Public Authorities (Fraud, Error and Recovery) Bill

Lord Vaux of Harrowden Excerpts

Committee stage
Wednesday 25th June 2025 Grand Committee

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I too rise very briefly. A number of us have raised this scandal throughout Committee and the Minister has rightly said, “Well, there’s an independent review, I really can’t comment until we get the findings”. I say, “If we can’t comment until we get the findings of the independent review, the Government shouldn’t be taking money from the carers. That would seem obvious to me. Let’s wait until we’ve got the findings of the independent review”.

However, this speaks to the moral dilemma that was very well articulated by the noble Baroness, Lady Lister of Burtersett. It is something that has been troubling many of us throughout Committee: the Bill fails to distinguish between the ways people are treated for error and for fraud. Through no fault of their own, they end up in some instances being criminalised and certainly subject to some quite severe powers. That has always felt morally unjustifiable.

Another point this raises is that, although we constantly say that the moral case for this is that the money must be reclaimed, many instances of error seem to be due to errors made by the DWP, yet there is never any clarity about how, morally, it might be asked to pay. I am not suggesting that it pays financially, but if we are saying that those who make an error must pay, I do not understand why the DWP has not, as part of the Bill, made it clear which errors made by the department or state bodies the public will be able to hold them to account for when they are made. The scandal of the carers has cut through with the public: people know about it and are discussing it, and they in no way think that these people are welfare scroungers, frauds or doing anything wrong. So I urge the Government in this instance to be very clear that they will not act, as this amendment rightly argues, at least until the inquiry has brought its conclusions into the public arena.

[Lord Vaux of Harrowden (CB)]

My Lords, I hope to be even more brief. I have sympathy for this amendment, but it is backward-looking, as it relates to situations that have already happened. We also need to stop them happening in the future. These problems have arisen because of a very badly designed benefit. It has a cliff-edge threshold. Cliff-edge thresholds will always be the ones that cause problems, so I really hope that we learn the lessons from this situation and stop applying cliff-edge thresholds to benefits. It does not work and is almost guaranteed to create problems of this nature.

[Viscount Younger of Leckie (Con)]

My Lords, these amendments are well intentioned—an expression I believe I used in the last group, but I mean it. I want to acknowledge from the outset that they speak to a principle that I believe we can all support: the importance of integrating independent expert advice into the policy and operational decisions that we take, especially in areas where there have been clear signs that something has gone wrong.

The ongoing concerns around carer’s allowance overpayments are a case in point. The issue has rightly attracted attention, both inside and outside the House, in particular last year, and I believe that the decision to commission an independent review is right. Where there are systemic weaknesses, whether in communication, process or oversight, they must be identified and addressed, and we should absolutely be willing to listen to expert recommendations to improve how the DWP operates in the future.

I want to recognise the principle behind these amendments: it would be wrong to ignore serious and credible concerns raised by carers, campaigners and the public. They deserve answers and a process that ensures that the mistakes of the past are not repeated. That is why the review matters, and I hope we will all welcome it when it reports. I add to the questions raised earlier about the timing and when it will come.

However, that brings me to the core of my hesitation with these amendments. Although they stem from an entirely legitimate concern, I fear that they may go too far in how they propose to respond to it. Amendment 124, as laid out eloquently by the noble Lord, Lord Palmer, would delay all recovery of carer’s allowance overpayments until the independent review had concluded and, crucially, all its recommendations had been implemented. Amendment 127 goes even further, effectively delaying the entire Act until those recommendations have been acted on.

I am not sure that this is a workable or proportionate course of action. We must remember that the review currently under way is, as I understand it, largely focused—this is an important point—on prevention. It asks how overpayments were allowed to happen in the first place, what lessons can be drawn and how the department can ensure that this does not recur. That is vital, but it is a forward-looking exercise: it is about improving systems going forward, not about deciding whether an overpayment that has already been identified should be recovered. The Minister might want to comment on my assessment of the review.

To put it plainly, if an overpayment has been made and the department has established this through due process, that money is owed to the public purse. The review likely will not and should not change that fundamental fact. We should not conflate the need to prevent future errors with the obligation to recover public funds that have already been incorrectly distributed. We are talking about money that could and should be supporting others in genuine need—to further a theme I made in the last group. While it is essential that recovery processes are fair and humane, it is also important that the recovery duty is not unduly delayed.

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If the DWP makes any decisions based on automated processing of personal data without meaningful human involvement which have legal or similarly significant effects on individuals, it must do so with specific safeguards in place, as per the UK’s data protection framework. When collecting personal data, the DWP must tell data subjects whether it uses any automated decision-making, with meaningful information about the logic involved and the significance and envisaged consequence for the data subject. Further safeguards, which apply after a relevant decision is taken, are set out—

[Lord Vaux of Harrowden (CB)]

Am I not right in thinking that that is about to change under the new Data (Use and Access) Act?

[Baroness Sherlock (Lab)]

I was just about to get to that point, if the noble Lord will bear with me. Further safeguards, which apply after a relevant decision is taken, are set out in data protection law, to be amended by Section 80 of the Data (Use and Access) Act. These include providing individuals with information about significant decisions made about them and the opportunity to make representations and obtain human intervention on the decision.

The noble Baroness, Lady Bennett, raised international comparisons and Australia. To be clear, the use of machine learning has led to legal action internationally, primarily because there were concerns about automated decision-making. That is not the case here, so I hope that reassures her.

This is not for this Bill and not for now, but the Committee has raised the fact that as, over time, AI will clearly be used a lot across government and the private sector, it is important that the Government make sure that all the right safeguards are in place. The DWP is leading the way on this, and the Department for Science, Innovation and Technology is leading several programmes of work to utilise the opportunities of AI and ensure that it is used safely. For example, the algorithmic transparency recording standard is a standardised way for public sector organisations to publish information about how and why they are using algorithmic tools. It is mandatory across central government for algorithmic tools that have a significant influence on a decision-making process with public effect or directly interact with the general public. The Government Digital Service is currently implementing the mandatory rollout of the ATRS in government departments and arm’s-length bodies.

Work is going on in this broad space, but I hope that I have reassured noble Lords that the current law and the provisions in this Bill give the noble Baroness reason to withdraw her amendment.

[Lord Vaux of Harrowden (CB)]

We have had this discussion a few times, but does the Minister accept that most if not all of the safeguards she has talked about exist not in law but in the codes, guidance and internal rules of the DWP? They could be changed at will by a future Government less robust in looking after people’s safeguards. Would it not be sensible to put something into the Bill to future-proof these safeguards? My concern is not what is happening now but what could happen in future.

[Baroness Sherlock (Lab)]

My Lords, I hope I have made the case, in speaking to the amendment that we have been discussing, that the law already provides those protections—or it will do so when the provisions of the data Act are implemented, if those changes have not already been made. For my money, we could not have been clearer that the Bill creates no new automated decision-making powers. DWP and fraud and error decisions are always made by humans. There is a debate to be had, broadly for the future, which is where the work being done by DSIT is really important. That is where protections across government to future-proof things need to be brought in—not in this Bill, which does not introduce any new automated decision-making powers.

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[Lord Palmer of Childs Hill (LD)]

My Lords, Amendment 126 would require a thorough assessment of the impact of the Bill on people facing financial exclusion. While the Bill’s intent to safeguard public money and tackle fraud is clear and necessary, we must not overlook the reality that those who are financially excluded are often among the most vulnerable in our society.

Financial exclusion can mean lacking access to basic banking services, credit or affordable financial products, which in turn imposes additional costs and barriers on those least able to bear them. Without a clear understanding of how the Bill’s provisions, such as new powers to access bank account information or recover debts, affect this group, we risk compounding their disadvantage and inadvertently causing hardship to those the social security system is meant to support. An independent assessment as proposed in this amendment would ensure that the implementation of the Bill does not create unintended consequences, and they would indeed be unintended for individuals already struggling to access financial services. It will provide Parliament with vital evidence of whether the Bill’s measures are proportionate and fair and whether additional safeguards or support are required for those at risk of exclusion.

This is about not weakening our response to fraud but ensuring that our actions are just and do not undermine the financial resilience of those who are most at risk of falling through the cracks. I know that the Minister and others mean well, but I urge the Committee to support this amendment, which guarantees that our efforts to protect public funds do not come at the expense of the most financially vulnerable in our communities. It is a balance. We need to be very careful that in stopping fraud we do not push people in vulnerable communities further down into debt and disappointment. I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, I add my support at least to the intentions behind this amendment. We have had a number of discussions in Committee on the potential impact of layering costs and bureaucracy on financial services providers that relate to a particular class of people. In doing that, we risk incentivising those providers to stop providing services to that class of people—in this case, benefit recipients—and thereby potentially increasing financial exclusion.

The intention behind this amendment is right and I support adding it to the scope of the independent reviewer. However, I was not totally clear whether this applies to the whole Bill or just to Part 1, because it refers to the independent reviewer under Clause 64(1), which relates only to Part 1. This should relate to the whole Bill on a cumulative basis, because the cumulative impact of all the elements of this Bill may lead to greater changes in the behaviour of financial services companies than the sum of the individual changes themselves. We need to find a way of making sure that this covers the whole Bill and the cumulative impact.

Secondly, the amendment would require only a one-off report after 12 months. I am not sure that that would be sufficient. If there are impacts, as I fear there could be, they are likely to accumulate over time as banks decide that this is more difficult and therefore stop providing services. As we have talked about before, this is a question not of active debanking but more likely of stopping providing services over time. If we are to review this, we need to look at the impact more periodically—not necessarily annually, but over a longer period. I support the intention, but the amendment may need tweaking as it stands.

[Viscount Younger of Leckie (Con)]

My Lords, I support Amendment 126, tabled by the noble Lord, Lord Palmer of Childs Hill, which would require an independent assessment of the impact of this Bill on those at risk of financial exclusion and, crucially, ensure that the findings of that assessment are made public and laid before Parliament.

The principle behind this amendment is very important. We have heard throughout the Committee’s deliberations from me, my noble friend Lady Finn and the noble Lord, Lord Vaux, about the real and pressing risk that some of the measures in this Bill could unintentionally deepen financial exclusion. As we have said several times, there is a risk that banks are made to feel concerned about their customers if they are subject to an EVN, or, as the noble Lord, Lord Vaux, has powerfully expressed previously and now, that banks could be deterred from taking on customers who are in receipt of benefits in the first place as a pre-emptive measure against the additional workload that this could demand.

As we do not yet have clarity from the Government about when and how often notices and demands will be made of banks, everyone is currently in the dark about how much of an additional workload this will mean for financial institutions. It is therefore entirely feasible that these institutions, which are, as we always need to remember, designed and operated to make money, could simply choose not to take the risks, impacting people who have not necessarily done anything wrong in the process. If we empower government to work more closely with banks to verify eligibility, recover funds and issue deductions, we must be equally mindful of the unintended consequences for those who sit at the margins of our financial system.

We appreciate that this amendment does not seek to obstruct or weaken the Bill. Quite the opposite—it offers the Government a constructive, concrete mechanism for assessing whether our enforcement framework is functioning in a way that is fair, proportionate and inclusive. This is an important measure, and I am sure that noble Lords across the Committee who have raised concerns about this issue will be somewhat reassured if the Government commit to undertaking a review as set out in this amendment.

We have heard Ministers reassure us that these powers will be used carefully and that the risk of harm is low. This amendment provides an opportunity to put those assurances to the test—not through speculation, but through evidence. Twelve months after this Bill is enacted, the independent reviewer would be tasked with producing a report examining the extent to which the measures we have passed are having an adverse impact on those already struggling to access or maintain financial stability.

In conclusion, this is not a burdensome ask; it is a safeguard. It would ensure that, as we work to strengthen our systems against fraud, we do not inadvertently erect new barriers for those who are financially vulnerable already. It would give the House and the other place the opportunity to revisit and respond to those findings, if and when action is needed. I therefore urge the Minister to consider this proposal seriously and to work with colleagues to ensure that the fight against fraud does not come at the cost of fairness or financial exclusion.