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

Debate between John Milne and Andrew Western

Committee stage
Tuesday 18th March 2025 Public Bill Committees

[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]

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.

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

Debate between John Milne and Andrew Western

Committee stage
Thursday 13th March 2025 Public Bill Committees

[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 (Tenth sitting)

Debate between John Milne and Andrew Western

Committee stage
Tuesday 11th March 2025 Public Bill Committees

[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 ---

[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.)