Public Authorities (Fraud, Error and Recovery) Bill

Gill German Excerpts

2nd reading
Monday 3rd February 2025 Commons Chamber

[Gill German (Clwyd North) (Lab)]

This Bill is crucial for delivering on this Government’s manifesto commitment to safeguard taxpayers’ money. As the Secretary of State has rightly stated, we must be

“turning off the tap to criminals who cheat the system and steal law-abiding taxpayers’ money.”

In Wales alone, the national fraud initiative found £7.1 million of fraud and payment errors in 2022-23, up by £0.6 million since the previous year. Figures such as this show just how much a blight on the economy fraud and error continue to be. I have heard at first hand from constituents about instances of benefit fraud that they are well aware of, such as individuals using past addresses to make claims to which they are not entitled. They know that this is not right, and they expect us to take action. It is also essential that we crack down on organised crime gangs and streamline the process through which DWP investigators can act to bring these serious offenders to justice more swiftly.

I welcome this Government’s crackdown on fraud, because every £1 lost to fraudulent claims is £1 that could be spent on vital public services—services that my constituents in Clwyd North rely on to strengthen our communities and improve lives. However, it is crucial that we make a clear distinction between intentional fraud and accidental individual error. Errors leading to overpayments may be the result not of deliberate wrongdoing, but of the inherent complexity of the social security system itself. Many of my constituents have shared their struggles with the complexity of applying for benefits, and knowing what to apply for and how. This causes significant stress, and it exemplifies the risks of penalising individuals who may simply have been unable to navigate the system, further entrenching the fear of making a mistake. The Bill must therefore go hand in hand with reforms to make this navigation far more straightforward.

A YouGov survey for Turn2us in 2024 found that 77% of respondents believed they would struggle when they needed to claim benefits if their circumstances changed. This highlights the real challenges that people face in navigating a system that is often confusing and difficult to understand. The Government must ensure that their powers to recover overpayments differentiate between fraudulent criminal activity and genuine mistakes. Without this distinction, there is a risk of penalising individuals who have simply struggled to navigate the system, and those people may already be in vulnerable situations.

Getting this Bill right, however, will mean that £1.5 billion of taxpayers’ money over five years will be saved. That money can be invested in the services that people in my constituency and across the country rely on, from public transport to local infrastructure. With fraud and error costing nearly £10 billion a year, we must act decisively to drive down this fraud and error and protect public funds. At a time when families are struggling and public services are under pressure, ensuring that taxpayers’ money is spent where it is truly needed is not just responsible, but essential.

This Bill must tackle fraud and error in a way that is fair and proportionate and does not punish those who have made an honest mistake. I know that the Government have worked hard to include measures that will ensure that these critical distinctions are made as the Bill progresses. However, it is crucial that we do not shy away from coming down on this issue, and that we ensure constituents see their hard-earned contributions going directly to the services that strengthen our communities.

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

Gill German Excerpts

Committee stage
Tuesday 25th February 2025 Public Bill Committees

[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.

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

Gill German Excerpts

Committee stage
Tuesday 25th February 2025 Public Bill Committees

[Michelle Welsh (Sherwood Forest) (Lab)]

Q My question is quite straightforward. How much will the Bill save the taxpayer in the welfare fraud space?

Andrew Western: In the DWP space, we estimate that the amount would be £1.5 billion over the forecast period. That roughly equates to around £950 million on the eligibility verification measure, with the overwhelming majority of the rest—in fact, almost all of it—coming from the debt recovery power. There are also potentially significant savings over time that my hon. Friend the Parliamentary Secretary, Cabinet Office may want to outline with regard to the PSFA powers. I realise that they are scalable; they start off small-scale. Minister Gould, would you like to come in on the potential?

Georgia Gould: They are more modest in the first instance. We are estimating just under £60 million-worth of savings. We are testing the new models. If the model is successful, there is potential to scale that up. We think that this is the first time we are introducing powers to take on fraud in the wider public sector outside tax and welfare. A huge amount of fraud has gone uninvestigated. We think the deterrent impact of this will be substantial.

[Gill German (Clwyd North) (Lab)]

Q We heard earlier from Anna from the Money and Pensions Service, who believes that the relationship between the service and the DWP is good. She said that a link has been established with Jobcentre Plus advisers to make sure that people are referred for advice to do with debts if needed. How important is that kind of person-centred approach in the practical application of the Bill, particularly in the case of error and the preventive measures we have spoken about—the wraparound care so that people do not get into problems with error much further down the line?

Andrew Western: As I have highlighted in my questions to witnesses throughout the day, there is the potential, through the eligibility verification measure, for a number of overpayments to be detected earlier than they would have been otherwise, thereby avoiding the large numbers that we have seen people rack up in overpayments through, for instance, the carer’s allowance challenges that we have seen in recent years.

The breadth of the conversation we are looking to have with people who are in debt with the Department is significant. We heard about the MoneyHelper service, on which the Money and Pensions Service works with us. That is just one of a range of organisations and packages that we utilise to support people who are in debt. We know that, whatever the reason—whether it is fraud or error, but particularly, as you say, if it is error—it is an incredibly stressful time for people.

In debt recovery terms, the power that we are taking is intended to be a power of last resort. What we always want to do, having been through all the things that you would expect us to do—the vulnerability management framework that was referenced earlier and the assessment that we make of people’s ability to pay—is to agree an affordable repayment plan. By the time we reach the point where we are looking for a direct deduction order, we would have looked to engage somebody on multiple occasions, contacting them several times and trying to agree that plan. This is for people we have no other means of engaging. It is as much a lever to try to bring them to the table and have the sorts of conversations you referenced as anything else.

This is also about addressing the existing fundamental unfairness. We can directly deduct from somebody in receipt of benefits, by deducting from that benefit entitlement, and we can do the same for someone in pay-as-you-earn employment, but we do not have that opportunity for people in receipt of income through other means—most obviously, but not exclusively, self-employed people. There is a fundamental point about addressing that inequity in the system. Having made those financial assessments, we know that these are people who can afford to pay. We have tried to reach out with the wraparound support that you suggested, and ultimately, they continue to refuse to engage.

[Michael Payne]

Q There has been some discussion today about the use of technology and AI. As Ministers, what are you doing to ensure that humans still take the final decisions on whether the powers should lead to enforcement?

Andrew Western: As it relates to the DWP—I do not know whether you want to say anything about the PFSA powers later, Georgia—it is worth reflecting that the proposed eligibility verification power is in effect a data-push power. The banks will not make any decisions as to someone’s culpability, on what penalty they might receive, or on whether the overpayment flagged on the account is legitimate; all the banks will do is send back a marker against an account to suggest that someone is in breach of their eligibility requirements.

For example, that might include someone who has more than £16,000 in their account, but is in receipt of universal credit. It is important to say that the flag is then passed to a human investigator to analyse the information and look at what the reasons may be, because there can be very legitimate reasons why someone has more than £16,000 in their account and is still entitled to benefits, such as someone who has received a compensation payment that is out of scope of what would be considered capital for benefit-eligibility reasons.

In all the five principal measures on the DWP side of the Bill, a human is involved in the decision making: on eligibility verification, it is passed to an investigator; on information gathering, when we receive information, it is passed to an investigator to consider the next steps in a fraud investigation; on debt recovery, an individual—a person—would make a decision as to someone’s ability to repay a debt; and on penalties reform as proposed, a human will determine what actions will be taken against a person who received a penalty for fraud against a DWP grant scheme. That is entirely the way that it works with any other penalty that can already be applied. Finally, on the powers of search and seizure, as we would expect, a human judge will take a decision on whether to issue a warrant. At every stage, a human decision maker is baked in before any final decision on sanction or otherwise.