Public Authorities (Fraud, Error and Recovery) Bill

Debate between Baroness Anderson of Stoke-on-Trent and Viscount Younger of Leckie

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 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

Debate between Baroness Anderson of Stoke-on-Trent and Viscount Younger of Leckie

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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[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

Debate between Baroness Anderson of Stoke-on-Trent and Viscount Younger of Leckie

Wednesday 4th June 2025 Grand Committee

[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.

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[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.

Women’s State Pension Age Communication: PHSO Report

Debate between Baroness Anderson of Stoke-on-Trent and Viscount Younger of Leckie

Tuesday 17th December 2024 Lords Chamber

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

My Lords, I beg to move that the House—

[Viscount Younger of Leckie (Con)]

I would like to come back briefly with a further question, as there is time; we do have time for Back-Bench questions as well as Front-Bench questions. As regards the future, can the Minister give us a feel for how progress on AI is going in the department in respect of the data for WASPI women?