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.