Public Authorities (Fraud, Error and Recovery) Bill

Lord Palmer of Childs Hill Excerpts

Consideration of Commons amendments and / or reasons
Tuesday 11th November 2025 Lords Chamber

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

My Lords, I beg to move Motion A and will speak also to Motions B and D. I want to start by thanking this House once again for the constructive debates and meticulous scrutiny that the Public Authorities (Fraud, Error and Recovery) Bill has received throughout its passage. It has undoubtedly been strengthened, and I am grateful for the time noble Lords have put into engaging with the Government.

I believe that the Bill, as agreed by the House of Commons, makes a significant step in delivering this Government’s manifesto commitment to safeguard public money and ensure that every pound is wisely spent. At the same time, the Bill now contains further significant safeguards on the use of the new powers for the DWP and PSFA, strengthened by the scrutiny and insights of your Lordships’ House.

In moving Motion A, I will, with leave of the House, speak also to Motions B and D, which are grouped together. I turn first to Amendment 1 and the government amendments in lieu, Amendments 1A and 1B. As I said on Report in the Lords, the Government were unable to accept the original drafting of this amendment. However, we have listened to the desire of your Lordships’ House and, with some technical changes, are happy to propose these alternatives. I am grateful for the constructive discussions on these with the noble Baroness, Lady Finn, and the noble Viscount, Lord Younger—to whom I wish a remote happy birthday.

The amendments will give the Minister for the Cabinet Office the power to initiate an investigation when they consider it necessary in the public interest. As my colleague, the Minister for Transformation, set out when proposing this amendment in the other place, the Government believe it will almost never be necessary for the Minister to exercise this new power, due to the collaborative approach of the normal working of government, but it will be available if there is genuine necessity. It is the Government’s intention to create a fraud investigation service and this amendment is compatible with that continued intention.

Our amendments in lieu also make some consequential changes to Clause 2 to preserve the intention that the PSFA should not take on matters assigned to the Secretary of State with responsibility for Social Security, or His Majesty’s Revenue & Customs, for the reason which has remained unchanged throughout the passage of the Bill: that those departments already have considerable resources and powers to tackle tax and social security fraud.

I now turn to Lords Amendments 30 and 31. As I set out on Report, the Government support the principle behind these amendments. However, we could not accept the drafting as it stood. We agree that staff must be appropriately trained before they are able to use these powers and that robust oversight, both internal and external, is essential. I am therefore grateful for the constructive and rewarding discussions with the noble Baroness, Lady Finn, and the noble Viscount, Lord Younger—who is very young today—and propose the alternative government Amendments 31A, 31B and 31C. They have indicated their support and I hope that other noble Lords will also support them. The amendments mandate statutory guidance and a new reporting requirement and set internal recording requirements. They strike the right balance of ensuring strong ministerial and parliamentary oversight of the powers, without unnecessarily involving Ministers in operational decisions.

First, the statutory guidance will detail how the Minister will exercise the function of investigating suspected fraud against public authorities. It will outline governance arrangements, delegation of powers to authorised officers and authorised investigators, standards for the training and appointment of authorised officers and investigators and how the Minister will collaborate with an independent reviewer. Secondly, a report will be prepared following the end of each financial year and will be laid in Parliament by the Minister, stating how many times investigation and enforcement powers in Part 1 of the Bill have been used. This ensures regular ministerial and public visibility without compromising operational details. Lastly, there is now a requirement for the PSFA to keep internal written records of the exercise of the powers, which will be made available for scrutiny by an independent reviewer.

These records will specify the power exercised, date, reason for use and by whom, ensuring internal accountability. They will be made accessible to the independent reviewer, who will assess the use of the powers and produce a report which the Minister will publish and lay in Parliament. This addresses the need for a written record without public disclosure of sensitive information. Together, these amendments underscore our commitment to transparency, oversight and accountability, which we have maintained over the passage of this Bill.

We further committed during Committee in the Commons to adhering to the Cabinet Office governance code on public appointments, which is overseen by the Commissioner for Public Appointments; adding the independent reviewer to the Order in Council; following the established process for agreeing posts that should be subject to pre-appointment scrutiny by Select Committee without the need for legislative provision in the Bill; and compiling a list of all the concerns raised in both Houses to put before the independent reviewer, who will also meet with parliamentarians who have raised areas where they think their work should be focused.

I have also agreed with the noble Baroness, Lady Finn, that, because she really enjoys debating with me at the Dispatch Box, the initial statutory guidance will be subject to a take-note debate in Grand Committee after it is laid in Parliament. Together, the amendments ensure that Ministers are accountable for the use of the powers in Part 1 of the Bill and show how they are delegated. In places, they build on processes that would already have been in place but that we have brought forward into the Bill. I am grateful for the constructive discussions with the noble Baroness, Lady Finn, on these amendments and I am pleased to put in place these commitments. I hope this is sufficient to address the concerns of noble Lords and that they will agree to the Motions not to insist from the other place.

Finally, I turn to a minor and technical amendment the Government made to Lords Amendment 75 to Schedule 2. Amendment 75A simply ensures that authorised investigators are captured within the regulation-making power set out by Schedule 2, if or when the powers conferred under Part 1 of the Bill are transferred to another public authority that is not within the scope of the Ministers of the Crown Act 1975, or if the PSFA is set up as its own statutory body. It does not change the use of any powers laid out within the Bill. I hope noble Lords will support the Motion from the other place and I beg to move.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Government for listening to some of the points made by the noble Baroness, Lady Finn, myself and others. We are dealing here with Motions A, B and D, so let me deal with Motion A first. The Lords amendment aimed to give more powers to Ministers to take investigatory or enforcement action and we voted against it in the Lords due to it giving, in our view, too many powers to the Minister.

The Government have, to some extent, listened, and the amendment in lieu reaches what I would describe as a middle ground. That seems to be, as far as I know, acceptable to other people who will be speaking in this debate, I believe—coming first, I cannot be certain of that. On that basis, on these Benches, we are willing to accept the amendment in lieu in Motion A.

Turning to Motion B, Lords Amendments 30 and 31 relate to limiting the extent that powers can be used and ensuring that, when powers are used, they are properly reported. As noble Lords will know, we supported the amendments in the Lords and have noted again what the Government’s reaction has been. I am reasonably pleased at the reaction. The amendments reach, as I said on the other amendment, a middle ground, and from these Benches we are minded to accept the amendments in lieu.

Turning to Motion D, the powers to establish the PSFA and transfer functions, the Lords amendment created the Public Sector Fraud Authority. The amendment in lieu is a tidying-up amendment, as the noble Baroness said, and is uncontroversial. On these Benches, we accept that amendment in lieu. I look forward to the other amendments in due course.

[Baroness Finn (Con)]

My Lords, as we consider the amendments brought forward by the Government, I want to begin by recognising the diligent and constructive work undertaken across this House throughout the passage of this Bill. We have examined almost every clause in detail, identified weaknesses and proposed sensible, proportionate reforms. I think it is fair to say that, as a result, the Bill before us today is stronger, fairer and more workable. The Government have listened to many of the concerns raised, not least from these Benches and from the noble Lord, Lord Vaux of Harrowden. I want to put on record our appreciation for the collaborative spirit in which the Ministers, the noble Baronesses, Lady Sherlock and Lady Anderson, and their officials have engaged.

--- Later in debate ---

[Lord Vaux of Harrowden (CB)]

My Lords, as we have just heard, Motions C, E and F relate to amendments that I tabled on Report, and which the House very generously supported.

I will start with Motion C, which relates to Amendment 43. This would have broadened the scope of the independent review of the use of the eligibility verification notice process powers to consider the costs to the banking industry and the potential impact on vulnerable people. I regret that the Government did not feel able to accept that, and I am very grateful to those in the other place who supported the amendment so passionately, including quite a number on the Government’s own Benches.

However, I thank the Minister for the assurances she has given, especially in relation to the publication of a revised impact assessment, and her offer of the opportunity to meet with the independent reviewer once they have been appointed. I also take comfort from the point made by the Minister in the other place, repeated just now by the Minister, that the amendment the Government made on Report, which requires that the use of EVM powers be necessary and proportionate, will potentially allow the independent reviewer to consider impacts on vulnerable people if concerns arise. Therefore, while I would have preferred that my amendment be accepted, on the basis of these assurances I will not push it further.

Turning to Motion E, this Lords amendment would have made it clear that the existence of an eligibility indicator alone could not constitute reasonable suspicion, and that no action to suspend or change a benefit or utilise the extensive investigation powers that the Bill creates could be taken unless the information had first been reviewed by a suitably qualified person. This has been made even more important when we read about how HMRC has behaved recently in respect of child benefit. HMRC used incomplete travel information and stopped paying benefit solely on the basis of that information, unfairly impacting up to 23,500 people. That is a tangible example of how information used in isolation, without proper checks or review, can cause real and unfair harm. It is essential, therefore, that EVM information alone should not be used to take decisions that may have a serious impact on someone who may be entirely innocent, and that all decisions should be reviewed by a person so that we do not see something similar happening at DWP.

Although they do not accept the original amendment, the Government have tabled amendments 84A and 84B, which get us most of the way there. The authorised officer or the Secretary of State must have regard to all the information they have, including, importantly,

“information that is not EVM information”.

Some concerns have been raised in the other place and outside about what would happen if the only information the DWP had was EVM information. The Minister touched on that, but it would be helpful if she could comment a bit further when she winds up. Is there any situation where, because EVM information is the only information the department has, that could be the only basis for a decision?

Otherwise, these amendments in lieu substantially cover the concerns that were raised in this House, especially when we also take account of the Government amendments passed by this House on Report that restrict the use of the EVM process so that it may only be used to assist in identifying incorrect payments. I thank the Minister for her continuing constructive engagement in trying to meet the concerns raised by this House, and I urge noble Lords to accept Amendments 84A and 84B in lieu, and to support Motion E.

Finally, I turn to Motion F. The Bill grants a number of police powers to DWP officials, including the power to use reasonable force. The original Amendment 97 would have restricted the use of reasonable force by DWP officials to force against items and property—the example we have been given many times is breaking into a filing cabinet—rather than allowing force against people.

Again, I am grateful to the Minister for the Government amendments in lieu. These, in effect, turn the amendment around. Rather than taking the general power to use reasonable force but then restricting it to items and property, as the original amendment did, the amendments in lieu removed the general power to use reasonable force but introduce a bespoke power for DWP officials to use reasonable force only against items and property. Ultimately, that is very much the same thing.

I am pleased that the amendments in lieu retain the oversight of the Independent Office for Police Conduct, which is an important safeguard. With thanks to the Minister for her engagement on this, I urge noble Lords to accept the amendments in lieu and support Motion F.

With these amendments and the others that have been proposed, the safeguards around the use of the significant new powers that the Bill will give to the Cabinet Office and DWP have been strengthened. This is a very good example of how this House can improve legislation. I thank all noble Lords from all sides of the House who have been so supportive and constructive throughout the process, and particularly the Ministers, for their always constructive engagement throughout, which has allowed us to make real improvements to the Bill. It now achieves a better balance between achieving what is intended—to reduce fraud and error—while being fairer and better protecting vulnerable people.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for her constructive approach. It has not always answered all the questions but it has gone a long way towards that. I put on record our thanks to the noble Lord, Lord Vaux, for his constructive initiatives on which some of these amendments are based, and to the noble Baroness, Lady Finn, for all the informative stuff that has come from her.

I will speak first to Motion C. The Lords amendment was agreed upon by this Chamber to ensure that the impacts of this legislation on the most vulnerable in society are properly considered by the Secretary of State. While I stress that the Government have been forthcoming in offering compromise solutions, it is disappointing that they did not offer any real alternative solution. I was pleased to see the Liberal Democrat Benches in the other place push this issue to a vote and was disappointed that neither Labour nor the Conservatives supported this amendment. Disappointing as this is, I appreciate that the Government and Parliament have made their mind up on the issue and I am not going to break ranks and push a vote on it.

The Bill introduces an independent review on the use of eligibility verification powers. This Lords amendment expands the scope of the review to ensure that the costs are proportionate, to consider whether the exercise of the Secretary of State’s powers in Schedule 3B has had any adverse effect on vulnerable people, and to consider the ability of benefits claimants to access banking services. As noble Lords know, we on these Benches supported the Lords amendment. The Government have, sadly, disagreed, saying that it is not appropriate to make further provision about reviews relating to eligibility verification measures. While it is disappointing that the Government have not looked to be as constructive as we would like them to be, it is clear that we are unlikely to make further progress on this than that which we have reached. On that basis, I do not intend to challenge the Commons response.

I turn to Motion E. The use of reasonable force— a point I raised a lot at earlier stages—lies at the heart of guaranteeing civil liberties for all citizens and ensuring that no innocent party is treated unfairly and without cause. The original Lords amendment would have prevented authorised officers using force against a person during entry, search and seizure. I am pleased that the amendment in lieu continues this principle, while explicitly outlining that it is only constables who are trained in the proportional use of force who will be able to use reasonable force in respect of persons. We spoke about force on filing cabinets, but it is persons we are really concerned about.

We on the Liberal Democrat Benches will therefore support the Government’s amendments in lieu, but we will continue to make sure that the powers granted in this legislation relating to the use of force are used proportionately. We will carefully scrutinise the independent review that has been promised on the exercise of the functions, including the reasonable use of force, which the Secretary of State must commission and later publish. I hope the Minister will give us some idea of when that is going to be published. Any assurance the Minister can give the House on this independent review and when it will come will be very much appreciated.

On that basis, we welcome the constructive comments that the Government have made and the points that the noble Lord, Lord Vaux, made in introducing these amendments. We do not intend to press further on these issues.

[Baroness Finn (Con)]

My Lords, as we come to this final group of government amendments on the DWP section of the Bill, I begin by recognising the real progress that has been made on the DWP use of PACE powers and eligibility verification provisions—progress that has been driven by this House’s detailed scrutiny and the persistence of Members from all sides, not least the noble Lords, Lord Vaux of Harrowden and Lord Verdirame, and the noble Baroness, Lady Fox of Buckley. Throughout, we on these Benches have sought to ensure that the Bill strikes the right balance—strong on fraud prevention but fair, proportionate and mindful of its impact on vulnerable people. We therefore welcome the Government’s concessions in several areas, which have come about as a result of the sustained pressure applied by this House.

Amendment 43 concerns the eligibility verification mechanism. Our overriding concern has been the impact on vulnerable individuals and those at risk of financial exclusion. The system must not lead to people being debanked, subject to excessive deductions or left unable to access essential services. We are pleased that the Government have now committed to an assurance that Parliament will be able to engage with the independent reviewer after Royal Assent to explore these issues, and that the concerns that we have raised here and in the other place will be formally shared with the reviewer.

I am grateful that the Minister in the other place claimed the may/must change as a government initiative—imitation, after all, is the sincerest form of flattery—but it was in fact first proposed from these Conservative Benches. That is another example of the constructive scrutiny that has improved the Bill, and I am sure that the Minister will be keen to correct this on the record.

We welcome the Government’s concession in Amendments 84A and 84B. These make it clear that human decision-makers must have regard to all relevant information and ensure that human judgment remains embedded in the process. This protects against the risks of mechanistic or AI-driven decision-making, not only now but into the future as these technologies evolve and become more widespread. This is a sensible safeguard and a direct result of arguments advanced in your Lordships’ House.

Regarding PACE powers, I am pleased that the Government have finally accepted that DWP investigators should not be able to use reasonable force against individuals. This corrects a serious drafting flaw in the text of the Bill and aligns its provisions with the Government’s stated policy. It makes the law safer, clearer and more coherent. I really thank the Minister for her valiant efforts in this area. However, it is surprising, especially given that it protects the integrity of the Government’s stated policy, that it should have required so much persuasion from your Lordships’ House for the Government to get to this position.

As a result of the changes made to the Bill in this House, the Public Sector Fraud Authority and the DWP will be better equipped to act against frauds while operating within a framework of stronger safeguards. Because of efforts on these Benches and others, the PSFA will be proactive but also more accountable and transparent. As a result of the work of the noble Lord, Lord Vaux, and other noble Lords, vulnerable people will be better protected and represented in the independent review, and the use of artificial intelligence will be subject to clearer human oversight. Fundamentally, the use of PACE powers will be strictly limited to property, not people.

Having said all that, there are still gaps in the Bill. The Government have yet to engage seriously with the growing problem of sickfluencers, online figures who use their platforms to encourage and advise people to make fraudulent benefits claims. Unless the Government begin to analyse and address this issue, they risk falling behind and missing the opportunity to tackle a significant driver of future fraud risk. We welcome the progress achieved, but we will continue to raise the issues we have championed during the passage of this Bill and keep a watchful eye on how its provisions are enacted. The Bill now better reflects the need to protect the public purse from fraud and the duty to safeguard the public. It leaves your Lordships’ House in a far better place than when it arrived and demonstrates once again, as the noble Lord, Lord Vaux, has said, the constructive and vital work of this House.