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I will refer to government Amendments 30, 31, 104 and 105, as your Lordships will have noticed that these have been withdrawn from the Marshalled List.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 For this reason, they have been withdrawn but we will retable them once they are compliant.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.

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[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.

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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.