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

Georgia Gould Excerpts

Committee stage
Tuesday 25th February 2025 Public Bill Committees

[Andrew Western]

Q Thank you. I will just ask one more question; I am interested in your views on societal attitudes to fraud. Clearly, we have seen a significant increase in fraud and error within the DWP since the pandemic, with around £35 billion lost in total and upwards of £7 billion lost to fraud last year alone. We hear an awful lot about the changing attitudes that people have towards fraud. Is that something that you have seen, recognised and acknowledged? Are there other drivers that you think are behind those increased numbers?

Dr Kassem: Yes, I have seen that in the literature, but not in practice yet. I think the way to go forward with that is by education and raising awareness about fraud and its impact, because those individuals committing fraud do not see the harm there. They see the Government as having lots of money in a rich country. They see themselves as entitled as well—more than others—and they take their fair share, or they might do it out of revenge, ideology or coercion, perhaps. There are lots of motivations for them to do that. Educating them about why this is wrong and what would be the consequences of committing fraud can help to reduce fraud over the long term and raise awareness about it. Equally important is training staff in public authorities about fraud, what it means and how to detect it. Prevention is better than a cure. Again, those have to go hand in hand. Yes, there has to be an investigation and a deterrent to discourage people from doing it, and this Bill is an excellent step in doing so.

However, if you produce the Bill, with untrained staff members who are not able to identify fraud criminals individually or organisationally, it will not really work. Preventing fraud requires a holistic approach. You cannot focus on prevention alone or on enhancing accountability alone, or on deterrence or investigation. Everything needs to work together, and education plays an important part internally in public sectors and externally across the public.

Professor Button: I have recently done some research where we replicated a study from 10 years ago. We sought a representative sample of the population and their attitudes to various deviant behaviours, including benefits fraud, and we found there was a significant decline in honesty. I think there are changes that are particularly pronounced among younger people. It has been driven by a whole range of factors, not least it is much easier to be dishonest now. If you go back 20 or 30 years, if you wanted to apply for a loan or a credit card you had to go to a bank. Now you just do it online on a computer. It is much easier to engage in dishonest behaviours in those types of ways.

The other thing is that social media and different types of forums provide opportunities for people to discuss how to engage in dishonest behaviour. I am doing some research at the moment about online refund fraud. We have been going into forums where a wide range of individuals discuss how to defraud retailers and get refunds for stuff that they have bought online. I strongly suspect that that kind of thing is probably also going on for benefits fraud. All of those factors are making it much easier, so I think there is a much more significant challenge for not just the public sector, but private sector organisations in dealing with fraud because of that.

Professor Levi: There is a lot of scope for unchallenged behaviour. Who gets challenged by people? If you do not have face-to-face relationships, the opportunities for moral education are much fewer. Personally, I think there needs to be a lot more in schools, but there is a lack of capacity in the schools curriculum for that kind of thing. Also, there should be more about how to avoid being a victim and discussions about money muling and so on. There is a broader spectrum of behaviours where people can get involved in fraud that we need to look at collectively.

[The Parliamentary Secretary, Cabinet Office (Georgia Gould)]

Q Thanks for bringing your significant experience to this discussion. My question builds on Dr Rasha Kassem’s point about the importance of oversight. That is something that we have taken very seriously in drafting the Bill and trying to ensure that independent oversight is built into every part. I am interested in the assessment of all the witnesses of the level of oversight that is built in. As we develop further work, guidance and training, is there anything we need to think about to continue to strengthen that?

Professor Button: If you look at this in the broader context of hybrid policing bodies, which is one of my areas of study—non-police bodies that engage in a whole range of enforcement functions—what is being proposed in terms of the accountability of this body compared with, say, the Health and Safety Executive, the Gangmasters and Labour Abuse Authority and some of the many other different types of enforcement bodies is certainly on a par with, if not better, than some of those organisations, with the inspection, the complaints body that people have access to and the additional measures in place.

One of the crucial areas is obviously when you get to prosecutions. With the Post Office scandal, we have seen the challenges if you have too much control over prosecution as well. The Department for Work and Pensions does use the Crown Prosecution Service, but with the lesser sanctions, it might be an issue to have more accountability, where you have that situation, to avoid excessive use of those penalties in a very negative way. That is possibly the only area where I would see an issue. Otherwise, the accountability measures are very similar to the many other hybrid enforcement bodies that central Government have.

[Georgia Gould]

Q On the PSFA side, in order to recover debt, you would have to apply to a court. Does that answer that point or is there more to be done?

Professor Button: Yes, I think that does. That is fine.

Professor Levi: His Majesty’s inspectorate of constabulary and fire and rescue services has been pretty tough on fraud policing by the police, so I am personally encouraged by the proposal for accountability and review by them. It is reasonably rigorous and scientific, and there is the National Audit Office as well. Following on from Professor Button’s comments, sampling behaviours at all levels is a good methodology for testing. The question that Dr Kassem was raising earlier about the internal stuff and the supervision of that is a more complex example.

Dr Kassem: My suggestion was more about having an independent oversight board—independent from the PSFA—to review the work and also perhaps to support an independent audit of the operation and see whether the Bill is actually working in terms of recovery and of transparency and fairness. Someone might say, “Okay, we need someone from the PSFA on the board to feed back about operational tasks and challenges and so on.” That is fair enough, but that could slightly reduce the independence that we are talking about. It can still produce a report to describe the work, the performance and the challenges that it met, and a completely independent board can then oversee the work and challenge and scrutinise it if needed.

[Georgia Gould]

Q The proposal is to have an independent chair that is completely independent of the PSFA and reports into Parliament. Do you think that answers that point?

Dr Kassem: Yes.

[Georgia Gould]

It is really reassuring to hear that because oversight is incredibly important to us. I have one more question, but I am happy to give way to others.

[Andrew Western]

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

Dr Kassem: Personally, I would recommend a board rather than an individual, because how sustainable could that be, and who is going to audit the individual? You want an unbiased point of view. That happens when you have independent experts discussing the matter and sharing their points of view. You do not want that to be dictated by an individual, who might also take longer to look at the process. The operation is going to be slower. We do not want that from a governance perspective—if you want to oversee things in an effective way, a board would be a much better idea.

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

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

[Rebecca Smith]

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

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

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

[Georgia Gould]

Q In your experience of researching fraud, how does this Bill compare to international best practice? Should we be considering anything else that you have seen that particularly works in other places?

Professor Levi: The Americans used to be better at this than may have been the case in the past few weeks. The General Accounting Office and some of the inspectorates general in the US have been pretty active, but the US still had a huge amount of covid-19 fraud. Australia is getting better. Clearly, the head of the Public Sector Fraud Authority is part of this group of people trying to improve things, but I would say we are starting at a pretty modest level, in terms of numbers of people. In terms of the DWP, it is a struggle for everyone. We have to look at it in relation to general welfare. I remember going to a meeting and talking to some French delegates who said to me that it was about—

[The Chair]

Order. That brings us to the end of the allotted time for this panel. I thank the witnesses very much for their evidence. We will move to the next panel.

Examination of Witness

Helena Wood gave evidence.

--- Later in debate ---

[Rebecca Smith]

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

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

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

[Georgia Gould]

Q You mentioned that the PSFA powers are used generally, but they have not been available to tackle fraud in the public sector outside of tax and welfare. What is your assessment of bringing those powers into this space? How effective will they be at tackling public sector fraud?

Helena Wood: This is a really necessary approach. However, I would caution that we are holding off from establishing the PSFA as a statutory body for now, and I completely understand the reasons for that: we are in a very tight fiscal environment, the cost of setting up a new agency is substantial, and we need to test the competence of the PSFA in doing so. However, I think in due course we need a more fixed timeline to move the PSFA off into a statutory body, to at least remove any perception—if not actual political interference—in investigations. That is really important—we need a stronger timetable. I know that will happen when the time is right, but I would like to see a stronger timetable towards it. I think there will be at least a perceived risk of Executive overreach if the PSFA does not move in that direction more quickly.

[Georgia Gould]

Q Obviously, the provision in the Bill is to move the PSFA to be a statutory body, but as we were discussing earlier, built in for the current period is the oversight of an independent chair. Does that offer reassurance of that oversight in the meantime?

Helena Wood: There is a question of “Who guards the guards?” in some respect. This Bill has significantly built in oversight; I think at every step we see that. However, it depends who the independent chair is, and a question would be whether that individual could be subject to a parliamentary approval process, as other oversight positions are—particularly if we look at the National Audit Office model, for example. It might be good to build in a parliamentary approval process for the individual who will take that role.

[Georgia Gould]

Q You also talked about the importance of training. Part of the reason that we are starting off quite small is because the PSFA has broader powers than those under the DWP part of the Bill—for example, with the powers to levy fines, there will be authorised officers who have training and who have to apply to courts to use search warrants and so on. What are your thoughts on how we ensure that that training means that those 24 officers have the necessary expertise to be able to take on these powers?

Helena Wood: That is a really good question, which deserves more considered thought. These are people who have not gone through the police training process, for example.

I wonder if it is worth considering whether we make use of the powers contingent on being a financial investigator, as accredited under the Proceeds of Crime Act. However, I make that suggestion with some caution, knowing that in a practical sense there is a national shortage of financial investigators across the country. We are haemorrhaging these individuals; we train them up in the public sector and they go straight out to be poached by the financial sector, and probably to respond to some of these measures set out in the Bill. I say this with some caution, however, as that is a properly accredited and overseen process of skills. We need to look carefully about who exercises those powers and whether they need to do an analogous police training programme. I think there is some consideration of the professionalising investigations programme, although they cannot be officially credited over time—they will not be using the powers as frequently as that process would require.

Those are the parts of the Bill I would like to see strengthened in some way. It is perhaps incumbent on the Government to look at what the other routes are beyond a financial investigator to ensure the right level of competence in using what are very intrusive powers.

[Andrew Western]

Briefly, on the question of efficacy and scale, His Majesty’s Revenue and Customs has powers at the moment to request information from banks en masse. Given the experience we have within Government of doing that, and from what I can see, the lack of problem with it, I wonder whether you feel—

--- Later in debate ---

[Rebecca Smith]

Q I am particularly interested in the work that the NHS serious fraud team is already doing. What specific challenges do you currently face in investigating fraud and recovering money that the Bill will help? Do you think there are gaps in what is being proposed that could be tweaked or amended?

Alex Rothwell: If we take the view that fraud has already happened—I have spoken about prevention, but once a fraud has happened and we have discovered it—there are increasingly limited opportunities to pursue criminal investigations. Although we maintain a strong investigative capability that deals with more serious types of criminality, we know about the challenges in the criminal justice system—the disclosure burden is high, it is incredibly expensive to run criminal investigations, and often they take eight years or longer to reach fruition—so we are increasingly looking at how else we can deal with fraud when it is presented to us.

In many ways, it is the low-value, high-volume cases that we see that are more challenging, where we are perhaps seeking to recover funds from someone who has taken £5,000, as I mentioned earlier. This is where I have the most interest in the Bill, because I think we would seek to use those powers extensively, and of course every penny that we recover is money that will be well spent in the NHS. I do not necessarily see any gaps in this particular legislation. There are elements of the work that we do in the national health service where we would benefit from some more powers, but the focus here is obviously on the Bill, rather than on our own ability. A lot of that would apply to how we access medical records, for example.

[Georgia Gould]

Q You have talked a little about the kind of police pressures that exist. I would be interested in both of your assessments, given your experience, of the police’s capacity and ability to investigate public sector fraud, and whether that means there is more of a need for civil powers.

Alex Rothwell: If we look across other international jurisdictions, we see that law enforcement agencies often have quite distinctive public sector fraud or crime functions—for example, the FBI has an extensive healthcare fraud capacity. The way policing has evolved over the last 20 or 30 years, particularly with an emphasis on drug supply, knife crime and firearms, has meant there is little capacity in policing to tackle public sector fraud, and of course there is an ever-present terrorism threat, which is changing rapidly. There is also safeguarding, with the National Crime Agency having quoted publicly the figures in terms of people who are a risk to children, for example.

One of the challenges is that even if you invest more in fraud capability, when a crisis happens, whether that is because of public order or some other form of crisis, policing has to flex more than other investigations. Inevitably, crimes like fraud are perhaps easier to put on hold for a time. Certainly since 2018 we have seen a gradual professionalisation and an increasing capability in the public sector, which I endorse. We could invest more in the police, but my concern is that there will continue to be crises that affect policing that will impact the ability of policing to support the public sector in the way that is required.

Kristin Jones: I agree with everything that Alex just said. The same applies to prosecution: if you have specialist prosecutors, where the resource is ringfenced, they do not get dragged away, but if you have them in with other prosecutors, it depends on what the pressure is at any particular time as to what resource is going to be given to fraud prosecutions.

[Gill German (Clwyd North) (Lab)]

Q We have talked about the increased public acceptability of fraud, and attitudes towards that, and indeed the social-media guides that are out there—the “how to” guides—that present it as a victimless crime. Along with improvements to investigative powers, what will the Bill’s very existence do to change that public narrative?

Alex Rothwell: One thing that we have always struggled to do is put a value on deterrence, because it is quite hard to say categorically that someone has not done something because of a change in approach to something. However, it is my view that, once it is known that there are increased powers in this space and that individuals will be pursued for funds, we will see some behaviour change. We could potentially quantify that, but the challenge is directly relating it to the Bill, particularly if you introduce other measures at the same time. I think there will be a powerful deterrent effect if it is exercised correctly and at scale and the public can see the benefits.

Kristin Jones: I agree. If people know there is an increased likelihood that they will be detected, that will have an effect. It is also important to use similar means to get the right narrative across about what you should and should not be doing.

[Georgia Gould]

Q I am interested in the point you made about future-proofing against future pandemics or crises. Can you both give us your reflections on what you learned from the covid pandemic? Do you feel the Bill addresses what we need to do to ensure that we do not end up with the level of fraud we saw during the pandemic?

Kristin Jones: We have to plan for emergencies—they will, inevitably, occur—and the work on that should be kept up to date so that you can refer back to one you prepared earlier. That is so important because when there is an emergency, everybody is doing their best to get through it as fast as they can, and that is not the time for slow consideration, whereas having been through that experience, now is the time to reflect and document what we are going to do in future.

Alex Rothwell: Fundamentally it is about the loosening of controls, our understanding of the impact of the loosening of controls, and the friction that is or is not introduced when you are addressing an emergency. We also now have a much better understanding of how that can manifest itself. But I am confident that the Bill would enable an effective response.

[Georgia Gould]

Q What do you see as the biggest current threats in terms of fraud against the public sector and—if we have time—how does the Bill address them?

Alex Rothwell: From my perspective it is the digital footprint that is left and our ability to analyse that at scale. Very few transactions, if any, take place that do not have a digital or electronic footprint of some kind. The data sharing and our capability to analyse that data is the most important factor. The Bill goes some way to addressing that, but obviously elements of the Bill are about responding to fraud once it has happened. That, for me, is the biggest challenge. But on top of that are the safeguards that we put in place to ensure that our interpretation of that analysis is also correct.

[Georgia Gould]

So the other half—the prevention side—has to accompany this.

Alex Rothwell: Absolutely.

[Georgia Gould]

I very much agree.

Kristin Jones: Increasingly in society today knowing what the truth is, with the amount of data and false information out there, can be the problem.

[Andrew Western]

Q Alex, I have a final question regarding what you said earlier about the level of fraud you have seen remaining fairly static but you have increased your prevention measures. Which of the new measures you have stepped up have been particularly effective?

Alex Rothwell: Data analysis has been particularly effective, as has getting better at recording and reporting—for example, we now have a ubiquitous case recording system that exists across the national health service. The greatest value we have seen so far has been in improved data analysis on large datasets that exist on, for example, national contracting. That is where the value lies in future.

[Georgia Gould]

Q Is the partnership with the PSFA that already exists working well?

Alex Rothwell: Yes, it is. As I mentioned, the professionalisation of fraud specialists has made huge inroads in terms of the acceptability of fraud professionals, particularly in a finance environment—we deal with audit committees and so on—and there is also the recognition that the Government are taking fraud seriously. That is not just this Government but the previous one as well. The direction we have had from the Cabinet Office—

[The Chair]

Order. That brings us to the end of the allotted time for the Committee to ask questions. I thank the witnesses for their evidence. We will move on to the next panel.

Examination of Witnesses

Anna Hall and Christy McAleese gave evidence.