in the Bill are exercisable only when there are reasonable grounds for suspicion that, for example, fraud has been committed. Reasonable grounds are a safeguard to protect individuals from baseless state interference and fishing expeditions. They uphold the rule of law by preventing arbitrary state power but “reasonable” requires clarification once we go into the context of the role of technology, which is at the heart of the Bill; that is one of the reasons why I have put my name to these amendments and will raise other amendments in relation to algorithms later on in Committee.

These amendments are safeguards to ensure accountability; to ensure that we are clear about the basis on which algorithms are used; and to ensure that we do not allow them to become the basis of lazy caricatures and stereotypes. Examples have been given by other speakers on this group, but I anticipate that it is possible that the Government might well cite the Equality Act as a guard against such discrimination. However, it is important to note that, although the Equality Act does lots of very good things, it will not necessarily help us here because not all prejudice is reducible to protected characteristics. In fact, attitudes to people on benefits in general and sections of the white working class do not fit into the Equality Act, so it is important that we do not just rely on another piece of legislation here.

Also, if we are going to say that AI algorithms, into which a potential discriminatory nature can be built—as has already been explained—were to make mistakes and discriminate against any group that is covered by the Equality Act, we would be clogging up the Equality Act with lots of legal challenges based on this Bill. I think that using the “reasonable” test for algorithms and ensuring that there is a commitment to no discrimination on the face of the Bill is a very valuable way of countering that.

[Viscount Younger of Leckie (Con)]

My Lords, as the noble Lord, Lord Vaux, said, we are moving towards the DWP elements of the Bill, although I suggest that these particular amendments are more of a hybrid between the Cabinet Office and the DWP. As I think the noble Baroness, Lady Fox, indicated, the DWP elements in scope are universal credit, the ESA and pension credit.

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[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, I will add that to the list of things to write to noble Lords about, if that is okay.

[Baroness Fox of Buckley (Non-Afl)]

It is very reassuring, of course, to hear the Minister, absolutely correctly, insist that individual officers will not choose who to discriminate against. When I supported this, I was not thinking that the officers of the state would necessarily be wandering around with their own prejudices and saying, “nick them” or “investigate them”. I would want to imagine that that would not be the case.

What I think we are talking about here—and this is because the use of technology is so profoundly important to what the Government want to do—is the latent biases in the training data. The connections made between data points are notoriously inaccurate and can be arbitrary, so we are seeking some reassurance here, and I will come back on this in another group. In relation to the accuracy and inaccuracy of algorithms, as I said, last year, two-thirds of the claims flagged by the DWP algorithm as high risk were legitimate in the end, so this is not a foolproof method. Consequently, I am not entirely convinced or satisfied that the Minister has quite answered what the concerns were—certainly that I was raising.

[Baroness Anderson of Stoke-on-Trent]

I am so sorry to have disappointed the noble Baroness, but I will be writing to all Members to answer the questions I have outlined.

Public Authorities (Fraud, Error and Recovery) Bill

Baroness Fox of Buckley Excerpts

Committee stage
Monday 16th June 2025 Grand Committee

[Baroness Fox of Buckley (Non-Afl)]

My Lords, we have heard some important and powerful speeches. I broadly support all the amendments in this group. There is concern outside the House around these eligibility verification notices—people are genuinely worried about them and they are, I think, right to be—but I want to ask the Minister something directly. This Bill has been dubbed “the bank spying powers Bill”. There has been a lot of publicity about it. I know that campaigns such as Big Brother Watch have been gathering up signatures. There was an article in the newspapers today about it. I have heard Ministers, in debates, describe those kinds of descriptions as over-the-top hyperbole and say that it is absolutely ridiculous to talk in this way.

I think that paranoia is inevitable when things are not accountable or clear. I just want to say that I genuinely do not understand how the highly complex monitoring that this Bill demands, in order to provide information to the DWP, can happen unless it uses the processing of the data of all bank accounts. If you ask a bank to provide information on a group of people, the only way it can find out who that group of people is is algorithmically—I will come back to this—which means looking at the data of all bank accounts. That is one of the reasons why the idea of spying powers is raised. Have I got that wrong? Can the Minister clarify whether that is hyperbole and what the reality is? That would be especially helpful before I speak to my amendments on algorithms so that I do not make a mess of what I say.

[Lord Sikka (Lab)]

My Lords, I support all the amendments in this group, but I want to make a brief comment on Amendment 89. It is inappropriate for the Government to have powers to extend to and include other benefits, because each benefit may well have a different dynamic as to whether there is a possibility of fraud. If you look at the DWP statistics, you will see that some of the other benefits have a very low incidence of fraud; it is universal credit that is out of line, compared to the rest. I do not think that the Government should be allowed powers to add to those three benefits. That would be highly draconian. If the present Government, or a future one, feel that there is a need, they should bring primary legislation. At that time, we can also take the opportunity to smooth the rough edges of this Bill, which might have become visible by then.

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[Baroness Sherlock (Lab)]

My Lords, I am not a flow chart gal, but if anyone is capable of turning this into a useful flow chart, I shall have a look into it.

I fully accept, being an observant person, that not everybody in the Committee agrees with these measures. It is clear that they can make a difference to tackling fraud and error. We think that they are proportionate, but I accept that some Members do not think that, and that is obviously completely legitimate. We simply take a different view.

In the next few groups of amendments, we get to look at different aspects of how that would work, but it is the Government’s view that the scale of fraud is such that it needs to be tackled. If there were other, simpler ways in which to do it, we would have used them by now. This is a source of data that will help us to tackle fraud and error in overpayments, which we do not have at the moment. We do not see any other suitable ways in which to do it, so we think that it is proportionate. We have wrapped it around in safeguards as much as possible.

[Baroness Fox of Buckley (Non-Afl)]

The Minister has been very helpful. There are obviously disagreements philosophically, but what is confusing is that the financial service representatives have suggested that this is a trawling exercise—the quote given was of a “fishing exercise”. The Minister has stressed, “Don’t worry: when we go to the banks and ask for this information, it is suspicionless. We are not treating people as though they have done anything wrong; we are simply finding out”. That is a huge admission that the state—the Government—is going to the banks and demanding that they provide information for no other reason than that these people are on benefits.

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[Lord Davies of Brixton (Lab)]

My Amendment 83 is a probing amendment. I want to know more about the Government’s thinking on this. As the noble Lord, Lord Vaux, indicated, this is sparked by the comments of UK Finance, which represents, broadly speaking, those who will have to comply with this legislation, interrogate customers’ bank accounts and provide the DWP with information, so its views are very germane. It submitted a briefing for Second Reading, and a number of its points still stand, except to the extent that there has been any engagement between the DWP and UK Finance since Second Reading. I would be interested if the Minister could brief the Committee.

It is still, however, relevant to mention my points. I will focus on one in particular, as my amendment does. UK Finance raised a range of concerns that need to be taken seriously. I will outline them, just to put this into context. It is concerned about the potential conflict with its duties to deal with financial crime. It regarded this as a diversion from its capacity to deal with economic crime, and it was concerned that there were insufficient safeguards for bulk data access. I would be interested if the Minister could address those issues, either now or in correspondence.

My amendment focuses on the other point that it raised. It said:

“Risks of financial harm: Tensions between the Bill and firms’ existing obligations under the FCA’s Consumer Duty and Vulnerability Guidance could result in harm to vulnerable consumers. Bad actors learn workarounds quickly, so the powers may end up impacting most acutely people inadvertently making—or subject to—errors”.


That is a massive criticism of the Bill’s provisions, and it is important that it should be addressed explicitly, either in correspondence or in reply to this debate. I want to paraphrase in very broad terms the attitude of UK Finance towards the Bill. The truth—although it would not say it in quite these terms—is that it does not like it. It wishes that it was not here because of the pressure that it would place on it in all sorts of ways. That is outlined in its briefing.

I will address more directly the issue of financial harm to vulnerable customers. The Government need to say extensively and explicitly how they expect financial institutions to reconcile their undoubted duty of care towards their customers and their obligations under the Bill. To put this into context, the Child Poverty Action Group says that

“the eligibility verification measure would mean people face more suspicionless surveillance and intrusion into their privacy simply by virtue of being benefit recipients. We believe it is fundamentally unfair and potentially unlawful to subject these families to surveillance that the rest of the population does not face, simply because they are on a low income”.

I already quoted the concerns of Helena Wood of CIFAS. There is no doubt that the provisions of the Bill will be of massive concern to individuals, and that should be a major issue in how the Government implement the Bill—I have made plain my objections in principle—and how it will be handled in relation to vulnerable customers.

I have an amendment—let us hope we get to it on Wednesday—about the affordability assessment. Having an affordability assessment is not my idea; it is in the Government’s briefing note, but they do not explain what they mean by it. We will have a debate on Monday about the nature of that affordability assessment. But that in itself will put pressure on customers. Just being there, it will create pressure, particularly for people struggling with poverty and who have problems with their mental health.

It is essential that the affordability assessment will be able to understand the individual circumstances, but the process of implementing that assessment will in itself create harm for the consumer. I cannot see an easy way through on this, but the Government need to address the issue and tell us what they will do to ensure that this conflict is avoided.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, there was extensive conversation about the role of banks in the debate on a previous day in Committee, and I probably got carried away with my own hyperbole when I said that they were being coerced into being involved, on which the noble Baroness, Lady Anderson, corrected me. However, I think we can say that they are compelled to be involved and that financial penalties, which will become increasingly punitive, will be levied if they do not do as the Government request. If they get those penalties, the cost might not be an issue but there would certainly be reputational damage. We need to have some context here and recognise that the banks are not queuing up to do this. That is an important point, which the noble Lord, Lord Davies of Brixton, has made. There is a reluctance about some of the things that are happening with the Bill, which I think the Government can admit to.

In all the literature they have produced and in conversations we have had so far, the Government have reassured those of us who are worried about privacy. We are constantly being reassured that there are limitations on the type of data the banks will share. On the other hand, the way in which the Government are dealing with that is by saying that the banks will be fined—there will be a penalty—if they overshare or if they provide inaccurate information, so I fear that this penalty will, again, have the impact of pushing the blame or responsibility on to banks for any errors.

That makes me nervous, because it is not clear to me how they will not see anyone on benefits as just a pain in the neck for them, since they will now have to go through the exercise of checking, which they are being compelled to do or they will be fined or get into trouble, and if they get the information wrong or hand over the wrong information, they can be fined again. Inevitably—this is why I am interested in these amendments—the banks will associate these eligibility verification notices and the work being asked of them for those on benefits, and they will view such people as creating more work and more jeopardy.

I also think the banks are being held responsible for things they should not necessarily be responsible for. I would be interested to know how the Minister feels, because I think it is a reasonable query at this point to ask, “Isn’t there a problem with private banks being asked to be government inspectors?” I think it was one of the MPs who said that the purpose of banks is not to act as an arm of the state. How should private banks respond to the fact that the state is asking them to do a huge amount more in relation to this clamp-down on DWP welfare fraud? It seems to me that, ultimately, we are asking the banks to do what the Government should be doing, and the banks will get the blame if things go wrong. They are the ones who will be doing the surveillance, no matter which way we look at it.

[Lord Palmer of Childs Hill (LD)]

My Lords, I warmly welcome the spirit and substance of these amendments, which would collectively strengthen the Public Authorities (Fraud, Error and Recovery) Bill by ensuring that our approach to tackling fraud is not only effective but fair and—that word again—proportionate.

Amendment 81 from the noble Lord, Lord Vaux of Harrowden, rightly probes how the Secretary of State will prevent undue costs being imposed on banks and seeks to clarify the mechanisms for cost recovery. This, I believe, is an essential safeguard, ensuring that our financial sector partners are not overburdened by compliance costs, which could ultimately impact customers and the wider economy.

Similarly, Amendment 91, which calls for an independent review of the eligibility verification powers with a focus on the proportionality—that word again—of costs incurred by both the department and banks, is a welcome step towards transparency and accountability in the implementation of these new powers.

I am particularly supportive of Amendment 83, which would place the duty of care that financial services providers owe to their customers at the forefront, ensuring that data sharing with the DWP does not override these fundamental responsibilities. This is a crucial point. While we must be resolute in our effort to combat fraud—on which I am sure we all agree—we must not do so at the expense of the trust and the rights of individuals. It is a very fine line to draw.

Amendment 89C from the noble Lord, Lord Vaux, would remove the risk that the mere existence of an eligibility indicator could trigger unnecessary action against account holders, thereby preventing unintended harm to individuals.

Taken together, these amendments would ensure that the Bill’s powers are exercised with restraint and with full regard to the interests of both institutions and individuals. We must not let it trigger unnecessary actions against account holders under the Proceeds of Crime Act. I support these amendments in their entirety.

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Moved by

[Baroness Fox of Buckley]

82: Schedule 3, page 79, line 22, at end insert—
“(4) The Secretary of State must publish the eligibility indicators.”Member’s explanatory statement
This amendment requires the Secretary of State to make public the eligibility indicators against which the banks are required to check their customers’ accounts.

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[Baroness Fox of Buckley (Non-Afl)]

My Lords, my Amendments 82 and 88 attempt to bring much-needed transparency and clarity to how and why banks are being asked to check their customers’ bank accounts via EVMs. I also support Amendment 89ZA by the noble Lord, Lord Vaux.

Amendment 82 would require the Secretary of State to make eligibility indicators publicly available. As noble Lords will have gathered by now, I am opposed to eligibility verification notices in general and in principle. However, if they are to remain in the legislation, we need to maximise the transparency around them to guard against overreach. Amendment would 88 requires codes of practice to

“to include scrutiny provisions about the algorithms used by banks and the effectiveness of the eligibility verification measure”

in this clause.

At present, there is insufficient oversight in the Bill. We know that algorithms are central to the Bill. That is in line with the Government’s commitment to turbocharge data analytics and AI into public services in general and fraud risk detection in particular. Under this Bill, thousands of decisions regarding the collection and review of the private financial information of people receiving benefits will be—de facto at least—automated. That is a high-risk way to facilitate making decisions; especially those of a sensitive nature. Yet there is no other way for banks, building societies and so on to conduct the benefits eligibility checks that the Bill compels them to do without an algorithmic system—we have already touched on that—but the Bill does not include the specific eligibility search criteria of the algorithm involved. These amendments seek to address this lack of oversight.

The Explanatory Notes offer examples of search criteria, such as capital holdings or the legal limits of stays abroad, but there are no provisions to limit the criteria or provide transparency on them. That lack of transparency makes me question whether the Government are using the most appropriate mechanisms for their ends here, given the complexity of benefits eligibility per se, individuals varied circumstances and the sheer scale of the population’s financial accounts, joint accounts and so on.

It is unclear, and certainly no evidence has yet been provided that I am convinced by, why the Government think that banks are better placed than the DWP to conduct these complex assessments, especially when it involves outsourcing unconsented automated surveillance to third parties such as banks. These are all things that we have already discussed, so what I am specifically looking at here are the difficulties in relation to what we are asking banks to do.

There is no information in the Bill specifying who is responsible for supplying the algorithms required for this surveillance. Can the Minister clarify whether the DWP will provide third-party organisations such as banks with its existing search methodology? Will third parties be responsible for developing and deploying their own? I can understand that this might be being worked on. I have gathered from some of the things that the Minister has already mentioned that these technical issues might still be being resolved. However, it is not clear in the Bill who or what will decide on the algorithms, and there will be no accountability in relation to what we ask those algorithms to do.

In both the cases that I have given, we need to be able to probe how the powers will be put into practice. Can the Minister tell us how much testing has been done on the systems the banks will use? If it has not been done so far, when will we have it?

I do not understand why the Bill does not have provisions for quality assurance checks or a periodic review of these new automated systems. Without such quality checks, it seems inevitable that inaccurate information will be flagged and mistakes will occur, at great human cost. We heard similar concerns from the noble Lord, Lord Sikka, today. The noble Lord, Lord Vaux, referenced the Netherlands’ child tax credit scandal, which led to, for example, more than a thousand children being taken into foster care. That was because of algorithmic problems and a particular use of algorithms, with precisely the same ends of tackling fraud. Surely the Minister can see that the constant scanning of millions of accounts in relation to often complex queries and claims will make false positive matches for fraud highly likely.

I was trying to listen to what the Minister said earlier about how no decisions will be taken. Maybe we can clarify all that finally here, in terms of my concerns. I am worried that, as a result, a significant number of false positives will lead to account holders’ personal details being wrongly flagged up to the Government for further investigation, which in turn may incur further privacy intrusion—let alone penalties.

There have been problematic previous schemes that we should learn the lessons from. Take for example financial institutions’ suspicious activity reports, or SARs, which are used to combat money laundering—a laudable aim. But these SARs already have problems. A 2017 study of a sample of the largest banks found that, of approximately 16 million reviewed, 640,000 SARs were filed, yet only 4% of them resulted in law enforcement involvement.

Then there is a DWP pilot: the housing benefit accuracy award initiative, which was used to produce a risk score for housing benefit claimants that was then used as the basis for review of housing benefits by local councils. The algorithm flagged approximately 400,000 cases a year, identifying most of them as high-risk cases. As a consequence, councils were required to conduct file case reviews of those flagged, which involved invasive checks of bank statements, payslips, rent, et cetera. I know someone who was a victim of this and can testify to how awful that experience was. Benefits were suspended where claimants were not compliant or able to produce evidence to support their claim. But data obtained from the DWP by Big Brother Watch, which has been absolutely heroic in alerting the public to the problems associated with the Bill, showed that only one in three people on housing benefits subject to review were in fact being paid the wrong amount. That meant that 200,000 people were placed under suspicion at the hands of an algorithm, despite having done nothing wrong. The algorithm risks are amplified tenfold in the Bill—we should be taking this much more seriously in terms of scrutiny.

On recording how people’s data will be assessed and not relying solely on algorithms, we are given assurances in the Explanatory Notes—the Minister has been clear about this—that

“a human will always be involved in any further inquiries and any decision taken afterwards that might affect eligibility or benefit awards”.

But these assurances are not an adequate safeguard alone, as we have already touched on in earlier groups. On one hand, there is a tendency for human deference to algorithmic outputs—we have all heard the phrase, “The data does not lie”—and I fear that that is what will happen. On the other hand, courts are currently required to presume that computer systems operate correctly, placing the onus upon defendants to provide evidence that the systems they are implicated by are flawed.

There is also the small matter of staffing and resources. With many thousands of accounts being flagged to the DWP under the proposed system, it is not clear what is feasible in terms of the scale and nature of human involvement, or whether it will be genuinely meaningful. The Minister only moments ago assured us that members of the DWP would always be involved. Maybe this is the kind of job creation scheme that the Government are involved in, but it seems that that is an awful lot of civil servants who will be required if fraud is happening everywhere, and so on and so forth. So I worry.

Indeed, the impact assessment on the Bill acknowledges that the DWP may have to slow the volume of data requests to manage the potential volumes, because there will be so many. If a human decision-maker does not have enough time to properly review a decision—which is my fear—as may well be the case with the deluge of data that DWP will expect to receive from banks, the human input cannot be properly regarded as meaningful.

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[Lord Vaux of Harrowden (CB)]

I have just answered my own question.

[Baroness Fox of Buckley (Non-Afl)]

I apologise for jumping up and down. This is the confusion I have in relation to this area: if you are a fraudster and you are watching this Committee very carefully, as the Minister indicated they are doing—I am sympathetic to the idea that I am perhaps being naive in publishing, “Here you are, fraudsters, this is what you should do”—it seems to me that what you would do is set up multiple bank accounts. In fact, I think it was the Minister for Transformation, Andrew Western MP, who conceded

“that we will not have full sight of somebody’s accounts if they bank with more than one institution”.—[Official Report, Commons, Public Authorities (Fraud, Error and Recovery) Bill Committee, 6/3/25; col. 237.]

So it seems to me that the fraudsters are over there playing the system.

This is a Bill that gives enormous powers, about which I worry. It seems that the eligibility criteria should be known in order for them to be accountable. I do not want to be naive, but the people who actually need the eligibility criteria are those people who might, by error, breach the eligibility criteria, but also, democracy requires it because we need to know how to hold this legislation to account. The fraudsters—the people who are deliberately going out of their way to rip off the welfare system—already know how to play this, if that makes any sense. Even as I was tabling the amendment, I was aware of the fact that I am not saying, “Let’s give the game away completely”; however, we cannot just say, “We can’t tell you anything in case the fraudsters find out”, when there are real loopholes here that the fraudsters are going to exploit anyway.

[Lord Sikka (Lab)]

Related to that, as far as I understand it, some benefits can be paid into foreign bank accounts but they are totally beyond the scope of the Bill, so, presumably, if there is fraud there, it will never really be tackled. Secondly, is it permissible for a UK-resident benefit recipient to request that the benefit be paid into a bank account in the Cayman Islands, the Bahamas, Cyprus or somewhere else?

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[Baroness Sherlock (Lab)]

Clearly, I am expressing this really badly, because I have said it about 17 times and still have not explained it clearly.

When the noble Viscount was a Minister—perhaps it was his predecessor—under the previous Government, they were working with banks to find out whether the proof of concept worked. The answer is that, yes, it does. Test and learn is about saying, “We’re now going to build this up and operate it at scale. How do we do it? What does it look like?” Bit by bit, we will work with a small number of banks; try it out; make sure that the processes, the data pushes and so on work properly; and work with a small number of people who also understand how the sector works as a whole. Then, when it is working, we will roll it out to a wider number.

I am sorry if I have not been explaining that clearly, but that is the difference. The proof of concept asks: can it be made to work? The answer is yes. The test and learn asks: what is the best way to set this up so that the systems will work and so that we get the right information at the right time—a time when we are able to work it properly? I hope that that has helped.

[Baroness Fox of Buckley (Non-Afl)]

I give many thanks to noble Lords for their contributions to this debate. In some ways, it has clarified quite a lot for me; in some ways, I am completely confused. I will go off and read the debate, reflect on it then work out how to bring this issue forward on Report.

I thank the noble Viscount, Lord Younger of Leckie, for his supportive remarks in general and the insights that he brought; they are much appreciated. I thank the noble Lord, Lord Vaux, for drawing attention to my dilemmas around transparency. I want there to be more transparency but, as I said, I do not want to be associated with being an idiot—well, that ship might have sailed—in relation to giving the game away. Transparency is important in politics and in terms of trust in a new Bill that will bring about a huge change in the way the state is viewed, in terms of how it relates to citizens on benefits and so on. One of the reasons for this confusion and difficulty is that this Bill insists on treating fraud and error indistinguishably. That is one of the dangers with it. Fraud is one thing, but people who are inadvertently overpaid when errors are made are treated with the same piece of legislation. That is why it was helpful of the noble Lord, Lord Sikka, to remind us earlier that there are people who will play the system—that is one thing—while there are other people who could inadvertently be treated like criminals.

Public Authorities (Fraud, Error and Recovery) Bill

Baroness Fox of Buckley Excerpts

Committee stage
Wednesday 18th June 2025 Grand Committee

I conclude by saying that I have taken some time to spell out many details that I am sure the Committee will be reasonably familiar with, but, at the same time, perhaps it is a test for the Minister to give us some full explanations as to the safeguards that they are putting in place. I beg to move.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I warmly welcome these amendments in the name of the noble Viscount, Lord Younger. I appreciated the detail that he went into because it is important that we remember that these direct deduction orders are real instruments of power. I am interested in how they will be used differentially, because I do not want them to be a blunt instrument. Therefore, it is worth remembering and considering those who might be on the receiving end of them.

In an earlier group discussing search and seizure, I had been considering speaking but was in some ways put off, because I thought that the search and seizure measures were only meant for organised criminal gangs. As was pointed out, if that was in the Bill maybe it would be more reassuring. It is difficult to know how many people will be affected by the same powers. We want to differentiate, surely, between the vulnerable and an organised criminal gang. There are those who are technically fraudulent, but it is because they have made a mistake, and so on.

I particularly thought of that because I listened to a vivid documentary recently about bailiffs and people who had got themselves into all sorts of distress and debt, with bailiffs kicking down their doors. I had that caricature in my head, and I do not want that to happen to those people. I am not suggesting the search and seizure measures will lead in that direction, but we should always think: who is on the receiving end of these powers? How did they get into that situation? How does the Bill make a distinction so that we do not, on the one hand, have a one-size-fits-all approach? On the other hand—this is a slight anxiety I have— I do not want us to simply get into a situation where we are saying that, because people are on welfare, they are vulnerable. That is equally a caricature, and I do not think it is helpful for us to see people always in a victim role.

I would be interested—that is why I welcome this group—in making the distinctions and learning how the Minister envisages us making the distinctions between the multitude of people on welfare when these powers, which are quite severe in many instances, are going to be applied. How will that happen? Who makes the decision? I think that is why these amendments are very useful.

[Lord Palmer of Childs Hill (LD)]

My Lords, I am pleased in this instance to express my strong support for Amendments 99D and Amendment 109ZA, tabled by the noble Viscount, Lord Younger, and the noble Baroness, Lady Finn. I have not been quite so firm in my support for others, but Amendment 99D would ensure that, before any deduction is applied to recover debt overpayment, due regard is given to the wider circumstances and vulnerabilities of the liable person. There would be a requirement for this assessment to be documented and available to the claimant on request.

This is a vital safeguard that would place fairness and compassion at the heart of the debt recovery process, ensuring that individuals are not pushed into hardship without a proper understanding of their personal situation. It aligns with my and my party’s commitment to a welfare system that is both effective and humane, recognising that people’s circumstances can be complex—gosh, they certainly can be—and that a one-size-fits-all approach to debt recovery is neither just nor practical.

Amendment 109ZA—we have a wonderful numbering system—would further strengthen these protections by requiring the Minister to consider the additional costs of living with a disability before making a direct deduction order. This would be an essential step in ensuring that disabled people, who often face higher living expenses, are not disproportionately affected by debt recovery measures. Both amendments reflect the principles of proportionality and sensitivity that should underpin all government action in this area. They represent a significant improvement to the Bill’s framework for tackling fraud and error while safeguarding the dignity and well-being of the most vulnerable.

Unlike the noble Baroness, Lady Fox, who said she was a bit hesitant on this, I urge the Committee and the Minister to support these amendments, which would ensure that the pursuit of public funds is always balanced with compassion and respect for individual circumstances. At this stage of the Bill, as mentioned by the noble Viscount, these measures need to be introduced so that we can perhaps on Report include them in the Bill.

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Moved by

[Baroness Fox of Buckley]

102: Schedule 5, page 104, line 19, leave out “make” and insert “apply to the appropriate court for”
Member’s explanatory statement
This amendment removes the power of the Secretary of State to make direct deduction orders and instead provides for direct deduction orders to be made only by a court following an application by the Secretary of State to the court.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, in moving Amendment 102, I shall speak also to Amendment 122. I thank the noble Lord, Lord Palmer of Childs Hill, for putting his name to these amendments.

These amendments are similar to those that I tabled in an earlier group in relation to Part 1. In this instance, they focus on removing the power of the Secretary of State to make direct deduction orders and instead suggests that DDOs be made only by the relevant court following an application from the Secretary of State.

Throughout Committee, the noble Lord, Lord Vaux, has helpfully stressed that, when we are having this discussion, particularly in this environment, it is very difficult to imagine a Minister other than the noble Baroness, Lady Sherlock, who I do not think of as a malign person. In this instance, this is not helpful, because as a Committee we must always take a decision based on what we think could happen in future—what powers are being created—and therefore we bring to bear as much as we can the safeguards as a Committee.

I think that we can all agree, and we keep saying this, that it is important to note that the powers are in pursuit of a legitimate aim: here, to reclaim overpayment of money paid to welfare claimants. Following the previous group, we should not say that a welfare claimant, if they have defrauded the state, should be treated with kid gloves—I am not suggesting that. But whenever new state powers over the individual are created, a legitimate aim is not enough to mean that we should not have a more granular probing of the powers that have been created, which is why we as a Committee need to insist that powers are tightly drawn to guard against arbitrariness and limited to what is necessary and proportionate. When the Government award themselves powers, as they do in this part of the Bill, to intrude on the privacy of anyone’s bank account, check on its contents and remove money, there needs to be a strong legal justification. As yet, I am not convinced that we should not make it the job of the courts to best determine and assess when this is appropriate.

In an earlier group, on search and seizure powers, the Minister reassured the Committee that we do not need to worry because this would happen only with court approval. I am suggesting that we might need court approval here. The DWP characterises DDOs as a power of last resort, which can be exercised only when the Secretary of State has given the debtor a reasonable opportunity to settle the debt and notified them of the possible use of the powers. I felt that the Minister’s helpful explanation earlier really brought this to life.

On the other hand, there is no definition in the Bill of what, for example, a reasonable opportunity threshold might be. Ironically, one of the safeguards presented by the DWP is a check on affordability, in terms of fairness. This takes the form of account information notices. I know that we will have a number of amendments on that issue, but I want to dwell on this now, because these safeguards are one of the most egregious aspects of the Bill. To consider whether the debtor can afford to have funds deducted before the Secretary of State makes a DDO, page 105 of the Bill tells us that

“the Secretary of State must obtain and consider bank statements for the account covering a period of at least three months”.

One requirement of the account information notices is that the bank must not notify the account holder—or anyone associated with them, for that matter. Surely this, as I have mentioned in previous contexts, puts the bank in an invidious position of being compelled to breach any professional confidentiality that it owes its customer, even if its customer is a debtor, based on the word of the Government telling it that the account holder owes the DWP money. Compelling banks to hand over bank statements secretly, however benign the motives in relation to affordability checks—all without any external oversight, such as judicial authority —needs to be probed in terms of its efficacy and ethics, which is what these amendments try to do.

Before issuing a DDO, the Secretary of State must give the debtor and any joint account holder notice of the proposed order and invite them to make representations, as the Minister explained earlier. On the basis of these representations, the Secretary of State will decide whether and on what terms to make the DDO, and may do so only if satisfied from bank statements and representations that the order is fair and that the liable person, the account holder and their dependants will not

“suffer hardship in meeting essential living expenses”.

That sounds so reasonable but, in reality, it hands extraordinary discretion to the Secretary of State, as there is no threshold to determine what constitutes hardship or essential living expenses. I am sure that, if we went around the Room, we would have various versions of what we need to live on and would argue over it. Who decides what is fair in this instance? I suggest that at least having an external court look at this would be more appropriate.

Perhaps we would put such qualms aside, if these powers applied only to overpayments caused by deliberately fraudulent behaviour. I can see why going hard on fraudsters might be popular, but these powers to seize funds directly from bank accounts without judicial scrutiny will also apply to individuals who have been overpaid as a result of making a mistake when filling out one of those notoriously complex claim forms, who have failed to update a change in their circumstances, or who may just be struggling to navigate the system in general. Such errors—that is what they are—account for almost a quarter of overpayments. They include errors caused by the DWP’s own actions, as the carer’s allowance scandal revealed, but it is the likes of unwitting carers who will be on the receiving end of these powers, yet the negligent DWP staff who made the mistakes are nowhere caught by the powers that we are discussing.

I say this not to have a go at the staff, in that instance, but to note, as we have talked about previously, that we do not need a one-size-fits-all situation. That was the point that the noble Lord, Lord Palmer, made and it is very important. All sorts of people will be caught up—people making mistakes, vulnerable people and some fraudsters—but they will all be treated the same.

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[Baroness Sherlock (Lab)]

I apologise; I forgot to answer that. No, it does not. These measures apply to any kind of overpayment but, as I described, they are only matters of last resort. We have to have gone through all the other possibilities and people must simply have failed to engage. So this really will happen only if somebody is absolutely not engaged with us at all. As is the case with deductions from benefits or deductions from earnings, they are available as a tool for overpayments, whether or not they will be used.

[Baroness Fox of Buckley (Non-Afl)]

I thank the noble Lords who spoke on these amendments for appreciating—even if they did not support—the spirit of what they are trying to do. Despite that, I do actually want to do this rather than just wanting the spirit. But I know that the noble Viscount, Lord Younger, feels that it will not work practically. But we have had a slightly contradictory answer there, because they are either absolutely the last resort and will hardly ever be used—in which case they will not clog up the court system, to be fair—or they will be used a lot more, which means that there is all the more reason for them to go through the courts, if they will be used liberally from the point of view of a safeguard. So I did get confused about that.

Some thoughtful points were made. The noble Lord, Lord Vaux, usefully probed the Minister—in a way that I was not able to—on exactly when and in what circumstances. These questions about the distinction between error and where the overpayment came from matter in relation to the powers that have been created.

[Baroness Sherlock (Lab)]

Will the noble Baroness give way?

[Baroness Fox of Buckley (Non-Afl)]

Yes, of course.

[Baroness Sherlock (Lab)]

I am sorry to interrupt—I never get to say that anymore. I thought it might be helpful for the Committee if I clarified. The noble Lord, Lord Vaux, referred to Clause 89; that actually refers to administrative penalties and recovery for non-benefit payments, not for benefit payments. I should have made that clear. I am sorry to interrupt the noble Baroness, Lady Fox, in full flow—please carry on.

[Baroness Fox of Buckley (Non-Afl)]

It is very helpful for these things to be clarified. As noble Lords can see every time we are in Committee, I have so many pieces of paper, so I appreciate that and am not saying that I am on top of all the detail.

However, I think it is important, in the spirit of the way that the noble Lord, Lord Palmer, was motivated to support these amendments, that this is not just about the detail; there is an important principle here. I really liked the viral film mentioned by the noble Baroness, Lady Bennett of Manor Castle, because people do care about this Bill and what its impact will be, and we have to be able to answer all the questions as the legislators who are debating it. People know that we are involved in this, and I sometimes feel that it is unclear exactly what will be acquired by all these powers.

The problem with saying that these powers will hardly ever be used is that these powers are going in the statute book, so they can be used. I am not going to talk about bank statements again, but the reason I raised them on this group is because, before a DDO can be introduced, you have to check bank statements through the mechanism of the affordability checks that we will go on to discuss, and that is a breach of privacy. If we are giving the DWP the power to do this, we need to have a check. The way we have done that historically is to rely on the courts to take money. As this is related, I am trying to see whether this could be a useful check to make sure that these powers are not exploited.

We have plenty of time to go, so I think some of us may come back with a version of this amendment—potentially better worded—when we get to Report. It is not just to fly the flag for civil liberties but, as I think the noble Lord, Lord Palmer, said, a need to have trust in the system. If the Bill is to be taken seriously by people who do not just think that it is draconian and who do not do the caricatures that the Minister wants, it must be watertight in its safeguards and protections, as well as in the powers that it creates. Those two things have to live together; otherwise, it will be discredited before it even hits the statute book.

[Viscount Younger of Leckie (Con)]

I just want to pick up on something quite interesting that the noble Baroness said, which leads me to ask a question of the Minister. I am not expecting an answer now. It is to do with the capacity or number of cases. I have no idea how many DDO cases could end up going to the courts, but it may be more than the noble Baroness, Lady Fox, thinks. I am just reminded of my experience of the Child Maintenance Service: it looks at those people who we know can pay and who are not paying, and they go all the way to the courts. There are many thousands. I rest my case by saying that there is a danger that the courts could be clogged up, but it would help the Committee to have some idea, perhaps in writing, of the number of cases that would or could go to court as a consequence of these amendments.

[Baroness Sherlock (Lab)]

I will write to the noble Viscount. As he knows from his experience with the Child Maintenance Service, as each form of enforcement comes into view, more and more people simply pay without it being necessary, so a sort of funnel comes down. If we have any information about scale, I would be happy to write.

[Baroness Fox of Buckley (Non-Afl)]

I beg leave to withdraw my amendment.

Amendment 102 withdrawn.

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[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to follow the noble Lord, Lord Palmer of Childs Hill, who has clearly and eloquently outlined the reasons for this amendment, which the noble Baroness, Lady Kramer, tabled, and to which I attached my name. The noble Lord talked about the risk of loss of trust in public authorities. We should also look at the other side of this: the loss of trust in banks. People may have heard the acronym GDPR. People might not know all the ins and outs but they think that anything to do with bank accounts is private stuff. They want to trust that if their information is with the bank, it is not going to be handed out to anyone else. We have a situation whereby, although the situation has improved in recent years, still 2.1% of Britons are unbanked. That figure is significantly higher for the under-25s. It is also higher in some regions and nations; for example, Scotland.

We have to think not just about the impact on attitudes towards the DWP. I thank the Minister for acknowledging in her response to my previous contribution that the department has a long way to go. However, bank statements contain all sorts of information beyond what is relevant to anything the DWP knows about. For example, people may find themselves in a difficult situation after a relationship has broken down, and their bank statement may reveal all kinds of things about their personal life that they really do not want anyone else to see. There may be purchases they consider embarrassing. They do not want anyone else to see them. Getting the whole copy of the bank statement is not going to provide just information relevant to what the DWP is doing or not, or any other income and so on. There is going to be a lot of other material as well. As the Bill is currently written, it is disproportionate, as the noble Lord, Lord Palmer, said.

[Baroness Fox of Buckley (Non-Afl)]

Very briefly, I absolutely support the amendment. I raised some of my concerns when moving my amendment in the previous group. When I heard that bank statements could be requested, I thought it was not true and I kept having to check it. I thought, “This cannot be right”, because throughout the passage of the Bill we have been assured by the Minister, “Oh, no. We do not want any details. We are only going to have the name. There is no surveillance”. I then thought, “Oh my God, they can get the bank accounts of individuals, allegedly to check whether they have enough money in their bank account, saying that they are doing it only because they are being nice to them”.

I am of the generation who think that if you lose your bank account, there is serious jeopardy. In other words, I would never show my bank accounts around. I am paranoid about anyone seeing my bank accounts. I worry about that sort of thing, although it is not that I have anything to hide—just to note. As the noble Baroness, Lady Bennett, indicated, you can find out from people’s bank accounts what their politics are, their trade union affiliations and their sexual preferences —all sorts of things. On the idea that the DWP will not be looking at that but will just be checking how much money you have, it cannot do that. It is essential that we think twice about this.

These account information notices also apply to joint bank accounts. I know that we are going on to discuss joint accounts in a minute, but that means that those pots of intimate, private, sensitive and granular information held within a bank statement can be revealed about individuals who are not on benefits, who are not debtors, who are not involved at all—they simply share a joint account. I would like this removed from the Bill. It is too scary.

[Viscount Younger of Leckie (Con)]

My Lords, I thank the noble Baronesses, Lady Kramer and Lady Bennett of Manor Castle, for tabling this amendment. I recognise the spirit in which this proposal is made—a desire to ensure that the use of direct deduction powers is subject to proper scrutiny and does not override individual rights without appropriate justification.

However, I must express some serious reservations about the effect that this amendment would have. By removing the ability of the DWP to request relevant bank statement information from financial institutions before issuing a DDO, we risk undermining the very evidential foundation that should underpin the use of this power in the first place. If we are to give Ministers and their departments powers to recover money owed to the public purse—a legitimate policy objective that is supported on all sides of this Committee—we must also ensure that those powers are exercised responsibly and on the basis of proper evidence. Access to account information, under strictly controlled conditions, is part of what makes that possible. Without it, the risk is not simply inefficiency or delay. The greater danger is that deduction decisions could be made with incomplete or inaccurate information, leading to inappropriate enforcement action or simply to missed opportunities to recover legitimately owed funds. Neither outcome would serve the interests of fairness, nor would they deliver good value for public money.

We have heard throughout Committee about the importance of a system that is not only robust but proportionate and just. I entirely agree—as our amendments and interventions thus far have made clear. However, for a system to be proportionate, it must be informed, which requires access to evidence. I reiterate the concerns that we raised on these Benches at Second Reading. Schedule 3B (1)(2) (b)(i) makes it clear that an eligibility verification notice, which would serve to identify or help to identify fraud, can be applied only to the bank account

“into which a specified relevant benefit has been paid”.

As my noble friend Lady Stedman-Scott set out at Second Reading, we are concerned that this creates a substantial loophole which could be exploited by fraudsters who are, as the government amendments have suggested, able to find out whether they are being pursued by the DWP through an information request. This is a real issue. It seems a likely and obvious outcome that such a person could move money between the relevant account and another, held with different bank, to avoid scrutiny.

We submit that for this to be an enforcement regime, there cannot be any loopholes or workarounds which may permit a fraudster to hang on to the money that they have stolen from the taxpayer. As we stated at Second Reading, the Bill as set out suggests that the Government will be tied up in a legal bind, ensuring in statute that they cannot verify or ultimately pursue the recovery of funds that are not held within the account specified. However, with the right safeguards and with responsible communication of information, there is surely a way in which this regime can be constructed that is responsible and fit for purpose.

We believe that the Government must expand their capacity and ability to access further bank accounts held in the name of the relevant person to prevent them simply opening another account and moving money around, which, as the Bill is currently drafted, seems to be a clear and easy way for them to avoid both proper scrutiny and will prevent the money being recovered. Perhaps the Minister will say whether parallels can be drawn with the current system set out between HMRC and the banks for the recovery of tax resulting either from overpayments or tax fraud, which I am sure she will say works. That may be helpful.

Finally, I want to respond briefly to the concerns raised about whether these provisions amount to a snoopers’ charter—a charge that has been raised throughout the passage of the Bill. It is right that we scrutinise the scope of these powers carefully, but it is also important to be clear about what the Bill does and does not do. In our view, the Bill sets out defined and limited circumstances under which verification measures may be used. It cannot be doubted that an informed and fair decision on deduction orders can be reached only if it is grounded in accurate and up-to-date information. I believe that it is for the Government to make it absolutely clear in Committee how these safeguards on process will function in practice and how transparency and accountability will be maintained. I understand the sensitivities involved in accessing bank data. That is why these safeguards and oversight mechanisms are important.

With that, I hope that noble Lords will reflect on whether the amendment achieves that balance, and I look forward to the Minister’s response on how the very valid concerns that it speaks to can be addressed.