Public Authorities (Fraud, Error and Recovery) Bill

Lord Garnier Excerpts

2nd reading
Thursday 15th May 2025 Lords Chamber

[Lord Garnier (Con)]

My Lords, it is a pleasure to follow the noble Baroness. I hope I match some of her enthusiasm, but she may be disappointed.

I begin by drawing attention to my practice at the Bar, which includes acting for and against the Serious Fraud Office. It additionally involves advising on civil fraud matters. I am also the patron of the Fraud Advisory Panel—a charity with offices at and financially supported by the Institute of Chartered Accountants in England and Wales, and supported by a number of law, accountancy and forensic investigation firms, and related professionals and academics. In essence, it exists to improve professional and public awareness of fraud and what can and should be done about it.

Last month, the Home Office Minister, the noble Lord, Lord Hanson of Flint, kindly gave the keynote address at the FAP’s annual fraud conference and I am very grateful to him. I hope that noble Baronesses on the Treasury Bench will pass on my thanks for his taking the time and trouble to set out the Government’s thinking and intentions on tackling fraud.

I will not do much more today than express a few platitudes and then, in agreement with my noble friend Lady Finn, remind us to be careful what we wish for. As the noble Baroness, Lady Alexander, indicated in her powerful speech, fraud is an insidious crime. Because there are no broken bones or blood on the carpet, because it frequently requires a high degree of ingenuity and because, as often as not, the fraudster is mysterious—perhaps hiding in plain sight or far away behind a computer screen—the crime of fraud does not seem to attract public disapproval in the same way as crimes of violence. I regret that, sometimes, fraudsters are admired for their brains while their criminality is forgotten or ignored. In short, fraud is a nasty and brutal crime that can ruin lives, hurt the vulnerable and cause untold economic misery. Whether it is committed, and its consequences felt, here or abroad, it is universally to be condemned, as are the dishonest spivs and criminals who carry it out. Fraud accounts for 40% of crime in this jurisdiction.

In welcoming my noble friend Lady Spielman and in looking forward to her maiden speech, I warn her that I have, over the years, become something of a cracked record on the subject of economic crime and the need to increase the weapons that this jurisdiction has at its disposal to deal with it. I have argued long and hard, but not always successfully, for the increase in the ambit of the criminal “failure to prevent” regime. The Economic Crime and Corporate Transparency Act 2023 introduced provisions relating to the corporate failure to prevent fraud offences. Those provisions will come into force this coming September, so no one could accuse this or the previous Government of undue haste.

However, those provisions will affect only large organisations, defined as those meeting at least two of three criteria: a turnover of over £36 million, a balance sheet of over £18 million, or more than 250 employees. That, as I have never been slow to point out, covers only 0.5% of the United Kingdom’s corporate economy and is the equivalent of prosecuting only burglars taller than six feet six. I apologise to the noble Lords, Lord Vaux and Lord Cromwell, and to the noble and learned Lord, Lord Thomas of Cwmgiedd, because they have heard me make this tired joke endlessly, particularly during the Committee and Report stages of the Economic Crime and Corporate Transparency Bill. I am sure that they are heartily sick of it, but I am still unconvinced that that limitation was either necessary or sensible.

There are many large artillery pieces before us in the Bill, which are designed to smash fraud in the welfare system, in government more widely and in other sectors. But do those guns come with gunners and shells? In imperial China, the warlords who fought their local rivals knew that they could succeed because they had no fear of an empty cannon. If their revolt was against the Emperor’s rule, they could comfort themselves with the thought that heaven is high and the Emperor is far away. Local and effective action is required to defeat fraud. Is this Bill, like most criminal justice Bills, far too long, overcrowded with extraneous provisions and designed for its rhetorical effect rather than to improve the investigation and prosecution of fraud?

Until the police outside the City of London Police are once again resourced, staffed and trained to understand and deal with fraud—to gather the evidence and to present it coherently to the Crown Prosecution Service for it to prosecute—the types of fraud that do not currently attract the attention of the SFO, which is concerned with large and complex financial crime, will, I fear, continue to go largely ignored or be brushed aside. The duty officer at the police station will continue to sigh sympathetically and simply tell the poor victim to see a solicitor. If a large proportion of the 40% to which I have referred is beyond the capacity of the police to cope with, we will have a problem and your Lordships’ House should require some convincing that the measures in the Bill, well intended as they may be, will hit the target. Have the Government audited the work of the Public Sector Fraud Authority and do they have any empirical evidence that increased Cabinet Office involvement will achieve what is promised by the Bill?

The noble Lord, Lord Vaux, in his delightfully quizzical way, made some highly important and effective points, wrapped up in questions that this Government must answer. We all look forward, either later today or in Committee, to his receiving the answers.

Finally, I refer to some arguments raised in the other place about state interference in the private affairs of others without adequate due process. To take just one example, the now Independent but former Labour Member of Parliament, Zarah Sultana—so no political ally of mine—complained when the Bill was being discussed there that there are

“powers in the Bill that force banks to trawl through our private financial data, scanning for indicators of fraud and error—indicators that are not publicly disclosed—and flag those individuals to the Government. These powers will allow the Department for Work and Pensions to seize money directly from bank accounts without due process, suspend driving licences and even search properties and personal devices. They are not the hallmarks of a free and democratic society but the tools of an Orwellian surveillance state”.—[Official Report, Commons, 3/2/25; col. 611.]

Whether that Member of Parliament is exaggerating or not and whether she is right or wrong, the Government must meet those arguments with seriousness and persuade us that they are behaving in a proportionate and humane fashion in putting those measures into the Bill.

Like my noble friend Lady Finn, I am concerned that Ministers are giving themselves powers to take punitive actions without the intervention of the courts or adequate ability for respondents to make representations on their own behalf. This is not just a question of process but of constitutional propriety.

Finally—this question has been raised on a number of occasions this afternoon—will the Department for Work and Pensions’ driving disqualifications affect the cost of drivers’ post-disqualification vehicle insurance? We need clarification on this so that we are not double penalising those who fail to pay their DWP debts.