Public Authorities (Fraud, Error and Recovery) Bill

David Chadwick Excerpts

2nd reading
Monday 3rd February 2025 Commons Chamber

[David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)]

It is an honour to follow such an excellent speech from the hon. Member for Normanton and Hemsworth (Jon Trickett). As a Welsh Liberal Democrat, I find myself concerned with the civil liberties aspects of this Bill, particularly the influence and power it gives to the big banks. I spent seven years working in data privacy as a data protection consultant, and reading this Bill created more questions than it answered. I worked on datasets involving different businesses, Governments and organisations from across the world. In particular, I want to speak to the points around the banks, because as we speak, customers from Lloyds and Halifax cannot access their bank accounts because of an outage. We should be concerned about making banks the judge, juries and executioners of social policy, particularly with something as important as welfare policy.

The UK has strong data protection laws that have been carefully negotiated over time and inherited from the European Union, and this Bill threatens to erode some of those protections and implicates treaties that we have already signed, such as the data adequacy agreement we have with the European Union. If the EU was to turn around and say that it was unhappy with the Government’s decision to monitor their subjects and citizens in this way, that would create many more problems for organisations across the UK. Citizens should have the right to object to automated decision making, and I struggle to see how asking banks to scan their datasets for potential fraud could not be regarded as decision making. Let us give citizens the right to be able to object to these decisions being made about them. If we do not, we might be violating the data privacy agreements that are already in place.

What do the Government expect the process to look like, when they are asking the banks to provide this information? The Secretary of State said that the information would be provided in a digital format, but what will that actually look like in practice? What could go wrong if, as has been mentioned, the banks are having to relay huge datasets to the Government and to the DWP in particular? That could create honeypots of data that might be easy for hackers to intercept and interfere with.

In data protection, if there is not data integrity, availability and confidentiality, essentially all of the agreements that exist with the data subject and the data processor can be said not to be valid. I therefore wonder what the Government see as the perfect framework for this data to be provided. Does it mean that the banks will have to export the names of everyone who has more than £16,000 in savings and send that to the Government to see whether they are in receipt of welfare payments?

One of the core principles of a free society is the right to privacy, yet in its current form, this Bill represents an intrusion by the state into the privacy of individual citizens. Under the Bill, the Government would be granted sweeping powers to access and monitor the personal financial records of citizens, even without any evidence of suspicious activity to justify such actions.

Many people are in receipt of welfare payments through no fault of their own, and this Bill could result in the mass surveillance of private financial information, potentially affecting 9.4 million citizens. The presumption of innocence is a cornerstone of our justice system, yet the Bill would fundamentally alter that principle. Under the Bill, individuals could be presumed guilty until proven innocent, with their personal data shared, investigated and scrutinised without sufficient cause or due process. That sets a dangerous precedent, where the burden of proof falls on citizens, not the state. We have all seen the devastating impact of errors made by the Department for Work and Pensions on individuals. Such a system could lead to disastrous consequences, where it falsely flags someone as fraudulent due to simple administrative errors or unintentional mistakes. The hon. Member for Normanton and Hemsworth acknowledged that the banks had raised concerns about whether they are the right organisations to do this.

The Bill risks creating a two-tier society where certain groups are subjected to intrusive financial monitoring by the state while others are not, which would undermine the principles of equality and fairness that our society is built on. In the current climate where banks are closing branches left, right and centre—Lloyds bank has announced that it will close its branch in Pontardawe—the Government should not be asking banks to act as judge, jury and executioner in social welfare policy while granting themselves access to people’s bank accounts but not requiring those banks to ensure that citizens have access to their bank accounts. That does not sit well with the liberal society that I want to live in, and I do not believe that my citizens want to live in such a society, either. I call on the Government to rethink their proposals and to assure us that the Bill will not undermine our data protection adequacy agreement with the European Union.