Public Authorities (Fraud, Error and Recovery) Bill

Debate between Lord Davies of Brixton and Baroness Finn

Report stage
Wednesday 15th October 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, I expressed considerable concern about this part of the Bill in Committee. I have studied the amendments that have been put forward and, like the noble Baroness who has spoken on behalf of the Liberal Democrats, will reserve my position, since we can come back to this. The amendments, which we have been told came forward last week, seem like an improvement, but the question is whether they are sufficient. It is easy to spot what is there; the most difficult part of the process is spotting what is not, and I need a bit more time to achieve that. So, although I am in no sense speaking against the amendments, I am reserving my position on the overall effect of this clause and the objections that I raised in Committee. I will say a bit more on the next group of amendments, which are more germane.

[Baroness Finn (Con)]

My Lords, the amendments in this group all relate to the duties placed on banks and other financial institutions in connection with debt recovery and information notices. Broadly speaking, the amendments represent a constructive and welcome set of clarifications from the Government. They respond directly to a number of issues raised in Committee about transparency, fairness and proportionality in the way that these powers are exercised.

On the Government’s amendments limiting the period during which a bank is prohibited from informing an account holder that it has received an information notice, we on these Benches see that as a largely sensible change. The amendment means that after three months or sooner, if a further notice is received under Section 21, the prohibition on informing the account holder will lapse. That is an improvement. It ensures that investigations cannot drift indefinitely in silence, while still protecting the integrity of live inquiries.

However, we would welcome confirmation from the Minister that when no action has been taken within that period then the department considers the case effectively closed or dormant. If a person is made aware that an information notice has been issued in respect of their account and they were in fact involved in some sort of fraud, then being made aware of this fact would compromise an investigation if it was ongoing, as that person could take action to avoid scrutiny. If the Minister could therefore clarify for us that, after this three-month period, a live investigation would not be affected through the sharing of this information then we would be content with this proposal.

I turn to the Government’s amendments removing the requirement for banks to prevent an account being closed outright where a deduction order has been made. This achieves the same policy outcome as the original drafting, ensuring that sufficient funds remain available for recovery, but it does so in a more proportionate and administratively practical way. The bank will still have to preserve the specified sum, but without being forced into the position of acting as an involuntary custodian for the rest of the customer’s affairs. That strikes the right balance between protecting public money and minimising unnecessary interference in personal banking arrangements.

We warmly welcome the amendment addressing suspended direct deduction orders. This is one that we pressed strongly in Committee, and we are very pleased that the Government have responded and taken us up on our suggestion, which was also supported by many other noble Lords, such as the noble Lord, Lord Palmer of Childs Hill, and the noble Baroness, Lady Fox of Buckley.

As drafted originally, the Bill would have allowed an order to be suspended indefinitely, potentially leaving someone in limbo for years, uncertain whether it would ever be reactivated. That was clearly unsatisfactory. The new provision rightly ensures that, if an order has been suspended for more than two years, it must be treated as revoked and all relevant parties notified. That is a fair and proportionate solution that restores clarity and finality for the individual concerned.

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[Baroness Finn (Con)]

My Lords, the amendments in this group focus on one central theme: ensuring proper scrutiny, transparency and accountability in how the powers granted under this Bill are exercised. These amendments are about ensuring that, as we build a powerful new framework for tackling public sector fraud, we also build in the right checks, balances and reporting duties, not only for Ministers but for the departments, banks and public bodies that will have to deliver the regime day to day.

The first of these amendments to Clause 38 would require that the outcome of any consultations held before making regulations on deduction orders be laid before Parliament before those regulations come into force. That is a reasonable step. Clause 38 already obliges Ministers to consult such persons as they consider appropriate, but, as things stand, there is no requirement to publish the results of explain how the Government have responded to the views expressed. This amendment simply ensures that Parliament can see the evidence and feedback underpinning any regulatory change. Banks and financial institutions will be at the forefront of implementing these powers: their experience and operational insight will be vital. Parliament should therefore be able to see what those institutions have said, what works, what does not, and what the likely impact of proposed changes will be before new rules take effect.

Alongside that sits our amendment requiring that any future regulations under Clause 38 be accompanied by an impact assessment covering the projected costs and effects on banks and financial institutions. As we have said throughout the passage of the Bill, the partnership with the financial sector must be one of collaboration, not imposition. An impact assessment is not an obstacle: it is a basic instrument of good governance. It ensures that decisions are informed by evidence, that burdens are proportionate and that Ministers, Parliament and industry all have a shared understanding of the practical consequences of what is being proposed.

Our third amendment, after Clause 64, would take that principle one step further. It would require the Minister, within 12 months of these provisions coming into force, to conduct a review of the administrative and compliance costs imposed on the banks by this Bill, including staffing, reporting and opportunity costs. This is about fairness and being realistic. We are asking the financial services sector to play a major operational role in this new system: to respond to information notices, process deduction orders and help recover public funds. That is legitimate for the purposes of the Bill, on which all noble Lords broadly agree, but it comes with a cost. Parliament has a right to know what that cost is and whether it is being managed proportionately and effectively.

At a higher level of oversight, our next two amendments would introduce annual reporting requirements. The first would require the Minister to publish an annual report on the use of the powers conferred under Part 1 of the Bill, setting out how often they have been used, in what context and with what results. This is about shining a light on the operation of the regime itself, how these new powers are working in practice, how effective they are in recovering public money and how proportionately they are being exercised.

The second would require an annual report on the overall extent of public sector fraud: a single, authoritative assessment of the scale and nature of the problem across government. The Public Accounts Committee, the National Audit Office and indeed the Government themselves have all acknowledged that the current picture is fragmented and inconsistent. Without reliable data, it is impossible to design effective policy, measure progress or target resources where they are most needed. An annual report would help close that gap, improve accountability and ensure that both Parliament and the public can see whether we are making headway against the problem.

None of these proposals is designed to delay or frustrate the Bill. We are not seeking to divide the House on these amendments. What we seek is assurance that the Government recognise the importance of these issues, that the machinery of the Bill will operate transparently, that Parliament will be kept informed and that those upon whom these duties fall will be treated fairly and proportionately. They are therefore constructive and common-sense measures. They would strengthen parliamentary oversight, improve the evidence base for future policy and help ensure that the strong powers created by the Bill are matched by equally strong safeguards and accountability.

I hope, therefore, that the Minister will reflect on these proposals in that spirit and that, as the Bill proceeds, the Government will bring forward their own commitments to embed these principles of transparency, consultation and reporting in the way that these powers are used. I beg to move.

[Lord Davies of Brixton (Lab)]

I have already taken the opportunity to reiterate the concerns I have expressed about parts of the Bill. I find myself in the somewhat against-the-grain position of agreeing with much of what was said on behalf of the Opposition. Amendment 26 seems to me entirely reasonable, given the level of concern that has been expressed about the extension of government powers over matters that are essentially personal. Although we are not going to vote on these amendments, I very much hope that my noble friend the Minister, in replying to the debate, will give a clear assurance that these workings—which, it has to be said, go into new areas of state control—will be looked at on a continuing basis and not automatically become a matter of routine.

House of Lords (Hereditary Peers) Bill

Debate between Lord Davies of Brixton and Baroness Finn

Report stage
Wednesday 2nd July 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

I appreciate that, at this late hour, there will be a keenness for everyone to go, but I want to remind the House of its history in opposing amendments such as that proposed by the noble Lord.

One has to remember that, without the right of the Prime Minister exercising the royal prerogative, we would not have had the Parliament Acts and, perhaps more importantly, we would not have had the Great Reform Act 1832. It was because of the royal prerogative and the ability of the Prime Minister to appoint Peers that we were able to move forward to our current democratic state.

I will quote from the debates that took place in this House—but of course not in this Chamber. Speaking from the Opposition Benches, the Earl of Winchilsea

“said, he suffered a pain of mind greater than he could express in thinking that he had lived to that hour to witness the downfall of his country. That night would close the first act of the fatal and bloody tragedy. It would close the existence of that House”—

the House of Lords—

“as one branch of the Legislature, for its independence, which was its brightest ornament, had fallen, and without that independence it might be considered as having ceased to exist”.—[Official Report, 4/6/1832; col. 349.]

Well, we still have the Earls of Winchilsea on the Opposition Benches forecasting total catastrophe from this move towards a more democratic House. Earl Grey, the Prime Minister—at a time when the Prime Minister was in this House—said in response that

“if the House of Commons should, after their Lordships rejecting, for a second time, a Bill sent up from that House, persist in asserting the opinion expressed by it with reference to that Bill, and that it should appear that in the event of an appeal to the country, it was not probable that another House of Commons would be chosen less zealous for Reform, then, in his mind, the emergency had arrived which would justify that exercise of the prerogative by which only a serious collision between the two Houses could be prevented”.—[Official Report, 4/6/1832; col. 362.]

I think the point persists almost 200 years later that the right of the Prime Minister to subject this House to the appointment of Peers is part of the process by which we achieve our present democratic freedoms, which I think would be a great loss to the country as a whole.

My promise, when I was appointed to this House by the leader of the Labour Party, was to vote for the abolition of this House, and I am still of that opinion—the sooner the better. Unfortunately, in making the promise I was not told exactly what should replace the House, but I am in favour of abolition and I think the power of the Prime Minister and the royal prerogative are important and certainly should not be lost, because we would end up with either a fully democratic House—which I oppose, because of its effect on the Commons—or this House, which is subject to democratic control through the Prime Minister.

[Baroness Finn (Con)]

My Lords, this has been a short but important debate and I thank my noble friend Lord Lucas for bringing the House’s attention once again to an unavoidable consequence of this legislation. We are heading towards a fully appointed House, with all the appointments made by the Prime Minister. I appreciate that political parties nominate, but the ability to decide the number and timing of appointments rests solely with the Prime Minister. It is therefore of some concern that the Prime Minister, with such powers of patronage, is attempting to remove more than 80 parliamentarian opponents through the Bill.

We will have a debate—another one—on the size of the House next week, so I will not comment specifically on numbers at this point. However, when the Lord Privy Seal spoke on this amendment in Committee, she was critical of the “We have the numbers and can get this through” approach that she felt previous Governments had taken, and encouraged the House of Lords to adopt a more deliberative approach. That is exactly the approach that we are seeking to take with this Bill and others, and we should not be criticised for doing so.

Having heard me speak in the HOLAC debate, noble Lords will be aware of my views on retaining the discretion that Prime Ministers have to appoint the Peers they wish to appoint. But my noble friend Lord Lucas is right to bring back this important issue of the balance between the parties and to seek further assurances about the responsibility of the Prime Minister to behave reasonably.

I am sure that the current Prime Minister will continue to do so, and I hope that this amendment will never be necessary, but legislation should seek to look to the future and anticipate that future Prime Ministers might not behave in such an appropriate way in terms of appointments. It is a shame that we find ourselves in this position, but I look forward to hearing the Leader’s response.