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

Steve Darling Excerpts

Committee stage
Thursday 6th March 2025 Public Bill Committees

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

The clauses outline the steps and safeguards before the Minister may impose a penalty. Getting these provisions right, ensuring that due process is followed, affected individuals and businesses have a right to respond and penalties are not imposed arbitrarily, is crucial.

Clause 56 sets out the procedural rights of a person facing a penalty. It ensures that penalties are not imposed without the affected party first being allowed an opportunity to respond. Subsection (2) requires that a notice of intent be given to any person facing a penalty, inviting them to make representations before a final decision is made. Under subsection (3), the notice of intent must include the amount of the proposed penalty, the reasons for imposing a penalty of that amount, and the means by which representations may be made, as well as the timescale for doing so.

As we are approaching the end of part 1, I know that the Government will be disappointed if I do not have a long list of questions on these provisions for the Minister. A theme from Tuesday’s sessions was the time limit on representations. The Bill states that individuals and businesses must be given a minimum of 28 days to make representations. There is a little more flexibility in the provisions we debated on Tuesday, but do the Government intend to set a maximum limit, whether in the legislation or perhaps the code of practice, on the number of days that would be available for such representations? If not, how will it be ensured that the process does not become excessively prolonged, as the Minister spoke about on Tuesday? As well as causing delay for the public authority seeking to recover funds, it might cause uncertainty for businesses and individuals. We are also interested to hear about guidance that might be issued on when it would be appropriate to vary the 28 days and allow a longer period for representation in order to strike a balance.

On the issue of authorised officers, and assuming that the decisions are being delegated, the Minister has previously referred to the Carltona principle whereby Ministers can delegate decision-making and executive powers to appropriate officials. In the light of the Government’s intention to repeal the Northern Ireland Troubles (Legacy and Reconciliation) Act 2023, I am interested to know whether they have assessed the impact that might have on the operation of the Carltona principle in these circumstances. The principle is derived from pre-second world war case law, but it was significantly weakened in the Gerry Adams challenge. It was one of the things the previous Government were seeking to change, as a response to amendments in the House of Lords to re-establish the principle. In the absence of the 2023 Act, will the principle still be legally robust enough to allow the delegation that the Government intend under this Bill?

We assume that the decision on whether to maintain, reduce or cancel a proposed penalty will be made by an authorised officer rather than the Minister for the Cabinet Office, so will the Minister set out the level of seniority of the authorised officers within the PSFA and how that decision was reached? What training will those officers be required to undergo for this specific function, and what steps is the PSFA expected to put in place to ensure consistency in decision making across different cases?

Clause 57 outlines the process for issuing a penalty decision notice once a final decision has been made. Again, the requirements in the clause appear to be sensible and necessary if we are to ensure that individuals and organisations are fully informed of their liability and have an opportunity to challenge decisions that they believe to be incorrect or unfair, so we support the clause standing part of the Bill.

Clause 58 deals with reviews of penalty decisions. I have a few questions about who in the PSFA or Government will conduct the review. Who will ensure that they are properly separate from the individual decision-making process and if the reviews are to be conducted by officials, what will be the level of seniority required?

The clauses set out important procedural safeguards that seem to be appropriate to ensure penalties are not imposed unfairly. If we are given clarification regarding the degree of discretion available, the seniority, and training in decision making and the safeguards that ensure fairness, we will be content for the clauses to stand part of the Bill.

[Steve Darling (Torbay) (LD)]

It is a pleasure to serve under your chairmanship, Sir Desmond. The Liberal Democrats broadly welcome the proposals in the clauses. Safeguarding people is an essential part of the Bill. I suspect we will go into that in greater depth as we embark on part 2.

[Georgia Gould]

I would indeed have been disappointed if the shadow Minister had not had lots of detailed questions for me on the operation of the powers. I agree wholeheartedly about the importance of safeguards.

To take the questions in turn, we are confident of the legal robustness of the Carltona principle. It is how Government routinely works, and we are confident that the powers can be exercised by highly trained authorised officers. As the shadow Minister says, 28 days is a minimum. There are no plans at the moment to introduce a maximum, but the intention is for the team to work as quickly as possible to recoup public money. As we have discussed, there might be exceptional circumstances where people need more time, and the authorised officers will be able to provide that time on a case-by-case basis, always bearing in mind the need to return money that is owed because of fraud.

We will talk shortly about the oversight and review process, but we want a separate team outside the PSFA that is answerable to an independent reviewer. It could look at the wide range of cases and ensure there is consistency and that powers are used proportionately. It could report to Parliament, so there would be ongoing scrutiny of the exercise of the powers. It is important to remember what will have taken place by the time we get to a penalty. In order to establish the recovery of a debt, if the individual did not agree, the matter will have gone to court. An authorised officer will have reviewed the case and submitted to a senior member of the team the rationale for a penalty to be imposed.

There are a number of routes of review. The first is a review by another authorised officer of a higher grade in the PSFA team. If the individual is not satisfied with that, they will, as the shadow Minister set out, have the ability to apply to a court or a tribunal to have that reviewed. There are robust safeguards built in within the PSFA and outside the PSFA.

Question put and agreed to.

Clause 56 accordingly ordered to stand part of the Bill.

Clauses 57 to 59 ordered to stand part of the Bill.

Clause 60

Appeals

--- Later in debate ---

[Siân Berry (Brighton Pavilion) (Green)]

It is a pleasure to serve under your chairmanship again, Sir Desmond. I want to reiterate the points made by the Opposition spokesperson, the hon. Member for Kingswinford and South Staffordshire. It is not good enough to be able to refer only to the official record of the long list that the Minister just read out of what is likely to appear in the code of practice. At this stage of the legislation, we ought to be scrutinising at least a draft.

The clause does not include any consultation on a draft code of practice and there are no scrutiny safeguards built into the legislation, so it is wrong to not be looking at the details. In previous debates, I have set out my concerns that although there have been reassurances that this part of the Bill is about major fraud, and that it excludes the Department for Work and Pensions, it is easy to envisage that there may be a scheme of fraud against other Departments that involves defrauding grants that are available to support people claiming certain benefits. That might bring people who are poorer and more vulnerable into a scheme where, according to previous clauses, these penalties may be applied. We need to look at the code of practice in draft form at this stage of the legislation or as soon as possible.

[Steve Darling]

Legislation that is rushed is often legislation that is dangerous, and I fear that that is where we are today. The hon. Member for Kingswinford and South Staffordshire was very polite in putting his challenges to the Minister, but I would like to be a little more robust and say that I believe it is extremely unreasonable that we do not have the code before us. “The devil is in the detail” is a hackneyed phrase, but that is the fact of the matter. I say to the Minister that it would be extremely helpful if the code could be published before the legislation passes throughout Parliament, so that there is at least the opportunity to scrutinise it at a later date. I look forward to receiving a satisfactory response from her.

[Georgia Gould]

I am grateful for those questions. As I set out, the code of practice provides additional guidance and operational detail, but the important thing is that the key safeguards we have discussed are covered in a great deal of detail in the Bill. We have gone through the right to appeal and the level of the authorised officer who will be looking at every part of the process, whether that is the initial decision or the review. We have discussed the timeframes, all the appeal routes that are built into the legislation, and the oversight. The key safeguards to the operationalisation of these powers are in the Bill in a great deal of detail.

It is right that I went through the kind of operational detail that the code of practice will cover. To hopefully offer some reassurance on the questions of consultation and precedent, in developing the code of practice, we are building on a great deal of precedent within Government—from the DWP, the Home Office and His Majesty’s Revenue and Customs—on the use of these powers and what has worked well. There is already a huge amount of consultation, at ministerial and official level, on developing the code. There will be a public consultation on it as well, and, as we have already committed, we will bring forward the code of practice within the parliamentary process.

Question put and agreed to.

Clause 62 accordingly ordered to stand part of the Bill.

Clause 63 ordered to stand part of the Bill.

Clause 64

Independent review

[Steve Darling]

I beg to move amendment 31, in clause 64, page 34, line 23, at end insert—

“(1A) Prior to appointing an independent person, the Minister must consult the relevant committee of the House of Commons.

(1B) For the purposes of subsection (1A), ‘the relevant committee’ means a committee determined by the Speaker of the House of Commons.”

This amendment would ensure Parliamentary oversight of the appointment of the “Independent person”.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Clause 65 stand part.

[Steve Darling]

The amendment is about ensuring transparency around the Bill. I have already explored transparency, and other hon. Members have talked about reasonableness. The Bill gives the Minister the ability to appoint their own independent person. Although I am sure that those in power for the foreseeable future are very reasonable individuals who will genuinely appoint independent persons, we can read in our newspapers about people not very far away who are effectively appointing yes-people around them, so I fear that we need to future-proof the Bill to ensure that the people appointed are genuinely independent.

Constitutions elsewhere in the world have checks and balances heavily built into governance. The amendment, which proposes to delegate to the Speaker the decision about how the appropriate Committee of Parliament can be involved and consulted about the appointment of the independent individual, would be a good way of ensuring genuine independence and reasonableness. I hope that the Government seriously consider it; we will be pressing it to a vote.

[Georgia Gould]

I will start by talking about clauses 64 and 65, and then I will address the amendment.

It is absolutely necessary that there is appropriate independent oversight to ensure the powers in the Bill are used appropriately, and we welcome debate on that. That is why we have introduced the power to appoint an independent person, which might be one person—an independent reviewer—or an organisation such as His Majesty’s inspectorate of constabulary and fire and rescue services. They will augment the existing oversight structures laid out elsewhere in the Bill, such as the role of the Independent Office for Police Conduct, set out in clause 9, which will investigate the most serious complaints into the PSFA’s use of entry, search and seizure powers.

Clause 64 mandates that an independent person appointed by the Minister undertakes reviews of the use of powers in the Bill. The independent reviewer will conduct reviews to consider whether the exercise of the powers is in keeping with the legislation, codes of practice and relevant guidance. They will produce a report of their findings for the Minister, including any recommendations they deem appropriate. The Minister is then required to publish the report and lay it before Parliament. That ensures there is both public and parliamentary accountability in the role of the independent person outlined in the Bill.

As we state in the explanatory notes, we intend to make the duty imposed by the clause in two ways. First, the Government will commission His Majesty’s inspectorate of constabulary and fire and rescue services to inspect the PSFA’s use of the new investigative powers, which can include the end-to-end investigative process and decision making. HMICFRS has a long-standing history, going back to 1856, and it independently assesses and reports on the performance of police and fire and rescue services in the UK, as well as other public bodies with investigatory powers, such as His Majesty’s Revenue and Customs. HMICFRS reports are already made available publicly, and are an efficient way to hold bodies accountable for their investigative practices.

Secondly, the Government are creating a new position for an independent reviewer to whom the PSFA’s oversight team will report. The independent reviewer will assess how the PSFA exercises the powers given to it in the Bill. The independent reviewer will carry out reviews and report on whether the use of the powers is in keeping with the legislation, codes of practice and relevant guidance, as well as considering areas where HMICFRS or other oversight bodies have not already reported. The independent reviewer could, for instance, consider live case reviews or conduct supplementary reviews between those undertaken by other bodies, or look specifically at how the PSFA has taken forward recommendations from past reviews. The independent chair will have discretion in determining where to focus their resources.

We do not believe it is necessary to legislate in the manner proposed by the amendment to ensure parliamentary scrutiny. Parliament will scrutinise the independent person’s report, which the Minister is obliged to lay in Parliament. There is also an established process for agreeing posts that should be subject to pre-appointment scrutiny by Select Committees without the need for legislative provision. That process is to reach agreement on posts suitable for pre-appointment scrutiny between my Department and the Chair of the relevant Select Committee. We will be following that process for the appointment of the independent chair. We hope that offers assurance to the hon. Member for Torbay. The appointment of the independent reviewer will also fully comply with the governance code on public appointments which is overseen by the Commissioner of Public Appointments.