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.

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

Steve Darling Excerpts

Committee stage
Tuesday 4th March 2025 Public Bill Committees

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

Clause 13 sets out that the Minister can use powers to recover amounts from a penalty, such as late payment, but also relevant costs to be awarded by a court or tribunal. Relevant costs rightly also include costs that are reasonably incurred by the Minister in exercising the powers in chapter 4.

Can the Minister share details on what this measure might include? What is reasonable and what are the expected amounts that might be recovered in this way? Does this also cover legal costs—for example, court fees and legal representation? Will it include investigatory costs, such as the use of forensic accountants or data analysts? Does it extend to administrative costs, such as the work of civil servants processing cases? How is reasonableness to be determined within these clauses? What criteria or guidelines will be used to assess whether a cost is reasonable and will there be an independent review process to prevent excessive or disproportionate costs from being been claimed? Will the affected individuals or entities have the right to challenge, at an appropriately early stage, costs that they deem to be unreasonable?

On the expected scale of the costs, do the Government have an estimate of the average cost that could be incurred and recovered under these provisions, and will there be caps or limits on the amount that can be recovered from an individual or organisation? Does the Minister expect those to vary? How will cost recovery be monitored and reported to ensure transparency?

Given the potential financial impact on those subject to enforcement proceedings, it is crucial that clear safeguards, transparency and accountability mechanisms are in place to ensure that costs remain proportionate and fair. I would appreciate further detail from the Minister about how these costs will be defined, managed and reviewed.

Clause 14 provides that the Minister can recover an amount due in respect of a penalty only when the time for appealing has passed without an appeal, or any appeal has been finally determined. We think that that is perfectly sensible and will support the clause.

[Steve Darling (Torbay) (LD)]

In the oral evidence, Professor Levi highlighted some powers regarding asset freezing that the police have had since 2017. I would welcome the Minister’s reflections on whether these powers could have a significant impact in this area of the law—in particular, whether they would apply to international organisations, and the impact on individuals. I think that would be helpful to the Committee.

[Georgia Gould]

I welcome the support for the clause. To clarify, the operational costs of running PSFA operations and investigations will not be included in reasonable costs. There is work being done through the test and learn period by the enforcement unit to inform those costs, and guidance will be published in due course. As I have set out previously, there will be independent oversight of the full use of these powers, by a team that will answer to an independent chair. They will report to Parliament and will look at all aspects of the use of these powers, including the cost. If it is not established by agreement, we will have to apply to a court or tribunal to determine what the debt is, so there will be that added aspect of independence.

For asset seizing, we can apply for orders through the courts. In evidence we heard from the financial industry, there were questions about how the powers will work together, and there is work going on to respond to some of those questions. Our teams are working very closely with those financial bodies.

Question put and agreed to.

Clause 13 accordingly ordered to stand part of the Bill.

Clause 14 ordered to stand part of the Bill.

Clause 15

Payable amounts

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Mike Wood]

Clause 17 establishes that when a payable amount is recoverable, the Minister can issue an order for direct deductions from a liable person’s bank account, either through regular deductions or a lump sum payment, as she said. Clause 18 further clarifies that those deductions can be taken from any account in which the liable person has a beneficial interest. That is extremely important, given the difficulty in establishing the different networks of bank accounts that may be held, particularly in cases of serious and organised fraud. We welcome the flexibility the clause introduces.

Although the provisions aim to improve efficiency in recovering public funds, there are still questions regarding fairness, proportionality and the safeguards that are in place, starting with the definition of beneficial interest in clause 18. Clause 18(1) allows the Minister to make an order on an account that is held by the liable person and contains an amount that the Minister considers the liable person has a beneficial interest in. What criteria or evidence does the Minister expect the PSFA to use in determining a person’s beneficial interest in an account, given the complex ownership and title structures that may be in place? On the flip side of that, how will the rights of third parties be protected, particularly if funds belong to someone other than the liable person that might be held in a shared account?

That brings us to the question of joint accounts. Clause 20 assumes that a joint account is split equally between account holders unless the Minister has reason to believe otherwise. What types of evidence would be accepted to demonstrate that the liable person’s beneficial interest is different from an equal split? The Minister referred to bank statements, but would those investigating also look at legal documents or perhaps third-party testimony? Would that be appropriate in some circumstances? Will additional checks be carried out to ensure that joint account holders are not unfairly penalised for debts that might not be theirs? It is not uncommon for people in marriages or long-term partnerships to have a domestic joint account. It might well be that one of the partners in the relationship is, in practical terms, paying more into an account, but also using the account more than the other partner, despite the two names being equally on the face of the account.

Clause 21, on the notice and the right to respond, sets out the process of notifying banks and liable persons before deductions are made, and includes provision allowing them to make representations within 28 days. The clause allows the Minister to notify the bank first before informing the liable person, to prevent account closure, asset withdrawal or other measures being taken to deprive the taxpayer of the recovery of sums that might rightfully be recoverable. Can the Minister point to a precedent for that approach in other areas of law? How does that align with best practices in financial enforcement?

Although clause 21 allows the liable person to make representations to the Minister, there is not an explicit provision for an independent appeal mechanism. Is there a reason why the Bill does not provide for such a process? Would the Government consider an independent review mechanism, beyond the systematic review that is in place for the Bill, to ensure that decisions are fair and transparent and do not disproportionately affect people in individual cases?

To go back to the potential risks of financial and domestic abuse that I touched on earlier, deducting money from joint accounts could create serious risks for individuals in financially abusive relationships. What safeguards will be put in place to prevent financial hardship, particularly for vulnerable individuals who might not actually be responsible for the debts that the PSFA seeks to recover? What specialist training will staff receive to identify and mitigate the risk of financial or domestic abuse? The effectiveness of the measures will depend on strong safeguards, clear guidance and robust oversight mechanisms to ensure fairness and proportionality. I would appreciate further clarification from the Minister on those points.

[Steve Darling]

I rise to speak about clause 20 in particular. Liberal Democrats are heartened by clause 18, which clearly says that if there is another account the money could be drawn from, that will be utilised. However, we are particularly concerned about coercive and controlling relationships.

In my 30 years serving the people of Torbay as a councillor, I found on a number of occasions that people who are happy to conduct fraud against other parties, whether the state or other organisations, are often very happy to financially abuse their partners as well. That leaves their partners in a very vulnerable situation. I found that often the individuals affected are very trusting people who have vulnerabilities elsewhere in their lives, which would be recognised by the Department for Work and Pensions if it were supporting them.

I really want to hear from the Minister how the DWP is going to support people and be alive to the risk. It is about making sure that there is a culture of knowledge of the issue among the investigators. Although it is essential that we get the money from fraud in, we do not want collateral damage on people who have been abused.

--- Later in debate ---

[Mike Wood]

Clause 19 grants the Minister significant powers to obtain financial information from banks before making a direct deduction order, including the ability to request three months of bank statements, or perhaps statements covering a longer period where specified. The power to issue an account information notice requires banks to provide statements to determine what deduction should be made, and the power to issue a general information notice requires banks to disclose an individual’s account details, balances and correspondence addresses.

Clearly, in many investigations there will be good reason why some or all of that information is necessary, appropriate and justified. Of course, some of the information will be extremely sensitive, so we need necessary safeguards and appropriate oversight to ensure that sensitive information is requested and subsequently shared only where it is directly necessary to the investigation, and where the Minister or PSFA has justifiable grounds to think either that an error is costing the public sector significant amounts of money or that there has been a case of deliberate fraud. As I said about the previous grouping, a prohibition on banks informing the liable person that an information notice has been issued is a sensible measure to prevent that person from taking action to frustrate attempts to recover money that ought to be recovered—they could, for example, empty their account before deductions could take place. In principle, we support powers designed to ensure effective debt recovery under the right circumstances and when used in the right way, but there are several concerns regarding proportionality and oversight when it comes to protecting legitimate privacy rights.

First, on the unlimited timeframe for bank statements, clause 19 states that the Minister must obtain at least three months’ worth of statements, but can request a longer period if specified in the notice. What criteria will determine whether more than three months of statements is needed? Is there a reason why no upper limit is specified within the clause on how far back those requests can go? Clearly, the further back that requests are made for a bank statement, the greater the risk that they could lead to overly intrusive requests that may not be entirely necessary for the debt recovery.

On the broad information-gathering powers, the general information notice allows the Minister to demand a full list of all accounts held by the liable person, their details and their addresses. Presumably, that is for the specific financial institution that the notice refers to. Are there any safeguards to prevent excessive or disproportionate use of those notices? Must there be a reasonable suspicion or at least a threshold to be met before those powers can be exercised? The Bill states that the Minister can only request information to exercise their core functions, but that is obviously a very broad measure so could be interpreted very broadly.

Banks would be prohibited from informing the liable person that an information notice had been issued. Although that prevents individuals from evading deductions, it means that they may be unaware of a Government investigation into their finances even after the event. Are there any circumstances in which the liable person might be informed that their financial data has been accessed—perhaps after an investigation has been closed? Does the Minister envisage any independent oversight to ensure that those powers are used proportionately?

On the burden on banks and financial institutions, on which my hon. Friend the Member for South West Devon and I have tabled amendments to be debated later in the proceedings, these powers will require banks to process and respond to Government information notices, likely adding costs and administrative burdens to those institutions. Have the Government consulted with financial institutions to assess how proportionate the kinds of requests envisaged under the Bill are, the ease or the difficulty of compliance, and the estimated cost to banks and the financial sector? During evidence last week, some financial institutions did not seem to have any idea of what scale of burden that would be putting on their members. Again, a large part of this came back to the lack of visibility of draft codes of practice.

On privacy and data protection concerns, although the Bill states that the Minister can only request relevant information, that can be interpreted broadly. What legal protections exist to ensure that financial data is accessed and used appropriately for the very narrow purposes for which these clauses are intended? Will there be an independent review mechanism to assess whether those powers are used lawfully and proportionately?

Finally, given the wide-ranging implication of the powers, further clarity and safeguards are needed to balance effective debt recovery against individual privacy rights. I would welcome further details from the Minister on those critical issues, so that we can be comfortable going forward that the wide-ranging powers that we would be granting to the Minister and the PSFA cannot be misused and that individual privacy rights will be protected and respected.

[Steve Darling]

I ask the Minister to reflect on how speedily the Bill is going through Parliament. As we heard from the hon. Member for Kingswinford and South Staffordshire, financial institutions are not clear about the impact on or the cost to them. When we legislate in haste, challenges will often come out of the woodwork in the longer term. In this particular area, again, the issue is about the safeguards. We assume that we are dealing with reasonable people, but we do not have to look far in international news to see what can go wrong when unreasonable people gain power.

Where are the safeguards? When holding a Minister to account, it is often assumed that the Minister will be a reasonable person. Sadly, however, in the future the Minister may not be a reasonable person, so where are the safeguards for individuals? Also, as alluded to earlier in the debate, it would be helpful to have some assurance on the banks and the impact on them.

[Georgia Gould]

Let me go through those points in turn. The first question was about why someone might need information before three months. There are two critical reasons why: one is to ascertain potential vulnerability and affordability plans—we have talked about safeguarding joint account holders so as to have more information—and the other is to prevent people from evading paying: if more information were needed to ensure that the assets had not been moved. Throughout, we have tried to balance ensuring fairness for the taxpayer and protecting vulnerability. I hope it will give some reassurance that such powers are used effectively elsewhere in Government. We have learned from best practice.

I talked through the process of the first notice, and that will be where the individual is informed that that information has been requested. As we have discussed, a number of safeguards are built into the process, and the intention when recovering debt will be to work with the individual and to make it collaborative. If people refuse to pay, only at that point would we apply to the courts or a tribunal, where safeguards are of course in place.

To the wider question of what safeguards hold the system to account, as I have outlined and as we will discuss in more detail later, a team answerable to an independent chair will oversee every part of the process, including the ability to look at live cases and at the patterns, to ensure proportionate use of the powers. That individual will report to Parliament. Separately, a fully independent body will review the full use of the powers. We expect that to be His Majesty’s Inspectorate of Constabulary and Fire and Rescue Services. The Bill also includes a provision to make the PSFA a statutory body, and so fully independent of the Minister. While it remains in this smaller phase, where we are testing the powers, the independent safeguards are built in.

On the point about the consultation with the finance bodies, I hope the Committee heard in the evidence that UK Finance was clear that we have been having a constructive dialogue on all of the issues. The PSFA has published an impact assessment, which suggests that, in the first instance, banks will need to look at a very small number of cases. We have committed to testing and learning alongside the process as the PSFA grows. There will be established practice for working closely with the banks. We expect the burden on banks for the application of the PSFA powers to be limited. I hope that gives some reassurance on oversight.

--- Later in debate ---

[Steve Darling]

The Liberal Democrats support this Conservative amendment. I will not go over the arguments again, as they have been well put. Some clauses talk about safeguards. It is about the culture of the organisation, making sure that individuals have professional curiosity and how to foster that within the organisation. Professional curiosity can bear significant fruit for a number of Government organisations when they conduct activities, but broadly we are supportive.

[Siân Berry (Brighton Pavilion) (Green)]

It is a pleasure to serve under you today, Mrs Lewell-Buck. I do not support the Conservative amendment. A lot of the discussion in Committee has been about reducing the risk of harm to potentially vulnerable people and people caught up in these frauds, who might not deserve to be punished in any way. I would not support taking out a measure that is there presumably to reduce the consequences of making an error. Therefore, I will not support the amendment.

--- Later in debate ---

There is a clear lack of detail on how bank costs will be controlled, how much burden will fall on financial institutions, and whether the system will deliver a net financial benefit to the taxpayer. The Minister urgently needs to clarify those points before implementation to ensure fairness, transparency and proportionality, and I would be grateful if she responded to those concerns.

[Steve Darling]

I echo many of the concerns raised by the shadow Minister. There are serious issues with giving a blank cheque to banks to undertake certain activities. How are they planning to calculate what their cost is? Is it purely the direct cost of that activity, or are they able to ladle into that some of their central costs? Clearly, if they did not exist as a bank, they would not be able to undertake these activities. There is uncertainty, and we wish to see fairness and transparency. Some feedback from the Minister on this matter would be extremely welcome, because although it is fair that people pay for the activity to be undertaken by banks, so that the burden does not fall on either the banks or the taxpayer, it is important that it is equitable. I look forward to the Minister’s response.

[Georgia Gould]

I referred in my opening remarks to the positive and ongoing conversations that we are having with banks and the UK finance industry, and that was reflected in the evidence we heard. A UK Finance representative said that a number of conversations with industry have taken place since the measures were announced, and referred to “constructive conversations”.

Concerns were raised about safeguards for the charges that banks could put in place under the PSFA measures, and I have already outlined some of the safeguards in place. The deduction of a bank’s administrative costs should not cause the liable person, other account holders, those living with the liable person or joint account holder, or those financially dependent on the liable person or joint account holder hardship in meeting essential living expenses, and they should be fair.

There are further protections in the Bill. Clause 37 contains the powers to make further provisions through regulations on the administrative charges that can be imposed by the bank. The powers will be used to introduce a cap on the charges that can be imposed under the clause and adjusted in line with inflation. To give further reassurance to the Committee, this is in line with the powers that HMRC has through the Enforcement by Deduction from Accounts (Imposition of Charges by Deposit-takers) Regulations 2016. For HMRC, the regulations specify that the amount should be

“the lesser of…the amount of those administrative costs reasonably incurred by the”

bank “and £55.” So there is precedent, and the necessary regulations will be made in due course.

In my view, new clause 6 is not required. We have already published the Bill’s impact assessment, which sets out the minimal expected cost to businesses of its measures, where it has been possible to do so, including to banks. The impact assessment has been green-rated by the Regulatory Policy Committee. DWP has also committed to providing estimates in a subsequent impact assessment of the business costs for DWP’s eligibility verification measure, within three months of Royal Assent. So DWP has already come forward to commit to bringing forward that information as part of the package. I am confident that that will provide the necessary transparency that the shadow Minister seeks, and I hope that our commitment again today to provide those costs reassures hon. Members.

Equally, we believe that the purpose of amendment 23 is already provided for through the regulation-making powers under clause 37. As I stated, we have consulted and will continue to consult the banks to implement the measures in part 1 of the Bill, as set out in the published impact assessment. In part 1, the costs to banks are expected to be minimal and offset by the ability of banks to recover administrative costs from the liable person.

Clause 24 enables the banks to recover administrative costs from the liable person, and clause 37 provides for regulations to be made in relation to the costs that a bank may recover by virtue of clause 24. We intend the regulations to be reasonable for those paying and for the banks. Before introducing such regulations, a consultation must occur with those representing the interests of banks. We are committed to continuing engagement and consultation with the financial services sector through the passage of the Bill and its implementation —indeed, that has been ongoing since evidence was given last week.

It is important to put the cost to banks in the context of the amount that will be recovered under the Bill, which we estimate to be £940 million—money that is vital to delivering public services. It is right that every part of the system plays its part in recovering money that was lost to fraud. Having outlined the key provisions in the clause, I urge the Committee to agree that it should stand part of the Bill.

I have just received a message: I thought I said that DWP would produce an impact assessment in 12 months, but I said three months. I assure everyone that it is 12 months.

Question put and agreed to.

Clause 24 accordingly ordered to stand part of the Bill.

Clause 25

Insufficient funds

Question proposed, That the clause stand part of the Bill.

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

Steve Darling Excerpts

Committee stage
Thursday 27th February 2025 Public Bill Committees

[The Chair]

I call the shadow Minister—sorry, the Lib Dem spokesperson.

[Steve Darling (Torbay) (LD)]

It is a pleasure to serve under your chairmanship, Mrs Lewell-Buck. I am pleased that you already see that we will become the official Opposition by the next general election, as long as the right hon. Member for North West Essex (Mrs Badenoch) continues.

The Liberal Democrats would like to state clearly that fraud is wrong and, as the Minister rightly stated, it robs the state of the ability to support people and drive the change in our communities that we all thirst for. Our concern is that this legislation is being rushed through Parliament at breakneck speed, and rushed legislation can result in dangerous consequences for those who get caught up in it eventually. I share this concern with the Minister: we legislate at haste and repent at leisure when things go wrong.

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[Mike Wood]

Clause 3 would give the PSFA the power to issue information notices to a third party, compelling them to provide information within a deadline. The amendments set out the circumstances in which that would be done and set what we think is a perfectly reasonable test of reasonableness, as well as exploring the time provided for the recipients of notices to respond. Our amendments are designed to probe some areas of this process. The powers given to the Minister for the Cabinet Office in clause 3 are wide-ranging, so we wish to ensure that these are used reasonably and proportionately, and solely in connection with the explicit purpose of the Bill. We have tabled amendments 11, 10, 14, and 9 to that end.

We have to remember that the powers can be used against individuals and small businesses. While we might expect most of the notices to be issued against multinational companies, particularly financial institutions, we also need to consider those who do not have the capacity of larger organisations. The powers must be used reasonably and effectively in all circumstances.

Amendment 11 sets a reasonableness test relating to whether the information being requested is likely to relate to the fraud in question—for example, in private text messages—and therefore whether it is reasonable to ask for that information, and whether the cost involved in recovering the required information is likely to be reasonable and proportionate. The Minister referred to equivalent powers that are available in other forms of investigation that the Government and their agencies and bodies carry out. We see the reasonableness test as equivalent to that which HMRC must meet in its notices.

We also wish to ensure that the powers are not misused, and amendments 9 and 10 are directed towards that purpose. Although clause 3 states that the Minister can use the powers only against someone

“whom the Minister has reasonable grounds to suspect has committed fraud against a public authority”

the Bill provides no definition of “reasonable”, so amendments 9 and 10 are designed to fill some of that gap.

Amendment 10 specifies that the Minister for the Cabinet Office

“has reasonable grounds to suspect a person has committed fraud against a public authority if…there is an objective basis for the Minister’s suspicion based on facts, verifiable information or intelligence, and…a reasonable person would be entitled to reach same conclusion based on the same facts, information or intelligence.”

We want to be clear about what we do not think are reasonable grounds. These would include, for example, if the Minister’s suspicions were based in any way on a person’s physical appearance—protected characteristics under the Equality Act 2010 that the person may have, or appear to the Minister to have—or were based solely on any generalisation or stereotype giving rise to a belief that certain groups or categories of people are more likely to be involved in criminal activity. We want to ensure that the powers are exercised responsibly and appropriately.

Amendment 9 gives the definition of “reasonable” as meaning that

“the Minister must have formed a genuine suspicion in their own mind, and the suspicion that fraudulent activity has taken place must be reasonable. This means that there must be an objective basis for that suspicion based on facts, verifiable information and or intelligence which indicate that fraudulent activity will be found, so that a reasonable person would be entitled to reach the same conclusion based on the same facts and information, and or intelligence.”

Amendments 9 and 10 are based on the reasonable grounds for suspicion that are contained in the PACE—the Police and Criminal Evidence Act 1984—code A.

Bearing in mind that these powers will be exercised against individuals, some of whom might struggle to provide information, we want to probe the choice of 10 days as the timeframe in which to provide information. Amendment 14 increases the minimum notice period from 10 working days to 28, which is similar to the standard minimum time that people would expect to be given to respond to written requests for information from HMRC. Given the scope of the information that might be requested, appropriate time must be given to organisations and individuals to comply. External circumstances should also be taken into account when considering the time periods. If an individual is on annual leave or off sick for a few days, they may have less than a week to provide the information or they will face significant fines. That does not seem reasonable.

We are not necessarily saying that 28 days is a better time period than seven, but I would be grateful if the Minister explained why the Government set the minimum time that they did. That is particularly pertinent, as failure to provide the information required would carry a civil penalty of £300 a day, which, for an individual, can amount to a considerable sum of money very quickly.

In its current form, without being more specific about what it means to be “reasonable” or expanding the timeframes, we are a little concerned that the powers that clause 3 gives the Minister may not include the necessary checks and balances, so I would appreciate her reassurances on that point.

[Steve Darling]

Perhaps the word that the shadow Minister used most was “reasonableness”. In our strange political world in recent months, the question of what is reasonable in our society has changed significantly following the change of President in the United States. What normal society would expect is “reasonable” of an elected official, both here and in America, gives me, as a Liberal Democrat, cause for concern in relation to how we can make sure that a Bill like this, which gives very significant powers to the state, sets safeguards in stone to protect our communities. We will come to that later, but I would welcome reassurance from the Minister. Although I am sure that we are all reasonable people in this room, others who are unreasonable might take power at a later stage of our lives. With this legislation, how can we put safeguards in place? I hope that we will cover that later, but the Minister’s early thoughts would be welcome.

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[Mike Wood]

The amendments are all about ensuring that there is not just independent oversight but an effective independent channel of appeal against information notices that does not just go back to the same organisation that issued the original notice. Clause 4 will allow for the person to whom the information notice is given to appeal the notice up to seven days after it is issued, but that appeal will go back to the Minister for the Cabinet Office—or, in practice, the PSFA—to review it and decide whether to revoke, amend or uphold the notice. As drafted, it gives the Minister significant power, as really the only responsible person who can review the decision to give the notice.

There therefore appears to be a significant lack of independent oversight. I would be grateful if the Minister could explain why there is no ability to have an independent appeal of the kind that would generally take place against HMRC decisions and notices, through the first-tier tribunal. That is why we tabled amendments 15, 16, 17 and 18: to change the appeal body from the Minister for the Cabinet Office to the first-tier tribunal. We are concerned that, given it is the Minister who has been given the power to investigate fraud, it is then a case of allowing the Minister to mark their own homework if they—or the people acting on their behalf—review the decisions themselves.

I would like to understand the Minister’s view on whether that is an effective use of ministerial time and capacity. Does she envisage that any such appeal decisions would be delegated? In the amendments, we propose to replace the Minister with the first-tier tribunal in that process, which would be equivalent to the processes that would be expected when a decision of HMRC is reviewed. Our amendments would ensure that an independent third party is involved with the review process.

I would be grateful if the Minister could explain why there should be no ability for such an appeal to be made, whether it is made immediately against the notice for information or perhaps as a second appeal stage. We need to be satisfied that there is a good reason why people who are the subject of those notices, which may be quite onerous, particularly for individuals and smaller organisations, should not have the ability to appeal to an independent body. Normally, natural justice would assume that to be the case.

[Steve Darling]

I concur about the safeguarding of individuals. While there may be an independent reviewer or chair, the challenge, for me, is who appoints them. If it ends up being the Minister who appoints the chair, how independent will they be? Given what we are seeing elsewhere in the world, how do we ensure that we build a structure of independence into the Bill that we may not previously have thought was needed? I am somewhat supportive of the proposals from colleagues, but equally, I look forward to hearing what the Minister has to say on the challenge.

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[Mike Wood]

Sorry, it has been a while since I have been on a Bill Committee.

The amendments would allow the individual or organisation to apply for an extension to the 10 working days within which they are currently required to provide information requested in an information notice, if they are reasonably unable to comply. This is a common sense approach to support people who are engaging with the process and prevent them from being hit with penalties, which was never the intention of the legislation. This is also important because we do not know precisely what information the Minister will be able to ask individuals to provide, other than that an information notice cannot require the giving of particularly sensitive—such as excluded or special procedure—material, as defined in sections 11 to 14 of the Police and Criminal Evidence Act 1984. This includes confidential business records or journalistic material. Otherwise, the Minister for the Cabinet Office has a very open-ended power to require different types of information. It would be helpful if the Minister could explain whether the Government would consider allowing those issued with information notices to apply specifically for an extension if they cannot reasonably provide the information within the time period requested.

[Steve Darling]

I can add very little to what the shadow Minister said. Again, I am broadly sympathetic on the need to have these safeguards in the legislation, and on not knowing what the practice notes are. We are very much in the dark, so that does give us cause for concern.

[Georgia Gould]

The critical thing to note here is that we have been very clear in the Bill that 10 days is a minimum. As we heard in evidence, some organisations will find it very easy to provide the information within 10 days; others will find it harder. As I have already set out, we will ensure that responding to different kinds of organisations proportionately is referenced in the code of practice.

I previously explained why we believe that the time limits in the Bill for information requests are appropriate, and why we believe that internal review strikes the right balance in preventing fraudsters from frustrating the process. The current drafting includes powers for authorised officers to vary the duration of an information notice in clause 4. The clause allows an information notice to be varied subject to the outcome of an internal review. A variation of a notice can include amending the timeframe to comply with a request if it is found that a longer timeframe is required.

We have discussed how the Bill allows information-providers a minimum of 10 working days to comply, which in practice will be tailored on a case-by-case basis, with each case judged on its own merits and the time period applied appropriately. This is a similar approach to that taken by HMRC, for example: an authorised officer would take account of the nature of the information or documents required and how easy it will be for the person to provide or produce them. That, in turn, protects the information-holder from not being asked to produce information within an unreasonable timescale. In response to the amendment, I ran through what the reasonable grounds test will be and the kinds of thinking that authorised officers will have to go through to determine what information they will gather. That includes writing it down so that their thought processes in requiring information can be reviewed.

[Steve Darling]

I welcome that reassurance from the Minister, which we will take onboard.

[Mike Wood]

I thank the Minister for her response, which offered some moderate reassurance. We would be comfortable if either it was included in the Bill or we at least had sight of the code of practice, which will actually define that decision-making process. A fundamental flaw of this Bill Committee is that we are being asked to make decisions on something that may be produced in the future, of which we have no advanced sight. For now, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

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[Georgia Gould]

Clause 3 introduces a civil power that allows authorised officers to compel information from first and third parties, similar to that used by HMRC. Clause 4 introduces a right to request a review of a decision to issue an information notice within seven days of a notice being issued. The policy intention is that this provides adequate time for an individual or business to request a review of a decision to issue an information notice, and sets a time limit for a review that will balance any attempts that might be made to aggravate the information collection process by slowing down the fraud investigation unnecessarily. During the review process, authorised officers will work with information-holders to give them every opportunity to comply.

[Steve Darling]

The Minister referred to a review process; it would be really helpful if the Committee could be aware of how long that process is likely to take.

[Mike Wood]

Clause 4 gives the Minister a considerable amount of power to compel individuals, as well as organisations, to provide an unspecified range of information within what could be very tight timescales, on pain of a fine of £300 a day if they fail to comply. The only route to appeal these powers is going back to the person or organisation that is exercising them, and we are concerned about the natural justice of this approach.

The legislation, as drafted, involves no impartial third party in the review process on a case-by-case basis, so it leaves individuals with nowhere else to go if they disagree with what is being asked for, or cannot practically comply with the request in the specified timeframe. Our amendments aim to balance these powers, and I am naturally disappointed that the Minister was unable to consider accepting at least some of them.

High Street Businesses

Steve Darling Excerpts

Wednesday 26th February 2025 Westminster Hall

[Steve Darling (Torbay) (LD)]

I will not take up all that time because I know that time is pressing.

First, I congratulate the hon. Member for Stockton West (Matt Vickers) on obtaining this extremely important debate. The issue has been well debated so far. I will focus on antisocial behaviour and its impact, with communities feeling unsafe to go out into our town centres. I go back to the cuts, probably about 14 years ago, to the Supporting People budget. Effectively, 90% of that budget was binned by the Conservative council at that time. It was supporting people with drug and alcohol issues, as well as many other vulnerable people who needed support.

At the last count in Torbay, 40 people were sleeping rough across the bay, which is absolutely shocking. The number has more than doubled. Sadly, people sleeping rough make others feel unsafe, and therefore unwilling to go into our town centres. We need more funding to support people, but we also need the stick of more bobbies on the beat—more uniformed officers who can be seen supporting our communities.

I will turn to the main meat here. We have seen the steady decline of our town centres over decades. Out-of-town and now online shopping have had a devastating effect on our town centres. We need to ensure that local authorities have the ability to place-shape, whether that is having influence over stopping immediate transfer from retail to residential, or whether it is enhancing and speeding up the abilities of compulsory purchase orders. I am only too alive to one case in my constituency of Torbay. It straddled the Ukraine war, which meant that we saw a massive boost in the cost to redevelop Paignton town centre, and now that particular location is just a car park. We have that uncertainty, and if we want to drive that imagination for our communities, we need certainty, so please can we look at streamlining those compulsory purchase orders?

Finally, colleagues have mentioned the massive impact of the national insurance contribution hikes. Although the policy is still slightly over the horizon, its cold hand is sending a chill through the heart of our town centres. The Conservatives may have almost nailed down the coffin lid on our town centres, but I fear that the Labour party will actually put in the last nail with NICs.

Infected Blood Compensation Scheme

Steve Darling Excerpts

Wednesday 23rd October 2024 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats are glad to see the introduction of this legislation and the establishment of the infected blood compensation scheme. We are glad that it will move the victims of this atrocity, both those infected and affected, closer to long-overdue justice and compensation. Victims and their families have been waiting decades for answers and for recognition of the suffering that they have endured. Liberal Democrats welcome the findings of Sir Brian Langstaff’s report, which vindicated so many of those people affected. We voted last December for the amendment to the Victims and Prisoners Bill, requiring the Government to set up the compensation scheme, and we are glad that this motion establishes that.

[Steve Darling (Torbay) (LD)]

This is a deeply sad scandal. Does my hon. Friend agree that we need reassurance from the Minister that there is adequate capacity to process the applications at pace?

[Sarah Olney]

I thank my hon. Friend for that intervention. It goes very much to the heart of the remarks that I shall make about ensuring that the compensation scheme established through this legislation is indeed adequate, not just in its resources but in its powers to fully address the magnitude of the justice and compensation that is owed to the families who have suffered.

Although we are grateful that the Government have brought this legislation before Parliament at such an early stage, we want to ensure that these proposals go far enough, and ensure that all those affected get the justice they deserve. The Liberal Democrats will work with the Government to ensure that the provision for fair and proper compensation is implemented as quickly and effectively as possible.

More than 3,000 deaths are attributable to infected blood and blood products, over 30,000 people were infected with hepatitis C or HIV after receiving infected blood transfusions, and many thousands more have been affected by the suffering that has been caused. This scandal is a chilling story of people being failed, not only by the medical professionals who treated them but by the NHS—which should have been responsible for the safety of their treatment—and by a series of Governments whose integrity and diligence should have precluded such an atrocity from ever taking place.

Over the decades when this was happening, children were subject to unsafe and deeply unethical clinical testing. Senior doctors in British hospitals administered experimental treatments while knowing the significant risk of contaminated products, and staff in haemophilia centres across the country used blood products even though it was widely known that these products were likely to be infected, as was so vividly highlighted by the hon. Member for Newport East (Jessica Morden).

The scope of the negligence goes far beyond the medical administration; the infected blood inquiry report reveals a culture of covering up. We must ensure that there is transparency in governance, especially given the disregard with which the last Conservative Government treated the public’s trust. The Liberal Democrats support the survivors’ call for a duty of candour on all public officials, as well as the introduction of increased legal protections for whistleblowers. We must do all we can to ensure that we have an honest political culture in which concerns are listened to and questions answered, so that nothing of this nature can ever happen again. We are glad that the report has made public the extent to which people were failed, and that there is support across the House for acknowledgement of the injustices that have been suffered, which this legislation begins to rectify.

However, while we are grateful for the Government’s action in response to Sir Brian’s inquiry, particularly the Minister’s extension of the scheme beyond the initial commitments from the previous Government, we are concerned that the legislation does not go far enough. Financial compensation cannot make up for the years of injustice and the unimaginable distress that so many thousands of people have gone through.

The compensation scheme is an important step in acknowledging their suffering, but I urge the Minister to see it as the first step in the process of compensating victims. We want to see legislation that compensates the children who, without consent, were tested on with contaminated blood but did not go on to develop a disease. We want to see recognition of the family members who saw loved ones suffer, and in some instances pass away, but who will receive no compensation because they were over the age of 18 at the time of infection. We want to see a clear and explicit explanation of the payment bandings that have been set out, and we want to see engagement with the affected community at all stages.

It is vital that the scheme acknowledges the trauma experienced beyond the physical suffering caused by the infected blood. Not only were so many lives cut short or destroyed by the hideous physical illnesses that contaminated blood caused, but unimaginable psychological distress has been caused by experimentation on unconsenting and often unaware patients. We urge the Government to ensure that this scheme encompasses all those who suffered owing to the infected blood scandal, and that any further legislation is developed with the close engagement of those who best understand that suffering.

Our principal concerns lie with the transparency of the calculation of compensation payments. It is crucial that the scheme does not establish a hierarchy of suffering, and I ask the Minister to outline the process by which these tariffs were decided. The compensation for people treated with infected blood products who “self-cleared” hepatitis C is very low, and does not account for the health impacts that they have experienced or the psychological damage that they have experienced. There is also a significant discrepancy between those infected with hepatitis C and those infected with HIV. Although we welcome the initiation of compensation payments, we believe that there must be greater transparency over how they have been calculated. We urge the Minister to engage with the affected communities, and to ensure that there is clear communication explaining how these decisions have been reached.

The complications caused by the decades of defensive cover-up have not only exacerbated the trauma experienced by victims, but affected the estates of those who have died. In the intervening decades, some estates have become contentious and the question of the rightful recipients of compensation has therefore become unclear. In some cases, the compensation could be entailed away from those on whom a person’s infection or death has had the greatest impact. It is vital for the IBCA to have the necessary resources and powers to support victims through the process, to ensure that appropriate compensation is received by all those affected.

The burden of the administrative concerns and queries from affected families is currently falling on overstretched charities. Has the Minister considered the creation of a dedicated unit to deal with inquiries, working alongside the IBCA? We must support the work of these vital organisations—the charities providing support—and engage with them to understand exactly the needs of those affected. The motion sets out the possibility of future legislation, and we hope that the Government will follow up this legislation with vital community engagement. We urge them to ensure, as the scheme progresses, that there are mechanisms in place to enable the concerns of charities, organisations and affected individuals to be heard.

We are also cautious about the structural limitations of the IBCA. Given the many years over which the scandal took place, the six-year timeframe of the authority as a legal entity does not seem appropriate. The equivalent scheme set up by the Irish Government in the 1990s is still active, and it is crucial that the IBCA exists for long enough to ensure that the full compensation scheme and associated processes can be carried out effectively.

The Liberal Democrats are glad to see the introduction of this legislation. We welcome the Government’s swift creation of a compensation body, the IBCA, to implement the report’s recommendations and begin payments to the victims of this scandal. It is essential that people begin to receive the compensation that is so long overdue, and it is vital that that is done in the most compassionate and effective way. While we hope that the Government will go further in ensuring that the affected community are fully engaged and consulted in this process, the infected blood compensation scheme will allow victims, both infected and affected, to move, at last, towards justice.

Let me finally take this opportunity to thank Emily, Eleni, Pipsy, Claudia, Harry and Orlando, who are A-level students in my constituency and have been gaining work experience in my office this week. It has been a pleasure to host them, and they have worked very hard in helping me to put my speech together.