Public Authorities (Fraud, Error and Recovery) Bill
Viscount Younger of Leckie ExcerptsWednesday 18th June 2025
(4 days, 9 hours ago)
Grand CommitteeRead Full debate Public Authorities (Fraud, Error and Recovery) Bill 2024-26 View all Public Authorities (Fraud, Error and Recovery) Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 96-I(a) Amendments for Grand Committee (Supplementary to the Marshalled List) - (3 Jun 2025)
Lord Palmer of Childs Hill (LD)
My Lords, as we consider Amendments 92 and 93 from the noble Lord, Lord Sikka, moved by the noble Lord, Lord Vaux, on his behalf, it is important to reflect on the balance between effective fraud prevention and the safeguarding of individual rights. Amendment 92 proposes that investigators’ powers of entry, search and seizure should be exercised only when accompanied by an authorised member of the police force. This approach could provide an additional layer of oversight and reassurance to the public, but it may also introduce operational complexities that could affect the speed and efficiency of investigations into public sector fraud.
Similarly, Amendment 93 seeks to require court authorisation before the Secretary of State can appoint authorised investigators. This would introduce judicial oversight, which is a well-established safeguard in many areas of law enforcement, and it could help to prevent the potential misuse of investigatory powers. But it may also add—as I said before—procedural steps that could delay urgent investigations, possibly hindering the recovery of stolen public funds, which is what this debate is all about.
Both amendments raise important questions about proportionality and accountability. I look forward to hearing the views of colleagues and the Minister on how best to achieve the right balance in this legislation, and I await their contributions.
Viscount Younger of Leckie (Con)
My Lords, I also wish to be brief and will cut down my notes, but this is a good opportunity to raise a number of points. I am very pleased that the noble Lord, Lord Vaux, has spoken to Amendments 92 and 93, as supported, or added to, by the noble Lord, Lord Palmer.
I share the principle that underpins Amendment 92 in the name of the noble Lord, Lord Sikka—that the powers of entry, search and seizure provided for in Clause 76 must be exercised responsibly and proportionately, with proper regard for the rights of individuals. However, my main point here is that, while the amendment aims to provide a safeguard by requiring investigators to be accompanied by a police officer when exercising these powers, I suggest that we need to balance that safeguard with a degree of practicality. If the use of these powers is deemed serious enough to require a police presence, one might reasonably ask an obvious question: why would the police not simply carry out the action themselves, under existing powers—I think that was the point that the noble Lord, Lord Vaux, made—rather than acting in an accompanying or supporting role? If these powers are to be used more routinely—for example, to support the investigation of lower-level but still costly fraud—do we risk placing a significant administrative and resource burden on our already overstretched police forces? I could say more on this, but I will not.
Amendment 93, also in the name of the noble Lord, Lord Sikka, seeks to insert an additional layer of judicial oversight into the appointment of authorised investigators by requiring that their authorisation is subject to court approval, rather than left solely to the discretion of the Secretary of State. Without going into the detail, I support the principle behind this amendment.
I will conclude by asking some questions of the Minister on process, which has been a consistent theme on this side in our previous four days in Committee. I am not expecting answers now; it is really to put down the questions along the themes that I have just spoken to. We have had some verbal reassurance from the Government that these powers will be used against property and not people. I am not quite sure how reasonable force can be applied against property but, more than this, it is clear from the text of the Bill that this is not legally guaranteed. Reasonable force could be wielded against people by DWP officers; I hope that the Government can provide more clarity on the balance of that. Can the Minister confirm that these powers could in fact be used against people, as well as property? That is quite an important point. Again, the argument is about whether the police or the DWP may be required. In addition, can she give us some more information as to why she believes these powers need to be granted to civil servants in the DWP?
I say again that the police are the recognised authority, who have legitimacy, in the eyes of the public, to exercise and apply PACE powers. I feel that the Government have a duty to defend, quite strongly, why they want to grant these sweeping powers to members of a government department such as the DWP. We have a police service for a reason: officers are trained, regulated and experienced in using these powers appropriately. If fraud is suspected, particularly at a serious level, is it not right that it should be investigated by the police and not delegated to civil servants?
My concluding comment is that we should be cautious about expanding investigatory powers without a clear and compelling case. My final question to the Minister is: what justification is there for bypassing the police? That plays into my main question, which is: whither the police and whither the DWP?
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.
Baroness Sherlock (Lab)
The expectation is that we will be dealing with different kinds of crime. We are talking about serious and organised crime, where we will go out looking for evidence. We believe we do need these powers. If there is another argument behind that I am happy to write to the noble Lord. I have explained why the DWP needs them, and we clearly do need them in these circumstances because without them we could not conduct this work. The DWP has lots of experience because we already do this work; the police just have to go out with us, to be there and to do the searching. So we know what we need and therefore we know that we need these powers. If there is anything else I can add on the PSFA, I will write to the noble Lord.
Viscount Younger of Leckie (Con)
The Minister may have just answered my question, which is a slightly opaque one, perhaps. Is it a good assumption that in any search of a property by the DWP when it suspects fraud, members of the DWP will always go prepared with the necessary back-up, including the police or members of the NCA, if they suspect it is going to be a challenging search—or is that wrong?
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 Palmer of Childs Hill (LD)
My Lords, as we turn to government Amendments 94 to 97, I wonder, as I always do when there are lots of government amendments to their own Bill, whether enough thought has gone into it in the other place.
I know that these proposals are primarily technical, with the key aim of simplifying the drafting of new Schedule 3ZD to the Social Security Administration Act 1992. Government Amendment 96 introduces a single clear prohibition on the seizure or examination of information of legal privilege. This streamlining could help to clarify the legal position for both investigators and those subject to investigation, ensuring that the Bill’s provisions are easier to interpret and apply in practice.
Clarity in legislation is always desirable, especially in complex areas such as fraud investigation, where the rights of individuals and the needs of public authorities must be carefully balanced. At the same time, it is important to consider how these amendments interact with the Bill’s wider objectives of safeguarding public money and equipping authorities with the tools needed to tackle fraud and error effectively. Ensuring that information which is subject to legal privilege is properly protected is a long-standing principle within our legal system. These amendments appear to reaffirm that commitment without substantially altering the Bill’s intent. I have no problem in agreeing with what should have been in the Bill at the beginning.
Viscount Younger of Leckie (Con)
My Lords, my remarks largely chime with those made by the noble Lord, Lord Palmer. The Committee will be relieved to know that this is my shortest speech. I offer some measured support for these amendments. They address the important principle of the protection of legally privileged material, and in a way that simplifies and clarifies the drafting of this part of the Bill.
The right to legal professional privilege is, of course, a cornerstone of our justice system. That principle should be unambiguous in legislation of this kind. These amendments seek to express that safeguard more clearly through a single consolidated position. There is certainly merit in that. A simplified and consolidated statement of the limitation on investigatory powers in respect of privileged material is likely to be easier to apply in practice and could reduce the risk of inadvertent overreach.
Baroness Sherlock (Lab)
My Lords, I am grateful for the support and take the chiding in the spirit in which noble Lords intended it.
Government amendments are a key part of the legislative process. Noble Lords will have seen them from time to time, allowing for the refinement and improvement of Bills as they move through Parliament. It is critical that the Bill’s provisions comply with the distinct legal jurisdiction of Scotland. Every effort has been made to ensure that this is the case. We have worked closely with the Office of the Advocate-General for Scotland and with officials in the Scottish Government.
Following an additional review of the Bill prior to Committee, the Office of the Advocate-General for Scotland identified the need for a minor amendment to ensure that the powers would operate in Scotland as intended. We felt it was important to make the law clear in the Bill. I am grateful for noble Lords’ grace on this.
“Consideration of vulnerabilities(1) The Secretary of State must have due regard for the external circumstances pertaining to a person under investigation in respect of the mental capacity, economic circumstances, and physical and mental health of the claimant, particularly where the claimant is or may reasonably be considered a vulnerable person.(2) For the purposes of this section, a "vulnerable person" includes, but is not limited to, individuals who—(a) lacks mental capacity within the meaning of the Mental Capacity Act 2005;(b) are in receipt of, or have been assessed as eligible for, support relating to mental or physical health conditions;(c) could be reasonably regarded as vulnerable to domestic abuse or coercion.(3) The Secretary of State shall ensure that a fair and reasonable assessment of the claimant's circumstances is conducted before any deduction is applied.(4) The assessment under subsection (3) may consider evidence provided on behalf of the claimant, including medical reports, financial information, and input from authorised support workers or representatives.(5) All decisions to deduct welfare payments shall be documented, with explicit reference to how the claimant’s vulnerability was considered. (6) The records under subsection (5) shall be made available to the claimant upon request and subject to audit by an independent body.”Member’s explanatory statement
This new clause would ensure that, before a deduction was applied, due regard was given to the wider circumstances and vulnerabilities of the liable person, which they would have to document, to be made available upon request by the claimant.
Viscount Younger of Leckie (Con)
My Lords, Amendments 99D and 109ZA are in my name. Amendment 99D seeks to ensure that, before a deduction order is applied, proper and fair consideration is given to the wider circumstances of the person under investigation, especially where there may be indicators of vulnerability. It is an amendment rooted not in obstruction but in principle and in pragmatism. It recognises that, if we are to give public authorities powerful tools to detect and recover fraud, we must also ensure that those powers are exercised with fairness and, crucially, the full understanding of the person’s situation.
Many individuals who fall under investigation may be living with complex challenges. I know that we touched on these matters earlier in Committee, but some of these issues are worth repeating. Some individuals may lack the mental capacity to understand what is being asked of them; others may be suffering from physical or mental health conditions that impair their ability to manage forms, deadlines or correspondence; and still others may be experiencing domestic abuse, coercion or forms of control that make it difficult or even impossible for them to make independent financial decisions. These people do not, certainly as yet, have a deputy, proxy or power of attorney in support. They remain in sole charge of their accounts.
I am sure that noble Lords across the Committee would welcome reassurance from the Government, first, on how these people will be identified and, secondly, how the system and process will cope and adapt to reflect their needs and, where needed, to protect them. These are not on-the-edge cases; they are realities that front-line officials in the department and around the country encounter every day. If we are not careful, precisely these individuals may end up most at risk of enforcement action—not because they are wilfully defrauding the system but because they simply did not or could not understand what was expected of them.
We must therefore be careful to differentiate error from intent to defraud. There will be cases where a person under investigation may not have understood what he or she was supposed to be doing but is technically fraudulent. This is exactly what this amendment seeks: it would require that the Secretary of State has due regard to the mental capacity, economic circumstances and health of the claimant, especially where there are indicators of vulnerability. It would also ensure that a fair and reasonable assessment of the person’s circumstances is conducted before any deduction is applied. I should say that this is not about softening our stance on fraud; it is simply about targeting it accurately and responsibly.
The amendment also places emphasis on the evidentiary basis of decisions. It allows for medical reports, financial statements and input from support workers or advocates to be taken into account. Importantly, it also creates a clear paper trail by requiring that decisions to deduct are documented with reference to how the claimant’s vulnerabilities were considered. That documentation must be made available upon request and be subject to independent audit. I argue that this is important and not a form of bureaucracy—before noble Lords get up.
So we come back to understanding how the test-and-learn operation and exercises will take account of this. Could the Minister give us some detail on how such cases will be identified and on the other questions that I asked earlier? I also ask her to help the Committee to understand what the Government will access in terms of information relating to these wider circumstances. We see it as vital that this information is taken into consideration.
At this stage of the Bill, it is also right that we ask what kinds of protections the Government intend to put in place for vulnerable people generally. This extends to the Cabinet Office aspects of the Bill. I realise that my noble friend Lady Finn may have raised these questions earlier, but what process will be followed to ensure that mental capacity is assessed? What training will investigators have to recognise signs of coercion or distress, and what mechanisms will be available to review decisions, particularly where someone’s vulnerability has been overlooked? These are not academic questions; they go to the heart of what kind of enforcement regime we are creating and how confident the public can be that it will act justly, especially where people are least able to defend themselves.
I turn to Amendment 109ZA. It is well established that the Government themselves recognise that disabled people face higher living costs than their non-disabled counterparts. We have had many debates in the Chamber that have highlighted these issues. We know that these costs are not optional; they are the result of essential needs—specialised equipment, personal care and accessible transport—and higher utility bills, among other things.
Viscount Younger of Leckie (Con)
My Lords, I am very grateful for the thoughtful and supportive contributions from the noble Baroness, Lady Fox, and the noble Lord, Lord Palmer, which we have heard throughout this debate. As it draws to a close, I want to return to the fundamental values that underpin Amendments 99D and 109ZA.
I will not repeat everything I said before but, briefly, these amendments are not about hampering fraud enforcement but about ensuring that where serious powers are granted—powers that allow the state to intervene directly in someone’s financial life—they are exercised with the kind of care, discretion and humanity that should be the hallmark of any public authority in a just society.
Amendment 99D asks a simple but fundamental question: how do we treat those whose circumstances may mean that they did not or could not understand or apply the rules? As the Minister herself said, rightly, we all want the same thing. Fraud must be pursued, but, as the noble Baroness, Lady Fox, alluded to, we must not collapse the distinction between error and intent, between misunderstanding and malice. The law and those who enforce it must have the tools to see the difference.
Amendment 109ZA builds on this principle of proportionality; it addresses a reality that we all know—that disabled people may face higher costs of living by virtue of their condition. As I said earlier, the direct deduction order, if applied too bluntly, can turn an already stretched household into one facing crisis, and we must ensure that these powers are used with sensitivity. This is exactly what my Amendment 109ZA provides: a measured and sensible requirement.
I appreciate the very sensible explanations that the Minister produced. I appreciate what she said and the fullness of her remarks. I shall make sure that I read all her remarks in Hansard to see whether they satisfy the concerns expressed in the amendments that I have tabled. I appreciate the fullness of what she has produced. Both these amendments provide something important. They place a protective guardrail on otherwise broad and serious enforcement powers. They ask us to apply judgment, not just rules, and to recognise vulnerability and not just liability. Separately, I also appreciate the safeguards that the Minister spelled out towards the end of her remarks.
Broadly, people will support fraud enforcement when they believe it is fair, and they will support recovery powers when they trust that those powers will not be used to punish the vulnerable alongside the guilty. This is where the balance needs to be struck.
I shall also look at Hansard because the Minister gave us a helpful explanation in terms of the balance required in the obligations placed on the DWP, and at whether in fact my amendments are too onerous or a bit overreaching. I would like to reflect on those questions. We may come back on Report with something, or we may not. In the meantime, I beg leave to withdraw the amendment.
Lord Palmer of Childs Hill (LD)
My Lords, I am proud to support Amendments 102 and 122, which I tabled alongside the noble Baroness, Lady Fox of Buckley. Amendment 102 proposes that the power to make direct deduction orders should rest with the courts following an application from the Secretary of State, rather than allowing the Secretary of State to impose such orders directly. This change would introduce an important layer of judicial oversight, ensuring that deductions from individuals’ bank accounts are made only after careful, independent consideration of the evidence and the circumstances.
Although the Bill includes safeguards such as affordability and vulnerability checks, as enumerated by the Minister, and rights to representation and appeal, placing the final decision in the hands of the court would further strengthen public confidence in the fairness and proportionality of the debt recovery process. Amendment 122 is consequential on this approach, ensuring consistency throughout the Bill. By requiring court approval for direct deduction orders, we uphold the principle that significant intrusions into personal finances should be subject to the highest standards of scrutiny and due process. This is particularly important given the potential for hardship and complexities that can arise in cases involving joint accounts or vulnerable individuals. I hope the Minister can address that when she replies.
These amendments do not seek to undermine the Government’s legitimate efforts to recover public funds lost to fraud or error but rather to ensure that such efforts are always balanced with robust protections for individual rights. I urge fellow noble Lords to support these amendments as a constructive step towards a more transparent and accountable system, and I am very pleased to have signed this amendment in the name of the noble Baroness, Lady Fox.
Viscount Younger of Leckie (Con)
My Lords, I have a degree of sympathy for the amendment in the name of the noble Baroness, Lady Fox, and the noble Lord, Lord Palmer of Childs Hill. It touches on a value that I know many of us across this House instinctively support: namely, that powers which interfere with the person’s finances should be subject to proper oversight and scrutiny—in other words, by a court and not by a politician. Let us start with that.
The principle underpinning the amendment is sound. When the state seeks to impose a direct deduction from an individual’s account, that is no small matter. It affects not just policy outcomes but people’s daily lives, and we should never lose sight of that. Much was spoken about that in earlier groups. I am sure that the noble Baroness, Lady Fox, and the noble Lord, Lord Palmer, have suggested introducing a requirement for the court to authorise such a deduction because it reflects the gravity of that particular action.
However—there is a however—although I support the sentiment, I have reservations about the practicality, and I am afraid that the remarks from the noble Baroness, Lady Bennett, have increased my concerns. Requiring every direct deduction order to go through the courts will prove burdensome to the judicial system and may risk making this part of the regime so slow and administratively heavy that it becomes inoperable in practice. That would not only undermine the Government’s legitimate aim of tackling fraud effectively and speedily, but could also result in delays and uncertainty for claimants and public authorities alike. Just to be helpful to the Minister, can she enlighten us on the current state of the backlog in the courts—which is a message she might expect me to give—and how, therefore, Amendment 102, for example, might not be helpful to the process?
I have another question about an appeals process. Everyone, I believe, has the right to an appeal, but how would this work, given the status of the courts? That is a question for the Minister to ponder over. We are, after all, talking about a mechanism intended to recover public money in a targeted and efficient way. If every deduction, regardless of scale or complexity, must first pass through court proceedings, we risk erecting a barrier that stifles the entire process. There must surely be a way of reconciling the desire for oversight with the need for operational efficiency—a challenge that I lay down to the noble Baroness, the Minister.
So, while I cannot support the amendment as currently drafted, I agree that the principle of independent oversight should not be overlooked. There may be better ways of embedding that principle in the system through enhanced safeguards; clearer audit mechanisms; greater efficiency and speed—that is, in expediting the DDOs; and improving transparency around how deduction decisions are made and reviewed.
I recognise this from all who have spoken, and I have listened carefully to all the speeches. I believe that these amendments, and particularly Amendment 102, starts a valuable conversation; even if its solution is not quite the right one, its motivation certainly is. I hope that the Minister can reassure the Committee that the Government recognise the need for these powers to be exercised responsibly but also sensibly so that they can operate effectively, and that they are open to exploring proportionate mechanisms of accountability that simply do not grind the system to a halt, and if so—a very simple question to end on: what could this system be?
Baroness Sherlock (Lab)
My Lords, I am grateful for some really good questions. These are exactly the kind of questions the Lords Committee should be asking on these sorts of issues, and I hope to give decent answers.
Should I ever get round to writing a book, somewhere in the credits it will say “Definitely not a malign person”. I am very grateful to the noble Baroness for that. It is the best compliment I am going to have today —you have to take them where you can find them in this business—so I thank her very much.
Amendments 102 and 122, as we have heard, want to restrict the use of the direct deduction power to circumstances where a court has determined it necessary and appropriate. I thought the noble Baroness, Lady Fox, made her argument very clearly; I hope to try and persuade her that she does not need to press these amendments because I think we have a good case on this.
Baroness Fox of Buckley (Non-Afl)
It is very helpful for these things to be clarified. As noble Lords can see every time we are in Committee, I have so many pieces of paper, so I appreciate that and am not saying that I am on top of all the detail.
However, I think it is important, in the spirit of the way that the noble Lord, Lord Palmer, was motivated to support these amendments, that this is not just about the detail; there is an important principle here. I really liked the viral film mentioned by the noble Baroness, Lady Bennett of Manor Castle, because people do care about this Bill and what its impact will be, and we have to be able to answer all the questions as the legislators who are debating it. People know that we are involved in this, and I sometimes feel that it is unclear exactly what will be acquired by all these powers.
The problem with saying that these powers will hardly ever be used is that these powers are going in the statute book, so they can be used. I am not going to talk about bank statements again, but the reason I raised them on this group is because, before a DDO can be introduced, you have to check bank statements through the mechanism of the affordability checks that we will go on to discuss, and that is a breach of privacy. If we are giving the DWP the power to do this, we need to have a check. The way we have done that historically is to rely on the courts to take money. As this is related, I am trying to see whether this could be a useful check to make sure that these powers are not exploited.
We have plenty of time to go, so I think some of us may come back with a version of this amendment—potentially better worded—when we get to Report. It is not just to fly the flag for civil liberties but, as I think the noble Lord, Lord Palmer, said, a need to have trust in the system. If the Bill is to be taken seriously by people who do not just think that it is draconian and who do not do the caricatures that the Minister wants, it must be watertight in its safeguards and protections, as well as in the powers that it creates. Those two things have to live together; otherwise, it will be discredited before it even hits the statute book.
Viscount Younger of Leckie (Con)
I just want to pick up on something quite interesting that the noble Baroness said, which leads me to ask a question of the Minister. I am not expecting an answer now. It is to do with the capacity or number of cases. I have no idea how many DDO cases could end up going to the courts, but it may be more than the noble Baroness, Lady Fox, thinks. I am just reminded of my experience of the Child Maintenance Service: it looks at those people who we know can pay and who are not paying, and they go all the way to the courts. There are many thousands. I rest my case by saying that there is a danger that the courts could be clogged up, but it would help the Committee to have some idea, perhaps in writing, of the number of cases that would or could go to court as a consequence of these amendments.
Baroness Sherlock (Lab)
I will write to the noble Viscount. As he knows from his experience with the Child Maintenance Service, as each form of enforcement comes into view, more and more people simply pay without it being necessary, so a sort of funnel comes down. If we have any information about scale, I would be happy to write.
Baroness Fox of Buckley (Non-Afl)
Very briefly, I absolutely support the amendment. I raised some of my concerns when moving my amendment in the previous group. When I heard that bank statements could be requested, I thought it was not true and I kept having to check it. I thought, “This cannot be right”, because throughout the passage of the Bill we have been assured by the Minister, “Oh, no. We do not want any details. We are only going to have the name. There is no surveillance”. I then thought, “Oh my God, they can get the bank accounts of individuals, allegedly to check whether they have enough money in their bank account, saying that they are doing it only because they are being nice to them”.
I am of the generation who think that if you lose your bank account, there is serious jeopardy. In other words, I would never show my bank accounts around. I am paranoid about anyone seeing my bank accounts. I worry about that sort of thing, although it is not that I have anything to hide—just to note. As the noble Baroness, Lady Bennett, indicated, you can find out from people’s bank accounts what their politics are, their trade union affiliations and their sexual preferences —all sorts of things. On the idea that the DWP will not be looking at that but will just be checking how much money you have, it cannot do that. It is essential that we think twice about this.
These account information notices also apply to joint bank accounts. I know that we are going on to discuss joint accounts in a minute, but that means that those pots of intimate, private, sensitive and granular information held within a bank statement can be revealed about individuals who are not on benefits, who are not debtors, who are not involved at all—they simply share a joint account. I would like this removed from the Bill. It is too scary.
Viscount Younger of Leckie (Con)
My Lords, I thank the noble Baronesses, Lady Kramer and Lady Bennett of Manor Castle, for tabling this amendment. I recognise the spirit in which this proposal is made—a desire to ensure that the use of direct deduction powers is subject to proper scrutiny and does not override individual rights without appropriate justification.
However, I must express some serious reservations about the effect that this amendment would have. By removing the ability of the DWP to request relevant bank statement information from financial institutions before issuing a DDO, we risk undermining the very evidential foundation that should underpin the use of this power in the first place. If we are to give Ministers and their departments powers to recover money owed to the public purse—a legitimate policy objective that is supported on all sides of this Committee—we must also ensure that those powers are exercised responsibly and on the basis of proper evidence. Access to account information, under strictly controlled conditions, is part of what makes that possible. Without it, the risk is not simply inefficiency or delay. The greater danger is that deduction decisions could be made with incomplete or inaccurate information, leading to inappropriate enforcement action or simply to missed opportunities to recover legitimately owed funds. Neither outcome would serve the interests of fairness, nor would they deliver good value for public money.
We have heard throughout Committee about the importance of a system that is not only robust but proportionate and just. I entirely agree—as our amendments and interventions thus far have made clear. However, for a system to be proportionate, it must be informed, which requires access to evidence. I reiterate the concerns that we raised on these Benches at Second Reading. Schedule 3B (1)(2) (b)(i) makes it clear that an eligibility verification notice, which would serve to identify or help to identify fraud, can be applied only to the bank account
“into which a specified relevant benefit has been paid”.
As my noble friend Lady Stedman-Scott set out at Second Reading, we are concerned that this creates a substantial loophole which could be exploited by fraudsters who are, as the government amendments have suggested, able to find out whether they are being pursued by the DWP through an information request. This is a real issue. It seems a likely and obvious outcome that such a person could move money between the relevant account and another, held with different bank, to avoid scrutiny.
We submit that for this to be an enforcement regime, there cannot be any loopholes or workarounds which may permit a fraudster to hang on to the money that they have stolen from the taxpayer. As we stated at Second Reading, the Bill as set out suggests that the Government will be tied up in a legal bind, ensuring in statute that they cannot verify or ultimately pursue the recovery of funds that are not held within the account specified. However, with the right safeguards and with responsible communication of information, there is surely a way in which this regime can be constructed that is responsible and fit for purpose.
We believe that the Government must expand their capacity and ability to access further bank accounts held in the name of the relevant person to prevent them simply opening another account and moving money around, which, as the Bill is currently drafted, seems to be a clear and easy way for them to avoid both proper scrutiny and will prevent the money being recovered. Perhaps the Minister will say whether parallels can be drawn with the current system set out between HMRC and the banks for the recovery of tax resulting either from overpayments or tax fraud, which I am sure she will say works. That may be helpful.
Finally, I want to respond briefly to the concerns raised about whether these provisions amount to a snoopers’ charter—a charge that has been raised throughout the passage of the Bill. It is right that we scrutinise the scope of these powers carefully, but it is also important to be clear about what the Bill does and does not do. In our view, the Bill sets out defined and limited circumstances under which verification measures may be used. It cannot be doubted that an informed and fair decision on deduction orders can be reached only if it is grounded in accurate and up-to-date information. I believe that it is for the Government to make it absolutely clear in Committee how these safeguards on process will function in practice and how transparency and accountability will be maintained. I understand the sensitivities involved in accessing bank data. That is why these safeguards and oversight mechanisms are important.
With that, I hope that noble Lords will reflect on whether the amendment achieves that balance, and I look forward to the Minister’s response on how the very valid concerns that it speaks to can be addressed.
Baroness Sherlock (Lab)
My Lords, I am grateful to all noble Lords for their contributions. As we have heard, this amendment would remove the requirement for banks to provide information to the department in response to notices, including bank statements, for the purposes of making a direct deduction order. However, getting this information from banks, including relevant bank statements, is not only instrumental to the effectiveness of the direct deduction power—it is crucial as a necessary and important safeguard to ensure the affordability of deductions, which is why we cannot accept this amendment.
I remind the Committee that the recovery powers proposed under the Bill are ones of last resort. They are for those not in receipt of benefit or in PAYE employment who have other income streams or capital and who repeatedly refuse to engage with the DWP to agree an affordable repayment plan. Without the information shared by the bank, the DWP would have no means to consider the debtor’s financial circumstances and would therefore be prevented from meeting other obligations and vital safeguards in the Bill, such as establishing an affordable deduction rate and avoiding causing hardship.
Put simply, if we do not know how much money someone has, we risk taking more than they can afford to repay at that time. The DWP is working collaboratively with the Money and Pensions Service on “ability to pay” checks, using bank statements and, where possible, the standard financial statement principles, to prevent financial hardship. These checks will consider the debtor’s essential living expenses, such as housing and utilities, and the Bill provides that direct deduction orders must not cause the debtor hardship in meeting these expenses.
Using bank statements in this way allows the deduction to be affordable and fair based on the individual circumstances, rather than a blanket approach of leaving a set amount in the account which, if not set high enough, could prevent the debtor from meeting those essential costs. The information gathered through these notices is proportionate and other provisions in the Bill restrict the use of bank statements obtained under this power. They are solely for the purposes of recovering the money that is owed. I say to the noble Baroness, Lady Fox, that it is a legal requirement not to use the information for any purpose other than debt recovery. That is spelled out in paragraph 3(10) of new Schedule 3ZA, inserted by Schedule 5 of the Bill.
I also remind the noble Baroness that all this can be avoided, including obtaining information from a debtor’s bank, if the individual agrees to get in touch to discuss and agree an appropriate repayment plan. In that case, we will not need bank statements because we can talk to them and ask for appropriate evidence, and they can provide evidence of other kinds, if that is sensible.
I will just pick up on a number of things. We are not interested in looking at what people spend their money on. It is worth reminding the noble Baroness, Lady Fox, and the Committee that we have said different things at different times because there are different measures in the Bill. For the EVM over here, there is no transaction data—absolutely not, under any circumstances—and I say to the noble Viscount, Lord Younger, that we are looking only at the bank account into which we pay benefits. Fresh sentence: over here, the DWP’s debt recovery powers are aimed at different people, who are not on benefits as, by definition, the EVM is only for those on benefits. It is aimed at people who are not in PAYE employment, who owe the department money and who will not engage. If at least four attempts have been made to contact them but they simply have not got in touch, we can start to use the powers. In that case, we do have the power under our debt recovery powers to go to any bank account that they have; we are not limited to the bank account into which we pay benefits. As I have just said, we are not interested in looking at what people spend their money on. The power can be used to recover debt only in cases where somebody is not in receipt of benefits, as I have described.
Lord Palmer of Childs Hill (LD)
My Lords, the amendment seeks to ensure that, before any direct deduction order is made under this schedule, the Secretary of State must consider the effect of such an order on any person who is a victim of domestic abuse, or whom the Secretary of State reasonably believes to be at risk of domestic abuse.
While the Bill rightly includes very important safeguards, such as affordability and vulnerability checks, and limits on the amounts that can be deducted to protect debtors from undue hardship, these general measures may not provide sufficient protection for those experiencing or at risk of domestic abuse, whose circumstances are often uniquely precarious and complex. Victims of domestic abuse frequently face financial control and instability, and the imposition of a direct deduction order could inadvertently place them at greater risk, either by exacerbating economic hardship or alerting an abuser to their financial situation. It is therefore essential that the Secretary of State has a specific statutory duty to assess the impact on this particularly vulnerable group before any order is made. By adopting this modest amendment, we would strengthen the Bill’s existing safeguards and ensure that the most vulnerable are not further disadvantaged by well-intentioned recovery mechanisms. I urge noble Lords to support the amendment in the interests of justice, compassion and the protection of those at risk. I beg to move.
Viscount Younger of Leckie (Con)
My Lords, I offer my strong support for Amendment 109, tabled by the noble Lord, Lord Palmer. It proposes a vital and compassionate safeguard that ensures that, before any direct deduction order is made, proper consideration is given to whether the individual involved is a victim of domestic abuse—or certainly at risk of it.
We know that domestic abuse too often includes economic and financial control. Perpetrators may take over access to bank accounts, manage benefit claims in their partner’s name or use coercion to extract money. For victims in these circumstances, a deduction order made against a joint or controlled account is not just a technical enforcement step but can be catastrophic and expose them to further harm, deepen their financial insecurity and reinforce the very cycle of abuse that they are trying to escape. The amendment puts in place an essential duty that, before such a deduction is imposed, the Secretary of State must ask a basic question: is this person safe? Are they vulnerable specifically to domestic abuse? Could such action cause caused further harm? I am sure the Committee will realise that these comments are not new. This is not about creating loopholes but about making sure that we do not inadvertently punish the very people who most need our protection. If our system is to be just, it must distinguish between those who are deliberately defrauding the system and those who are themselves being defrauded, manipulated or coerced in private and invisible ways.
I fully recognise—others may raise this point—that this kind of information is not always easy to obtain. As we know, domestic abuse is often hidden, and victims may be reluctant or unable to disclose it. But that is not a reason to avoid the responsibility. On the contrary, it is precisely why we must build protective considerations into the decision-making process. So, if a red flag is raised—whether through third-party evidence, existing support services or patterns in the account—the system must be capable of pausing, asking the right and necessary questions and adjusting course. That is surely not an undue burden; it is what we should expect of a responsible, modern enforcement regime.
Of course, I also note that the Government already have duties under the Domestic Abuse Act 2021—I expect we will hear this from the Minister—and under the wider Equality Act to consider how their decisions impact vulnerable groups. But this amendment gives practical effect to those duties in the specific context of direct deduction orders. It does not create new rights out of thin air; it reinforces and operationalises obligations that the state already carries.
So I ask the noble Baroness two questions. In the system and process designed, and having reached proof of concept with the banks—at least on two occasions; I refer back to previous comments—who is responsible for recognising these issues in respect of account holders? Is it the banks? To what extent do they know such detail about their account holders? Or is it the DWP? Is it more likely to know of such matters? Obviously, in the discussions leading up to and beyond the decision to give out benefits, such issues surely would have emerged. Perhaps the Minister can enlighten us on the precise responsibilities here.
Perhaps the Minister can also confirm that the banks would not see the analysis of vulnerability as a key part of their responsibility—that is linked to my previous point—but that their role is simply to raise a red flag with deliberately limited data, as has been outlined, where there is that match of an account holder in receipt of benefits who also has £16,000 or more in an account.
The final question, which chimes with questions asked on perhaps day 4 of Committee, is: how often are such checks carried out by banks, as requested by the DWP? Or—I need to be put right again; forgive me—is the algorithm such that a flag is raised on a 24/7 basis by an algorithm that does a match? Then a report is given to the bank’s responsible person—let us call him the banking manager.
There is a thread running through this debate about how to balance power and protection. Indeed, it is an issue on which noble Lords across the Committee agree; therefore I warmly welcome this amendment from the noble Lord, Lord Palmer, as it provides us with another opportunity to test out the Government and raise our concerns. This amendment is principled, proportionate and practical. I hope the Government will take it seriously, in the spirit it is meant, and reflect carefully on the values it enshrines. I believe it gets to the very essence of what the Bill is about. With that, I look forward to the answers from the Minister.
Baroness Sherlock (Lab)
My Lords, I am grateful, as ever. The subject of Amendment 109, put forward by the noble Lord, Lord Palmer, is very much as it was in the fourth group, with the earlier amendments in the name of the noble Viscount, Lord Younger. The Committee agrees on the objective in that area and we are simply going to talk about the best way to achieve that.
I thank the noble Lord, Lord Palmer, for raising this issue but again, for reasons not dissimilar to those articulated earlier, his amendment is not the best way to achieve this. However, I hope I can give him the assurance that he is looking for.
The DWP very much understands the importance of this issue. The noble Viscount is right that we have statutory obligations, but it is also embedded in the department. All our front-line staff are trained in addressing the issue of domestic violence, the training is regularly refreshed and we engage with stakeholders: the department take it very seriously.
We are committed to continuing to support victims and survivors of domestic abuse whenever they interact with the department. We have experience in this area, as well as existing guidance and processes for supporting victims of domestic abuse. As I say, the training our front-line management staff receive includes assessing affordability and identifying and dealing with vulnerable customers.
My officials have been looking in detail, specifically at how victim survivors could be impacted by the measures in the Bill, and working closely with key stakeholders, including the charity Surviving Economic Abuse, to ensure that the code of practice sets out the right approach to mitigating risks for victim survivors of domestic abuse. The current draft of the code of practice includes steps officials will take to identify signs of domestic abuse, where possible, to identify risks and to support the individual.
However, although I recognise the important intent behind this amendment, the fact is that it would apply to anyone affected by a direct deduction order, including debtors and non-debtors. Similarly to the earlier Amendments 99D and 109ZA from the noble Viscount, Lord Younger, it does not require or enable the DWP to take any action to identify possible impacted individuals or provide any new means by which the DWP could do so.
Viscount Younger of Leckie (Con)
My remarks will be brief. I thank the noble Lord, Lord Davies of Brixton, for tabling Amendments 109A and 109B, which seek to introduce further safeguards into the process by which direct deduction orders are applied. These amendments are clearly driven by a legitimate concern. I am sure it is one that we all share; no one should be pushed into destitution—note that word—because of enforcement action taken by the state. We on these Benches broadly support the intention behind these amendments. As we expand the state’s ability to recover funds lost through fraud, we must do so in a way that is measured, proportionate and fair. We agree that the person on the receiving end of a direct deduction order must be treated with dignity and that the enforcement should never push a person below the threshold of subsistence.
However, while we agree on the principle, the Bill as currently drafted already contains sufficient protections to give effect to that principle. These amendments propose going further. As the noble Lord, Lord Davies, set out, they would hard-wire specific mechanisms into the legislation itself with a mandatory affordability assessment and a fixed, safeguarded amount of £1,000 to be left in a person’s account. While we understand the motivation behind these proposals, we are not persuaded that they strike the right balance.
First, on the affordability assessment, the key question is not whether such considerations should be made—they absolutely should be—but whether placing a rigid requirement in the Bill is the best way to achieve it. Secondly, regarding the safeguarded sum, the proposal to set a fixed floor of £1,000 may be well intentioned but risks creating unintended consequences. For some individuals, that figure may be appropriate, but for others with significantly higher levels of debt or multiple fraudulent claims—of which there are a few, I am afraid—it may act as an unjustified barrier to recovery. A blanket threshold does not easily accommodate the complexity of individual circumstances.
We must not forget what this system is designed to do. We are talking about the recovery of public funds that were obtained unlawfully. These are not arbitrary deductions, but actions taken in response to fraud—in some cases, large-scale fraud—committed against the public purse. These funds belong not to the state in the abstract but to the taxpayers, the public and the people who rely on our public services. I remind the Committee of our duty to recover them on their behalf. We must exercise this power responsibly and we believe the Bill enables that. We must also ensure that we do not design a system that is so laden with friction that it fails to deliver on its core purpose of upholding the rule of law and restoring funds to the public where fraud has occurred.
These amendments raise important points, and we welcome the values that underpin them. We are committed to ensuring that the system is fair, proportionate and humane. We are confident that the existing provisions in the Bill, supported by robust guidance and operational safeguards, provide a sufficient framework to achieve those goals without introducing additional complexity that may compromise the system’s effectiveness.
Before the Minister thinks that I am writing yet another speech for her, I have some questions for her, which may also be helpful to the noble Lord, Lord Davies. Take the case of someone who has taken money fraudulently but finds himself destitute through his own actions and might otherwise be on the streets, homeless —or worse, hungry. What help can the state give to him? What options are there? As a basic, I presume that he will still be eligible for universal credit, albeit, as the noble Lord, Lord Davies, said, it would be subject to an agreed deduction for his misdemeanours. He would therefore still get support, assuming that he is not allowed to keep the £1,000 in his account. As the noble Lord said, the money and advisory services are there, and Citizens Advice is there. They are there to offer advice, but what support is there for such people in extremis? The Minister may say that the household support fund is also there and could be called upon, but that fund is subject to local help and is in the gift of local authorities to give out. Would destitute people come into that?
In conclusion, we do not support these amendments, but I thank the noble Lord, Lord Davies, for prompting this important and short debate. We look forward to working together to ensure that the final system strikes the right balance between fairness and firm recovery of debt.
Baroness Sherlock (Lab)
My Lords, I am grateful to my noble friend Lord Davies for raising this, and to the noble Viscount for his observations. I agree with my noble friend that affordability assessments should be conducted—he has made that clear, and we certainly want to do that as we think it is important—before a direct deduction order is issued, but we regard this amendment as unnecessary and duplicating existing provisions.
Paragraph 6 of new Schedule 3ZA, inserted by Schedule 5 of the Bill, provides that recovery must not cause hardship to the debtor, any joint account holder or dependant, and must be fair. Paragraph 3 requires the DWP to obtain, via an account information notice, bank statements covering at least the most recent three months in order to help make that assessment.
Further detail on how affordability will be assessed will be set out in the code of practice, a draft of which is available to Members; I am sure that my noble friend has had the opportunity to see it. It sets out the principles that will apply when affordability is assessed. They include ensuring that essential living expenses and other reasonable financial commitments are identified and protected. Officials are working closely with organisations such as the Money and Pensions Service to develop the code and, as required by Clause 93, a formal public consultation will be conducted on the draft before it is first issued.
As I have already outlined, affordability assessments must and will take place prior to enforcing a deduction order. These checks use banks statements, allowing DWP officials to consider expenses such as housing and utilities, enabling the deduction to be affordable, fair and based on individual circumstances, rather than a blanket approach of leaving a set amount in the account which could, if not set high enough, prevent the debtor from meeting those essential costs, as the amounts will vary from person to person.
For regular direct deduction orders, paragraph 6(3) of new Schedule 3ZA requires that any regular deductions made by the DWP each month must not exceed 40% of the monthly average amount credited to the account during the last period in which statements were assessed. Regulations will be made under paragraph 24(2)(d) to further set a maximum rate of 20% for all cases that have not arisen due to fraud.
These figures are maximums, rather than fixed deduction rates. Deduction rates will vary as officials take any affordability, hardship factors or other relevant circumstances into consideration. This approach mirrors that already used effectively in the DWP’s existing powers of deduction from earnings or benefits, and it is not obvious why it should be different in these circumstances. Given the safeguards outlined, requiring that £1,000 be left in one or more of the liable person’s bank accounts in every case where a DDO was sought is unnecessary, as the safeguards will already achieve the outcome intended by this amendment.
Regarding the specific questions, I reassure my noble friend that we are alive to the concerns of UK Finance, which we meet regularly. We are working with MaPS and relevant debt sector organisations on this. He mentioned a comparison with HMRC. HMRC has confirmed that its power is a one-off deduction of a tax debt, not a regular deduction. As a result, it does not assess customers’ affordability as part of the process. Its safeguard instead requires it to leave a minimum of £5,000 across the customer’s accounts to stop taxpayers being left with insufficient funds to cover basic needs. We are taking a different approach: we are assessing affordability, and we will have clear sight via bank statements of the debtor’s ability to repay.
In addition to the work we are doing with MaPS, we are working with relevant stakeholder organisations to make sure that our communications with debtors are clear, to help them understand what we are doing and to engage in the best possible way.
I remind the Committee that before any deductions are taken, account holders will be notified and given the chance to make representations. They can provide relevant information about their financial position and evidence relevant to affordability. Even at that stage, the department’s preference is to reach an agreed position with the debtor. If reasonable payment terms can be agreed and they are maintained by the debtor, the DWP will not make a deduction order.
My noble friend and I clearly want the same thing: to make sure that any recovery is affordable. We have taken different routes, but I hope that what I have said today will help him to accept that our route is doing the job and, in the light of that, he will withdraw his amendment.
I am sorry, I forgot to respond to the noble Viscount about destitution. I may have to come back to him on that, because it would depend very much on somebody’s circumstances. Although the household support fund is locally determined, some directions, steers and guidance are given by the centre by the DWP to local authorities. But the fund is significantly there to help with the cost of living. In relation to someone who is destitute and has committed fraud, people may still, if they have an ongoing entitlement to benefit, have been subject to a loss of benefit penalty as part of a process. So it would very much depend on the circumstances. But if I can find anything else useful, I should be happy to put that in writing to the noble Viscount.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to follow the noble Lord, Lord Davies of Brixton, and speak to this stand part notice, also signed by the noble Lord, Lord Sikka. The noble Lord, Lord Davies of Brixton, set out the question of principle about whether we allow access. I will make a couple of practical arguments and one point of comparison.
I start with the practical arguments. I was just thinking back to the second-ever vote that the Green Party won in either House of Parliament, which was an amendment in the name of my noble friend Lady Jones of Moulsecoomb calling for a review of rural bus services. Losing your driving licence might be an inconvenience, if you live in London—in most parts—but, if you live in the depths of the countryside, it effectively totally traps you in a situation where huge practical disadvantage will happen in your life.
It is worth noting that Clause 92 allows the disqualification of a licence for two years. I acknowledge that this is by a court—it is different to what we were talking about before—but I also acknowledge that the option of jail is available here. I am not quite sure how a court will make a judgment—if it is a really serious offence, where will you place those issues? My comparative point is to note that, back in 2023, the then national lead for the police for fatal crash investigations, Andy Cox, made some very strongly worded statements about people who get 12 points on their licence. He said that too many people were using exceptional circumstances to get out of losing their licence. In fact, one in five people who end up with more than 12 points on their licence in three years succeed in pleading exceptional hardship and therefore do not their licence and can continue to drive.
The really important point here is that, as the national lead for fatal crash investigations pointed out, some people in that situation go on to kill on the roads. We have a situation where people who are driving dangerously and illegally are able to keep their licences, which is quite a contrast to people who have not been accused of doing anything wrong on the roads but may potentially be suffering from that penalty.
Again, we are talking about something that is potentially hitting recipients of benefits, and I rather suspect that a lot of those people who manage to plead exceptional hardship in court, and keep driving with 12 points on their licence, have a fair amount of privilege in their life and can employ fairly expensive lawyers to keep driving. There is a real imbalance there, which should be cause for concern to the Committee.
Viscount Younger of Leckie (Con)
My Lords, I oppose the proposition that Clause 92 and Schedule 6 should not stand part of the Bill. Clause 92 provides for disqualification from driving to be a sanction that is available in the most serious and persistent cases of benefit fraud, where a recoverable amount remains unpaid despite all reasonable efforts at recovery.
I do not wish to step on the Minister’s toes by speaking in defence of this provision. Perhaps I should anticipate another speech that she will be making—we will probably be in broad agreement. However, we must be clear that this is not about punishing people arbitrarily but about ensuring that there is an effective deterrent against repeated and deliberate non-compliance with efforts to recover public money. We have a precedent for this, as we noted at Second Reading. The same mechanism exists in the child maintenance enforcement regime. We have learned from that experience that deterrents do work—or we think that they work. I will return to that in a moment. Fewer than five driving licences were seized under those powers, because the power to impose a disqualification was sufficient to prompt compliance. It was a last resort that rarely had to be used, precisely because it was effective in changing behaviour before reaching that point.
In the spirit of trying to be helpful to the Government here, what evidence can be produced that the threat of taking away a driving licence is indeed a deterrent? One statistic could be the number of cases of non-payment from those people whom we know have the ability to repay unlawfully gained moneys but who resolutely refuse to do so and are on the cusp of having their licences taken away. To ascertain the numbers that may have miraculously fallen at this point is one way of defining whether the deterrent has worked. One might assume that any numerical drop in non-paying numbers immediately before a licence withdrawal defines that deterrent. I listened carefully to the remarks from the noble Baroness, Lady Bennett. Perhaps the fall could be seen to be larger in rural areas, as the deterrent would be more significant there than in urban areas. The Minister may be able to enlighten us on this or add that to a letter that hopefully will be coming our way.
This is about proportionate enforcement. Clause 92 does not create a routine sanction. It does not apply automatically. It is not triggered for minor mistakes or for those who are acting in good faith. It exists as a targeted and time-limited measure, for use only when all other routes have been exhausted and when the liable person is wilfully refusing to repay money, which—let us not forget—has been obtained unlawfully.
Some may argue that disqualification from driving is a severe consequence—the noble Baroness, Lady Bennett, has made that point. However, we must weigh that against the seriousness of fraud against the public purse. This money could have been used to fund front-line services, support the vulnerable or maintain trust in the welfare system. Those who persistently abuse the system must know that there are consequences for their actions, which will be followed through. This clause provides one such consequence that is proportionate but effective.
We have been consistent throughout Committee in saying that enforcement must be fair but credible. If the consequence of not repaying fraudulently obtained benefits is no more than a polite letter and no meaningful follow-up, then we send entirely the wrong message. Clause 92 helps to restore that balance. It does not criminalise poverty or target vulnerable people. It sets out a power that, in exceptional cases, can be used to bring about compliance when other tools have failed. I therefore oppose the removal of Clause 92 and Schedule 6 and urge colleagues to do the same. I am interested to hear the remarks of the Minister.
Viscount Younger of Leckie (Con)
I appreciate the noble Baroness’s very full response. This is more of a probing question. We have obviously been debating and talking about driving licences. The ultimate punishment or sanction is prison, but we obviously do not want to exercise that if possible, both for the individual and because we do not want to clog up prisons. But what other sanctions could there be? We have been talking about driving licences, but I know that, in the Child Maintenance Service, taking away passports was raised as a possible sanction. What thoughts does the noble Baroness have on that front?
Baroness Sherlock (Lab)
We are not proposing removal of passports on this occasion.
Member's explanatory statement
This amendment and another to clause 105 in the name of Viscount Younger would compel final codes of practice to be laid before Parliament, before the provisions in the Act could come into force.
Viscount Younger of Leckie (Con)
My Lords, we now turn to what I believe is the last group for today. I will speak to Amendments 122A, 122B and 122C, which largely concern the code of practice and matters relating to the codes of practice as set out in Clause 93.
These amendments are not only sensible but vital if we are to ensure that the framework for exercising these powers is both transparent and democratically accountable. Fundamentally, our amendments recognise that the code of practice is not a peripheral procedural matter; it is a foundational document. It will guide how sensitive and powerful enforcement powers are exercised. It will shape the expectations placed upon investigators, the protections afforded to individuals and the standards against which public officials will be held. In short, it will govern the operational culture of the entire system.
Amendment 122A would ensure that the final version of the code is laid before Parliament before these new provisions in the Bill can come into force. I feel it is important at this stage to reiterate that we are being asked to grant significant new powers, including powers of entry, search, seizure and direct deduction, and it is therefore wholly appropriate that Parliament sees, and has the opportunity to scrutinise, the final version of the rules that will help determine how those powers are used. We welcome that, and thank the Minister—I perhaps should have said this earlier—for making good on her promise to release draft versions of the code to noble Lords ahead of Committee, although we feel that it is even more important that we have a binding assurance from the Government that a final version of these documents will be made available to Members of both Houses ahead of the Act coming into force.
Amendment 122B would further strengthen this by requiring a public consultation on the draft code before it is issued. I have a feeling that the Minister may have confirmed this earlier; nevertheless, I raise it now and await her reply. Consultation is not just a box-ticking exercise, it is a vital part of democratic policy-making, especially in areas where the state will be interacting with vulnerable people, seizing property or accessing private data. Consultation allows front-line practitioners, civil society groups and those with lived experience to offer their perspective and to flag where guidance may be unclear, safeguards may be weak and unintended consequences might arise. We must not underestimate the value of that input.
We have said many times that our primary goal and function throughout Committee is ensuring that the Government come out with a Bill that is ready to go. We want a public authorities Act that combats fraud effectively and deters criminality in the future but also works for the people who will undertake and be subject to its provisions. It really is important that we get all these balances right and that we incorporate these review mechanisms now, so that the Bill is ready to go once it becomes law.
Finally, Amendment 122C would ensure that any subsequent change to the code is not only laid before Parliament but subject to parliamentary review. This is a particularly important point, because it speaks to the danger of incremental change, where guidance can be revised behind closed doors, without scrutiny or proper debate. These codes are not trivial; they are the operational blueprint of this entire regime. If we in this House and the other place are to fulfil our role as scrutineers and custodians of civil liberties, we must retain the ability to oversee how these powers evolve.
If the Government’s position is that these powers will be used proportionately, lawfully and with care, they should have no difficulty in agreeing that the rules that govern them should be open to parliamentary oversight, public consultation and full transparency. That is not a constraint; it is a safeguard for both the public and the state.
As I have said before, we are of course all agreed on the need to tackle fraud, but we must also agree on the need to exercise these new powers with clarity, accountability and respect for the values that underpin our legal and constitutional system. We believe that these amendments would help to ensure that. I urge the Minister to accept them, or, at the very least, to recognise their merit and return with similar provisions that enshrine the same principle.
Parliament broadly supports what the Government are doing, and if the Government intend to exercise these powers responsibly, with adequate safeguards, consideration and the principle of proportionality that I and my noble friend Lady Finn have returned to several times in Committee, I assume and hope that Parliament will have no problem supporting what the Government do in their code of practice. However, parliamentary oversight, to ensure that the Government are tied to these important principles not just now but in the future, is an important safeguard which we feel must be made explicit in the Bill.
In conclusion, these are reasonable, proportionate and constructive proposals. They would not hinder the Bill’s effectiveness; rather, they would make the Bill more effective once it comes into force. I see that, miraculously, there is no one else wishing to support—I am sure it is no reflection on my remarks—but I genuinely look forward to the Minister’s closing remarks. I beg to move.
Baroness Sherlock (Lab)
My Lords, in the absence of a crowd of supporters, I thank the noble Viscount for setting out his amendment so clearly. I hope that my remarks will reassure him and give him the confidence that he does not need to press ahead with these amendments.
Amendments 122A, 122B, 122C and 129 seek to compel the Secretary of State to conduct a public consultation on the DWP’s code of practice for the debt recovery powers, to lay a final code before Parliament before the powers in this Bill come into force and to subject any changes to the code to parliamentary review. Amendment 128 would require the Minister for the Cabinet Office to lay a code of practice before Parliament on the administration of penalties before the PSFA’s powers under Part 1 can come into force.
The provision made for a code of practice in Clause 93 is important for the DWP’s debt recovery measures, providing transparency and reassurance on how the debt recovery powers will be operationalised. However, we think these amendments duplicate existing provisions in the Bill and therefore are not necessary.
The DWP’s code of practice on debt recovery powers will complement the provisions in the Bill, setting out guidance and key principles, including how and when the new recovery powers will be used. Extensive collaboration continues to take place with a wide range of stakeholders, including the Money and Pension Service, the charity Surviving Economic Abuse and the finance sector, to develop this code of practice. The purpose of this engagement is to ensure the code provides relevant operational guidance on matters such as vulnerability and to give clarity for debtors subject to the powers and their representatives. We are grateful to all organisations for their helpful collaboration and guidance.
Drafts of all the DWP codes of practice have been made available for review by noble Lords upon request. While there is no requirement on us to provide drafts of these codes alongside the legislation or even to legislate to produce one, we understand their importance and want to be transparent with Parliament. This is also why new Section 80D(6), as inserted by Clause 93, already requires us to carry out a formal public consultation before the first code is published and to lay each issued version before Parliament. In response to the noble Viscount’s questions, the Government are consulting on all codes. Both the DWP and the PSFA will publish them before first use.
We have already said in terms of the debt, this will be done before the new debt powers in Part 2 of this Bill are used. However, I should note that Amendment 129 as drafted would prevent all the other provisions in the Bill that are not subject to the debt code of practice coming into force until the debt code was issued. I am not sure if that was the intention of the noble Viscount, but it would obviously be disproportionate and unnecessary.
It is also not clear from the amendment what parliamentary review of future changes to the code would entail but I am going to assume the noble Viscount would like Parliament to have the opportunity to challenge or scrutinise the code each time it is updated. If so, that would not be necessary or proportionate. The code will be revised periodically to keep it up to date with operational considerations and processes, and the Bill makes provision for each issued revision to be laid before Parliament.
The noble Viscount mentioned the importance of Parliament seeing the rules. It is worth understanding that the debt code of practice does not contain statutory provisions, nor does it place obligations on others. Rather, it sets out how the department will operationalise the new recovery powers. The Bill clearly sets out in considerable detail the legal obligations introduced. Other substantive provisions set out in regulations will, of course, be subject to normal opportunities for parliamentary scrutiny. I am also unaware of any precedent for revisions to a code of this nature to be considered by Parliament or subject to its approval.
Amendment 128 takes us back to the PSFA in Part 1 of the Bill. Noble Lords will recall that we have already discussed Clause 62, which makes provision for the PSFA to produce a code of practice that will explain how and why civil penalties will be calculated and imposed to ensure the powers are used transparently and reasonably. This clause stands part of the Bill.
A draft of the PSFA code of practice has also been provided to noble Lords, as was promised in Committee in the other place. As I mentioned, the PSFA intends to consult widely on the code of practice prior to the publication of the finalised draft, which will be before the first use of the penalty powers. Indeed, Clause 62(4) states:
“The Minister must lay the code of practice, or any reissued code of practice, before Parliament”.
I have outlined that the provisions already in the Bill go above and beyond what is required for legislation of this kind because we recognise the importance of the code of practice and have done so in the spirit of transparency. With those assurances, I urge the noble Viscount to withdraw his amendment.
Viscount Younger of Leckie (Con)
My Lords, the codes of practice are documents which we feel, from how the Bill is drafted, are being treated as ancillary—I set out my stall on that earlier—when, in truth, they are central. These codes will be the compass by which investigators navigate the use of intrusive and sensitive powers, they will be the primary reference point for those administering the system and those subject to it, and they will set the standards by which the system is judged.
Having said that, I have noted the Minister’s responses and reassurances, particularly on the publication of the codes, if I heard her correctly, so I appreciate all that. I will look further at the purpose behind our Amendment 129, and I take her point on that. I am not in the business of wrecking the Bill—I know she did not say that—and will reflect before Report on that amendment and the responses the Minister has given to the other amendments. I appreciate all her responses. With that, I beg leave to withdraw my amendment.
Public Authorities (Fraud, Error and Recovery) Bill
Viscount Younger of Leckie ExcerptsMonday 16th June 2025
(6 days, 9 hours ago)
Grand CommitteeRead Full debate Public Authorities (Fraud, Error and Recovery) Bill 2024-26 View all Public Authorities (Fraud, Error and Recovery) Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 96-IV(a) Amendments for Grand Committee (Supplementary to the Fourth Marshalled List) - (13 Jun 2025)
Viscount Younger of Leckie (Con)
My Lords, I offer my support for most of the proposals in this group of amendments, which strike me as largely thoughtful, proportionate and consistent with the principles that we have returned to time and again throughout this Committee stage: clarity in law; accountability in process; and fairness in the exercise of power. As we know, we have spent three days carefully scrutinising the powers set out in this Bill—powers that are, by any measure, significant. In that context, it is right that we continue to ask whether the safeguards accompanying these powers are sufficient and, where they are not, how they could be strengthened in a practical, proportionate and legally coherent way. We believe that these amendments are consistent in furthering that principle.
First, I have taken note of the cautionary tale arising from the Australian experience, as raised by the noble Lord, Lord Sikka. Amendments 76 and 78, which seek to clarify liability for errors or omissions in information provided under Clause 72, are rooted in a basic but essential legal principle: parties need to know where responsibility lies. If someone is being compelled to provide information under threat of penalty, it must be clear whether they or a third party acting on their behalf will be held liable for any inaccuracies. Without clear statutory guidance, we risk confusion and, worse still, unjust outcomes where individuals may be penalised for honest mistakes or information errors outside their control. These amendments would address that problem in a measured way by introducing transparency and clarity into the process.
Amendment 77 addresses a slightly different but equally important concern. As the noble Lord, Lord Vaux, outlined so eloquently, we are focusing on proportionality and reasonableness in the exercise of investigatory powers. The amendment would insert a reasonableness test requiring that an authorised officer must reasonably consider the request for information to be necessary and proportionate. To my mind, this is simply good law. It reflects what is already expected in broader public law standards, but writing it clearly into the legislation would give both officials and the public confidence that such powers are bound by objective legal norms. It would strengthen decision-making, improve accountability and, perhaps most important, provide a clearer basis for redress if powers are exercised in an overly broad or inappropriate manner. However, I note from the remarks made by the noble Lord, Lord Vaux, that we cannot—or should not—say, “Oh, joy of joys”, in respect of the guidance provided.
With clarity established as to where responsibility lies, by necessity a process will have to be put in place and be tested to make sure that there is oversight and sign-off. If the Minister is not minded to accept Amendments 76 and 77, can she outline in detail what the process is? If she cannot do so, I ask her to write to me and to copy in all those noble Lords who are involved in today’s Committee. The Minister may say that this is all part of the as-yet-unfinished “test and learn”, but a full answer is requested. I think I have picked up that she may be able to enlighten us in this respect at the beginning of this fourth day in Committee. I hope so.
However, I must express my concerns and ultimately oppose Amendment 79 in the name of the noble Lord, Lord Sikka, on the grounds that it risks undermining the effectiveness of the very system that we are seeking to strengthen—although I note the example given, the sad story of Ms Green, highlighted by the noble Baroness, Lady Bennett. The amendment would require that a copy of every information notice issued under Clause 72 be sent to all parties affected by that notice, including, crucially, the individual who is the subject of the investigation.
Fraud investigations, particularly in the social security context covered by Clause 72, often rely on timely access to accurate information before the subject of the investigation is made aware. This is not a matter of secrecy for secrecy’s sake; it is a matter of preserving the integrity of the evidence and preventing interference with the process. If a person suspected of fraud is notified that they are under investigation or even that information about them is being requested from a third party, there is a very real risk that they may destroy or tamper with evidence, close accounts, alter records or otherwise act to frustrate the inquiry before it has a chance to develop properly. This is not speculative; it is a well-established principle in law enforcement and regulatory practice. It is not clear when this notice would be sent, but there is an assumption in the amendment in the name of the noble Lord, Lord Sikka, that it would be sent immediately—perhaps he could clarify that when he winds up—in which case, I rest my case.
There is a reason why investigators, whether in HMRC, the police or other regulatory bodies, are often permitted to conduct inquiries without giving advance notice to those under scrutiny. To do otherwise, as I said, would be to tip off the very individuals whose conduct is in question and, in doing so, jeopardise the ability of investigators to properly undertake their duties. Investigators would be hampered at the outset, fraudsters would have an early warning and those operating within the system in good faith, including civil servants, local authorities and partner organisations, would find it significantly harder to detect and prevent abuse. This is particularly true in cases of organised or sophisticated fraud, where timely access to third-party data may be the only way to build a case before the trail goes cold. It is also true in cases where vulnerable individuals, perhaps manipulated by others, may be at risk of harm if alerted prematurely. I will return to that theme later today.
Of course, we must always strive for fairness and accountability, but there is a distinction between eventual transparency and instant notification. There are appropriate points in the process when the subject is made aware of action against them and can engage in a process of review, but to mandate notification at the earliest investigative stage before facts are even established would, I believe, give potential wrongdoers an unearned advantage. Therefore, I respectfully suggest that the practical consequences of this amendment would be counterproductive and potentially damaging to the very goals of the Bill. We need a fraud enforcement system that is lawful, proportionate and fair but also capable of operating effectively in the face of growing and increasingly complex threats to public finances. That is why I cannot support this amendment.
To conclude, a balance must always be struck between individual rights and the broader public interest. In this case, that balance lies in ensuring that information requests are reasonable, that liability is clear and that powers are used with restraint and purpose but not in mandating disclosures that could derail legitimate investigations. I therefore welcome Amendments 76 to 78, but I am afraid that I urge caution about and ultimately oppose Amendment 79.
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, I thank all noble Lords who have contributed to this short debate and I welcome the Committee to Part 2 of the PAFER Bill. We are on to the DWP and it will be a joy to travel in this ship together with my happy fellow travellers. Before answering the specifics of the amendment, I want to reflect on some of the comments made by my noble friend Lord Sikka, because he helpfully highlighted a couple of the confusions that have permeated some of the discussion around the Bill.
The Bill contains a number of different measures and, in most cases, they apply to different people. In his speech, my noble friend spoke as though these information-gathering powers applied to all those people to whom, for example, an eligibility verification notice will be sent. In fact, that is not the case at all. A number of the amendments coming up next are about the eligibility verification measure, so I will return to any comments about it then. These information-gathering powers are quite different. They are specifically aimed at people of whom there is a reasonable suspicion of fraud by a named individual. This is a particular category of person.
Clause 72 makes provision for expanded information-gathering powers. There are existing powers in the Social Security Administration Act 1992, but they enable DWP to compel information only from a set list of organisations. That approach is restrictive and can delay or prevent the gathering of information that is relevant to proving or disproving a criminal benefit fraud investigation. So new Section 109BZB, inserted into the 1992 Act by this Bill, will update those powers to enable DWP to obtain relevant information from any information holder in respect of a DWP criminal investigation. That kind of information can be vital in proving or disproving an allegation of fraud.
Amendments 76 and 78, tabled by my noble friend Lord Sikka, concern liability for incorrect or incomplete information provided by an information holder in response to an information notice. The Bill is clear that information providers must comply with the information notice and should also be aware of their own data protection obligations in doing so. Information about those obligations will be included in the code of practice, and the information notice must specify the potential consequences for failing to comply.
Section 111 of the Social Security Administration Act 1992 sets out offences for intentionally failing to provide required information, as well as delaying or obstructing an authorised officer. In those circumstances, DWP can take action. So introducing a separate statutory liability for all errors is not necessary and would, in my view, actually place an unfair burden on information holders, particularly when mistakes are unintentional or minor.
Amendment 77, tabled by the noble Lord, Lord Vaux, would insert “reasonably” into subsection (1)(b) of new Section 109BZB. I hope to persuade the noble Lord that we in fact have a very good case here. I think that it will be easier to write. There may be some disagreement about his comments about JOYS—this will be another theme, I think; I suspect that “Ode to Joy” jokes and other joy jokes will abound. But I will write, because I want to talk specifically about the amendment that he has tabled today and how that affects the DWP parts of the Bill.
The current drafting of subsections (1)(a) and (1)(b) of new Section 109BZB in Clause 72 sets out that, prior to issuing an information notice, an authorised officer must have “reasonable grounds to suspect” that a DWP offence has been committed and must consider it “necessary and proportionate” to require the information. Both those steps have to happen, so I would argue that the drafting already captures the intent of the amendment. We have been doing this for some time. The department already has these information-gathering powers, with well-established training and guidance in place to ensure that they are used appropriately and in line with the existing law.
Authorised officers are trained and accredited before they can use those powers and they have to adhere to the code of practice. The existing guidance makes it clear that they have to consider all the facts, justify their decisions and record their reasoning. That will apply in the same way to the new expanded powers as it does to the current powers. For those reasons, we are confident that the principle of reasonableness is clear in the drafting of Clause 72 and we further support it. I can see that the noble Lord is itching to get to his feet.
Lord Sikka (Lab)
I am very grateful to everyone for their contributions to this debate. I want to come back on a couple of issues.
I fully understand the arguments made against Amendment 79, but at the moment the individual becomes aware that something is afoot only much later in the day. Individuals rarely have time to seek legal advice. They often cannot afford legal advice. Early notification that they are subject to scrutiny, especially when they have never committed a crime and are just under suspicion, would mean that they may be able to save the DWP some time, effort and money on needless investigations. They may even be able to go to the local citizens advice bureau or somewhere else to get some advice. Leaving it until a much later stage inevitably means that there will be a lot of psychological stress for people. They will probably throw in the towel, a bit like the sub-postmasters, and think, “I’ve got to get off this merry-go-round. I will plead guilty even though I am not, because I cannot really contest anything with the Government”. So, I understand the arguments made, but I think that the current position of not telling the benefit claimants much earlier on really will lead to problems.
The Minister referred to the information provider’s duty for data protection and so on, but I have a concern, given that the DWP will make errors. It has a history of making thousands of them. Given that banks make errors in providing information, once DWP officials have received the information from the bank, they have to interpret that information and make sense of it. There will be misinterpretations, which will have serious consequences for the people affected.
The question to which I still have not heard an effective answer is: who will be liable? Who will pay the compensation? Will it be the public purse? Will it be the banks? The DWP will have a statutory relationship with the bank and hence can demand information, but banks are normally required to preserve confidentiality or financial information, and a bank will not ask anything from the individual concerned. It cannot at that point be said to owe a duty of care to somebody with whom it does not actually communicate, especially when that duty of care is eroded by the Bill. So the question remains: who will foot the bill, which could run into billions of pounds, if we end up with a similar situation to the one in Australia? I hope that the Minister can clarify that situation about who will foot the bill.
Viscount Younger of Leckie (Con)
Before the noble Lord sits down, I want to raise something, which is more of a question to the Minister and the team behind her. When I was in post, I became perhaps infamous, particularly when I did not understand something, for asking for a flow chart, and I wonder whether this is such a case where a flow chart would be extremely helpful. By that I mean that, when a process starts, what happens? One answers yes or no to questions and then it follows through with the safeguards included. I would find that incredibly helpful, and I suspect the team has one already. If there is one, I would find it helpful to see how the system works and where the safeguards are.
Baroness Sherlock (Lab)
I have never seen a flow chart, but some of these powers are not necessarily part of the same process, so they would not necessarily appear on the same piece of paper. But if I have any other way of explaining it, I would be very happy to do that.
Since I am on my feet, I reiterate that if the DWP is asking for information about an individual and it gathers information, it will most likely be doing so from a number of sources. An authorised officer will then review the information, and if there is felt to be a case for fraud, they will then interview the suspect under caution, who will be given the opportunity to get appropriate advice. There will be a process of engaging and discussion, but even before it gets to that stage, it is entirely possible that somebody will have reached out to find out the reason why an overpayment has been made. So, there are plenty of opportunities, and this specific amendment relates specifically to the extension of an existing power, which is used only when there is reasonable suspicion of fraud by a named individual. So, I do not think this amendment would help achieve the kind of things that have been discussed, and I urge the noble Lord to withdraw the amendment.
Baroness Sherlock (Lab)
My Lords, I am grateful to the noble Baroness for giving me the opportunity to recover my voice and to say that not only will we not do it but the Bill says explicitly that the measure cannot be used on the state pension, so there is no question of it being used for that.
The case load is really straightforward. Fraud in the state pension is so low that it is the one area where the NAO does not qualify the accounts. We have to have a rationale. The reason we have chosen these three benefits initially is specifically because they are the areas where fraud is significant, and we know the information is out there that could make a difference. I can absolutely reassure the noble Baroness on that point: without amending primary legislation, this measure cannot be used on the state pension, and the Government will not do that. Any subsequent Government would have to change the law to be able to do it. I am grateful to the noble Baroness.
Viscount Younger of Leckie (Con)
My Lords, I intervene briefly to add a little history on the reason we included pensions. As the noble Baroness, Lady Bennett, may know, there is some fraud in the pensions area, to the tune of £100 million. This, I admit, is not as much as the £9.5 billion in welfare fraud that the Minister cited, but I just wanted to put the record straight; there was a reason for including pensions.
Secondly, you can have it one way or the other. We thought it would be good to put all benefits in scope in primary legislation, but I accept that another way of doing it is to limit it to the three benefits, as this Government have done, with a view to having secondary legislation for including others. I understand that.
Baroness Sherlock (Lab)
I am grateful. The noble Viscount is quite right: there is some fraud in the state pension. It was a judgment about proportion, having compared the size and value of the case load. It is very small. The fact that the affirmative procedure is used means that there will have to be a debate. The Government cannot simply on their own start investigating new benefits without anyone knowing about it, so that makes a difference.
The Bill is clear that, to help make this measure proportionate, only the minimum amount of information necessary is shared with DWP by the banks. That can include only details about the account, such as an account number and sort code; details to identify the individuals, such as names and dates of birth; and details about how the individuals appear to be breaching the eligibility criteria for their benefit. But still at that point, no one is suspected of having done anything wrong; the presumption of innocence remains, because further inquiries are needed to establish whether a benefit has been incorrectly paid.
Some people may have disregards in place that mean they are allowed to have more money than is normally used in the benefit rules. For example, normally you are allowed to have only £16,000 maximum in capital to be entitled to universal credit, but there are reasons why you might have more than that. Some forms of compensation payments are disregarded, for example. There may be a perfectly good reason, which will be investigated at that point—and that will be that. Others may have made a genuine mistake that has led to an overpayment of benefits, which it is important to correct as quickly as possible for the individual and the organisation.
However, there will be some cases, especially in the early stages, that ultimately lead to fraud being identified; that conclusion will never be drawn from these data alone. As is the case now, any claim where a suspicion of fraud arises is referred to our specialist investigation team, which has to undertake a thorough investigation, following all reasonable lines of inquiry before any determination can be drawn.
Just to reassure my noble friend, whether he accepts it or not, in fraud and error cases, decisions on entitlement will be made by a DWP staff member.
Baroness Sherlock (Lab)
I think that we are talking at cross-purposes here. The information will be sent across to DWP, and DWP will take information on an individual and, if there is a signal that an individual may have a breach in eligibility criteria and may have more money in their bank account than is permitted, that information will be looked at and taken together with other information and a DWP staff member will make a judgment about what to do about that. I do not think that I can be any clearer than that.
Viscount Younger of Leckie (Con)
I am standing up to be helpful to the Minister. For fear of being rather like a long-playing record, I think that a flow chart would be incredibly helpful—so I am pressing my case for a flow chart. That is all that I shall say.
Baroness Sherlock (Lab)
My Lords, I am not a flow chart gal, but if anyone is capable of turning this into a useful flow chart, I shall have a look into it.
I fully accept, being an observant person, that not everybody in the Committee agrees with these measures. It is clear that they can make a difference to tackling fraud and error. We think that they are proportionate, but I accept that some Members do not think that, and that is obviously completely legitimate. We simply take a different view.
In the next few groups of amendments, we get to look at different aspects of how that would work, but it is the Government’s view that the scale of fraud is such that it needs to be tackled. If there were other, simpler ways in which to do it, we would have used them by now. This is a source of data that will help us to tackle fraud and error in overpayments, which we do not have at the moment. We do not see any other suitable ways in which to do it, so we think that it is proportionate. We have wrapped it around in safeguards as much as possible.
Lord Palmer of Childs Hill (LD)
My Lords, I warmly welcome the spirit and substance of these amendments, which would collectively strengthen the Public Authorities (Fraud, Error and Recovery) Bill by ensuring that our approach to tackling fraud is not only effective but fair and—that word again—proportionate.
Amendment 81 from the noble Lord, Lord Vaux of Harrowden, rightly probes how the Secretary of State will prevent undue costs being imposed on banks and seeks to clarify the mechanisms for cost recovery. This, I believe, is an essential safeguard, ensuring that our financial sector partners are not overburdened by compliance costs, which could ultimately impact customers and the wider economy.
Similarly, Amendment 91, which calls for an independent review of the eligibility verification powers with a focus on the proportionality—that word again—of costs incurred by both the department and banks, is a welcome step towards transparency and accountability in the implementation of these new powers.
I am particularly supportive of Amendment 83, which would place the duty of care that financial services providers owe to their customers at the forefront, ensuring that data sharing with the DWP does not override these fundamental responsibilities. This is a crucial point. While we must be resolute in our effort to combat fraud—on which I am sure we all agree—we must not do so at the expense of the trust and the rights of individuals. It is a very fine line to draw.
Amendment 89C from the noble Lord, Lord Vaux, would remove the risk that the mere existence of an eligibility indicator could trigger unnecessary action against account holders, thereby preventing unintended harm to individuals.
Taken together, these amendments would ensure that the Bill’s powers are exercised with restraint and with full regard to the interests of both institutions and individuals. We must not let it trigger unnecessary actions against account holders under the Proceeds of Crime Act. I support these amendments in their entirety.
Viscount Younger of Leckie (Con)
My Lords, I speak in support of Amendments 81 and 91 in the name of the noble Lord, Lord Vaux, which seek to introduce proportionate and principled safeguards into the operation of eligibility verification notices: namely, that the Secretary of State must first be satisfied that the costs to the person receiving the notice are reasonable and proportionate, or else agree to reimburse those costs in whole or in part, and that this be subjected to an independent review. This is not a marginal or administrative detail; it goes to the heart of how we structure and sustain effective partnerships between the Government and the private sector, and particularly to how we treat the banking sector as a key actor in the fight against public sector fraud.
Throughout our deliberations on the Bill, my noble friend Lady Finn and I have returned time and again to the importance of ensuring that the powers are exercised responsibly, with due regard to proportionality and fairness. This amendment is a natural extension of that principle. It recognises that, when we ask third parties—in this case, banks and financial institutions—to support fraud detection by responding to eligibility verification notices, we are asking them to divert time, resources and personnel to do so. This of course comes at a cost, and it is only right that these costs are acknowledged and handled fairly.
As has been said, the banking sector plays an essential role in supporting government anti-fraud objectives. Banks will help to identify irregularities, flag risks and support enforcement action. But if we want this co-operation to continue and to deepen, we must treat banks as strategic partners, not simply as tools to be leveraged without regard to impact. This amendment would ensure that we are not shifting the financial burden of fraud prevention on to the shoulders of institutions that are neither the source of the fraud nor the primary beneficiaries of its reduction. It would also introduce a basic but important fairness test, that if costs are disproportionate, they should be recognised and potentially reimbursed.
Given the scale and frequency with which these powers may be used under the new framework, we should recognise that banks may be required to undertake substantial internal data searches, compliance checks or system queries, potentially at short notice. As the noble Baroness, Lady Fox, pointed out in her excellent remarks, to do so effectively, banks will need to allocate skilled staff and technological resources. It is only reasonable that we ensure that such work is feasible and fairly compensated where appropriate. Furthermore, the precise detail on how this mechanism will work is still vague from the Government.
I shall not mention flow charts again, for fear of being shouted down, but maybe we need a spreadsheet—although perhaps I shall be shouted down on that basis. Can the Minister give some detail as to how the “test and learn” with the banks is going as regards the operability of the system? In particular, what are the anticipated costs to the banks? It is understandable that the Government may not be able to answer this, as they may say that it will depend on the number of potential cases emerging and issues emanating for each case, which will vary. However, I would imagine—and I think that I said this at Second Reading—that the ongoing test-and-learn process will be able to highlight an average per case cost. If there is no information available, how do we know that the costs are not astronomical or even unsustainable for the system established? I hope that the Minister can enlighten us on that.
Lord Vaux of Harrowden (CB)
My Lords, I have Amendment 89ZA in this group—I still do not understand the numbering system that the Public Bill Office uses.
Before I move on to that, I want to make a couple of comments on the two amendments that the noble Baroness, Lady Fox, just raised. I have to say that I am a bit cautious about Amendment 82, because if you tell everybody what the eligibility indications are, it becomes very easy to avoid them. There is also a massive, gaping loophole in the Bill, which is that it covers only one bank at a time. I do not know—I would be quite interested to understand from the noble Baroness—whether, having received data from individual banks, the DWP will be amalgamating and therefore will be able to track the sort of concept that, if you have £8,000 in this bank account and £8,000 in that bank account, that puts you up to the £16,000 that would trigger the eligibility indicator. But there is a gaping hole there and, if you publish everything you are looking for, it makes it so much easier to get around it. So I am a little cautious about that one.
I am much more sympathetic to at least the spirit behind Amendment 88. We had a long debate the other day around the issues of machine learning, bias, stereotyping and generalisation creeping into decision-making processes, and there is more to do in this Bill around the safeguards around the use of automated decision-making. I know that the noble Baroness will talk about the code of practice, but that is very specific. It requires a human element only where the decision could impact on benefit eligibility. So it does not include stepping into the next phase of an intrusive investigation using the powers in Clause 72, for example. So, whether or not Amendment 88 is the right way to go, there is definitely more that we need to think about in terms of safeguards around the use of algorithmic or machine learning—or AI or whatever—trawling through this, and a number of amendments later cover the same ground a bit.
Amendment 89ZA is very simple. It simply says that applicants for benefits should be informed at the time of their application that information relating to their bank accounts may be provided to the Secretary of State, and that people who are already in receipt of benefits are informed within three months of the commencement of the Bill.
The information-gathering powers that this Bill creates are a significant step, and are carried out without any suspicion of fraud, so it must be appropriate and fair that people are informed that their bank account information may be provided to the department. I cannot actually see any reason for not accepting this one; it would improve transparency and also make those who are considering fraud think twice if they are being told that their bank account details could be accessed. In fact, I mean “provided”, because technically they are not accessed but provided.
As a general principle, as set out in our data protection laws, people have the right to know where their data is going and how it is being used, and I really cannot see any reason why this situation should be any different.
Viscount Younger of Leckie (Con)
My Lords, I wish to speak broadly in support of Amendment 82 in the name of the noble Baroness, Lady Fox of Buckley. This amendment goes to the heart of something that we should all be able to agree on: that the public have a right to know the rules by which they may be judged and that those tasked with making assessments, such as banks, should not be left to act on unclear or unpublished guidance.
This amendment would require the Secretary of State to publish the eligibility indicators that banks are expected to use when checking their customers’ accounts under the new regime. In plain terms, it asks the Government to set out clearly, before these provisions are enforced, what criteria are being used to determine eligibility. This chimes with the opening remarks made by the noble Baroness, Lady Fox. It is difficult to see how a system of such potential consequence to individuals and to financial institutions alike can be implemented fairly, if the basis on which it operates is not published and understood in advance.
We have heard throughout the debates on this Bill about the need to balance effective fraud prevention with the protection of individual rights, proper due process, and clarity for institutions involved. Amendment 82 speaks directly to that balance. If banks are to play a front-line role in identifying accounts or individuals under suspicion, they must be given unambiguous and publicly available guidance to avoid the risk of overreach, error or unjustified intrusion. We cannot have a system where accounts are flagged or actions taken on the basis of indicators that are withheld from public view. That would be both untransparent and unjust.
We should not legislate for a regime that affects people’s access to their financial resources or that places duties on banks to act in quasi-investigative ways, without knowing exactly how those judgments are to be made. This is not a wrecking amendment—it does not oppose the broader framework of the Bill. It merely insists that, before new powers are exercised, the public and partners involved in delivery know the criteria. That is not too much to ask. In fact, it is the very least we should expect in a system rooted in fairness and good governance. Again, this echoes the remarks made by the noble Baroness, Lady Fox.
To pick up on remarks made by the noble Lord, Lord Vaux, there is a balance to be struck between not giving too much away in the interest of transparency so that fraudsters are given fuel to manipulate the system. Can the Minister say where that balance should be struck, as balance there must be?
Similarly, I speak in support of Amendment 88, also in the name of the noble Baroness, Lady Fox. I believe it represents a sensible and timely addition to the schedule. As we have discussed throughout the passage of this Bill, the use of data and automated decision-making, particularly through algorithms, is becoming an increasingly central feature of fraud detection and eligibility verification. That in itself is not a problem; it is a reflection of the complexity and scale of modern fraud threats. But it also means that we need clear and consistent standards for how these tools are developed, deployed and scrutinised. The cautionary tale from the Netherlands, highlighted by the noble Baroness, Lady Fox, is very much noted. I am sure that the Committee has noted it.
This amendment goes to the heart of the need for standards. By requiring the code of practice to include mechanisms for the scrutiny of algorithms used by those in receipt of eligibility verification notices, typically banks, it creates a shared framework for oversight. This is particularly important when algorithms are applied across several discrete institutions, each of which may have slightly different internal systems, standards or even risk profiles. Without a common baseline, we risk inconsistency, a lack of accountability and potential harm to individuals through opaque or poorly calibrated processes.
Moreover, new sub-paragraph (g) proposed in this amendment rightly extends that principle of scrutiny to the powers themselves, and we must also be willing to assess whether they are effective and 100% secure in their specified and sole objective. We must also be willing to assess whether they are proportionate to the outcomes that they set out to deliver. In short, this is a practical amendment rooted in the principles of clarity, consistency and continuous improvement—perhaps part of the test and learn. It does not obstruct the Government’s goals; it helps to make them more credible and accountable, we believe.
I express my support for Amendment 89ZA in the name of the noble Lord, Lord Vaux of Harrowden, which I believe strikes a careful and important balance between transparency, accountability and the effective operation of the powers contained in this schedule. At its core, this amendment does something quite simple but significant: it ensures that individuals applying for or receiving relevant benefits are clearly informed—that is, in writing—that information relating to their bank accounts may, under certain circumstances, be shared with the Secretary of State. This is a matter of basic transparency and fairness. I note that this is being proposed at the time the benefit is applied for, and I might describe it—perhaps putting words into the mouth of the noble Lord, Lord Vaux—as part of an induction process when one applies for any benefit in scope. In other words, fair warning is given that a benefit that comes from the taxpayers’ pocket has responsibilities attached to it. Perhaps this should also be placed in the code of practice, and I ask that question of the Minister.
If we are to entrust public authorities with powers of this magnitude—which allow for sensitive financial data to be accessed without the individual’s active consent—surely it is right that we also commit to informing individuals of the possibility that those powers might be used. This is not about compromising investigations or alerting fraudsters in advance; it is about ensuring that people understand the system that they are entering and can act responsibly and lawfully within it. Providing this information up front reinforces personal responsibility. As I said earlier, it says clearly to the individual, “If you are claiming public money, there is a legitimate expectation that your eligibility may be subject to verification”. It allows claimants to know the rules of engagement in advance, and it ensures that they cannot claim later to have been caught unawares.
At the same time, I recognise, and I think the noble Lord does as well—I hope he does—that this amendment must not inadvertently encourage more sophisticated methods of deception. It is a fine line to walk, and this chimes with my earlier question to the Minister. We must not turn transparency into a user manual for fraud, but I believe that this amendment is framed carefully enough to avoid that risk. It does not disclose when, how or under what criteria information will be requested—only that it may be. That is, I believe, a proportionate step. Ultimately, this amendment supports the legitimacy of the wider regime, and I therefore support it and hope that the Government will see it as a constructive addition to the schedule.
Baroness Sherlock (Lab)
My Lords, I am grateful to all the noble Lords for their comments. Amendment 82, tabled by the noble Baroness, Lady Fox, would require the Secretary of State to make public the eligibility indicators, as set out in EVNs. Although I understand the point that she is making, I am firmly of the view that making public the eligibility indicators will be counterproductive, for reasons alluded to by the noble Lord, Lord Vaux. It is set out very clearly in the Bill that all eligibility indicators have to link to the eligibility criteria for those benefits that are within the scope of the EVN measure: universal credit, pension credit and ESA. Those eligibility criteria are widely available for anyone to see, including on the GOV.UK website. The DWP does its utmost to ensure that customers who claim benefits are clear on the relevant criteria, and they are reminded many times throughout their claim of the need to report changes of circumstances against these key criteria. This is important because there are people out there who are not fraudsters but who make genuine errors, and we do all we can to help people understand the eligibility rules and ensure that changes of circumstances are reported.
As the noble Viscount alluded to, there is a fine line between transparency and making things easier for fraudsters, but I do not want to publish the specific eligibility indicators that we will set out in an EVN, because to do so would actually help those who want to commit fraud to circumvent the measure. We know from all kinds of sources that there are people out there who study every single rule and piece of information we put out to try to work out how to get around them and get money to which they are not entitled. The Committee would obviously want us to do everything we can to avoid that. So, to protect the effectiveness of this measure and to help stop fraud, we do not think it appropriate that we publish the eligibility indicators.
Turning to Amendment 88, also from the noble Baroness, Lady Fox—
Baroness Sherlock (Lab)
To be clear, their bank details cannot be accessed by the DWP under this measure; their bank details can be accessed by the DWP under its other powers. I know that the noble Lord knows this but I want it to be clear for the record because there is a lot of misunderstanding out there; I hope that he will let me finish my sentence. The DWP cannot access people’s bank accounts using this measure or look at transaction data. It does not see what they spend their money on or any of that. It can simply ask banks to let it know whether a particular criterion is met. I take the noble Lord’s point; we think that this is adequate, but he does not, so I am afraid that we may just have to agree to disagree on this one.
Regarding the noble Lord’s other point, on how much data and how many different banks will be involved—and when—we had two choices in doing this: test and learn, which is the subject of much comment; or the alternative, which is a big bang involving all the banks going out together at once, getting their data, bringing it in and going through it. We decided not to do that, as we thought that it would be irresponsible. Test and learn means that, for the first 12 months of the rollout, we will initially work closely with a smaller number of banks and financial institutions, identifying any possible areas for concern, allowing them to be addressed and sorting out teething problems. The measure will then gradually be rolled out with all the relevant financial institutions. The impact assessment says that, in the first year—2026-27—we expect a rollout rate of around 2%, going up to 25% in 2027-28. The idea is that you start very small, make sure that it works, iron out the problems and then grow it as it goes on.
I think it was the noble Baroness, Lady Fox, who mentioned that the data could be slowed down. We do not want to bring in data that we cannot process; we want to bring in data that is appropriate. We will bring it in and manage it, as we are able and resourced to do. I hope that that reassures noble Lords; I encourage the noble Baroness, Lady Fox, to withdraw her amendment.
Viscount Younger of Leckie (Con)
I want a bit of clarity on test and learn. We have had two exercises, which have reached proof of concept. I am confused now because the Minister is, I think, indicating that there are test and learn exercises still to begin. How many are ongoing and how many are due to begin?
Baroness Sherlock (Lab)
Clearly, I am expressing this really badly, because I have said it about 17 times and still have not explained it clearly.
When the noble Viscount was a Minister—perhaps it was his predecessor—under the previous Government, they were working with banks to find out whether the proof of concept worked. The answer is that, yes, it does. Test and learn is about saying, “We’re now going to build this up and operate it at scale. How do we do it? What does it look like?” Bit by bit, we will work with a small number of banks; try it out; make sure that the processes, the data pushes and so on work properly; and work with a small number of people who also understand how the sector works as a whole. Then, when it is working, we will roll it out to a wider number.
I am sorry if I have not been explaining that clearly, but that is the difference. The proof of concept asks: can it be made to work? The answer is yes. The test and learn asks: what is the best way to set this up so that the systems will work and so that we get the right information at the right time—a time when we are able to work it properly? I hope that that has helped.
Lord Palmer of Childs Hill (LD)
My Lords, I am also pleased to welcome Amendments 84 and 85, tabled by the noble Lord, Lord Vaux of Harrowden, which serve to strengthen the safeguards within the Bill.
Amendment 84 would ensure that an authorised person must have more than just the existence of an eligibility indicator before embarking on more intrusive investigations. We believe this is a vital protection against overreach, ensuring that individuals are not subjected to unnecessary or disproportionate scrutiny based on limited evidence. Such a safeguard is entirely in keeping with my party’s principles of fairness and proportionality—that word again—and it will help to maintain public confidence in the system by ensuring that investigations are always grounded in robust evidence.
Amendment 85, which requires that information received following an eligibility verification notice is reviewed by an appropriately senior person before any changes to benefits or intrusive investigations are commenced, is equally welcome. This amendment introduces an important layer of oversight and accountability, ensuring that decisions with potentially significant consequences for individuals are not taken lightly or without proper consideration. By embedding these checks and balances into the Bill, we would be not only protecting the rights of claimants but upholding the integrity of our counterfraud efforts. I confirm other comments about how important these amendments are, and I hope that we can carry them forward to Report if need be.
Viscount Younger of Leckie (Con)
My Lords, I rise to speak in support of speak in support of Amendments 84 and 85 in the name of the noble Lord, Lord Vaux of Harrowden. These are thoughtful, proportionate and necessary additions to this schedule, and they speak directly to the themes that we on these Benches, and many across the Committee, have consistently returned to throughout Committee: clarity, fairness and safeguards for the individual in the exercise of significant state powers.
Amendment 84 seeks to ensure that the mere presence of an eligibility indicator is not, in and of itself, treated as constituting reasonable grounds for suspicion, as required under new Section 109BZB(l)(a) of the Social Security Administration Act 1992, before certain investigatory powers can be triggered. This is of fundamental importance. The Bill proposes a system whereby data provided by financial institutions, under an EVN, may trigger further investigatory steps. But what is an eligibility indicator? It is, in essence, a flag: a signal generated through algorithmic or rule-based analysis that a particular feature of a person’s financial behaviour may be anomalous or potentially inconsistent with benefit entitlement.
As I have said before, we must be absolutely clear: an eligibility indicator is not a finding of fact. It is not, in itself, evidence of wrongdoing. Amendment 84 simply ensures that the existence of a flag must be the beginning of a process and not the end of one; that further evidence or analysis must be applied before escalation; that human judgment must play a role, as has been mentioned today; and that when the state exercises its powers, especially when those powers touch on privacy, dignity or the right to subsistence, it does so on the basis of reasonable grounds. This is a proportionate safeguard. It respects the need to act on suspicious patterns, but it also respects the rights of the individual and the integrity of the system.
Amendment 85 builds on this principle by adding an additional layer of oversight—namely, that any action to suspend or amend a person’s benefits or to initiate intrusive investigatory steps must first be reviewed by a person of appropriate seniority and experience, authorised by the Secretary of State. Again, this is not an attempt to frustrate or delay the enforcement regime—it is a recognition that decisions on subsistence-level support must be taken with proper scrutiny by individuals equipped with the training, authority and awareness to make such decisions with the necessary care.
We must also remember that these are not abstract powers. They affect real and often vulnerable people, whose entire financial well-being may rest on the outcome of these decisions. A mistaken suspension of benefits, based on an unreviewed flag or misinterpreted data, can mean missed rent, no food on the table or the spiral into debt and instability. Also, it is possible that, if the system did not work as intended, individuals who suffered wrongful financial detriment—or, worse, reputational detriment—could take legal action.
If we are to maintain public trust in these powers, it is vital that there is confidence in not only their lawfulness but their soundness. A requirement that an appropriately senior official reviews and signs off on such actions is not a high bar. It is, in many ways, the least that we should expect of a responsible and accountable system. Can the Minister confirm, as she did the other day in respect of the Cabinet Office debates, the exact level of an appropriately senior official?
I should add that this chimes with remarks I made in our debate on a previous group about the need to have a so-called four eyes principle of oversight by a human being on decisions made—a fail-safe system for the monitoring of decision-making. The noble Lord, Lord Vaux, outlined the arguments in this respect very well. Together, these amendments would provide what so many across the Committee have called for: safeguards that ensure that the system operates justly as well as efficiently. They would not remove powers or obstruct action. They would embed standards of evidence, scrutiny and accountability into the decision-making process—standards that we would demand in any area of public life where the stakes are this high.
Lord Palmer of Childs Hill (LD)
My Lords, I welcome Amendments 89A and 89B, tabled by the noble Lord, Lord Sikka, which seek to ensure that the Department for Work and Pensions eligibility verification powers are restricted solely to bank accounts held in the name of the benefit claimant. The noble Lord, Lord Sikka, said a lot about this, and I agreed with it. These amendments are a measured and proportionate response to concerns about the scope of data-gathering under the Bill. By limiting DWP powers in this way, we would provide vital reassurance to claimants and their families that only their own accounts, not those of partners, relatives or unrelated third parties, will be subject to scrutiny. This approach would uphold the important principle of privacy and ensures that the fight against fraud does not inadvertently cast too wide a net, potentially impacting innocent individuals.
Further, these amendments would reinforce the Bill’s existing safeguards, which already stipulate that eligibility verification notices may be issued only for the purpose of identifying incorrect payments of relevant benefits and only in relation to accounts in receipt of specified benefits. By making it explicit that only the claimant’s own accounts can be examined, we would strengthen public trust in the system and demonstrate our commitment to fair and proportionate use of government powers.
So many people have joint accounts and accounts with more than two names on them, and I am not sure what would happen in those circumstances. You can see that, when Tom Bloggs or Sarah Bloggs have an account, there may be a reason to look at them—but if it is held by Sarah Bloggs and Tom Jones, what happens then? There is a danger here that people will be brought into the net, because accounts held in several names are very common, and I am not reassured from what I have read that they will not be dragged in in some way. I support the amendments from the noble Lord, Lord Sikka, in this case.
Viscount Younger of Leckie (Con)
My Lords, I shall speak briefly to this group. For once I shall be helpful to the Government, as I rise to speak in opposition to Amendments 89A and 89B in the name of the noble Lord, Lord Sikka.
These amendments would limit the scope of Department for Work and Pensions eligibility verification powers, as we see it, so that they apply only to bank accounts held solely in the name of the benefit recipient, including joint accounts from scrutiny. I recognise the intention behind this proposal, which is to protect privacy and the financial autonomy of those sharing bank accounts with benefit claimants—the noble Lord, Lord Sikka, very eloquently set out his stall—but I respectfully argue that the amendments would create a significant and problematic loophole in the integrity of the fraud and error detection system.
Let us be clear: if these amendments were adopted, a person under investigation for suspected misrepresentation of assets or income could very easily shield those resources simply by transferring them into a joint account, potentially with a spouse, relative, or even a third party. Under the proposed wording, such an account would then fall outside the reach of the DWP’s verification powers, regardless of whether the claimant retained full control over the funds or continued to benefit from them. Perhaps the Minister can help me and the Committee in understanding how the DWP test-and-learn mechanism might have highlighted such an issue, and how it might have provided such a solution.
This is not a theoretical risk. We know from operational experience that individuals engaged in fraudulent activity will often use exactly such mechanisms to conceal income or capital. The ability to move money to a joint account is a clear weakness that could be exploited by those who—we must remember—are believed to have stolen money from the taxpayer.
Under the current drafting of the Bill, the Government rightly allow verification of accounts held by or accessible to the claimant, including joint accounts. This does not mean that third parties will have their data or finances indiscriminately accessed. There are safeguards in place. The department will not be able to view or interfere with every joint account at will, only those, as the Minister indicated earlier, where eligibility indicators suggest a relevant connection, and only where necessary to verify benefit entitlement. These powers are proportionate and targeted.
The amendments, however, would tie the hands of investigators, even where there is a clear and compelling reason to examine whether the claimant has access to or control over funds that affect their entitlement. In so doing, they would introduce a gaping loophole in the very process that is meant to protect taxpayer money and ensure fairness across the system. Let us not forget the public interest at stake here. We are talking about a welfare system that supports millions of people, but also one that must command public confidence and demonstrate that it is both compassionate and resilient to abuse. Creating a known and easily exploited blind spot, as these amendments would, risks undermining that confidence and inviting avoidable losses to fraud or error.
Moreover, this is not a question of criminalising or persecuting people who live with others or hold joint accounts for legitimate reasons. It is about ensuring that where state funds are being claimed on the basis of need, the system has a fair and proportionate—to use that word again—ability to verify the facts, including the assets and income to which the claimant may have access.
No one benefits from a system where loopholes are left open, least of all the people whom the welfare state exists to support. These amendments may be well intentioned, as I said earlier, but they would weaken the ability of the department to carry out its responsibilities effectively, and in doing so would undermine both the fairness and sustainability of the benefits system. I therefore urge noble Lords not to support these amendments. Let us uphold the principle that verification powers should be robust, proportionate and resistant to manipulation—and not inadvertently create a rule that the dishonest can use to their advantage.
Finally, I feel that I might have written a speech for the Minister, but I am sure that she will tell me that I am completely wrong and, perhaps, rebut some of my points.
Baroness Sherlock (Lab)
My Lords, I thank noble Lords, especially the noble Viscount, for doing some of my work for me; I am very grateful. I cannot support my noble friend’s amendments, but I am grateful to him because he has raised a point that people need to understand, and this Committee is exactly the right place to understand the issue.
It might be worth taking a step back. There will be two ways of getting information. We could either go to banks and say, “Here is Mr John Smith, please give us everything you know about him”, but then we would have to give personal information about the individual to the banks, which they do not have. Or we could do what we have decided to do, which is to say: “This is the account into which we pay the money. Please give us the information from that account according to these criteria”. We have gone with the second, because we will not be giving out personal information to financial institutions. However, that does have some consequences, which I will go through one at a time.
First, DWP benefits can be—indeed, are—paid into joint accounts held by one or more individuals. It is therefore essential for financial institutions to share information about joint accounts and any linked accounts that include a relevant benefit payment. Perhaps the most critical reason why we need joint accounts to be in scope of the EVM is that both pension credit and universal credit are household benefits; by that, I mean that eligibility for these benefits will depend on the circumstances of those in the household, including incomes and savings held by both account holders, not just by one individual. It is therefore vital to receive information on joint accounts.
In cases where the relevant benefit is paid into a joint account, information about both account holders and other linked accounts may be shared by the financial institution with the DWP. Again, I have explained why: it is because we cannot give out personal information about them. Once the information is shared, the DWP will then identify the benefit claimant and delete any information that is not relevant to the claim. That is made clear in the code of practice, which noble Lords have had a chance to see; this will be relevant in a moment to the points that the noble Lord made about landlords.
It is worth pausing here. Unlike previous iterations—it may be that the noble Lord is thinking back to some of those—this measure specifically excludes certain accounts from its scope: business accounts, credit card accounts, mortgage accounts, and a lot of other accounts that were previously in scope but are not anymore.
On landlords, if a benefit is paid into a landlord’s account then, yes, that will come back, but, basically, the test will then be: is the account or person a benefit claimant? If not, the information will be discarded and destroyed. Although it is possible, for the reasons I have explained, that a landlord’s account could be identified by a bank if it matches the eligibility indicators and is not a business account, the DWP can easily identify landlords having a housing benefit paid directly to them once we have received the data from a bank. The DWP will screen out these cases and disregard their data. I hope that that assures the noble Lord and that he can in turn assure those who were concerned.
The question of appointees is something that I raised under a previous iteration of this; I simply have not been able to find a way around it. Corporate appointees and businesses are excluded, but, for personal appointees, we simply have not been able to do that. Of course, the appointee’s account will have the benefit paid into it, if the benefit is relevant. The only thing you could do is exclude anyone you knew was an appointee, but then many appointees are claimants in their own right, so you simply could not do that either.
All I can say is that, by receiving from institutions, we will filter out any information that is not relevant; I hope that that will reassure the noble Lord. We are interested only in information on benefits paid by the DWP to benefit claimants; that is for them. If the appointee is holding the benefit for that individual, that is in scope—of course it is—but not if it is for other purposes; likewise goes for landlords. Those with powers of attorney will be treated in the same way as appointees. Again, if the money is for the benefit claimant and it is about that, we can look at it; if it is not, we cannot. I hope that that will reassure my noble friend and that he can withdraw his amendment.
Lord Palmer of Childs Hill (LD)
My Lords, it is another sort of spirit that I want at the moment.
I am pleased to welcome these thoughtful amendments, which significantly enhance the transparency, accountability and fairness of the Bill. Amendment 90 from the noble Lord, Lord Sikka, seeks to ensure that the voices and experiences of benefit recipients are taken into account in any independent review of eligibility verification measures. This is a vital step in building trust and legitimacy for these new powers, ensuring that those most affected have a say in how the system is reviewed and improved. Listening to recipients will provide invaluable insights, helping to identify unintended consequences and ensuring that the system remains responsive and humane.
Similarly, Amendments 91A and 91B are tabled by the noble Lord, Lord Vaux of Harrowden, and my noble friend Lady Kramer, who is busy in the Chamber on the Employment Rights Bill, where I should have been. These are crucial safeguards. Amendment 91A requires that the independent review specifically considers the impact of eligibility verification on vulnerable persons, ensuring that our most at-risk citizens are not overlooked or disproportionately affected. Amendment 91B strengthens the review process by obliging the Secretary of State to disclose all information reasonably requested by the independent reviewer rather than leaving disclosure to ministerial discretion. These changes will create a more vigorous and effective oversight regime, fostering public confidence that the powers are being exercised justly and transparently. I support these amendments.
Viscount Younger of Leckie (Con)
My Lords, in speaking for the Opposition, I should say that there is quite a bit to say, but I have cut down my remarks in the interests of time. I think the Committee will be pleased to hear that.
I regret that once again I oppose an amendment by the noble Lord, Lord Sikka, whose proposed change to Clause 75 seeks to replace the appointment of an independent person with that of a
“panel, at least 50% of which is … elected by recipients of the benefits in question”.
Although I understand the sentiment behind this proposal—namely, to ensure that the voices of benefit recipients are heard in the process of oversight—I respectfully submit that this amendment is not the right way to achieve that goal. It is very democratic in spirit but unworkable.
I will begin with the practicalities. This amendment, if accepted, would introduce a highly complex, costly and poorly defined mechanism for oversight. The idea of electing panel members from among benefits recipients across all forms of social security is, on the face of it, well-meaning, as I said, but in practice it presents serious challenges. Who would organise and administer such elections? How would the eligibility to vote or stand be determined? What benefit types would qualify and what mechanisms would ensure proportional representation across regions, demographics and types of support? Those questions are not trivial; they go to the core of whether such a panel could ever be considered credible, workable or legitimate in the eyes of the public, including the very claimants it is intended to empower. I also suspect that it would take an age to establish. Those are rather harsh remarks, but I wanted to make those points.
Moreover, we must ask what value this mechanism adds that is not already achievable through more conventional, proven models of independent oversight. There are already established ways to ensure that claimants’ experiences and perspectives inform the design and review of eligibility verification processes through public consultation, user engagement panels, stakeholder round tables and the commissioning of qualitative research from trusted bodies. Those are the serious proposals the Minister must consider, and I am sure she will, in the formulation of the Bill.
The proposal put forward by the noble Lord, Lord Sikka, is surely a probing one, although I do not think he said that—but it does not stand up to scrutiny. For example, we must also consider the principle at stake here. Although it is right that we take account of the views of claimants whose lived experience is, I admit, vital in shaping fair and effective policy, it is not clear why 50% of an independent review body should be drawn exclusively from that group and no other. If the logic is that those affected by a policy should have a say in reviewing it, then surely one should equally argue that those funding the system—namely, taxpayers—should have a similar right to elect members or, indeed, that professionals with technical expertise in fraud prevention, digital systems or legal due process should be the ones appointed. In other words, this proposal risks becoming an exercise in representational logic that ticks a few boxes but is ineffective.
On the other hand, Amendment 91A in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer, speaks to principles that we on these Benches have returned to time and again, which I will not repeat now. Clause 75 establishes an independent review of how the Secretary of State’s powers are being exercised. It is only right and essential that when we assess how these powers are working in practice, we also assess how they are affecting those who are most at risk of being overlooked, misunderstood or wrongly penalised by the system. That is precisely what Amendment 91A would ensure. It would add a single but vital criterion to the scope of the review—the need to examine the impact on vulnerable persons, not as an afterthought or a footnote but as a formal and explicit part of the oversight process.
Why does this matter? We know from evidence, experience and common sense that those with vulnerabilities are more likely to struggle with complex paperwork, to misunderstand official communications and to have irregular financial arrangements that do not fit neatly into bureaucratic templates. Those individuals are not necessarily gaming the system; they are trying to get by. But unless the operation of the Bill is sensitive to their needs, they could too easily become the collateral damage of a system designed to root out frauds. Let us be clear: it is entirely possible to take tough action on fraud and take care not to harm vulnerable people in the process. It is not a question of either/or; it is a matter of how we build safeguards into the system so that it delivers justice, not just efficiency.
Amendment 91B, also in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer, addresses a critical point of principle—namely, that the independent reviewer must be genuinely independent. At present, Clause 75 allows the Secretary of State to determine what information may be disclosed to the independent reviewer. In our submission—and, I suspect, in the views of the noble Lord, Lord Vaux, the noble Baroness, Lady Kramer, and other noble Lords—this is not the way to construct a genuinely independent mechanism of review. We cannot have a system in which the Secretary of State can control the flow of information to the independent reviewer. We believe that this amendment would restore some balance.
Public Authorities (Fraud, Error and Recovery) Bill
Viscount Younger of Leckie ExcerptsWednesday 11th June 2025
(1 week, 4 days ago)
Grand CommitteeRead Full debate Public Authorities (Fraud, Error and Recovery) Bill 2024-26 View all Public Authorities (Fraud, Error and Recovery) Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 96-III Third marshalled list for Grand Committee - (10 Jun 2025)
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.
Baroness Fox of Buckley (Non-Afl)
My Lords, as part of the unusual alliance, I think that now is a good time to reflect on where we are in the Bill. We are now talking about powers targeted at recipients of universal credit, employment and support allowance, and pension credit. Relevant accounts that can be flagged to the Government include any account
“into which a specified relevant benefit is paid”.
Approximately 9.4 million people are in receipt of a benefit currently specified by the Bill—one in eight people in the UK. This already risks creating a two-tier society in and of itself, in which certain groups are subjected to intrusive financial monitoring by the state while others are not.
I was very pleased to see these two amendments because I worry when I consider that, last year, two-thirds of claims flagged by a DWP algorithm as potentially high-risk were, in fact, legitimate. We are now talking about the use of algorithms in relation to the group of people I talked about, so I am happy to support the noble Lord, Lord Vaux, and the noble Baroness, Lady Bennett of Manor Castle, on Amendments 75A and 79A.
The key thing here is to stress something that has already been discussed at great length throughout our debates on the Bill, which is what we consider “reasonable grounds”. The noble Lord, Lord Vaux, has raised reasonability throughout. Generally, but not consistently, the investigator powers in the Bill are exercisable only when there are reasonable grounds for suspicion that, for example, fraud has been committed. Reasonable grounds are a safeguard to protect individuals from baseless state interference and fishing expeditions. They uphold the rule of law by preventing arbitrary state power but “reasonable” requires clarification once we go into the context of the role of technology, which is at the heart of the Bill; that is one of the reasons why I have put my name to these amendments and will raise other amendments in relation to algorithms later on in Committee.
These amendments are safeguards to ensure accountability; to ensure that we are clear about the basis on which algorithms are used; and to ensure that we do not allow them to become the basis of lazy caricatures and stereotypes. Examples have been given by other speakers on this group, but I anticipate that it is possible that the Government might well cite the Equality Act as a guard against such discrimination. However, it is important to note that, although the Equality Act does lots of very good things, it will not necessarily help us here because not all prejudice is reducible to protected characteristics. In fact, attitudes to people on benefits in general and sections of the white working class do not fit into the Equality Act, so it is important that we do not just rely on another piece of legislation here.
Also, if we are going to say that AI algorithms, into which a potential discriminatory nature can be built—as has already been explained—were to make mistakes and discriminate against any group that is covered by the Equality Act, we would be clogging up the Equality Act with lots of legal challenges based on this Bill. I think that using the “reasonable” test for algorithms and ensuring that there is a commitment to no discrimination on the face of the Bill is a very valuable way of countering that.
Viscount Younger of Leckie (Con)
My Lords, as the noble Lord, Lord Vaux, said, we are moving towards the DWP elements of the Bill, although I suggest that these particular amendments are more of a hybrid between the Cabinet Office and the DWP. As I think the noble Baroness, Lady Fox, indicated, the DWP elements in scope are universal credit, the ESA and pension credit.
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.
Pension Protection Fund and Occupational Pension Schemes (Levy Ceiling) Order 2025
Viscount Younger of Leckie Excerpts(1 month, 4 weeks ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Palmer of Childs Hill (LD)
My Lords, I thank the noble Lord, Lord Davies, and the noble Baronesses, Lady Altmann and Lady Drake, for their contributions to this interesting evening. I bring fellow Peers back to the order before us—the Pension Protection Fund and Occupational Pension Schemes (Levy Ceiling) Order 2025—which is the basis for our discussion today, rather than the wide-ranging subjects we have dealt with.
The order says that the Pension Protection Fund levy cannot exceed £1.4 billion, but the Pension Protection Fund has announced that it plans a levy of no more than £45 million, as referred to by the noble Baroness, Lady Drake, and potentially of zero. I cite this from the 2025-26 plans of the Pension Protection Fund.
The background is that, when the PPF was created, the worry was that if things turned out badly and lots of underfunded DB pension schemes went bust, the hole in the PPF would be met by jacking up the levy on the sponsors of surviving DB pension schemes—in other words, the employers. Two protections for the employers were put in place: the levy cannot rise by more than 25% from one year to the next and it cannot exceed the levy ceiling, which is the number in this order.
What actually happened was that the levy grew for a while, though got nowhere near the ceiling, but then started to fall owing to a combination, as has been referred to, of good investment returns at the PPF, lower than expected numbers of insolvencies—which is great news—and improved scheme funding. That all gives rise to it being in “robust health”, as the noble Lord, Lord Davies, defined it, and the comments around surplus or reserves, which we are not to talk about.
I guess that the PPF would like to charge a zero levy but does not feel that it can; once it is zero it can never be reintroduced, because it cannot rise by more than 25%, and 25% of zero is zero. It has therefore been lobbying the DWP for a while to allow it to set a zero levy and still be able to bring it back later if, unhappily, things go wrong. I think it has won the argument and I hope that a measure to this effect will be included in the forthcoming pensions scheme Bill that has been referred to.
This order, which is what we are talking about, is a formality and the ceiling obviously does not bite in any conceivable world. Can the Government confirm that, following the success of the PPF, they plan to change the rules to make it possible—this is the important part—for the PPF to charge a zero levy? Other noble Lords have referred to this flexibility that is needed. I hope the Minister can give us a positive steer on that.
Viscount Younger of Leckie (Con)
My Lords, I thank the noble Lord, Lord Davies of Brixton, for securing this important and timely debate about a topic that encompasses and highlights the financial security of retirees, impacts the stability of the economy and involves the balance of responsibility and the relationship between employers, individuals, pension fund boards and trustees, and the Government. As always, it is a pleasure to precede the Minister, the noble Baroness, Lady Sherlock. As she might expect, most of my questions will be directed more towards her than to the noble Lord.
We are not here to contest the order—the statutory annual levy rise in line with the growth of average weekly earnings, thereby increasing the PPF and the occupational pensions scheme levy ceiling by 4% for 2025-26. As the noble Lord, Lord Palmer, said, it is a formality. However, there are legitimate questions to ask and this is an opportunity for me to ask some questions from the Opposition about government strategy, if I may.
First, I am sure your Lordships will agree that, as a safeguard, the Pension Protection Fund is a crucial backstop for protecting the retirement savings of millions of people in the UK. I very much agree with the compliments expressed by the noble Baroness, Lady Altmann, about the PPF and its management. It seems obvious to say this but, nevertheless, I will say it: we should not take for granted the importance of financial security in retirement, especially as people are living longer and relying more on the provision of private pension income.
Welfare Reform
Viscount Younger of Leckie Excerpts(3 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Viscount Younger of Leckie (Con)
My Lords, I thank the Minister for repeating the Statement on these long- awaited and much-trumpeted welfare reforms. I say at the outset that the Government are right to look at our growing welfare bill, which is far too high—I think we agree on that. Without action, it will rise to £100 billion by the end of the decade. We need to increase the number of reassessments and hold more in-person assessments to ensure that only those who are eligible for welfare payments receive them.
In government, up until July, we extended employment support, and Ministers are right to continue with our Conservative legacy in the form of the tailored pathway. My first question to the Minister is: how will the £1 billion earmarked for this be measured in terms of success and meaningful results?
Above all else, we welcome the reannouncement of a host of projects and initiatives that we, the previous Government, were already undertaking, such as changing work capability assessments and creating a single assessment; merging new-style jobseeker’s allowance and employment and support allowance into a new, time-limited higher rate; and, of course, I should remind the Benches opposite, providing support for WorkWell. The Labour Party’s slow conversion to the idea that our country needs everybody who can work to do so should be welcomed today.
However, after eight months of dither and delay, the taxpayer has forked out £7 billion in extra sickness benefits, while nearly half a million more people have been signed off sick. On that note, or perhaps I should say fit notes, there is considerable surprise that the Government have scrapped them. It remains the case that there is a 94% sign-off rate, and this sits at the heart of the sickness benefit epidemic. Where is the action on people being signed off sick for the everyday ups and downs of life? Where are the steps that we need to take to bring down the number of people who are leaving work every single day? Currently, it stands at 2,000 people a day, and Ministers need to tackle this urgently. We do not blame the doctors, who are so busy. Can the Minister spell out what, after today’s announcement, the process is for assessing whether someone is fit to undertake work of any sort—while recognising, of course, that this is a key challenge for any Government?
Today’s announcement leaves more questions than it provides answers, and on the areas the Government have finally acted on, they need to be tougher. I have to say that £5 billion in savings is a drop in the ocean compared to the explosion in disability benefits, which, as I said earlier, are set to rise to nearly £100 billion by 2029. Do the Government think that this saving is sufficient, and enough to fill their fiscal black hole, which is the real reason why they are expected to take emergency budgetary steps next week? We on these Benches are unclear whether this small saving is net of the costs and commitments to extra expenditure in today’s Statement. Can the Minister tell us whether the savings announced today include the £5 billion the previous Government had already agreed with the OBR for reforming the work capability assessment? If so, today’s announcement will mean no real savings at all for the Government.
Turning to the plans to change PIP, they leave us with yet more uncertainty and will leave those most concerned about the speculation in recent weeks still in the dark. Will the Minister say why there have been so many leaks, semi-announcements and prolonged rumours over several weeks, which have caused genuine anxiety for those most vulnerable? I hope that a post-mortem is going on in the department, or even in No. 10, about this. The proposal to require individuals to score a minimum of four points raises crucial questions. Who decides how these points will be awarded, and thus is ultimate arbiter of who is deserving of the state’s support? Will there be an appeals tribunal process, with an even longer backlog? Ministers say they will consult on this. Can the Minister confirm exactly when this consultation will be completed and when she expects the new assessment system to be operational? Why did the Government cancel our PIP consultation? What is the difference between this one—the Minister referred to a review—and the previous Government’s, apart from an at least eight-month delay?
On the “right to try” initiative, can the Minister give us some more information about how this will work? For example, if someone goes on to the scheme but after, say, two weeks, they say the role is not for them, can they go straight back on benefits? What is the catch, if any? It would be very helpful to have an explanation. With today’s announcements being linked to the Green Paper, I am not clear what happens next. Is there a White Paper or is this the end of the process, but for these announcements?
There is clearly much anecdotal evidence of fraud in the benefit system. The Minister will cite the upcoming fraud Bill, which focuses, as she knows, on interventions by banks, but it is not clear whether the Bill tackles the malicious websites that direct those inclined to abuse the benefit system. Will the Minister give her view on this?
This was a chance to seize the moment and to choose work over a life on benefits, but the Government have fallen short. Our country needs everybody who can work to do so. That principle should be at the heart of our welfare system. Yet still, the fundamental question of how many people will be helped back into work, and by when, remains unanswered by this announcement.
I remind the Benches opposite that, under Parliaments going back to 2010, successive Conservative Governments helped 4 million more people into work, and we will continue to champion work as a means to bring dignity, purpose and security for individuals and their families.
I finish by acknowledging the large number of questions that I have posed to the Minister. I have great respect for the Minister; she knows that. She will know that the tone of my questions is not directed so much at her personally but is a riposte to the overtly and rather unnecessary political stance taken earlier in the other place by the right honourable Secretary of State for Work and Pensions.
Lord Palmer of Childs Hill (LD)
My Lords, these welfare reforms aim to reduce benefit spending while encouraging greater workforce participation. I thank the Minister for reading the Statement and the noble Viscount for the useful questions that he has raised. I have respect for both of them, as they know.
From these Benches, we want to see more people in work, including those with disabilities. While the need for reform is clear, the Liberal Democrats are concerned that the current proposals risk worsening the very issues that they intend to address. We all want to see a more efficient welfare system, but that cannot come at the expense of the most vulnerable in society, particularly those with disabilities or health conditions. Instead of focusing on short-term cuts, we must reform the system in a way that is fair and compassionate and ensures dignity for all.
Does the Minister agree that one of the main aims of this reform package is, as the Statement says, to save £5 billion—often at the expense of the vulnerable in society?
One key area of concern are the proposed cuts to benefits for people with disabilities, which could push many into poverty and greater dependence on social care. The chief executive of Citizens Advice has warned that these changes could have “serious long-term consequences”, and we on these Benches passionately agree. For individuals with severe disabilities or health conditions, this reform package may well create further barriers to employment rather than removing them. The Government’s proposal to freeze the health top- up in universal credit for existing claimants, while reducing it for new ones, will only add to the pressure on disabled individuals, undermining their ability to achieve independence and security. Why are new claimants considered less vulnerable than existing claimants? Of course, that is nonsense and worthy of Ebenezer Scrooge.
These Benches welcome the idea of merging contributory benefits and creating a new unemployment insurance, but the fact remains that we are still waiting for an overdue comprehensive overhaul of the Department for Work and Pensions. Until the Government get serious about fixing health and social care—systems that are intrinsically linked to people’s ability to work—the welfare system will continue to struggle. The social care review’s three-year timeline is hugely disappointing and highlights the lack of urgency in addressing these critical issues. If the Government truly want to cut benefit spending, they must first address the root causes, not just apply superficial, short-term fixes borne by those least able to object.
These Benches remain committed to supporting people with disabilities into employment. We agree whole- heartedly with the Government’s aim to provide a right to try to work without the risk of losing benefits. However, from history, I have a sneaking premonition that it will be more difficult, and slow, to get back on to the benefits ladder once you have tried to work. That is what has happened in the past.
The wider changes, including delays in the health top-up for young people and increasing reassessments, must be approached with caution. We need to ensure that any reforms we make are sustainable and focused on long-term support for those who are most in need. Does the Minister agree that a balanced approach is needed—one that addresses the root causes of welfare dependency and puts people’s dignity and well-being at the heart of its reforms?
Universal Credit (Standard Allowance Entitlement of Care Leavers) Bill [HL]
Viscount Younger of Leckie ExcerptsFriday 14th March 2025
(3 months, 1 week ago)
Lords ChamberRead Full debate Universal Credit (Standard Allowance Entitlement of Care Leavers) Bill [HL] 2024-26 View all Universal Credit (Standard Allowance Entitlement of Care Leavers) Bill [HL] 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Viscount Younger of Leckie (Con)
My Lords, once again I thank the right reverend Prelate the Bishop of Manchester for bringing this Bill before your Lordships’ House. As we said at Second Reading, we support the sentiments behind the Bill, which has raised awareness of care leavers and the struggles they face. We all know how vulnerable young people who leave care can be and the challenges of transitioning into adulthood without the support that many others receive.
As noble Lords will be aware, care leavers who are over the age of 18 are entitled to claim universal credit on the same basis as over 25 year-olds, but at a lower rate. Standardising the allowance payable is a noble cause that I know, and we have heard, the right reverend Prelate cares very deeply about, and he is to be commended for his tenacity and dedication to the cause. But finally, to restate our position on the Bill, we believe that a number of alternative provisions already exist, such as the setting up home allowance. Extending the monetary support to care leavers, as this Bill suggests, has fiscal implications, as has been highlighted. It will be up to His Majesty’s Government to decide whether the provisions of the Bill are financially workable.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, I add my thanks to my friend the right reverend Prelate the Bishop of Manchester, and I commend him for his work on this Bill and for giving the whole House an opportunity to understand more about the experiences of care leavers and those in the care system now. I add my thanks to charities such as Barnardo’s and Become. I had the opportunity to speak with care-experienced young people at events there and I learned a lot from that, as I did from discussions with the right reverend Prelate at earlier stages of the Bill.
The right reverend Prelate is quite right that adverse childhood experiences are at the heart of this. We recognise that many care leavers, because of the experiences they have had, are more likely to be out of education, employment or training, and more likely to experience financial difficulty, health problems or homelessness. Although, as the right reverend Prelate rightly predicted, I am not in a position to support his Bill today, I want to say that the Government are determined to make sure that we offer the right support to care leavers. We already offer a range of safeguards and specialist services to support them. Care leavers under 25 can claim the local housing allowance rate of housing benefit; they can get specialist support with transitioning into adult claims; they can get extra help in returning to education if they have missed out on that; and they can get all kinds of support to help them develop and get into jobs. However, there is much more to do and the right reverend Prelate is right to challenge us.
The Government are taking steps to improve support for care leavers and young people more widely. When the Children’s Wellbeing and Schools Bill comes forward, we will be looking to see how we can support care leavers to find accommodation and access local services. Through our youth guarantee, we will help all 18 to 21 year-olds get access to quality training or apprenticeships or find work. But that is all for another day. Again, I thank the right reverend Prelate and those who have brought these issues before the House, I thank all noble Lords who have contributed and I look forward to continuing to work on these issues as time goes on.
National Insurance Pension Underpayments
Viscount Younger of Leckie Excerpts(3 months, 1 week ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Baroness Sherlock (Lab)
That was slightly different: it was about an error in people’s national insurance records. The DWP itself discovered during a fraud and error exercise that there were some historic errors in recording where people should have had home responsibilities protection in their national insurance record, which in turn would have affected their pension record. The Government have now contacted all the people they have identified as potentially missing HRP and invited them to make a claim for those missing periods. HMRC issued over 370,018 letters to potentially affected customers, and there have been approximately 493,813 hits on the GOV.UK HRP online checker. So far, the DWP has received 19,491 cases from HMRC and processed 11,694 of them, paying arrears of £42 million. I hope that answers the noble Lord’s question.
Viscount Younger of Leckie (Con)
My Lords, recent statistics from the DWP demonstrate that 13 million people are receiving state pension payments. Saving adequately for retirement remains a challenge for many, particularly, as has been said, for single women and for those with gaps in employment, such as women taking time out to raise children and people suffering ill health. That is why the previous Government lowered the threshold for auto-enrolment to 18, with an opt-out, to enable retirement savings to commence earlier. As the Minister knows, the deadline of 5 April is fast approaching, before which people under the age of 73 can apply to buy back some of those lost years of contribution going back to 2006, and those benefits could make a huge difference to people’s lives. What is the level of uptake for this? Thinking about the warm words that the Minister gave about publicising DWP products, as it were, what more can she do to publicise this and make sure that the deadline is met?
Baroness Sherlock (Lab)
I thank the noble Viscount; there have been good questions today. With the transition from the old state pension to the new state pension, it became more important that people had their own national contribution records in full, because that is what their pension will depend on in future. The previous Government set a deadline—originally April 2023, if memory serves me—by which people had to decide whether to apply to buy back missing years. That deadline was extended to April 2025, so it is coming up on 5 April. I can assure the noble Viscount that there is a surge of people wanting to buy years back; in fact, HMRC and the DWP are working together to ensure that everybody who wants to pay money to fill those gaps in their record can do so. Not only is there the online tool I mentioned earlier; customers can identify gaps and make payments automatically without even contacting the DWP or HMRC, or they can phone us. We have increased resources to about 480 people working across the Revenue and the DWP to manage the high volume of calls coming in.
To reassure not just the noble Viscount but anyone listening out there: as long as people contact the DWP ahead of the 5 April deadline, they will be able to fill gaps back to 2006. In addition, we have launched an online call-back form; people can simply register their interest and the DWP will call them back within eight weeks. Again, provided they register that interest before 6 April, they will be able to fill those gaps if they want to.
Social Security Benefits Up-rating Order 2025
Viscount Younger of Leckie Excerpts(3 months, 4 weeks ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Janke (LD)
My Lords, I, too, thank the Minister for her presentation. I also support very strongly the Government’s commitment to the triple lock, despite the loud and frequent calls for it to be abandoned. It is worth repeating that those who call for it to be abolished often do so from a position of financial security, conveniently ignoring the fact that large numbers of pensioners are dependent on the state pension, which is still one of the lowest in Europe.
I also welcome the capping of automatic deductions on debt from universal credit that leave people far below the amount they need to live on. But over the last year there have been reports of record levels of deductions from universal credit, and I wonder if the Minister could comment on the reasons for those.
The 1.7% uprating for other benefits will be of little comfort to the growing numbers in poverty. The Joseph Rowntree report has been mentioned already; it tells us that one in five people in the UK—21%—are in poverty. Of these 14.3 million people, 8.1 million are working-age adults, 4.3 million are children and 1.9 million are pensioners. Children, as we have heard, have higher risks of poverty overall, at 30%, versus 21% for the whole population. But larger families with three or more children have consistently faced a higher rate of poverty: 45% of children in large families were in poverty in 2022-23. That is an appalling indictment of this policy, which Labour Oppositions have criticised so much, as the noble Baroness, Lady Lister, acknowledged. I wonder how long it will take for the Government to abolish it.
Today’s uprating means that we are looking to approve a basic rate of universal credit of £92 a week for a single person aged over 25, and £145 for a couple. Yet the Joseph Rowntree Foundation and the Trussell Trust have estimated that at least £120 is needed for a single person, and £200 for a couple, in order to afford even the basic essentials—a shortfall of around £30 a week on the bare minimum needed to survive. Shortfalls in the benefit system are key drivers of poverty, depriving people of the basic necessities for survival. Specific features have been found to increase the numbers in poverty, including the benefits cap and the two-child limit, and the erosion of the value of universal credit means that its standard allowance is now at around its lowest levels as a proportion of average earnings. I too support the Joseph Rowntree Foundation on having a basic minimum floor for universal credit.
Another feature is that the capital cut-off for universal credit has been frozen since the benefit was introduced. This is a form of taxation by stealth of the least well-off, and it hits hard people in their 50s and 60s who are on benefits, having saved something for later life. For example, if they have more than £16,000 in non-pension ISAs, they are disqualified from universal credit. I wonder whether this needs to be looked at again.
The House of Lords Select Committee report Hungry for Change recommended that:
“The Government should embed consideration of the cost of the Eatwell Guide into calculations of benefit payment rates”.
Many of us were very surprised to hear that this is not factored into the calculation of the amount of benefits needed to live on. The report continued:
“The cost of the Government’s dietary guidance should be built in as a reference point to consideration of government interventions, including those relating to welfare and public food provision”.
It also cited, horrifyingly, that
“the poorest decile of UK households would need to spend 74% of their after-housing … income on food just to meet the cost”
of the Government’s Eatwell Guide, as
“compared to just 6% in the richest decile”.
With individuals and families denied the means of buying bare essentials, will the Government undertake a proper assessment of the adequacy of benefit payments to pay for the cost of essentials, including food?
The uprating today, as others have said, is not realistic in the face of ever-increasing poverty in the UK. A far-reaching and radical review of the benefits system is needed to tackle some of the fundamental problems. I know that we all look forward to the forthcoming benefit review, and the child poverty strategy, which we very much hope will address some of these desperate issues that continue to condemn families and individuals to a life of insecurity, hunger and misery, and children to a childhood of deprivation that will stay with them for life.
Viscount Younger of Leckie (Con)
My Lords, I, too, thank the Minister for clearly outlining the essence of these two SIs. I recall that last year, they were debated separately but I cannot remember why. Nevertheless, we are reverting to the status quo ante, and I hope that this will speed things up somewhat.
State Pension: Triple Lock
Viscount Younger of Leckie Excerpts(5 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Baroness Sherlock (Lab)
My Lords, if my noble friend has lots of good ideas about filling in the financial black hole this Government inherited, I would certainly be glad to hear them, and so too would my colleague the Chancellor of the Exchequer. So I encourage him to make a Budget submission and I look forward to reading it.
On the question of pensioners, we were very careful. Means testing the winter fuel payment was not a decision we wanted to take, and we were careful to protect the poorest pensioners—those entitled to pension credit. Those who get pension credit can also find themselves accessing a wide range of other passported benefits that will help support them. We also managed, despite the circumstances, to find the money to maintain the household support fund and to extend it into next year, so that, if there are people still struggling, there is help for them.
There is also plenty of other help and a range of support out there for pensioners, including the warm home discount and cold weather payment. I understand how tough this is. I know that the cost of living is high but the Government are determined to do all they can to make things as easy as possible for people despite the circumstances.
Viscount Younger of Leckie (Con)
My Lords, it is interesting to note that, at the recent general election, the average voter in the average constituency was aged over 55. The demographics are interesting; there are lots of these people, and they matter. The last Government recognised and addressed pension poverty, and the need to support pensioners. The Minister will know that we took 200,000 pensioners out of absolute poverty. Those figures go back to 2010. I find it extraordinary that Labour’s own analysis shows a reversal of 25% of this in the first year alone. On the pensions review, can the Minister tell us a bit more about the timing—when we are going to see some action? In my view, this is yet another review, of many. We are not really seeing action.
Baroness Sherlock (Lab)
That was a little ungracious, I fear, but I will unpick those points one at a time. First, on poverty, let us have a little statistics duel. The last Labour Government lifted a million pensioners out of poverty. Meanwhile, relative pensioner poverty saw a slight increase in the decade between 2010-11, when Labour was last in power, and 2022-23, the period for which we have the latest statistics. We all have challenges to face here, but this Government are determined to work on that.
On the pensions review, as I have explained to the noble Viscount before, stage 1 was focused on making sure that the market was working properly. Stage 2, which follows next, will focus on making sure that we have the appropriate levels of saving in the market and that people have the vehicles in which to invest. We are determined to do this but we cannot fix the entire pensions market overnight. If we tried to do that, we would make mistakes and the noble Viscount would take me to task, rightly, for those. We will do this in the right time, not the fastest time.
Pension Review: Phase 2
Viscount Younger of Leckie Excerpts(6 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Viscount Younger of Leckie (Con)
My Lords, I congratulate the noble Baroness on her promotion. I understand that stage 2 of the review, if it does go ahead, focusing on pensions adequacy, might recommend that pensions contributions increase from 8% to 12%, meaning that employees would continue to contribute 3%, but with employers increasing their contributions from 5% to 9%, which is a very heavy burden, especially on hard-pressed small businesses. In addition, for employees opting out of auto-enrolment, which is their right, the recommendation might be that employers would still pay their side of the contribution. Why did the Chancellor not think holistically about all the costs that businesses have to bear in employing staff when she made the decision in her Budget to raise the national insurance contributions?
Baroness Sherlock (Lab)
My Lords, I thank the noble Viscount for his kind words. I am very grateful; it is very gracious of him. He is asking me to comment on speculation about something that might be recommended in the phase 2 review, which has not started yet, so I hope he will bear with me. We think that getting this the right way around really matters. Phase 1 is about trying to get the market working as well as it should, both the DC side and the consultation on the Local Government Pension Scheme. If we can get the market functioning well and drive more scale and consolidation, looking at what they are doing in Canada and Australia, we can then have a better-functioning market and better returns. At that point in stage 2, we can look at matters of adequacy and at what money is going into it.