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.)