Public Authorities (Fraud, Error and Recovery) Bill

John Milne Excerpts

2nd reading
Monday 3rd February 2025 Commons Chamber

[John Milne (Horsham) (LD)]

I am sure that I speak for all hon. Members when I say that putting a stop to fraud of any kind is welcome, especially at a time when public money is scarce. However, many of my Horsham constituents have contacted me to say that the powers outlined in the Bill are very far-reaching and, if abused, could have hugely detrimental effects on benefit claimants through no fault of their own.

As my hon. Friend the Member for Torbay (Steve Darling) said, the carer’s allowance repayment scandal shows exactly what can go wrong when the state has high-level powers over debt recovery. Due to departmental error, not the claimants’ error, there were more than 250,000 cases of overpayment to carers in the last five years of the Conservative Government. That is an enormous number. What would have happened to those carers, who are paid very little for the huge service to society that they provide, if the powers in the Bill had been in place during those five years? They would probably have faced forced withdrawals from their bank account, the possible removal of their driving licence or even forced entry to their home by the DWP.

The Bill will give increased powers to access private bank accounts. This requires careful consideration from a civil liberties perspective. However, the DWP already has the power to compel third parties to share data where criminal activity is suspected. The new powers appear to reduce the need for prior evidence and simply grant access at will. Given that access to banking information is estimated to recover just 1.4% of the Government’s annual loss to fraud and error, do these powers of forced withdrawal represent a proportionate action? Before introducing new powers, it might make more sense for the Government to increase the efficacy of existing requirements on third parties to report suspicious activity, and for HMRC to share banking data on an annual basis.

The Government have asserted that the Bill will save the public purse £1.5 billion, but in the absence of an impact statement, how do we know? If the DWP is to have the power to take people’s money, suspend driving licences and enter homes, we should at least be very confident that it is worth it. In particular, we need to be sure that the savings predicted do not come from the blameless victims of departmental error, as happened with the carer’s allowance overpayment scandal. It is of huge importance that fraud be reduced, but until we are sure that we have learned the lessons of the past, we run the risk of damaging people’s lives for insufficient benefit. We are at risk of making the same mistakes again, but with fewer checks and balances.

The sentiment of the Bill is welcome, but there are risks attached. I am concerned that it builds a narrative that assumes that the claimant is the guilty party, when it could be the Department that is at fault. I therefore call on the Government to apply all possible care before launching new regulations that, at present, would amount to a matter of trial and error.

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

John Milne Excerpts

Committee stage
Tuesday 4th March 2025 Public Bill Committees

[Rebecca Smith (South West Devon) (Con)]

I have some queries about clause 17 and the provisions on recovery from bank accounts. My comments apply to clause 38 as well, but I will speak specifically to clause 17.

Earlier, the Minister mentioned that some of the powers for direct deductions and deductions from earnings are used more widely across the DWP, particularly in the CMS for recouping costs for parents. Have the Government thought more broadly than simply direct deductions and deductions from earnings? My understanding is that the CMS has quite strong powers beyond that and has used them in the past.

Given the nature of fraud against public authorities—these are ultimately quite serious offences—what more has been done to consider whether direct deductions and deductions from earnings are enough and will be all that is required? At some stage, do we need to think about putting in tougher and more stringent powers to claw back the money owed to the Government?

[John Milne (Horsham) (LD)]

As the Minister described, the powers in the Bill are already used by other parts of Government. Can she provide us with any evidence of their success? Are they doing the job they were made for? Have they led to a change in behaviour in the way potential fraudsters set up accounts or attempt to disguise beneficiary interests?

[Georgia Gould]

I really appreciate the focus on vulnerability and oversight, because with these powers comes a huge amount of responsibility. The questions that have been raised today are really important.

First, the joint account holder will be able to make their own representations for review. The starting point will be the equal split, as was set out, but they will be able to make representations and ask to have their rights reviewed as part of the investigative process.

On the wider point about vulnerability, which was well made, there is a huge amount of established practice in Government, and the PSFA will seek to learn from that. The Government debt management vulnerability toolkit will be utilised. All the authorised officers will have training in vulnerability and economic abuse. Vulnerability assessments will take place in every single instance of debt recovery and vulnerability will be kept under review. A range of training and safeguards is in place around our approach.

On clause 21, I reassure the shadow Minister that there is precedent in HMRC. There can be both an internal review and an appeal, which is set out in clauses 34 and 31.

A wider point was made about whether we have looked at different and wider powers. The thing to remember about the powers is that in the majority of cases, but not all cases, we expect them to be used to recover funds from organisations rather than individuals, which is why we have focused on the financial side of debt recovery and penalties. Other powers are used by other Departments. I said earlier that we want to continue to be able to use other legal procedures to pursue recovery, including liability orders, and the Bill will not stop us doing so. We have a range of options in front of us.

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

John Milne Excerpts

Committee stage
Thursday 6th March 2025 Public Bill Committees

In conclusion, while we all want fraud and error to be robustly tackled in the welfare system, these provisions are not proportionate to achieving that aim and we should not undermine the presumption of innocence and fundamental privacy rights in order to achieve it. I urge the Minister to reconsider this part of the Bill. We should be treating people who claim benefits as citizens, not as suspects, and for that reason I will be opposing clause 74 and schedule 3.

[John Milne (Horsham) (LD)]

It is a pleasure to serve under your chairmanship, Sir Jeremy. It is important for us all in this place to remember that, although we make legislation with the best of intentions, it does not always play out perfectly in practice. As a member of the Work and Pensions Committee, I heard evidence a few days ago from a number of claimants who have had a very bad experience at the hands of the DWP. Their overall theme was one of antagonism and hostility from the service, and they described a number of serious problems.

That is the attitude that, unfortunately, many claimants and many people across the country have. They think that the objective of the DWP is to catch them out rather than to help them—rightly or wrongly, that is what they feel. In that context, the title of this Bill covers “fraud and error”, not “fraud and genuine human mistake”—which, frankly, is what goes on a lot of the time.

I say that particularly in the context of our amendment 30 relating to pension credit. As my hon. Friend the Member for Torbay has described, pension credit is an area of relatively low fraud. However, there are more elderly and vulnerable people who are more likely to make an error, particularly in the context of the removal of winter fuel payments. There is a little extra onus on pension credit, and we are trying to push greater take-up. About a third of eligible people do not claim pension credit. Part of the reason is that many of them feel intimidated by the process and the feeling that they are getting something that they should not have. It is fear that holds them back.

A few months ago, the Secretary of State for Work and Pensions, the right hon. Member for Leicester West (Liz Kendall) said she would “move heaven and earth” to try to push that take-up higher, because we never seem to get past that 65% to 66% level. In that context, this feels like a retrograde measure, likely to depress rather than to encourage take-up.

[Neil Coyle]

Could the hon. Member give us the figures on the increase in pension credit take-up for the period during which a Lib Dem held the position of Minister for Pensions?

[John Milne]

That was before my time and I was not even in the country, so I am afraid I cannot answer that question.

It is very important that we should be pushing take-up, not sending it into reverse. For that reason, I ask the Minister to reconsider the need to include pension credit; that the upside—the amount of money that might be recovered from fraudulent claims—is relatively modest compared with the potential downside of putting more people off claiming.

Regarding amendment 29, tabled by the Liberal Democrats, we have heard from many witnesses, such as Big Brother Watch, about the risk of mission creep and these powers being extended in too many directions. It seems to me completely unnecessary to simply give the Minister of the day the power to add whatever benefits he or she feels like at that time. There is no need for it. Excluding that now does not affect the tax take or the potential benefit for the Government, and it seems an unnecessary and disproportionate power. I urge the Minister to reconsider the inclusion of that measure.

[Damien Egan (Bristol North East) (Lab)]

I want to make a few points, because I am worried that some Members are underestimating the level of fraud and the direction of travel, because it is only going up.

The hon. Member for Brighton Pavilion is correct in a sense in saying that people voted for change and that fairness in the welfare system is one of the things they voted for, but part of that is about having confidence in the welfare system. People can see the level of fraud, and they want the Government to restore the balance so that it is less in favour of people committing fraud.

I encourage those Members who are apprehensive about these elements to visit their local jobcentre. I did two visits at my local jobcentre in Kingswood; I had to go back because the work coaches had so many stories to tell. Members of the Work and Pensions Committee will have heard me say this before, but I spoke to two women: one had been there for 45 years and the other 41 years. They said the level of fraud is something that they have never seen before. I wish they were here now, because everything that they said about how we deal with it was about getting information from banks and other agencies and sharing that information on eligibility and combating fraud. I wanted to make those points and I encourage Members to speak to them.

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

John Milne Excerpts

Committee stage
Tuesday 11th March 2025 Public Bill Committees

[Steve Darling]

It is a pleasure to serve under your chairmanship, Mr Western. We have touched previously on having an independent overview of the activities that will take place under the Bill, and this is another opportunity to have the checks and balances I have alluded to on a number of occasions. Of course, all Members in the room are reasonable people, but we see in world politics what happens when people are unreasonable. Given that the United Kingdom’s constitution is unwritten, beginning to build those checks and balances into legislation is important. Amendment 37 would hardwire them into the Bill, and I ask that the Minister give it serious consideration. I have heard hints that it may be taken into account in one way or the other when the Bill goes to the other place, but I would welcome some reassurance, if possible, that that is the case.

[John Milne (Horsham) (LD)]

It is a pleasure to serve under your chairmanship, Mr Western. As my hon. Friend the Member for Torbay said, the amendment is about checks and balances. We appreciate that the Bill has been introduced in the context of the Government’s desire to cut the benefits bill, but the Treasury deeming something to be financially necessary does not necessarily make it right.

The percentage lost to fraud and error is relatively modest, but of course the sums are huge because the overall number is huge. We need to remember that these measures will not get anywhere near recovering all that money, so the question is: is the action proportionate, considering the sacrifice we are making in terms of civil liberties? It is vital that we get the best value from public money, but the amount expected to be recovered is just 2% of the estimated annual loss to fraud and error of £10 billion, and just a quarter of what is lost to official error at the Department for Work and Pensions.

As drafted, the clause empowers the Minister to appoint an independent person to carry out reviews of the Secretary of State’s function under schedule 3B to the Social Security Administration Act 1992. There is no external oversight, and that undermines the credibility of the role. Our amendment states:

“Prior to appointing an independent person, the Minister must consult the relevant committee of the House of Commons”,

which means

“a committee determined by the Speaker of the House of Commons.”

Without proper scrutiny, the role’s independence is undermined, potentially damaging trust in the process.

The Committee previously heard evidence from Dr Kassem of Aston University, who stated:

“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.” ––[Official Report, Public Authorities (Fraud, Error and Recovery) Public Bill Committee, 25 February 2025; c. 13, Q15.]

A board would ensure that the appointment is truly independent and subject to parliamentary scrutiny. We therefore propose that the Minister must consult the relevant House of Commons Committee before making such an appointment. That simple steps would ensure genuine independence and parliamentary scrutiny, and would strengthen transparency and public confidence.

[Rebecca Smith (South West Devon) (Con)]

It is a pleasure to serve under your chairmanship this morning, Mr Western. As we have just heard, Liberal Democrat amendments 37 to 42 would mean that, before appointing an independent person, the Minister had to consult a Committee of the House of Commons nominated by Mr Speaker. Amendments 38 to 42 seek to replace an independent person with an independent board, and therefore to allow the Secretary of State to appoint persons to, and confer functions upon, the board.

I have a couple of questions for the hon. Member for Torbay. What greater independence do the Liberal Democrats think will be gained by changing the requirement, given that both the independent board and the independent person would be appointed by the Secretary of State? What practical difference will the amendments make to improve the review process and ensure that it is high quality?

--- Later in debate ---

[The Chair]

I remind Members to bob if they wish to catch my eye to speak, and to refrain from using the word “you”, which refers to me as opposed to the Minister.

[John Milne]

My colleague has just partially asked my question. While we broadly welcome the clause, we are concerned by the absence of the code of practice. Could the Minister give any indication of the kind of guidance that it might contain? Also, at what stage of the parliamentary process will there be scrutiny of it, given that it will not be during this Committee?

[Siân Berry (Brighton Pavilion) (Green)]

It is a pleasure to serve under your chairship, Mr Western. I want to raise the comments made by the Information Commissioner in relation to the Bill and the updates to the previous Government’s proposals. I understood that they were more content with this Bill than the previous Bill. They were pleased that it brought data protection more tightly within the measures, and that it talked about data protection in a much more consistent way with the law. They said that the Bill more tightly scopes the types of information that can and cannot be shared. I understand that our debate on clause 85 covered some of those improvements.

However, at the end of their comments, the Information Commissioner talked about the review process, and said very clearly that they would like to explore with the Government the role that the Information Commissioner’s Office can play in assisting with the review process. This clause does not set out the different offices and people with whom the independent reviewer needs to liaise in preparing their report. I wondered whether Ministers could comment on their thoughts surrounding that process, and consider setting out in the code of practice or further guidance how the independent reviewer might engage properly with data protection in their review.

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

John Milne Excerpts

Committee stage
Tuesday 11th March 2025 Public Bill Committees

[Rebecca Smith]

Clause 90 makes provision for recovery of social security debts directly from the liable person’s bank account. That power is broadly similar to powers contained in the Child Support Act 1991 and the Finance (No. 2) Act 2015, which enable deductions to be made directly from the liable person’s bank account without a court order. We support the inclusion of the power in the Bill, but further to our debates on part 1, I should be interested to know whether any other measures beyond bank account recovery and disqualification from driving were considered. Reference was made earlier to the ability to seize assets, particularly in relation to part 1 and the Public Sector Fraud Authority, but as that is not on the face of the Bill I would be grateful for further details about if and where that is allowed for within part 2.

[John Milne (Horsham) (LD)]

It is a pleasure to serve under your chairmanship again, Sir Jeremy. I am again raising concerns about a serious power to make direct deductions from people’s bank accounts.

Life does not always come in neat paragraphs; it is messy. I have had a number of letters from constituents in Horsham setting out the kind of errors that can happen. A lady called Marianne, who is a universal credit recipient, received a small inheritance, which she tried to report by phone and email, but that still resulted in her wrongly losing her UC for a period. Another constituent, Hannah, said:

“I have zero hours contract and work between 9-11 hours a week at just over minimum wage. At times I have had a back dated pay rise which pushed me over the allowance limit (I wasn’t informed in advance this was happening). I’m also at the mercy of someone else submitting my hours, so if they aren’t submitted on time they roll over to the next pay period causing me to exceed the allowance limit.”

At no time did she ever come anywhere near the allowance limit in real earnings; nevertheless, she was caught up in the rules.

Does the Minister feel that we have sufficient safeguards to avoid that kind of inadvertent administrative error? Mistakes have happened in the past and will continue to happen, but this is a very strong power that could cause real distress.

[Andrew Western]

We have not considered the seizure of assets under this Bill; nor are we are looking at forcing the sale of a home. We want to ensure that the powers we take are proportionate. We are not seeking to cause further hardship, and clearly the loss of their home would likely move a person into that category. Those decisions would ultimately remain with the court were we to take particularly serious case through the courts.

The hon. Member for Horsham raised some examples from his casework of people in receipt of universal credit who found they were inadvertently in receipt of overpayments. If they are still in receipt of universal credit—I think they are, going by what the hon. Gentleman said—they would be out of scope for the debt recovery powers that we are considering, so this provision would not apply in those specific examples.

If someone tells us of a change of circumstances, we always seek to action that as swiftly as possible. In cases such as the second example that the hon. Gentleman cited, where the mistake was the employer’s, there is not a tremendous amount that the Department can do. I have sympathy with his constituent, but it does not sound like that case would fall under the umbrella of departmental error. I assure him, however, that as both his constituents were still in receipt of benefits, they would not face a deduction from their bank accounts. That does not mean that an overpayment would not be recovered through other means, but recovery would be out of scope of this power. The treatment of overpayments from universal credit as recoverable was determined by Parliament a long time ago—I believe in 2012.

Question put and agreed to.

Clause 90 accordingly ordered to stand part of the Bill..

Schedule 5

Recovery from bank accounts etc

--- Later in debate ---

[Rebecca Smith]

Schedule 5 makes provision regarding direct deduction orders from bank accounts. These can be regular or lump sum. The Secretary of State may make a direct deduction order in respect of a joint account only if the liable person does not hold a sole account in respect of which a direct deduction order may be made that would likely result in the recovery of the recoverable amount within a reasonable time. I would be grateful if the Minister explained what criteria will be used to decide whether a person has such an account. This came up last Thursday in relation to the main bank account of a claimant and the fact that the DWP will not be able to ascertain what other bank and savings accounts may be held. Is the same true here? Is this relevant only if the joint account is the account into which the benefits are paid? For the record, I am referring to column 238 of Hansard on 6 March.

The schedule will give the Secretary of State a power to request bank statements that is not time limited. It will also give the Secretary of State the power to request from banks details about the accounts that a person holds with that bank. The Secretary of State can set out how and when the bank must comply with the notice, and explain that the bank may be liable for a penalty under it if it fails to do so without a reasonable excuse. Can the Minister reassure the Committee about his planned engagement with banks—indeed, has he already had such engagement? Do banks think that this is a manageable requirement, and what will the costs of administering it be? Should that engagement with banks be due to happen, what might be done to reflect their views?

We have discussed that there is quite an onerous expectation on banks. The Parliamentary Secretary, Cabinet Office, the hon. Member for Queen’s Park and Maida Vale, made a comment, in terms of the Cabinet Office powers, that it was almost the banks’ civic duty to make sure that they do this. I am intrigued to know whether they agree with that. It would be interesting to know what engagement Ministers have had, and what they will do about it. Lastly, how long will banks have to comply with notices, and what level of penalty will be levied on them if they do not comply? I think those are fair questions.

[John Milne]

The hon. Member raises the issue of the burden on banks; there is also the potential burden on the claimant. Banks sometimes have very large administrative charges, well in excess of the actual costs of whatever it is they do. Can the Minister give any assurance that there is some upper safety limit on excessive charging by banks? For instance, will a bank be able to charge for its corporate cost centre—a contribution towards its head office or functions—as can be the case with other charges? Basically, I seek clarity on the balance of how the charges will be administered.

[Rebecca Smith]

That relates to what I was going to say on amendment 43, had we got to it. I entirely appreciate what the hon. Member says about dealing with the vulnerable and protecting them from undue expectations, but is it not right that, if someone’s bank account goes overdrawn, they pay those charges regardless of their financial situation? Are we potentially seeking to give claimants more rights than they would ordinarily have with their own bank account simply because it is the DWP that is trying to recoup the money, rather than their bank?

[John Milne]

I am simply concerned that there should be some control of, or protection against, excessive charging. In the past, institutions have inflicted disproportionate charges that bear no relation to the actual cost of servicing whatever action had to be remedied. I am therefore seeking confirmation from the Minister that there is some protection in that direction as well with regard to the costs on the banks, as we said earlier.

--- Later in debate ---

[Rebecca Smith]

Clause 91 makes provision for a liable person to be disqualified from driving. Any disqualification from driving will always be suspended in the first instance, subject to the liable person complying with what the court has assessed to be affordable and reasonable payments. When disqualification does occur, it is temporary and the liable person can have the disqualification lifted by satisfying the court that they are now making and will continue to make repayments.

We support the clause in general, but I have a few questions for the Minister about the practicalities, which are worth debating. First, however, will he clarify whether the clause is for cases of fraud, error or both? From what he said, it feels as if it is for both, and it is worth getting that on the record. What safeguards will the Department put in place to ensure that someone is not disqualified unnecessarily? Again, it sounds as if there is a long process before getting to that point. Is there a right of appeal or can the process be stopped before the disqualification takes place?

A few additional questions came to mind as I listened to the Minister just now. What role are the DVLA and the police expected to play in the wider disqualification? Who is responsible for the enforcement of that disqualification? I certainly know of a neighbour of mine who was disqualified for two years but continued driving; it was frustrating when I knew what he had done. Who would be responsible for that enforcement? In that instance, I knew that I could ultimately go to the police, but the scenario could be different in this case.

Likewise, will the decisions to disqualify from driving be publicised as they are when someone is disqualified for speeding or drink-driving? Again, that is part of the punishment; it also enables other people to know when somebody is in breach and promotes enforcement. It is also worth querying what measures might be put in place when somebody cannot be disqualified. The Minister said that some people would not be disqualified because of their jobs or family situations. What would be the deterrent for those people?

Furthermore, what if the person were not a driver or in possession of a driving licence? Obviously, recovery will be attempted from bank accounts, but if losing a driving licence is the final stop point it will be in the interests of fraudsters to divest themselves of theirs. We need to make sure that whatever it is that we are trying to achieve in the Bill, there are no shortcuts or opportunities for people to evade the repayment that the Department seeks.

[John Milne]

I am uncomfortable with this proposal, because it seems unfair that one group of people should be liable to a punishment and not another. If someone cannot drive or they do not have a car, this punishment means nothing to them, whereas another group who do drive are affected—and some of them very deeply, depending on their lifestyle, such as living in the country or other necessary means. I am fundamentally uncomfortable with what seems to be a punishment that falls on only one group of people, when it should be levied equally.

[Siân Berry]

As we have been discussing, schedule 6 and clause 91 make provision that, where all other methods of debt recovery have failed, including the direct deduction order measures we have been discussing, the DWP may apply to a court to have the debtor disqualified from driving. Like the hon. Member for Horsham, I have real concerns about these new powers. I cannot see how this specific novel civil penalty of removing a driving licence is at all appropriate to the particular group of people we are discussing, nor do I see the equivalence to the people being enforced upon by HMRC and the Child Maintenance Service, which have similar powers.

Legitimate benefit claimants who are overpaid through error, make a mistake or for any other reason owe money to the DWP are, almost by definition, in need of help. They might often make mistakes or fail to disclose information through an oversight, and their failure to engage with the DWP to date might be due to genuine incapacity and health issues. I am therefore very concerned that there are ineffective safeguards in the court process for these powers.

Although the DWP must apply to the court for the disqualification order, the court does not have discretion to refuse unless the debtor needs a driving licence to earn a living or has another essential need for one. It is unclear the extent to which this will protect vulnerable benefit claimants who have not engaged with the DWP due to incapacity, illness or mental ill health, or for whom driving is not essential for their work, but may be essential for their wellbeing or family life. I am not sure that the proposed legislation is clear enough about what will be deemed essential or what will be reasonable for the court to object to.

I also have concerns, as outlined a moment ago, that these powers cannot be exercised unless the people concerned have tried every other method, from benefit deductions or deductions from earnings to the direct deductions from bank accounts—the measure we have just discussed, which is extraordinarily intrusive on people’s financial information and privacy. Given that these powers would only be used where it appears that those other powers cannot be, is it not true that they are basically only for when a debtor cannot physically pay back what they owe? In effect, this measure of removing the driving licence is a punishment. It is a poverty penalty for those who do not have the means, despite all the intrusion that Ministers have gone through to establish that, to return what they have been overpaid.

I cannot support this power. It is incredibly punitive. I do not think it will create the conditions in which debtors are encouraged to engage with the DWP, but it could create dire consequences for individuals who are already struggling and least able to afford repayments.

--- Later in debate ---

On the deterrents for non-drivers, to respond to the hon. Member for Horsham, this is just one of a suite of powers available to us. We could also look at options such as charging orders, were this power not available to us, but we have seen from the Child Maintenance Service that this is a really strong lever to bring people to the table. It is a power of last resort, and a power that, in practice, is used very sparingly; it is more of a deterrent, when people are refusing to engage with us or to repay money that is owed.

[John Milne]

In the light of the Minister’s confirmation that this power does refer both to error and fraud, I am all the more concerned. Removing a driving licence can mean the removal of a means of income. It is almost like the old-fashioned debtors’ prison: someone is in debt, so they are put in prison, and then they cannot get out of their debt. It is a Catch-22 situation.

I understand that the power has been used regarding the Child Maintenance Service. I have a case in Horsham where a constituent feels that he is being unreasonably demanded of; he is in trouble because he will potentially lose his job because of just such an order. Therefore, this power could be applied inaccurately or incorrectly—it is inevitable that in a large organisation there will be mistakes—so I am concerned that the power seems both very extreme and, as I said before, not generally applied. It should be generally applied in order to be legitimate.

[Andrew Western]

On the point about a debtors’ prison, if somebody requires their vehicle for work, that is a criterion that a judge can consider in terms of whether a licence should be disqualified. It is also worth remembering that, in all cases, the initial move would be to suspend the suspension of the driving licence to give somebody the time to engage with us and start to pay. While, as I say, this is baked in as a last resort, we have put a number of break points in this process for people to engage. Indeed, even after we have suspended the licence, if somebody starts making repayments, they can have their licence reinstated. However, we have explicitly stated that caring responsibilities and the need for a car for employment purposes are criteria that would mean that we would not look to pursue that suspension.

Turning to the comments from the hon. Member for Brighton Pavilion, I understand where she is coming from. She is consistent in her view of an erosion of civil liberties coming about as a result of many aspects of this Bill. However, I must say to her that the idea that we have exhausted everything, including deductions from benefits, fundamentally misses the point about the cohort of people who would be in scope for this power. Benefit claimants and people who are paid through PAYE would not be in scope of the driving licence power; it would be people who are no longer on benefits. Indeed, if they were on benefits, we would be able to deduct from those benefits directly, without needing recourse to such actions.

I therefore take a fundamentally different view from the hon. Lady on whether this amounts to a poverty penalty. Clearly, the poorest people would not be impacted by this power; it is for people who we know have the means to pay. Usually, we know they have the money, but they have moved it out of our reach, so we have ascertained their ability to pay, but it is not possible to lay our hands on those funds. This power—like wider mechanisms for people who do not drive, such as charging orders—is the initial lever to bring people to the table.

As I said in response to the hon. Member for Horsham, before we suspend a licence, we will ask people to engage with us. After agreeing the right to suspend that licence, we will give somebody a further opportunity to engage with us and to begin making regular repayments. After the licence has ultimately been suspended, there will again be the opportunity to commence regular payments and have the licence reinstated. All that is a power of last resort.

I will give the Child Maintenance Service statistics for context. The CMS utilised this power on seven occasions last year; six of those were suspensions of suspension and only one was an actual suspension of a driving licence. That tells us that this power is important as much as a deterrent as in practice. It is for that reason that it forms a part of this Bill.

Question put and agreed to.

Clause 91 accordingly ordered to stand part of the Bill.

Schedule 6 agreed to.

Ordered, That further consideration be now adjourned.—(Gerald Jones.)

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

John Milne Excerpts

Committee stage
Thursday 13th March 2025 Public Bill Committees

[Rebecca Smith]

Clause 94 states that any costs incurred by the Secretary of State in recovering an amount under clauses 71 to 80 or schedules 3ZA or 3ZB of the Social Security Administration Act 1992 may be recovered as though they were recoverable under the same methods as the debt itself. Will it be done separately, and what might the cost to the Department be in putting that forward? Is there any limit to the costs that the Secretary of State can recoup in this way?

Clause 95 clarifies that provision does not require or authorise processing of information that contravenes data protection legislation, or the Investigatory Powers Act 2016. The final line states,

“references to giving a notice or other document…include sending the notice or document by post.”

This also came up in the debate on Tuesday, so I would like to get it on the record. I assume I know the answer, but can the Minister clarify whether this includes electronic methods of communication also, such as email? If I may ask this, as I am intrigued, then why does sending by post need separate legislation? We have debated the subject twice now, and the answer is probably really straightforward, but as it is set out on its own line, it might be a nice idea to find out why it has to be legislated for. I ask that purely because I am nosy and would like to know.

[John Milne (Horsham) (LD)]

It is a pleasure to serve under your chairmanship, Sir Desmond. Clause 84 states that costs incurred by the Secretary of State in taking recovery actions can be themselves recovered. Will the Minister clarify what happens in a case where the claimant is found to be not guilty? What happens to the costs then? Are they borne by the bank, the DWP or the claimant? Will he also clarify how the cost of the general trawl through all the accounts is apportioned?

Secondly, to go back to the issue of fraud versus error, and how they seem to be treated as pretty much the same throughout the Bill, will the Minister clarify whether, where it is the DWP’s error, a claimant would still end up paying the administrative charge? If that is the case, it seems quite unreasonable, so it would be great if the Minister could clarify those points.

[Andrew Western]

I am a little perplexed by the suggestion that somebody would be found not guilty or be charged. We are talking about debt recovery, so it is a slightly separate matter. It is not a criminal issue; it is a question of how, through civil powers, we can reclaim funding, so I am not sure that those questions arise. But if the hon. Member for Horsham wants to intervene on that, he is welcome to.

On the question of whether fraud and error are distinguishable in the reclamation of debt, the answer is no. They are treated in the same way, because this is about situations in which it has already been established that somebody owes us a recoverable amount and they have repeatedly refused to engage. I refer to my earlier comments about the number of times we would have reached out to somebody to get them to engage with the process. Parliament has previously resolved that overpayments of certain types of benefits are recoverable, and the Bill does not change that.

On the question about savings and so on, we would be able to recover all reasonable costs. There is no particular limit on what we can recover, and it is treated on the same terms as debt.

On the question of why we need to make a distinction for email, this is one of those situations in which I am grateful that I can sometimes reach out for answers. It goes back to the Interpretation Act 1978; we did not have email back then, so we need to set out separately, on a legal and technical basis, that post is specifically allowed, given provisions elsewhere. Yes, digital is still permissible, but we need to state specifically that post is acceptable as well.

[John Milne]

I used the word guilt, but can we forget that? I am referring to a case in which a claimant was investigated, so costs were incurred, but they were found not to be at fault, rather than guilty.

[Andrew Western]

I think the hon. Gentleman is referring to situations in which the court determines that the debt is not recoverable. I imagine that at that point we would bear the cost ourselves; it would not be recoverable from the individual. There is clearly some risk for us in that, as is perfectly usual, but by the point at which we decided to take somebody to court we would be able to demonstrate that a significant amount of effort had gone into attempting, through other mechanisms, to make them pay back what they owed the Department, so I hope we would have a very high success rate in that regard.

Question put and agreed to.

Clause 94 accordingly ordered to stand part of the Bill.

Clause 95 ordered to stand part of the Bill.

Clause 96

Offences: non-benefit payments

Question proposed, That the clause stand part of the Bill.

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

John Milne Excerpts

Committee stage
Tuesday 18th March 2025 Public Bill Committees

[Steve Darling]

I encourage colleagues to support these proposals about the carer’s allowance. Carers are the backbone of many households across the United Kingdom, and I hope the Minister will support the amendment.

[John Milne (Horsham) (LD)]

It is a pleasure to serve under your chairmanship, Mr Western.

The DWP is making extensive and growing use of algorithms for investigation purposes. Without proper oversight, these systems threaten error, unfairness and bias, which could lead to wrongful debt collection. Our amendment therefore calls for an independent audit of these systems at least every six months, to ensure accuracy and fairness. The audit must be conducted by experts in data science, ethics and social policy with no ties to the DWP or system developers. True independence is key.

The audit look at issues such as accuracy, so whether the algorithms are correctly identifying overpayments; fairness, so whether they unfairly target certain groups or operate with bias; and, above all, transparency and accountability. After each audit, we suggest that a full report must be published, presented to Parliament within 14 days, and made publicly accessible. If serious flaws are found, the Secretary of State must respond within 30 days with a clear action plan to fix these issues. Overall, Liberal Democrats are positive about benefiting from new technology, but we do need to consider whether it offers help, not harm.

In the wider context, what work is the use of AI generating? There are already chronic staff shortages at the DWP, with 20% vacancy rates becoming routine. Disability Rights UK has commented that operational failures now permeate every layer of welfare administration. Fraud investigation teams therefore already lack capacity to address the annual £6.4 billion of overpayments. There are only four fraud advisers per regional office to handle cases flagged by frontline staff, which has created a bottleneck, so that very often 90% of suspected fraud cases go uninvestigated. In other words, one could suggest there is already plenty of fraud to investigate without trawling for more. This amendment ensures regular scrutiny, transparency and fairness. I urge the Minister to consider it.

[Andrew Western]

It is important that I begin by paying tribute to the millions of unpaid carers across this country. The Government recognise and value the vital contribution made by carers every day in providing significant care and continuity of support to family and friends, including pensioners and those with disabilities. The 2021 census indicates that around 5 million people in England and Wales may be undertaking some unpaid care, and many of us take on a caring role at some point in our lives. Like other hon. Members, through my postbag and at events across my constituency, I see much of the work carers do. Carers are fortunate to have some wonderful advocates, not only their MPs but organisations such as Carers UK, Carers Trust and the Learning and Work Institute, to name but three.

We inherited a system in which busy carers already struggling under a huge weight of responsibility had been left having to repay large sums of overpaid carer’s allowance, sometimes worth thousands of pounds. We needed to understand exactly what had gone wrong so we could set out our plan to put things right. This is why we launched an independent review of earnings-related overpayment of carer’s allowance. We were delighted that Liz Sayce OBE agreed to lead this review, which is now well under way; we anticipate receiving its conclusions this summer.

The review will investigate how overpayments of carers allowance have occurred, what can be done to best support those who have accrued them, and how to reduce the risk of these problems occurring in future, but we are not sitting back and just waiting for the outcome of the independent review. Right now, we want to make it as easy as possible for carers to tell us when something has changed in their life that could affect their carer’s allowance, so we will continue to review and improve communications. From this April, the weekly carer’s allowance earnings limit will pegged to 16 hours’ work at national living wage levels, so in future it will increase when the national living wage increases. The earnings limit will be £196 a week net earnings, up from £151 today. As a result, over 60,000 more people will be able to receive carer’s allowance between 2025-26 and 2029-30. That is the largest increase in the earnings limit since carer’s allowance was introduced in 1976.

As the Chancellor said at the Budget, we need to look at the current cliff edge earnings rules. A taper could further incentivise unpaid carers to do some work and reduce the risk of significant overpayments, but introducing a taper to carer’s allowance is not without challenges. It could significantly complicate the benefit, and significant rebuilding of the carer’s allowance system would be required. The DWP has begun scoping work to see whether an earnings taper might be a feasible option in the longer term, but any taper is several years away.

New clause 10 sets out four points. As I have mentioned, an independent review has been commissioned, its terms of reference have been published and it is well under way. It is anticipated that it will report its conclusions in the summer. Both the report from the independent review and the Government’s response will be published, and we will report to the House.

I disagree with the hon. Member for Torbay on two issues. It would not be responsible of us to commit in advance to implementing all and any recommendations from such a review, sight unseen. We need to consider them carefully. In addition, the proposed new clause, as I understand it, would not have the effect he desires. We would still be able to recover overpayments of carer’s allowance from benefits under the powers in the Social Security Administration Act 1992.

The new clause would prevent our recovering debts directly from bank accounts of those not on benefits or PAYE, which is one of the additional powers given in this Bill. Even if the new clause operated as intended, it would be disproportionate to suspend all recovery of carer’s allowance overpayments until after the review is concluded, as those with overpayments are already covered by the usual safeguards of appeal rights, affordable deductions and, in exceptional circumstances, waiver. Given the discrepancy this would create between those on PAYE and benefits and those with other forms of income, I hope the hon. Gentleman acknowledges the need to withdraw the new clause rather than create further unfairness in the system.

Regarding new clause 11, I re-emphasise that we will not speculate on the findings or any potential outcomes of the independent review. All recommendations will be considered when the independent review concludes. It would not be appropriate of the Department to commit to this new auditing requirement until that has happened, when we can take a holistic view of carer’s allowance and how DWP uses data. Nevertheless, it is helpful to set out how DWP currently uses data to verify eligibility for carer’s allowance. Verification of earnings and pensions alerts were introduced to carer’s allowance in October 2018 as part of a wider strategy to identify data sources, to verify information provided by the claimant, or to identify if information has not been provided by the claimant. Like all data we use for that, it is not intended to replace the legal requirement of a claimant to provide information that may change their entitlement to social security.

VEP alerts arise from HMRC payroll data. The alert service provides a notification of new earnings or pensions as they come into payment, or if amounts change during the life of the claim. The Department uses business rules to prioritise those alerts, based on data provided by the real-time earnings system. Since 2019, we have actioned around 50% of the alerts received in the Department as part of our focus on reducing the risk and level of overpayments. Having secured additional funding in the one-year spending review, we will be deploying additional resource in 2025-26,to action the alerts received from HMRC as quickly as possible. The Department is also testing an approach of using text messages to remind customers of the need to report changes in their circumstances.

Finally, I emphasise that the use of VEP alerts does not replace human decision making. If the Department processes an alert that highlights a change in earnings and a customer has not reported the change, DWP officials will contact the customer to confirm details have changed. If any overpayment is identified, it will be referred to debt-recovery teams. DWP remains committed to working with anyone who is struggling with their repayment terms, and will always look to negotiate sustainable and affordable repayment plans.

In the light of the information I have set out, and the ongoing work of the carer’s allowance independent review, I urge the hon. Member for Torbay to withdraw the proposed new clause.

--- Later in debate ---

[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.

[John Milne]

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

The new clause would require that the use of algorithms, algorithmic tools and systems, and artificial intelligence, including machine learning, should be included within the algorithmic transparency reporting standard. That standard, established by the Government, is supposed to be mandatory for all Government Departments. However, last November, The Guardian reported that not a single Whitehall Department has registered the use of AI systems since it was made mandatory.

Throughout debate on this issue, the Government have consistently downplayed the risk of using AI to trawl for suspect claimants, but if it really is that simple, why have so many organisations come out with concerns and opposition? That includes Age UK, ATD—All Together in Dignity—Fourth World, Amnesty International, Campaign for Disability Justice, Child Poverty Action Group, Defend Digital Me and Difference North East. I could go on: I have half a page, which I will spare the Committee from, listing organisations that have expressed concern. It is quite a roll call.

Governments can and will get things wrong. History tells us that if it tells us anything. In June 2024, a Guardian investigation revealed that a DWP algorithm had wrongly flagged 200,000 people for possible fraud and error; it found that two thirds of housing benefit claims marked as high risk in the previous three years were in fact legitimate, but thousands of UK households every month had their housing benefit claims wrongly investigated. Overall, about £4.4 million was wasted on officials carrying out checks that did not save any money. We know that more mistakes will happen, no matter how hard we try to avoid them. I therefore ask the Minister to support the insertion of new clause 14 as a small measure of defence against future institutional failings.

[Rebecca Smith]

As we have heard, Liberal Democrat new clause 14 would require the use of algorithms, algorithmic tools, and systems, and artificial intelligence, including machine learning, to be included in the algorithmic transparency reporting standard. I have obviously just heard the comments of the hon. Member for Horsham, but I would be interested to know precisely what the Liberal Democrats are aiming to achieve with this new clause and how such reporting would better enable the Government to crack down on fraud and error. Is that the intention behind the new clause?

[Andrew Western]

I share the support expressed by the hon. Member for Horsham for the algorithmic transparency recording standard as a framework for capturing information about algorithmic tools, including AI systems, and ensuring that public sector bodies openly publish information about the algorithmic tools used in decision-making processes that affect members of the public. However, I do not think the new clause is a necessary addition to the Bill, and I will explain why.

First, all central Government Departments, including the DWP and the Cabinet Office, are already required to comply with the standard as appropriate. We are committed to ensuring that there is appropriate public scrutiny of algorithmic tools that have a significant influence on a decision-making process with public effect, or that directly interact with the public. We have followed and will continue to follow the guidance published by the Department for Science, Innovation and Technology on this to ensure the necessary transparency and scrutiny.

Secondly, I remind the Committee that although the DWP and PSFA are improving their access to relevant data through the Bill, we are not introducing any new use of machine learning or automated decision making in the Bill measures. I can continue to assure the House that, as is the case now, a human will always be involved in decisions that affect benefit entitlement.

Thirdly, although I do not wish to labour the point yet again, I remind the Committee that the Bill introduces new and important safeguards, including reporting mechanisms and independent oversight in the Bill, demonstrating our commitment to transparency and ensuring that the powers will be used proportionately and effectively. The DWP takes data protection very seriously and will always comply with data protection law. Any information obtained will be kept confidential and secure, in line with GDPR.

[John Milne]

I am content to beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 15

Offence of encouraging or assisting others to commit fraud

“(1) The Social Security Administration Act 1992 is amended as follows.

(2) In section 111A (Dishonest representation for obtaining benefit etc), after subsection (1G) insert—

‘(1H) A person commits an offence if they—

(a) encourage or assist another person to commit an offence under this section, or

(b) provide guidance on how to commit an offence under this section.’

(3) In section 112 (False representations for obtaining benefit etc), after subsection (1F) insert—

‘(1G) A person commits an offence if they—

(a) encourage or assist another person to commit an offence under this section, or

(b) provide guidance on how to commit an offence under this section.’”—(Rebecca Smith.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.