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

Mike Wood Excerpts

Committee stage
Tuesday 11th March 2025 Public Bill Committees

[Andrew Western]

Amendments 48 and 22 seek to limit the amount that can be deducted via a direct deduction order in any month to 20% of the amount credited to the account in the relevant period in non-fraud cases, and to set no limit in cases where the Department considers it more likely than not that the debt is the result of fraud.

The hon. Member for South West Devon will know I have sympathy with the idea of quickly collecting debts that arise due to fraud, but the measures in the Bill already allow the Department to collect higher amounts through a lump sum deduction order, rather than through a regular deduction order. This important flexibility in the application of these powers will allow us to seek a higher level of deductions. A lump sum deduction order can also be followed with a regular deduction order, if deemed appropriate.

The Bill currently states that, where recovery is made under a regular deduction order, the deduction must not exceed 40% of the amount credited into the account during the relevant period. Forty per cent is the maximum and is in line with other maximum rates for the DWP’s existing recovery powers, such as the direct earnings attachment power and the Child Maintenance Service’s deduction from earnings order power.

[Mike Wood (Kingswinford and South Staffordshire) (Con)]

Perhaps the Minister can correct me if I have misunderstood, as the drafting obviously relates to the parallel provisions we debated in clause 22. My understanding is that, as currently drafted, if the Minister or the Public Sector Fraud Authority is satisfied that a loss is the result of fraud, they can impose a lump sum deduction up to 100% of the credited amount in an account. However, if they were to use a regular deduction order, each sum can be only 40%. Is there any reason, in principle or for welfare, why it is okay to take 100% of someone’s account on day one but not okay to take 50% today and 50% the following month?

[Andrew Western]

Put simply, my understanding is that if an individual debtor has sufficient money in their account to pay 100% on day one without financial hardship, we will apply that power. Where that is not possible—for example, if a person’s debt exceeds their means to repay it in one go—we will look at a regular deduction order. It is on that basis that we came to the 40% figure, which is based on the income going into an account each month.

We have set the cap to ensure that ongoing living costs can still be met on a month-by-month basis. It may not be that the figure used is 40%. We are simply seeking to give ourselves flexibility up to that amount. We are not saying that we will never recover more than that. If someone has £10 million in a bank account and owes the Department £1 million, it is reasonable to assume it will not cause them undue hardship to recover all of it in one go through a lump sum deduction.

The two powers are complementary but separate—one deals with ongoing recovery from a person who does not have sufficient means for recovery in one go, and the other deals with people who have savings or means significant enough to do just that. I hope that answers the question. I am happy to take another intervention if not.

The Bill currently states that when a recovery is made under a regular deduction order, deductions must not exceed 40% of the amount credited into the account during the relevant period—month by month is the obvious example. Forty per cent is the maximum and is in line with other maximum rates for the DWP’s existing recovery powers. The Department intends to set lower rates for regular deductions in non-fraud cases, allowing those rates to remain in line with existing recovery powers. Paragraph 24 of proposed new schedule 3ZA to the Social Security Administration Act 1992 therefore makes provision for regulations to be brought forward to set a maximum percentage deduction that is less than 40% in these cases.

[Mike Wood]

It sounds as though the Minister is speaking to amendment 22, which would restrict his power to set a lower amount to non-fraud cases. If we agree that lower limits should apply only in cases that do not involve fraud, can we just accept the amendment?