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

Georgia Gould Excerpts

Committee stage
Tuesday 18th March 2025 Public Bill Committees

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

It is a pleasure to serve under your chairmanship, Mr Western. I appreciate the intention of the hon. Member for South West Devon in tabling the new clause—that is, to take fraud against the public sector seriously—but the Government plan to resist it, because we believe that the proposals are already covered and that it could lead to unintended consequences that do the opposite of what she wants.

As the hon. Member said, new clause 2 would create a new offence of fraud against a public authority. We believe that that could have a detrimental effect and is unnecessary, because fraud is already an offence, and this is clearly defined in clause 70 as offences under the Fraud Act 2006 and the common law offence of conspiracy to defraud. The Bill uses those offences—they do not need to be written into it to have effect—and we have given assurances on that during a previous debate.

Consequently, there does not need to be a specific fraud offence for public authorities. Assisting and encouraging fraud against a public authority, as is mentioned in the new clause, is already an offence. The offences of “encouraging or assisting”, as set out in sections 44 to 46 of the Serious Crime Act 2007, apply to fraud offences as they do to other crimes. Again, that does not need to be written into the Bill to have effect.

The Public Sector Fraud Authority will be able to investigate cases in which it appears that someone has encouraged someone else to commit fraud. If we discover encouragement, that would likely form part of the PSFA’s investigation into a fraud case, and the Crown Prosecution Service could pursue that offence using the evidence collected. Whether action can be taken will depend on the facts of the case, the evidence available and whether the necessary standard of proof can be met.

Crucially, new clause 2 would reduce the maximum sentence available for Fraud Act and conspiracy offences from 10 years to seven years, for fraud against public authorities only.

[Mike Wood (Kingswinford and South Staffordshire) (Con)]

I thank the Minister for her response, but why does she feel that benefit fraud ought to be a specific offence, with maximum sentences under the Social Security Administration Act 1992, but that it is not appropriate for a specific offence to apply to people who deliberately defraud other public authorities?

[Georgia Gould]

As I set out, these measures are already covered, and the proposals would potentially reduce sentences from 10 years to seven years. I am sure that the hon. Member does not want those who defraud the public sector to get lower sentences than those who would defraud the private sector.

[Mike Wood]

The Minister is being generous in giving way. Prosecutors have a choice as to which charge to bring. They can still bring a charge under the common law offence, which as the Minister says, has a high maximum sentence—but one that is very rarely imposed—or, as with benefit fraud, they could bring it under a specific offence, as proposed in new clause 2. The Sentencing Council would then develop the guidelines that apply to deliberately defrauding public authorities. Although the Minister is right that the maximum sentence under the new clause is lower than the theoretical maximum for the common law offence, in practice, it is likely to see rather more substantial sentences imposed on conviction.

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[Georgia Gould]

We already have effective fraud legislation. The issue that the Bill seeks to address is that we do not currently have the resources or the powers to properly investigate that or to recover money. We believe that the suggestions that are being made would have the unintended consequences of reducing the seriousness of the offence, in the way that I have set out. The proposals also omit the option available in the Fraud Act offences and the common law conspiracy offence for the Crown court to impose an unlimited fine instead of, or as well as, a term of imprisonment. Again, that weakens the response. That is contrary to the Government’s intention with the Bill that strong action should be taken against public sector fraud.

New clause 15 seeks to introduce an offence of encouraging or assisting others to commit fraud by adding new subsections to sections 111A and 112 of the Social Security Administration Act 1992. Sections 111A and 112 set out two specific offences related to benefit fraud. Although the intention behind the new clause is commendable, I believe that it is not needed for several reasons, which are similar to those I have set out on new clause 2.

First, the existing legal framework already provides sufficient measures to tackle fraud of this nature. The Fraud Act 2006 and the Serious Crime Act 2007 make it a criminal offence to encourage or assist any other offence, including when it relates to fraud. There are also existing laws that serve a similar purpose for Scotland. Those existing laws are robust and comprehensive, ensuring that individuals who provide guidance on how to commit fraud, or encourage others to do so, can be prosecuted effectively. Introducing additional subsections to the 1992 Act would therefore be redundant and unnecessary.

Secondly, the new clause could potentially complicate the legal landscape. Adding new subsections to the 1992 Act risks creating overlapping and conflicting provisions that could lead to confusion and inefficiency in enforcement. It is essential to maintain clarity and coherence in our legal system to ensure that justice is served effectively. Moreover, the new clause would mean that those convicted of a new offence would face a less punitive sentence than they would under existing laws. For example, under new clause 15, a conviction related to section 112 would carry a maximum period of custody of three months, compared with a maximum of 10 years under the existing Fraud Act. As a result, and this is similar to what I set out on new clause 2, rather than strengthening our position to respond to such types of fraud, new clause 15 could result in a weakened response.

Although new clauses 2 and 15 are well intended, neither new clause is needed as the existing legal framework already provides sufficient measures to address this issue, and introducing additional subsections would only complicate the legal landscape. However, I very much heard the points about the research being done by the hon. Member for South West Devon and the importance of tackling those who set up sites to try to defraud the public sector. I am more than happy to have a further meeting about how we can take action on that. We believe that we can do that using the existing powers, but we would welcome further discussion. The PSFA and DWP will be concentrating on the provisions in the Bill that are intended to effectively address and combat fraud through them. I therefore ask the hon. Member for South West Devon to withdraw the motion.

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[Georgia Gould]

This is similar to the previous new clause we discussed. We have a lot of sympathy with the points set out. We want to ensure that we recover money, whether it is fraud against the public sector more widely or fraud against the DWP, but we believe that that is already covered in the Bill and I will run through why.

Clause 16 clarifies that the PSFA is able to seek alternative civil recovery through the civil courts, in addition to the direct deduction orders and deduction from earnings orders in the Bill. It confirms that the PSFA will be able to apply to the county court for a recovery order. That is an order providing that the payable amount is recoverable

“under section 85 of the County Courts Act 1984, or…otherwise as if it were payable under an order of the court.”

Section 85 of the County Courts Act also refers to the use of the procedure in schedule 12 to the Tribunals, Courts and Enforcement Act 2007 to recover the money. That would enable the PSFA to seek enforcement of a debt by applying for a warrant of control in the county court, enabling a court enforcement officer to seize and sell goods to satisfy the debt. That ensures that the PSFA is able to pursue recovery through the most appropriate and effective mechanisms. New clause 13 is therefore already provided through the Bill for the PSFA and through existing legislation for the DWP—section 71 and section 71ZE of the Social Security Administration Act 1992 to be specific—allowing them operational flexibility to recover money in the most effective and efficient way to return money to the public purse. An amendment is not required to do that.

[Rebecca Smith]

I beg to ask leave to withdraw the motion.  

Clause, by leave, withdrawn.  

New Clause 14

Inclusion of systems within the Algorithmic Transparency Reporting Standard

“(1) For the purposes of this section, ‘system’ means—

(a) algorithms, algorithmic tools, and systems; and

(b) artificial intelligence, including machine learning

provided that they are used in fulfilling the purposes of this Act.

(2) Where at any time after the passage of this Act, the use of any system is—

(a) commenced;

(b) amended; or

(c) discontinued

the Minister must, as soon as reasonably practicable, accordingly include information about the system in the Algorithmic Transparency Reporting Standard.” —(John Milne.)

This new clause would require the use of algorithms, algorithmic tools, and systems, and artificial intelligence, including machine learning, to be included within the Algorithmic Transparency Reporting Standard.

Brought up, and read the First time.

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[Rebecca Smith]

I beg to move, That the clause be read a Second time.

New clause 16 would require the Secretary of State to conduct a review of whistleblowing processes in relation to fraud in the public sector within one year of the Bill passing. The Opposition would like the review to include the appropriateness and efficacy of existing whistleblowing processes, the barriers to reporting fraud, the reasons for the under-reporting of fraud, and recommendations for change.

The Committee has previously discussed the 2023 National Audit Office report that highlighted the difficulties with whistleblowing within the public sector, particularly in respect of whistleblowing on senior colleagues. The NAO also highlighted that of the public sector whistleblowing disclosures it received in 2023-24, 12% related to fraud. I did not get a particularly clear answer from the Minister about the safeguards that have been put in place to ensure that junior civil servants are able to raise concerns about more senior members of staff, so I am interested to see if there is more to be said.

It is a serious issue. One of the reasons I was interested in tabling this new clause is that, as a junior member of staff at a local authority, I saw this happen. I was in a situation where two colleagues were defrauding the local housing authority, and at that stage as a 21-year-old I did not feel able to do anything about it. That is one of the biggest regrets of my life. Having worked significantly in housing since, the fact that I was not able to call them out for essentially purchasing a council house that they were no longer living in, makes me feel that this safeguard —ensuring that Government Departments’ houses are in order as the legislation goes forward—is particularly vital.

John Smart, who sits on the PSFA’s advisory panel, raised the example of the US, which has whistleblower reward legislation in place that is effective at flushing out issues affecting payments made by the Government. The legislation flushes out fraud by incentivising whistleblowers to blow the whistle, so to speak. He recommended that the Government consider such legislation, so could the Minister inform the Committee whether the Government have looked into that option? Would it be possible for us to learn from that legislation? Could the Government consider such legislation in the future, and if not, why not?

[Georgia Gould]

I thank the hon. Lady for raising the critical issue of whistleblowing. I assure her of how seriously the Under-Secretary of State for Work and Pensions—my hon. Friend the Member for Stretford and Urmston—myself, and both Secretaries of State take the issue of whistleblowing. I hope, as I set out our responses to the NAO report and our wider work, to offer the reassurance that the Opposition are looking for.

When it comes to internal and external fraud against the public sector, Government Departments are responsible for their own whistleblowing arrangements and for overseeing arrangements in their arm’s length bodies. For example, the Department for Business and Trade publishes and regularly updates its guidance, “Whistleblowing: list of prescribed people and bodies”, which details who individuals can raise a concern with. The list comprises bodies and individuals to whom making a disclosure qualifies the individual who makes the disclosure for legal protections under the Employment Rights Act 1996—for instance, protection against being dismissed by their employer for the disclosure.

Whistleblowers can report concerns about public sector fraud to bodies such as the NAO’s Comptroller and Auditor General, the director of the Serious Fraud Office, the Auditors General for Wales and for Scotland, the NHS Counter Fraud Authority and various other bodies listed on gov.uk. The NAO report that the hon. Lady referred to set out that between 2019 and 2022 fraud one of the most common concerns raised—I think it accounted for 40% of concerns.

On the review of the existing processes, the key findings of the recent NAO publication related to the need to increase awareness of the channels for whistleblowing, to improve the experience of whistleblowers and to ensure that lessons are learned, as the hon. Lady set out. In the light of the NAO report, and with the intention of opening up as many avenues as possible for the reporting of public sector fraud, the PSFA will explore with the Department for Business and Trade whether it would be appropriate to add the PSFA to the list of prescribed organisations. That would go alongside the existing ability to raise fraud within a public sector body or Department. We will also use the findings of the report, as well as the NAO’s good practice guide to whistleblowing in the civil service, to inform our approach.

The DWP has established processes by which members of the public and staff can report suspected benefit fraud. Members of the public can report fraud online at gov.uk, by phone or by post, while DWP staff follow clear internal guidance and processes. Given the intent to maintain the focus of this legislation, the recent work by the National Audit Office, the existing DWP processes and the steps the PSFA is taking to continue to improve the whistleblowing offer for public sector fraud, I will resist new clause 16.

[Rebecca Smith]

I appreciate the Minister’s response. We will withdraw the new clause, but I urge her to go back and look at what more can be done. I appreciate that the PSFA might come in as a prescribed organisation, but I am particularly concerned about how we bridge the gap and enable more junior civil servants to blow the whistle in relation to senior colleagues. Ultimately, that was the focus of the NAO report. If there is a way to look at that ahead of Report stage, I would be grateful. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 17

Duty to consider domestic abuse risk to holders of joint accounts

“(1) Before any direct deduction order under Schedule 5 is made, the Secretary of State has a duty to consider its effect on any person (‘P’) who—

(a) is a victim of domestic abuse, or

(b) the Secretary of State reasonably believes to be at risk of domestic abuse,

where P shares a joint account with a liable person believed to be the perpetrator or potential perpetrator of domestic abuse.

(2) In this section ‘domestic abuse’ has the meaning given by section 1 of the Domestic Abuse Act 2021.”—(Steve Darling.)

Brought up, and read the First time.

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[The Chair]

With this it will be convenient to discuss clauses 100 to 104 stand part.

[Georgia Gould]

This is the final group of clauses that the Committee will consider. I give massive thanks to the Committee for our constructive dialogue, which I am sure will continue—I look forward to a long afternoon and Thursday discussing these final clauses.

Clause 99 covers how the Bill will be applied and limited by setting out the retrospective effect of the new powers, and makes some technical amendments to the Limitation Act 1980. There is a significant policy change in the clause, which is the extension of the existing six-year limit for civil claims relating to covid frauds. I think the Committee will agree that is critical. Although the application and limitation of the clause covers the whole Bill, and the powers can be used on existing cases, retrospective effect does not apply for clauses 96 and 97, which relate to non-benefit payment administrative penalties.

Subsection (3) of clause 99 sets out that the time-limit change applies to amounts that an England and Wales public authority is entitled to claim from a person as a result of a fraud the person carried out. Subsection (5) clarifies what is meant by an England and Wales public authority, and explains that Scottish and Welsh devolved authorities are not included. Subsection (7) makes technical amendments to section 38(11) of the Limitation Act 1980.

Clause 100 enables the Secretary of State for Work and Pensions and the Minister for the Cabinet Office to ensure that the Bill works alongside all existing legislation. As is usual for Bills that may have provisions consequential for other Acts of Parliament, the power allows the Secretary of State and the Minister to amend other legislation to ensure that the Bill works effectively with existing Acts of Parliament.

Clause 101 recognises that the Bill requires a money resolution, primarily because it confers new functions on the Minister for the Cabinet Office and the Department for Work and Pensions.

Clause 102 sets out the Bill’s territorial extent, while annex A in the accompanying explanatory notes provides a full breakdown of the territorial extent and application of its measures. The provisions in part 1 apply to England and Wales. Legislative consent is required for Wales for some parts of the part 1 provisions. The provisions in part 2 apply to England, Wales and Scotland in relation to reserved matters.

As the Committee is aware, the UK Government do not generally legislate on devolved matters without the consent of the relevant devolved Governments. We have written to our counterparts in Scotland and Wales, and engagement with both remains ongoing, to seek legislative consent from Wales on the part 1 provisions that interact with Welsh competence and from Scotland on the part 2 provisions that interact with Scottish competence.

Clause 103 is required to enable the provisions in the Bill to be implemented. It sets out how the Bill’s provisions will be commenced.

Finally, clause 104 is straightforward and confirms that the short title of the Act will be the Public Authorities (Fraud, Error and Recovery) Act 2025, to summarise the intent of the Bill captured in the long title. Having outlined the main provisions in clauses 99 to 104, I commend them to the Committee.

[Rebecca Smith]

The good news is that the Minister has answered some of my questions, particularly in respect of clause 99 and the extension of the retrospective time limits. Clause 100 is a standard Henry VIII power to make consequential provision as a result of the legislation; does the Minister envisage that the power will need to be used frequently? Clauses 101 to 104 are standard provisions and we do not have any substantive comments to make on them.

[The Chair]

I remind the Committee that we have until 11.25 am.

[Georgia Gould]

The Henry VIII power is to ensure that any other legislation is in line with this legislation. We do not expect it to be used on lots of occasions, but it will be used on some. We welcome the Opposition’s support for the extension to the limit for investigating covid fraud. I thank the Committee again for its work on the Bill, which will ensure that we take action against fraud wherever it occurs.

Question put and agreed to.

Clause 99 accordingly ordered to stand part of the Bill.

Clauses 100 to 104 ordered to stand part of the Bill.

Question proposed, That the Chair do report the Bill, as amended, to the House.

[Andrew Western]

I place on the record my thanks to you, Mr Western, and all the other Chairs who have supported and guided us through the Bill. I thank the Clerks and officials from the Cabinet Office and DWP for their support. I also thank my co-pilot, the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Queen’s Park and Maida Vale; the Opposition spokespersons; and all Committee members for their input. I commend the Bill to the Committee.

Question put and agreed to.

Bill, as amended, accordingly to be reported.

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

Georgia Gould Excerpts

Committee stage
Tuesday 25th February 2025 Public Bill Committees

[Andrew Western]

Q Just for clarification, is there an independent oversight mechanism in place for the use of those powers?

Richard Las: I do not know, if I am honest, whether there is. I can look that up for you.

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

Q Thank you both for your evidence. First, to Joshua, on the NAO’s reports on fraud, the PSFA measures hopefully build on many of those recommendations. I would welcome your assessment of the PSFA measures in that light and of any areas where you think we should go further.

Joshua Reddaway: I think you are referring to the report we did in March 2023, after the PSFA had just been established. We very much wanted it to be a baseline for the challenges it was trying to deal with. We basically said that there needed to be a cultural change across all of Government, that 84% of the resources were in DWP and HMRC, and that covid really exposed that the Government did not have the capability in other Departments. I have to say that, from our point of view, we saw fraud as essentially a welfare and tax issue for many years, so it was a bit of a surprise to start bringing it out to the other Departments a bit more.

I would interpret the Bill as being about giving the powers, particularly on the enforcement side, and in the meantime, the PSFA has been doing quite a lot on the prevention side. The prevention side is primarily where I would be focused because that is where the biggest gains are to be had in dealing with the cultural changes that are needed across all of Government. Mind you, I do not read the Bill as being against that; I see it as supplementary.

We would be very disappointed if the PSFA became exclusively an investigation and enforcement-type agency. The impact assessment thinks it can get roughly £50 million over 10 years from enforcement. Like I say, every million counts, but that is very tiny compared with the challenge that the PSFA is trying to meet. Is that the sort of thing you are interested in?

[Georgia Gould]

Q Yes, and I wholeheartedly agree with that. A massive role in prevention, professionalisation and raising the profile of fraud sits within that, but what is your analysis of how much the deterrent measures in the Bill will support that prevention agenda?

Joshua Reddaway: It is not rare to find what we call audited bodies, Government organisations, that have found a fraud, have taken it as far as they can through their internal services, and have tried to hand it over to the police to make an arrest—this is the point where it is outside audit—but have not been able to find anyone who will pick up that file, which has been fairly developed. The point that we raised in the 2023 report and that the PSFA was trying to deal with was: how can you get an organisation that fills the gap to help defend the Government when they get attacked? The police are basically going to say that Government are big enough and ugly enough to look after themselves on this.

When we looked at fraud more widely across society in a report that we did later in 2023, we found that at that time it was 40% of all crime and 1% of police resources. That is what you are trying to tackle here. You are trying to have an organisation that fills the gap on enforcement. How important is that? I think it is about having a deterrent, and if you get it right it should also be about root cause analysis. By that I mean, if you have an investigation and you are able to fully investigate it, it is not just about prosecuting that person, but about properly understanding why that happened in the first place, and improving it. So if you are an organisation that is outsourcing an investigation to another party, I always wonder a bit whether they will do that bit of the loop. I am hopeful that the PSFA will develop the capability to do that.

[Georgia Gould]

That is a very helpful challenge.

Joshua Reddaway: That is my understanding of this. Our one concern is, please don’t let this be the tail that’s wagging the dog.

[Siân Berry (Brighton Pavilion) (Green)]

Q To follow up on that point, the Bill is called the Public Authorities (Fraud, Error and Recovery) Bill. Do you feel like there is enough built in to identify and deal with errors? As you say, systemic things may be uncovered that are causing errors or losses that are not in fact fraud. Does that get fed back? Would you like to see more in the Bill that systematises that?

Joshua Reddaway: Interesting. The reason we always talk about error and fraud together is because it is often really difficult to differentiate between them when you are doing prevention. So, in my job, I am more interested in fraud and error together because I am more interested in how to correct that and stop the money going out. If you are in Richard’s job, as I am sure he will tell you in a second, he is going to be more interested in the one that you can prosecute—to an extent.

Richard Las: I am happy to jump in from an HMRC perspective. It is important to understand what the driver is—I think that is absolutely right—and to be able to distinguish between fraud and error. We have estimates for fraud and error in terms of the tax system, which we publish every year. We generate those estimates for a lot of different activity, but partly they are the result of our own inquiries, so we are analysing what we do and what we see. We make a judgment—is it fraud, is it error?—and we work out what is going on. Absolutely, you have to look at the underlying reasons, so if there is an error, a repeated error, you ask what is going on there—what is the cause of it? Certainly, as we develop our business in HMRC—especially with people filing online—we are very much looking to prompt people so that they can get the right answer. Those of you who do self-assessment hopefully will see that yourself—“Are you sure? Is this information correct?” That really does help in reducing errors—the simple errors that people might make, because it is complicated.

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[Rebecca Smith]

Q Interestingly, one of the previous witnesses talked about powers that other countries have but we do not, which potentially would do exactly what you have just described. Are there any countries already doing something along the lines of what you just suggested it would be helpful for us to look at—perhaps not for this Bill, but in the future?

John Smart: An obvious example is the United States; there is an interesting case in point at the moment, which I have dealt with quite a lot. The US has whistleblower reward legislation in place, which is very effective at flushing out issues affecting payments made by Government. Their qui tam legislation, as it is called, flushes out frauds by incentivising whistleblowers to blow the whistle. It creates a lot of work for various organisations, but it encourages people to think about whether fraud is being committed against the Government in the US. That is an obvious piece of legislation that might be worth considering in this country.

[Georgia Gould]

Q As an adviser to the PSFA, you have seen the organisation grow. What is your assessment of where the PSFA is in tackling public sector frauds, and how the Bill moves us on?

John Smart: That is a big question. I have been involved with the Cabinet Office for over 12 years, so the inception of the PSFA came about while I was working there. In the 18 months since it was formed, the PSFA has gone a long way to reach a better understanding of where the issues sit across Government. Clearly, it plays best outside the DWP and HMRC. My passion has been identifying where fraud is taking place, which I have worked on for the past 10 years, and trying to quantify the fraud occurring within Government. As you all know, that is very hard to quantify because it is hidden and therefore unknown. The PSFA has gone a long way and is continuing to flush out where resources should be committed to preventing, investigating and deterring fraud across Government outside HMRC and the DWP. That is critical. When I first started asking Departments where frauds were within the Departments, they replied, “There’s nothing to see here.” At least now, particularly because of the work the PSFA has been doing, there is recognition that there is a real issue to be addressed, and that it is not just expenses fraud, or whatever they used to think it was.

[Georgia Gould]

Q I have a question about the information-gathering powers and timings that builds on previous questions. The current proposal is that there will be a minimum of 10 days to gather information, but that that timeframe can be made longer in discussion with the business, and be made proportionate to its size. The business or organisation will be able to request a review of the timeframe if they feel it is too onerous. Is that a proportionate position in terms of information-gathering powers and safeguards?

John Smart: As we said earlier, the larger organisations will be geared up to provide the information within the timeframe required. Some of the smaller organisations might struggle to meet that 10-day requirement, but I still think it is a reasonable starting point. If you do not start with a reasonable starting point, for the larger organisations you end up deferring decision making and action being taken. I think 10 days is reasonable.

[Georgia Gould]

Q So it is about being explicit that that is a minimum and it can be extended, based on those conversations?

John Smart: Exactly. That is the reason for the starting point.

[The Chair]

If there are no further questions, I thank John Smart for his evidence, and we will move on to the next panel.

Examination of Witnesses

Eric Leenders and Daniel Cichocki gave evidence.

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[Siân Berry]

Q Disabled people who receive direct payments have expressed some concern that there can be underspends and that these can build up. They have asked for a particular account to be ringfenced for that, and essentially not looked at in relation to these measures. Is that feasible? What is your lead time for knowing that you would need to do it? Would it need to go into the Bill initially?

Eric Leenders: It would always be within the gift of a consumer to open a separate account. They can then ask for the benefit to be paid into that account. There might be a risk, from a wider perspective, that potentially attorneys and landlords might no longer want to receive benefits directly because of the potential admin burdens through this Bill. I flag that as a consideration. I do not think it is necessarily a show-stopper but certainly it is something that I think from a vulnerability perspective we need to be alive to, because that might be an additional responsibility on a vulnerable person, for example, to pay the rent.

[Georgia Gould]

Q I echo the points made by my hon. Friend the Member for Stretford and Urmston about the really strong level of engagement. I welcome the conversations that we have had and that I know are ongoing with our teams. On the PSFA side of the Bill, I heard what you said about potential exemptions, but are there any other areas that you would like us to work on in detail as we move forward?

Daniel Cichocki: The key thing for us now, as I said in relation to the DWP measures, is to start to look at the detail of the draft regulations and the code of practice that sit behind the powers, which we look forward to engaging on. Our broader observations are more on the DWP side. Across both elements of the Bill we welcome very strongly the independent review processes that have been built into the powers. We think the scope of those reviews could just consider some of the other factors that we know have been raised as questions around these powers. For instance, could there be more direct scope for that independent reviewer to consider the impact of some of the unintended consequences on vulnerable customers and the cost of compliance? Those are just some broader points on the independent review, but I think the principle of having one across both elements of the Bill is important.

[Georgia Gould]

Thank you very much.

[Rebecca Smith]

Q We see that there has been a lack of robust assessment of business costs so far. The Government have been unable to say what the cost to the banks will be. Do you have any concerns about the costs or the other impacts on businesses in the sectors? I suppose the flip question of that is: do you think there should be incentives to get them to actually work with it? It feels to me like there is a huge amount of good faith here, in that banks are expected to bear the costs of providing this information, but are there unforeseen costs that we need to be concerned about as well?

Daniel Cichocki: In terms of broad principles, obviously wherever there is additional legislation and regulation on the sector, we would hope that that is proportionate. We anticipate doing further work with the Government to help to support the impact assessment as a result of the more detailed work when we see the draft code of practice, when we are better able to understand the methods through which this information will be shared, the practicalities of how it works, and the scale at which the powers will be used. We therefore anticipate more work being done around the impact assessment.

We would hope and anticipate that the Government would recognise that the impact on the private sector needs to be proportionate. As well as the cost implications around resource, this is also around prioritisation. To my earlier point, many of the teams that will be complying with this legislation will currently be complying with the broader legislation and regulation that we have in place, sharing information with the Government and law enforcement, and ensuring proportionality of how that resource is deployed. Certainly from an industry perspective, as a broad principle, we would see it as appropriate and desirable for much of that resource to be focused on serious and organised crime in the round.

Eric Leenders: I have a couple of brief points. First, one consideration is congestion. There is quite a crowded mandatory change stack, as we call it. There is a sequence of changes in train that firms are already implementing. Secondly, to your specific point about the cost-benefit analysis, we recognise the challenge that the cost will be direct, as in the build costs that we have just summarised. The benefits—reducing and deterring criminality generally, and perhaps even preventing it—are perhaps more indirect. I suppose that leads to another point: the extent to which we need to be thoughtful about circumvention and how to ensure that the legislation is suitably agile, so that bad actors cannot game the system no sooner than it has been introduced.

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[Michael Payne]

Q Throughout the previous witness sessions, there have been questions about concerns with respect to training for PSFA enforcement officers. I wondered whether you wanted to say anything more than you have already to the Committee about training for enforcement officers.

Mark Cheeseman: I will come back to what I said about the counter-fraud profession. We are one of the only countries in the world with professional standards published. Those are used by the police, the Serious Fraud Office and HMRC. They use these types of powers successfully on a regular basis. We would have exactly the same standard of investigator—both by bringing them in and by training them up to those standards—who would use these powers if and when they are in place.

[Georgia Gould]

Q I want to build on the earlier line of questioning about Ministers’ sign-off. My under-standing is that the powers will be delegated to authorised officers and there will be no ministerial sign-off on any part of the investigation. That will rightly be separate. I think it would be helpful if you could clarify how that will work in practice.

Mark Cheeseman: Yes. Apologies—that was a slip when I answered earlier. Yes, the powers of the Minister—it is written as “the Minister” in the Bill—are delegated to authorised officers, who sit in the PSFA. They would be qualified to the standards of the profession, and they would be taking the decision. What I was referring to earlier is that any review decision, if someone asked for a review, would be taken by a separate authorised officer. There are a number of provisions in the Bill to enable people within the process to make an information-gathering request or to ask for something else to be reviewed.

[Georgia Gould]

Q And those authorised officers would make the decision about the timing to allow for information gathering; that would not be a ministerial decision.

Mark Cheeseman: Absolutely. That decision is made by the authorised officers, based on their experience of weighing up both proportionality and how they can engage with the organisation or individual they are asking for that information, and that individual or organisation can request a review of that request.

[Georgia Gould]

Q Thank you. It would be helpful to hear from you about the work that the PSFA has been doing more broadly to consult, and to talk to other parts of the public sector and other experts, in developing this package and the thinking behind it.

Mark Cheeseman: Absolutely. First, the PSFA has been brought together from experts across the system. We have brought in experts not just from within the public sector, but from other sectors, and we also work with other countries to understand what they do on this. We have been consulting very widely with the public sector, and a number of the people who have come to look at this have looked at it from the point of view of what they could not achieve in their own public bodies and therefore how they could take more action and what that power would look like. We have also brought together other investigators and asked them what they think the optimal powers are and what the proportionality aspect and the safeguards should be, and considered that. We have done quite broad consultation within the public sector, but we have also asked local authorities what their views are on other aspects such as that.

[Georgia Gould]

Q Concerns were raised earlier that the PSFA would take its eye off the ball on prevention and the wider area of work, and become an agency focused only on enforcement. It would be helpful if you could address and answer those concerns.

Mark Cheeseman: The Public Sector Fraud Authority has two elements to it. One is overseeing Government and how individual Departments are doing in dealing with fraud and what they are doing on it; the Bill itself says that Departments would refer cases to the PSFA and ask for them to be dealt with under it. The second is providing some of the services that support Departments around taking action on fraud where it happens.

The biggest difference we will make, alongside that, is through prevention. We heard from witnesses earlier about the use of data and analytics. We have a data and analytics service that works with public bodies to use that to find and prevent fraud up-front. We also have a risk service that works with other parts of the public sector to understand the risks they face, in order again to prevent those risks by putting in controls.

While there will always be that balance, there will also always be some element of fraud that is still committed. We will not be able to design a system where there is no fraud risk or design out fraud. There will always be cause for an efficient, effective and proportionate part of the machine to take action on those instances of fraud and to investigate them thoroughly and properly.

[Rebecca Smith]

Q This is possibly a slightly nuanced question, but there has been a lot of talk about the authorised officer role. To my mind, when you go from the Minister to the authorised officer, that feels like quite a big jump in title. It might be quite a small thing but, from your experience at the PSFA, does that terminology work when looking to expand beyond that, in terms of people’s understanding of how senior the people doing these investigations are? The word “officer” is often used, particularly in the public sector, to mean quite a junior role. How do we ensure that the public and people across the public sector understand how senior these people are? Does that need to be on the face of the Bill or in the code of practice? How would you look at that?

Mark Cheeseman: Again, I do not know whether it would need to be in the Bill; that would be for you to debate. As it gets past the authorised officer, there is a structure: there are senior leaders with deep experience in investigating fraud who are overseeing them. We have structures of senior investigation officers overseeing your investigators and the individual authorised officers. While it may feel like a big jump, there is a structure to ensure quality, to ensure the right practices, and so on. That directly compares with what happens elsewhere.

I am pretty comfortable that “authorised officers” is a term used elsewhere. I recognise what you say about the seniority of grade; I had to have a wry smile, because it took me a while to get to HEO and SEO—higher executive officer and senior executive officer—but those are still senior, experienced roles. They are experienced administrators with a high level of skillset and expertise doing those roles. Part of the reason for creating the counter-fraud profession is to show the expertise and capability that those experienced counter-fraud experts have in taking action on fraud.