Public Authorities (Fraud, Error and Recovery) Bill

Caroline Nokes Excerpts

Report stage & 3rd reading
Tuesday 29th April 2025 Commons Chamber

[Several hon. Members rose—]

[Madam Deputy Speaker (Caroline Nokes)]

Before I call the next speaker, may I make it clear that I will come to the Liberal Democrat spokesperson immediately afterwards?

[Gill German (Clwyd North) (Lab)]

I welcome the return of this Bill to the House. I was happy to speak on it on Second Reading, when I welcomed the Government’s crackdown on fraud, because every pound lost to fraudulent claims is a pound that could be spent on the vital public services on which my constituents in Clwyd North rely. It is extremely good to see the recognition of the issue, and the action taken in response to the £7.1 million of fraud and error payments in 2022-23 in Wales alone—that figure is up by £600,000 on the previous year.

The fine-tuning of this Bill is important, and that fine-tuning is done through the Government amendments, which speak to the correct application under devolution settlements, policy intent, the application and limitation of part 3, and the consequential amendments proposed to parent Acts. I was glad to be a member of the Public Bill Committee that considered the Bill in more detail, and I throw my weight behind the comments made about how the Bill Committee progressed, and how helpful that was to Committee members. The explanations and expansions by the Ministers served us well and have brought us to where we are today.

I spoke on Second Reading about the distinction between intentional fraud and accidental individual error, and I am pleased that Government amendments speak to reservations relating to that, and to proportionality. Crucial safeguards will be strengthened to ensure that no one is pushed into undue financial hardship because of debt recovery. Those safeguards include strict affordability checks on recovery payments, and checks on vulnerabilities.

[Gill German]

The Bill will protect vulnerabilities where we see them and it is very much a Bill of last resort. It is aimed at people who are not engaging with the DWP on fraud and error cases. Now that carers are aware of the problems that have occurred in the system, we hope that they engage, so I do not believe that the Bill will impact them in the way that the hon. Gentleman suggests. Indeed, the Bill will protect claimants by enabling early dialogue, which will stop errors sooner and prevent debt building up through genuine mistakes; I initially had a reservation on that point.

It is clearer than ever that the measures are powers of last resort for those who have refused to engage and are able to pay—it is important to emphasise that point. The measures put DWP powers in line with those that already exist for His Majesty’s Revenue and Customs and the Child Maintenance Service, and put the importance of the public money spent by those bodies on an equal footing.

The behaviour change that is expected to come as a wider benefit of the Bill is welcome. The Bill encourages debtors to negotiate a repayment plan ahead of using the measures of last resort. Importantly, as has been said, it deters organised fraudsters and those looking to become involved in fraud by ensuring that it is not framed as a victimless crime. It is anything but, because it robs us all of vital money for public services. We are not willing to shrug our shoulders at that, as the Conservative party did at the rising tide of fraud during the covid pandemic and beyond. We must all reinforce the narrative that benefit fraud is not a victimless crime, and our tackling it through the Bill is long overdue.

Throughout the passage of the Bill—in Committee and now on Report—I have been reassured that those who have genuine difficulty navigating the social security system have nothing to fear from the Bill. Indeed, it will raise awareness of the importance of early dialogue. However, I still have concerns about the complexity of the system and how it is administered, as I voiced at Second Reading, but that is for another day. As a member of the Work and Pensions Committee, I will continue to focus on that, as well as having regular dialogue on the subject with my constituents.

To conclude, I welcome the Bill and the fine tuning that has come about through Government amendments passed in Committee. I was pleased to serve on my first Public Bill Committee, and thank the Chairs, Ministers and all involved for its smooth running. I am happy to support the Government amendments put to the House today.

[Madam Deputy Speaker (Caroline Nokes)]

I call the spokesperson for the Liberal Democrat party.

[Steve Darling (Torbay) (LD)]

I start by assuring the hon. Member for South West Devon (Rebecca Smith) that my office has talked me out of mentioning the Waitrose cheesecake that was a hot topic throughout Committee. On a more serious note, I would like to explore the challenges in the Bill. As we have heard, fraud can only be a bad thing, as it robs the public purse, but we need to ensure that our approach is proportionate, and that is where the rub is for us, as Liberal Democrats.

First, I want to focus on the covid crisis. We all lived through that, and some of us were in hot seats. I was leader of Torbay council at the time, so it felt as if I was in the eye of the storm for some of those challenges. I am afraid to say that for many of us in this Chamber, it feels as if the Conservatives were asleep at the wheel, given the level of fraud that we saw taking place during the pandemic. The fact that £10 billion-worth of fraud occurred around personal protective equipment is shocking. Some £16 billion of fraud occurred around support for businesses. While it was extremely important that we supported businesses appropriately, the safeguards were extremely limited. One businessman in Torbay said to me that it was as if the Chancellor of the Exchequer had got handfuls of £50 notes, filled carrier bags across the town centre, and said to the criminal element, “Come and help yourselves.” The reality is that the money could and should have been put to good use. In my constituency, Torbay hospital is crying out for investment. We have a sewage scandal, and the Environment Agency could be supported in tackling that issue. We also have the cost of living crisis; we could support people in ensuring warmer homes. All that money could help with those things.

A colleague and good friend has already alluded to the carer’s allowance crisis, and the real challenge that it poses. More than 136,000 people—the population of the Torbay unitary authority area—are affected by it. There is some £250 million of cost on those people. We Liberal Democrats fear that the powers in the Bill could make things even tougher for those who have challenges to do with the carer’s allowance.

Members do not have to take it from me that the benefits system is broken; the Secretary of State for Work and Pensions, the Chancellor of the Exchequer and the Prime Minister have said that it is. If there is such agreement in Government that the benefits system is broken, why are we adding to this edifice? It is built on a foundation of sand, yet we are looking to pile more responsibilities on to it, without looking for the true, positive culture change in the DWP that we need.

Colleagues have alluded to the areas of debate around the Bill. I will touch on a few major concerns that we Liberal Democrats have. The opportunity that the Bill presents for Orwellian levels of mass surveillance of those who get means-tested benefits causes me grave concern.

--- Later in debate ---

[Richard Burgon (Leeds East) (Lab)]

I congratulate my hon. Friend on his eminently reasonable and common-sense approach to this debate and on amendment 11. Does it seem to him, as it seems to me, that this legislation takes place in a wider context? Along with the proposed tightening of eligibility for personal independence payment, it moves us towards a hostile environment for benefit claimants, particularly disabled benefit claimants. We will end up treating them as suspects automatically. Does he agree that it was right for us to oppose this measure when the Conservatives wanted to do it? I tabled an early-day motion, signed by nearly 50 MPs, to that effect. We have to oppose this measure now. The best way to resolve it is by the Government accepting his eminently reasonable—

[Madam Deputy Speaker (Caroline Nokes)]

Order. That was a very long intervention. Perhaps we would be better off going back to Neil Duncan-Jordan.

[Neil Duncan-Jordan]

I thank my hon. Friend for his intervention. I will cover the connection between this piece of legislation and the Green Paper shortly.

--- Later in debate ---

[Several hon. Members rose—]

[Madam Deputy Speaker (Caroline Nokes)]

Order. It would be helpful if Members tried to confine their speeches to five minutes or so, but I do not propose to introduce a formal time limit yet.

[Esther McVey (Tatton) (Con)]

I wish to speak in support of new clause 11, entitled “Publication of results of pilot schemes”. Make no mistake: this Bill allows for a massive expansion of state powers. It will permit mass financial surveillance of the public. It is a massive overreach by the state, so of course it requires close scrutiny. It requires the publication of those results, and then they must be analysed.

Let me put this in context. Before the covid years, fraud and error across the tax and benefit system were at an all-time low. Then, in 2020, after a state-imposed lockdown—another massive state intervention—unprecedented financial support was set up for millions of people, in a rush of panic, with the full support of Members on both sides of the House. I exclude myself from that, but very few Members opposed the arrangement, and it opened up all sorts of new vulnerabilities in the system.

This support was set up only because of a blanket stay-at-home mandate from the state. It was the state that opened up those fraud vulnerabilities, and it was the state that saw, as a result of those impositions, many millions more people claiming universal credit. Let me give the House the figures. In March 2020, 3 million people were receiving universal credit. By November that year 5.8 million were receiving it, and in January 2025 the number was 7.5 million. Just as the heavy-handed state intervention of lockdown left the public paying a very high price, I am concerned that the Bill, another heavy-handed state intervention, will also leave the public paying a very high price. As Big Brother Watch states, the Bill will introduce

“an unprecedented system of mass financial surveillance; create a second-tier justice system for people on the poverty line; undermine the presumption of innocence; result in serious mistakes risking the freedoms and funds of our country’s elderly, disabled and poor; and turn Britain’s once-fair welfare system into a digital surveillance system.”

I have said it before and I will say it again, lockdown was an experiment inflicted on the British people without their consent and that experiment failed. The Bill will be another such experiment on the British public.

--- Later in debate ---

[John McDonnell]

Following the right hon. Gentleman’s track record on issues like this—he has been proved right on virtually every occasion—I agree. In addition to the mass surveillance, the extent of the information that can be sought and interpreted from the Bill is extremely wide-ranging and open to challenge.

What has annoyed me is that we are now introducing legislation in advance of what we were promised by way of codes of conduct and operation. We have no idea how this will work out in practice without those codes. Members may recall that the codes set out detail on how the system would operate at every level, with the information seeking, investigatory powers and so on. We do not have those, but we are being told not to worry, because the other place will receive them—well, that is not our responsibility as MPs. Our responsibility is to deal with the matter here.

We also do not know how the “independent persons”, as they are described in the legislation, are to be appointed or how they are going to operate. The hon. Member for Brighton Pavilion (Siân Berry) raised the question of how their reports and recommendations will then be implemented. There is also the question of whom they will be accountable to and whether there is any accountability for those independent persons to this House.

Time and again, when we have introduced legislation like this in the past that has short-circuited the traditional protective constitutional and legal mechanisms, it has led to debacles and miscarriages. I warn Ministers that that is exactly what we are facing here. Reference has been made to issues with regard to the use of computers, models and algorithms. We seem to have learned nothing from where we have made those errors.

As I also raised on Second Reading, what is happening here is discriminatory. We are choosing a class of people—largely working-class people—who are claiming benefits, and we are targeting them. If there is a class of people we should be targeting who have a record of fraud and of claiming things that they should not, well, here we are. As the expenses scandal demonstrated, if there is one group of people we should be examining more closely, it is Members of Parliament.

I want to talk very briefly about the impact of these measures from a constituency point of view. As an MP for 28 years and a councillor for over 12 years—40 years in total—I have met lots of people who do not claim benefits to which they are entitled. They are often older people, but there are others as well. Why do they not claim? In my experience, it is because of the stigma attached to claiming benefits. With this Bill, we are adding a bit more stigma, which will act as a disincentive to those who genuinely qualify for benefits and should be coming forward. It is that terror of making an error, that fear of risking being penalised for claiming a benefit they may not be entitled to—or of being paid too much. There is a real fear among my constituents about such miscarriages.

Most of the constituents who come to our constituency surgeries have tried everything else by the time they get to us. They are the ones with the most chaotic lives. And they are the ones who get sanctioned time and again, not because of any deliberate act, but often because they have mental health issues, or because something in their life, prevents them from attending that interview, or from applying for enough jobs in time. What will happen to them? They will be dragged into this system again. At the moment, they come to us—this is largely the case in my constituency—because most of the advice agencies have been closed down thanks to the cuts that have taken place, and they come to us in desperation. This Bill will make people even more desperate. It will deter people who qualify for benefits from claiming, and it will cause real hardship and impose severe penalties on those who least deserve it. That is why I think this is a poor piece of legislation, and it will not be long before we are back here again to amend it, to restore some elements of civil liberties and protection for the poorest in our society.

[Madam Deputy Speaker (Caroline Nokes)]

I shall impose, with immediate effect, a four-minute time limit.

[John Milne (Horsham) (LD)]

When it comes to public money, everyone accepts the importance of preventing fraud; there is no dispute about that. The mere thought that our benefit system could be exploited loosens the cement holding our welfare system together. However, if we look back in history, there has been a track record of fraud recovery measures not delivering what was hoped. This measure will also probably never save the £1.5 billion that is expected of it, so I ask: will the alleged rewards of this legislation ever match the scale of the imposition on our civil liberties, and are we really going after the right targets?

We all want to catch deliberate and professional fraudsters, but they are precisely the people who are astute enough to change tactics, set up separate bank accounts, and avoid suspicion. Instead, it will be the innocent and the accidental claimants who fall into the trap. The implicit assumption is that we should trust in the DWP as a completely error-free organisation across the entirety of its massive operation. But the DWP does make mistakes. It makes mistakes all the time. And even when it knows that it has made a mistake, and it has been told so, it is very capable of making the same mistake all over again.

In my constituency of Horsham, Anthony and his husband were accused of providing misinformation to the DWP and were overpaid £10,000 as a result. Anthony protested without success. After a long fight the case went to appeal. The tribunal wasted no time deciding in his favour—it was an open and shut case. But then, earlier this year, Anthony and his husband were migrated over to universal credit. After confirming all details were correct, the DWP overpaid them again, and then sought to claw the money back over the following months. The DWP’s mistake, but Anthony pays the penalty.

The DWP has its rules, but real life does not run in straight lines. Real life is messy. How can we possibly rely on the DWP to mark its own homework when we know that there are just four fraud advisers per regional office to handle cases flagged by frontline staff?

Yes, there are some checks and balances within this legislation, but what is really needed is a profound cultural change within the DWP, and that is much harder to achieve. The common experience of people who have to deal with the DWP on a daily basis is that they feel that it is always looking to catch them out. Years and years of inflammatory rhetoric under a succession of Conservative Governments have convinced people to regard the DWP as their enemy, not their friend. If anything, the Bill digs that hole a little deeper.

What concerns me most about the Bill is its extreme overconfidence. It assumes that Government agencies always get things right and that individual citizens are to be automatically treated as objects of suspicion. In Committee, the Government were resistant to any amendments except their own, so I very much hope that they will reconsider today and accept the Liberal Democrat amendments.