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

Debate between Michael Payne and Rebecca Smith

Committee stage
Tuesday 25th February 2025 Public Bill Committees

[Michael Payne]

Q Thank you both for sharing your experience and expertise with us this morning. It is estimated that there was about £5.4 billion-worth of fraud and error in temporary covid-19 schemes that were not run by HMRC. You will know that this is an area of significant public interest. The Public Accounts Committee said:

“It is very unlikely that most of the losses due to fraud and corruption”

during the pandemic

“will ever be recovered.”

How far do you agree with that statement? Do you think the new powers for the Public Sector Fraud Authority change the prospects?

Alex Rothwell: I absolutely do think they change those prospects. I was still in law enforcement when covid-19 was happening, and there was an extensive discussion about the police’s ability to support investigations. Frankly, policing had significant challenges with fraud, and still does, in terms of the volume of attacks against individuals and businesses, which made supporting the public sector almost an impossible ask, so I certainly welcome the ability to strengthen the public sector fraud response.

On whether the money will be recovered, there are significant challenges, as I am sure you are aware. It is right to apply a cost-benefit approach as well; although there is a moral imperative, we increasingly look at things in a commercial sense and at whether there is financial value in recovering funds.

Kristin Jones: It is very difficult to get money back from fraudsters, especially where it is organised, because the money disappears into different accounts in different names, and overseas through lots of corporate bodies, so it will be a big challenge. The important thing about this piece of legislation is whether we are future-proofing it so that, looking forward, we can learn from what has happened in the past and not repeat the mistakes.

[Rebecca Smith]

Q I am particularly interested in the work that the NHS serious fraud team is already doing. What specific challenges do you currently face in investigating fraud and recovering money that the Bill will help? Do you think there are gaps in what is being proposed that could be tweaked or amended?

Alex Rothwell: If we take the view that fraud has already happened—I have spoken about prevention, but once a fraud has happened and we have discovered it—there are increasingly limited opportunities to pursue criminal investigations. Although we maintain a strong investigative capability that deals with more serious types of criminality, we know about the challenges in the criminal justice system—the disclosure burden is high, it is incredibly expensive to run criminal investigations, and often they take eight years or longer to reach fruition—so we are increasingly looking at how else we can deal with fraud when it is presented to us.

In many ways, it is the low-value, high-volume cases that we see that are more challenging, where we are perhaps seeking to recover funds from someone who has taken £5,000, as I mentioned earlier. This is where I have the most interest in the Bill, because I think we would seek to use those powers extensively, and of course every penny that we recover is money that will be well spent in the NHS. I do not necessarily see any gaps in this particular legislation. There are elements of the work that we do in the national health service where we would benefit from some more powers, but the focus here is obviously on the Bill, rather than on our own ability. A lot of that would apply to how we access medical records, for example.

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

Debate between Michael Payne and Rebecca Smith

Committee stage
Tuesday 25th February 2025 Public Bill Committees

[Michael Payne]

Q There has been some discussion today about the use of technology and AI. As Ministers, what are you doing to ensure that humans still take the final decisions on whether the powers should lead to enforcement?

Andrew Western: As it relates to the DWP—I do not know whether you want to say anything about the PFSA powers later, Georgia—it is worth reflecting that the proposed eligibility verification power is in effect a data-push power. The banks will not make any decisions as to someone’s culpability, on what penalty they might receive, or on whether the overpayment flagged on the account is legitimate; all the banks will do is send back a marker against an account to suggest that someone is in breach of their eligibility requirements.

For example, that might include someone who has more than £16,000 in their account, but is in receipt of universal credit. It is important to say that the flag is then passed to a human investigator to analyse the information and look at what the reasons may be, because there can be very legitimate reasons why someone has more than £16,000 in their account and is still entitled to benefits, such as someone who has received a compensation payment that is out of scope of what would be considered capital for benefit-eligibility reasons.

In all the five principal measures on the DWP side of the Bill, a human is involved in the decision making: on eligibility verification, it is passed to an investigator; on information gathering, when we receive information, it is passed to an investigator to consider the next steps in a fraud investigation; on debt recovery, an individual—a person—would make a decision as to someone’s ability to repay a debt; and on penalties reform as proposed, a human will determine what actions will be taken against a person who received a penalty for fraud against a DWP grant scheme. That is entirely the way that it works with any other penalty that can already be applied. Finally, on the powers of search and seizure, as we would expect, a human judge will take a decision on whether to issue a warrant. At every stage, a human decision maker is baked in before any final decision on sanction or otherwise.

[Rebecca Smith]

Q I will ask one question in a second, but I wanted to come back on the point that my hon. Friend the Member for Kingswinford and South Staffordshire made about the code of practice. The Minister has said that each time in our scrutiny we get to a point in the Bill that relates to a bit of the code of practice, he will bring that to us then and we can discuss it. Will that be in writing? It strikes me that if something is there for us to discuss at a particular point, it would make much better sense to have discussed it all at the beginning, so that we can look at it as a whole. Otherwise, I am not quite sure how we will do it in debate.

Andrew Western: A draft code of practice will not be available at that stage, so I will speak in general terms about what we intend to include, but there will not be a written document at that stage.