Public Authorities (Fraud, Error and Recovery) Bill

Lord Sikka Excerpts

Committee stage
Monday 16th June 2025 Grand Committee

Moved by

[Lord Sikka]

76: Clause 72, page 40, line 12, at end insert—
“(6) P is liable for all errors arising from the information provided.”Member's explanatory statement
This amendment seeks to clarify which party is liable for the consequences of providing incorrect information.

[Lord Sikka (Lab)]

My Lords, there are four amendments in this group. Three are mine; the fourth belongs to the noble Lord, Lord Vaux, and is of a different kind altogether, so I shall let him address that one. I shall just speak to Amendments 76, 78 and 79.

Amendments 76 and 78 seek a statement from Ministers about liability for errors. The Government will be demanding information from banks about the transactions, income and wealth of individuals who have never committed any crime or misdemeanour. Such individuals should have the right to know that they have been targeted and treated as second-class citizens. They would be denied financial privacy simply because they are poor, old, sick, disabled and unfortunate. They may wish to lobby their Member of Parliament against what they might regard as unjust law.

Amendment 79 asks that all the parties affected by the information notice must receive a copy of that notice. If the measure about curbing fraud on the public purse is really appropriate, because the Government are really concerned about how the public purse is being depleted, perhaps it should have been applied first to Members of this House and the other House. After all, who can forget the expenses scandal? Yet this idea of surveillance of bank accounts is applied not to Members of this House or the other House but only to those who receive benefits. Again, that indicates that something is not appropriate.

Throughout the passage of this Bill, Ministers have said little about who will be liable for the consequences arising from any errors in the information notices issued by DWP or in the information supplied by banks to DWP or about the erroneous assessments and decisions that might be made by DWP’s reliance on that information. Who would be liable for this new flood of errors? Unlike in the past, this time millions of people would be subject to surveillance; it is not on a case-by-case basis but en masse. If erroneous assessments are made, what compensation would they be entitled to, especially as those affected will not be able to afford legal advice? The Bill does not provide free legal advice to the victims who may be affected by errors made by DWP or the banks.

The Government have yet to say how many bank accounts would be subjected to surveillance. If people have half a dozen bank accounts, that could be 60 million-plus bank accounts. If those accounts have just 10 transactions a year, that is 600 million transactions. How many transactions are banks going to trawl through, and what sense will they make of it? I am sure that the Minister will give us that information today.

In view of the large volume of notices, bank accounts and transactions, errors are inevitable. The DWP already makes thousands of errors every year, and now it will be issuing even more information notices, which means inevitably more errors. It will be issuing information notices without any personal knowledge of the affected benefit claimants or their exact personal circumstances before it reaches a judgment. A 1% error in matters relating to universal credit could affect 75,000 people and ultimately have life-affecting consequences for thousands of individuals. Banks make errors too in the normal course of their business. The Post Office scandal shows that no computer system or algorithm is ultra safe. So, the Government must be prepared and have some idea of what errors will be made, how many will be made, how many people will be affected and what kind of compensation may be payable.

There is a warning about things to come from Australia, where what has become known as the Robodebt scandal happened against a background of scapegoating welfare recipients. People received letters saying they owed thousands of dollars in debt for wrong claims relating to benefits. Those so-called wrong claims were made because the algorithm used by the government departments and the banks was considered to be error prone. More than 500,000 Australians were affected by the policy and were forced to repay amounts by taking out loans, selling their property and using their savings. Just like in the Post Office scandal, many were named and shamed. People were made to feel like criminals. Eventually, the courts declared the policy to be illegal, and billions of dollars have been paid in compensation. Is that the fate that awaits this country too?

I am sure that the Government have been ultra careful with the Bill, but no matter how careful they are, errors will happen. Given the DWP’s record, people will be wrongfully prosecuted, moneys will be wrongfully clawed back and people will be scarred and will suffer. Banks will make errors too in the provision of information. So, each party needs to be aware of the liability position, and that is exactly what my amendment seeks to ensure. I beg to move.

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[Baroness Sherlock (Lab)]

Obviously, I am not going to comment on individual cases. As the noble Baroness will be aware, there is an inquiry going on into the carer’s allowance on which we hope to report in the near future, so we will learn more from that.

Let me be clear here: this is the question of whether somebody should be told in good time that they are being investigated. Clearly, that would be a problem. There is a reason why that precise problem is recognised in data protection legislation, which sets out the circumstances in which the DWP and other government departments can process data for law enforcement purposes without notifying the relevant data subject.

To pick up the noble Baroness’s point, it is not as though somebody would never know because, if a fraud investigation uncovered reasonable suspicion of fraud, at some point, for a case to go anywhere, there would have to be an interview under caution with the person suspected of it. The conversation about what had happened would take place at that point, so it is not as though they are never going to know about it; they would have to know about it. We are talking about how they are told, including in what way and at what time. Although I understand where my noble friend Lord Sikka is coming from, the reality is that his proposal would make it impossible to investigate fraud effectively and would allow those who wish to avoid appropriate action on their problems the opportunity to get away with it.

The final comment from the noble Viscount, Lord Younger, was about oversight. As with the review of investigations, the oversight of these measures will be carried out by His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services. I hope that that reassures him.

I hope that all that has helped to assure the noble Lords and that, on that basis, they will withdraw or not press their amendments.

[Lord Sikka (Lab)]

I am very grateful to everyone for their contributions to this debate. I want to come back on a couple of issues.

I fully understand the arguments made against Amendment 79, but at the moment the individual becomes aware that something is afoot only much later in the day. Individuals rarely have time to seek legal advice. They often cannot afford legal advice. Early notification that they are subject to scrutiny, especially when they have never committed a crime and are just under suspicion, would mean that they may be able to save the DWP some time, effort and money on needless investigations. They may even be able to go to the local citizens advice bureau or somewhere else to get some advice. Leaving it until a much later stage inevitably means that there will be a lot of psychological stress for people. They will probably throw in the towel, a bit like the sub-postmasters, and think, “I’ve got to get off this merry-go-round. I will plead guilty even though I am not, because I cannot really contest anything with the Government”. So, I understand the arguments made, but I think that the current position of not telling the benefit claimants much earlier on really will lead to problems.

The Minister referred to the information provider’s duty for data protection and so on, but I have a concern, given that the DWP will make errors. It has a history of making thousands of them. Given that banks make errors in providing information, once DWP officials have received the information from the bank, they have to interpret that information and make sense of it. There will be misinterpretations, which will have serious consequences for the people affected.

The question to which I still have not heard an effective answer is: who will be liable? Who will pay the compensation? Will it be the public purse? Will it be the banks? The DWP will have a statutory relationship with the bank and hence can demand information, but banks are normally required to preserve confidentiality or financial information, and a bank will not ask anything from the individual concerned. It cannot at that point be said to owe a duty of care to somebody with whom it does not actually communicate, especially when that duty of care is eroded by the Bill. So the question remains: who will foot the bill, which could run into billions of pounds, if we end up with a similar situation to the one in Australia? I hope that the Minister can clarify that situation about who will foot the bill.

[Viscount Younger of Leckie (Con)]

Before the noble Lord sits down, I want to raise something, which is more of a question to the Minister and the team behind her. When I was in post, I became perhaps infamous, particularly when I did not understand something, for asking for a flow chart, and I wonder whether this is such a case where a flow chart would be extremely helpful. By that I mean that, when a process starts, what happens? One answers yes or no to questions and then it follows through with the safeguards included. I would find that incredibly helpful, and I suspect the team has one already. If there is one, I would find it helpful to see how the system works and where the safeguards are.

[Baroness Sherlock (Lab)]

I have never seen a flow chart, but some of these powers are not necessarily part of the same process, so they would not necessarily appear on the same piece of paper. But if I have any other way of explaining it, I would be very happy to do that.

Since I am on my feet, I reiterate that if the DWP is asking for information about an individual and it gathers information, it will most likely be doing so from a number of sources. An authorised officer will then review the information, and if there is felt to be a case for fraud, they will then interview the suspect under caution, who will be given the opportunity to get appropriate advice. There will be a process of engaging and discussion, but even before it gets to that stage, it is entirely possible that somebody will have reached out to find out the reason why an overpayment has been made. So, there are plenty of opportunities, and this specific amendment relates specifically to the extension of an existing power, which is used only when there is reasonable suspicion of fraud by a named individual. So, I do not think this amendment would help achieve the kind of things that have been discussed, and I urge the noble Lord to withdraw the amendment.

[Lord Sikka (Lab)]

I am very grateful to the Minister for that reply, which gives us plenty to think about—and perhaps a flow chart would be helpful in due course. For the time being, I beg leave to withdraw my amendment.

Amendment 76 withdrawn.

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[Baroness Fox of Buckley (Non-Afl)]

My Lords, we have heard some important and powerful speeches. I broadly support all the amendments in this group. There is concern outside the House around these eligibility verification notices—people are genuinely worried about them and they are, I think, right to be—but I want to ask the Minister something directly. This Bill has been dubbed “the bank spying powers Bill”. There has been a lot of publicity about it. I know that campaigns such as Big Brother Watch have been gathering up signatures. There was an article in the newspapers today about it. I have heard Ministers, in debates, describe those kinds of descriptions as over-the-top hyperbole and say that it is absolutely ridiculous to talk in this way.

I think that paranoia is inevitable when things are not accountable or clear. I just want to say that I genuinely do not understand how the highly complex monitoring that this Bill demands, in order to provide information to the DWP, can happen unless it uses the processing of the data of all bank accounts. If you ask a bank to provide information on a group of people, the only way it can find out who that group of people is is algorithmically—I will come back to this—which means looking at the data of all bank accounts. That is one of the reasons why the idea of spying powers is raised. Have I got that wrong? Can the Minister clarify whether that is hyperbole and what the reality is? That would be especially helpful before I speak to my amendments on algorithms so that I do not make a mess of what I say.

[Lord Sikka (Lab)]

My Lords, I support all the amendments in this group, but I want to make a brief comment on Amendment 89. It is inappropriate for the Government to have powers to extend to and include other benefits, because each benefit may well have a different dynamic as to whether there is a possibility of fraud. If you look at the DWP statistics, you will see that some of the other benefits have a very low incidence of fraud; it is universal credit that is out of line, compared to the rest. I do not think that the Government should be allowed powers to add to those three benefits. That would be highly draconian. If the present Government, or a future one, feel that there is a need, they should bring primary legislation. At that time, we can also take the opportunity to smooth the rough edges of this Bill, which might have become visible by then.

[Baroness Finn (Con)]

My Lords, I rise to speak to this group of amendments, beginning with the Clause 74 stand part notice in the name of the noble Baroness, Lady Kramer, which was moved by the noble Lord, Lord Palmer. In our view, Clause 74 is not only necessary but foundational. It establishes the power to issue eligibility verification notices, which enable authorised officers to request information relevant to verifying a person’s entitlement to public funds or services. This is not an ancillary function; it is a mechanism that enables the Bill to work.

We broadly support Amendment 79B, which proposes the addition of a reasonableness test to the Secretary of State’s power to issue eligibility verification notices under Schedule 3. Throughout this Committee stage, we on these Benches have consistently returned to a set of core principles that should underpin the powers granted by this Bill: proportionality, accountability and clarity in the exercise of discretion. This amendment is very much in keeping with those principles. It would not constrain the function of the powers in question; instead, it would help to ensure that they are used lawfully, wisely and in a way that retains the confidence of both the public and those institutions asked to assist in their implementation.

Specifically, this amendment would require that the Secretary of State be “reasonably satisfied” that issuing an eligibility verification notice is both necessary and proportionate to the objective of identifying incorrect benefit payments. That is, by definition, not an unreasonable bar. It is not designed to frustrate the aims of the Bill or delay the work of the Government. On the contrary, it would simply formalise the expectation that the powers conferred under Schedule 3 should be exercised with care and justification.

This point is particularly relevant when we consider the position of banks and other financial institutions, which may be required under this provision to provide customer information. For those institutions, it is critical that the system is seen to be operating within a clear and lawful framework. They are being asked to co-operate in a sensitive and complex process. Ensuring that the Secretary of State is “reasonably satisfied”, and that this standard is explicitly in the Bill, would help to provide clarity, legitimacy and protection for all parties involved. As the noble Lord, Lord Vaux, and the noble Baroness, Lady Bennett, made clear on the previous group of amendments, legislation needs to be made for the future and, as such, reasonableness safeguards must be on the face of the Bill.

Moreover, this amendment would reinforce public confidence in the system. When members of the public know that strong powers, such as those that allow government access to eligibility-related data, are being exercised only after a specific, documented and reasonable assessment of necessity and proportionality, they are far more likely to view those powers as legitimate. Trust, as we know, is a critical currency in any enforcement regime.

This amendment would not obstruct the use of eligibility verification notices. It would simply require that they be issued on the basis of reasonable grounds, with a clear and proportionate purpose. It would bring consistency to the Bill, reassurance to the institutions involved and greater credibility to the broader anti-fraud effort that we all wish to support.

We oppose Amendment 80, which would substantially limit the exercise of eligibility verification notices under Schedule 3 to the Bill by requiring that they may be issued only where the welfare recipient is already suspected of committing a DWP offence. I suggest that this amendment risks undermining the core function of eligibility verification and, in so doing, would weaken the entire framework that the Government are proposing to put in place to detect and prevent fraud. Let us be clear about the purpose of the eligibility verification power: it is not primarily an enforcement power but rather a tool of assurance and risk management, designed to help to identify cases where payments are being made incorrectly.

The core problem with this amendment is that it conflates suspicion with verification. It assumes that an authorised officer must already suspect a DWP offence before reviewing financial data. In practice, however, it is often the financial data itself—the information provided in an account—that gives rise to that suspicion in the first place.

I turn to Amendment 89. We support the principle behind this amendment, which seeks to ensure that the powers contained in this Bill—substantial powers, we must all acknowledge—are exercised only in relation to the specific benefits explicitly listed in the Bill. This is not a wrecking amendment, nor one that seeks to undermine the Government’s legitimate goal of strengthening our response to fraud and error. Rather, it is about ensuring that when we legislate new powers, they are accompanied by a clear, democratic mandate and appropriate parliamentary scrutiny. The provision that this amendment seeks to remove would grant Ministers the ability, by regulation, to extend the application of these powers to further benefits beyond those originally listed. I submit that such an extension should not be done by regulation alone but rather with the explicit consent of Parliament through primary legislation or a tightly scrutinised process.

The powers outlined in Schedule 3, including access to personal financial information, the issuance of eligibility verification notices and the ability to act on suspicion of fraud, are not minor administrative tools. They represent a significant expansion of state capacity to inquire into private affairs in the name of public interest. That may well be justified in many cases, but it is only right that Parliament retains control over when and how these powers are extended to new areas of social security.

Supporting this amendment means drawing a line in the sand that the list of benefits to which these powers apply is not open-ended and that any extension should come back before Parliament for proper consideration. If, in future, a compelling case is made to include additional benefits, let that case be made here, in public, with scrutiny and accountability. That is how we ensure confidence in the law, in enforcement and in our broader welfare system.

This is not about resisting action on fraud but about ensuring that the tools we use to combat fraud are clearly grounded in public consent, which gives the system legitimacy. It is about protecting the balance of power between executive action and legislative oversight.

We have made the argument throughout Committee that clarity, transparency and accountability must be woven into the fabric of the Bill. This amendment speaks directly to those principles. It ensures that the powers in this legislation are not allowed to expand by stealth but only by clear, deliberate parliamentary decision.

I hope that the Minister will see this not as a restriction but as an opportunity: to reinforce the legitimacy of the powers the Government seek and to show that we are committed not only to effective fraud prevention but to the principled governance of that process. For that reason, we support this amendment.

Finally, in addressing the stand-part notice of the noble Baroness, Lady Kramer, on Schedule 3, we understand that this is an area of concern for many noble Lords across the Committee, but we do not feel that removing the schedule from the Bill is necessarily the most constructive way to go about this in Committee.

I appreciate that this is probing, and we therefore hope that the Government will use this opportunity, in responding to the stand-part notice of the noble Baroness, Lady Kramer, to address the concerns that we and many other noble Lords have raised in Committee, even if we do not support the noble Baroness’s stand-part notice.

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[Baroness Fox of Buckley (Non-Afl)]

I apologise for jumping up and down. This is the confusion I have in relation to this area: if you are a fraudster and you are watching this Committee very carefully, as the Minister indicated they are doing—I am sympathetic to the idea that I am perhaps being naive in publishing, “Here you are, fraudsters, this is what you should do”—it seems to me that what you would do is set up multiple bank accounts. In fact, I think it was the Minister for Transformation, Andrew Western MP, who conceded

“that we will not have full sight of somebody’s accounts if they bank with more than one institution”.—[Official Report, Commons, Public Authorities (Fraud, Error and Recovery) Bill Committee, 6/3/25; col. 237.]

So it seems to me that the fraudsters are over there playing the system.

This is a Bill that gives enormous powers, about which I worry. It seems that the eligibility criteria should be known in order for them to be accountable. I do not want to be naive, but the people who actually need the eligibility criteria are those people who might, by error, breach the eligibility criteria, but also, democracy requires it because we need to know how to hold this legislation to account. The fraudsters—the people who are deliberately going out of their way to rip off the welfare system—already know how to play this, if that makes any sense. Even as I was tabling the amendment, I was aware of the fact that I am not saying, “Let’s give the game away completely”; however, we cannot just say, “We can’t tell you anything in case the fraudsters find out”, when there are real loopholes here that the fraudsters are going to exploit anyway.

[Lord Sikka (Lab)]

Related to that, as far as I understand it, some benefits can be paid into foreign bank accounts but they are totally beyond the scope of the Bill, so, presumably, if there is fraud there, it will never really be tackled. Secondly, is it permissible for a UK-resident benefit recipient to request that the benefit be paid into a bank account in the Cayman Islands, the Bahamas, Cyprus or somewhere else?

[Baroness Sherlock (Lab)]

Just to be clear, this measure is attacking both fraud and error. It looks at overpayments, whatever the source. It is simply one tool among many that is available to the DWP and which will help produce a source of information, which will help to identify incorrect overpayments. Having got that information, the DWP will use the full range of powers and the information available to it. If any fraudsters are sitting down on a quiet Monday afternoon and watching this Committee, they should be warned: the DWP has lots of sources of information; it will investigate them; and it successfully prosecutes many people for fraud. The DWP will use this and other powers to pursue what is there. However, this measure alone has been scored by the OBR to save up to £940 million over the next five years. No single measure will be foolproof alone; it will play its part alongside a range of measures and processes to help root out fraud.

I will have to write to my noble friend Lord Sikka on the Cayman Islands. I do not have them at the back of my mind at the moment, I am afraid, but I will let him know if there is an issue over there.

I say to the noble Baroness, Lady Fox, that I fully accept that there is a line between giving all details in public and tackling fraud. We have given out a lot of information and a lot of protections here, and we have found ways of making sure that there is oversight. One reason for having oversight is that there are things that we will never be able to put out in public; it is important that somebody has scrutiny and can report to Parliament, independent of the department, on how these powers are being used. We would hope that that picks up the remaining areas of concern.

I turn to Amendment 88, also in the name of the noble Baroness, Lady Fox. I will address in turn the two points that it raises. The first is the requirement for the code of practice to include information about the ways in which scrutiny can be applied to the methods that a financial institution may use to identify relevant accounts, for the purposes of the eligibility verification measure. This is not a matter for a code of practice. The criteria that financial institutions must use to identify relevant accounts are described in paragraph 1(2)(b) of new Schedule 3B to the Social Security Administration Act 1992. Accounts must simply meet two tests in order for information to be shared by the financial institution with the DWP: first, the account must receive a relevant benefit payment or be linked to that account; and, secondly, the account in question must meet the criteria that the DWP sets out in the eligibility verification notice. Financial institutions operate in many ways. It must be for each individual financial institution to determine how it identifies relevant accounts.

The key point here is that the EVM asks banks to return specified data only where those two tests have been met. It is a data-requiring power; we are not asking banks to do anything more than that. Again, I remind the Committee that it is the DWP that will review all the information received and DWP staff who will make any decisions about entitlement where potential fraud or error is identified. No decisions will be taken using EVM data alone; decisions about entitlement will be made only once the DWP has made further inquiries.

On that point, the Bill does not introduce any new use of automated decision-making. The DWP will examine data received from banks under the new power, alongside other data received, to determine whether there has been an incorrect overpayment. As is set out in our personal information charter, which is publicly available, the DWP uses automated processing in some decision-making to help us deliver efficient services. The DWP will not make any decision that has significant effect based solely on automated processing unless the law allows this, and claimants will be informed if we make any such decision.

I turn to the second issue in this amendment. It would require the code of practice to contain information about measures that would enable scrutiny of the effectiveness of the EVM. This is, again, an important issue but not one for the code of practice. However, I completely agree with the noble Baroness, Lady Fox, that we must assess how effective the EVM is; that is why, under Clause 75, the independent overseer of the measure must consider the extent to which the exercise of the power has been effective in helping to identify incorrect payments of relevant benefits.

Finally, I turn to Amendment 89ZA, which raises the issue of informing claimants that the EVM may be used to require the sharing of information about their relevant accounts with the DWP. Let me take a moment to update the Committee on the ways in which the DWP will inform claimants and relevant account holders about the measure; I hope that this will reassure the noble Lord, Lord Vaux. The DWP has a personal information charter that sets out how it uses and stores personal information. It is publicly available, and claimants are explicitly directed to it at all times when the DWP requests their personal data. We will update the DWP personal information charter to make it clear that the EVM may be used to require the sharing of their personal information; that commitment is made clear in the draft code of practice, which noble Lords have seen.

This amendment suggests that we should inform claimants either at the start of their claim or within three months of the EVM becoming operational. Our approach of updating the personal information charter means that customers are much more regularly informed about the EVM; this is because claimants are regularly directed to the document throughout their claim. For the benefit of the Committee, I can confirm that claimants are explicitly directed to it in all DWP claim forms; in change of circumstance and uprating letters; in recorded telephone messages; in DWP agents’ telephony scripts; on digital online services; and in other products where the DWP collects personal data. As noble Lords will know, the draft code of practice, which will be publicly consulted on, makes clear that all those who hold a personal account into which a relevant benefit is paid should be aware that information about them and their relevant accounts may be shared by a financial institution with the DWP if the eligibility indicators specified in an EVN are met.

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Moved by

[Lord Sikka]

89A: Schedule 3, page 88, line 23, leave out “by one or more individuals” and insert “solely by the recipient of one of the benefits referred in paragraph 19(1)”
Member’s explanatory statement
This amendment and another in the name of Lord Sikka seeks to restrict the DWP’s powers in relation to eligibility verification solely to bank accounts held in the name of the benefit claimant only.

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[Lord Sikka (Lab)]

My Lords, good laws should consider unexpected negative consequences and eliminate them before any legislation is implemented. One consequence of the Bill could be that it might increase homelessness and financial exclusion. This arises because DWP’s powers of surveillance apply to bank accounts to which benefits are paid even though the account is not wholly under the control of the benefit claimant. These include bank accounts in the name of landlords and others. I am sure the Minister will be able to give us more information about how that will be dealt with.

A perennial problem is that some landlords and letting agents might refuse to let property to individuals receiving housing benefit or housing costs payments through universal credit, as they fear that rent might not be paid in full or on a timely basis. Housing benefit is usually paid directly to the tenant but, under certain circumstances, it can be paid directly to the landlord. Examples include circumstances where the tenant is unable to manage his or her finances, and may be considered to be vulnerable because of addictions, medical conditions, learning disabilities or physical disabilities. There may be evidence that the claimant consistently does not pay the rent and uses rent money to fund other aspects of his or her lifestyle. The claimant may well have fallen eight weeks behind in rent payments. Under these circumstances, benefits can be paid directly to the landlord. Of course, if the benefits are overpaid, the DWP already has powers to recover the overpayment from landlords without extended surveillance of the bank accounts. It is not clear, therefore, why the Government are taking on additional powers.

Under this Bill, the landlord’s bank account receiving the benefit will become subject to an information notice and related surveillance. It is not clear what the information notice sent to the landlord’s bank account would want to know. It cannot be whether the landlord has excessive savings or income above some ceiling, as the balance of that account and transactions leading to that balance have no influence on the claim of the tenant for any benefit. The money is paid to the landlord on behalf of the claimant whose circumstances are nothing to do with the financial position of the landlord. The landlord’s bank account, or accounts, may contain transactions about the letting business, rental payments from other tenants, tax payments, savings, investments, dividends, capital transactions and more. Such transactions are nothing to do with the benefit claimant whose rent is paid into the landlord’s bank account. Can the Minister explain what the DWP would want to know about the landlord’s bank account?

Faced with erosion of financial privacy, a landlord might refuse to have benefits paid directly into his bank account and refuse to let property to anyone receiving benefits, as that would be the only way of retaining financial privacy. The result could be increased homelessness. This is the fear that many disabled people have already expressed to me at various meetings, especially as their accommodation is adapted to their needs. They fear that other landlords would not incur the expenditure to provide them with suitable accommodation. It would be helpful if the Minister would explain whether landlords can refuse to have benefits paid directly into their bank accounts, and what would prevent them refusing to let property to people on benefits.

Of course, it is not just landlords who face this surveillance. For a variety of reasons, benefit claimants may be unable to open or manage a bank account. Many banks refuse to open a bank account for individuals sectioned under the Mental Health Act. Indeed, I have experienced that problem directly because, in my family, we have a person who has recently passed away who was sectioned, but no bank would give him a bank account. Every bank that we visited on the high street said, “Sorry, he cannot have a bank account”. Under these circumstances, the only option is to have a joint account into which some money or the benefits are paid. However, that person, the other bank account holder, then comes under surveillance. As I understand it, the third party whose name is on the joint bank account would definitely be subject to an information notice or surveillance. This will persuade many to refuse to be a joint bank account holder. In the case of a joint bank account, the money attributable to the benefit claimants may not easily be determined without detailed investigation. It is not quite clear what the bank would tell the DWP, because the bank can only look at a bank account; it cannot tell which money belongs to the claimant and which money to somebody else.

Can the Minister explain how the joint account holder’s money would be separated from that of the benefit claimant’s? Faced with loss of privacy, joint account holders may terminate their involvement, causing hardship and financial exclusion. Of course, the Government can insist that no benefit claimant is denied their bank account; that would go some way towards alleviating this problem—but no other Bill actually insists on that. What assessment has been made of the unexpected negative consequences, and what steps are the Government taking to eradicate them?

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[Baroness Sherlock (Lab)]

My Lords, I thank noble Lords, especially the noble Viscount, for doing some of my work for me; I am very grateful. I cannot support my noble friend’s amendments, but I am grateful to him because he has raised a point that people need to understand, and this Committee is exactly the right place to understand the issue.

It might be worth taking a step back. There will be two ways of getting information. We could either go to banks and say, “Here is Mr John Smith, please give us everything you know about him”, but then we would have to give personal information about the individual to the banks, which they do not have. Or we could do what we have decided to do, which is to say: “This is the account into which we pay the money. Please give us the information from that account according to these criteria”. We have gone with the second, because we will not be giving out personal information to financial institutions. However, that does have some consequences, which I will go through one at a time.

First, DWP benefits can be—indeed, are—paid into joint accounts held by one or more individuals. It is therefore essential for financial institutions to share information about joint accounts and any linked accounts that include a relevant benefit payment. Perhaps the most critical reason why we need joint accounts to be in scope of the EVM is that both pension credit and universal credit are household benefits; by that, I mean that eligibility for these benefits will depend on the circumstances of those in the household, including incomes and savings held by both account holders, not just by one individual. It is therefore vital to receive information on joint accounts.

In cases where the relevant benefit is paid into a joint account, information about both account holders and other linked accounts may be shared by the financial institution with the DWP. Again, I have explained why: it is because we cannot give out personal information about them. Once the information is shared, the DWP will then identify the benefit claimant and delete any information that is not relevant to the claim. That is made clear in the code of practice, which noble Lords have had a chance to see; this will be relevant in a moment to the points that the noble Lord made about landlords.

It is worth pausing here. Unlike previous iterations—it may be that the noble Lord is thinking back to some of those—this measure specifically excludes certain accounts from its scope: business accounts, credit card accounts, mortgage accounts, and a lot of other accounts that were previously in scope but are not anymore.

On landlords, if a benefit is paid into a landlord’s account then, yes, that will come back, but, basically, the test will then be: is the account or person a benefit claimant? If not, the information will be discarded and destroyed. Although it is possible, for the reasons I have explained, that a landlord’s account could be identified by a bank if it matches the eligibility indicators and is not a business account, the DWP can easily identify landlords having a housing benefit paid directly to them once we have received the data from a bank. The DWP will screen out these cases and disregard their data. I hope that that assures the noble Lord and that he can in turn assure those who were concerned.

The question of appointees is something that I raised under a previous iteration of this; I simply have not been able to find a way around it. Corporate appointees and businesses are excluded, but, for personal appointees, we simply have not been able to do that. Of course, the appointee’s account will have the benefit paid into it, if the benefit is relevant. The only thing you could do is exclude anyone you knew was an appointee, but then many appointees are claimants in their own right, so you simply could not do that either.

All I can say is that, by receiving from institutions, we will filter out any information that is not relevant; I hope that that will reassure the noble Lord. We are interested only in information on benefits paid by the DWP to benefit claimants; that is for them. If the appointee is holding the benefit for that individual, that is in scope—of course it is—but not if it is for other purposes; likewise goes for landlords. Those with powers of attorney will be treated in the same way as appointees. Again, if the money is for the benefit claimant and it is about that, we can look at it; if it is not, we cannot. I hope that that will reassure my noble friend and that he can withdraw his amendment.

[Lord Sikka (Lab)]

I thank the Minister and the noble Viscount, Lord Younger, for their illumination of, and contribution to, this issue. I am not really that convinced by their replies, to be honest. The reason is that a landlord can simply say, “I just won’t rent a property to anyone on benefits”. That way, the whole bank account—into which not just the benefit claimant’s benefit but other things go—is outside the scope of any DWP inquiry.

In time, we would notice that the amount of accommodation, especially for disabled people, had shrunk because of this piece of legislation. I think that many people would be dissuaded from becoming joint bank account holders with somebody who receives benefits for the same reason: they value financial privacy. We have to remember that this Bill is removing financial privacy only from people who are generally old, sick, disabled or unfortunate—everybody else can enjoy financial privacy. That would be the response.

So, in due course, there would be very heavy and negative social consequences. As I said earlier, the Minister can alleviate some of these by ordering banks or by creating legislation that says that the banks cannot refuse anyone a bank account. That way, many more people can have a bank account and the landlords, family members and friends may well be less likely to be subject to surveillance. This is something I will mull over for the next stage, but, for the time being, I beg leave to withdraw this amendment.

Amendment 89A withdrawn.

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Moved by

[Lord Sikka]

90: Clause 75, page 43, line 22, leave out “person” and insert “panel, at least 50% of which is made up of persons elected by recipients of the benefits in question,”
Member’s explanatory statement
This amendment seeks to clarify whether the Government will take account of the views of recipients of the benefits in question in any independent review of eligibility verification measures.

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[Lord Sikka (Lab)]

My Lords, there are three amendments in this group. Amendments 91A and 91B are tabled by the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer. All three seek to strengthen the review into the impact of eligibility verification on vulnerable persons. I will just speak to my Amendment 90.

Amendment 90 seeks to clarify whether the Government will take account of the views of recipients of the benefits in question in any independent review and suggests that this would be best achieved by ensuring that at least 50% of the review body is elected by benefit claimants. The proposed review under the Bill is welcome, even though it creates another quango. One difficulty is that regulators and reviewers are all too often appointed to advance political aims and objectives rather than serve the people. One needs to look no further than regulators of water and energy—the Independent Water Commission is currently reviewing the water industry, but its terms of reference exclude consideration of public ownership of water, even though that is favoured by many, including those who are experiencing high customer bills and sewage floating in rivers at the bottom of their gardens. I am seeking the representation of the people directly affected.

All too often, Governments claim that regulatory and review functions are best carried out by individuals with some experience of the field. None has more experience of the field than benefit claimants—after all, they are directly impacted. They will know the frustrations of answering 243 questions to apply for pension credit; they will also be subjected to financial surveillance and may be concerned about that. They are also affected by the DWP’s errors, including erroneous prosecutions, as we heard earlier. They have direct experience of that, and are therefore eminently qualified to directly participate in the review process.

This Bill refers to an independent review by a reviewer, but that reviewer will essentially be a political appointee. The review team is unlikely to include benefit claimants or someone experiencing hardship due to benefit cuts, confusing DWP forms or inconsistent application of DWP rules. Such a person and his or her team are unlikely to be able to bring the daily experiences of benefit claimants into the review. It is vital that the experience of the people on the receiving end of this legislation is brought directly into the review—their words and their worldview, not filtered through what was heard by somebody on some regulatory body or review commission. Quite often, there are cosmetic consultations or token discussions with the affected people. That is not really appropriate here.

Amendment 90 would empower benefit claimants and enable them to elect individuals to carry their worldviews into any review. The person so elected would be accountable to the claimants, whereas the proposed reviewer would not be accountable to any benefit claimant. There is absolutely nothing that they can do about it—they cannot force that person to consider their worldviews deeply. I fully appreciate that extending democracy may well be a contentious issue, even in Parliament, and that empowering people may well be contrary to some government department’s policies. Nevertheless, I would like to see greater representation of benefit claimants in any review that is carried out under the Bill. I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, I will speak to Amendments 91A and 91B in my name in the group, and I thank the noble Baroness, Lady Kramer, for her support in this.

As the noble Lord, Lord Sikka, just said, these two amendments are designed to expand the scope of the independent review and the powers of the independent reviewer. I was very pleased to see the introduction of an independent review around the EVN powers; it adds an important safeguard. But as drafted, the scope of the review is quite limited, covering only whether the exercise of the powers has complied with Schedule 3B and with the code of practice, and whether it has been effective in identifying or assisting in identifying incorrect payments. It does not cover any of the other impacts that the exercise of the powers might have beyond that; we talked in the previous group about the costs, for example.

We have previously discussed and raised concerns about the effects that the Bill could have on vulnerable people, so I will not repeat those again—we have had quite a lot of debates around it. However, the possibility of those impacts on vulnerable people is both real and important, so it should be considered once those powers are in force, and, frankly, the obvious place for that is the independent review. So Amendment 91A would simply add an assessment of the impact on vulnerable persons to the scope of the independent review.

Amendment 91B is about the powers of the independent reviewer to obtain information. As it stands at the moment, they have no information-gathering powers. All the Bill says is that the Secretary of State “may” disclose information to the independent reviewer, and that is not good enough. For the independent review to be meaningful, the reviewer must have the legal ability to obtain all the information that he or she considers necessary to carry out the review. That is what Amendment 91 attempts to achieve: to allow the independent reviewer to request whatever they feel necessary to carry out the review, and to put a requirement for the Secretary of State to disclose what is requested. I rather hope that neither of those is particularly controversial as amendments go.

Just generally, I should say that these are the last amendments that I have tabled, which may relieve the Minister, so I just wanted to say that I hope that she accepts the spirit in which all of them have been put forward. I accept that the Bill is much less concerning than its predecessor was, and I hope that she sees the amendments as generally constructive, aimed primarily at ensuring that the safeguards against misuse of these powers are both robust and, importantly, permanent. I will be very happy to meet with her between now and Report to see whether we can find common ground on some of them.

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[Baroness Sherlock (Lab)]

My Lords, my noble friend Lord Sikka’s Amendment 90 would require the independent oversight of the EVM to be carried out by a panel of people, at least half of whom would be elected by recipients of benefits in the scope of the measure.

First, I can clarify for the benefit of the Committee that the independent person in the Bill could be an individual, a group of persons or a panel. However, in appointing the person, we want to be clear that the Government will follow the direction of the Governance Code on Public Appointments throughout the process. In accordance with that code, it is for the Secretary of State to appoint an appropriate person or persons to the role of independent overseer, as set out in Clause 75, because, as the code says:

“The ultimate responsibility for appointments and thus the selection of those appointed rests with Ministers who are accountable to Parliament for their decisions and actions”.


However, the process will be overseen by the Commissioner for Public Appointments to ensure that it is robust and fair; this is in line with precedent.

My noble friend accused us of allowing some forms of politics to invade these decisions. I must say that the Secretary of State has a track record of appointing well-respected and experienced people to review the DWP’s work, even when that kind of oversight is not required. For example, in December she appointed Liz Sayce, the former chief executive of Disability Rights UK and formerly chair of the Social Security Advisory Committee, to lead the independent review into overpayment of the carer’s allowance; she also wanted Charlie Mayfield to lead a joint DWP and Department for Business and Trade review into the factors behind the growing levels of inactivity. I can assure the Committee that we will similarly look for relevant and independent expertise in this area. Clearly, the independent reviewer will have the discretion to engage with not only benefit claimants but any other key stakeholders whom they may consider appropriate, and we do not need to legislate for them to exercise that discretion.

The review must consider the extent to which the Secretary of State has complied with the legislation and the code of practice. The independent overseer will then consider the extent to which the Government have complied with the many safeguards outlined in the legislation and the code. So, the independent review is in the interests of all those who receive a payment for a relevant benefit and will help ensure that their rights are protected.

Amendment 91A in the name of the noble Lord, Lord Vaux, would require the independent reviewer to include in their annual report any impact that the EVM may have on vulnerable persons. Although I obviously agree that the DWP needs to consider carefully the vulnerabilities that our customers may have, I do not think that this amendment is necessary given the nature of the measure and the existing safeguards, including the oversight and reporting provisions. Again, I remind the Committee that this measure will actually help some of our customers, including those who are vulnerable. We know that people make genuine mistakes; access to this important data will help us find those mistakes sooner and enable us to correct them. Detecting overpayments earlier will help prevent claimants accruing large debts to the department in cases where an overpayment is recoverable.

The key issue is that this is just a data-requiring power. It will simply require a bank to share limited information where benefit-receiving accounts meet the eligibility criteria specified in a DWP notice. The process of a bank sharing data through this measure will have no direct impact on the person’s claim of vulnerabilities. The measure is not about targeting anyone; it is about ensuring that claimants are paid the correct amount of benefit. It is only then that, under the DWP’s long-standing business-as-usual processes, people may experience changes to their benefit award—for example, where, following further inquiries, it is determined that the payment is not correct or that they do not meet the eligibility rules for the payment.

A major aspect underpinning the issues raised by the noble Lord, Lord Vaux, is a broader question as to how the DWP supports vulnerable people in those processes. Layers of support already exist in the DWP to ensure that customers who are vulnerable or have complex needs have the right support put in place. DWP staff regularly conduct vulnerability checks and are proactive on this; when we do identify vulnerable individuals, we ensure that they receive the necessary support and adjustment. We have specially trained staff to support our most vulnerable customers, and they have access to a wide range of guidance to support them. Across our various benefits and services, colleagues record any support needs provided by the customer to ensure that, whenever a claimant speaks to the DWP, it is aware of how best to help them. As I have already set out, in cases of fraud and error, a DWP staff member will be the one making decisions affecting benefit entitlement.

Finally, I remind the Committee that the independent reviewer will report annually on how the powers have been exercised in line with the legislation and how effective they have been at identifying incorrect payments. They will be able to cover any issues they deem relevant, including the impacts the measure is having and what that means for DWP customers. Asking the independent reviewer to assess impacts on vulnerability would, by necessity, take the scope of the review far broader than the EVM, as it would need to focus on wider parts of DWP business. To accept this amendment would therefore fundamentally change the scope of the annual review.

Lastly, I understand what the noble Lord, Lord Vaux, is trying to achieve with Amendment 91B, but I do not believe it is necessary. The legislation already allows the Secretary of State to disclose information to the independent reviewer for the purpose of the reviews under new Section 121DD, and I assure the noble Lord that the DWP will of course work openly and collaboratively with the independent reviewer. We will provide them with the information requested and work with them to help identify the information they need to complete their review, sharing this under the existing provisions.

Should any incentive be needed, if the independent reviewer did not consider that they had received all the information they needed, the report they published and laid before Parliament would no doubt reflect this. It would be clear for Parliament to see and scrutinise it and hold the Government to account on it. However, I am confident that that situation will not arise because our deterrent will be quite enough. Nevertheless, to provide further assurance to the Committee that the Secretary of State will provide everything relevant, I am happy to commit to make this clear in the code of practice for the measure, but I would rather not legislate unnecessarily.

To close, I know that the noble Lord knows that the inclusion of this oversight matters to the whole Committee; it matters to me as much as it matters to him. The Government have not resisted calls for transparency and have a strong track record of working openly with independent reviewers, such as the independent review of carer’s allowance overpayments.

Since the noble Lord, Lord Vaux, mentioned that Amendment 91B is his final amendment, I want to say that I very much take his amendments in the constructive spirit in which they are intended. This is what the House of Lords Committee is for—to make sure that we pursue the aims of the Bill and that we do so in the most constructive and appropriate way possible. I look forward to carrying on engaging with him. For now, I hope that my noble friend Lord Sikka, whom I am sure I will see in future, will feel able to withdraw his amendment.

[Lord Sikka (Lab)]

My Lords, I am very grateful to the Minister and the noble Viscount, Lord Younger, for their contributions. The argument that something is costly and timely has been made for centuries against universal suffrage, but somehow we overcome that objection and recognise that people can be elected on to all sorts of bodies. In the rest of Europe, workers are elected on to company boards; nobody said that is costly and time-consuming. Perhaps we are yet to catch up with that kind of democratic revolution.

Regarding the cost, I understand the point made, but what has not been asked is: what is the cost of not doing it? There is also a cost associated with not doing something—in this case, not bringing the direct experience of those impacted by this legislation: those whose lives may be ruined, who may be named and shamed in the neighbourhood, who may perhaps end up losing somewhere to live or who cannot buy food or anything. There is a huge social cost that is basically being ignored. The cost of not doing it is more injustice and more exclusion.

Of course, if the Government want to reach a halfway solution, they could bring the NGOs and civil society organisations representing the disabled, poor, old and sick into this review, but that is not what I think I heard from the Minister—although I hope that, in time, that will be thought through again. Nevertheless, I wanted to fly the flag for democracy and public accountability. For the time being, I beg leave to withdraw my amendment.

Amendment 90 withdrawn.