Public Authorities (Fraud, Error and Recovery) Bill
Debate between Lord Palmer of Childs Hill and Baroness Finn
Baroness Finn (Con)
My Lords, this is a serious Bill. It deals with a serious problem. Fraud against the taxpayer is not a footnote. It is not a rounding error. It is a threat to public trust and the integrity of government. We on these Benches support the purpose behind the Bill. We want it to succeed. We want it to be strong, clear and capable of making a difference from the moment it takes effect. In the days ahead, we will approach Committee with purpose. We will work with the Government where we can; we will press them where we must. Our proposals will be focused, practical and aimed at making the Bill stronger.
At Second Reading, we raised a number of issues. These remain our priorities. We want proper oversight of the powers granted to the Public Sector Fraud Authority. We want strong review mechanisms. We want protection for those who may be exposed or vulnerable and we want recognition of the cost burden placed on those who are asked to deliver these powers. These concerns are not confined to one party or one corner of the House; they are widely shared. They reflect a simple truth: good intentions are not good enough. If we are to defeat fraud, we need sharp tools, clear lines of responsibility and laws that do not fold under pressure. That is the task before us and the spirit in which we will proceed.
We will be starting our Committee stage discussion by covering some of the proposals put forward in relation to the Cabinet Office. We broadly support the intention of these measures, but we have several key concerns and suggestions around the Bill as it stands. First, the role of the Public Sector Fraud Authority remains ill defined, particularly in relation to other public authorities. At present, the PSFA can only act when invited by the very bodies it is supposed to scrutinise. This is not effective oversight; it is an invitation to avoidance. Departments can simply choose not to refer themselves.
More importantly, if they lack the legal powers to investigate fraud internally, these powers should be given to them directly. If they already possess them but fail to act, a central authority merely serves as a convenient place to offload difficult or politically awkward cases. Yet the Bill does not address this gap. It does not strengthen departments or build capacity at source. Instead, it hands sweeping new powers to the Cabinet Office and places responsibility for tackling fraud across the entire public sector in the hands of a team of now just 25 civil servants. That is not a credible model. It concentrates accountability at the centre without providing the means to exercise it effectively and it leaves the rest of the system with little incentive to act.
PSFA officials are handed sweeping PACE powers with no direct authorisation or legal requirement to pass a reasonableness test and can refuse to undertake an investigation with no duty to report the reasons why. The risk is obvious. Complex fraud will be passed from hand to hand, referred and re-referred, until it disappears altogether into the undergrowth of government.
Secondly, the Bill grants the Public Sector Fraud Authority powers of remarkable breadth. These include the ability to obtain information notices, issue civil penalties, apply for search warrants under the Police and Criminal Evidence Act 1984 and extract funds directly from bank accounts by order. These are not judicial decisions; they are executive powers exercised administratively.
Critically, the Bill allows these functions to be exercised not by Ministers but by civil servants, as junior as high executive officer grade, acting as authorised officers under Clause 66. There is no requirement for ministerial sign-off and, in many cases, no real mechanism for contemporaneous parliamentary scrutiny. The only oversight comes in the form of an independent reviewer appointed by, and reporting to, the same Minister whose powers they are reviewing. That reviewer cannot intervene, stop action or compel disclosure. They merely write a report after the fact, which the Minister is then required to publish. That is not accountability; that is delegation without control, power without visibility and scrutiny without consequence. A system that concentrates coercive legal powers in the hands of junior officials outside of clear ministerial direction not only is constitutionally careless but risks creating a grey zone of enforcement where power is exercised without responsibility and mistakes cannot be traced back to those elected to answer for them.
Ensuring that we find the right balance, where we develop the PSFA into an authority that has proportionate powers, a credible anti-fraud function and proper oversight, is the objective of our amendments today. Our first amendment, the purpose clause, is intended to ensure that the use of sweeping powers in the Bill is limited only to the purpose of identifying and preventing fraud and the recovery of public funds lost through fraud and error, as well as to strengthen mechanisms to prevent this in the future. We believe that it is a sensible, proportionate amendment that will ensure that the powers in the Bill are used only in pursuit of that explicit objective. A legal protection against the abuse of powers is a responsible safeguard and, given the extent of some of the powers granted in the Bill, anchoring that to the core purpose on which noble Lords across the House agree is, in our view, a reasonable measure.
Our role as the Opposition, as I said, is to question the Government, to challenge them on their reasons and their rationale and to make suggestions on how to improve legislation. I look forward to this Committee day, and those upcoming, to play that role. I beg to move.
Lord Palmer of Childs Hill (LD)
My Lords, there is really not a lot to say at this stage. We support the purposes of the Bill. Obviously, it is not meant to be a contentious Bill, but the interesting thing is the fine line that it draws between chasing people who have made honest mistakes and those who enter into fraud. As with income tax—if we still use the old words from my accountancy days—the difference between evasion and avoidance is sometimes a very thin line. We will explore where you draw that line in terms of how you chase people for mistakes that have been made, perhaps on purpose or perhaps in error. We look forward to the progress of the Bill to see where those lines are drawn.