Public Authorities (Fraud, Error and Recovery) Bill

Debate between Baroness Sherlock and Lord Vaux of Harrowden

Committee stage
Wednesday 18th June 2025 Grand Committee

[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.

[Lord Vaux of Harrowden (CB)]

Can the Minister explain why the DWP needs that power but the PSFA does not? The two clauses in the Bill are otherwise identical and differ only in respect of the reasonable force element. If the PSFA does not need it, I do not understand why the DWP does.

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[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.

[Lord Vaux of Harrowden (CB)]

My Lords, I thank everyone who has taken part in this short but, I hope, illuminating debate. I have concerns about these police powers being given to civil servants and I do not think I am alone in that respect. I am comforted, to some extent, by the fact that these will be used only in the cases of serious and organised crime. I wonder whether the solution, therefore, is to put that in the Bill and put that safeguard in place, because I think that would comfort most people who have the concerns that we have. Perhaps that is something that the Minister might be willing to discuss between now and Report. That said, I beg leave to withdraw the amendment.

Public Authorities (Fraud, Error and Recovery) Bill

Debate between Baroness Sherlock and Lord Vaux of Harrowden

Committee stage
Monday 16th June 2025 Grand Committee

[Lord Vaux of Harrowden (CB)]

I understand the noble Baroness’s point. It was because it said “reasonable grounds” in the first half that the fact that it was missing in the second half—paragraph (b)—stuck out: you have to have reasonable grounds, but then you just have to consider. But my point is more than that. Let us imagine the worst-case scenario, where a future Government decide to go for an all-out DOGE approach to whatever. I have no doubt, as I said, that the noble Baroness and the department at the moment will follow the guidance, et cetera, that she laid out, but that is just guidance and it can be torn up on a whim. If a new Government decide to go all out, there is no reasonableness safeguard; they can just say, “We consider it necessary”, and there does not need to be any reasonableness attached to that. That is the concern. It is not about now; it is about where we might be in a year or five years’ time that worries me.

[Baroness Sherlock (Lab)]

I see where the noble Lord is going with this and I am happy to pick up the conversation outside. I do not think that the distinction is big enough for it to be a problem, because the reality is that a reasonable suspicion is not just a hunch: it has to be based on an objective test, it requires up-to-date and accurate information and it must be something that an ordinary reasonable person would consider a legitimate cause for suspicion given the same information. So, for information gathering to be legal and justified, the intrusion into a person’s privacy must be necessary, proportionate and in accordance with the legislation. We think that that is belt and braces, but I am happy to pick that up with the noble Lord because I think that we want the same thing. The only question is: do we need any more ways of saying it?

Finally, Amendment 79, in the name of my noble friend Lord Sikka, would require DWP to copy the information notice to all parties, including the subject of the information request. The noble Viscount, Lord Younger, has explained the obvious reason why this is the case: since these powers apply only to named individuals about whom there is a reasonable suspicion of fraud, telling somebody at the outset could clearly prejudice the investigation and potentially enable them to conceal or destroy evidence.

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[Lord Vaux of Harrowden (CB)]

I will jump in quickly before the Minister continues. She has been very helpful in explaining how this is going to work. I should say, as I have before, that I think this is infinitely better than it was when we saw it a year or so ago—I just put that on the record again. However, there are two questions about how it works on which I would like clarification.

First, I think the Minister indicated that the banks would not have to trawl all bank accounts, but I do not think that that is right. The logic must be that the DWP provides the criteria that it wants to look at, which is whether someone is in receipt of benefits and, secondly, whether there is a flag. In order to identify whether they are on benefits, the banks will have to trawl through all the accounts to find that out. That seems a necessary step—they have to spot the indicators in the accounts.

More importantly, though, this is not a one-off exercise under the Bill. They do not just send it once and then go away. The Bill allows for these things to be periodic within 12 months, and they can then be extended. I am interested to understand what the Government intend by “periodic”. Under the way that it is currently written, they could be saying, “I want you send us this data every day—or indeed every hour or minute—for the next 12 months”, and they could then extend it. What is the plan in terms of the periodicity of this?

[Baroness Sherlock (Lab)]

Let me deal with the noble Lord first, because that will be quick and I am conscious of the time—I have already gone over the 20 minutes. The DWP will tell the banks, “We have a reference number and these are the accounts at your bank into which we pay benefits; please look only at those accounts, not those of anyone else”. I have been saying this all the way along the line, but I have clearly failed to get this across. The noble Lord may recall the previous discussions when we were asked why you could not look at every bank account, and the reason is—

[Lord Vaux of Harrowden (CB)]

I am still not convinced that that is correct. I think that what happens is that there is an indicator that goes with the payment of the benefit, and we are then asking the banks, first, to identify all accounts where that indicator exists—so they have to look at all accounts to identify which those are—and, secondly, for those accounts, whether there are any with an eligibility indicator that is flagged. My reading is that it is in fact quite clear, and it is also clear in the code of conduct and the other stuff.

[Baroness Sherlock (Lab)]

In as much as we will say to the banks that we would like them to look at the accounts into which we pay benefits and will give them the reference numbers. Clearly, it is up to the banks how they identify those. I think it unlikely that they will take each bank account, look at it individually and make a decision, but it is up to them. We simply want them to look at those bank accounts and to tell us whether, within those bank accounts, they believe that the particular eligibility indicator that we have given them is correct.

Regarding frequency, we will negotiate that with the banks. The previous Government looked at an earlier iteration of this and ran two proofs of concept to establish that it would work and be effective. We now have to take the powers in order to be able to start doing this. So, we have agreed that we will work with a small number of banks and work out bit-by-bit how this works, bring over information as we can manage it, make sure that the system works, and build up as we go. We will determine from that how often we will need to do that and how it works. That has to be determined; we could not determine that in advance because we need the powers in the Bill to be able to start the process.

In response to the noble Baroness, Lady Fox, it is a question of proportionality. Clearly, we already ask the Revenue to tell us how much people earn in order to determine whether or not they meet the earnings criteria for, for example, universal credit. We could simply allow people to tell us, but when we did that, some of them got it wrong; many of them made mistakes; sometimes it changed, and sometimes they deliberately did not tell us. So now, we simply get information directly from the Revenue.

We think that the power is proportionate. Whenever someone compares it to something that feels disproportionate, such as spying or putting bugs in everyone’s houses, I think that we can either claim that this is a mass surveillance power like China would use and then wonder why people are getting paranoid about it, or, while I do my best to be specific about what we are trying to do, we can all try to have a measured conversation about whether or not it is reasonable, while fully accepting that for some people the line will be in a different place than for others for reasons of both philosophy and proportionality. I fully accept that.

I have done the best I can in 25 minutes. On that basis, I urge noble Lords to agree that the clause stand part.

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[Lord Vaux of Harrowden (CB)]

Before the Minister moves on to Amendment 88, I asked about the cross-comparison with datasets from different banks; this goes to the point that the Minister has just been making about it being easy to commit fraud. To what extent will data from bank A be amalgamated with data from bank B to discover whether, when combined, there is an eligibility indicator flag?

[Baroness Sherlock (Lab)]

An EVN can be used only in relation to the bank account into which the benefit is paid. Therefore, that would be a specific bank account in a specific bank. Of course, the DWP’s authorised investigators have and use a range of sources where they have a suspicion of fraud, and there is a range of mechanisms out there to look at what other information can be gathered in order to make that judgment. I can see that I have not hit on what the noble Lord was asking for.

[Lord Vaux of Harrowden (CB)]

In the situation where there would be a suspicion of fraud, you have bank A—actually, I suppose it would not have provided the information, would it?

[Baroness Sherlock (Lab)]

Exactly.

[Lord Vaux of Harrowden (CB)]

I have just answered my own question.

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[Baroness Sherlock (Lab)]

Just to be clear, this measure is attacking both fraud and error. It looks at overpayments, whatever the source. It is simply one tool among many that is available to the DWP and which will help produce a source of information, which will help to identify incorrect overpayments. Having got that information, the DWP will use the full range of powers and the information available to it. If any fraudsters are sitting down on a quiet Monday afternoon and watching this Committee, they should be warned: the DWP has lots of sources of information; it will investigate them; and it successfully prosecutes many people for fraud. The DWP will use this and other powers to pursue what is there. However, this measure alone has been scored by the OBR to save up to £940 million over the next five years. No single measure will be foolproof alone; it will play its part alongside a range of measures and processes to help root out fraud.

I will have to write to my noble friend Lord Sikka on the Cayman Islands. I do not have them at the back of my mind at the moment, I am afraid, but I will let him know if there is an issue over there.

I say to the noble Baroness, Lady Fox, that I fully accept that there is a line between giving all details in public and tackling fraud. We have given out a lot of information and a lot of protections here, and we have found ways of making sure that there is oversight. One reason for having oversight is that there are things that we will never be able to put out in public; it is important that somebody has scrutiny and can report to Parliament, independent of the department, on how these powers are being used. We would hope that that picks up the remaining areas of concern.

I turn to Amendment 88, also in the name of the noble Baroness, Lady Fox. I will address in turn the two points that it raises. The first is the requirement for the code of practice to include information about the ways in which scrutiny can be applied to the methods that a financial institution may use to identify relevant accounts, for the purposes of the eligibility verification measure. This is not a matter for a code of practice. The criteria that financial institutions must use to identify relevant accounts are described in paragraph 1(2)(b) of new Schedule 3B to the Social Security Administration Act 1992. Accounts must simply meet two tests in order for information to be shared by the financial institution with the DWP: first, the account must receive a relevant benefit payment or be linked to that account; and, secondly, the account in question must meet the criteria that the DWP sets out in the eligibility verification notice. Financial institutions operate in many ways. It must be for each individual financial institution to determine how it identifies relevant accounts.

The key point here is that the EVM asks banks to return specified data only where those two tests have been met. It is a data-requiring power; we are not asking banks to do anything more than that. Again, I remind the Committee that it is the DWP that will review all the information received and DWP staff who 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.

On that point, the Bill does not introduce any new use of automated decision-making. The DWP will examine data received from banks under the new power, alongside other data received, to determine whether there has been an incorrect overpayment. As is set out in our personal information charter, which is publicly available, the DWP uses automated processing in some decision-making to help us deliver efficient services. The DWP will not make any decision that has significant effect based solely on automated processing unless the law allows this, and claimants will be informed if we make any such decision.

I turn to the second issue in this amendment. It would require the code of practice to contain information about measures that would enable scrutiny of the effectiveness of the EVM. This is, again, an important issue but not one for the code of practice. However, I completely agree with the noble Baroness, Lady Fox, that we must assess how effective the EVM is; that is why, under Clause 75, the independent overseer of the measure must consider the extent to which the exercise of the power has been effective in helping to identify incorrect payments of relevant benefits.

Finally, I turn to Amendment 89ZA, which raises the issue of informing claimants that the EVM may be used to require the sharing of information about their relevant accounts with the DWP. Let me take a moment to update the Committee on the ways in which the DWP will inform claimants and relevant account holders about the measure; I hope that this will reassure the noble Lord, Lord Vaux. The DWP has a personal information charter that sets out how it uses and stores personal information. It is publicly available, and claimants are explicitly directed to it at all times when the DWP requests their personal data. We will update the DWP personal information charter to make it clear that the EVM may be used to require the sharing of their personal information; that commitment is made clear in the draft code of practice, which noble Lords have seen.

This amendment suggests that we should inform claimants either at the start of their claim or within three months of the EVM becoming operational. Our approach of updating the personal information charter means that customers are much more regularly informed about the EVM; this is because claimants are regularly directed to the document throughout their claim. For the benefit of the Committee, I can confirm that claimants are explicitly directed to it in all DWP claim forms; in change of circumstance and uprating letters; in recorded telephone messages; in DWP agents’ telephony scripts; on digital online services; and in other products where the DWP collects personal data. As noble Lords will know, the draft code of practice, which will be publicly consulted on, makes clear that all those who hold a personal account into which a relevant benefit is paid should be aware that information about them and their relevant accounts may be shared by a financial institution with the DWP if the eligibility indicators specified in an EVN are met.

[Lord Vaux of Harrowden (CB)]

There is a big difference between pointing someone towards a data protection statement—let us be brutally honest: how many of us have ever read one?—and telling people that their bank account details can be provided to the DWP as a result of having this particular benefit. Nobody has ever read a data protection statement, and I do not suppose that they ever will.

Welfare Reform

Debate between Baroness Sherlock and Lord Vaux of Harrowden

Tuesday 18th March 2025 Lords Chamber

[Lord Vaux of Harrowden (CB)]

My Lords, I think we all applaud the desire to get people off benefits and into work, but to do that we need jobs and we need employers who are willing to take those people. I hope the noble Baroness will not mind my quoting from the impact assessment that accompanies the Employment Rights Bill in relation to day 1 unfair dismissal rights. It states that

“there is evidence that the policy could negatively impact on hiring rates. For example, employers may be slower to take on workers due to the liability and increased protections”—

and I stress this last bit—

“particularly for those that are seen as riskier hires”.

Does the noble Baroness agree that that seems to be in direct conflict with the desire to bring people into work, and does she think it is a good idea?

[Baroness Sherlock (Lab)]

I thank the noble Lord for that question. I have real confidence in this. The noble Lord may know that in January we published the terms of reference for the Keep Britain Working review, a review headed by the former chair of John Lewis, Sir Charlie Mayfield, who is looking at ways in which we can make workplaces more receptive and more able to take on people who have health conditions and disabilities. It could include all kinds of ways in which we can support them. We want to remove the barriers to employers doing that.

We already know that this is the case: reasonable adjustments are often talked about as a way of doing it. The noble Lord may think that these difficult hires. In fact, it is estimated that, on average, employers could save between £5,000 and £11,000 for every employee they prevent from falling out of work. So having an inclusive workplace is not a “nice to have”: it is not an extra. It is a way of making sure that we protect those who are currently working. There are significant numbers of people at the moment who are working but have a condition, and hundreds of thousands of them fall out of work every year. Our system is trying to work with employers to protect those who are already in work, but we have lots of employers really engaged with us in jobcentres, in the work we are doing and in building relationships. People want to do this. We can do this.