Public Authorities (Fraud, Error and Recovery) Bill

Viscount Younger of Leckie Excerpts

Committee stage
Wednesday 25th June 2025 Grand Committee

[Lord Palmer of Childs Hill (LD)]

My Lords, I support Amendment 123, tabled by the noble Baroness, Lady Lister of Burtersett, and others, which would bring the test for recovery of universal credit overpayments caused by official error into line with Regulation 100(2) of the Housing Benefit Regulations 2006.

At present, the Department for Work and Pensions is empowered to recover universal credit overpayments even when they result from its own mistakes—a policy introduced with the Welfare Reform Act 2012. This approach marks a significant departure from the previous position on legacy benefits, where overpayments arising from official error could be recovered only if the claimant could reasonably have been expected to realise that there was an overpayment. The current system places an unfair burden on claimants, many of whom have no way of knowing that an error has occurred yet are still liable for repayment. I am grateful for the legal expertise of the noble Lord, Lord Verdirame, on this, showing that it is a complicated matter, with many legal precedents that I trust the Minister will take into account.

The evidence we have shows that the recovery of official-error overpayments can have severe financial and psychological impacts, with some individuals facing destitution as a result of sudden deductions from their benefits. The amendment would restore a vital safeguard by ensuring that only those overpayments that a claimant could reasonably have been expected to notice are recoverable, aligning universal credit with the principles of fairness and justice that underlie our social security system. This change would not prevent the recovery of overpayments where there has been claimant error or fraud but would, I hope, protect honest claimants from being penalised for mistakes entirely out of their control.

Many people do not look too closely at the moneys that come into their bank or Post Office account. They receive it and they think it is what they should receive. Sometimes it is not enough and sometimes, as we are discussing here, it might be too much. But most people take it and use it. We used to have this problem with council house rents, where the benefits were paid to the householder and they sometimes had to make a choice: did they buy bread and food or pay the rent? They used it for bread and food and did not have the money for rent. The rents started to be paid direct to the local authority or housing association, in order to mitigate that. It tends to prove the fact that people do not notice: they take what is needed and receive it. I urge noble Lords to support this amendment, to ensure that the system is both compassionate and just. I commend it to the Committee.

[Viscount Younger of Leckie (Con)]

My Lords, in speaking for the first time today, I take this opportunity to offer my congratulations to the Deputy Chairman of Committees, the noble Viscount, Lord Stansgate, on the arrival of his grandchild; I think he had indicated that he or she had arrived. It is interesting to reflect that when we started off on day one of Committee there was either a wedding or a honeymoon or both— I forget—and this allows me to declare a small interest of my own, which is that my daughter is due to give birth in two weeks.

[Noble Lords]

Ah!

[Viscount Younger of Leckie (Con)]

Right now, however, I want to speak with a degree of sympathy for the principle underlying Amendment 123, tabled by the noble Baroness, Lady Lister, and supported, as she said, by the noble Baroness, Lady Bennett, and the right reverend Prelate the Bishop of Leicester. I realise that the latter two are not in their place, but I understand that there is a good bit of interest in matters being debated in the Chamber at present and it may be that that is the reason.

The amendment raises a fair and important point of principle—namely, that there must be a clear distinction between those who have wilfully defrauded the state and those who have received overpayments through no fault of their own and could not reasonably have known that those payments were made in error. The noble Baroness, Lady Lister, eloquently laid out the arguments. We do not dispute that it is right for the state to recover money where fraud or deception has occurred, nor do we oppose the robust recovery of public funds where a claimant has knowingly continued to receive payments to which they were not entitled.

However, the amendment speaks to the cases where, due to administrative error or system failure, a claimant has been paid more than they were due and where they had no reasonable means of knowing that an error had occurred. In those cases, I believe that we must proceed with care. It is not fair to treat an individual as if they had committed wrongdoing if they were in effect passive recipients of a departmental error.

While we support the spirit of the amendment, though, it is important also to assert that public money, even when paid out in error, does not cease to be public money. It does not become the property of the claimant simply by virtue of its mistaken disbursement. When the state overpays, be that through a clerical oversight, a system issue or human error, we believe that that money is still owed to the public purse. That point is crucial because these funds are not abstract; they are the same funds from which other benefits are paid. They are resources that should be available to support others in need, those who are waiting on payments or who rely on the timely and correct functioning of our welfare system. Every unrecovered overpayment is, in a sense, money that could otherwise have gone to another person in genuine need. I hope that the noble Baroness, Lady Lister, would agree with that.

While I share the concern that individuals should not be penalised for departmental mistakes, I would be cautious about supporting a provision that could be interpreted as writing off the recovery of all such payments. There must be safeguards to ensure that claimants are treated fairly, yes, but also a means to ensure that taxpayers’ money is recovered, albeit in a sensitive and proportionate way. This is where I listened intently and with interest to the remarks made by the noble Lord, Lord Verdirame, and the precedent that he said was set by law. I am the first to say that where there is law that has been laid down, it should of course apply.

This is where proportionality becomes key. The Department for Work and Pensions must take steps to distinguish genuine error from deception and it must act reasonably in recovery, offering a choice of, for example, repayment plans or hardship considerations and, where appropriate, writing off small sums, however that is defined, that would cost more to recover than they were worth. However, it is not unreasonable to expect that, where a person receives a payment to which they were not entitled, even by mistake, and is later made aware of that error, the money should be returned.

For fear of being described as naive, I would say that the vast majority of people are honest and fair and would, as I would put it, fess up to receiving money that they were not due or were not expecting and would take steps to return the money in full. It is those very people who should be supported for their citizenship and honesty, rather than turning a blind eye to those who would not have owned up and would definitely have kept the moneys erroneously paid out. It does not matter whether you are poor or not so poor; the moneys are still wrongly paid out. It is fundamentally a matter of honesty. The example given by the noble Baroness, Lady Lister, is a case in point and I listened carefully to what she said. Of course, it has to be handled extremely carefully and sensitively and I am sure that the department is well up to dealing with that. However, we should support those who do the right thing by making sure that those who do the wrong thing do not benefit. That is a strong message.

I suggest that, rather than inserting a hard and fast rule in primary legislation, there may be room for improved guidance and safeguards in the code of practice, or through the incorporation of more effective, independent oversight, to ensure that these cases are dealt with proportionately and fairly. This chimes with questions that have been raised in this very short debate, and by the noble Baroness, Lady Lister.

Can the Minister state what continuing steps the DWP is taking to ensure that moneys are paid out to the correct people at the correct time? If she has the figures to hand, can she enlighten us on the reasons for error? For example, how much error is due to human error and how much to systems breakdowns?

In summary, we support the intent of the amendment—to ensure that the system is not punitive where there has been no wrongdoing—but we hesitate to go so far as to say that such funds should not be recovered at all. So I hope that the Minister will take this opportunity to outline, in her response, how the department will make these distinctions. As she knows, we have also raised this matter on previous days in Committee, so I hope that she will use this chance to speak about what internal corrections or changes have been made—or will need to be made—when payments are made in error. I imagine that this could include a four-eyes principle of oversight of systems; one may already be in place, but I wonder how effective it is.

To conclude, we are faced with two distinct problems: first, how we treat those who have received payments in genuine error, so that they are protected from undue negative effects; and, secondly, how the department will address the mistakes that were made internally.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to all noble Lords for their contributions to this debate.

As my noble friend Lady Lister explained, her Amendment 123 seeks to prevent the recovery of overpayments in universal credit and new-style benefits in instances where the claimant or their representative could not reasonably have been expected to realise that they had been overpaid. This would apply to the recovery of existing and future official-error overpayments. Although I understand my noble friend’s arguments, I regret that I am not able to accept her amendment. However, I will set out how this issue came about, what the department is doing about it and the way that we address it when it arises.

I will first take on the point made by the noble Lord, Lord Verdirame, which was referenced by the noble Viscount. We all of course obey the law, but, as I think the noble Lord said, common law is displaced by Section 71ZB of the 1992 Act, and, therefore, this is the law that we are currently applying. He suggested that it was a “very blunt instrument”, but it is not intended to be so. He may or may not find the way that I will describe how we deal with problems, when they come up, satisfactory, but I shall attempt to do that.

It is worth saying at the start that, as my noble friend indicated, the background to this is the Welfare Reform Act 2012, which was introduced under the coalition Government. That Act allowed all overpayments of universal credit, new-style JSA and new-style ESA to be recovered, regardless of the cause of the overpayment. The policy was introduced on the basis that money overpaid from the public purse should be recovered, with appropriate support—which I will come back to later—for anyone struggling with repayments.

Universal credit is what I gather is technically called a “dynamic benefit”: it supports people as they move in and out of work, or as their earnings change as they go up and down. I am told that part of the design consideration was therefore to operate in a similar way to the employer/employee relationship, which includes the recovery of overpayments. Having looked in Hansard at the Public Bill Committee debates at the time this was introduced, I saw that it was argued that, in practice, most overpayments of UC and new-style ESA and JSA would be recoverable to protect the public purse, but a decision could be made that part or all of the overpayment did not have to be repaid. It was argued that preventing DWP recovering official-error over- payments, as with old-style benefits, was not appropriate and that the system should allow a common-sense approach to the recoverability of overpayments.

That flexibility to recover overpayments of universal credit is, to some degree, crucial to allow the department to make corrections to an individual’s entitlement between assessment periods, because of the way that universal credit works. For example, if someone has a change of circumstances late in their payment period, they may be overpaid universal credit in that period, and that overpayment would need to be recovered from their payment in the next period. That flexibility clearly has to be retained.

I cannot comment on individual cases, as my noble friend will understand. However, we understand that overpayments, however they arise, can cause anxiety to those faced with repayments. In answer to the noble Viscount, the Government are very focused on improving payment accuracy in the first place and on preventing overpayments occurring through better use of data and continuous improvement activity. We are acting now and using learning from existing programmes; for example, insight from the DWP’s targeted case review of universal credit is already helping to shape continuous improvement and will support future preventive measures. The noble Viscount may recall that from his time in government.

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[Baroness Lister of Burtersett (Lab)]

I am afraid it was remiss of me not to congratulate the Chair on the recent addition to his family and to send best wishes to his daughter—fingers crossed, and I hope it all goes well.

I thank all noble Lords who spoke, including the noble Lord, Lord Verdirame—he sounded so learned that I want to call him noble and learned—for his helpful contribution. There is something very comforting about having someone who knows the law coming in behind you and saying that this is a point of principle. I very much appreciated that, as well as the support of the noble Lord, Lord Palmer of Childs Hill.

I appreciated the sympathy expressed by the noble Viscount, Lord Younger of Leckie, but it felt a bit like doing contortions so as not to have to criticise what his Government introduced. I do not accept the argument about public money. It is not like there is little pot and that if some of that pot goes to someone who has been overpaid because of the department’s error, that money will not be there for other claimants. The talk about public money felt a bit like some of the arguments around taxation being theft and so forth because it is public, the “It’s our money, not their money” sort of thing. Anyway, I appreciate the sympathy with which he approached the question, and I appreciate my noble friend, as always, engaging fully with what was said. I am disappointed that the department is not willing at all to budge on this.

We have to remember that universal credit is complicated. It may have been sold to us by the previous Government as a simplification but, in fact, it is complicated and, therefore, not surprising if people do not understand the payment that goes into their bank account. Who understands how universal credit is worked out? The answer is not many people. That has to be borne in mind when we are talking about what it is reasonable to expect people to know and respond to. The noble Lord opposite talked about fessing up and realising they have got it wrong, but people may not realise they have got it wrong until it is brought to their attention by the department because, tardily—we will hear more about that when it comes to carer’s allowance—it is brought to their attention that the payment is wrong. It is a question not of hiding but of simply not knowing.

I understand that universal credit is a dynamic benefit and that the payments are different from what went before—it is different from housing benefit—but surely there could be a provision that allowed for repayment not to be made in certain circumstances. My noble friend talked about a right of appeal, but that is pointless in this situation. The person who contacted me, D, went to appeal. She had a lovely judge at the appeal who looked at what the DWP said and said, “I’d really like to be able to give you this, but I can’t because the law does not allow me to.” Everybody’s time was wasted. She was given undue expectations. My noble friend said that people are encouraged to contact the recovery team and work out a decent repayment rate. I am not involved in the day-to-day business of universal credit, but the organisations that have helped with this and asked me to put this forward know the situation, and that is not how they see it. What should happen in theory does not always happen in practice on the ground.

If nothing else, perhaps this amendment will encourage the DWP to look again at its procedures and the guidance to make sure that things are happening as they are supposed to happen so that the picture that my noble friend painted is an accurate picture of what happens on the ground. I will obviously want to read in more detail to see whether we want to bring this back. I very much appreciate my noble friend answering my rather nerdy questions. It is not the first time that we have exchanged nerdiness in this Room. With that, I will withdraw the amendment but will want to consider what we do on Report.

[Viscount Younger of Leckie (Con)]

I shall just pick up on what the noble Baroness said about universal credit and the fact that it is quite complicated. I hope she will agree that the old system, where there were six benefits, was particularly overcomplicated and that one of the successes of the past 14 years of government was that the six benefits became one. I hope she might accept that it is not quite so complicated and that, secondly, as I have been told and believe, if we had not done that then the system of paying out benefits would have been in severe trouble during the Covid period.

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[Lord Vaux of Harrowden (CB)]

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

[Viscount Younger of Leckie (Con)]

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

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

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

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

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

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

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[Lord Palmer of Childs Hill (LD)]

My Lords, I will briefly address Amendment 124A, which seeks

“to secure fair administrative processes and meaningful human oversight”—

that is the point—

“for benefits recipients when … automated systems”

are used for decision-making. We have seen those problems with the Post Office and it happens all over.

The increasing adoption of algorithmic and automated decision-making within the public sector offers clear benefits in efficiency and consistency, but it also introduces significant risks, particularly around transparency, bias and the potential for unfair outcomes.

The Public Authority Algorithmic and Automated Decision-Making Systems Bill—that is a mouthful, is not it?—aims to regulate the use of these technologies, requiring impact assessments and transparency standards to ensure that decisions affecting individuals are accountable and subject to appropriate scrutiny. Amendment 124A aligns with those objectives by emphasising the need, as the noble Baroness said, for “human oversight”, especially where decisions have substantial effects on people’s lives.

It is essential that, when we embrace innovative technologies, we do not lose sight of the fundamental principles of fairness and accountability in public administration. Automated systems may be deployed in a way that mitigates risks to individuals and society and provides clear avenues for challenge and redress when errors occur. This amendment reinforces the importance of maintaining human involvement in critical decision-making processes, and ensuring that the rights of benefit recipients are protected and that public confidence in these systems is upheld. By supporting such measures, we can harness the advantages of automation while safeguarding against unintended consequences. I support this amendment.

[Viscount Younger of Leckie (Con)]

My Lords, there is a rather gloomy atmosphere here, but I am not quite sure why. My remarks will be relatively short. I find myself in a very unusual position—namely, I offer strong support for Amendment 124A tabled by the noble Baroness, Lady Bennett of Manor Castle. I do so not only because it incorporates vital safeguards but because it speaks to a principle that these Benches have highlighted and pressed for throughout Committee: that powerful tools must be matched by proper protections. I think we all agree with that.

This amendment could not be timelier. The use of artificial intelligence and automated systems is rapidly expanding across Whitehall, with departments increasingly deploying these tools to assist them in undertaking administrative tasks. There are clear benefits to this: efficiency, consistency and the ability to process large volumes of data quickly. AI can be a force multiplier. It can relieve overstretched teams and streamline basic tasks—I saw that when I was in post in the department—but it can never be a substitute for fair and human decision-making where individuals’ rights, entitlements and welfare are concerned.

The temptation to lean too heavily on automation is very real, particularly in areas such as social security where volumes are high and budgets are stretched. We have sought to highlight several times to the Government the additional workload and expense that we believe the provisions in this Bill will introduce for the department. Once we incorporate the need to consider additional needs, disabilities and those at risk of coercion—important safeguards that noble Lords across the Committee have supported—we start to face a massive workload. It is feasible, in light of this, that AI will increasingly be incorporated as part of this process, but we must ensure that this temptation is tempered by caution, principle and foresight. This amendment does just that; it makes clear that automation can assist, but not replace, the human judgment at the heart of a fair welfare system. Let there be light.

We are not legislating simply for this year, or even this Parliament. We are legislating for a system that must hold up under future Governments, under future pressures and in a future where Al capabilities are likely to expand even further. In just the past couple of years, we have all seen how dramatically these technologies have entered into our lives, often with little warning and even less scrutiny. The safeguards that we write into this Bill now are therefore not merely reactive, they are pre-emptive, and they are essential, a fact that groups such as JUSTICE have recognised and highlighted to us. That is why we have tabled our amendment with the same intent and near-identical wording. It is a proposal that we support wholeheartedly, and I commend the noble Baroness for bringing it forward at this stage.

The amendment would require four simple, yet fundamental things: first, that there is meaningful human involvement in any decision-making process that includes an automated element; secondly, that the individual affected receives an individual explanation, including how automation impacted their case; thirdly, that they are given a clear opportunity to make representations; and, fourthly, that they are provided with accessible information on how to challenge the decision. These are not high bars; they are the basic hallmarks of a just and humane administrative process.

There are also some important questions around accountability here. If there are no controls in the Bill on how AI is used, there is nothing, it seems to me, that would stop the department introducing this further as a matter of operational efficiency. However, this would have massive implications for the review process, which we have rightly discussed at length during Committee. If a decision is even partially informed by AI, who is held accountable? Could the civil servant in question blame AI instead of taking responsibility?

These are serious questions, and without proper safeguards in the Bill, we have no assurance from the Government that we could not, in the very near future, have a situation in which a person is attempting to review a case in which a mistake was made where the fault lies at the feet of a computer program, to put it bluntly. If we have clear human involvement in this process—guaranteed, not just promised—at least there is a person included in determining the final decision who can be held to account. This is a vital safeguard upon which the entire review mechanism would rest.

I can anticipate the response from the Minister: she will say that a human will always be at the end of a decision. However, it is not future-proofed, and I urge her to reflect on the long-term value of this amendment and to recognise that it would strengthen the Bill not only for today, but for the years to come. If the Minister can demonstrate to the Committee that these concerns will be protected against not only now, but in perpetuity—which is, of course, the effect of legislation when passed—I would be most grateful. However, from my perspective, I fear the Minister would struggle to meet this challenge because of how the Bill is drafted. I therefore believe there would be real value in the Government adopting this amendment to make sure that they, and the people they serve, are protected not only now, but into the future.

[Baroness Sherlock (Lab)]

My Lords, I regard that as a challenge. I am confident that I can assure the noble Viscount in the way that he wants to be. As I have said repeatedly—ad nauseum, to be fair—throughout Committee, the Government have a responsibility to tackle fraud and error and ensure that they are minimised. Fraud and error in the social security system were responsible for the overpayment of almost £10 billion in 2023-24. We recognise that there are opportunities for technology and data to help to identify potential fraud and error risks while also understanding the need to ensure their safe and effective use. I remind the Committee that, while the DWP is improving its access to relevant data through this Bill, we are not introducing any new automated decision-making measures in the Bill.

I will explain why this amendment is unnecessary, but I will pause briefly and digress. The noble Baroness, Lady Bennett, was commendably brief in her digression, and I will be commendably brief in mine. The Committee has at different points queried the role of automated decision-making, so I will put this point on the record. I start with the eligibility verification measure, a data-requiring measure to help the DWP identify where claimants do not meet the eligibility criteria for the benefit they are receiving. The DWP will review all information received, and DWP staff will make any decisions about entitlement where potential fraud or error is identified. No decisions will be taken using EVM data alone. Decisions about entitlement will be made only once the DWP has made further inquiries. Similarly, as previously debated, there will be no automated decision-making from the information obtained under the PSFA’s or the DWP’s information-gathering powers when we are investigating specific cases of suspected fraud. Again, decisions on the use of the new debt recovery powers will always be made by a trained member of staff.

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Moved by

[Viscount Younger of Leckie]

125A: After Clause 99, insert the following new Clause—
“Offence of facilitating fraud through dissemination of information(1) It shall be an offence for any person, by any means including electronic communication or publication on the internet, to intentionally publish, communicate, or otherwise make available information, advice, or instructions that are reasonably likely to be used by another person to—(a) mislead or deceive public authorities for the purpose of obtaining welfare or social security benefits to which they are not lawfully entitled;(b) circumvent eligibility checks, income or capital assessments, or other lawful mechanisms designed to verify entitlement under any enactment relating to the provision of social security or welfare benefits in the United Kingdom.(2) A person commits an offence under this section if they know, or ought reasonably to know, that the information or guidance provided—(a) is intended to facilitate dishonest conduct under the Social Security Administration Act 1992, the Welfare Reform Act 2012, or any associated regulations, or(b) will likely be used to enable or encourage another person to obtain, or attempt to obtain, benefits through deception or misrepresentation.(3) It shall be a defence for a person charged under this section to show that—(a) the information was provided for a legitimate public interest purpose, such as journalistic reporting or academic research, and not with the intention of facilitating unlawful conduct;(b) they took reasonable steps to prevent the information from being used for unlawful purposes.(4) A person found guilty of an offence under this section shall be liable—(a) on summary conviction, to a term of imprisonment not exceeding 12 months or a fine not exceeding the statutory maximum, or both;(b) On conviction on indictment, to a term of imprisonment not exceeding 5 years or an unlimited fine, or both.(5) For the purposes of this section “information” includes written, audio, visual, or digital content, including content distributed via social media platforms, websites and forums.”Member’s explanatory statement
This new amendment would make it an explicit offence to facilitate fraud through the dissemination of relevant information online.

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[Viscount Younger of Leckie (Con)]

My Lords, we have come to what I regard as one of the most important groups in this Committee. Amendment 125A addresses a growing and deeply troubling problem: the deliberate dissemination of information designed to assist others in committing fraud against the welfare system. It seeks, quite simply, a necessary and overdue safeguard to combat the rise of so-called “sickfluencers”.

I am sure that noble Lords across the Committee will be well aware that we are not the only ones discussing welfare today. Indeed, the Government face a serious challenge—a vote of confidence, perhaps—from their own Back-Benchers in the other place. This is a live subject and an important matter. We support the Government in their ambition to cut down the cost of welfare. It is clear from my perspective that some people need our help and are absolutely entitled to welfare payments, but we need to make sure that we draw the line in a place that makes sure that those who can work do so. I hope that chimes with the thinking of the Government as well. I take this moment to highlight that we are willing to support the Government in their ambition on this point specifically, subject to the three conditions that are: cutting the welfare budget, increasing the number of people in work and ruling out tax rises in the autumn.

When I raised the issue at Second Reading, the Minister said she would welcome proof with some examples, so I shall share some with the Committee to demonstrate the problem that we are talking about. On a YouTube channel called Mike Bolton Benefits Training, there is a series of videos in which Mr Bolton takes the viewer through the various stages of the PIP assessment process and provides scripts that can be used to score the maximum number of points. Mr Bolton bases these scripts on work that he has done with previous clients. In one video, he shares a script which he encourages viewers to recite when they are undergoing their PIP assessment, in answers to questions about accessibility. One answer that he recommends is the following:

“I always need a magnifying glass to read things like this form”.


That is simple and straightforward, and it leads to two points on the assessment. In another video, he outlines what someone would have to say in order to demonstrate that they had trouble reading and retaining information. Mr Bolton recalls the successful response that he and a previous client provided in answer to this section of the PIP assessment. The answer that he encourages the viewer to copy is:

“Even with my mum helping me, it takes a long time for me to read anything. She will sometimes read through something in just a minute, but it takes me five minutes or more before I am confident that I have understood what I am going through”.


In summing up, Mr Bolton says, and I quote him:

“What we have explained there is that, even with prompting, encouraging and explaining, she cannot read within a reasonable period of time, which would, of course, score a maximum eight points”.


There are even more egregious examples that I could draw on. A lady called Charlie Anderson with a YouTube channel in her name has a video called “Unlock the Secret Steps for WINNING Your PIP Claims—Step by Step Guide”, which runs to nearly two hours. Can your Lordships believe it? Ms Anderson goes further than providing a script to recite; she actually appears to encourage her viewers to live in a way that would score them a high number of points under the PIP assessment. For example, Ms Anderson encourages her viewers to stop washing themselves. She says in defence of this advice:

“We can maintain our personal hygiene without having a bath or shower. We do not have to feel guilty about this”.


Under the PIP assessment, you can score the full eight points if you cannot wash yourself at all—or, in this case, if you appear not to be able to wash yourself at all. If the person undergoing the assessment attends their appointment having not washed for several weeks because they have chosen not to, rather than because they are unable to, that is surely a form of fraud. The medical risks associated with not washing regularly are substantial, and providing this advice seems to be not only to encourage fraud but also to harm the viewer in the first place. If someone cannot wash because of their medical condition, that is something which should rightly be regarded and considered under the PIP assessment, but if someone is having to be convinced into not washing, that is clearly a decision that they are being asked to make in order to appear as if they have a serious medical condition—an important distinction that seems to me, again, tantamount to fraud.

Ms Anderson then seemingly encourages viewers to pretend that they suffer from medical conditions that they do not actually have. When discussing the washing and bathing element of the PIP assessment, Ms Anderson says, in advice to those giving an answer:

“This is your example: ‘My partner washes my hair for me because of my right shoulder’, and then say whatever the medical condition is that affects the right shoulder. That’s it. Keep it to being that simple”.


She then appears to encourage the viewer to pretend that they have arthritis, sharing tips on how they can convincingly claim that they have this condition. She says:

“This is really important. I’m right handed, so it would be my right side that’s more affected”—


that is, by arthritis—

“so you should giving advice always be clear on which side is worse”.

The example that Ms Anderson encourages the viewer to give to justify this claim is:

“When I get into the bath, my friend lifts my right leg into the bath for me in and out of the bath. Don’t forget the getting out bit as well”.


I turn to independence and questions in the assessment about going to the shops alone. Ms Anderson instructs the viewer to lie to their assessor about whether they can attend the shops and interact with the shopkeepers independently. She advises that the DWP assessor will ask whether the person under assessment goes to the shops alone and says that the viewer would likely say yes. Then she warns that the person will be asked if they speak to staff in the shop. She anticipates that the viewer is likely to say, “Yeah, I would say ‘hi’ to the shopkeeper”.

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[Baroness Sherlock (Lab)]

Again, I thank noble Lords for an interesting discussion—some of it even on the amendment.

The noble Baroness, Lady Fox, is right that sickfluencers are the Opposition’s favourite topic, but it gives us an opportunity to look at this element of fraud and how the Government deal with it. I will try to take us through it. This also gives me a chance to show the way in which our legislative framework provides a comprehensive basis to enable the DWP and the PSFA to address fraudulent activity against the public sector or the social security system.

In responding to the amendments, there is something that we need to acknowledge. The noble Viscount mentioned a broad spectrum and clearly this is, particularly online. The noble Baroness, Lady Fox, made this point on a previous day in Committee: there is a lot of advice online in all kinds of settings on how to claim disability benefits, and it can range from genuine advocates for disabled people to people in similar circumstances trying to tell other people what their experience has been to friends’ or family’s online content through social media. There is all manner of guidance out there, and we need to be very careful not to drag people who are not doing anything wrong into the debate.

While many people provide advice with good intentions, irrespective of how useful the advice is or how effective it will be, there are clearly some unscrupulous people who actively try to encourage or assist others in committing fraud against the social security system. Where activity can reasonably be countered, such as taking down websites or seeking the removal of posts that are unlawful, the DWP takes relevant action. We already collaborate with a range of government partners, including Action Fraud, the City of London Police and the National Cyber Security Centre to prevent fraudulent activity online.

There are legislative duties under the Online Safety Act for social media companies to remove harmful and illegal content, including content that encourages or assists others to commit offences. The Online Safety Act also allows us to work with Ofcom and its new trusted flagger process, and we have trusted escalation routes to report social media content on certain platforms.

We are committed to demonstrating that such behaviour should not be tolerated, and we encourage anyone who identifies material online—I include the noble Viscount, Lord Younger, in this—to report it through the available channels. These people should face consequences, but there is an existing legal framework to do so. Section 7 of the Fraud Act 2006 and Section 44 of the Serious Crime Act 2007 already make it a criminal offence for individuals to provide information on how to commit fraud. That includes influencers sharing and selling information online, such as fraud instruction manuals.

In addition, we are concerned that Amendment 125A could potentially complicate the legislative landscape. Adding a new offence would create overlap with existing legislation that could lead to confusion in prosecution or sentencing, and that is entirely avoidable. It also happens that, ironically, the amendment would actually shorten the maximum sentence for those convicted of the new offence; it would carry a maximum period of five years in custody but, if the noble Baroness, Lady Fox, does not like that, the current maximum is potentially 10 years under existing legislation.

I know that the noble Viscount acknowledged previously that public sector fraud hurts everyone and that he wants to tackle it and support us in doing that. I was surprised, therefore, to read Amendment 129A, which he tabled. The amendment would prevent the use of the powers in the Bill until we publish a review assessing the impacts of people who enable others to deceive a public authority to obtain social security or welfare benefits that they are not entitled to, or to circumvent eligibility checks. I clearly cannot agree that we should prevent the PSFA or the DWP using these important new powers to tackle fraud and error until we have published such a review. During that time, we could be out there investigating fraud, tackling error and recovering public money.

I encourage the noble Viscount to reflect on what he and his Government focused on when they were in power. This focus on people who share information online or through other means may not be the “silver bullet” as he hopes. We will continue to see determined and hostile actors trying to defraud the system. It is absolutely right that the department takes action to tackle fraudulent online content and has a deterrent, but the crucial thing to remember is that fraud itself cannot take place unless those seeking to defraud the welfare system manage to interact with it. That is why we have put so much effort into protecting the social security system directly. This provides the strongest chance of success, evidenced by looking at the significant value of such activity.

I really enjoyed the contribution by the noble Baroness, Lady Fox. There is so much that I would like to push back on but I do not think that I can keep the Committee here for long enough to get into some of the issues. To take a small one, however, she thinks that this Bill is a sledgehammer to crack a nut—I think it is a pretty big nut, and we want to tackle it. We will just have to agree to disagree on that. On her broader points, this Government recognise that there are too many young people who are genuinely struggling with their mental health and who need support. We want to make sure that they get the help that they need. We also recognise that, for many people, good work is good for good health, both physical and mental. We are now in a situation where one in eight of our young people are not in education, employment or training, and we cannot allow that to carry on.

We want to get out there and support people to get into the kind of work that will be good for them, but we want to make sure that those who genuinely cannot work are able to get support. That is the direction of travel for the Government and what our reforms are meant to be about.

The noble Viscount keep asking how many people the DWP prosecutes. As he will remember, the DWP is not a prosecutor itself. The department’s role is to refer cases to the appropriate prosecuting body, the Crown Prosecution Service, which selects the most appropriate offences to prosecute under. In 2023-24, fraud investigation teams in the DWP referred around 700 prosecution cases to the CPS and Crown Procurator Fiscal in Scotland. The department does not use the term “sickfluencer” and we do not have categories for that, so I cannot tell him how many cases fall under that description. We obviously do not comment on individual cases that we refer to the relevant prosecting body.

However, I understand the points that the noble Viscount is making. We are happy to continue to work in this space but, in terms of these amendments, just proposing what is in effect a complication of the landscape and a shorter prison sentence, while preventing the DWP and PSFA from using powers in this Bill to tackle fraud and error, will not deter those criminals; it will simply enable them to keep on going. I therefore urge him to withdraw his amendment.

[Viscount Younger of Leckie (Con)]

My Lords, I thank all those who have taken part in this short debate. As I said in my opening speech, this amendment reflects the reality that the vector of fraud is increasingly digital, but it also reflects something more fundamental: that our law must evolve to meet emerging threats, especially when those threats strike at the heart of public trust. We know that public confidence in welfare systems hinges on fairness, integrity and robust enforcement. We cannot let that confidence be eroded by silence in the face of digital abuse.

I say again—though I will not go into too much detail as I gave a long speech in opening this group—that we believe that this amendment is modest, measured and necessary. If the Government feel that the drafting can be improved, we stand ready to work with them. Judging from the Minister’s comments, that may not be the case. The principle must be accepted, however, because the damage being done is real—to public funds, to vulnerable claimants and to the credibility of the benefit system itself. As the Minister herself said, it is a nut; it is in fact quite a big nut. I believe it needs a sledgehammer or at least a reasonably big hammer.

On that note, I thank the noble Baroness, Lady Fox, for her comments. I listened carefully to her rather unexpected views on my amendments and, as she will guess, I did not agree with much of what she said. She came from an unusual and different angle. I will read Hansard to try to understand where she was coming from, but I agree with her and the noble Baroness that there are many other measures that must be taken to ensure that benefits, that is, universal credit or health top-up benefits, are given to the right people. The right amounts should be given to the right people. That is at the crux of the huge debate that is going on nationally at the moment and in the other place as we speak.

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[Lord Vaux of Harrowden (CB)]

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

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

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

[Viscount Younger of Leckie (Con)]

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

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

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

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

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

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

[Baroness Sherlock (Lab)]

My Lords, Amendment 126 would require the independent person, who will be appointed by the Minister for the Cabinet Office to review the PSFA powers under Part 1 of the Act, to carry out an additional assessment of the impact of the whole Act on the number of people facing financial exclusion. I hope that that clears up the question raised by the noble Lord, Lord Vaux. The reviewer is the one for the PSFA bit, and the impact would be for the whole Act, as the amendment is currently drafted.

I recognise the intent behind the amendment put forward by the noble Lord, Lord Palmer. I assure stakeholders in the financial sector—should they be watching—that we have heard the concerns that they have raised with us on these matters. I am confident, however, that this reporting on potential financial exclusion will not be necessary.

First, I want to talk a little wider and acknowledge that the Government recognise the place of financial services in the lives of millions of people and businesses across the UK. That is why we have already taken steps to give people greater protection against their bank accounts being closed, as part of our plan for change. To do so, the Government introduced rules under the Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 that require banks to give customers at least 90 days’ notice before closing accounts. The rules stipulate that, when doing so, the bank must provide a clear explanation in writing as to why they intend to close someone’s account. That gives people clarity on why the decision has been taken and, crucially, more time to challenge such decisions through bodies such as the Financial Ombudsman Service. These changes have been made off the back of consultation with industry and will take effect from April 2026.

Moreover, there are statutory protections to protect individuals most in need. The nine largest UK providers of personal current accounts are required by law to offer basic bank accounts to individual customers legally resident in the UK who do not have a bank account or who are not eligible for banks’ other accounts. Banks are prohibited by law from discriminating against UK consumers by reason of a range of protected characteristics, such as sex, ethnicity, disability and belief, when individuals apply for access to an account. So, while firms rightly have strict obligations to ensure the legitimacy of a business and to protect against financial crime, the Government have focused on account closures as a priority, given the material impact that a loss of banking services has on a business already in operation. That is the broader context.

Secondly, our approach on this Bill fits with that wider Government agenda on tackling financial exclusion. The DWP and the PSFA are working closely with stakeholders from the finance industry, including UK Finance and the Financial Conduct Authority, to ensure that no one is inadvertently or unintentionally excluded from access to financial services. As such, we have made provision in the legislation, where appropriate, to try to ensure that this is the case. For example, the DWP’s eligibility verification measure amends the Proceeds of Crime Act 2002 to make clear to financial institutions that they are exempt from returning a suspicious activity report in certain circumstances, if the information they have is only as a result of a data match from EVM. UK Finance agrees that this is an important exemption.

Thirdly, where appropriate, the codes of practice seek to provide further detail about banks’ duties in this space. For example, the code of practice for the EVN also clarifies that eligibility verification notices and the data returned in compliance with them are not intended to indicate that the DWP has any suspicion of fraud or financial wrongdoing, or that an error has occurred. The determination of any subsequent wrongdoing will be made following a further review of this evidence alongside other evidence, and is for DWP to determine, not the banks. We continue to engage with the financial industry and across government on drafting this to ensure that we get the wording right in our codes of practice.

For the PSFA, while the code of practice for Part 1 of the Bill is focused more on the new civil penalties, the PSFA will, in due course, publish guidance on the other powers in Part 1. This will consider these issues from the PSFA’s perspective and in more detail. For respective debt recovery measures, the PSFA and the DWP will align with the government debt policy, as well as abide by the standards set out by the government debt management function and the debt management vulnerability toolkit to handle those at potential risk of financial exclusion.

The Government acknowledge that financial exclusion is a serious problem, which is why we are taking steps to provide people with additional protections and to clarify duties in the Bill. I am confident that we have the necessary protections for individuals from financial exclusion in the Bill and therefore do not think that the amendment is needed. I therefore ask the noble Lord to withdraw his amendment.

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Moved by

[Viscount Younger of Leckie]

130: Clause 105, page 66, line 35, at end insert—
“(3A) Sections 72, 73 and 74 may not come into force until the Secretary of State has published, and laid before Parliament, a report outlining the specific process through which information will be collected in order to fulfil the obligations made out in Chapter 1, Part 2, and in Schedule 3, and their anticipated costs.”Member’s explanatory statement
This amendment seeks to ensure that, before coming into force, Parliament had sight of the mechanisms through which information would be gathered and shared, and the projected costs associated with this.

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[Viscount Younger of Leckie (Con)]

My Lords, for this group—the penultimate one in Committee—I thought that it would be helpful to noble Lords if I briefly read out what this amendment aims to do. It seeks to insert a new subsection to Clause 105, which states:

“Sections 72, 73 and 74 may not come into force until the Secretary of State has published, and laid before Parliament, a report outlining the specific process through which information will be collected in order to fulfil the obligations made out in Chapter 1, Part 2, and in Schedule 3, and their anticipated costs”.


Reading that aloud will allow me to explain the breadth of the amendment and what I am trying to do.

In essence, the amendment is an opportunity for us to question the Government on the mechanisms that they will use to recover funds, verify eligibility and work alongside the banks, to apply the provisions that have been set out in the Bill. I suspect that I am joined by several noble Lords across the Room when I say that, while the Bill—and the Minister’s remarks throughout these days in Committee—have helped to highlight the scale and purpose of the powers, we are still somewhat in the dark as to how these will really work in practice. We do not have clarity on how this will work operationally for banks and in the DWP, which is important for us to try to understand how this will work in practice. I accept what the Minister has said on certain occasions—namely, that a test and learn process is ongoing—and I suspect that she will probably say that in response.

Many of the concerns that I, my noble friend Lady Finn and many other noble Lords have raised over the past few weeks come out in how these systems are set up. Our discussion can only go so far when speaking about this in abstract; therefore, this amendment invites the Government, both now and ahead of Report, to set out how these provisions will work in practice and how the concerns that we have raised with the Government will be addressed. It may well be that my remarks will spur on a detailed letter from the Minister, to help us all in Committee in this respect.

We are still very unclear on how banks will be asked to comply with the provisions set out in the Bill. We have pressed the point numerous times that banks need to be involved in the discussions on costs and the recouping of costs, not only operationally but in relation to opportunity. Many questions remain about how this will work. First, how many notices will banks likely encounter per week, and how often will they be required to provide information to the DWP? Do the Government have an idea of how much the cost will be to banks per person in undertaking this process on behalf of the DWP? What will the EVN actually look like, and in what form will that be communicated? In what format will the banks be required to respond to this. I understand that, on a previous group today, the Minister attempted to answer some of these questions.

Anecdotally, I am aware that bank employees tasked with responding to HMRC are faced with millions of lines of data, which they stress is often of very poor quality. No account is taken for those who have died, address lines are often formatted in the wrong fields and personal information is incorrectly entered. Employees at the bank—not those in HMRC—have to trawl through all this information to check whether the person has died, or whether their surname is entered into a box meant for their postcode. This is an arduous task that takes hours to complete and diverts clever and capable employees from furthering the bank’s main objective of making money and contributing to our economy.

How these notices are made out, what they demand of banks and how the information is to be communicated in practice are important questions. We need to make sure that we are not imposing further undue costs on to banks. They are, as we have said many times, partners and not tools—they should not be asked to incur an undue cost in the fulfilment of public sector duties. Having a clear breakdown on how this system will work in practical terms, as agreed with the banks, is something that Parliament needs sight of before this Bill becomes law, because only then will we have some clarity on our questions in this matter.

Furthermore, we still need clarification about how a consideration for vulnerable people, with disabilities or who are at risk of coercion, will be adequately protected through the process of the exercise of the provisions in the Bill. We have been assured verbally by the Minister that these people will be considered—I accept that—but we have not really been told how. Further reassurances are required.

We have proposed—through amendments in my name and in those of my noble friend Lady Finn and other noble Lords, such as those tabled by the noble Lord, Lord Palmer—several practical models for how the Government would take adequate account of these factors when making a decision about pursuing the recovery of funds. Practically, this would require a lot more information to be accessed and reviewed about a person before the decision can be taken.

This is an important matter to consider in operational terms, as it would doubtless substantially increase the workload of the DWP in exercising these powers, requiring it to look at a good deal more than just numbers. However, making sure that we incorporate these additional needs and vulnerabilities into the process is vital, as we have said in the past. It is the only way in which we can make sure that we are not doing more harm than good, and that we do not cause further distress to those who should receive our help. On that basis, I hope that the Minister can set out how these considerations will be taken into account in practical terms, and how much additional expense and workloads she considers this would contribute to the DWP.

Finally, this is also an appropriate time for me to press the Government again on how the system will work across the banks. It is my understanding that the DWP can access information about the bank account into which the benefit payment is made, but no other. Can the Minister confirm whether that is the case or whether the DWP will also be able to access other accounts held in the same bank in the name of the person in question? As we have stated before, this legal limitation seems to be a serious issue, presenting a potential loophole that could be easily exploited by fraudsters, who could simply move money from one account to another, safe in the knowledge that the Government cannot legally pursue them any further based on legislation that they themselves introduced. Can the Minister also take this opportunity to outline operationally how this issue would be addressed, and whether she is considering changing this part of the Bill to shut down this loophole? Again, she may well prefer to write a letter.

The amendment serves as a timely and essential reminder that while the principles behind the Bill may be broadly accepted, its practical application still raises a host of unresolved questions, and we are being asked to sign off on a framework that will place significant new responsibilities on both the department and the UK’s banking sector, without having seen a clear operational blueprint. If the Government are to ask banks to take on a new role in data provision and verification, the Government must also be prepared to offer banks clarity, support and safeguards to prevent undue burden and to ensure accuracy in implementation. Equally, the processes by which vulnerable individuals will be identified and protected must be defined and made transparent.

I have given fair warning of some further questions about the letter from the noble Baroness, Lady Anderson, which sets out some of the figures on fraud that we asked for. I thank her for the letter and appreciate her sending it before the end of Committee. However, it raises further questions. I do not necessarily expect answers now, but I see that the Minister has a bit of paper in her hand.

First, the letter said of the figures:

“This estimate was calculated from taking total government spend and income for 2023/24 and deducting spend and income associated with known estimates and out-of-scope items. This revealed that around £560 billion of public spend and income was not subject to any fraud and error measurement in 2023/24”.


I raise this because I am confused about why we have £560 billion of public spend and income that is not subject to any fraud and error measurement. Can the Minister please clarify why this is the case? I suspect there is a simple answer. What steps are the Government taking to try to rectify this as soon as possible? It is a very big figure. Does the Minister anticipate that, within that £560 billion figure, there is some fraud or overpayment that we should be aware of?

Secondly, I was a little confused about the language used in the letter, which refers to and segregates “capital” and “abroad” overpayments. Can the Minister please clarify what these terms mean? I should probably know, but I do not. Furthermore, can she update the Committee on why “abroad” overpayments for pension credit are so high?

To conclude, can the Minister commit to making these operational details clear to the House ahead of Report, so that we can frame our important discussions at that stage on the basis of greater information than we currently have? Of course, that will impact and inform the amendments that we might bring back on Report. Setting out how this will work and how our concerns will be addressed might make life a bit easier for the Minister when she has to join us all again in a few weeks or so—I do not believe we have any dates yet—on Report. It would certainly give us clarity on what the Government envisage in practice for the provisions in this important Bill. I beg to move.

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I hope that I have answered the noble Viscount’s questions and that he has been persuaded that the amendment is not necessary. I therefore ask him to withdraw his amendment.

[Viscount Younger of Leckie (Con)]

My Lords, I thank the Minister for giving some answers to my questions, particularly those that I raised about the letter—there is greater clarity now. Some of the answers I probably should have known.

I appreciate her comments regarding the plethora of questions that I have raised. I am choosing my words quite carefully, and I totally understand that I was on the other side of the fence on this, but I hope that I might speak on behalf of others who have spoken in this Committee and say that it is quite a challenge for us, when we are challenging the Government, when we cannot get answers. I understand why the Minister cannot give us the answers, and I speak on behalf of my noble friend Lady Finn from the Public Sector Fraud Authority angle and the DWP angle. This goes back to June and July 2024 when, clearly, we were not able to give too much information out because there was test and learn. I of course understand that we cannot put too much into the public domain for fear of aiding those who might be keen to perpetrate fraud.

What I am really trying to say is that this amendment was deliberate in trying to draw out some further answers. I understand where the Minister is coming from in saying that she cannot give precise answers to many of the questions that we have put. Perhaps we should leave it, on this last day in Committee, with a request to the Minister to look again at the questions that I have raised on this group to see what further answers might be possible before Report. At the end of the day, we have to be sure that the Bill is workable and can be understood by all, and that any loopholes are filled. That is probably my only wish.

[Baroness Sherlock (Lab)]

I am grateful to the noble Viscount for his understanding. Just to be clear, the questions that we are not able to answer are primarily operational ones. What I am therefore trying to do is to make it possible for Parliament to scrutinise the legislation and to answer everything that seems to be legitimate and appropriate, which Parliament can look at, at this stage. Perhaps it would be useful if we were to organise another session for Peers between now and Report, so that the questions can be put to us and we can go through them. That might allow me to answer questions in a less constrained manner than I can at the Dispatch Box. I will commit to looking through all the questions that have been raised by noble Lords in Committee to see what we have and have not been able to answer. We can try to regroup before Report and see where we get to, if that would be acceptable.

[Viscount Younger of Leckie (Con)]

I thank the Minister for those comments. Others who have taken part in Committee may also be able to add value—I am sure that they would.

I have a final comment before I sit down and indeed withdraw my amendment. I know that the department set out to produce a code of practice at least a year ago, and I am pleased to know that the code is being built up and improved upon as part of test and learn—so I just clarify that I am aware of that. In the meantime, I beg leave to withdraw my amendment.

Amendment 130 withdrawn.

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Moved by

[Viscount Younger of Leckie]

131: After Clause 105, insert the following new Clause—
“Repeal of this Act(1) Subject to the following provisions of this section, this Act is repealed five years after the day on which it is passed.(2) The provisions of this Act are not repealed in accordance with this section but shall continue in force if in each of those five years the total amount recovered through the provisions in this Act exceeds the amount expended in exercising these powers by a margin of £500 million per annum.”Member's explanatory statement
This is a sunset clause requiring that the net benefit of provisions in the Act must exceed £500 million per annum at the end of a period of five years, else the Act will cease to be in force.

[Viscount Younger of Leckie (Con)]

My Lords, we come to the final group, which I am pleased to open. I thank noble Lords who have participated in this Committee, particularly the noble Baronesses, Lady Sherlock and Lady Anderson, on behalf of my friend Lady Finn, and all the officials for their answers to remarks and questions. I know that spending hours in Grand Committee is not a massively appealing prospect, particularly on these rather hot and stuffy days. We probably all deserve a drink after this.

Over the course of these days, we have raised some important questions and concerns that we have for the Government on a Bill that, despite its technical title, is quite important. I feel that the Committee has come together on several key issues around safeguarding, proper independent oversight of these powers and the costs, as I said a moment ago, that we will impose on banks.

We have outlined areas of the Bill that could threaten the well-being of and access to services for benefits claimants, we have raised concerns over the powers granted to the PSFA and we have brought our remarks not only on these Benches but across the Committee back to the principle of that important word “proportionality”. While we need to tackle the issue of public sector fraud robustly, we must do so in a way that is nuanced, safe and effective. This is a significant Bill in respect of the problem that it is trying to tackle and the powers that it is seeking to grant. It deserves our full attention and scrutiny for that reason, and I feel that much of the debate that we have had reflects that point.

Amendment 131 is a sunset clause, requiring that the net benefit of provisions in the Act must exceed £500 million per annum at the end of a period of five years. Its basic purpose is to set a standard for the performance and return on investment made as a result of the provisions in the Bill. We have heard many times about the scale and scope of the challenge that we are facing with respect to public sector fraud. Amendment 131 seeks to bring us back to the fundamental principle that our purpose should be the recovery of public money in a way that genuinely benefits the taxpayer.

We have spoken a lot about costs over the past few weeks and today. It is important that we pursue this policy in a way that is cost effective and recovers money in a meaningful and tangible way. This is about being responsible with taxpayers’ money, and we must ensure that we get a return on investment to approach this issue sensibly and pragmatically.

We have agreed pretty unanimously on the principle of returning to the taxpayer money that has been gained fraudulently, but there is no point in pursuing the policy if it does not give us a sufficient return on that investment. In other words, this would set a benchmark for efficacy and cost-effectiveness. If these powers are delivering real value for money, then they would remain. If they are not, then Parliament must revisit them—hence the amendment.

The public rightly expect that the powers we grant to Ministers and departments are not only proportionate but demonstrably effective. They do not want systems that are costly to administer and burdensome to operate and yield little in return, nor should they be expected to accept them. This amendment would simply create a clear feedback mechanism. It asks that the Government show their working and provide an evidence-based justification for retaining powers that intrude on privacy, create obligations for banks and place additional burdens on both government departments and third parties. If the system is working and recovering public money effectively and efficiently, then, as I said earlier, there is no difficulty in meeting that threshold, but if it is not then we should have the courage and accountability to stand back and reassess.

Let us also be clear: the amendment would not automatically repeal the Act in five years’ time. It would allow for its continuation if and only if the system works. It would not constrain the Government’s ambition but demand proof of delivery—and what is wrong with that? At a time of tightening public finances and growing digital scrutiny, it is more important than ever that new powers are not just well intentioned but demonstrably worth while, and this sunset clause would help to ensure that. It would build a clear and measurable standard, and it would respect Parliament’s duty to monitor the impact of the legislation that it enacts. I beg to move.

[Baroness Fox of Buckley (Non-Afl)]

I shall say a few words despite my earlier promise and add to this moment of harmony. This is an interesting amendment to finish off Committee. I talked earlier about sledgehammers and nuts. I am concerned about civil liberties being constrained by the Bill. There are huge invasions of privacy and things that I worry about in terms of overreach of state power, but we can be assured all the time that this is about protecting public money.

When we describe everything from organised crime to fake charities getting money from the state and so on, understandably, we then think, “Are we trying to balance this out? Is it proportional? Do we have to make compromises on freedoms in order to crack down on it?” I am not yet convinced that that proportionality exists, and I know that we will pursue some of that on Report. What will remain of this Bill are those powers, but I am not convinced that the money accrued back will justify the kind of powers that the Government are giving themselves.

--- Later in debate ---

[Baroness Sherlock (Lab)]

My Lords, I am grateful to the noble Viscount for introducing his amendment and welcome the noble Baroness, Lady Fox, back to the debate.

I thank all noble Lords who have contributed. I hope that those who were not here will read it on the record. Notwithstanding the comments about our being in Grand Committee rather than in the Chamber, this has been a very good and interesting Committee. It has been the House of Lords doing its job: testing through the details, sifting through things and being able to make sure that I have answers to questions. I am very grateful for the way in which noble Lords have engaged, and I also speak for my noble friend Lady Anderson. I thank everyone for that and all those involved in supporting it.

While I understand that the noble Viscount rightly wants to hold the Government to account, I am afraid that this, in practice, is a wrecking amendment, and I will explain why for two clear reasons. Therefore, I obviously must oppose it. We have said repeatedly—although I recognise that we have not yet convinced the noble Baroness, Lady Fox—that the measures in the Bill are strong and proportionate. We have made clear that, to ensure that they are implemented safely, they will be rolled out gradually through a test-and-learn approach.

When we are scaling up these powers, there will be a period when the powers will not be fully rolled out and delivering the level of savings that they are expected to in the future. That means that we will not deliver the same savings profile at the start, compared to when the measures are fully rolled out. Setting an arbitrary requirement that we must see net recoveries of £500 million a year—or any other rigid financial threshold—undermines that approach and risks either our prematurely withdrawing measures before they are fully rolled out, or requiring the Government to roll out the Bill more quickly, which would give industry less time to adjust and risk the powers being implemented less effectively and less safely.

As noble Lords know, the Bill is estimated to deliver benefits of £1.5 billion by 2029-30, as certified by the Office for Budget Responsibility. That is made up of £940 million in savings related to fraud and error overpayments through the eligibility verification measure, and £565 million in additional debt recoveries from the debt measure. Our impact assessment clearly outlines how we will scale up our rollout to deliver these savings.

I highlight to the noble Viscount that that delivery profile has been certified by the OBR. Looking at that delivery profile, he will clearly see that we would not meet the £500 million in net recoveries benefits in 2026-27, and, under his amendment, the powers would cease to be available in five years’ time because of the failure to meet that threshold. That would simply undermine the Government’s efforts after year one and remove any incentive to invest in the delivery of these measures, knowing they would be gone in five years. Given those figures, it is not clear how the noble Viscount can have anticipated the Bill achieving net recoveries of £500 million each year, as is set out in his amendment, without also wrecking the Bill.

Secondly, by extension, this amendment overlooks the wider benefits the Bill could bring. For example, the Bill contains preventive aspects, and some measures may change attitudes towards fraud, error and debt by providing an important deterrent effect. I believe this amendment would remove the potential for positive prevention and deterrent effects.

I know that the noble Viscount thinks this matters. When we discussed our debt recovery measures in this Room last week, he said that it was

“about ensuring that there is an effective deterrent against repeated and deliberate non-compliance with efforts to recover public money”.—[Official Report, 18/6/25; col. GC 482.]

I agree with him; we need these powers to remain for exactly that reason. But, if the noble Viscount believes this, he must also accept that, by their very nature, where overpayments are prevented or deterred, they will, by definition, reduce the size of the pool and the amount of money we can recover over time. While I accept that we are a way off that reality, this may mean there will come a time when we cannot recover a net of £500 million a year thanks to the success of our detection and prevention efforts. But that does not mean that our counter fraud and error activity—or the Bill, for that matter—should just cease. Indeed, it would mean that the activity is working and should continue, to keep levels of fraud and error down.

Unfortunately, we cannot easily quantify all these effects, as they are complex, so although savings from measures such as EVM account for detecting the overpayment and preventing it continuing into the future, this would not contribute towards a recovery figure, as the amendment specifies. It is instead taken account of by the OBR in the AME savings for the Bill.

I know the noble Viscount does not want fraudsters to be able to get away with attacking our public services or the state to be unable to properly verify benefit eligibility, or to let it continue to be the case that debtors will be able to refuse to repay money belonging to the taxpayer. So I ask him to consider a different approach to hold the Government’s delivery to account.

To close, I assure the Committee that we are not complacent; we are committed to delivering the Bill and its savings. Moreover, we want to scale measures where they prove successful to, I hope, save more in the future. But, given that we are introducing new powers and requirements, we must also deliver safely, as I know we all want to. If noble Lords want to see more detail about when we expect to make the savings or to see the anticipated costs of the measure, these can be found in the published impact assessment, in which we have committed to monitoring and evaluation in the Bill to ensure that the new powers are delivering as intended. For the reasons I have set out, I ask the noble Viscount to withdraw his final amendment.

[Viscount Younger of Leckie (Con)]

My Lords, in winding up on Amendment 131, I say that, as I laid out in my opening remarks, we believe that the amendment would introduce a clear, common-sense standard: that the powers in the Bill should continue only if they deliver real, measurable value—a net benefit of at least £500 million per year. I appreciate the support of the noble Baroness, Lady Fox, in this respect.

Although we do not see this as a wrecking amendment, I listened carefully to the arguments put by the Minister, which I will read in Hansard, and I have to say that I see some merit in her responses. However, it is still the case—she alluded to this—that there needs to be accountability. Our aim is not to obstruct the Bill—we do not see the amendment as being wrecking—but the message has been put across that there needs to be a form of accountability. We have heard often during our deliberations that the Bill is part of a test-and-learn approach. If that is the case, there must be a test and a measure of success. Without them, we risk creating a framework that operates indefinitely without delivering the intended returns.

In closing, I leave a question—perhaps hanging in the air—for the Minister to answer. Will she consider bringing forward some further ideas for how success can be measured? That is what we are all about and I think we are probably on the same side of the argument as to how we can measure success. Whether it is £500 million or a sunset clause is not for me to say—it is part of the amendment that I have put forward—but there needs to be something. To that extent, I suspect that we will press this aspect on Report. With that, I beg leave to withdraw my amendment.

Amendment 131 withdrawn.

Public Authorities (Fraud, Error and Recovery) Bill

Viscount Younger of Leckie Excerpts

Committee stage
Wednesday 4th June 2025 Grand Committee

[Lord Palmer of Childs Hill (LD)]

My Lords, there is really not a lot to say at this stage. We support the purposes of the Bill. Obviously, it is not meant to be a contentious Bill, but the interesting thing is the fine line that it draws between chasing people who have made honest mistakes and those who enter into fraud. As with income tax—if we still use the old words from my accountancy days—the difference between evasion and avoidance is sometimes a very thin line. We will explore where you draw that line in terms of how you chase people for mistakes that have been made, perhaps on purpose or perhaps in error. We look forward to the progress of the Bill to see where those lines are drawn.

[Viscount Younger of Leckie (Con)]

My Lords, I shall speak briefly as the other opposition Front-Bencher working on the Bill. I shall make a few introductory remarks on the purpose of the Bill as we begin Committee. I join my noble friend Lady Finn in welcoming this opportunity to have a productive, collaborative opening discussion on what the Bill is actually about and what it should be about.

Public sector fraud, as we have debated, is a crime that hurts every taxpayer in the country. It hurts every public service user and is an insult to everyone who works hard, pays their taxes and contributes to our society. This is a problem that we need to take steps to address, and the Government are right to reintroduce legislation and restart the process, which I know both Ministers acknowledge was started under the previous Government.

As noble Lords will be aware, my main focus will be on the second part of the Bill, which covers the DWP. This will not be covered so much in the amendments under discussion today, although I want to take the opportunity at the outset to flag up in advance and highlight some of the concerns that I have around these provisions and where my focus will be in the forthcoming Committee days. I hope this is helpful to the Committee.

First, on banks, there are still many questions over how the relationship between the DWP and the banks will manifest itself. We do not have clarity from the Government over how the process will work in practical terms or the costs that will be incurred by the DWP and financial institutions as a result of compliance under the terms of the Bill. As we highlighted at Second Reading, the Government, if they remain committed to human oversight of all decisions and reviews of information obtained from banks, could see a massive increase in their workload. Gaining greater clarity on this relationship, how it will work, the impact that it is anticipated to have and the resources required will form part of our approach on this part of the Bill.

Linked to this is the need to test the means to the end. What will be the cost for the expected return? How will the return be defined? That is the identity and recovery of fraud; also, the measurement of the deterrent factor in taking greater and more stringent measures to combat fraud—to take the challenge to the fraudsters, who have been seen to become ever more sophisticated. We will wish to challenge enforcement. What works? What are the sanctions for those who are convicted? Are they effective? What costs and resources are judged to be estimated in respect of this aspect of the Bill?

Secondly, we want to ensure that the Bill protects vulnerable people and recognises additional factors that may lie behind, for example, an overpayment. Proportionality in the exercise of these powers is vital, and we need to ensure that we do not cause greater harm than good in the pursuit of our shared objective. This concern is shared by noble Lords in this Committee. I am hopeful that we can reach an understanding with amendments that protect vulnerable people.

Finally, we see the Bill as an opportunity to combat those who seek to share information, allowing people to defraud the benefits and welfare system—the so-called “sickfluencers”. This is a serious problem. Thousands of people every day are consuming content that informs them of how to play examiners and score certain points based not on their actual health condition but on a script they have been taught online. These assessments are the mechanism through which the state determines eligibility for welfare payments. “Sickfluencers” who actively encourage dishonesty and make money out of a dishonest gaming system for exploitation must be stopped. We shall support amendments that seek to make this an explicit offence, so that there can be no room for doubt that these actions are wrong and could be criminal.

This is an important discussion on a topic that deeply affects everyone in our country. I welcome the opportunity to discuss ideas and suggestions for improvements to the Bill, which attempts to achieve a noble task. I and my noble friend Lady Finn will work in good faith with the Government and noble Lords across the Committee to improve the Bill and to make it effective and responsible.

[Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)]

My Lords, and so we begin. I thank all noble Lords present for their participation and engagement. On a personal note, before we get to the substance and serious detail of the Bill, this time last week I was having my make-up done for getting married, so I welcome noble Lords joining me on my honeymoon in our Palace.

Moving on to the substance, I remind your Lordships why we are here today. Fraud against the public sector takes money away from vital public services, enriches those who seek to attack the Government and damages the integrity of the state. This Government said clearly in our manifesto that we will not tolerate fraud or waste anywhere and that we will safeguard taxpayers’ money. This Bill is part of those efforts. This is a Government focused on delivery. The Bill makes provisions

“about the prevention of fraud against public authorities and the making of erroneous payments by public authorities; about the recovery of money paid by public authorities as a result of fraud or error; and for connected purposes”.

This is already in the Bill’s title. There is no need for an additional new clause at the start of the Bill to set out a purpose that reiterates this, albeit in different language.

It is important for your Lordships to understand the real impact of fraud against the public sector. This is a dry term for something profoundly impactful. It is not government or state that is the ultimate victim of such fraud. It is not the Chancellor’s pocket that is picked, although the Treasury bears the brunt of at least £55 billion of fraud and error each year. The real victim is the British people. Every taxpayer who pays their fair share pays a fraud premium, because fraudsters cheat the system and skim from the top. It is taxpayers who are the victims. Every citizen who uses public services, knows how much good every penny can be put to in the communities in which we all live and rightly expects that the money will go to support their community is being defrauded. It is our citizens who are the victims.

Everyone who is in need, and who relies on the benefits and welfare systems that others cynically abuse, is a victim of public sector fraud. Noble Lords across your Lordships’ Committee will share my contempt for fraudsters who attack the British people in this way, and will want to take decisive action to start putting things right.

--- Later in debate ---

[Lord Maude of Horsham (Con)]

My Lords, I apologise for not having been present for the Second Reading debate on this Bill—it is a subject rather dear to my heart—and for not being here at the beginning of this Committee’s proceedings this afternoon. In both cases, I had unmoveable previous commitments. I rise to express broad support for the amendment moved by the noble Baroness, Lady Kramer. She is absolutely right when she says that the Cabinet Office is the right place for a channel of this nature to be located. In later amendments, I will address concerns that the central public fraud authority needs to be empowered to intervene with other departments and be more strongly set up for that purpose. In the context of whistleblowing, I doubt whether it is essential to have this set out in the statute because there is nothing to stop the Cabinet Office setting up such a channel now, but it is an opportunity to ventilate the issue, which we should welcome.

Back when I was the Minister for the Cabinet Office, we were trying to simplify the way procurement was done because one of the unforeseen consequences of having absurdly overbureaucratic and overcomplicated procurement practices was that fraud became easier. When we were trying to simplify how procurements were done, we set up something we called, rather misleadingly, the mystery shopper channel. If bidders or suppliers saw, anywhere in the public sector, a procurement that was being done in the old-fashioned way—excessively prescriptive, rigid and expensive for bidders—they could let us know anonymously. They could tip us off, and the Cabinet Office was then in a position to intervene and draw attention to this—often because it was being done at a relatively junior level, without senior people being aware. So I know from experience that a channel of this nature can be very powerful, and many suppliers are immensely appreciative of the value it created for them. I support the approach that the noble Baroness has taken, and I hope the Minister will take that away.

[Viscount Younger of Leckie (Con)]

My Lords, I thank the noble Baroness, Lady Kramer, for raising whistle- blowers in respect of the Bill and for highlighting the importance of the protection of those who feel that they must speak out if they see an action or actions that they feel could be fraudulent or not in the public interest. Indeed, it could be actions that should be being taken but are not.

Ensuring that we have adequate protections for whistleblowers is vital to building confidence with the people we need to come forward if we are to tackle fraud. In respect of public sector fraud, such people are employed in local authorities or in the Civil Service. If certain protections are not in place, this can have a detrimental effect on recruitment, retention and perhaps career management.

In tackling fraud, we will inevitably ask—and, in fact, trust and expect—public officials to make the right calls and decisions in their day-to-day work. These decisions can often be incredibly tough, involving sensitive matters and perhaps involving close colleagues. So reassuring public sector workers that they will be protected when they do the right thing is of paramount importance, and we would support further reassurance from the Government that whistleblowers will be protected and supported when they come forward.

Amendment 3, tabled by the noble Baroness, Lady Kramer, presents a sensible proposal for the creation of a whistleblowing reporting channel that would guarantee anonymity and protect whistleblowers, who would themselves be legally defined. The noble Baroness might like to explain in her summing up, however, what she means by

“a process to update whistleblowers in cases of fraud”.

How would she see this work?

On her Amendment 66, we do not think it necessary to establish an office of the whistleblower, although I understand that, as she said, this is very much a probing amendment. It sounds laudable, with laudable aims, but we see this as potential overregulation—the setting up of another body, at an unknown cost and with an unknown number of employees and resources—when we believe that what we need is a proportionate and workable system, as the noble Baroness herself has said in her Amendment 3, and an established process by which fraud is able to be reported with protections in place.

There is a danger that if you set up a body such as a specific office for whistleblowing, you can perhaps unwittingly encourage too many false flags, where whistleblowing is almost encouraged and a bureaucracy is created. It is important that evidence of whistleblowing is protected only where it is substantive and where there are protections in place—not flimsy or based on hearsay, for example. Of course, wrongful reporting can have a devastating effect on people’s lives.

These are really questions for the Government to answer, because the noble Baroness, Lady Kramer, and I share the same objective: pushing and encouraging the Government, in the Bill, to demonstrate practically what actual new protections there are for those who see or perceive fraud in their area of public sector work, bearing in mind that fraudsters can be cunning and clever. It often surprises one who is ultimately seen to commit fraud—it is often in an unexpected area or from people you would never suspect of committing fraud.

I agree with the noble Baroness, Lady Kramer, that it is good to make comparisons with other whistleblowing processes, which she did with a deal of eloquence. I want to make a comparison with the NHS, as I understand that the NHS has upgraded its protections for whistleblowers. Thus Health Education England is listed as a prescribed person under the Public Interest Disclosure Act 1998, which was referred to by the noble Baroness, Lady Kramer. That means that workers at other organisations or companies who wish to raise concerns—in other words, whistleblowing—relating to the education, training and sufficient supply of healthcare workers at their employing organisation or company can do so to HEE. Prescribed persons enable workers to make public-interest disclosures to an independent body where the worker would prefer not to disclose to their employer direct, and the body may be able to take action on the disclosure.

We know that whistleblowing is the term used when a worker provides information to their employer or a prescribed person relating to wrongdoing. The wrongdoing will usually, though not always, relate to something that they have witnessed at work. This is also known as disclosure, which was raised by the noble Baroness as well. To be protected by whistleblowing law, a disclosure must be a qualifying disclosure. That means that the worker making the disclosure believes that doing so is in the public interest and it relates to one of the following categories, which I suspect the Committee will be aware of: criminal offence, breach of a legal obligation, miscarriage of justice, endangering health and safety, damage to the environment and covering up wrongdoing in any of those categories.

Workers have the right not to be subjected to any detriment as a consequence of making a disclosure. To qualify for protection when making a disclosure to a prescribed person, workers must have a reasonable belief that the matter falls within the prescribed persons remit and that the information disclosed is substantially true. Meeting these criteria is referred to as making a protected disclosure. Workers are encouraged to seek independent advice to help consider whether they might meet the criteria for making a protected disclosure. As the Committee may know, that can be obtained from Public Concern at Work or Speak Up or through a legal representative. In addition, HEE is required to report in writing annually on whistleblowing disclosures made to it as a prescribed person without identifying the workers concerned or their employers.

Rather than set up a new whistleblowing body— I have used the HEE as an example—I press the Government to find an existing mechanism, maybe within the Cabinet Office, a body that exists already and can be set up in the public sector and defined as a prescribed person specifically for public sector fraud, rather than setting up a particular office for the whistleblower.

We need to recognise that, although we are asking workers to do the right thing, we are also asking them to do something that is emotionally difficult and distressing. People should be empowered to stand up for the correct use of public money, which can happen only if cast-iron reassurances can be given to them.

With those explanations, I hope the Government will consider these points as they progress with the Bill, focusing on practical, sensible but proportionate proposals that will encourage people—which is the whole point—to come forward when they are made aware of some wrongdoing.

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, I welcome the amendments tabled by the noble Baroness, Lady Kramer, on the important issue of whistleblowing. Protections for whistleblowing are a key aspect of counterfraud investigations. A huge amount of the information originally received to guide our investigations comes from whistleblowers, so making sure that the appropriate protections are in place is incredibly important going forward. I welcome the opportunity to explore what more can be done and to reflect on what currently exists.

It will not surprise the noble Baroness that I am unlikely to commit to a new agency within this Bill today, but I welcome the opportunity to meet her to explore in more detail anything that she believes we can do within the confines of the Bill. I sat through a similar debate on the Armed Forces Commissioner Bill, when we also touched on these issues. I would like to reassure the noble Baroness, Lady Kramer, that the meeting she suggests is one that we have already discussed, but we will now advance it. I will meet all the agencies that she has highlighted to talk about what they do and do not require.

Currently, to qualify for the whistleblowing protections provided by the Public Interest Disclosure Act 1998, as inserted into the Employment Rights Act 1996, a worker needs to have a reasonable belief that their disclosure tends to show one of the relevant failures set out in legislation, that the disclosure is in the public interest and that the disclosure needs to be made to the relevant person—for example, the employer, a legal adviser or a prescribed person. The noble Baroness, Lady Kramer, touched on the challenges of using “workers”. DBT guidance sets out the definition of a worker as extending to agency workers and individuals supplied via an intermediary; non-employees undertaking training or work experience as part of a training course, otherwise than at an educational establishment; self-employed doctors, dentists, ophthalmologists and pharmacists in the NHS; police officers; student nurses; and student midwives. So although it is “worker”, there is a slightly wider definition.

Public Authorities (Fraud, Error and Recovery) Bill

Viscount Younger of Leckie Excerpts

Committee stage
Monday 9th June 2025 Grand Committee

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, before I outline the amendments in this group, I will refer to government Amendments 30, 31, 104 and 105, as your Lordships will have noticed that these have been withdrawn from the Marshalled List. Together, these amendments had sought to ensure that there was no conflict between the prohibition on a bank telling an account holder that it had received a deduction order information notice from either the PSFA or the DWP in respect of the holder’s account and any possible subject access requests, and would limit how long the prohibition had effect. Unfortunately, we found that the wording of these amendments did not achieve the desired effect. For this reason, they have been withdrawn but we will retable them once they are compliant.

I turn to the amendments in question. The current drafting of clauses in Parts 1 and 2 of the Bill may inadvertently prevent the First-tier Tribunal from exercising its right to extend the amount of time a person has to make an appeal, where there is good reason to do so. Therefore, government Amendments 26, 60, 63, 64, 86, 87, 100, 101, 119, 120 and 125 seek to prevent this from occurring and to clarify drafting across the Bill.

These amendments ensure that the First-tier Tribunal maintains its ability to extend the time limit for an appeal where there is good reason to do so, at the discretion of the tribunal. These amendments do so across the provisions in the Bill where there is a route of appeal available. This will ensure the proper consideration of appeals and that the system is focused on fair judgments. I beg to move Amendment 26 in the name of my noble friend Lady Sherlock.

[Viscount Younger of Leckie (Con)]

My Lords, I note the Minister’s remarks about the withdrawal of some government amendments. I will not go through them all. I look forward to their redrafting. I start by making the small point that there is an element of unpreparedness to the Bill. I realise that there is quite a lot of work in progress. My understanding is that it is an unusual approach to take, to withdraw and then redraft. The Minister will probably say that I am going too far, and I therefore look to a further explanation of that point.

Putting that to one side, the amendments that the Government have tabled appear at least in principle to be sensible changes, which permit a tribunal to extend the time limit for bringing an appeal about a direct deduction order. This relates to a DDO appeal in the public sector section of the Bill but also, as I understand it, in the DWP section, as it applies to the eligibility verification notice in respect of the agreed arrangements between the banks and the DWP. Here I refer to government Amendment 87 in particular.

However, this provides me with an opportunity to do a bit of questioning. Can the Minister outline some of the situations in which the tribunal could consider it “reasonable” to grant an extension to the review period? I suspect she will say that this is up to the tribunal to decide, but it would be helpful to understand the obvious reasons—and some of the less obvious reasons—why the tribunal could offer some leniency.

I presume that the appeal process would include an appeal not just on the DDO but to delay a payment of the DDO and to seek a reduction in the amount payable per week, with the total amount payable over a longer period. Is there an expectation that a longer period has a maximum length of time applied and a cut-off? Otherwise, it could be endless.

In the process of considering and drafting this amendment, I am sure that the Government have had regard to precedent and to how this provision has been used in other Acts. I am aware that similar provision exists in other statutes and, if the Minister could share examples with us of where extensions have been granted to individuals, why and for how long, it would help and allow the Committee to understand the practical ramifications of this amendment. I hope that the circumstances are exceptional, but the wording used in the amendment is for it to be seen as

“reasonable in all the circumstances”.

I hope that that adds to my argument.

Are there parallels to be drawn and lessons learned—for example, from the child maintenance system, for which I had responsibility—where the paying parent is defaulting on DDO payments and the tribunal system is therefore involved? Can some analogies be created?

As I said earlier, there is merit in seeking to allow greater flexibility in granting an appeal. Individuals should have adequate opportunity to exercise this right, but within reason. The amendment is, to that extent, well intentioned and it is something that we support. However, we must also be alive to the risk posed by so-called bad actors. We must ensure that flexibility does not come at the cost of action. We need to make sure that this appeal system allows those with genuine concerns to be heard and recognised, while minimising opportunities for vexatious complaints that are designed to delay and clog up the system, rather than use it responsibly. For example, it could be easy for an individual to claim that he is not able to fulfil his obligations to pay his DDO because, he states, he is suffering from mental health problems or has fluctuating psychotic episodes. What is the tried and tested system for tribunals to assess these claims thoroughly and have the necessary powers to refute or rebut what may be deliberate and vexatious claims?

In seeking precedent here, what is the experience of appeals to tribunals in other sectors—on the volume of cases, the exceptions and the knock-on effect on courts’ resourcing and delays to all cases in the pipeline? It would be most welcome to have some further clarity from the Minister about the considerations that she has towards the amendment, particularly in reference to precedent, which gives us some idea of how this is going to work.

I finish by echoing the words from my noble friend Lady Finn, who said on the last group—and she is right—that fraud against the taxpayer must be confronted robustly. My arguments on this group form the basis of that.

[Baroness Anderson of Stoke-on-Trent (Lab)]

I thank the noble Viscount for his comments, some of which, as he will appreciate, will be explored in more detail as we get to the DWP part of the Bill, Part 2. We will explore all these issues in more detail later in Committee, including some of the examples that he seeks about how all the powers in the Bill have precedent already, although I will touch on some.

However, I will start by querying the noble Viscount and pushing back a little on the suggestion that we were unprepared with this Bill. There was a genuine drafting error. Mistakes happen; human beings are known for making them occasionally. Given the late tabling of some of the amendments, a level of genuine solidarity and collaboration across your Lordships’ House, about how we work and move forward, may be better judged.

Regarding some of the points made, I will start with the specific point about what kind of circumstances would be reasonable to extend the timeframe for appealing an overpayment notice. In all circumstances, it is wholly up to the tribunal to decide what would be a reasonable extension from one month. There are recognised principles to guide the exercise of discretion to extend time periods, or not, which the tribunal will consider. A three-stage approach is applied to consideration of any extension: first, assessing the seriousness and significance of the failure to comply with the time limit; secondly, considering why the default occurred; and, thirdly, evaluating all the circumstances of the case to enable the tribunal to deal justly with the application.

I will address the point made about civil penalties and examples of how they are used from the position of the PSFA. We will address this in more detail with the DWP as we move forward. There is precedent across government for civil penalties to be issued to the civil standard by officials delegated to by Ministers, instead of penalties being issued by court. Examples include the Environment Agency and the APHA. In instances where penalties are issued in the above manner, it is also standard practice across government departments such as the Home Office, the Environment Agency and HMRC for appeals to be made to a court or tribunal as the final route of challenge should an individual feel that a penalty, including the amount, is unfair or incorrect. We are seeking to emulate those powers for the PSFA.

In instances where penalties are not issued by officials and are issued via courts, the courts have the right to extend the specified period within which an individual or business may appeal a decision. This is part of the civil procedure rules. The noble Viscount touched on the Child Maintenance Service. As we progress through Committee, I will use it in many examples regarding the powers of the PSFA and how we will seek to use the precedent already established by the CMS.

With that, I hope that noble Lords will appreciate that these amendments are important to ensure that the Bill as it stands does not interfere with the tribunal procedural rules. Those rules are in place for good reason. While it was not our intention to impact the discretion that tribunals have on appeal timeframes, we want to bring absolute clarity to this. This also creates additional protections for people who want to engage their appeal rights. I therefore hope that your Lordships will support these amendments, which I commend to the Committee.

--- Later in debate ---

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, I welcome the opportunity presented by this group of amendments to talk about some of the safeguards in the Bill for the recovery powers. The liable person will always be provided an opportunity to voluntarily repay, as I said in the previous group. The Bill affords them rights of making representations, and review and appeal to a court or tribunal. There are set maximum regular deduction rates and we have written into the legislation that deductions must be fair and affordable. Vulnerability will be considered at every step of the way and action taken where appropriate to tailor our approach accordingly.

As the Government have developed this approach, we have had to balance necessary and proportionate safeguards against the requirement for operational flexibility to efficiently and effectively recover money that the liable person should never have had in the first place—money that could and should have been used for the public good. I firmly believe that we have struck the right balance here. Unfortunately, the amendments tabled by the noble Baroness, Lady Finn, and the noble Viscount, Lord Younger, while well intentioned, will negatively impact our recovery activity while not providing any meaningful additional protections.

Amendment 28 would limit recovery from joint accounts if the liable person had a sole account from which the full amount owed could be recovered within five years. To reassure the noble Baroness, Lady Finn, what this amendment misses is that recovery from a joint account is already limited to the beneficial interest of the liable person. I understand her concerns about how that would be allocated but we believe we have a responsible medium here. The joint account holder is able to make representations on this matter to ensure that the funds taken into consideration are solely those of the liable person.

The amendment therefore limits the operational flexibility of the PSFA to undertake recovery action and provides no further protection to joint account holders. The time taken to recover will depend on the facts of the particular case and on the amount being recovered—five years may be suitable for some amounts but may not be where the PSFA is recovering substantially larger amounts and is seeking to do so over a longer period.

There may also be circumstances where repayment needs to take place over a longer period; for example, for those who are vulnerable or face hardship but none the less have the money to make repayments. It is important that the PSFA retains the flexibility required to recover a wide range of debts of varying amounts and to tailor repayments to the liable person’s circumstances.

Amendment 33A would require the PSFA to try to establish the joint account holder’s beneficial interest before using the formula defined in the Bill. This is duplicative and already provided for under Clause 20(3), which states that

“the presumption does not apply where the Minister has reason to believe that the liable person’s beneficial interest is different from the presumed share”;

that is, on review of the statements obtained for the account in question. As mentioned already, all joint account holders will have the opportunity to make representations as to their beneficial interest before any money leaves the account.

Amendment 34 would require the PSFA to provide the direct deduction order notice to the liable person within seven working days of it being provided to the bank. However, the current drafting already stipulates that the order must be shared

“as soon as reasonably practicable”.

I cannot foresee many circumstances where this would ever be more than seven days; after all, we want the money back. It is also important to maintain an element of flexibility to ensure that the banks have sufficient time to put in place the restrictions under Clause 26. This is to prevent the liable person from moving money out of their account and circumventing the debt recovery process.

Amendment 50 relates to applications to vary direct deduction orders and would compel the PSFA to set out its reasons behind any decision. This amendment is duplicative. The PSFA would be doing this anyway as a matter of good public law. The liable person should know why applications have been agreed or rejected, and it is necessary they know why if they are then to take up their review and appeal rights. The PSFA would also publish guidance on applications to vary, setting out its high-level approach.

Amendment 53 relates to the unfortunate circumstance where someone dies while a deduction order is in place. It would compel the PSFA to write to the next of kin or estate to confirm the cessation of the order. The Bill already stipulates that the order ceases as soon as the PSFA becomes aware of a death. This simply creates another administrative burden for the PSFA as it would be expected to hold information on next of kin or personal representatives—information that the banks themselves are unlikely to hold as it is not mandatory for this information to be given to banks by account holders.

The suggestion in Amendment 55 is an interesting one. It would prevent suspended direct deduction orders being restarted after a period of 24 months. This would impact the discretion that the PSFA could offer to those who owe money but have experienced an impactful, if temporary, change in their circumstances; for instance, through losing a job or undergoing medical treatment. It would also limit the operational flexibility of the PSFA, which would still have a duty to establish the most appropriate way of responding to such circumstances, balanced against the duty to recover money lost to fraud and error.

For example, someone may come forward to the PSFA after a DDO has been put in place and seek to negotiate because of a change in their circumstances. They may seek to engage directly and to negotiate their payments going forward but then fail to see things through. This could happen over a period of two years; we would then have to start the process all over again. Moreover, the Minister will already have the power to revoke a DDO if the liable person’s circumstances necessitate it.

I hope that these explanations reassure noble Lords and that the noble Baroness will withdraw her amendment.

[Viscount Younger of Leckie (Con)]

There is one matter that occurs to me in respect of Amendment 53. In the event of somebody’s death, where the deceased has been subject to a DDO, could this be included in the “Tell Us Once” service? That is, where a next of kin registers the death with the registrar, could the DDO be highlighted as part of the “Tell Us Once” service? Of course, this would include the highlighting of that revocation.

[Baroness Anderson of Stoke-on-Trent (Lab)]

I thank the noble Viscount for giving me the opportunity to reassure him that, yes, it can and it will.

--- Later in debate ---

I hope that these explanations reassure noble Lords and that they can therefore withdraw or not press their amendments.

[Viscount Younger of Leckie (Con)]

Can I just press the Minister a little more? I realise that, as she rightly said, we will explore these matters later in Committee—in particular, when we look at the DWP aspects of the Bill—but it would be helpful to have a bit more information on what the banks are thinking. What is their experience in terms of the work that has been undertaken so far? As the noble Baroness, Lady Fox, said—she is concerned about the so-called government inspectors approach taken by the banks—obviously, they are not doing this out of the good of their hearts. So it would be helpful to have a little more information, given that the work is by no means done; it is a work in progress. I have certainly been pulled up for calling this whole process a pilot scheme—I think that it is called “test and learn” or something—but some more information for the Committee at this early stage would be very helpful.

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, it would be inappropriate for me to speak on behalf of the banks, and I do not think that noble Lords would want me to do so. But as far as I am aware—having said I will not speak for them, I am now going to—the banks are supportive of the approach we are taking. In terms of fraud, we are working very closely with them. The banks, however, want us to be as similar to HMRC as possible, and we are trying to do that. Given that those are regulations they currently work with in day-in, day-out, that is what we are trying to emulate. I think that is as far as I can go. The noble Viscount should be reassured that we are engaging directly with UK Finance regularly, and he might want to reflect on the evidence that it gave in Committee stage in the other place about how comfortable it was with this section of the Bill.

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[Baroness Anderson of Stoke-on-Trent (Lab)]

I take this opportunity to thank the noble Baroness, Lady Finn, for both her engagement and support for this group of amendments and her wider engagement on the Bill.

While these amendments alone are relatively minor, together they reflect the importance of the ongoing consultation with key stakeholders, which is intrinsically linked with a desire to ensure that the legislation is as clear, precise and straightforward to implement as possible. The PSFA has consulted departments, public bodies, academics and non-public sector groups over many years of policy work to identify and resolve gaps in debt management powers across government. The PSFA has continued to work with stakeholders to consult on these powers as they go through Parliament and is committed to continuing to do so during implementation. We have listened directly to feedback raised by the financial sector and are taking the steps necessary to bring the clarity it seeks. I therefore hope that your Lordships will support these amendments.

[Viscount Younger of Leckie (Con)]

In support of my noble friend Lady Finn and in the spirit of agreeing with what is going on, I just want to ask a probing question of the Minister that is perhaps a little unfair. As we have noticed, there are a number of government amendments here and there is work in progress. The agreement between the Government and the banks continues. Does she have any idea when this will end? In other words, as Committee progresses, should we expect further government amendments as the banks and the Government work together to nail down the detail of agreements concerning the Public Sector Fraud Authority and the Department for Work and Pensions?

[Baroness Anderson of Stoke-on-Trent (Lab)]

I thank the noble Viscount. I feel like these may be famous last words, but I am assured that we hope not to table any more government amendments in Committee.

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[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, in response to the noble Baroness, I state that there is the First-tier Tribunal opportunity, in terms of there being an independent process to go to. That is why we have put in place the additional safeguards with regard to the independent person who will be appointed to review all cases at their discretion, not at that of the Cabinet Office, as well as HMICFRS—so there is someone who has oversight. That is also why we are making ourselves subject to the IOPC for matters of complaints, as outlined in the Bill.

The noble Baroness raises a very important point about Horizon. I assure noble Lords that the Horizon scandal and how we ensure that it is not repeated has been central to this Government’s thinking on safeguarding. In light of the seriousness of events, the Government wish to proactively ensure the highest levels of oversight in new legislation, and that is why they exist in this Bill.

With regard to one of the points raised by the noble Baroness, Lady Finn, on the appointment of the independent person subject to a parliamentary pre-appointment hearing, the Government cannot commit to this at this stage. Cabinet Office guidance states that it should be discussed between the relevant Secretary of State and the chair of the relevant Select Committee. The Government want to make sure that the independent person is demonstrably independent and are exploring all available routes to achieve that. I hope that we will be able to discuss that further in due course, but with these explanations I hope that I have reassured noble Lords and that therefore they will not press their amendments.

[Viscount Younger of Leckie (Con)]

I just wanted a bit more clarity in terms of the Child Maintenance Service, which she alluded to. My understanding is that, if there is a problem with cases looked at by the CMS, they go up to a different level to ICE—the independent case examiner—and complaints are reviewed.

I am a little bit confused as to exactly what the Minister’s argument was. Backing up the argument from my noble friend Lady Finn, we are strongly looking for independence in the public sector. I was not quite sure whether the Minister was saying that it was okay because rather like the Child Maintenance Service there is an independence or if it is something else?

[Baroness Anderson of Stoke-on-Trent (Lab)]

I apologise if I was not clear. My point was that internal reviews are already a normal process within government. HMRC, the DWP and the Child Maintenance Service already adopt them.

Public Authorities (Fraud, Error and Recovery) Bill

Viscount Younger of Leckie Excerpts

Committee stage
Wednesday 11th June 2025 Grand Committee

[Viscount Younger of Leckie (Con)]

The noble Baroness might expect one of us to intervene. I understand where she is coming from in terms of reports, because these amendments are basically focusing on the laying of reports. However, outside the Room I have asked in the past about the current level of fraud. The noble Baroness alluded to it, but perhaps she could confirm that at the moment, the estimated level of public sector fraud stands at £55 billion. I know that I have asked for this before but it would be very helpful to have a breakdown of how much public sector fraud there is when it comes to the DWP aspects of the Bill. I think I am asking about the same issues, but it would be extremely helpful to know where we stand right now as a base, in terms of the level and quantity of fraud, and any breakdowns.

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, I am more than happy to write to the noble Viscount.

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[Baroness Fox of Buckley (Non-Afl)]

My Lords, as part of the unusual alliance, I think that now is a good time to reflect on where we are in the Bill. We are now talking about powers targeted at recipients of universal credit, employment and support allowance, and pension credit. Relevant accounts that can be flagged to the Government include any account

“into which a specified relevant benefit is paid”.

Approximately 9.4 million people are in receipt of a benefit currently specified by the Bill—one in eight people in the UK. This already risks creating a two-tier society in and of itself, in which certain groups are subjected to intrusive financial monitoring by the state while others are not.

I was very pleased to see these two amendments because I worry when I consider that, last year, two-thirds of claims flagged by a DWP algorithm as potentially high-risk were, in fact, legitimate. We are now talking about the use of algorithms in relation to the group of people I talked about, so I am happy to support the noble Lord, Lord Vaux, and the noble Baroness, Lady Bennett of Manor Castle, on Amendments 75A and 79A.

The key thing here is to stress something that has already been discussed at great length throughout our debates on the Bill, which is what we consider “reasonable grounds”. The noble Lord, Lord Vaux, has raised reasonability throughout. Generally, but not consistently, the investigator powers in the Bill are exercisable only when there are reasonable grounds for suspicion that, for example, fraud has been committed. Reasonable grounds are a safeguard to protect individuals from baseless state interference and fishing expeditions. They uphold the rule of law by preventing arbitrary state power but “reasonable” requires clarification once we go into the context of the role of technology, which is at the heart of the Bill; that is one of the reasons why I have put my name to these amendments and will raise other amendments in relation to algorithms later on in Committee.

These amendments are safeguards to ensure accountability; to ensure that we are clear about the basis on which algorithms are used; and to ensure that we do not allow them to become the basis of lazy caricatures and stereotypes. Examples have been given by other speakers on this group, but I anticipate that it is possible that the Government might well cite the Equality Act as a guard against such discrimination. However, it is important to note that, although the Equality Act does lots of very good things, it will not necessarily help us here because not all prejudice is reducible to protected characteristics. In fact, attitudes to people on benefits in general and sections of the white working class do not fit into the Equality Act, so it is important that we do not just rely on another piece of legislation here.

Also, if we are going to say that AI algorithms, into which a potential discriminatory nature can be built—as has already been explained—were to make mistakes and discriminate against any group that is covered by the Equality Act, we would be clogging up the Equality Act with lots of legal challenges based on this Bill. I think that using the “reasonable” test for algorithms and ensuring that there is a commitment to no discrimination on the face of the Bill is a very valuable way of countering that.

[Viscount Younger of Leckie (Con)]

My Lords, as the noble Lord, Lord Vaux, said, we are moving towards the DWP elements of the Bill, although I suggest that these particular amendments are more of a hybrid between the Cabinet Office and the DWP. As I think the noble Baroness, Lady Fox, indicated, the DWP elements in scope are universal credit, the ESA and pension credit.

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[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, it does not look as though we are ending on an easy group for me. Amendments 75A and 79A, tabled by the noble Lord, Lord Vaux of Harrowden, and the noble Baroness, Lady Bennett of Manor Castle, cover the same ground in Parts 1 and 2. The amendments would add a definition of what cannot constitute “reasonable grounds” in the legislation, setting out certain factors that will not constitute reasonable grounds for suspicion.

Although I understand the intention behind the amendments, I want to assure your Lordships that stereotypes and generalisations would not be considered reasonable grounds for starting an investigation or issuing an information notice. Under the information powers, an information notice may be sent only when an authorised officer has reasonable grounds to suspect that a relevant offence has been committed. An authorised officer must genuinely suspect that the fraud has been carried out by the individual, and that belief will be based on an objective assessment of facts, information and/or intelligence. “Reasonable grounds” are a standard test used by other organisations, including the police, and it is clear that they cannot be based on a hunch or the types of personal factors listed in the amendments.

The DWP has well-established safeguards to ensure that this test is applied properly in practice, with authorised officers documenting all reasoning for their decisions, including the basis for their suspicion, and through the Bill the PSFA will implement comparable safeguards. Management checks provide further internal assurance, and both the PSFA and the DWP intend to appoint His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services to independently inspect the use of these powers.

Finally, DWP guidance for authorised officers is also included in the new draft code of practice, which has been made available to noble Peers as a working draft prior to consultation. The PSFA will draft guidance on the lawful use of its information powers, which will cover this issue.

I will review the specific points made, especially regarding automated processes, and will probably end up writing to noble Lords on the questions I do not cover, but I will give a flavour of the Government’s thinking. Do the PSFA or the DWP use automated processes that enable generalisations and stereotypes when gathering information about individuals? No, we do not. The DWP does not use automated processes to decide whether an information notice will be issued, and the PSFA will not do so when the power is granted. An information notice may only ever be issued by an authorised officer, who must carefully consider whether it is necessary and proportionate to do so and document their reasons.

Regarding artificial intelligence in fraud and error, given what is being debated in the Chamber, I feel that we have two AI conversations going on. The DWP has a responsibility to ensure that fraud is minimised so that the right payments are made to the right people at the right time. Fraud controls are vital to reduce waste and protect taxpayers’ money. Advanced analytics, including machine learning, will play a critical role in tackling fraud, error and debt.

There is currently one fraud error and error machine-learning model in full deployment on universal credit advances, and others are at various stages of testing and development, designed to prevent fraud in the highest areas of loss. We have been careful to implement a supervised machine-learning approach and incorporate human intervention to consider the case and make further inquiries if necessary. Our use of advanced analytics does not replace human judgment. The Bill does not introduce automated decision-making.

To improve our approach and assure Parliament and the public of our processes, we intend to develop fairness and analysis assessments, which can be published through the annual report and accounts process. We will ensure that the fairness analysis assessment sets out the rationale for why we judge the models to be reasonable and proportionate, but without divulging the detail of our fraud and error controls, which would put the department’s security at risk.

The noble Viscount will know better than me that two proofs of concept were completed by the last Government on this issue. So there is proof of concept on EVM, but we are clear, especially from the PSFA side, that we will continue with a test and learn approach to this, and will report back with any other developments. As I said, DWP decisions on fraud and error will be made by a human. I will review his other questions to see whether I need to write to him. I hope that that gives a level of reassurance to noble Lords, and that the amendment can be withdrawn.

[Viscount Younger of Leckie (Con)]

I appreciate the answers that the Minister has given. I also appreciate that there are more answers to come, but could she add to the answer in writing about the timing for the remaining proofs of concept: when they are going to be completed? I see that as being germane to the rolling out of this process.

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, I will add that to the list of things to write to noble Lords about, if that is okay.

Public Authorities (Fraud, Error and Recovery) Bill

Viscount Younger of Leckie Excerpts

Committee stage
Monday 16th June 2025 Grand Committee

The speeches from the noble Lords, Lord Sikka and Lord Vaux, and the noble Baroness, Lady Bennett, have added more information. What the noble Lord, Lord Sikka, and others are aiming to stop is a comedy of errors. Indeed, these amendments would help to stop that in the information-gathering powers being given to the Department for Work and Pensions. I commend these amendments in the names of the noble Lords, Lord Sikka and Lord Vaux.

[Viscount Younger of Leckie (Con)]

My Lords, I offer my support for most of the proposals in this group of amendments, which strike me as largely thoughtful, proportionate and consistent with the principles that we have returned to time and again throughout this Committee stage: clarity in law; accountability in process; and fairness in the exercise of power. As we know, we have spent three days carefully scrutinising the powers set out in this Bill—powers that are, by any measure, significant. In that context, it is right that we continue to ask whether the safeguards accompanying these powers are sufficient and, where they are not, how they could be strengthened in a practical, proportionate and legally coherent way. We believe that these amendments are consistent in furthering that principle.

First, I have taken note of the cautionary tale arising from the Australian experience, as raised by the noble Lord, Lord Sikka. Amendments 76 and 78, which seek to clarify liability for errors or omissions in information provided under Clause 72, are rooted in a basic but essential legal principle: parties need to know where responsibility lies. If someone is being compelled to provide information under threat of penalty, it must be clear whether they or a third party acting on their behalf will be held liable for any inaccuracies. Without clear statutory guidance, we risk confusion and, worse still, unjust outcomes where individuals may be penalised for honest mistakes or information errors outside their control. These amendments would address that problem in a measured way by introducing transparency and clarity into the process.

Amendment 77 addresses a slightly different but equally important concern. As the noble Lord, Lord Vaux, outlined so eloquently, we are focusing on proportionality and reasonableness in the exercise of investigatory powers. The amendment would insert a reasonableness test requiring that an authorised officer must reasonably consider the request for information to be necessary and proportionate. To my mind, this is simply good law. It reflects what is already expected in broader public law standards, but writing it clearly into the legislation would give both officials and the public confidence that such powers are bound by objective legal norms. It would strengthen decision-making, improve accountability and, perhaps most important, provide a clearer basis for redress if powers are exercised in an overly broad or inappropriate manner. However, I note from the remarks made by the noble Lord, Lord Vaux, that we cannot—or should not—say, “Oh, joy of joys”, in respect of the guidance provided.

With clarity established as to where responsibility lies, by necessity a process will have to be put in place and be tested to make sure that there is oversight and sign-off. If the Minister is not minded to accept Amendments 76 and 77, can she outline in detail what the process is? If she cannot do so, I ask her to write to me and to copy in all those noble Lords who are involved in today’s Committee. The Minister may say that this is all part of the as-yet-unfinished “test and learn”, but a full answer is requested. I think I have picked up that she may be able to enlighten us in this respect at the beginning of this fourth day in Committee. I hope so.

However, I must express my concerns and ultimately oppose Amendment 79 in the name of the noble Lord, Lord Sikka, on the grounds that it risks undermining the effectiveness of the very system that we are seeking to strengthen—although I note the example given, the sad story of Ms Green, highlighted by the noble Baroness, Lady Bennett. The amendment would require that a copy of every information notice issued under Clause 72 be sent to all parties affected by that notice, including, crucially, the individual who is the subject of the investigation.

Fraud investigations, particularly in the social security context covered by Clause 72, often rely on timely access to accurate information before the subject of the investigation is made aware. This is not a matter of secrecy for secrecy’s sake; it is a matter of preserving the integrity of the evidence and preventing interference with the process. If a person suspected of fraud is notified that they are under investigation or even that information about them is being requested from a third party, there is a very real risk that they may destroy or tamper with evidence, close accounts, alter records or otherwise act to frustrate the inquiry before it has a chance to develop properly. This is not speculative; it is a well-established principle in law enforcement and regulatory practice. It is not clear when this notice would be sent, but there is an assumption in the amendment in the name of the noble Lord, Lord Sikka, that it would be sent immediately—perhaps he could clarify that when he winds up—in which case, I rest my case.

There is a reason why investigators, whether in HMRC, the police or other regulatory bodies, are often permitted to conduct inquiries without giving advance notice to those under scrutiny. To do otherwise, as I said, would be to tip off the very individuals whose conduct is in question and, in doing so, jeopardise the ability of investigators to properly undertake their duties. Investigators would be hampered at the outset, fraudsters would have an early warning and those operating within the system in good faith, including civil servants, local authorities and partner organisations, would find it significantly harder to detect and prevent abuse. This is particularly true in cases of organised or sophisticated fraud, where timely access to third-party data may be the only way to build a case before the trail goes cold. It is also true in cases where vulnerable individuals, perhaps manipulated by others, may be at risk of harm if alerted prematurely. I will return to that theme later today.

Of course, we must always strive for fairness and accountability, but there is a distinction between eventual transparency and instant notification. There are appropriate points in the process when the subject is made aware of action against them and can engage in a process of review, but to mandate notification at the earliest investigative stage before facts are even established would, I believe, give potential wrongdoers an unearned advantage. Therefore, I respectfully suggest that the practical consequences of this amendment would be counterproductive and potentially damaging to the very goals of the Bill. We need a fraud enforcement system that is lawful, proportionate and fair but also capable of operating effectively in the face of growing and increasingly complex threats to public finances. That is why I cannot support this amendment.

To conclude, a balance must always be struck between individual rights and the broader public interest. In this case, that balance lies in ensuring that information requests are reasonable, that liability is clear and that powers are used with restraint and purpose but not in mandating disclosures that could derail legitimate investigations. I therefore welcome Amendments 76 to 78, but I am afraid that I urge caution about and ultimately oppose Amendment 79.

[The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, I thank all noble Lords who have contributed to this short debate and I welcome the Committee to Part 2 of the PAFER Bill. We are on to the DWP and it will be a joy to travel in this ship together with my happy fellow travellers. Before answering the specifics of the amendment, I want to reflect on some of the comments made by my noble friend Lord Sikka, because he helpfully highlighted a couple of the confusions that have permeated some of the discussion around the Bill.

The Bill contains a number of different measures and, in most cases, they apply to different people. In his speech, my noble friend spoke as though these information-gathering powers applied to all those people to whom, for example, an eligibility verification notice will be sent. In fact, that is not the case at all. A number of the amendments coming up next are about the eligibility verification measure, so I will return to any comments about it then. These information-gathering powers are quite different. They are specifically aimed at people of whom there is a reasonable suspicion of fraud by a named individual. This is a particular category of person.

Clause 72 makes provision for expanded information-gathering powers. There are existing powers in the Social Security Administration Act 1992, but they enable DWP to compel information only from a set list of organisations. That approach is restrictive and can delay or prevent the gathering of information that is relevant to proving or disproving a criminal benefit fraud investigation. So new Section 109BZB, inserted into the 1992 Act by this Bill, will update those powers to enable DWP to obtain relevant information from any information holder in respect of a DWP criminal investigation. That kind of information can be vital in proving or disproving an allegation of fraud.

Amendments 76 and 78, tabled by my noble friend Lord Sikka, concern liability for incorrect or incomplete information provided by an information holder in response to an information notice. The Bill is clear that information providers must comply with the information notice and should also be aware of their own data protection obligations in doing so. Information about those obligations will be included in the code of practice, and the information notice must specify the potential consequences for failing to comply.

Section 111 of the Social Security Administration Act 1992 sets out offences for intentionally failing to provide required information, as well as delaying or obstructing an authorised officer. In those circumstances, DWP can take action. So introducing a separate statutory liability for all errors is not necessary and would, in my view, actually place an unfair burden on information holders, particularly when mistakes are unintentional or minor.

Amendment 77, tabled by the noble Lord, Lord Vaux, would insert “reasonably” into subsection (1)(b) of new Section 109BZB. I hope to persuade the noble Lord that we in fact have a very good case here. I think that it will be easier to write. There may be some disagreement about his comments about JOYS—this will be another theme, I think; I suspect that “Ode to Joy” jokes and other joy jokes will abound. But I will write, because I want to talk specifically about the amendment that he has tabled today and how that affects the DWP parts of the Bill.

The current drafting of subsections (1)(a) and (1)(b) of new Section 109BZB in Clause 72 sets out that, prior to issuing an information notice, an authorised officer must have “reasonable grounds to suspect” that a DWP offence has been committed and must consider it “necessary and proportionate” to require the information. Both those steps have to happen, so I would argue that the drafting already captures the intent of the amendment. We have been doing this for some time. The department already has these information-gathering powers, with well-established training and guidance in place to ensure that they are used appropriately and in line with the existing law.

Authorised officers are trained and accredited before they can use those powers and they have to adhere to the code of practice. The existing guidance makes it clear that they have to consider all the facts, justify their decisions and record their reasoning. That will apply in the same way to the new expanded powers as it does to the current powers. For those reasons, we are confident that the principle of reasonableness is clear in the drafting of Clause 72 and we further support it. I can see that the noble Lord is itching to get to his feet.

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[Lord Sikka (Lab)]

I am very grateful to everyone for their contributions to this debate. I want to come back on a couple of issues.

I fully understand the arguments made against Amendment 79, but at the moment the individual becomes aware that something is afoot only much later in the day. Individuals rarely have time to seek legal advice. They often cannot afford legal advice. Early notification that they are subject to scrutiny, especially when they have never committed a crime and are just under suspicion, would mean that they may be able to save the DWP some time, effort and money on needless investigations. They may even be able to go to the local citizens advice bureau or somewhere else to get some advice. Leaving it until a much later stage inevitably means that there will be a lot of psychological stress for people. They will probably throw in the towel, a bit like the sub-postmasters, and think, “I’ve got to get off this merry-go-round. I will plead guilty even though I am not, because I cannot really contest anything with the Government”. So, I understand the arguments made, but I think that the current position of not telling the benefit claimants much earlier on really will lead to problems.

The Minister referred to the information provider’s duty for data protection and so on, but I have a concern, given that the DWP will make errors. It has a history of making thousands of them. Given that banks make errors in providing information, once DWP officials have received the information from the bank, they have to interpret that information and make sense of it. There will be misinterpretations, which will have serious consequences for the people affected.

The question to which I still have not heard an effective answer is: who will be liable? Who will pay the compensation? Will it be the public purse? Will it be the banks? The DWP will have a statutory relationship with the bank and hence can demand information, but banks are normally required to preserve confidentiality or financial information, and a bank will not ask anything from the individual concerned. It cannot at that point be said to owe a duty of care to somebody with whom it does not actually communicate, especially when that duty of care is eroded by the Bill. So the question remains: who will foot the bill, which could run into billions of pounds, if we end up with a similar situation to the one in Australia? I hope that the Minister can clarify that situation about who will foot the bill.

[Viscount Younger of Leckie (Con)]

Before the noble Lord sits down, I want to raise something, which is more of a question to the Minister and the team behind her. When I was in post, I became perhaps infamous, particularly when I did not understand something, for asking for a flow chart, and I wonder whether this is such a case where a flow chart would be extremely helpful. By that I mean that, when a process starts, what happens? One answers yes or no to questions and then it follows through with the safeguards included. I would find that incredibly helpful, and I suspect the team has one already. If there is one, I would find it helpful to see how the system works and where the safeguards are.

[Baroness Sherlock (Lab)]

I have never seen a flow chart, but some of these powers are not necessarily part of the same process, so they would not necessarily appear on the same piece of paper. But if I have any other way of explaining it, I would be very happy to do that.

Since I am on my feet, I reiterate that if the DWP is asking for information about an individual and it gathers information, it will most likely be doing so from a number of sources. An authorised officer will then review the information, and if there is felt to be a case for fraud, they will then interview the suspect under caution, who will be given the opportunity to get appropriate advice. There will be a process of engaging and discussion, but even before it gets to that stage, it is entirely possible that somebody will have reached out to find out the reason why an overpayment has been made. So, there are plenty of opportunities, and this specific amendment relates specifically to the extension of an existing power, which is used only when there is reasonable suspicion of fraud by a named individual. So, I do not think this amendment would help achieve the kind of things that have been discussed, and I urge the noble Lord to withdraw the amendment.

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[Baroness Sherlock (Lab)]

My Lords, I am grateful to the noble Baroness for giving me the opportunity to recover my voice and to say that not only will we not do it but the Bill says explicitly that the measure cannot be used on the state pension, so there is no question of it being used for that.

The case load is really straightforward. Fraud in the state pension is so low that it is the one area where the NAO does not qualify the accounts. We have to have a rationale. The reason we have chosen these three benefits initially is specifically because they are the areas where fraud is significant, and we know the information is out there that could make a difference. I can absolutely reassure the noble Baroness on that point: without amending primary legislation, this measure cannot be used on the state pension, and the Government will not do that. Any subsequent Government would have to change the law to be able to do it. I am grateful to the noble Baroness.

[Viscount Younger of Leckie (Con)]

My Lords, I intervene briefly to add a little history on the reason we included pensions. As the noble Baroness, Lady Bennett, may know, there is some fraud in the pensions area, to the tune of £100 million. This, I admit, is not as much as the £9.5 billion in welfare fraud that the Minister cited, but I just wanted to put the record straight; there was a reason for including pensions.

Secondly, you can have it one way or the other. We thought it would be good to put all benefits in scope in primary legislation, but I accept that another way of doing it is to limit it to the three benefits, as this Government have done, with a view to having secondary legislation for including others. I understand that.

[Baroness Sherlock (Lab)]

I am grateful. The noble Viscount is quite right: there is some fraud in the state pension. It was a judgment about proportion, having compared the size and value of the case load. It is very small. The fact that the affirmative procedure is used means that there will have to be a debate. The Government cannot simply on their own start investigating new benefits without anyone knowing about it, so that makes a difference.

The Bill is clear that, to help make this measure proportionate, only the minimum amount of information necessary is shared with DWP by the banks. That can include only details about the account, such as an account number and sort code; details to identify the individuals, such as names and dates of birth; and details about how the individuals appear to be breaching the eligibility criteria for their benefit. But still at that point, no one is suspected of having done anything wrong; the presumption of innocence remains, because further inquiries are needed to establish whether a benefit has been incorrectly paid.

Some people may have disregards in place that mean they are allowed to have more money than is normally used in the benefit rules. For example, normally you are allowed to have only £16,000 maximum in capital to be entitled to universal credit, but there are reasons why you might have more than that. Some forms of compensation payments are disregarded, for example. There may be a perfectly good reason, which will be investigated at that point—and that will be that. Others may have made a genuine mistake that has led to an overpayment of benefits, which it is important to correct as quickly as possible for the individual and the organisation.

However, there will be some cases, especially in the early stages, that ultimately lead to fraud being identified; that conclusion will never be drawn from these data alone. As is the case now, any claim where a suspicion of fraud arises is referred to our specialist investigation team, which has to undertake a thorough investigation, following all reasonable lines of inquiry before any determination can be drawn.

Just to reassure my noble friend, whether he accepts it or not, in fraud and error cases, decisions on entitlement will be made by a DWP staff member.

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[Baroness Sherlock (Lab)]

I think that we are talking at cross-purposes here. The information will be sent across to DWP, and DWP will take information on an individual and, if there is a signal that an individual may have a breach in eligibility criteria and may have more money in their bank account than is permitted, that information will be looked at and taken together with other information and a DWP staff member will make a judgment about what to do about that. I do not think that I can be any clearer than that.

[Viscount Younger of Leckie (Con)]

I am standing up to be helpful to the Minister. For fear of being rather like a long-playing record, I think that a flow chart would be incredibly helpful—so I am pressing my case for a flow chart. That is all that I shall say.

[Baroness Sherlock (Lab)]

My Lords, I am not a flow chart gal, but if anyone is capable of turning this into a useful flow chart, I shall have a look into it.

I fully accept, being an observant person, that not everybody in the Committee agrees with these measures. It is clear that they can make a difference to tackling fraud and error. We think that they are proportionate, but I accept that some Members do not think that, and that is obviously completely legitimate. We simply take a different view.

In the next few groups of amendments, we get to look at different aspects of how that would work, but it is the Government’s view that the scale of fraud is such that it needs to be tackled. If there were other, simpler ways in which to do it, we would have used them by now. This is a source of data that will help us to tackle fraud and error in overpayments, which we do not have at the moment. We do not see any other suitable ways in which to do it, so we think that it is proportionate. We have wrapped it around in safeguards as much as possible.

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[Lord Palmer of Childs Hill (LD)]

My Lords, I warmly welcome the spirit and substance of these amendments, which would collectively strengthen the Public Authorities (Fraud, Error and Recovery) Bill by ensuring that our approach to tackling fraud is not only effective but fair and—that word again—proportionate.

Amendment 81 from the noble Lord, Lord Vaux of Harrowden, rightly probes how the Secretary of State will prevent undue costs being imposed on banks and seeks to clarify the mechanisms for cost recovery. This, I believe, is an essential safeguard, ensuring that our financial sector partners are not overburdened by compliance costs, which could ultimately impact customers and the wider economy.

Similarly, Amendment 91, which calls for an independent review of the eligibility verification powers with a focus on the proportionality—that word again—of costs incurred by both the department and banks, is a welcome step towards transparency and accountability in the implementation of these new powers.

I am particularly supportive of Amendment 83, which would place the duty of care that financial services providers owe to their customers at the forefront, ensuring that data sharing with the DWP does not override these fundamental responsibilities. This is a crucial point. While we must be resolute in our effort to combat fraud—on which I am sure we all agree—we must not do so at the expense of the trust and the rights of individuals. It is a very fine line to draw.

Amendment 89C from the noble Lord, Lord Vaux, would remove the risk that the mere existence of an eligibility indicator could trigger unnecessary action against account holders, thereby preventing unintended harm to individuals.

Taken together, these amendments would ensure that the Bill’s powers are exercised with restraint and with full regard to the interests of both institutions and individuals. We must not let it trigger unnecessary actions against account holders under the Proceeds of Crime Act. I support these amendments in their entirety.

[Viscount Younger of Leckie (Con)]

My Lords, I speak in support of Amendments 81 and 91 in the name of the noble Lord, Lord Vaux, which seek to introduce proportionate and principled safeguards into the operation of eligibility verification notices: namely, that the Secretary of State must first be satisfied that the costs to the person receiving the notice are reasonable and proportionate, or else agree to reimburse those costs in whole or in part, and that this be subjected to an independent review. This is not a marginal or administrative detail; it goes to the heart of how we structure and sustain effective partnerships between the Government and the private sector, and particularly to how we treat the banking sector as a key actor in the fight against public sector fraud.

Throughout our deliberations on the Bill, my noble friend Lady Finn and I have returned time and again to the importance of ensuring that the powers are exercised responsibly, with due regard to proportionality and fairness. This amendment is a natural extension of that principle. It recognises that, when we ask third parties—in this case, banks and financial institutions—to support fraud detection by responding to eligibility verification notices, we are asking them to divert time, resources and personnel to do so. This of course comes at a cost, and it is only right that these costs are acknowledged and handled fairly.

As has been said, the banking sector plays an essential role in supporting government anti-fraud objectives. Banks will help to identify irregularities, flag risks and support enforcement action. But if we want this co-operation to continue and to deepen, we must treat banks as strategic partners, not simply as tools to be leveraged without regard to impact. This amendment would ensure that we are not shifting the financial burden of fraud prevention on to the shoulders of institutions that are neither the source of the fraud nor the primary beneficiaries of its reduction. It would also introduce a basic but important fairness test, that if costs are disproportionate, they should be recognised and potentially reimbursed.

Given the scale and frequency with which these powers may be used under the new framework, we should recognise that banks may be required to undertake substantial internal data searches, compliance checks or system queries, potentially at short notice. As the noble Baroness, Lady Fox, pointed out in her excellent remarks, to do so effectively, banks will need to allocate skilled staff and technological resources. It is only reasonable that we ensure that such work is feasible and fairly compensated where appropriate. Furthermore, the precise detail on how this mechanism will work is still vague from the Government.

I shall not mention flow charts again, for fear of being shouted down, but maybe we need a spreadsheet—although perhaps I shall be shouted down on that basis. Can the Minister give some detail as to how the “test and learn” with the banks is going as regards the operability of the system? In particular, what are the anticipated costs to the banks? It is understandable that the Government may not be able to answer this, as they may say that it will depend on the number of potential cases emerging and issues emanating for each case, which will vary. However, I would imagine—and I think that I said this at Second Reading—that the ongoing test-and-learn process will be able to highlight an average per case cost. If there is no information available, how do we know that the costs are not astronomical or even unsustainable for the system established? I hope that the Minister can enlighten us on that.

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[Lord Vaux of Harrowden (CB)]

My Lords, I have Amendment 89ZA in this group—I still do not understand the numbering system that the Public Bill Office uses.

Before I move on to that, I want to make a couple of comments on the two amendments that the noble Baroness, Lady Fox, just raised. I have to say that I am a bit cautious about Amendment 82, because if you tell everybody what the eligibility indications are, it becomes very easy to avoid them. There is also a massive, gaping loophole in the Bill, which is that it covers only one bank at a time. I do not know—I would be quite interested to understand from the noble Baroness—whether, having received data from individual banks, the DWP will be amalgamating and therefore will be able to track the sort of concept that, if you have £8,000 in this bank account and £8,000 in that bank account, that puts you up to the £16,000 that would trigger the eligibility indicator. But there is a gaping hole there and, if you publish everything you are looking for, it makes it so much easier to get around it. So I am a little cautious about that one.

I am much more sympathetic to at least the spirit behind Amendment 88. We had a long debate the other day around the issues of machine learning, bias, stereotyping and generalisation creeping into decision-making processes, and there is more to do in this Bill around the safeguards around the use of automated decision-making. I know that the noble Baroness will talk about the code of practice, but that is very specific. It requires a human element only where the decision could impact on benefit eligibility. So it does not include stepping into the next phase of an intrusive investigation using the powers in Clause 72, for example. So, whether or not Amendment 88 is the right way to go, there is definitely more that we need to think about in terms of safeguards around the use of algorithmic or machine learning—or AI or whatever—trawling through this, and a number of amendments later cover the same ground a bit.

Amendment 89ZA is very simple. It simply says that applicants for benefits should be informed at the time of their application that information relating to their bank accounts may be provided to the Secretary of State, and that people who are already in receipt of benefits are informed within three months of the commencement of the Bill.

The information-gathering powers that this Bill creates are a significant step, and are carried out without any suspicion of fraud, so it must be appropriate and fair that people are informed that their bank account information may be provided to the department. I cannot actually see any reason for not accepting this one; it would improve transparency and also make those who are considering fraud think twice if they are being told that their bank account details could be accessed. In fact, I mean “provided”, because technically they are not accessed but provided.

As a general principle, as set out in our data protection laws, people have the right to know where their data is going and how it is being used, and I really cannot see any reason why this situation should be any different.

[Viscount Younger of Leckie (Con)]

My Lords, I wish to speak broadly in support of Amendment 82 in the name of the noble Baroness, Lady Fox of Buckley. This amendment goes to the heart of something that we should all be able to agree on: that the public have a right to know the rules by which they may be judged and that those tasked with making assessments, such as banks, should not be left to act on unclear or unpublished guidance.

This amendment would require the Secretary of State to publish the eligibility indicators that banks are expected to use when checking their customers’ accounts under the new regime. In plain terms, it asks the Government to set out clearly, before these provisions are enforced, what criteria are being used to determine eligibility. This chimes with the opening remarks made by the noble Baroness, Lady Fox. It is difficult to see how a system of such potential consequence to individuals and to financial institutions alike can be implemented fairly, if the basis on which it operates is not published and understood in advance.

We have heard throughout the debates on this Bill about the need to balance effective fraud prevention with the protection of individual rights, proper due process, and clarity for institutions involved. Amendment 82 speaks directly to that balance. If banks are to play a front-line role in identifying accounts or individuals under suspicion, they must be given unambiguous and publicly available guidance to avoid the risk of overreach, error or unjustified intrusion. We cannot have a system where accounts are flagged or actions taken on the basis of indicators that are withheld from public view. That would be both untransparent and unjust.

We should not legislate for a regime that affects people’s access to their financial resources or that places duties on banks to act in quasi-investigative ways, without knowing exactly how those judgments are to be made. This is not a wrecking amendment—it does not oppose the broader framework of the Bill. It merely insists that, before new powers are exercised, the public and partners involved in delivery know the criteria. That is not too much to ask. In fact, it is the very least we should expect in a system rooted in fairness and good governance. Again, this echoes the remarks made by the noble Baroness, Lady Fox.

To pick up on remarks made by the noble Lord, Lord Vaux, there is a balance to be struck between not giving too much away in the interest of transparency so that fraudsters are given fuel to manipulate the system. Can the Minister say where that balance should be struck, as balance there must be?

Similarly, I speak in support of Amendment 88, also in the name of the noble Baroness, Lady Fox. I believe it represents a sensible and timely addition to the schedule. As we have discussed throughout the passage of this Bill, the use of data and automated decision-making, particularly through algorithms, is becoming an increasingly central feature of fraud detection and eligibility verification. That in itself is not a problem; it is a reflection of the complexity and scale of modern fraud threats. But it also means that we need clear and consistent standards for how these tools are developed, deployed and scrutinised. The cautionary tale from the Netherlands, highlighted by the noble Baroness, Lady Fox, is very much noted. I am sure that the Committee has noted it.

This amendment goes to the heart of the need for standards. By requiring the code of practice to include mechanisms for the scrutiny of algorithms used by those in receipt of eligibility verification notices, typically banks, it creates a shared framework for oversight. This is particularly important when algorithms are applied across several discrete institutions, each of which may have slightly different internal systems, standards or even risk profiles. Without a common baseline, we risk inconsistency, a lack of accountability and potential harm to individuals through opaque or poorly calibrated processes.

Moreover, new sub-paragraph (g) proposed in this amendment rightly extends that principle of scrutiny to the powers themselves, and we must also be willing to assess whether they are effective and 100% secure in their specified and sole objective. We must also be willing to assess whether they are proportionate to the outcomes that they set out to deliver. In short, this is a practical amendment rooted in the principles of clarity, consistency and continuous improvement—perhaps part of the test and learn. It does not obstruct the Government’s goals; it helps to make them more credible and accountable, we believe.

I express my support for Amendment 89ZA in the name of the noble Lord, Lord Vaux of Harrowden, which I believe strikes a careful and important balance between transparency, accountability and the effective operation of the powers contained in this schedule. At its core, this amendment does something quite simple but significant: it ensures that individuals applying for or receiving relevant benefits are clearly informed—that is, in writing—that information relating to their bank accounts may, under certain circumstances, be shared with the Secretary of State. This is a matter of basic transparency and fairness. I note that this is being proposed at the time the benefit is applied for, and I might describe it—perhaps putting words into the mouth of the noble Lord, Lord Vaux—as part of an induction process when one applies for any benefit in scope. In other words, fair warning is given that a benefit that comes from the taxpayers’ pocket has responsibilities attached to it. Perhaps this should also be placed in the code of practice, and I ask that question of the Minister.

If we are to entrust public authorities with powers of this magnitude—which allow for sensitive financial data to be accessed without the individual’s active consent—surely it is right that we also commit to informing individuals of the possibility that those powers might be used. This is not about compromising investigations or alerting fraudsters in advance; it is about ensuring that people understand the system that they are entering and can act responsibly and lawfully within it. Providing this information up front reinforces personal responsibility. As I said earlier, it says clearly to the individual, “If you are claiming public money, there is a legitimate expectation that your eligibility may be subject to verification”. It allows claimants to know the rules of engagement in advance, and it ensures that they cannot claim later to have been caught unawares.

At the same time, I recognise, and I think the noble Lord does as well—I hope he does—that this amendment must not inadvertently encourage more sophisticated methods of deception. It is a fine line to walk, and this chimes with my earlier question to the Minister. We must not turn transparency into a user manual for fraud, but I believe that this amendment is framed carefully enough to avoid that risk. It does not disclose when, how or under what criteria information will be requested—only that it may be. That is, I believe, a proportionate step. Ultimately, this amendment supports the legitimacy of the wider regime, and I therefore support it and hope that the Government will see it as a constructive addition to the schedule.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to all the noble Lords for their comments. Amendment 82, tabled by the noble Baroness, Lady Fox, would require the Secretary of State to make public the eligibility indicators, as set out in EVNs. Although I understand the point that she is making, I am firmly of the view that making public the eligibility indicators will be counterproductive, for reasons alluded to by the noble Lord, Lord Vaux. It is set out very clearly in the Bill that all eligibility indicators have to link to the eligibility criteria for those benefits that are within the scope of the EVN measure: universal credit, pension credit and ESA. Those eligibility criteria are widely available for anyone to see, including on the GOV.UK website. The DWP does its utmost to ensure that customers who claim benefits are clear on the relevant criteria, and they are reminded many times throughout their claim of the need to report changes of circumstances against these key criteria. This is important because there are people out there who are not fraudsters but who make genuine errors, and we do all we can to help people understand the eligibility rules and ensure that changes of circumstances are reported.

As the noble Viscount alluded to, there is a fine line between transparency and making things easier for fraudsters, but I do not want to publish the specific eligibility indicators that we will set out in an EVN, because to do so would actually help those who want to commit fraud to circumvent the measure. We know from all kinds of sources that there are people out there who study every single rule and piece of information we put out to try to work out how to get around them and get money to which they are not entitled. The Committee would obviously want us to do everything we can to avoid that. So, to protect the effectiveness of this measure and to help stop fraud, we do not think it appropriate that we publish the eligibility indicators.

Turning to Amendment 88, also from the noble Baroness, Lady Fox—

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[Baroness Sherlock (Lab)]

To be clear, their bank details cannot be accessed by the DWP under this measure; their bank details can be accessed by the DWP under its other powers. I know that the noble Lord knows this but I want it to be clear for the record because there is a lot of misunderstanding out there; I hope that he will let me finish my sentence. The DWP cannot access people’s bank accounts using this measure or look at transaction data. It does not see what they spend their money on or any of that. It can simply ask banks to let it know whether a particular criterion is met. I take the noble Lord’s point; we think that this is adequate, but he does not, so I am afraid that we may just have to agree to disagree on this one.

Regarding the noble Lord’s other point, on how much data and how many different banks will be involved—and when—we had two choices in doing this: test and learn, which is the subject of much comment; or the alternative, which is a big bang involving all the banks going out together at once, getting their data, bringing it in and going through it. We decided not to do that, as we thought that it would be irresponsible. Test and learn means that, for the first 12 months of the rollout, we will initially work closely with a smaller number of banks and financial institutions, identifying any possible areas for concern, allowing them to be addressed and sorting out teething problems. The measure will then gradually be rolled out with all the relevant financial institutions. The impact assessment says that, in the first year—2026-27—we expect a rollout rate of around 2%, going up to 25% in 2027-28. The idea is that you start very small, make sure that it works, iron out the problems and then grow it as it goes on.

I think it was the noble Baroness, Lady Fox, who mentioned that the data could be slowed down. We do not want to bring in data that we cannot process; we want to bring in data that is appropriate. We will bring it in and manage it, as we are able and resourced to do. I hope that that reassures noble Lords; I encourage the noble Baroness, Lady Fox, to withdraw her amendment.

[Viscount Younger of Leckie (Con)]

I want a bit of clarity on test and learn. We have had two exercises, which have reached proof of concept. I am confused now because the Minister is, I think, indicating that there are test and learn exercises still to begin. How many are ongoing and how many are due to begin?

[Baroness Sherlock (Lab)]

Clearly, I am expressing this really badly, because I have said it about 17 times and still have not explained it clearly.

When the noble Viscount was a Minister—perhaps it was his predecessor—under the previous Government, they were working with banks to find out whether the proof of concept worked. The answer is that, yes, it does. Test and learn is about saying, “We’re now going to build this up and operate it at scale. How do we do it? What does it look like?” Bit by bit, we will work with a small number of banks; try it out; make sure that the processes, the data pushes and so on work properly; and work with a small number of people who also understand how the sector works as a whole. Then, when it is working, we will roll it out to a wider number.

I am sorry if I have not been explaining that clearly, but that is the difference. The proof of concept asks: can it be made to work? The answer is yes. The test and learn asks: what is the best way to set this up so that the systems will work and so that we get the right information at the right time—a time when we are able to work it properly? I hope that that has helped.

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[Lord Palmer of Childs Hill (LD)]

My Lords, I am also pleased to welcome Amendments 84 and 85, tabled by the noble Lord, Lord Vaux of Harrowden, which serve to strengthen the safeguards within the Bill.

Amendment 84 would ensure that an authorised person must have more than just the existence of an eligibility indicator before embarking on more intrusive investigations. We believe this is a vital protection against overreach, ensuring that individuals are not subjected to unnecessary or disproportionate scrutiny based on limited evidence. Such a safeguard is entirely in keeping with my party’s principles of fairness and proportionality—that word again—and it will help to maintain public confidence in the system by ensuring that investigations are always grounded in robust evidence.

Amendment 85, which requires that information received following an eligibility verification notice is reviewed by an appropriately senior person before any changes to benefits or intrusive investigations are commenced, is equally welcome. This amendment introduces an important layer of oversight and accountability, ensuring that decisions with potentially significant consequences for individuals are not taken lightly or without proper consideration. By embedding these checks and balances into the Bill, we would be not only protecting the rights of claimants but upholding the integrity of our counterfraud efforts. I confirm other comments about how important these amendments are, and I hope that we can carry them forward to Report if need be.

[Viscount Younger of Leckie (Con)]

My Lords, I rise to speak in support of speak in support of Amendments 84 and 85 in the name of the noble Lord, Lord Vaux of Harrowden. These are thoughtful, proportionate and necessary additions to this schedule, and they speak directly to the themes that we on these Benches, and many across the Committee, have consistently returned to throughout Committee: clarity, fairness and safeguards for the individual in the exercise of significant state powers.

Amendment 84 seeks to ensure that the mere presence of an eligibility indicator is not, in and of itself, treated as constituting reasonable grounds for suspicion, as required under new Section 109BZB(l)(a) of the Social Security Administration Act 1992, before certain investigatory powers can be triggered. This is of fundamental importance. The Bill proposes a system whereby data provided by financial institutions, under an EVN, may trigger further investigatory steps. But what is an eligibility indicator? It is, in essence, a flag: a signal generated through algorithmic or rule-based analysis that a particular feature of a person’s financial behaviour may be anomalous or potentially inconsistent with benefit entitlement.

As I have said before, we must be absolutely clear: an eligibility indicator is not a finding of fact. It is not, in itself, evidence of wrongdoing. Amendment 84 simply ensures that the existence of a flag must be the beginning of a process and not the end of one; that further evidence or analysis must be applied before escalation; that human judgment must play a role, as has been mentioned today; and that when the state exercises its powers, especially when those powers touch on privacy, dignity or the right to subsistence, it does so on the basis of reasonable grounds. This is a proportionate safeguard. It respects the need to act on suspicious patterns, but it also respects the rights of the individual and the integrity of the system.

Amendment 85 builds on this principle by adding an additional layer of oversight—namely, that any action to suspend or amend a person’s benefits or to initiate intrusive investigatory steps must first be reviewed by a person of appropriate seniority and experience, authorised by the Secretary of State. Again, this is not an attempt to frustrate or delay the enforcement regime—it is a recognition that decisions on subsistence-level support must be taken with proper scrutiny by individuals equipped with the training, authority and awareness to make such decisions with the necessary care.

We must also remember that these are not abstract powers. They affect real and often vulnerable people, whose entire financial well-being may rest on the outcome of these decisions. A mistaken suspension of benefits, based on an unreviewed flag or misinterpreted data, can mean missed rent, no food on the table or the spiral into debt and instability. Also, it is possible that, if the system did not work as intended, individuals who suffered wrongful financial detriment—or, worse, reputational detriment—could take legal action.

If we are to maintain public trust in these powers, it is vital that there is confidence in not only their lawfulness but their soundness. A requirement that an appropriately senior official reviews and signs off on such actions is not a high bar. It is, in many ways, the least that we should expect of a responsible and accountable system. Can the Minister confirm, as she did the other day in respect of the Cabinet Office debates, the exact level of an appropriately senior official?

I should add that this chimes with remarks I made in our debate on a previous group about the need to have a so-called four eyes principle of oversight by a human being on decisions made—a fail-safe system for the monitoring of decision-making. The noble Lord, Lord Vaux, outlined the arguments in this respect very well. Together, these amendments would provide what so many across the Committee have called for: safeguards that ensure that the system operates justly as well as efficiently. They would not remove powers or obstruct action. They would embed standards of evidence, scrutiny and accountability into the decision-making process—standards that we would demand in any area of public life where the stakes are this high.

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[Lord Palmer of Childs Hill (LD)]

My Lords, I welcome Amendments 89A and 89B, tabled by the noble Lord, Lord Sikka, which seek to ensure that the Department for Work and Pensions eligibility verification powers are restricted solely to bank accounts held in the name of the benefit claimant. The noble Lord, Lord Sikka, said a lot about this, and I agreed with it. These amendments are a measured and proportionate response to concerns about the scope of data-gathering under the Bill. By limiting DWP powers in this way, we would provide vital reassurance to claimants and their families that only their own accounts, not those of partners, relatives or unrelated third parties, will be subject to scrutiny. This approach would uphold the important principle of privacy and ensures that the fight against fraud does not inadvertently cast too wide a net, potentially impacting innocent individuals.

Further, these amendments would reinforce the Bill’s existing safeguards, which already stipulate that eligibility verification notices may be issued only for the purpose of identifying incorrect payments of relevant benefits and only in relation to accounts in receipt of specified benefits. By making it explicit that only the claimant’s own accounts can be examined, we would strengthen public trust in the system and demonstrate our commitment to fair and proportionate use of government powers.

So many people have joint accounts and accounts with more than two names on them, and I am not sure what would happen in those circumstances. You can see that, when Tom Bloggs or Sarah Bloggs have an account, there may be a reason to look at them—but if it is held by Sarah Bloggs and Tom Jones, what happens then? There is a danger here that people will be brought into the net, because accounts held in several names are very common, and I am not reassured from what I have read that they will not be dragged in in some way. I support the amendments from the noble Lord, Lord Sikka, in this case.

[Viscount Younger of Leckie (Con)]

My Lords, I shall speak briefly to this group. For once I shall be helpful to the Government, as I rise to speak in opposition to Amendments 89A and 89B in the name of the noble Lord, Lord Sikka.

These amendments would limit the scope of Department for Work and Pensions eligibility verification powers, as we see it, so that they apply only to bank accounts held solely in the name of the benefit recipient, including joint accounts from scrutiny. I recognise the intention behind this proposal, which is to protect privacy and the financial autonomy of those sharing bank accounts with benefit claimants—the noble Lord, Lord Sikka, very eloquently set out his stall—but I respectfully argue that the amendments would create a significant and problematic loophole in the integrity of the fraud and error detection system.

Let us be clear: if these amendments were adopted, a person under investigation for suspected misrepresentation of assets or income could very easily shield those resources simply by transferring them into a joint account, potentially with a spouse, relative, or even a third party. Under the proposed wording, such an account would then fall outside the reach of the DWP’s verification powers, regardless of whether the claimant retained full control over the funds or continued to benefit from them. Perhaps the Minister can help me and the Committee in understanding how the DWP test-and-learn mechanism might have highlighted such an issue, and how it might have provided such a solution.

This is not a theoretical risk. We know from operational experience that individuals engaged in fraudulent activity will often use exactly such mechanisms to conceal income or capital. The ability to move money to a joint account is a clear weakness that could be exploited by those who—we must remember—are believed to have stolen money from the taxpayer.

Under the current drafting of the Bill, the Government rightly allow verification of accounts held by or accessible to the claimant, including joint accounts. This does not mean that third parties will have their data or finances indiscriminately accessed. There are safeguards in place. The department will not be able to view or interfere with every joint account at will, only those, as the Minister indicated earlier, where eligibility indicators suggest a relevant connection, and only where necessary to verify benefit entitlement. These powers are proportionate and targeted.

The amendments, however, would tie the hands of investigators, even where there is a clear and compelling reason to examine whether the claimant has access to or control over funds that affect their entitlement. In so doing, they would introduce a gaping loophole in the very process that is meant to protect taxpayer money and ensure fairness across the system. Let us not forget the public interest at stake here. We are talking about a welfare system that supports millions of people, but also one that must command public confidence and demonstrate that it is both compassionate and resilient to abuse. Creating a known and easily exploited blind spot, as these amendments would, risks undermining that confidence and inviting avoidable losses to fraud or error.

Moreover, this is not a question of criminalising or persecuting people who live with others or hold joint accounts for legitimate reasons. It is about ensuring that where state funds are being claimed on the basis of need, the system has a fair and proportionate—to use that word again—ability to verify the facts, including the assets and income to which the claimant may have access.

No one benefits from a system where loopholes are left open, least of all the people whom the welfare state exists to support. These amendments may be well intentioned, as I said earlier, but they would weaken the ability of the department to carry out its responsibilities effectively, and in doing so would undermine both the fairness and sustainability of the benefits system. I therefore urge noble Lords not to support these amendments. Let us uphold the principle that verification powers should be robust, proportionate and resistant to manipulation—and not inadvertently create a rule that the dishonest can use to their advantage.

Finally, I feel that I might have written a speech for the Minister, but I am sure that she will tell me that I am completely wrong and, perhaps, rebut some of my points.

[Baroness Sherlock (Lab)]

My Lords, I thank noble Lords, especially the noble Viscount, for doing some of my work for me; I am very grateful. I cannot support my noble friend’s amendments, but I am grateful to him because he has raised a point that people need to understand, and this Committee is exactly the right place to understand the issue.

It might be worth taking a step back. There will be two ways of getting information. We could either go to banks and say, “Here is Mr John Smith, please give us everything you know about him”, but then we would have to give personal information about the individual to the banks, which they do not have. Or we could do what we have decided to do, which is to say: “This is the account into which we pay the money. Please give us the information from that account according to these criteria”. We have gone with the second, because we will not be giving out personal information to financial institutions. However, that does have some consequences, which I will go through one at a time.

First, DWP benefits can be—indeed, are—paid into joint accounts held by one or more individuals. It is therefore essential for financial institutions to share information about joint accounts and any linked accounts that include a relevant benefit payment. Perhaps the most critical reason why we need joint accounts to be in scope of the EVM is that both pension credit and universal credit are household benefits; by that, I mean that eligibility for these benefits will depend on the circumstances of those in the household, including incomes and savings held by both account holders, not just by one individual. It is therefore vital to receive information on joint accounts.

In cases where the relevant benefit is paid into a joint account, information about both account holders and other linked accounts may be shared by the financial institution with the DWP. Again, I have explained why: it is because we cannot give out personal information about them. Once the information is shared, the DWP will then identify the benefit claimant and delete any information that is not relevant to the claim. That is made clear in the code of practice, which noble Lords have had a chance to see; this will be relevant in a moment to the points that the noble Lord made about landlords.

It is worth pausing here. Unlike previous iterations—it may be that the noble Lord is thinking back to some of those—this measure specifically excludes certain accounts from its scope: business accounts, credit card accounts, mortgage accounts, and a lot of other accounts that were previously in scope but are not anymore.

On landlords, if a benefit is paid into a landlord’s account then, yes, that will come back, but, basically, the test will then be: is the account or person a benefit claimant? If not, the information will be discarded and destroyed. Although it is possible, for the reasons I have explained, that a landlord’s account could be identified by a bank if it matches the eligibility indicators and is not a business account, the DWP can easily identify landlords having a housing benefit paid directly to them once we have received the data from a bank. The DWP will screen out these cases and disregard their data. I hope that that assures the noble Lord and that he can in turn assure those who were concerned.

The question of appointees is something that I raised under a previous iteration of this; I simply have not been able to find a way around it. Corporate appointees and businesses are excluded, but, for personal appointees, we simply have not been able to do that. Of course, the appointee’s account will have the benefit paid into it, if the benefit is relevant. The only thing you could do is exclude anyone you knew was an appointee, but then many appointees are claimants in their own right, so you simply could not do that either.

All I can say is that, by receiving from institutions, we will filter out any information that is not relevant; I hope that that will reassure the noble Lord. We are interested only in information on benefits paid by the DWP to benefit claimants; that is for them. If the appointee is holding the benefit for that individual, that is in scope—of course it is—but not if it is for other purposes; likewise goes for landlords. Those with powers of attorney will be treated in the same way as appointees. Again, if the money is for the benefit claimant and it is about that, we can look at it; if it is not, we cannot. I hope that that will reassure my noble friend and that he can withdraw his amendment.

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[Lord Palmer of Childs Hill (LD)]

My Lords, it is another sort of spirit that I want at the moment.

I am pleased to welcome these thoughtful amendments, which significantly enhance the transparency, accountability and fairness of the Bill. Amendment 90 from the noble Lord, Lord Sikka, seeks to ensure that the voices and experiences of benefit recipients are taken into account in any independent review of eligibility verification measures. This is a vital step in building trust and legitimacy for these new powers, ensuring that those most affected have a say in how the system is reviewed and improved. Listening to recipients will provide invaluable insights, helping to identify unintended consequences and ensuring that the system remains responsive and humane.

Similarly, Amendments 91A and 91B are tabled by the noble Lord, Lord Vaux of Harrowden, and my noble friend Lady Kramer, who is busy in the Chamber on the Employment Rights Bill, where I should have been. These are crucial safeguards. Amendment 91A requires that the independent review specifically considers the impact of eligibility verification on vulnerable persons, ensuring that our most at-risk citizens are not overlooked or disproportionately affected. Amendment 91B strengthens the review process by obliging the Secretary of State to disclose all information reasonably requested by the independent reviewer rather than leaving disclosure to ministerial discretion. These changes will create a more vigorous and effective oversight regime, fostering public confidence that the powers are being exercised justly and transparently. I support these amendments.

[Viscount Younger of Leckie (Con)]

My Lords, in speaking for the Opposition, I should say that there is quite a bit to say, but I have cut down my remarks in the interests of time. I think the Committee will be pleased to hear that.

I regret that once again I oppose an amendment by the noble Lord, Lord Sikka, whose proposed change to Clause 75 seeks to replace the appointment of an independent person with that of a

“panel, at least 50% of which is … elected by recipients of the benefits in question”.

Although I understand the sentiment behind this proposal—namely, to ensure that the voices of benefit recipients are heard in the process of oversight—I respectfully submit that this amendment is not the right way to achieve that goal. It is very democratic in spirit but unworkable.

I will begin with the practicalities. This amendment, if accepted, would introduce a highly complex, costly and poorly defined mechanism for oversight. The idea of electing panel members from among benefits recipients across all forms of social security is, on the face of it, well-meaning, as I said, but in practice it presents serious challenges. Who would organise and administer such elections? How would the eligibility to vote or stand be determined? What benefit types would qualify and what mechanisms would ensure proportional representation across regions, demographics and types of support? Those questions are not trivial; they go to the core of whether such a panel could ever be considered credible, workable or legitimate in the eyes of the public, including the very claimants it is intended to empower. I also suspect that it would take an age to establish. Those are rather harsh remarks, but I wanted to make those points.

Moreover, we must ask what value this mechanism adds that is not already achievable through more conventional, proven models of independent oversight. There are already established ways to ensure that claimants’ experiences and perspectives inform the design and review of eligibility verification processes through public consultation, user engagement panels, stakeholder round tables and the commissioning of qualitative research from trusted bodies. Those are the serious proposals the Minister must consider, and I am sure she will, in the formulation of the Bill.

The proposal put forward by the noble Lord, Lord Sikka, is surely a probing one, although I do not think he said that—but it does not stand up to scrutiny. For example, we must also consider the principle at stake here. Although it is right that we take account of the views of claimants whose lived experience is, I admit, vital in shaping fair and effective policy, it is not clear why 50% of an independent review body should be drawn exclusively from that group and no other. If the logic is that those affected by a policy should have a say in reviewing it, then surely one should equally argue that those funding the system—namely, taxpayers—should have a similar right to elect members or, indeed, that professionals with technical expertise in fraud prevention, digital systems or legal due process should be the ones appointed. In other words, this proposal risks becoming an exercise in representational logic that ticks a few boxes but is ineffective.

On the other hand, Amendment 91A in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer, speaks to principles that we on these Benches have returned to time and again, which I will not repeat now. Clause 75 establishes an independent review of how the Secretary of State’s powers are being exercised. It is only right and essential that when we assess how these powers are working in practice, we also assess how they are affecting those who are most at risk of being overlooked, misunderstood or wrongly penalised by the system. That is precisely what Amendment 91A would ensure. It would add a single but vital criterion to the scope of the review—the need to examine the impact on vulnerable persons, not as an afterthought or a footnote but as a formal and explicit part of the oversight process.

Why does this matter? We know from evidence, experience and common sense that those with vulnerabilities are more likely to struggle with complex paperwork, to misunderstand official communications and to have irregular financial arrangements that do not fit neatly into bureaucratic templates. Those individuals are not necessarily gaming the system; they are trying to get by. But unless the operation of the Bill is sensitive to their needs, they could too easily become the collateral damage of a system designed to root out frauds. Let us be clear: it is entirely possible to take tough action on fraud and take care not to harm vulnerable people in the process. It is not a question of either/or; it is a matter of how we build safeguards into the system so that it delivers justice, not just efficiency.

Amendment 91B, also in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer, addresses a critical point of principle—namely, that the independent reviewer must be genuinely independent. At present, Clause 75 allows the Secretary of State to determine what information may be disclosed to the independent reviewer. In our submission—and, I suspect, in the views of the noble Lord, Lord Vaux, the noble Baroness, Lady Kramer, and other noble Lords—this is not the way to construct a genuinely independent mechanism of review. We cannot have a system in which the Secretary of State can control the flow of information to the independent reviewer. We believe that this amendment would restore some balance.

Public Authorities (Fraud, Error and Recovery) Bill

Viscount Younger of Leckie Excerpts

Committee stage
Wednesday 18th June 2025 Grand Committee

[Lord Palmer of Childs Hill (LD)]

My Lords, as we consider Amendments 92 and 93 from the noble Lord, Lord Sikka, moved by the noble Lord, Lord Vaux, on his behalf, it is important to reflect on the balance between effective fraud prevention and the safeguarding of individual rights. Amendment 92 proposes that investigators’ powers of entry, search and seizure should be exercised only when accompanied by an authorised member of the police force. This approach could provide an additional layer of oversight and reassurance to the public, but it may also introduce operational complexities that could affect the speed and efficiency of investigations into public sector fraud.

Similarly, Amendment 93 seeks to require court authorisation before the Secretary of State can appoint authorised investigators. This would introduce judicial oversight, which is a well-established safeguard in many areas of law enforcement, and it could help to prevent the potential misuse of investigatory powers. But it may also add—as I said before—procedural steps that could delay urgent investigations, possibly hindering the recovery of stolen public funds, which is what this debate is all about.

Both amendments raise important questions about proportionality and accountability. I look forward to hearing the views of colleagues and the Minister on how best to achieve the right balance in this legislation, and I await their contributions.

[Viscount Younger of Leckie (Con)]

My Lords, I also wish to be brief and will cut down my notes, but this is a good opportunity to raise a number of points. I am very pleased that the noble Lord, Lord Vaux, has spoken to Amendments 92 and 93, as supported, or added to, by the noble Lord, Lord Palmer.

I share the principle that underpins Amendment 92 in the name of the noble Lord, Lord Sikka—that the powers of entry, search and seizure provided for in Clause 76 must be exercised responsibly and proportionately, with proper regard for the rights of individuals. However, my main point here is that, while the amendment aims to provide a safeguard by requiring investigators to be accompanied by a police officer when exercising these powers, I suggest that we need to balance that safeguard with a degree of practicality. If the use of these powers is deemed serious enough to require a police presence, one might reasonably ask an obvious question: why would the police not simply carry out the action themselves, under existing powers—I think that was the point that the noble Lord, Lord Vaux, made—rather than acting in an accompanying or supporting role? If these powers are to be used more routinely—for example, to support the investigation of lower-level but still costly fraud—do we risk placing a significant administrative and resource burden on our already overstretched police forces? I could say more on this, but I will not.

Amendment 93, also in the name of the noble Lord, Lord Sikka, seeks to insert an additional layer of judicial oversight into the appointment of authorised investigators by requiring that their authorisation is subject to court approval, rather than left solely to the discretion of the Secretary of State. Without going into the detail, I support the principle behind this amendment.

I will conclude by asking some questions of the Minister on process, which has been a consistent theme on this side in our previous four days in Committee. I am not expecting answers now; it is really to put down the questions along the themes that I have just spoken to. We have had some verbal reassurance from the Government that these powers will be used against property and not people. I am not quite sure how reasonable force can be applied against property but, more than this, it is clear from the text of the Bill that this is not legally guaranteed. Reasonable force could be wielded against people by DWP officers; I hope that the Government can provide more clarity on the balance of that. Can the Minister confirm that these powers could in fact be used against people, as well as property? That is quite an important point. Again, the argument is about whether the police or the DWP may be required. In addition, can she give us some more information as to why she believes these powers need to be granted to civil servants in the DWP?

I say again that the police are the recognised authority, who have legitimacy, in the eyes of the public, to exercise and apply PACE powers. I feel that the Government have a duty to defend, quite strongly, why they want to grant these sweeping powers to members of a government department such as the DWP. We have a police service for a reason: officers are trained, regulated and experienced in using these powers appropriately. If fraud is suspected, particularly at a serious level, is it not right that it should be investigated by the police and not delegated to civil servants?

My concluding comment is that we should be cautious about expanding investigatory powers without a clear and compelling case. My final question to the Minister is: what justification is there for bypassing the police? That plays into my main question, which is: whither the police and whither the DWP?

[The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, I thank noble Lords for their comments and questions. I will speak first to Amendment 92. The amendment would undermine the policy intent of this part of the Bill, so we cannot accept it. The DWP leads investigations into social security matters and, as a result, our staff are better positioned to search for items relevant to these investigations—the things that they deal with, such as benefit claim packs or documents related to fraudulent identities. Requiring the police to be present for all DWP search and seizure activity, including investigative tasks related to securing criminal evidence, would erode the anticipated obvious benefits of the measure to both the DWP and the police. Crucially, it would divert the police away from focusing on the crime within our communities that only they can deal with and dealing with the human victims of those crimes.

These powers allow the DWP to apply to a court for warrants to enter a premises, conduct search and seizure and apply for and exercise production orders, with or without the police present. That clarifies the point made by the noble Lord, Lord Vaux. They provide the DWP with greater control over its own operations and ensure that police time is not spent undertaking administrative tasks on the DWP’s behalf.

However, I reassure the Committee that safeguards are in place to govern the use of these powers. First and foremost, court approval must be granted for all warrants. The requirements for a DWP warrant application will be as strict as those for a police warrant application. Furthermore, the DWP intends to exercise these powers exclusively in cases involving serious and organised crime. This is not novel. Similar powers are already being used by HMRC, the Food Standards Agency and the Gangmasters and Labour Abuse Authority, which can undertake search and seizure activity without needing to be accompanied by the police.

Amendment 93 would impose unique obligations on the courts that they do not face in respect of other government departments with similar powers. PACE powers do not require the individual exercising them to be appointed by the court and there is no clear reason for the DWP to be any different. DWP-authorised investigators, like others who exercise PACE powers, will be subject to the PACE code of practice relating to search and seizure activity and will be required to follow the same procedures and processes as the police when submitting a warrant application to the court. These are not standards set by the DWP; they are set out in PACE, which all bodies exercising these kinds of law enforcement powers must adhere to. Specialist training must be successfully completed before authorisation is given and only then can an authorised investigator exercise these powers on behalf of the Secretary of State. That approach ensures that the correct responsibilities are attributed to the Secretary of State and the courts.

On the question relating to the PSFA, I am advised that it is not that a constable necessarily has to be present, but somebody with those powers, who may not be a police officer but could be from the National Crime Agency, the Serious Fraud Office, et cetera. As I said, the police do not always have to be there, if it is not necessary. There will be occasions when it will be necessary. For example, the previous Government published a fraud plan in which they recommended that powers of not only search and seizure but arrest be taken. We have decided not to take those powers, so if there needed to be an arrest, we would need to have police officers with us. If there were a risk of serious violence, again, the police would need to be present, but not otherwise.

On the question of force, the provisions set out in Clause 76 provide powers under PACE to enable DWP serious and organised crime investigators to apply for a search warrant to enter a premises, search it and seize items, with or without police involvement in England and Wales. The clause also enables authorised investigators to apply to a judge for an order requiring an individual suspected of social security fraud to provide certain types of sensitive information when relevant to the criminal investigation. It also provides for the use of reasonable force to conduct a search, such as breaking open a locked filing cabinet to search for materials. The clause provides that these powers can be used by an authorised investigator who is authorised by the Secretary of State.

To be clear, a warrant provides for the powers that can be deployed when that warrant is exercised. Our authorised investigators in DWP will not use reasonable force against people, although they may use it against property, such as breaking open a locked filing cabinet to retrieve a laptop or other evidence. However, the reason it has to be here is that, when the DWP applies for a warrant, that warrant must cover any activities that may need to be undertaken by either the DWP or the police, so although our investigators will not use reasonable force against people, it may be necessary for the police to do so when they are accompanying the DWP. That is why the legislation is drafted that way. If it were not, police out there on our warrant would not be able to use reasonable force and there may be occasions on which they need to do so. I hope that that clarifies matters for the noble Lord.

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[Baroness Sherlock (Lab)]

The expectation is that we will be dealing with different kinds of crime. We are talking about serious and organised crime, where we will go out looking for evidence. We believe we do need these powers. If there is another argument behind that I am happy to write to the noble Lord. I have explained why the DWP needs them, and we clearly do need them in these circumstances because without them we could not conduct this work. The DWP has lots of experience because we already do this work; the police just have to go out with us, to be there and to do the searching. So we know what we need and therefore we know that we need these powers. If there is anything else I can add on the PSFA, I will write to the noble Lord.

[Viscount Younger of Leckie (Con)]

The Minister may have just answered my question, which is a slightly opaque one, perhaps. Is it a good assumption that in any search of a property by the DWP when it suspects fraud, members of the DWP will always go prepared with the necessary back-up, including the police or members of the NCA, if they suspect it is going to be a challenging search—or is that wrong?

[Baroness Sherlock (Lab)]

As I said, the police might need to be present if we felt there was a risk of any serious violence. If it was felt there might be a need for arrests or, as the noble Viscount has suggested, there was a possible risk of violence, the police would be asked to accompany DWP officers. I have given those assurances, so I hope the noble Lord will withdraw the amendment.

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[Lord Palmer of Childs Hill (LD)]

My Lords, as we turn to government Amendments 94 to 97, I wonder, as I always do when there are lots of government amendments to their own Bill, whether enough thought has gone into it in the other place.

I know that these proposals are primarily technical, with the key aim of simplifying the drafting of new Schedule 3ZD to the Social Security Administration Act 1992. Government Amendment 96 introduces a single clear prohibition on the seizure or examination of information of legal privilege. This streamlining could help to clarify the legal position for both investigators and those subject to investigation, ensuring that the Bill’s provisions are easier to interpret and apply in practice.

Clarity in legislation is always desirable, especially in complex areas such as fraud investigation, where the rights of individuals and the needs of public authorities must be carefully balanced. At the same time, it is important to consider how these amendments interact with the Bill’s wider objectives of safeguarding public money and equipping authorities with the tools needed to tackle fraud and error effectively. Ensuring that information which is subject to legal privilege is properly protected is a long-standing principle within our legal system. These amendments appear to reaffirm that commitment without substantially altering the Bill’s intent. I have no problem in agreeing with what should have been in the Bill at the beginning.

[Viscount Younger of Leckie (Con)]

My Lords, my remarks largely chime with those made by the noble Lord, Lord Palmer. The Committee will be relieved to know that this is my shortest speech. I offer some measured support for these amendments. They address the important principle of the protection of legally privileged material, and in a way that simplifies and clarifies the drafting of this part of the Bill.

The right to legal professional privilege is, of course, a cornerstone of our justice system. That principle should be unambiguous in legislation of this kind. These amendments seek to express that safeguard more clearly through a single consolidated position. There is certainly merit in that. A simplified and consolidated statement of the limitation on investigatory powers in respect of privileged material is likely to be easier to apply in practice and could reduce the risk of inadvertent overreach.

[Baroness Sherlock (Lab)]

My Lords, I am grateful for the support and take the chiding in the spirit in which noble Lords intended it.

Government amendments are a key part of the legislative process. Noble Lords will have seen them from time to time, allowing for the refinement and improvement of Bills as they move through Parliament. It is critical that the Bill’s provisions comply with the distinct legal jurisdiction of Scotland. Every effort has been made to ensure that this is the case. We have worked closely with the Office of the Advocate-General for Scotland and with officials in the Scottish Government.

Following an additional review of the Bill prior to Committee, the Office of the Advocate-General for Scotland identified the need for a minor amendment to ensure that the powers would operate in Scotland as intended. We felt it was important to make the law clear in the Bill. I am grateful for noble Lords’ grace on this.

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Moved by

[Viscount Younger of Leckie]

99D: After Clause 88, insert the following new Clause—
“Consideration of vulnerabilities(1) The Secretary of State must have due regard for the external circumstances pertaining to a person under investigation in respect of the mental capacity, economic circumstances, and physical and mental health of the claimant, particularly where the claimant is or may reasonably be considered a vulnerable person.(2) For the purposes of this section, a "vulnerable person" includes, but is not limited to, individuals who—(a) lacks mental capacity within the meaning of the Mental Capacity Act 2005;(b) are in receipt of, or have been assessed as eligible for, support relating to mental or physical health conditions;(c) could be reasonably regarded as vulnerable to domestic abuse or coercion.(3) The Secretary of State shall ensure that a fair and reasonable assessment of the claimant's circumstances is conducted before any deduction is applied.(4) The assessment under subsection (3) may consider evidence provided on behalf of the claimant, including medical reports, financial information, and input from authorised support workers or representatives.(5) All decisions to deduct welfare payments shall be documented, with explicit reference to how the claimant’s vulnerability was considered. (6) The records under subsection (5) shall be made available to the claimant upon request and subject to audit by an independent body.”Member’s explanatory statement
This new clause would ensure that, before a deduction was applied, due regard was given to the wider circumstances and vulnerabilities of the liable person, which they would have to document, to be made available upon request by the claimant.

[Viscount Younger of Leckie (Con)]

My Lords, Amendments 99D and 109ZA are in my name. Amendment 99D seeks to ensure that, before a deduction order is applied, proper and fair consideration is given to the wider circumstances of the person under investigation, especially where there may be indicators of vulnerability. It is an amendment rooted not in obstruction but in principle and in pragmatism. It recognises that, if we are to give public authorities powerful tools to detect and recover fraud, we must also ensure that those powers are exercised with fairness and, crucially, the full understanding of the person’s situation.

Many individuals who fall under investigation may be living with complex challenges. I know that we touched on these matters earlier in Committee, but some of these issues are worth repeating. Some individuals may lack the mental capacity to understand what is being asked of them; others may be suffering from physical or mental health conditions that impair their ability to manage forms, deadlines or correspondence; and still others may be experiencing domestic abuse, coercion or forms of control that make it difficult or even impossible for them to make independent financial decisions. These people do not, certainly as yet, have a deputy, proxy or power of attorney in support. They remain in sole charge of their accounts.

I am sure that noble Lords across the Committee would welcome reassurance from the Government, first, on how these people will be identified and, secondly, how the system and process will cope and adapt to reflect their needs and, where needed, to protect them. These are not on-the-edge cases; they are realities that front-line officials in the department and around the country encounter every day. If we are not careful, precisely these individuals may end up most at risk of enforcement action—not because they are wilfully defrauding the system but because they simply did not or could not understand what was expected of them.

We must therefore be careful to differentiate error from intent to defraud. There will be cases where a person under investigation may not have understood what he or she was supposed to be doing but is technically fraudulent. This is exactly what this amendment seeks: it would require that the Secretary of State has due regard to the mental capacity, economic circumstances and health of the claimant, especially where there are indicators of vulnerability. It would also ensure that a fair and reasonable assessment of the person’s circumstances is conducted before any deduction is applied. I should say that this is not about softening our stance on fraud; it is simply about targeting it accurately and responsibly.

The amendment also places emphasis on the evidentiary basis of decisions. It allows for medical reports, financial statements and input from support workers or advocates to be taken into account. Importantly, it also creates a clear paper trail by requiring that decisions to deduct are documented with reference to how the claimant’s vulnerabilities were considered. That documentation must be made available upon request and be subject to independent audit. I argue that this is important and not a form of bureaucracy—before noble Lords get up.

So we come back to understanding how the test-and-learn operation and exercises will take account of this. Could the Minister give us some detail on how such cases will be identified and on the other questions that I asked earlier? I also ask her to help the Committee to understand what the Government will access in terms of information relating to these wider circumstances. We see it as vital that this information is taken into consideration.

At this stage of the Bill, it is also right that we ask what kinds of protections the Government intend to put in place for vulnerable people generally. This extends to the Cabinet Office aspects of the Bill. I realise that my noble friend Lady Finn may have raised these questions earlier, but what process will be followed to ensure that mental capacity is assessed? What training will investigators have to recognise signs of coercion or distress, and what mechanisms will be available to review decisions, particularly where someone’s vulnerability has been overlooked? These are not academic questions; they go to the heart of what kind of enforcement regime we are creating and how confident the public can be that it will act justly, especially where people are least able to defend themselves.

I turn to Amendment 109ZA. It is well established that the Government themselves recognise that disabled people face higher living costs than their non-disabled counterparts. We have had many debates in the Chamber that have highlighted these issues. We know that these costs are not optional; they are the result of essential needs—specialised equipment, personal care and accessible transport—and higher utility bills, among other things.

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With those answers, to the effect that we agree with the objectives of the amendments but struggle with their impact, I hope the noble Viscount will be able to withdraw Amendment 99D.

[Viscount Younger of Leckie (Con)]

My Lords, I am very grateful for the thoughtful and supportive contributions from the noble Baroness, Lady Fox, and the noble Lord, Lord Palmer, which we have heard throughout this debate. As it draws to a close, I want to return to the fundamental values that underpin Amendments 99D and 109ZA.

I will not repeat everything I said before but, briefly, these amendments are not about hampering fraud enforcement but about ensuring that where serious powers are granted—powers that allow the state to intervene directly in someone’s financial life—they are exercised with the kind of care, discretion and humanity that should be the hallmark of any public authority in a just society.

Amendment 99D asks a simple but fundamental question: how do we treat those whose circumstances may mean that they did not or could not understand or apply the rules? As the Minister herself said, rightly, we all want the same thing. Fraud must be pursued, but, as the noble Baroness, Lady Fox, alluded to, we must not collapse the distinction between error and intent, between misunderstanding and malice. The law and those who enforce it must have the tools to see the difference.

Amendment 109ZA builds on this principle of proportionality; it addresses a reality that we all know—that disabled people may face higher costs of living by virtue of their condition. As I said earlier, the direct deduction order, if applied too bluntly, can turn an already stretched household into one facing crisis, and we must ensure that these powers are used with sensitivity. This is exactly what my Amendment 109ZA provides: a measured and sensible requirement.

I appreciate the very sensible explanations that the Minister produced. I appreciate what she said and the fullness of her remarks. I shall make sure that I read all her remarks in Hansard to see whether they satisfy the concerns expressed in the amendments that I have tabled. I appreciate the fullness of what she has produced. Both these amendments provide something important. They place a protective guardrail on otherwise broad and serious enforcement powers. They ask us to apply judgment, not just rules, and to recognise vulnerability and not just liability. Separately, I also appreciate the safeguards that the Minister spelled out towards the end of her remarks.

Broadly, people will support fraud enforcement when they believe it is fair, and they will support recovery powers when they trust that those powers will not be used to punish the vulnerable alongside the guilty. This is where the balance needs to be struck.

I shall also look at Hansard because the Minister gave us a helpful explanation in terms of the balance required in the obligations placed on the DWP, and at whether in fact my amendments are too onerous or a bit overreaching. I would like to reflect on those questions. We may come back on Report with something, or we may not. In the meantime, I beg leave to withdraw the amendment.

Amendment 99D withdrawn.

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[Lord Palmer of Childs Hill (LD)]

My Lords, I am proud to support Amendments 102 and 122, which I tabled alongside the noble Baroness, Lady Fox of Buckley. Amendment 102 proposes that the power to make direct deduction orders should rest with the courts following an application from the Secretary of State, rather than allowing the Secretary of State to impose such orders directly. This change would introduce an important layer of judicial oversight, ensuring that deductions from individuals’ bank accounts are made only after careful, independent consideration of the evidence and the circumstances.

Although the Bill includes safeguards such as affordability and vulnerability checks, as enumerated by the Minister, and rights to representation and appeal, placing the final decision in the hands of the court would further strengthen public confidence in the fairness and proportionality of the debt recovery process. Amendment 122 is consequential on this approach, ensuring consistency throughout the Bill. By requiring court approval for direct deduction orders, we uphold the principle that significant intrusions into personal finances should be subject to the highest standards of scrutiny and due process. This is particularly important given the potential for hardship and complexities that can arise in cases involving joint accounts or vulnerable individuals. I hope the Minister can address that when she replies.

These amendments do not seek to undermine the Government’s legitimate efforts to recover public funds lost to fraud or error but rather to ensure that such efforts are always balanced with robust protections for individual rights. I urge fellow noble Lords to support these amendments as a constructive step towards a more transparent and accountable system, and I am very pleased to have signed this amendment in the name of the noble Baroness, Lady Fox.

[Viscount Younger of Leckie (Con)]

My Lords, I have a degree of sympathy for the amendment in the name of the noble Baroness, Lady Fox, and the noble Lord, Lord Palmer of Childs Hill. It touches on a value that I know many of us across this House instinctively support: namely, that powers which interfere with the person’s finances should be subject to proper oversight and scrutiny—in other words, by a court and not by a politician. Let us start with that.

The principle underpinning the amendment is sound. When the state seeks to impose a direct deduction from an individual’s account, that is no small matter. It affects not just policy outcomes but people’s daily lives, and we should never lose sight of that. Much was spoken about that in earlier groups. I am sure that the noble Baroness, Lady Fox, and the noble Lord, Lord Palmer, have suggested introducing a requirement for the court to authorise such a deduction because it reflects the gravity of that particular action.

However—there is a however—although I support the sentiment, I have reservations about the practicality, and I am afraid that the remarks from the noble Baroness, Lady Bennett, have increased my concerns. Requiring every direct deduction order to go through the courts will prove burdensome to the judicial system and may risk making this part of the regime so slow and administratively heavy that it becomes inoperable in practice. That would not only undermine the Government’s legitimate aim of tackling fraud effectively and speedily, but could also result in delays and uncertainty for claimants and public authorities alike. Just to be helpful to the Minister, can she enlighten us on the current state of the backlog in the courts—which is a message she might expect me to give—and how, therefore, Amendment 102, for example, might not be helpful to the process?

I have another question about an appeals process. Everyone, I believe, has the right to an appeal, but how would this work, given the status of the courts? That is a question for the Minister to ponder over. We are, after all, talking about a mechanism intended to recover public money in a targeted and efficient way. If every deduction, regardless of scale or complexity, must first pass through court proceedings, we risk erecting a barrier that stifles the entire process. There must surely be a way of reconciling the desire for oversight with the need for operational efficiency—a challenge that I lay down to the noble Baroness, the Minister.

So, while I cannot support the amendment as currently drafted, I agree that the principle of independent oversight should not be overlooked. There may be better ways of embedding that principle in the system through enhanced safeguards; clearer audit mechanisms; greater efficiency and speed—that is, in expediting the DDOs; and improving transparency around how deduction decisions are made and reviewed.

I recognise this from all who have spoken, and I have listened carefully to all the speeches. I believe that these amendments, and particularly Amendment 102, starts a valuable conversation; even if its solution is not quite the right one, its motivation certainly is. I hope that the Minister can reassure the Committee that the Government recognise the need for these powers to be exercised responsibly but also sensibly so that they can operate effectively, and that they are open to exploring proportionate mechanisms of accountability that simply do not grind the system to a halt, and if so—a very simple question to end on: what could this system be?

[Baroness Sherlock (Lab)]

My Lords, I am grateful for some really good questions. These are exactly the kind of questions the Lords Committee should be asking on these sorts of issues, and I hope to give decent answers.

Should I ever get round to writing a book, somewhere in the credits it will say “Definitely not a malign person”. I am very grateful to the noble Baroness for that. It is the best compliment I am going to have today —you have to take them where you can find them in this business—so I thank her very much.

Amendments 102 and 122, as we have heard, want to restrict the use of the direct deduction power to circumstances where a court has determined it necessary and appropriate. I thought the noble Baroness, Lady Fox, made her argument very clearly; I hope to try and persuade her that she does not need to press these amendments because I think we have a good case on this.

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[Baroness Fox of Buckley (Non-Afl)]

It is very helpful for these things to be clarified. As noble Lords can see every time we are in Committee, I have so many pieces of paper, so I appreciate that and am not saying that I am on top of all the detail.

However, I think it is important, in the spirit of the way that the noble Lord, Lord Palmer, was motivated to support these amendments, that this is not just about the detail; there is an important principle here. I really liked the viral film mentioned by the noble Baroness, Lady Bennett of Manor Castle, because people do care about this Bill and what its impact will be, and we have to be able to answer all the questions as the legislators who are debating it. People know that we are involved in this, and I sometimes feel that it is unclear exactly what will be acquired by all these powers.

The problem with saying that these powers will hardly ever be used is that these powers are going in the statute book, so they can be used. I am not going to talk about bank statements again, but the reason I raised them on this group is because, before a DDO can be introduced, you have to check bank statements through the mechanism of the affordability checks that we will go on to discuss, and that is a breach of privacy. If we are giving the DWP the power to do this, we need to have a check. The way we have done that historically is to rely on the courts to take money. As this is related, I am trying to see whether this could be a useful check to make sure that these powers are not exploited.

We have plenty of time to go, so I think some of us may come back with a version of this amendment—potentially better worded—when we get to Report. It is not just to fly the flag for civil liberties but, as I think the noble Lord, Lord Palmer, said, a need to have trust in the system. If the Bill is to be taken seriously by people who do not just think that it is draconian and who do not do the caricatures that the Minister wants, it must be watertight in its safeguards and protections, as well as in the powers that it creates. Those two things have to live together; otherwise, it will be discredited before it even hits the statute book.

[Viscount Younger of Leckie (Con)]

I just want to pick up on something quite interesting that the noble Baroness said, which leads me to ask a question of the Minister. I am not expecting an answer now. It is to do with the capacity or number of cases. I have no idea how many DDO cases could end up going to the courts, but it may be more than the noble Baroness, Lady Fox, thinks. I am just reminded of my experience of the Child Maintenance Service: it looks at those people who we know can pay and who are not paying, and they go all the way to the courts. There are many thousands. I rest my case by saying that there is a danger that the courts could be clogged up, but it would help the Committee to have some idea, perhaps in writing, of the number of cases that would or could go to court as a consequence of these amendments.

[Baroness Sherlock (Lab)]

I will write to the noble Viscount. As he knows from his experience with the Child Maintenance Service, as each form of enforcement comes into view, more and more people simply pay without it being necessary, so a sort of funnel comes down. If we have any information about scale, I would be happy to write.

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[Baroness Fox of Buckley (Non-Afl)]

Very briefly, I absolutely support the amendment. I raised some of my concerns when moving my amendment in the previous group. When I heard that bank statements could be requested, I thought it was not true and I kept having to check it. I thought, “This cannot be right”, because throughout the passage of the Bill we have been assured by the Minister, “Oh, no. We do not want any details. We are only going to have the name. There is no surveillance”. I then thought, “Oh my God, they can get the bank accounts of individuals, allegedly to check whether they have enough money in their bank account, saying that they are doing it only because they are being nice to them”.

I am of the generation who think that if you lose your bank account, there is serious jeopardy. In other words, I would never show my bank accounts around. I am paranoid about anyone seeing my bank accounts. I worry about that sort of thing, although it is not that I have anything to hide—just to note. As the noble Baroness, Lady Bennett, indicated, you can find out from people’s bank accounts what their politics are, their trade union affiliations and their sexual preferences —all sorts of things. On the idea that the DWP will not be looking at that but will just be checking how much money you have, it cannot do that. It is essential that we think twice about this.

These account information notices also apply to joint bank accounts. I know that we are going on to discuss joint accounts in a minute, but that means that those pots of intimate, private, sensitive and granular information held within a bank statement can be revealed about individuals who are not on benefits, who are not debtors, who are not involved at all—they simply share a joint account. I would like this removed from the Bill. It is too scary.

[Viscount Younger of Leckie (Con)]

My Lords, I thank the noble Baronesses, Lady Kramer and Lady Bennett of Manor Castle, for tabling this amendment. I recognise the spirit in which this proposal is made—a desire to ensure that the use of direct deduction powers is subject to proper scrutiny and does not override individual rights without appropriate justification.

However, I must express some serious reservations about the effect that this amendment would have. By removing the ability of the DWP to request relevant bank statement information from financial institutions before issuing a DDO, we risk undermining the very evidential foundation that should underpin the use of this power in the first place. If we are to give Ministers and their departments powers to recover money owed to the public purse—a legitimate policy objective that is supported on all sides of this Committee—we must also ensure that those powers are exercised responsibly and on the basis of proper evidence. Access to account information, under strictly controlled conditions, is part of what makes that possible. Without it, the risk is not simply inefficiency or delay. The greater danger is that deduction decisions could be made with incomplete or inaccurate information, leading to inappropriate enforcement action or simply to missed opportunities to recover legitimately owed funds. Neither outcome would serve the interests of fairness, nor would they deliver good value for public money.

We have heard throughout Committee about the importance of a system that is not only robust but proportionate and just. I entirely agree—as our amendments and interventions thus far have made clear. However, for a system to be proportionate, it must be informed, which requires access to evidence. I reiterate the concerns that we raised on these Benches at Second Reading. Schedule 3B (1)(2) (b)(i) makes it clear that an eligibility verification notice, which would serve to identify or help to identify fraud, can be applied only to the bank account

“into which a specified relevant benefit has been paid”.

As my noble friend Lady Stedman-Scott set out at Second Reading, we are concerned that this creates a substantial loophole which could be exploited by fraudsters who are, as the government amendments have suggested, able to find out whether they are being pursued by the DWP through an information request. This is a real issue. It seems a likely and obvious outcome that such a person could move money between the relevant account and another, held with different bank, to avoid scrutiny.

We submit that for this to be an enforcement regime, there cannot be any loopholes or workarounds which may permit a fraudster to hang on to the money that they have stolen from the taxpayer. As we stated at Second Reading, the Bill as set out suggests that the Government will be tied up in a legal bind, ensuring in statute that they cannot verify or ultimately pursue the recovery of funds that are not held within the account specified. However, with the right safeguards and with responsible communication of information, there is surely a way in which this regime can be constructed that is responsible and fit for purpose.

We believe that the Government must expand their capacity and ability to access further bank accounts held in the name of the relevant person to prevent them simply opening another account and moving money around, which, as the Bill is currently drafted, seems to be a clear and easy way for them to avoid both proper scrutiny and will prevent the money being recovered. Perhaps the Minister will say whether parallels can be drawn with the current system set out between HMRC and the banks for the recovery of tax resulting either from overpayments or tax fraud, which I am sure she will say works. That may be helpful.

Finally, I want to respond briefly to the concerns raised about whether these provisions amount to a snoopers’ charter—a charge that has been raised throughout the passage of the Bill. It is right that we scrutinise the scope of these powers carefully, but it is also important to be clear about what the Bill does and does not do. In our view, the Bill sets out defined and limited circumstances under which verification measures may be used. It cannot be doubted that an informed and fair decision on deduction orders can be reached only if it is grounded in accurate and up-to-date information. I believe that it is for the Government to make it absolutely clear in Committee how these safeguards on process will function in practice and how transparency and accountability will be maintained. I understand the sensitivities involved in accessing bank data. That is why these safeguards and oversight mechanisms are important.

With that, I hope that noble Lords will reflect on whether the amendment achieves that balance, and I look forward to the Minister’s response on how the very valid concerns that it speaks to can be addressed.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to all noble Lords for their contributions. As we have heard, this amendment would remove the requirement for banks to provide information to the department in response to notices, including bank statements, for the purposes of making a direct deduction order. However, getting this information from banks, including relevant bank statements, is not only instrumental to the effectiveness of the direct deduction power—it is crucial as a necessary and important safeguard to ensure the affordability of deductions, which is why we cannot accept this amendment.

I remind the Committee that the recovery powers proposed under the Bill are ones of last resort. They are for those not in receipt of benefit or in PAYE employment who have other income streams or capital and who repeatedly refuse to engage with the DWP to agree an affordable repayment plan. Without the information shared by the bank, the DWP would have no means to consider the debtor’s financial circumstances and would therefore be prevented from meeting other obligations and vital safeguards in the Bill, such as establishing an affordable deduction rate and avoiding causing hardship.

Put simply, if we do not know how much money someone has, we risk taking more than they can afford to repay at that time. The DWP is working collaboratively with the Money and Pensions Service on “ability to pay” checks, using bank statements and, where possible, the standard financial statement principles, to prevent financial hardship. These checks will consider the debtor’s essential living expenses, such as housing and utilities, and the Bill provides that direct deduction orders must not cause the debtor hardship in meeting these expenses.

Using bank statements in this way allows the deduction to be affordable and fair based on the individual circumstances, rather than a blanket approach of leaving a set amount in the account which, if not set high enough, could prevent the debtor from meeting those essential costs. The information gathered through these notices is proportionate and other provisions in the Bill restrict the use of bank statements obtained under this power. They are solely for the purposes of recovering the money that is owed. I say to the noble Baroness, Lady Fox, that it is a legal requirement not to use the information for any purpose other than debt recovery. That is spelled out in paragraph 3(10) of new Schedule 3ZA, inserted by Schedule 5 of the Bill.

I also remind the noble Baroness that all this can be avoided, including obtaining information from a debtor’s bank, if the individual agrees to get in touch to discuss and agree an appropriate repayment plan. In that case, we will not need bank statements because we can talk to them and ask for appropriate evidence, and they can provide evidence of other kinds, if that is sensible.

I will just pick up on a number of things. We are not interested in looking at what people spend their money on. It is worth reminding the noble Baroness, Lady Fox, and the Committee that we have said different things at different times because there are different measures in the Bill. For the EVM over here, there is no transaction data—absolutely not, under any circumstances—and I say to the noble Viscount, Lord Younger, that we are looking only at the bank account into which we pay benefits. Fresh sentence: over here, the DWP’s debt recovery powers are aimed at different people, who are not on benefits as, by definition, the EVM is only for those on benefits. It is aimed at people who are not in PAYE employment, who owe the department money and who will not engage. If at least four attempts have been made to contact them but they simply have not got in touch, we can start to use the powers. In that case, we do have the power under our debt recovery powers to go to any bank account that they have; we are not limited to the bank account into which we pay benefits. As I have just said, we are not interested in looking at what people spend their money on. The power can be used to recover debt only in cases where somebody is not in receipt of benefits, as I have described.

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[Lord Palmer of Childs Hill (LD)]

My Lords, the amendment seeks to ensure that, before any direct deduction order is made under this schedule, the Secretary of State must consider the effect of such an order on any person who is a victim of domestic abuse, or whom the Secretary of State reasonably believes to be at risk of domestic abuse.

While the Bill rightly includes very important safeguards, such as affordability and vulnerability checks, and limits on the amounts that can be deducted to protect debtors from undue hardship, these general measures may not provide sufficient protection for those experiencing or at risk of domestic abuse, whose circumstances are often uniquely precarious and complex. Victims of domestic abuse frequently face financial control and instability, and the imposition of a direct deduction order could inadvertently place them at greater risk, either by exacerbating economic hardship or alerting an abuser to their financial situation. It is therefore essential that the Secretary of State has a specific statutory duty to assess the impact on this particularly vulnerable group before any order is made. By adopting this modest amendment, we would strengthen the Bill’s existing safeguards and ensure that the most vulnerable are not further disadvantaged by well-intentioned recovery mechanisms. I urge noble Lords to support the amendment in the interests of justice, compassion and the protection of those at risk. I beg to move.

[Viscount Younger of Leckie (Con)]

My Lords, I offer my strong support for Amendment 109, tabled by the noble Lord, Lord Palmer. It proposes a vital and compassionate safeguard that ensures that, before any direct deduction order is made, proper consideration is given to whether the individual involved is a victim of domestic abuse—or certainly at risk of it.

We know that domestic abuse too often includes economic and financial control. Perpetrators may take over access to bank accounts, manage benefit claims in their partner’s name or use coercion to extract money. For victims in these circumstances, a deduction order made against a joint or controlled account is not just a technical enforcement step but can be catastrophic and expose them to further harm, deepen their financial insecurity and reinforce the very cycle of abuse that they are trying to escape. The amendment puts in place an essential duty that, before such a deduction is imposed, the Secretary of State must ask a basic question: is this person safe? Are they vulnerable specifically to domestic abuse? Could such action cause caused further harm? I am sure the Committee will realise that these comments are not new. This is not about creating loopholes but about making sure that we do not inadvertently punish the very people who most need our protection. If our system is to be just, it must distinguish between those who are deliberately defrauding the system and those who are themselves being defrauded, manipulated or coerced in private and invisible ways.

I fully recognise—others may raise this point—that this kind of information is not always easy to obtain. As we know, domestic abuse is often hidden, and victims may be reluctant or unable to disclose it. But that is not a reason to avoid the responsibility. On the contrary, it is precisely why we must build protective considerations into the decision-making process. So, if a red flag is raised—whether through third-party evidence, existing support services or patterns in the account—the system must be capable of pausing, asking the right and necessary questions and adjusting course. That is surely not an undue burden; it is what we should expect of a responsible, modern enforcement regime.

Of course, I also note that the Government already have duties under the Domestic Abuse Act 2021—I expect we will hear this from the Minister—and under the wider Equality Act to consider how their decisions impact vulnerable groups. But this amendment gives practical effect to those duties in the specific context of direct deduction orders. It does not create new rights out of thin air; it reinforces and operationalises obligations that the state already carries.

So I ask the noble Baroness two questions. In the system and process designed, and having reached proof of concept with the banks—at least on two occasions; I refer back to previous comments—who is responsible for recognising these issues in respect of account holders? Is it the banks? To what extent do they know such detail about their account holders? Or is it the DWP? Is it more likely to know of such matters? Obviously, in the discussions leading up to and beyond the decision to give out benefits, such issues surely would have emerged. Perhaps the Minister can enlighten us on the precise responsibilities here.

Perhaps the Minister can also confirm that the banks would not see the analysis of vulnerability as a key part of their responsibility—that is linked to my previous point—but that their role is simply to raise a red flag with deliberately limited data, as has been outlined, where there is that match of an account holder in receipt of benefits who also has £16,000 or more in an account.

The final question, which chimes with questions asked on perhaps day 4 of Committee, is: how often are such checks carried out by banks, as requested by the DWP? Or—I need to be put right again; forgive me—is the algorithm such that a flag is raised on a 24/7 basis by an algorithm that does a match? Then a report is given to the bank’s responsible person—let us call him the banking manager.

There is a thread running through this debate about how to balance power and protection. Indeed, it is an issue on which noble Lords across the Committee agree; therefore I warmly welcome this amendment from the noble Lord, Lord Palmer, as it provides us with another opportunity to test out the Government and raise our concerns. This amendment is principled, proportionate and practical. I hope the Government will take it seriously, in the spirit it is meant, and reflect carefully on the values it enshrines. I believe it gets to the very essence of what the Bill is about. With that, I look forward to the answers from the Minister.

[Baroness Sherlock (Lab)]

My Lords, I am grateful, as ever. The subject of Amendment 109, put forward by the noble Lord, Lord Palmer, is very much as it was in the fourth group, with the earlier amendments in the name of the noble Viscount, Lord Younger. The Committee agrees on the objective in that area and we are simply going to talk about the best way to achieve that.

I thank the noble Lord, Lord Palmer, for raising this issue but again, for reasons not dissimilar to those articulated earlier, his amendment is not the best way to achieve this. However, I hope I can give him the assurance that he is looking for.

The DWP very much understands the importance of this issue. The noble Viscount is right that we have statutory obligations, but it is also embedded in the department. All our front-line staff are trained in addressing the issue of domestic violence, the training is regularly refreshed and we engage with stakeholders: the department take it very seriously.

We are committed to continuing to support victims and survivors of domestic abuse whenever they interact with the department. We have experience in this area, as well as existing guidance and processes for supporting victims of domestic abuse. As I say, the training our front-line management staff receive includes assessing affordability and identifying and dealing with vulnerable customers.

My officials have been looking in detail, specifically at how victim survivors could be impacted by the measures in the Bill, and working closely with key stakeholders, including the charity Surviving Economic Abuse, to ensure that the code of practice sets out the right approach to mitigating risks for victim survivors of domestic abuse. The current draft of the code of practice includes steps officials will take to identify signs of domestic abuse, where possible, to identify risks and to support the individual.

However, although I recognise the important intent behind this amendment, the fact is that it would apply to anyone affected by a direct deduction order, including debtors and non-debtors. Similarly to the earlier Amendments 99D and 109ZA from the noble Viscount, Lord Younger, it does not require or enable the DWP to take any action to identify possible impacted individuals or provide any new means by which the DWP could do so.

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[Viscount Younger of Leckie (Con)]

My remarks will be brief. I thank the noble Lord, Lord Davies of Brixton, for tabling Amendments 109A and 109B, which seek to introduce further safeguards into the process by which direct deduction orders are applied. These amendments are clearly driven by a legitimate concern. I am sure it is one that we all share; no one should be pushed into destitution—note that word—because of enforcement action taken by the state. We on these Benches broadly support the intention behind these amendments. As we expand the state’s ability to recover funds lost through fraud, we must do so in a way that is measured, proportionate and fair. We agree that the person on the receiving end of a direct deduction order must be treated with dignity and that the enforcement should never push a person below the threshold of subsistence.

However, while we agree on the principle, the Bill as currently drafted already contains sufficient protections to give effect to that principle. These amendments propose going further. As the noble Lord, Lord Davies, set out, they would hard-wire specific mechanisms into the legislation itself with a mandatory affordability assessment and a fixed, safeguarded amount of £1,000 to be left in a person’s account. While we understand the motivation behind these proposals, we are not persuaded that they strike the right balance.

First, on the affordability assessment, the key question is not whether such considerations should be made—they absolutely should be—but whether placing a rigid requirement in the Bill is the best way to achieve it. Secondly, regarding the safeguarded sum, the proposal to set a fixed floor of £1,000 may be well intentioned but risks creating unintended consequences. For some individuals, that figure may be appropriate, but for others with significantly higher levels of debt or multiple fraudulent claims—of which there are a few, I am afraid—it may act as an unjustified barrier to recovery. A blanket threshold does not easily accommodate the complexity of individual circumstances.

We must not forget what this system is designed to do. We are talking about the recovery of public funds that were obtained unlawfully. These are not arbitrary deductions, but actions taken in response to fraud—in some cases, large-scale fraud—committed against the public purse. These funds belong not to the state in the abstract but to the taxpayers, the public and the people who rely on our public services. I remind the Committee of our duty to recover them on their behalf. We must exercise this power responsibly and we believe the Bill enables that. We must also ensure that we do not design a system that is so laden with friction that it fails to deliver on its core purpose of upholding the rule of law and restoring funds to the public where fraud has occurred.

These amendments raise important points, and we welcome the values that underpin them. We are committed to ensuring that the system is fair, proportionate and humane. We are confident that the existing provisions in the Bill, supported by robust guidance and operational safeguards, provide a sufficient framework to achieve those goals without introducing additional complexity that may compromise the system’s effectiveness.

Before the Minister thinks that I am writing yet another speech for her, I have some questions for her, which may also be helpful to the noble Lord, Lord Davies. Take the case of someone who has taken money fraudulently but finds himself destitute through his own actions and might otherwise be on the streets, homeless —or worse, hungry. What help can the state give to him? What options are there? As a basic, I presume that he will still be eligible for universal credit, albeit, as the noble Lord, Lord Davies, said, it would be subject to an agreed deduction for his misdemeanours. He would therefore still get support, assuming that he is not allowed to keep the £1,000 in his account. As the noble Lord said, the money and advisory services are there, and Citizens Advice is there. They are there to offer advice, but what support is there for such people in extremis? The Minister may say that the household support fund is also there and could be called upon, but that fund is subject to local help and is in the gift of local authorities to give out. Would destitute people come into that?

In conclusion, we do not support these amendments, but I thank the noble Lord, Lord Davies, for prompting this important and short debate. We look forward to working together to ensure that the final system strikes the right balance between fairness and firm recovery of debt.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to my noble friend Lord Davies for raising this, and to the noble Viscount for his observations. I agree with my noble friend that affordability assessments should be conducted—he has made that clear, and we certainly want to do that as we think it is important—before a direct deduction order is issued, but we regard this amendment as unnecessary and duplicating existing provisions.

Paragraph 6 of new Schedule 3ZA, inserted by Schedule 5 of the Bill, provides that recovery must not cause hardship to the debtor, any joint account holder or dependant, and must be fair. Paragraph 3 requires the DWP to obtain, via an account information notice, bank statements covering at least the most recent three months in order to help make that assessment.

Further detail on how affordability will be assessed will be set out in the code of practice, a draft of which is available to Members; I am sure that my noble friend has had the opportunity to see it. It sets out the principles that will apply when affordability is assessed. They include ensuring that essential living expenses and other reasonable financial commitments are identified and protected. Officials are working closely with organisations such as the Money and Pensions Service to develop the code and, as required by Clause 93, a formal public consultation will be conducted on the draft before it is first issued.

As I have already outlined, affordability assessments must and will take place prior to enforcing a deduction order. These checks use banks statements, allowing DWP officials to consider expenses such as housing and utilities, enabling the deduction to be affordable, fair and based on individual circumstances, rather than a blanket approach of leaving a set amount in the account which could, if not set high enough, prevent the debtor from meeting those essential costs, as the amounts will vary from person to person.

For regular direct deduction orders, paragraph 6(3) of new Schedule 3ZA requires that any regular deductions made by the DWP each month must not exceed 40% of the monthly average amount credited to the account during the last period in which statements were assessed. Regulations will be made under paragraph 24(2)(d) to further set a maximum rate of 20% for all cases that have not arisen due to fraud.

These figures are maximums, rather than fixed deduction rates. Deduction rates will vary as officials take any affordability, hardship factors or other relevant circumstances into consideration. This approach mirrors that already used effectively in the DWP’s existing powers of deduction from earnings or benefits, and it is not obvious why it should be different in these circumstances. Given the safeguards outlined, requiring that £1,000 be left in one or more of the liable person’s bank accounts in every case where a DDO was sought is unnecessary, as the safeguards will already achieve the outcome intended by this amendment.

Regarding the specific questions, I reassure my noble friend that we are alive to the concerns of UK Finance, which we meet regularly. We are working with MaPS and relevant debt sector organisations on this. He mentioned a comparison with HMRC. HMRC has confirmed that its power is a one-off deduction of a tax debt, not a regular deduction. As a result, it does not assess customers’ affordability as part of the process. Its safeguard instead requires it to leave a minimum of £5,000 across the customer’s accounts to stop taxpayers being left with insufficient funds to cover basic needs. We are taking a different approach: we are assessing affordability, and we will have clear sight via bank statements of the debtor’s ability to repay.

In addition to the work we are doing with MaPS, we are working with relevant stakeholder organisations to make sure that our communications with debtors are clear, to help them understand what we are doing and to engage in the best possible way.

I remind the Committee that before any deductions are taken, account holders will be notified and given the chance to make representations. They can provide relevant information about their financial position and evidence relevant to affordability. Even at that stage, the department’s preference is to reach an agreed position with the debtor. If reasonable payment terms can be agreed and they are maintained by the debtor, the DWP will not make a deduction order.

My noble friend and I clearly want the same thing: to make sure that any recovery is affordable. We have taken different routes, but I hope that what I have said today will help him to accept that our route is doing the job and, in the light of that, he will withdraw his amendment.

I am sorry, I forgot to respond to the noble Viscount about destitution. I may have to come back to him on that, because it would depend very much on somebody’s circumstances. Although the household support fund is locally determined, some directions, steers and guidance are given by the centre by the DWP to local authorities. But the fund is significantly there to help with the cost of living. In relation to someone who is destitute and has committed fraud, people may still, if they have an ongoing entitlement to benefit, have been subject to a loss of benefit penalty as part of a process. So it would very much depend on the circumstances. But if I can find anything else useful, I should be happy to put that in writing to the noble Viscount.

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[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to follow the noble Lord, Lord Davies of Brixton, and speak to this stand part notice, also signed by the noble Lord, Lord Sikka. The noble Lord, Lord Davies of Brixton, set out the question of principle about whether we allow access. I will make a couple of practical arguments and one point of comparison.

I start with the practical arguments. I was just thinking back to the second-ever vote that the Green Party won in either House of Parliament, which was an amendment in the name of my noble friend Lady Jones of Moulsecoomb calling for a review of rural bus services. Losing your driving licence might be an inconvenience, if you live in London—in most parts—but, if you live in the depths of the countryside, it effectively totally traps you in a situation where huge practical disadvantage will happen in your life.

It is worth noting that Clause 92 allows the disqualification of a licence for two years. I acknowledge that this is by a court—it is different to what we were talking about before—but I also acknowledge that the option of jail is available here. I am not quite sure how a court will make a judgment—if it is a really serious offence, where will you place those issues? My comparative point is to note that, back in 2023, the then national lead for the police for fatal crash investigations, Andy Cox, made some very strongly worded statements about people who get 12 points on their licence. He said that too many people were using exceptional circumstances to get out of losing their licence. In fact, one in five people who end up with more than 12 points on their licence in three years succeed in pleading exceptional hardship and therefore do not their licence and can continue to drive.

The really important point here is that, as the national lead for fatal crash investigations pointed out, some people in that situation go on to kill on the roads. We have a situation where people who are driving dangerously and illegally are able to keep their licences, which is quite a contrast to people who have not been accused of doing anything wrong on the roads but may potentially be suffering from that penalty.

Again, we are talking about something that is potentially hitting recipients of benefits, and I rather suspect that a lot of those people who manage to plead exceptional hardship in court, and keep driving with 12 points on their licence, have a fair amount of privilege in their life and can employ fairly expensive lawyers to keep driving. There is a real imbalance there, which should be cause for concern to the Committee.

[Viscount Younger of Leckie (Con)]

My Lords, I oppose the proposition that Clause 92 and Schedule 6 should not stand part of the Bill. Clause 92 provides for disqualification from driving to be a sanction that is available in the most serious and persistent cases of benefit fraud, where a recoverable amount remains unpaid despite all reasonable efforts at recovery.

I do not wish to step on the Minister’s toes by speaking in defence of this provision. Perhaps I should anticipate another speech that she will be making—we will probably be in broad agreement. However, we must be clear that this is not about punishing people arbitrarily but about ensuring that there is an effective deterrent against repeated and deliberate non-compliance with efforts to recover public money. We have a precedent for this, as we noted at Second Reading. The same mechanism exists in the child maintenance enforcement regime. We have learned from that experience that deterrents do work—or we think that they work. I will return to that in a moment. Fewer than five driving licences were seized under those powers, because the power to impose a disqualification was sufficient to prompt compliance. It was a last resort that rarely had to be used, precisely because it was effective in changing behaviour before reaching that point.

In the spirit of trying to be helpful to the Government here, what evidence can be produced that the threat of taking away a driving licence is indeed a deterrent? One statistic could be the number of cases of non-payment from those people whom we know have the ability to repay unlawfully gained moneys but who resolutely refuse to do so and are on the cusp of having their licences taken away. To ascertain the numbers that may have miraculously fallen at this point is one way of defining whether the deterrent has worked. One might assume that any numerical drop in non-paying numbers immediately before a licence withdrawal defines that deterrent. I listened carefully to the remarks from the noble Baroness, Lady Bennett. Perhaps the fall could be seen to be larger in rural areas, as the deterrent would be more significant there than in urban areas. The Minister may be able to enlighten us on this or add that to a letter that hopefully will be coming our way.

This is about proportionate enforcement. Clause 92 does not create a routine sanction. It does not apply automatically. It is not triggered for minor mistakes or for those who are acting in good faith. It exists as a targeted and time-limited measure, for use only when all other routes have been exhausted and when the liable person is wilfully refusing to repay money, which—let us not forget—has been obtained unlawfully.

Some may argue that disqualification from driving is a severe consequence—the noble Baroness, Lady Bennett, has made that point. However, we must weigh that against the seriousness of fraud against the public purse. This money could have been used to fund front-line services, support the vulnerable or maintain trust in the welfare system. Those who persistently abuse the system must know that there are consequences for their actions, which will be followed through. This clause provides one such consequence that is proportionate but effective.

We have been consistent throughout Committee in saying that enforcement must be fair but credible. If the consequence of not repaying fraudulently obtained benefits is no more than a polite letter and no meaningful follow-up, then we send entirely the wrong message. Clause 92 helps to restore that balance. It does not criminalise poverty or target vulnerable people. It sets out a power that, in exceptional cases, can be used to bring about compliance when other tools have failed. I therefore oppose the removal of Clause 92 and Schedule 6 and urge colleagues to do the same. I am interested to hear the remarks of the Minister.

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I hope that what I have explained about the way that it will work, the many safeguards that are built in, the limited point at which it can be brought in and the ways that it can happen is enough to persuade my noble friend to withdraw his amendment.

[Viscount Younger of Leckie (Con)]

I appreciate the noble Baroness’s very full response. This is more of a probing question. We have obviously been debating and talking about driving licences. The ultimate punishment or sanction is prison, but we obviously do not want to exercise that if possible, both for the individual and because we do not want to clog up prisons. But what other sanctions could there be? We have been talking about driving licences, but I know that, in the Child Maintenance Service, taking away passports was raised as a possible sanction. What thoughts does the noble Baroness have on that front?

[Baroness Sherlock (Lab)]

We are not proposing removal of passports on this occasion.

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Moved by

[Viscount Younger of Leckie]

122A: Clause 93, page 60, line 9, after “a” insert “final”
Member's explanatory statement
This amendment and another to clause 105 in the name of Viscount Younger would compel final codes of practice to be laid before Parliament, before the provisions in the Act could come into force.

[Viscount Younger of Leckie (Con)]

My Lords, we now turn to what I believe is the last group for today. I will speak to Amendments 122A, 122B and 122C, which largely concern the code of practice and matters relating to the codes of practice as set out in Clause 93.

These amendments are not only sensible but vital if we are to ensure that the framework for exercising these powers is both transparent and democratically accountable. Fundamentally, our amendments recognise that the code of practice is not a peripheral procedural matter; it is a foundational document. It will guide how sensitive and powerful enforcement powers are exercised. It will shape the expectations placed upon investigators, the protections afforded to individuals and the standards against which public officials will be held. In short, it will govern the operational culture of the entire system.

Amendment 122A would ensure that the final version of the code is laid before Parliament before these new provisions in the Bill can come into force. I feel it is important at this stage to reiterate that we are being asked to grant significant new powers, including powers of entry, search, seizure and direct deduction, and it is therefore wholly appropriate that Parliament sees, and has the opportunity to scrutinise, the final version of the rules that will help determine how those powers are used. We welcome that, and thank the Minister—I perhaps should have said this earlier—for making good on her promise to release draft versions of the code to noble Lords ahead of Committee, although we feel that it is even more important that we have a binding assurance from the Government that a final version of these documents will be made available to Members of both Houses ahead of the Act coming into force.

Amendment 122B would further strengthen this by requiring a public consultation on the draft code before it is issued. I have a feeling that the Minister may have confirmed this earlier; nevertheless, I raise it now and await her reply. Consultation is not just a box-ticking exercise, it is a vital part of democratic policy-making, especially in areas where the state will be interacting with vulnerable people, seizing property or accessing private data. Consultation allows front-line practitioners, civil society groups and those with lived experience to offer their perspective and to flag where guidance may be unclear, safeguards may be weak and unintended consequences might arise. We must not underestimate the value of that input.

We have said many times that our primary goal and function throughout Committee is ensuring that the Government come out with a Bill that is ready to go. We want a public authorities Act that combats fraud effectively and deters criminality in the future but also works for the people who will undertake and be subject to its provisions. It really is important that we get all these balances right and that we incorporate these review mechanisms now, so that the Bill is ready to go once it becomes law.

Finally, Amendment 122C would ensure that any subsequent change to the code is not only laid before Parliament but subject to parliamentary review. This is a particularly important point, because it speaks to the danger of incremental change, where guidance can be revised behind closed doors, without scrutiny or proper debate. These codes are not trivial; they are the operational blueprint of this entire regime. If we in this House and the other place are to fulfil our role as scrutineers and custodians of civil liberties, we must retain the ability to oversee how these powers evolve.

If the Government’s position is that these powers will be used proportionately, lawfully and with care, they should have no difficulty in agreeing that the rules that govern them should be open to parliamentary oversight, public consultation and full transparency. That is not a constraint; it is a safeguard for both the public and the state.

As I have said before, we are of course all agreed on the need to tackle fraud, but we must also agree on the need to exercise these new powers with clarity, accountability and respect for the values that underpin our legal and constitutional system. We believe that these amendments would help to ensure that. I urge the Minister to accept them, or, at the very least, to recognise their merit and return with similar provisions that enshrine the same principle.

Parliament broadly supports what the Government are doing, and if the Government intend to exercise these powers responsibly, with adequate safeguards, consideration and the principle of proportionality that I and my noble friend Lady Finn have returned to several times in Committee, I assume and hope that Parliament will have no problem supporting what the Government do in their code of practice. However, parliamentary oversight, to ensure that the Government are tied to these important principles not just now but in the future, is an important safeguard which we feel must be made explicit in the Bill.

In conclusion, these are reasonable, proportionate and constructive proposals. They would not hinder the Bill’s effectiveness; rather, they would make the Bill more effective once it comes into force. I see that, miraculously, there is no one else wishing to support—I am sure it is no reflection on my remarks—but I genuinely look forward to the Minister’s closing remarks. I beg to move.

[Baroness Sherlock (Lab)]

My Lords, in the absence of a crowd of supporters, I thank the noble Viscount for setting out his amendment so clearly. I hope that my remarks will reassure him and give him the confidence that he does not need to press ahead with these amendments.

Amendments 122A, 122B, 122C and 129 seek to compel the Secretary of State to conduct a public consultation on the DWP’s code of practice for the debt recovery powers, to lay a final code before Parliament before the powers in this Bill come into force and to subject any changes to the code to parliamentary review. Amendment 128 would require the Minister for the Cabinet Office to lay a code of practice before Parliament on the administration of penalties before the PSFA’s powers under Part 1 can come into force.

The provision made for a code of practice in Clause 93 is important for the DWP’s debt recovery measures, providing transparency and reassurance on how the debt recovery powers will be operationalised. However, we think these amendments duplicate existing provisions in the Bill and therefore are not necessary.

The DWP’s code of practice on debt recovery powers will complement the provisions in the Bill, setting out guidance and key principles, including how and when the new recovery powers will be used. Extensive collaboration continues to take place with a wide range of stakeholders, including the Money and Pension Service, the charity Surviving Economic Abuse and the finance sector, to develop this code of practice. The purpose of this engagement is to ensure the code provides relevant operational guidance on matters such as vulnerability and to give clarity for debtors subject to the powers and their representatives. We are grateful to all organisations for their helpful collaboration and guidance.

Drafts of all the DWP codes of practice have been made available for review by noble Lords upon request. While there is no requirement on us to provide drafts of these codes alongside the legislation or even to legislate to produce one, we understand their importance and want to be transparent with Parliament. This is also why new Section 80D(6), as inserted by Clause 93, already requires us to carry out a formal public consultation before the first code is published and to lay each issued version before Parliament. In response to the noble Viscount’s questions, the Government are consulting on all codes. Both the DWP and the PSFA will publish them before first use.

We have already said in terms of the debt, this will be done before the new debt powers in Part 2 of this Bill are used. However, I should note that Amendment 129 as drafted would prevent all the other provisions in the Bill that are not subject to the debt code of practice coming into force until the debt code was issued. I am not sure if that was the intention of the noble Viscount, but it would obviously be disproportionate and unnecessary.

It is also not clear from the amendment what parliamentary review of future changes to the code would entail but I am going to assume the noble Viscount would like Parliament to have the opportunity to challenge or scrutinise the code each time it is updated. If so, that would not be necessary or proportionate. The code will be revised periodically to keep it up to date with operational considerations and processes, and the Bill makes provision for each issued revision to be laid before Parliament.

The noble Viscount mentioned the importance of Parliament seeing the rules. It is worth understanding that the debt code of practice does not contain statutory provisions, nor does it place obligations on others. Rather, it sets out how the department will operationalise the new recovery powers. The Bill clearly sets out in considerable detail the legal obligations introduced. Other substantive provisions set out in regulations will, of course, be subject to normal opportunities for parliamentary scrutiny. I am also unaware of any precedent for revisions to a code of this nature to be considered by Parliament or subject to its approval.

Amendment 128 takes us back to the PSFA in Part 1 of the Bill. Noble Lords will recall that we have already discussed Clause 62, which makes provision for the PSFA to produce a code of practice that will explain how and why civil penalties will be calculated and imposed to ensure the powers are used transparently and reasonably. This clause stands part of the Bill.

A draft of the PSFA code of practice has also been provided to noble Lords, as was promised in Committee in the other place. As I mentioned, the PSFA intends to consult widely on the code of practice prior to the publication of the finalised draft, which will be before the first use of the penalty powers. Indeed, Clause 62(4) states:

“The Minister must lay the code of practice, or any reissued code of practice, before Parliament”.


I have outlined that the provisions already in the Bill go above and beyond what is required for legislation of this kind because we recognise the importance of the code of practice and have done so in the spirit of transparency. With those assurances, I urge the noble Viscount to withdraw his amendment.

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[Viscount Younger of Leckie (Con)]

My Lords, the codes of practice are documents which we feel, from how the Bill is drafted, are being treated as ancillary—I set out my stall on that earlier—when, in truth, they are central. These codes will be the compass by which investigators navigate the use of intrusive and sensitive powers, they will be the primary reference point for those administering the system and those subject to it, and they will set the standards by which the system is judged.

Having said that, I have noted the Minister’s responses and reassurances, particularly on the publication of the codes, if I heard her correctly, so I appreciate all that. I will look further at the purpose behind our Amendment 129, and I take her point on that. I am not in the business of wrecking the Bill—I know she did not say that—and will reflect before Report on that amendment and the responses the Minister has given to the other amendments. I appreciate all her responses. With that, I beg leave to withdraw my amendment.

Amendment 122A withdrawn.

Public Authorities (Fraud, Error and Recovery) Bill

Viscount Younger of Leckie Excerpts

Report stage
Tuesday 21st October 2025 Lords Chamber

[Lord Palmer of Childs Hill (LD)]

My Lords, on these Benches, we welcome the agreement reached with the devolved Administrations—may this be a lesson to people around the world on how to deal with them, at least in this case.

The amendments in this group relate to how the powers in the Bill refer to Scotland specifically. Amendment 41, together with related amendments to Clause 74, and the replacement of Clause 101 and others, reverses—I stress that—the changes made in the House of Commons. I gather that this follows confirmation from Scottish Ministers that they wish the changes to the Secretary of State’s functions regarding information notices to apply to them as well. This seems to me a positive movement of Administrations working together—long may it continue.

[Viscount Younger of Leckie (Con)]

My Lords, as it is my first appearance at the opposition Dispatch Box on Report, I echo remarks made by my noble friend Lady Finn on the first day of Report, because I also appreciate the constructive approach that the Government have taken following Committee.

It is perhaps appropriate that, as a Scot, my first brief contribution relates to matters north of the border. It is our understanding that this amendment has been brought forward by the Government in order to apply to Scotland those provisions of the Bill which we have already debated in earlier clauses, in particular those concerning the new powers to issue information notices under the Social Security Administration Act 1992, and to clarify that the new methods of recovery introduced under the Bill will not apply to devolved benefits.

In that sense, these amendments are essentially technical in nature, as the Minister said, ensuring consistency across the United Kingdom and confirming that the devolved benefits system in Scotland remains outside the scope of the new recovery powers. We appreciate and support the clarification. However, while the amendments themselves are straightforward, they raise some wider questions about the relationship between the UK and the devolved Administrations in this area.

It is somewhat surprising that these changes have had to come forward as government amendments at this relatively late stage of the Bill, when one might have expected such matters to have been settled at the drafting stage through earlier consultation and agreement with Scottish Ministers. The Government have placed great store over the past year in stating that they seek to improve communications and trust between the UK Government and the devolved nations, so can the Minister give us an update on how they view progress on these changes and what has changed in the past year?

While we do not oppose these amendments—indeed, we welcome the fact that the necessary legislative consent has now been secured—they prompt reflection on the importance of ensuring that such engagement happens promptly and systematically in future. The relationship between the UK and the devolved Governments works best when issues of competence and application are identified and agreed well in advance, rather than being corrected through amendments on Report.

That said, I would be grateful if the Minister could take this opportunity to update the House on the Government’s current assessment of the risk of fraud in relation to devolved benefits and on what engagement has taken place with the devolved Administrations to address that risk. Can she tell us what steps she is aware of in those authorities to tackle fraud within their systems and how information sharing and co-ordination between the UK Government and the devolved Governments is being managed to ensure that fraud risks are tackled effectively across all jurisdictions?

We are content to support these amendments that bring Scotland into line with the rest of the UK where appropriate while respecting the devolution settlement and maintaining clarity over responsibilities in the fight against fraud.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to the noble Viscount for his kind words. I, too, have enjoyed the engagement we have had across the House. It shows how the Lords can make a constructive contribution to the scrutiny of legislation.

The noble Lord, Lord Palmer, is quite right that we have a developed and developing devolution situation in the UK, and are showing that it is possible for different jurisdictions to make different judgments and to find ways of coexisting peacefully. We are very glad to be able to do that, and I thank him for flagging that up.

On the timing, I am advised that it is routine for these matters to be resolved at this point in the process. I reassure the House that our officials have engaged with their Scottish counterparts throughout the policy development stage and the passage of the Bill. It was during Lords Committee that we received formal confirmation from the Scottish Government that they wished the updates to the information gathering powers in the Bill to apply to them too, hence we have brought forward appropriate amendments.

In response to the questions from the noble Viscount, Lord Younger, fundamentally—this stems from the point made by the noble Lord, Lord Palmer—tackling fraud and error in devolved benefits must be the responsibility of the relevant devolved Government. That is the nature of devolution. However, we have engaged extensively with the devolved Governments throughout the passage of the Bill, and these amendments reflect that engagement. I reassure him that we routinely work closely with the Scottish Government to share information and good practice to support each other’s efforts to tackle fraud and error. That includes data-sharing agreements so that we can share information where necessary, which I suspect is the kind of assurance that he was hoping for.

I am grateful for those questions, and I hope that with those assurances noble Lords can accept these amendments.

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[Viscount Younger of Leckie (Con)]

My Lords, there are a number of amendments in this group, each touching on different principles relating to the operation of and limits to the eligibility verification measure. I will address them all briefly. I appreciate the Minister’s full reminder of the intent of this and of some of the operational details behind the EVM, which was very helpful.

I am afraid that we cannot support Amendments 45A, 65 and 74A in the name of the noble Baroness, Lady Kramer, as she may expect. As the noble Baroness herself iterated, these amendments would in practice remove one of the Bill’s core operational mechanisms: the framework that enables the detection and investigation of fraud and error in the welfare system. Taking out Clauses 75 and 76 and Schedule 3 would not simply adjust how the powers are used; it would dismantle the machinery that allows the system to function. We on these Benches support the principles behind the Bill and, broadly speaking, how it seeks to counter fraud and deter wrongdoing. As the Minister reminded us, it was a Conservative Government, up until the general election last year, who initiated the approach for the DWP to ask banks and financial institutions for their help in tackling welfare fraud. I also acknowledge that some improvements have been made in the past year.

Removing these clauses would, in effect, as the noble Baroness has admitted, be a wrecking amendment, denying the Department for Work and Pensions the tools it needs to identify and evidence cases of fraud. The real debate, which this House has been having constructively throughout Committee and again on Report, is about how those powers are exercised—proportionately, cost-effectively and with due regard to rights, safeguards and well-being. That is the discussion we should be having, not one that seeks to strike out the core of the Bill.

We broadly welcome the government amendments, which make sensible, constructive improvements to the operation of EVNs. The first, set out in Amendment 48, is the insertion of the “necessary and proportionate” test, which is a welcome safeguard that raises the standard for how these powers are applied. The second clarification, that EVNs may be used only for assisting in identifying incorrect payments, provides welcome precision and helps prevent any risk of mission creep.

Talking of precision, I thank the Minister and her team for producing a series of flow charts. As she knows, I was pressing for these in Committee because there is considerable complexity, including work in progress—I am not quite sure whether we now call it “test and learn” instead of proof of concept—for all those involved in understanding the processes and operations between the banks and the DWP, with the checks, balances and timeframes set out. I hope the Minister acknowledges that this is a help for the department and that it will be continuously updated and improved as the system evolves.

We believe, however, that there remains scope for further clarification, which is why I was glad to add my name to the amendment from the noble Lord, Lord Vaux of Harrowden. This additional clarification through the language of his amendment is important. It would make it explicit that the exercise of this power is anchored to the purposes of the Bill rather than to any broader or more flexible administrative interpretation that might develop over time. In practical terms, it would ensure that the Secretary of State’s use of these powers cannot be varied or expanded except by returning to Parliament to amend the primary legislation; for example, were the Government at some future point to seek to extend these powers to cover other forms of welfare support.

We believe that this is an important safeguard. It ties the scope of the eligibility verification regime firmly to the text of the Bill, providing Parliament and the public with confidence that its use will remain confined to the limited, proportionate purposes that we have debated. For that reason, we consider this a sensible and necessary amendment and we are glad to support the noble Lord, Lord Vaux, in bringing it forward.

We are sorry to say that we cannot support Amendment 50, tabled by the noble Baroness, Lady Fox of Buckley, although we entirely appreciate her engagement with us on this point and the spirit in which it was brought forward. The aim of improving transparency is understandable but requiring banks to inform account holders that they have been flagged following an eligibility verification notice risks undermining the integrity of ongoing investigations.

I listened carefully to the noble Baroness’s speech, and despite her explanation and the safeguard that she outlined, we remain worried that notifying a potentially liable person too early could allow them to conceal or move funds, frustrating the process. While the intention is fair, it could cause or create a serious loophole. Therefore, I am afraid we cannot support it.

However, one of the points on which I agree with the Government is that some of those seeking to defraud the state—after all, it is taxpayers’ money we are talking about—will stop at nothing to get their way to make money for themselves. There is a line to be drawn to ensure that transparency does not provide an open goal for fraudsters.

It appears that the drafting of Amendment 60, in the name of the noble Lord, Lord Sikka, may not achieve what is intended. As it stands, it would seem, having read it, to place a duty on banks or institutions, rather than individuals, to receive legal advice before complying with a notice. The DWP, in any case, has access to legal advice intradepartmental, so it would be up to the department’s discretion to use this on a case-by-case basis and should not be statutory.

If, however, the noble Lord’s intent, which became clearer in his remarks, is to ensure that individuals affected by DWP actions can access advice or support, that is a broader and legitimate issue. However, this amendment does not appear to address it; therefore, we do not and cannot support it. Individuals might choose to consult a lawyer, but this would be up to them. Can the Minister confirm that no taxpayers’ funds would be used to fund this, if this was indeed the intention?

We welcome the Government’s change in Amendment 61 to extend the review period from seven to 14 days. This responds directly to concerns raised by these Benches and by other noble Lords in Committee that the original timeframe was too short for financial institutions to act upon. It is a practical and welcome step that reflects the realities of compliance, and we are glad that the Government have listened.

Finally, we have some sympathy with Amendment 62, also tabled by the noble Baroness, Lady Fox. I remember that the noble Baroness spoke to this in Committee. It is right that individuals should be able to understand, at least in part, the role of algorithms used in decisions that affect them, and being able to have sight of this as part of a review makes sense. However, transparency must not come at the cost of investigatory integrity. As I stated earlier, there is a delicate balance between fairness to individuals and protecting methods that could be exploited if disclosed.

The noble Baroness, Lady Fox, asked many questions, which I will certainly not repeat. I simply ask the Minister to clarify how these concerns might be addressed in practice, perhaps through the review or the appeal mechanism, while maintaining that balance.

Finally, we welcome that the amendments in this group provide us with an opportunity to have a further discussion on this important part of the Bill, the essence of its prime aim. We are grateful to the Government for listening to the concerns that were raised in Committee, as well as to other noble Lords for identifying areas about which they are concerned and offering the Government the chance to comment. We shall be listening with interest to the Minister’s response.

[Baroness Sherlock (Lab)]

My Lords, I thank all noble Lords for their contributions today and, indeed, throughout Committee. We have a better Bill as a result, and I am grateful for that. I am grateful to the noble Viscount, Lord Younger, for his support for the principle we are discussing here and for his gracious acknowledgement of the improvements to the Bill. I thank him for that; it was a kind and gracious comment, and I appreciate it.

In response to the noble Lord, Lord Vaux, I will not dwell on this matter, but I am grateful to him for accepting that, even if he came at the issue from a slightly different angle, he is happy with where we have ended up. I thank him again for pushing us, throughout the stages of the Bill, in various ways, and I am grateful that he has accepted where we have ended up with our amendment.

The noble Baroness, Lady Kramer, is absolutely right that her amendment is not nuanced; it lands firmly in the court of whatever the opposite of nuance is. In a sense, it is straightforward: her party does not support these measures at all. I have no doubt that, were her party to form a Government, it would locate another place to find £1 billion to make up for this. However, our party is determined that, if we are to spend money on social security, it should go to the people who are entitled to it and the people who need it—it should not go to other people. We will take the necessary measures to make sure that that happens, and we are doing that in this Bill. We also want to make sure that it is done appropriately and with enough safeguards, and I hope that I have shown to the House my willingness to bend over backwards to provide those safeguards. The principle is that people should not get money to which they are not entitled; it should go to those who are entitled to it and who need it—and that is what we are doing here.

The noble Viscount, Lord Younger, is right that my noble friend Lord Sikka’s Amendment 60 applies to the section that covers penalties that may be issued to financial institutions that fail to comply with an EVN. Therefore, the effect of the amendment would be that the DWP would be required to ensure financial institutions had taken legal advice before issuing a penalty for failing to comply with an EVN. I think we would all agree that, if they need legal advice, they could probably afford it—and so we are okay on that front. However, I fully understand that it is very hard to table amendments outside government, so I take it that the intention of the amendment is as my noble friend made clear: that the DWP is required to ensure that claimants receive legal advice before the DWP can make any adjustments to a person’s claim. However, we do not regard that as either practical or necessary.

There are already existing protections for claimants whenever an overpayment is calculated, including the ability to request a mandatory reconsideration and/or appeal to tribunal. Where an individual is investigated on a suspicion of fraud, they may be interviewed under caution. In that situation, they will always be notified of their right to seek legal advice and provided information about applying for financial assistance with legal costs through legal aid. In response to the question from the noble Viscount, legal aid is funded from the public purse, so if somebody were to qualify for legal aid, it would be funded by the taxpayer in the appropriate way. I confess that that is about as much as I can offer on that front.

My noble friend Lord Sikka mentioned a range of difficult circumstances. A lot of the debate here tends to mix up fraud, error and all the other reasons for overpayments. There are different reasons why somebody may have been overpaid: it may have been a genuine error; they may have been careless; they may have forgotten or deliberately failed to tell us about some change to their circumstance that affects their entitlement; it may be fraud; or there may have been an error on the part of the state. Gathering data early minimises the extent of the build-up of any overpayment, whatever the reason. That has to be a good thing; it is what we found out elsewhere. I hope that my noble friend appreciates that that is at least part of our approach.

I turn to the amendments tabled by the noble Baroness, Lady Fox. As she said, Amendment 50 would require account holders to be informed. Even though I know that she does not intend the amendment to do this, the reality is that it could compromise the DWP’s ability to tackle fraud. In most cases where it is just an error that has been made, the DWP will contact claimants to give them the opportunity to explain potential incorrect payments, in which case the amendment would not be needed. However, in the cases where there is a suspicion of fraud, it would clearly undermine any criminal investigation to inform potential fraudsters that their information had been identified using an EVM or what the financial institution had identified. It might also cause unnecessary distress for those who are not guilty of fraud, such as account holders and claimants who, for example, may have a disregarded compensation payment and who otherwise would have been quite rightly left alone because they had not done anything wrong—there is no need to try to scare people into thinking that an issue will be coming down track. It would also impose further burdens on financial institutions, which would have to inform their customers about this.

Amendment 62 from the noble Baroness, Lady Fox, seeks scrutiny of the methods that a financial institution may use to identify relevant accounts. At the risk of boring the House, I note that the EVM asks banks to return specified data only where criteria, set out in the Bill, have been met. Financial institutions operate in many ways, and it is for each individual financial institution to work out how it identifies relevant accounts, rather than for the Government to set out potentially cumbersome processes.

Just to pick up on a couple of things that the noble Baroness, Lady Fox, said, I want to make this really clear: we will not be asking banks, for example, to work out whether somebody is entitled to a health benefit, such as ESA. We may ask them to identify an account into which ESA is being paid. Health data will be special data and will therefore be expressly prohibited from being returned. The intention is very simple: to ask them to identify the kind of things I described earlier. In response to the noble Lord, Lord Vaux, I was giving an example. There are many examples, but that was the one I chose.

To sum up, I have set out a clear case for the EVM and how our government amendments today and other changes that have been made address many of the areas of concern. I recognise that I have not persuaded the noble Baroness, Lady Kramer, but I hope other noble Lords can see the point of this measure, can see the difference it would make and can understand that with the safeguards around, it is the right thing to do. The EVM will save an estimated £940 million by 2029-30. It will be a vital tool to help the DWP spot and detect errors quickly, while also assisting us in identifying fraud. I urge noble Lords to support this measure.

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[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the noble Lord, Lord Deben, very much for that. The point I would like to make is that there are people who will perpetuate fraud but, if you try to close up every single channel, you will catch people who are innocent. I believe that all laws should allow for people to get away with fraud, perhaps, if it means that you are not accusing people unintentionally. These amendments are appropriate because, as has been said, who knows what Government will come along and what people will be in charge? If there is fraud, it has to be proved pretty conclusively, rather than, because we suspect fraud, us making it impossible for people who would otherwise be found innocent. We found that with the Horizon scandal: it looked all right but AI said that they were all guilty, though they were not guilty. When even speeches made in this House probably come from AI, we have to be increasingly careful about what we do. These amendments protect people; if they are pressed, we on these Benches will support them.

[Viscount Younger of Leckie (Con)]

My Lords, I speak in support of these amendments tabled by the noble Lord, Lord Vaux of Harrowden, and I am pleased to have added my name to them, because both amendments make valuable and necessary clarifications to the operation and oversight of the eligibility verification mechanism—EVM—and they do so in a way that strengthens, rather than weakens, the Government’s objectives under this Bill.

Amendment 52 makes a particularly important clarification. As the Government have repeatedly described their approach to the EVM as a test and learn process, it is vital that we make clear in the Bill that the mere existence of an eligibility indicator does not in itself constitute reasonable grounds for suspicion. That may sound like a technical point, but it has real-world implications. When a system is still developing, when its data sources are still being refined and when human understanding of how it operates is still evolving, there is a very real risk of false positives and unintended consequences.

The Government have said that there is some clarification within the process of an investigation that would help to clarify that persons subject to an EVM are not guilty, and that there are not, therefore, necessarily reasonable grounds for suspicion. However, putting this clarification in the Bill would be a really valuable step in making this absolutely clear, in black and white, to everyone involved. This amendment removes ambiguity and ensures that this point is not in question.

We have already discussed throughout this Bill the importance of safeguards and clarity when new investigative systems are created, particularly where multiple third parties are involved in data sharing and enforcement, which is paramount. This amendment provides exactly that and sets out this lack of reasonable suspicion in the Bill so that we avoid the potentially harmful ambiguity.

Moreover, this amendment ensures that, before any intrusive action is taken—in other words, before any benefit is amended, suspended or investigated—a person of appropriate seniority and experience must review the information and confirm that there are genuine reasonable grounds for suspicion. This aspect of the amendment places human oversight where it belongs: between the algorithm and the citizen. This matters all the more because, as many noble Lords will have seen, the Government themselves are moving rapidly to expand the use of AI in fraud detection and enforcement. Only a couple of weeks ago, civil servants across Whitehall received an internal update about the significant expansion of AI use within the Public Sector Fraud Authority in an article titled:

“Behind the Scenes: Building the AI Tool that is Revolutionising Fraud Prevention”.


I listened very carefully to the passionate speech from the noble Lord, Lord Deben, added to by the noble Lord, Lord Palmer. We believe that this makes these safeguards an urgent necessity. As we rightly modernise our defences against fraud, we must also modernise our protections against error, bias and overreach. Ensuring human involvement in that process in the way it has been set out in this Bill is fundamentally important, and this amendment provides that assurance.

Amendment 67 complements the first one by broadening the remit of the independent review of the EVM powers. The noble Lord, Lord Vaux, eloquently laid out his reasoning here. It makes sure that the reviewer looks at not just operational effectiveness but proportionality, costs, unintended consequences and how these powers affect vulnerable people and those interacting with the banking system. These are precisely the areas where well-intentioned powers can have unintended harm if they are not closely monitored.

We on these Benches raised these concerns in Committee and do so again on Report. There is the potential for disproportionate costs on financial institutions, the potential chilling effect on access to basic banking services for those already on the margins and, above all, the potential for harm to vulnerable people who find themselves caught up in complex enforcement processes. It is right that the independent reviewer should have these matters placed explicitly within their remit. I am therefore glad that the noble Lord, Lord Vaux, has framed his amendment to achieve exactly that. We need to recover public money which has been overpaid—we are in no doubt on that point—but doing so in a way that causes more harm than good benefits no one. The reviewer must have regard to this, not as a suggested area of review but as a statutory duty.

These are measured, practical amendments that I believe carry broad support across the House. They are not about blocking the Bill or frustrating its purpose: they are about ensuring that the new systems it creates are used wisely, fairly and proportionately. We therefore hope that the Government will listen and take these proposals seriously, recognise their constructive intent and accept them as a genuine improvement to the Bill. If the noble Lord, Lord Vaux, decides to test the opinion of the House, we on these Benches will be supporting him.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to all noble Lords for their contributions. My response to these amendments builds on the arguments I made at greater length in the last group.

Amendment 52, from the noble Lord, Lord Vaux, states that the existence of an eligibility indicator alone does not constitute reasonable grounds for the suspicion of fraud under Section 109BZB of the Social Security Administration Act. I have sought to assure noble Lords already today that a conclusion will never be drawn from EVM information. At the point the information is shared, no one is suspected of having done anything wrong and therefore, by definition, no action could be taken to correct the thing that could have been done wrong because no one is suspected of having done anything wrong. I could not be clearer on that.

I think it is worth reminding the House that there are two different things happening here. This measure allows DWP to ask banks to flag up accounts that may on the face of it have received a benefit to which someone is not entitled. That is a piece of information that comes into the department. Along with other pieces of information, it will be sifted and examined, and decisions will be made through the usual processes. DWP does this all the time, with all kinds of information. Those decisions are made. Pursuing fraud is something that is done day to day. Whenever DWP receives data in response to an EVM, the data will be matched with information that DWP holds, so it can identify the claimant and any inconsistencies between the information received from the financial institution and the information provided by the claimant over the life of their claim. It will also look at any possible disregards and any other relevant information, as I explained on the last group.

It is only then, as with our current practice, when a possible inconsistency is identified, that steps will be taken to determine how or even whether a claim needs to be reviewed. In some cases, it will be clear that no further action is required and the data from the EVM will be used no further. In cases of potential error, DWP may contact the customer to discuss the claim or ask for further information. In cases where potential fraud is then suspected, the case may be passed to an authorised officer, who will consider all relevant information to determine whether there are reasonable grounds to suspect that a DWP offence has been committed.

The noble Lord, Lord Deben, made a passionate speech, and he is someone for whom I have a great deal of respect. If what he suspected was happening, his passion would be justified, but I want to persuade him that it is misplaced. The decision to judge that someone has been guilty of fraud and to take action is not an automatic process. It is also not a determination that can be made by just anyone. It can be made only by an authorised officer in the DWP. If there are no reasonable grounds to suspect that a DWP offence has been committed, the case is passed back to the relevant benefit team or compliance team. At all times during that process, as is the case now, DWP will ensure that any next steps are reasonable and proportionate. There are no immediate suspensions of benefits during the process and, where appropriate, DWP will always endeavour to work with the customer to establish the facts around a benefit claim and identify any possible vulnerabilities. I hope that my position on that is clear and is made even clearer by the government amendments—

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[Lord Palmer of Childs Hill (LD)]

My Lords, I support this amendment because any exercise of physical powers must surely rest with the police. Are we going to train a new breed of DWP officers who have to be tough and able to act as police? It is quite nonsensical.

The one thing that worries me about this amendment is that it is quite easy on violent filing cabinets. You can attack a filing cabinet, apparently, because that is all right. I think this division between property and individuals is a very strange line to draw. Do you hide in a filing cabinet because you think that would be safer? No, you must not hide in a filing cabinet because, under this legislation, even under the amendment, you can attack a filing cabinet because it might hit back. I think the whole thing, when you read it carefully, is quite nonsensical. We have to get back to the crux of the amendment from the noble Lord, Lord Vaux, which is that if there is going to be physical restraint, it has to be from the police and from no one else.

[Viscount Younger of Leckie (Con)]

My Lords, I am very glad to have added my name to this series of amendments tabled by the noble Lord, Lord Vaux of Harrowden. They go to the heart of one of the most serious concerns that we have raised repeatedly with the Government, both inside this Chamber and beyond. I am very pleased that my noble friend Lord Harper spoke from his personal experiences where the state has found itself having to use force, and I will revert to that in a moment.

We are deeply concerned by the powers being granted to DWP investigators under this Bill, particularly the authorisation to use reasonable force against both property and people when exercising powers of entry, search or seizure under the Police and Criminal Evidence Act 1984—I believe that my noble friend Lord Harper referenced 2017, but I will need to check my facts on that. These are, in both name and substance, police powers. The idea that civil servants—officials who are not police officers—should be able, in law, to use physical force against members of the public is one that should give this House real pause. It raises profound questions about the limits of state power and the safeguards that ought to accompany it.

The Government have said that they cannot carve out these powers from PACE because it is separate Home Office legislation, but that simply does not stand up to scrutiny. We will hear later from the Minister, but they have already carved out the power of arrest for both the DWP and the Cabinet Office and they have explicitly carved out the use of reasonable force from the Cabinet Office’s own PACE powers under this Bill. It is, therefore, perfectly possible to do so; the Bill itself provides the precedent.

Given that, we struggle to understand why the Government are unwilling to make a simple, sensible and proportionate distinction that reasonable force may be used only against property and not against people. As it stands, the provision creates an unnecessary and troubling loophole, and one that we doubt will withstand the realities of operational use. On that basis, I had formed my own questions and, funnily enough, they chime with many of the points raised by my noble friend Lord Harper and the noble and right reverend Lord, Lord Sentamu, and, indeed, the noble Lord, Lord Deben, and the noble Baroness, Lady Fox, so there is support around the House.

Let us kick off. First, assuming that the DWP visits a property with a view to seizing property only and people there threaten violence or are violent but the police are not there, what are DWP officials expected to do there and then? Secondly, what training would DWP officials be given to deal with any potential violence? How far would this training go? This point was raised by the noble Lord, Lord Deben. Is it clear what is expected of them? What are the limits? What might be given to these officials for defence against physical force? Thirdly, what equipment would DWP officials be provided with to assist with restraining individuals if this arose in a scenario where only assets were being seized? Fourthly, and perhaps the biggest question of all, what happens if matters get out of hand, the police are not there, or they have been called but they are not there yet, and an individual is injured? The individual could be a DWP official or an individual within whose house the property is being seized. The police can be referred to the Independent Police Complaints Commission, but what redress or investigations are in place for DWP officials, given this scenario? I am referring to legal protections.

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Moved by

[Viscount Younger of Leckie]

86: Clause 89, page 54, leave out lines 18 to 20
Member's explanatory statement
This amendment would ensure that the Secretary of State did not have the power to direct the independent person to review only certain timeframes.

[Viscount Younger of Leckie (Con)]

My Lords, Amendments 86, 87 and 88 in my name and that of my noble friend Lady Finn concern the independence and effectiveness of the independent reviewer established under Clause 89. They are what we might call bite- size amendments, but they go to the heart of what independence and accountability mean in practice.

Amendment 86 would remove the power of the Secretary of State to direct the independent person to review only certain timeframes. Amendment 87 would change the wording of Clause 89 so that the Secretary of State “must”, rather than “may”, provide information to that independent person for the purposes of their review.

We bring these amendments forward in the spirit of consistency and fairness. We welcome the Government’s amendments to Clauses 66 and 76, both of which change the wording from “may” to “must” when referring to the Minister’s duty to provide information to independent reviewers. Those are important and positive changes.

The Government have rightly recognised that independent scrutiny cannot be meaningful unless reviewers have the information they need, and that Ministers must therefore be under an obligation and not merely a discretion to provide it. We entirely agree with that principle, one we championed consistently throughout Committee, and which garnered the support of many noble Lords present. However, we are concerned that, having been adopted in Clauses 66 and 76, it has not been applied consistently across the Bill.

Clause 89, which deals with the independent review of powers exercised under Sections 109A to 109H of the Social Security Administration Act 1992—including, among other things, the power to enter and inspect premises under Section 109C—still uses the weaker “may” formulation. This means that the Secretary of State is not required to share information with the independent reviewer and can determine which periods or activities the reviewer is permitted to examine. When we are talking about an independent review mechanism, we do not believe that this is good enough.

If the Government accept, as they now have, that independent reviewers examining the Cabinet Office’s functions under Clause 65 and the DWP eligibility verification mechanism set out in Clause 76 should have an enforceable right to the information they need, then surely the same must apply to those reviewing the DWP’s use of these further powers under the Social Security Administration Act 1992. There is no justification for having one standard of transparency for one and not the other.

The Government amendments on their own subject the PSFA and the Minister for the Cabinet Office to different standards to the DWP, which surely cannot be right. Based on the Government’s amendments, the Minister for the Cabinet Office must provide information to the independent reviewer for the purposes of an investigation into the exercise of the Minister’s functions under this part. However, it is different for the DWP, which must provide this information to the independent reviewer only when it comes to the EVM. For other independent reviews under this part, the Secretary of State still “may” only provide this information.

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[Baroness Sherlock (Lab)]

My Lords, I am grateful to the noble Viscount for explaining his amendment. I will start by gently reminding him of something. He said that we should not avoid oversight because it is inconvenient. Does he remember that when his Government, led and represented by him, introduced equivalent powers to many of these in the DPDI Bill, there was literally no independent oversight at all anywhere in that Bill? So, I am very happy to respond on the way we are putting it in, but I hope the House will give us credit for having actually put in significant independent oversight, and I would encourage him to remember that.

Having said that, while I understand the rationale for Amendments 86 to 88, we do not believe that they are appropriate or necessary. DWP’s intention for Clause 89 is to appoint an independent, external inspectorate body to inspect DWP’s end-to-end criminal investigations. His Majesty’s Inspectorate of Constabulary and Fire and Rescue Services has provided this function for public services for over 160 years. DWP has committed to commissioning HMICFRS as the body best placed to provide an independent inspection role in England and Wales and, similarly, His Majesty’s Inspectorate of Constabulary in Scotland, for Scotland. I can assure the House that DWP are committed to ensuring the right level of scrutiny for these powers and will follow existing HMICFRS and HMIC Scotland’s processes and guidance, which requires transparency and accountability.

These inspectorate bodies bring huge experience of working in this area, providing robust inspections to other similar bodies. That is why DWP will work with them to agree mutually that each inspection takes place over a suitable period, so that they are assessing and reporting on a period which realistically reflects DWP’s use of search and seizure powers. DWP has worked closely with both HMICFRS and HMIC Scotland, and we understand that sharing information is an integral part of the inspection process. That is why the department is committed to providing all relevant information, so that meaningful inspections can be carried out.

It is important to highlight the unnecessary risk Amendments 86 and 87 create. These amendments could result in sharing information with the inspectorate that could then become disclosable material in a live investigation, potentially jeopardising the outcome. Because of the range of investigatory techniques used during DWP criminal investigations, it is important that the Secretary of State retains discretion not to provide information when the consequences of sharing that information outweigh the benefit to an inspection—for instance, to protect customers or prevent compromising future prosecutions. Depending on the circumstances, examples of such sensitive material not suitable for sharing might include material given in confidence, details about witnesses or other persons who may be in danger if their identities are revealed, material revealing the location of any premises or other place used for surveillance, and material relating to the private life of a witness. I hope that explains why I cannot accept these amendments.

Amendment 88 seeks to extend the remit and scope of an independent person appointed under Clause 89. We have already confirmed that this will be HMICFRS and HMIC Scotland. They will provide an additional safeguard to ensure that the DWP is using these powers proportionally and in line with their intended purpose. However, although the inspectorates are very impressive in their fields, it is clearly not within their remit to assess expenditure or amounts recovered and conduct cost-benefit assessments of the various measures in the Bill. But the Office for Budget Responsibility has certified the estimated £1.5 billion of benefits contained in this Bill and, separately, our impact assessment clearly outlines the estimated costs and how we will scale up our rollout to deliver the savings and commits to monitoring and evaluation of Part 2 of the Bill.

I also remind the House of the existing reporting mechanisms for the DWP’s fraud and error activities that make this amendment unnecessary. In the DWP’s annual report and accounts, the department reports on the savings made from our fraud and error activities, including savings made from activity across our counterfraud and targeted case review teams. In addition, we also report on our debt recovery totals and debt stock. The departmental annual report and accounts are reviewed and scrutinised by the National Audit Office, which publishes a report on the accounts and provides independent assurance to Parliament on the proper use of public funds.

Finally, a question was asked about what is different between the DWP and the PSFA. The type and nature of DWP and PSFA criminal investigations are likely to be very different. That means the risks and decisions involved in disclosing sensitive material are different for each organisation. Due to the function it plays, the DWP is likely to have significantly more individuals who may be vulnerable, and it considers that disclosing sensitive material relating to those persons is not an appropriate approach for it to adopt. For that reason, the DWP must be able to withhold material in such cases to ensure that there is no detriment or risk to vulnerable persons who may be placed at risk.

To conclude, the DWP is committed to transparency and to delivering this Bill and its savings, but I do not think it is helpful or necessary to ask the inspectorates to step outside their existing remit given the routes already in place. I therefore urge the noble Viscount not to press his amendments.

[Viscount Younger of Leckie (Con)]

My Lords, I am grateful to the Minister for her response, but I am afraid we are still not persuaded on the point we raised around the powers of the independent reviewer to be provided with information. I certainly do not want to repeat what I said in opening but, in response to her earlier remarks, I want her to be clear that we recognise that some progress has been made on the Bill after a year. Without further ado, I have listened very carefully and heard her responses to Amendments 86 to 88, and I will test the opinion of the House on Amendment 87. I beg leave to withdraw.

Amendment 86 withdrawn.

Moved by

[Viscount Younger of Leckie]

87: Clause 89, page 54, line 23, leave out “may” and insert “must”
Member’s explanatory statement
This would compel the Secretary of State to provide information to the independent person for the purposes of a review.

[Viscount Younger of Leckie (Con)]

I beg to move.

Public Authorities (Fraud, Error and Recovery) Bill

Viscount Younger of Leckie Excerpts

Report stage
Tuesday 21st October 2025 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I will be very brief. I laid Amendment 92 in the same spirit as the amendments that I laid in an earlier group. The part of paragraph 3 of Schedule 5 that I find most difficult is a subset of the requirement for banks to provide information. The overarching requirement instructs banks to hand over to the Government, on request, three months of account statements for them to examine. The schedule says that the information must be used only to help determine whether or not to make a deduction under the Bill. I was trying to find out from the Minister what assurances there are that the use will be that narrow. It may be that I have misread it, but I cannot see any form of transparency or accountability that would provide that kind of assurance. It all seems to be completely internal to the DWP. My first question to the Minister is therefore this: how will the scheme verify that the information is not used for other purposes, because detailed account statements undoubtedly have information that could interest all kinds of people? Most importantly, will that information be destroyed after an investigation is closed?

The part of paragraph 3 that exercised me the most, in the original language of the Bill that came from the Commons, is that which prohibited banks from ever notifying the account holder that their information has been handed over to the state and for what purpose. To the Minister’s credit, that now seems to have been amended to say that the account holder can be told after three months. I am unclear whether that is an automatic notification, notification at the bank’s choice, or notification that requires a request from the account holder. To me, this matters, because I suspect that transparency is the only way to ensure that the information in the account is not used for purposes other than those stated in the Bill.

I am generally exceedingly uncomfortable with the idea that the original version basically required a sort of covert process, in which the information held on an individual by the state was not disclosed to that individual. The Minister has often suggested that the monitoring of accounts is to start a dialogue to see if a person has made a mistake in overclaiming rather than committing fraud. If somebody is not told that their information has been taken, read through, examined and dealt with in detail, I cannot see how they can possibly enter into a constructive discussion to explain what is happening.

I want to draw the attention of the Minister to an underlying principle. Jonathan Fisher KC has published part 1 of an independent review of disclosure and fraud offences, which was commissioned by the Government. I want to quote his words on transparency, because it seems that transparency was not built into the original Bill and is still limited in the revised version. He said that:

“A modern disclosure regime must require the prosecution”—


he is talking about the courts—

“to be honest concerning the reasonable lines of inquiry that have been pursued and how investigative material has been gathered, handled, and interrogated”.

I would very much like to see those principles embedded in this part of the Bill. I think we need assurances from the Minister that if we cannot find the language then they will in practice be embedded in this part of the Bill, because transparency is fundamental.

[Viscount Younger of Leckie (Con)]

My Lords, the amendments in this group tabled by the Government contain a mixture of substantive safeguards and some technical improvements designed to tidy up and clarify the Bill.

The main amendment, government Amendment 91, introduces further restrictions and procedural safeguards around the use of the new recovery methods created by Schedules 5 and 6. It requires that liable persons are properly notified and given an opportunity to settle their liability before enforcement action is taken, and that alternative routes of recovery, such as deductions from earnings or benefits, are considered before more intrusive powers are used. These are sensible and welcome provisions that strengthen procedural fairness and ensure that the new powers are exercised proportionately.

We do, however, note that these changes have come rather late in the passage of the Bill. They are substantive clarifications, going to the heart of how these powers will operate in practice. However, I listened to the explanations from the Minister on an earlier point I made about this and I now understand her position—while not necessarily agreeing with it, I understand it.

The group includes two largely technical amendments. The first, to Schedule 6, allows the Secretary of State to make regulations relating to applications to or appeals from magistrates’ courts in England and Wales, ensuring clarity and consistency in procedure. The second, to Clause 94, aligns the Bill with the Data Protection Act 2018 by confirming that “processing” has the same meaning as in the Act. This is a straight- forward but important clarification. It is my view that these amendments strengthen the fairness and clarity of the Bill, ensuring that it operates in a way that is proportionate, consistent and aligned with existing law. We therefore support them.

On Amendment 92, tabled by the noble Baroness, Lady Kramer, she may not be surprised that we do not support this amendment. It would remove a key part of the machinery that underpins the operation of this Bill—specifically, the ability of the Department for Work and Pensions to obtain limited, relevant bank information to determine whether a direct deduction order should be made. I realise that this chimes with the noble Baroness’s earlier Amendment 45A, so I will not repeat the comments I made then, save to say that this is a considerable change and would strike at the heart of the framework that enables the recovery of money lost to fraud and error.

The Government must have the legal capacity to verify whether an individual is eligible for the payments they are receiving and whether further action is required to prevent overpayment or recover funds that are owed to the state and, by extension, to the taxpayer. If a person receives money from the state, the state has both the right and the duty to ensure that this money is not being misused—and certainly is not ending up in the pockets of fraudsters or criminals. The Minister has already made clear that individuals in receipt of benefits will be informed that the Government may access certain account information for the purposes of investigating suspected fraud or error.

We are satisfied with the Government’s assurance that the information obtained under these provisions will be high level, proportionate and strictly limited to what is necessary for the purpose of recovering money lost to fraud and overpayment. Far from being excessive, the powers set out in this part of the schedule are a necessary and measured tool to protect public funds. For those reasons, we oppose Amendment 92.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to the noble Viscount for his support on these matters. Amendment 92 from the noble Baroness, Lady Kramer, seeks to remove the requirement for banks to provide information to the DWP for the purposes of making a direct deduction order from benefit recipients. I am not sure whether that was her intention or whether she intended to remove it from all, but that is the effect. I therefore need to clarify for the record that these powers cannot be used for those in receipt of benefit, and Amendments 89 and 91 make that even clearer.

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[Lord Palmer of Childs Hill (LD)]

My Lords, throughout the passage of the Bill, we on these Benches have repeatedly raised concerns about the punitive measures applied to carers who receive carer’s allowance and subsequently earn small amounts through additional work, often losing their carer’s allowance entirely. Amendment 103 would prohibit the Secretary of State using recovery methods in cases of overpayment of carer’s allowance until an inquiry has concluded and recommendations from that inquiry have been implemented on carer’s allowance overpayment.

We have had discussions with the Minister’s department on this, and we are hopeful that the Government will commit from the Dispatch Box to a date for publication. In those conversations we were promised a departmental briefing to me and, if necessary, to an MP of my choice. I will give advance notice of what we would expect to learn in that briefing: when do the Government expect to publish their response to the report? It has been nearly three months since they received the report. We acknowledge that there has been a change of Secretary of State, but are the Government still treating this with the high level of priority that they have given it so far? At our meeting, can the Government also set out a timetable for the publication of the report and actions they will take to deal with the issues set out in that report?

What are the Minister’s reflections, if she has reflections, on the report and its findings? Will the Government meet with carers—and in particular Carers UK, with which I have been in constant touch—who have been affected? Finally—and this will probably be the nail in the coffin—are the Government considering writing off any overpayments to carers?

From discussions that we have had outside this Chamber, I hope we can have a meeting with the department to deal with these matters and get some progress on them. Maybe it would not solve them completely, but it would mean that we feel we do not need to test the feelings of the House.

[Viscount Younger of Leckie (Con)]

My Lords, I am afraid that we must oppose Amendments 103 and 113 set out by the noble Lord, Lord Palmer of Childs Hill, for the same reasons that we gave in Committee.

The independent review to which I believe the noble Lord refers has a clear and limited purpose. As set out in the Government’s own guidance, it is designed to establish three things: first, how overpayments of carer’s allowance linked to earnings have occurred; secondly, what can best be done to support those who have accrued them; and, thirdly, how to reduce the risk of such problems arising in the future.

Nowhere in that remit does it question whether the overpayments were made. That point is already settled. The individuals in question have received government funds—taxpayer funds—to which they were not entitled. To put this in context, since 2019 over £357 million has been overpaid to carers for various reasons, such as where claimants breached the earnings limit, where claimants ceased to provide care, and where the claimant was also in receipt of an overlapping benefit. Often, I have to say, there have been innocent reasons.

The review will rightly examine how the system can be improved and how claimants can be better supported, but it will not, and cannot, rewrite the fact that money was misallocated and must therefore be returned. We think it would make no sense to halt all recovery activity pending the outcome of a review that does not address the underlying question of entitlement. The amendment would effectively suspend the recovery of public money that we already know has been wrongly paid out. We believe this cannot be justified, whether fiscally or morally.

I appreciate that the noble Baroness, Lady Kramer, who is in her place, set out to us outside the Chamber her concerns about a cliff edge. I welcome that input—her doing that and saying that—and the Government may want to comment on that. But it is also worth remembering that, even according to charities in support of those who have caring responsibilities, overpayments have been made to people who have not correctly reported that their caring responsibilities have ceased, that the person they are caring for has died, or that they are in receipt of an overlapping benefit. The person in question has a duty to report these changes, and it is clearly wrong that the person has not fulfilled their obligation to the taxpayer to report when these events happen.

Moreover, this amendment goes even further by requiring the Government not only to await the completion of the review and the laying of its report before Parliament but to implement its recommendations in full—I must emphasise that—before recovery can resume. We believe that this is quite extraordinary. We have no idea what those recommendations will be, and it would be deeply irresponsible to commit the Government in advance to implementing them wholesale without the ability to assess, modify or reject them as appropriate.

Public funds must be safeguarded and the Government must retain the flexibility to act responsibly in response to the review’s findings. This amendment would tie their hands and delay indefinitely the recovery of money that should never have been paid in the first place. In his summing up, the noble Lord might suggest how long the wait would be; the noble Baroness might also hazard a guess. Will it be many months, if not possibly a year or two? We really do not know, but I am sure it will be many months. It will become increasingly difficult to recover the money when so much time has gone by. Individuals may have experienced substantial changes in their lives or gone abroad. At worst, the individuals may, very sadly, have died.

For whatever reason, and bearing in mind people’s circumstances or vulnerabilities, we believe in principle that overpayments—a reminder that this is taxpayers’ money—are just that. They have been made to individuals in error—please note that—and should be repaid as soon as possible. I have an iota of sympathy with the noble Lord, Lord Palmer, on the principle behind the amendment—namely, ensuring fairness and learning lessons from what has gone wrong—but its practical effect would be short-sighted, costly and contrary to the basic duty of government to protect the public purse. For those reasons, we cannot and will not support it.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to the noble Lord, Lord Palmer, for explaining his amendments. Before we discuss the detail, I pay tribute to the millions of unpaid carers across the country. The Government value carers highly and recognise the vital contribution they make every day. I assure the noble Lord that my new Secretary of State feels just as strongly about this as the rest of us.

However, the reality is that, when we came into government, we realised we faced a flawed system where too many hard-working carers were left with often large overpayments to be repaid, sometimes worth thousands of pounds. I say clearly that I recognise the concerns of the noble Lord, Lord Palmer, and others on the whole issue of carer’s allowance. It is precisely because this Government take the issue so seriously that we commissioned an independent review of earnings-related overpayments of carer’s allowance to understand exactly what had gone wrong and to make any necessary improvements.

We have received the report from the independent reviewer, and I thank Liz Sayce OBE who led the review for her work. We are currently finalising our response to the report, following careful and detailed consideration of its findings and recommendations. I am pleased to confirm that we will publish both the report produced by Liz Sayce and the Government’s response to it before the end of this year. My ministerial colleague has written to the chair of the Commons Work and Pensions Select Committee to notify her of this.

This Government set up the review because we are determined to deal with the problems the system has created for carers. I hope the noble Lord, Lord Palmer, will be reassured by today’s commitment. Once the report and government response are published, and he and his colleagues in the other place, if he wishes, have had the opportunity to consider both, the ministerial team and the DWP will be happy to meet them to discuss this important issue and the Government’s next steps in detail.

I also remind the noble Lord and the House that this review is not all the Government have done to put things right for carers. We have been reviewing our communications to make it as easy as possible for carers to tell the DWP when there has been a change in their circumstances that may affect their carer’s allowance payment. We have been improving guidance and processes for our staff on the treatment of earnings and putting in extra resources to process the earnings information we receive from HMRC.

I think the noble Viscount, Lord Younger, mentioned the cliff edge, which the noble Baroness, Lady Kramer, is interested in. We have begun scoping work on introducing an earnings taper in carer’s allowance in the long run. This was mentioned by the Chancellor in the Budget. It is not straightforward, but a taper might be a way to further incentivise unpaid carers to do some work and could reduce the risk of significant overpayments. However, introducing a taper in carer’s allowance is not without its challenges. It could complicate the benefit as it currently stands and mean a significant rebuild of the system. The DWP has begun some scoping work to see whether an earnings taper might be an option in the longer term, but any taper, if introduced, will be several years away. I do not want to underplay the significance of trying to make changes such as that.

We have also introduced the largest increase in the earnings limit since carer’s allowance was introduced in 1976. That limit is now 16 hours of work at national living wage levels and over 60,000 additional people will be able to receive carer’s allowance between 2025-26 and 2029-30. I hope the noble Lord recognises this progress. He asked whether we would meet Carers UK. I can reassure him that Ministers and officials regularly meet Carers UK and other organisations which represent unpaid carers, as well as unpaid carers themselves. There have been meetings specifically on earnings-related overpayments in the past, and we expect further meetings in the future.

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Moved by

[Viscount Younger of Leckie]

110: After Clause 99, insert the following new Clause—
“Offence of facilitating fraud through dissemination of information(1) It shall be an offence for any person, by any means including electronic communication or publication on the internet, to intentionally publish, communicate, or otherwise make available information, advice, or instructions that are reasonably likely to be used by another person to— (a) mislead or deceive public authorities for the purpose of obtaining welfare or social security benefits to which they are not lawfully entitled;(b) circumvent eligibility checks, income or capital assessments, or other lawful mechanisms designed to verify entitlement under any enactment relating to the provision of social security or welfare benefits in the United Kingdom.(2) A person commits an offence under this section if they know, or ought reasonably to know, that the information or guidance provided—(a) is intended to facilitate dishonest conduct under the Social Security Administration Act 1992, the Welfare Reform Act 2012, or any associated regulations, or(b) will likely be used to enable or encourage another person to obtain, or attempt to obtain, benefits through deception or misrepresentation.(3) It shall be a defence for a person charged under this section to show that—(a) the information was provided for a legitimate public interest purpose, such as journalistic reporting or academic research, and not with the intention of facilitating unlawful conduct;(b) they took reasonable steps to prevent the information from being used for unlawful purposes.(4) A person found guilty of an offence under this section shall be liable—(a) on summary conviction, to a term of imprisonment not exceeding 12 months or a fine not exceeding the statutory maximum, or both;(b) On conviction on indictment, to a term of imprisonment not exceeding 5 years, or a fine, or both.(5) For the purposes of this section “information” includes written, audio, visual, or digital content, including content distributed via social media platforms, websites and forums.”Member’s explanatory statement
This new amendment would make it an explicit offence to facilitate fraud through the dissemination of relevant information online.

[Viscount Younger of Leckie (Con)]

My Lords, I realise that we are approaching the end of Report and the hour is late, but I do want to spend a little time speaking to my Amendment 110.

Those who were present in Grand Committee will recall the examples I cited of individuals producing and disseminating videos designed to help people cheat the checks put in place by the DWP to ensure that welfare support goes only to those with genuine entitlement. These were not isolated incidents. We are talking about content with titles such as:

“Unlock The Secret Steps For WINNING Your PIP Claims—Step By Step Guide”,


hosted on channels with names such as “Mike Bolton Benefits Training”. This is what has come to be known as the phenomenon of the “sickfluencer”, and it represents a serious and growing threat to the integrity of the welfare system—a threat which, I regret to say, the Government are, we believe, struggling to keep pace with.

For those to whom this term is unfamiliar, let me briefly explain. Sickfluencers are individuals who use Instagram, YouTube, TikTok and other social media platforms to publish detailed guides on how eligibility checks for welfare benefits can be manipulated or bypassed. They provide ready-made scripts to their viewers, instructing them on how to answer questions, what to disclose, how to pretend to have a disability or injury, and when to tell the truth and when they should lie. In short, they are professionals in coaching claimants to circumvent established eligibility safeguards. Indeed, the testimonies published on their websites and channels make it clear that many successful claimants attribute their outcomes directly to the advice of these sickfluencers. This is not simply a nuisance on the fringes of the system; it is an organised, deliberate effort to undermine the very principles of fairness and integrity on which the welfare system depends.

Since I last spoke on this issue, in Committee, thousands upon thousands more people have viewed this content. Hundreds more will have used it in their eligibility interviews, and possibly dozens will have been successful in their claim, precisely because of these videos and not because of a genuine entitlement.

I want to be clear that I understand that noble Lords on these Benches understand, and that the Conservative Party makes a point of understanding, that there are people in our country who should receive support from the state. There are people who cannot live without the support provided to them through the welfare system and it is absolutely right that we help those people. What can never be right is the abuse of this system of support by people who do not have a genuine eligibility, but who are coached to cheat the system and steal from the limited resources which should rightly be going to those who need them most.

If we have confidence in the system of testing as it currently stands, we should also be confident that it, and the assessors themselves, have the ability and the capacity to determine who is in need of support and those people who are not. This is the context in which we bring forward this amendment, which is designed to deal with this growing problem directly and proportionately. The amendment has been carefully drafted to ensure that we target those who are encouraging, facilitating and enabling fraud, an objective which I am sure noble Lords across the House will support.

Proposed new subsection (1) makes it absolutely clear that the offence applies only where a person intentionally publishes or communicates information that is reasonably likely to be used to mislead or deceive public authorities in order to secure welfare to which they are not entitled. This goes right to the heart of the problem I have described: the deliberate creation and dissemination of coaching materials designed to cheat the system.

Proposed new subsection (2) adds the essential safeguard that culpability arises only where the individual knows or ought reasonably to know that the content is intended to facilitate dishonest conduct under existing legislation, such as the Social Security Administration Act 1992 or the Welfare Reform Act 2012. This ensures that we are not targeting ordinary members of the public, but only those who are actively propagating content to enable fraud.

Proposed new subsection (3) then builds in crucial protections for legitimate activity. Journalists, academics and others who are acting in the public interest or who take reasonable steps to prevent their information being misused have a statutory defence. That means that this amendment does not criminalise responsible commentary or research; it criminalises those who deliberately and knowingly produce guides to cheating welfare assessments.

Proposed new subsection (4) sets out proportionate penalties: up to 12 months on summary conviction and up to five years on indictment. These sanctions are in line with other serious fraud-related offences, reflecting the harm done when organised online actors undermine the integrity of the welfare system.

Finally, proposed new subsection (5) makes clear that this applies across the spectrum of modern media: written, audio, video and digital content, including social media platforms. This allows the provision to keep pace with the reality of how this fraudulent material is produced and shared, and therefore safeguards its operational effectiveness into the future.

Therefore, we believe that this amendment is tightly drafted, carefully targeted and proportionately safeguarded, and would ensure that those who maliciously spread instructions on how to cheat the welfare system can be prosecuted. In short, it would criminalise not the sharing of information but the facilitation of fraud.

Fraud today is not static; it evolves, it adapts and it exploits new platforms with increasing sophistication. If this Bill is to succeed, it must be capable of not only addressing fraud as we see it today but of anticipating and countering the methods of tomorrow. This amendment would ensure that we do precisely that, tackling a wider breadth of fraudulent activity both in the temporal sense and in the online sphere. We believe it is an essential provision if we are to make this legislation truly effective and enduring.

There is a good reason for bringing this up again on Report. As the Minister knows, we seek a much greater effort in action from the Government to take down these abhorrent websites. We seek a series of proactive steps, with a timetable, to neutralise the individuals involved, who are no less than fraudsters. What are the government doing about sickfluencers? If the Minister replies that it is not for this Bill, then where and when?

I am concerned about the fact that the Government are not doing the proper groundwork required to tackle the threat, which is also to understand its scale. Is the Minister aware of work under way in the department to understand the relationship between sickfluencers and the rate of those claiming benefits such as PIP? What is the causal relationship that the department understands there to be between these two matters? In other words, how are the Government assessing the scale of the threat, with a view to crafting a response to match it? Academics at Oxford University and Bournemouth University, and journalists from an ever-increasing range of publications, are highlighting this, and have done so since I raised the issue in Committee. We are not alone in imploring the Government to take action on this front.

To conclude, I will be listening carefully and with interest to the response from the Minister. I am not expecting her to repeat that the current legislation is sufficient. I think she knows from discussions outside the Chamber that what I am really looking for is some real meat behind her remarks to show that the Government are taking this seriously as an abhorrent operation.

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For these reasons, and as I have outlined, the Opposition’s proposed approach is not the right one. I urge the noble Viscount to withdraw his amendment.

[Viscount Younger of Leckie (Con)]

I thank the Minister for her remarks. As I said, one of my main aims in speaking to this again was to draw out the actions from the Government on what they are doing to address what I call the scourge of sickfluencers. She states that the existing legislation covers the offences, but the offences are still occurring and are growing. However, I think I have succeeded to some extent in that I have managed to elicit from the Minister more information than I did in Committee, which is now on the record, on what the Government are undertaking cross-governmentally here. Although I am not entirely satisfied, I think I have succeeded to some extent. In the meantime, I wish to withdraw this amendment.

Amendment 110 withdrawn.

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[Baroness Sherlock (Lab)]

My Lords, government Amendment 114 ensures flexibility in the commencement of certain provisions of the Bill across the different nations of the United Kingdom. This approach is well established in legislation such as the Care Act 2014, the Digital Economy Act 2017 and the Public Order Act 2023. It ensures that implementation is both practical and responsive to the specific circumstances in each jurisdiction. For example, the courts in one part of the UK may be ready to hear certain applications while, in another, staff training and procedural updates may still be under way.

This amendment allows the flexibility to commence later in one area without unnecessarily delaying implementation in an area that is ready. Crucially, the amendment does not alter the substantive provisions contained in the Bill, and nor does it affect how or to whom they apply. It is simply a matter of good governance, ensuring that the legislation is brought into force in a way that is orderly, effective and sensitive to operational realities.

I hope that the House will support this amendment as a sensible and necessary step in delivering the Bill effectively across the UK. I beg to move.

[Viscount Younger of Leckie (Con)]

My Lords, I will keep my remarks brief. Amendment 114 is, as the Minister has indicated, a technical amendment but one that raises a point of some practical importance in how this legislation will be implemented. The amendment would allow commencement regulations to provide for provisions of the Bill to come into force on different days in relation to different areas. We recognise that this is a standard enabling power and we do not object to it in principle.

However, while we appreciate that this is likely to be a technical and administrative provision, we would welcome a little more clarity from the Minister as to the intended purpose. In particular, can the Minister explain whether the Government currently anticipate that the legislation will, in practice, come into force in a staggered way across different parts of the UK? It would be helpful to know whether any particular regional or administrative reasons have led to this amendment being proposed—for example, to accommodate devolved competencies or pilot schemes, or differences in data infrastructure between public authorities—or whether this is simply a precautionary measure to preserve flexibility.

We would also be grateful if the Minister confirmed whether the Government expect any significant differences in timing or rollout between areas once the Bill is enacted. If such differences are anticipated, what criteria will determine the order of commencement and how will Parliament and the public be kept informed of that process? So while we are content to support this amendment as a sensible technical adjustment, we would appreciate some reassurance that it will not result in confusion or inconsistencies.

Finally, as we come to the end of Report, I want, on a lighter note, to take this opportunity to thank all noble Lords for their engagement throughout these proceedings, and all those who have voted on the amendments upon which we have divided. I look forward to seeing some noble Lords again at Third Reading on Thursday.

[Baroness Sherlock (Lab)]

My Lords, I thank the noble Viscount for his questions. First, we have no reason to believe that any area or jurisdiction will not be ready; this is simply a precautionary measure to provide flexibility in case unexpected issues arise down the line. It is a standard legislative approach that provides flexibility to adapt if needed, and avoids holding back implementation in areas that are ready, should there be another area that needs more time. No specific powers have been earmarked or delayed. The amendment is an enabling one, and where readiness exists, powers will be commenced without delay. On how people will know, Parliament and the public will see the commencement regulations, which will make that clear. This amendment is simply to ensure flexibility in the commencement provisions across the different nations of the UK, and I commend it to the House.

Public Authorities (Fraud, Error and Recovery) Bill

Viscount Younger of Leckie Excerpts

3rd reading
Thursday 23rd October 2025 Lords Chamber

[The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, it has been a privilege for my noble friend Lady Anderson and me to take this important Bill through the House. This Government are committed to safeguarding public money and tackling fraud and waste. Public sector fraud is not a victimless crime; it damages our public services and, ultimately, it is taxpayers who suffer when they pick up the bill. Tens of billions of pounds are being lost to public sector fraud—money desperately needed by our public services. This Bill delivers on that commitment to safeguard public money and reduce fraud and overpayments resulting from errors across the public sector. It will enable the Public Sector Fraud Authority to support public sector bodies in investigating and dealing with fraud, and it will help the DWP better identify, prevent and deter fraud and error in the social security system. In doing so, this Bill will protect the public purse and deliver £1.5 billion of benefits over the next five years.

I thank all noble Lords who have given so generously of their time and wisdom in scrutinising this important legislation. Although we have not always agreed with them, my noble friend Lady Anderson and I have been grateful for the very many thoughtful and considered contributions that have prompted us at various points to improve the Bill or to clarify its provisions. This is what the House of Lords is for, and I am grateful for it.

Before I conclude, I offer some words of thanks, first, to the Opposition Front Bench. The noble Baroness, Lady Finn, and the noble Viscount, Lord Younger, have given robust but constructive challenge throughout the passage of the Bill. I am grateful for their time, both inside the Chamber and beyond. Similarly, I thank the noble Baroness, Lady Kramer, and the noble Lord, Lord Palmer of Childs Hill, from the Liberal Democrat Benches, who have been passionate advocates on issues such as whistleblowing and carers. I am grateful to the noble Lord, Lord Verdirame, and my noble friend Lady Lister for their careful engagement, both in and beyond the Chamber. I am grateful for the constructive challenge from around House, including from my noble friends Lord Sikka and Lord Davies of Brixton, the noble Baronesses, Lady Bennett and Lady Fox, and the right reverend Prelate the Bishop of Leicester.

Thanks must go to the noble Lord, Lord Vaux, who has maintained a keen interest in both parts of the Bill throughout its passage. The noble Lord has advocated for a number of different issues. We thank him for his constructive engagement and hope he welcomes the progress that has been made.

My noble friend Lady Anderson and I thank our Whips, especially our noble friend Lord Katz for his support throughout the Bill, and put on record our appreciation of all the officials and public servants who provided such dedicated support throughout this legislative process. I thank Georgia, Oliver, Alana and Ewan from our brilliant private offices, Matt, Louise and Tanya from the fabulous Bill team, and all the policy colleagues who stood behind them. Noble Lords who have met them will have been as impressed as I am with their professionalism and knowledge.

Finally, unusually, I thank my noble friend Lady Anderson’s husband for sharing her with us so extensively in the run-up to not just her wedding but her honeymoon. It is a sign of her dedication that she has given so much time to this Bill. She is the only person I know who can, while taking the content incredibly seriously, bring quite so many laughs to the subject of public sector fraud. I am grateful to so many noble Lords, and I beg to move.

[Viscount Younger of Leckie (Con)]

My Lords, I thank the Minister for her remarks. I will make a short reflection on our discussions on Report and in Committee. I speak for my noble friend Lady Finn in so doing. Despite the technical title, this is an important Bill, as the noble Baroness said. It addresses one of the most serious problems that public authorities face. Based on the Public Sector Fraud Authority’s methodology, fraud and error cost the taxpayer £55 billion to £81 billion in 2023-24. The Bill has sought to address this problem, at least in part, through the provision of extensive powers to officials in the DWP and the Cabinet Office. It is largely these that we have discussed over the past few months.

I am proud of the work that this House has done in scrutinising the Bill, identifying issues and problems, and working in the genuine spirit of collaboration to make it better, fairer and more effective. I pay particular tribute to the noble Baronesses, Lady Anderson of Stoke-on-Trent and Lady Sherlock, for the way they have engaged with Members from across the House. They have listened to concerns, shown genuine willingness to make improvements and demonstrated what responsible government should look like. I firmly believe that the Bill before us is stronger and more balanced than the one first introduced to this House. There is more to be done and areas for further improvement, but we have reflected this in our amendments. The changes that have been made are indeed welcome, and we look forward to ping-pong when it comes. I am also grateful to the noble Baronesses for following up on commitments swiftly, not least for providing the now famous flow charts, which have been genuinely useful to us and, I hope, their departments.

I thank other noble Lords for their engagement with this Bill and their support of our amendments both in Committee and on Report. We have sought to address what we see to be serious shortcomings in the Bill on questions of oversight, accountability, proportionality and fairness. I am thankful to noble Lords who supported us in the Divisions that we called. The amendments we have passed in this place advocate for greater oversight, clearer lines of accountability and a PSFA that can actively pursue fraud. I believe that these are important changes that make the Bill more effective and fairer.

I particularly thank the noble Lord, Lord Vaux, and the noble Baroness, Lady Fox, for their support of our amendments, and I certainly do not forget the noble Lord, Lord Palmer, and the noble Baroness, Lady Kramer. I thank them for their support on some of our proposals. I look forward with interest to seeing how the arrangement with the PSFA, the DWP and the banks evolves and becomes effective. We accept that it is test and learn. It is vital that the legislation to seal the agreement becomes effective in combating fraud.

Finally, I thank the officials who have worked so hard from the government side to enable this process to happen. I know from my time as a Minister that we rely on our officials for a great deal; indeed, it is often to them who we turn for advice and support. I also know that their work is often not credited because they are not visible in the way that we are during debates. I therefore thank officials from the DWP, the Cabinet Office, the PSFA and the Ministers’ private offices who have worked hard to support them and, indirectly, all of us in the discussions we have had on the Bill. Noble Lords from across the House should recognise them and their work. I pay particular tribute to and thank my assistant, Oliver Bramley, for his sterling work during this period.

I urge the Government to meet this House on the amendments that it has added to the Bill, given the extensive discussions and strong cross-party support that they command from across the House. The Bill that we return to the Commons is a better one and I urge the Government to use this opportunity to make these changes permanent.

Finally, we all leave the Bill with certain expressions ringing in our ears, such as “test and learn”, which I alluded to earlier, but particularly the tongue-twister “eligibility verification measure”. I think I can just still say that.

[Lord Vaux of Harrowden (CB)]

My Lords, this Bill is important, creating a wide range of powers for the Cabinet Office and DWP to deal with fraud and error. Until recently, it received very little attention in this House, being in Grand Committee. A small group of noble Lords have worked on it as it has gone through the stages in this House and it has been a great pleasure to work with all of them, across all parties.

I want to repeat what I said before: first, that the Bill as introduced was a much better Bill than its previous incarnation under the last Government. I am extremely grateful to both Ministers for that; they listened and acted on the concerns raised at that time and reflected many of them in the Bill as it was tabled originally. The same is true of the opposition team; I think they also heard those concerns, and it has been a pleasure that they have been so supportive of many of the changes made to strengthen the safeguards around the powers.

Equally, the engagement from the Ministers and their officials has been exemplary throughout the passage of the Bill. It has been a very good example of how this House works best and I am very grateful to all of them. They have been not only extremely generous with their time but very constructive in their engagement. Documents, such as the draft code of practice, have been published in good time, which I think most noble Lords would agree is not always the case. The detailed document that showed how the Bill would work alongside other legislation was a lot of work for somebody but incredibly helpful in enabling all of us to understand this better. As the noble Viscount, Lord Younger, just said, special mention is merited for whoever produced the famous flowcharts.

I am also grateful to all those who supported me in my efforts to strengthen the safeguards around these new powers, in particular, the noble Baroness, Lady Finn, the noble Viscount, Lord Younger of Leckie, the noble Baroness, Lady Kramer, and the noble Lord, Lord Palmer of Childs Hill, as well as the noble Baroness, Lady Fox, and others. Having said that, we were not able to find agreement on everything, as we saw on Tuesday. I say to the noble Baroness, Lady Sherlock, that I remain keen to see whether we can find a constructive solution to those remaining issues that would work for us all. I stand ready to work with her and her team to that end before we get into ping-pong. I am not trying to thwart the intent of the Bill and have tried throughout to reflect as closely as possible what the Government say they really need. I really hope that we can find something mutually agreeable during the next stages.