Public Authorities (Fraud, Error and Recovery) Bill

Baroness Bennett of Manor Castle Excerpts

Committee stage
Wednesday 18th June 2025 Grand Committee

Finally, one defence used by the DWP is that direct deduction order powers will not be promiscuously used, as they will be more used as a deterrent to primarily encourage repayment. Indeed, the impact assessment acknowledges that similar HMRC powers to deduct money from bank accounts were only used in 19 out of 22,500 cases evaluated. However, under these proposed direct deduction order powers, the debtor and any joint account holders will already have had their bank statements disclosed by their bank to the DWP before any measurable deterrent effect could be said to apply. This seems disproportionate for the Bill to give the Government the power to look through sensitive financial information in circumstances where the underlying power is hardly ever expected to be invoked and before the purported deterrent can even be said to have taken effect. Instead, my proposal is that these amendments will be a deterrent to the Government overreaching, knowing that powers will need to gain judicial authorisation. That might just rein in any cavalier attitudes to matters of privacy and proportionality in relation to welfare claimants being investigated. I beg to move.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise briefly to support the amendments so powerfully, and with considerable detail, explained by the noble Baroness, Lady Fox of Buckley. I want to cross-reference a couple of things. I was unable to be here for the whole discussion on the last group in this Committee but I came in and heard the Minister reassuring us that there are layers of support in the DWP for identifying the vulnerable and that there is regular vulnerability training.

I have to contrast that with one of my last contributions in this Committee and this Room, talking about the horrendous case of Nicola Green. I try to share as much as I can of what I am doing in the Chamber so that it is available to the world. I have to say that the little parliamentary video of that exchange, with its less-than-ideal lighting—no offence to anyone who is doing their best they can with the television—has, you could reasonably say, gone viral, because there is a flood of comments of people saying what the DWP has done to them. I cannot attest, of course, to the truth of every one of those comments, but there is a profound problem of trust with the DWP.

I fully acknowledge that the Minister, when she was on the Opposition benches, and I have often spoken out strongly on this matter. The Government actually called an inquiry into the DWP’s treatment of disabled people after the EHRC expressed concern that equality had been breached. That is the context in which we are looking at these amendments.

The noble Baroness is calling for people to have a day in court—to be able to have a genuinely independent voice in our greatly respected courts and put the case. If they indeed have committed fraud and can afford the repayments, or it is not a complete error by the DWP, or the DWP is at fault or is not being realistic about how much people need to eat and live, the court will make a ruling. That, surely, is regarded as a basic principle and right in our law.

[Lord Vaux of Harrowden (CB)]

My Lords, I will speak briefly to Amendments 102 and 122, which would require the Secretary of State to apply to the court for a direct deduction order—a DDO. I confess that I am struggling a bit to understand the circumstances in which the Secretary of State would be able to make a direct deduction order, as the Bill is drafted. I hope the Minister will be able to help me.

When we discussed the DDOs in relation to Part 1 of the Bill, the noble Baroness, Lady Anderson, correctly pointed out that a direct deduction order could be made only in circumstances where either there had been a final determination of the amount of the liability by a court or the person concerned had agreed that the amount was payable. I agreed then that that was an important safeguard, as it is a significant restriction on when the DDO process could be used under Part 1. I asked why, if the court was making the determination of liability, we did not just leave the court to determine the way in which it should be repaid, rather than requiring new powers for the Minister to make that decision. The noble Baroness was kind enough to offer to write to me on that, and I very much look forward to receiving her letter.

However, I think the same issue may arise here, except that I am struggling to find the definition of the amount recoverable described in paragraph 1(1) of new Schedule 3ZA, inserted by Schedule 5 to the Bill. Can the Minister please explain how the amount recoverable is determined, and by whom? Does this part have the same safeguard as Part 1, which is either final court determination or agreement by the person concerned, or is it at the discretion of the Secretary of State? I can see, in Clause 89, that the person must have been convicted of an offence or agreed to pay a penalty. That raises the question: does this DDO regime apply in cases or error, or not? Presumably, in cases of error there will not be a conviction or a penalty, so it does not apply in the case of error, but I am confused.

I cannot find anywhere the amount being determined by a court; that is where I am struggling a bit. If the recoverable amount has not been decided by the court, then the amendment in the name of the noble Baroness, Lady Fox, is likely to be necessary. That is particularly important because, just as it does in Part 1, for understandable reasons, the appeal process to the First-tier Tribunal against a DDO prevents a person appealing with respect to the amount that is recoverable. If that is the case, and the amount recoverable has not been determined by a court, I think there is an issue here.

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Allowing the DWP to bypass the courts and directly compel banks to hand over personal financial data, if that is the case, sets a dangerous precedent and is not in keeping with the principles of natural justice. If there are genuine grounds for suspicion of fraud or error, the proper course is to seek a court order ensuring independent oversight and accountability. The amendment strikes the right balance between tackling fraud and upholding the rights and dignity of benefit claimants. I urge noble Lords to support the amendment in the name of my noble friend Lady Kramer. I beg to move.

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to follow the noble Lord, Lord Palmer of Childs Hill, who has clearly and eloquently outlined the reasons for this amendment, which the noble Baroness, Lady Kramer, tabled, and to which I attached my name. The noble Lord talked about the risk of loss of trust in public authorities. We should also look at the other side of this: the loss of trust in banks. People may have heard the acronym GDPR. People might not know all the ins and outs but they think that anything to do with bank accounts is private stuff. They want to trust that if their information is with the bank, it is not going to be handed out to anyone else. We have a situation whereby, although the situation has improved in recent years, still 2.1% of Britons are unbanked. That figure is significantly higher for the under-25s. It is also higher in some regions and nations; for example, Scotland.

We have to think not just about the impact on attitudes towards the DWP. I thank the Minister for acknowledging in her response to my previous contribution that the department has a long way to go. However, bank statements contain all sorts of information beyond what is relevant to anything the DWP knows about. For example, people may find themselves in a difficult situation after a relationship has broken down, and their bank statement may reveal all kinds of things about their personal life that they really do not want anyone else to see. There may be purchases they consider embarrassing. They do not want anyone else to see them. Getting the whole copy of the bank statement is not going to provide just information relevant to what the DWP is doing or not, or any other income and so on. There is going to be a lot of other material as well. As the Bill is currently written, it is disproportionate, as the noble Lord, Lord Palmer, said.

[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.

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[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.

Public Authorities (Fraud, Error and Recovery) Bill

Baroness Bennett of Manor Castle Excerpts

Committee stage
Wednesday 11th June 2025 Grand Committee

[Baroness Coffey (Con)]

My Lords, I rise to speak to this amendment because I was at the Cabinet table when Covid-19 hit this country. I am very conscious of the arduous activity that went on among brilliant civil servants but, of course, mistakes were made, as well as successes.

It is interesting to try to understand why the noble Lord, Lord Palmer of Childs Hill, wants to go into this matter further, recognising that, in Parliament, there have already been several Select Committee inquiries; one was specifically done on fraud. Of course, we also have the public inquiry that is under way, to which the Government are contributing. I am trying to understand the purpose of this amendment and this extra report, recognising that the Government will in no way make any comments until the inquiry has concluded.

My understanding is that the inquiry is still going to take evidence in 2026. For what it is worth, as I am sure the Ministers here will be relieved to know, I am absolutely convinced that this Bill will become an Act of Parliament well before the end of 2025. So there is something here of an odd overlap. I understand that this will continue to be a subject of interest.

This is quite a wide ranging-element. I know that fraud happened. There is no doubt of that. However, we also averted fraud in the DWP. We managed to stop £1.6 billion going out on one particular weekend by intervening. There were plenty of attempts at fraud and, unfortunately, there were successes. Some of those people who committed that fraud are now in jail, thanks to the endeavours of the Government.

The noble Lord, Lord Palmer of Childs Hill, talks about resources that the country may have been deprived of when addressing the issues of Covid. I can honestly say to your Lordships that no resources were set aside at all. This is one of the reasons why there have been considerable challenges on aspects of needing to repay the debt that may have been acquired due to spectacular extra financing, whether that was through businesses or about people who had never claimed benefits in their life before, making sure that they got the money that we believe they were entitled to. That was while recognising that some of the easements initially may have been subject to some fraud, but we also made every effort to try to stop it. I have already given an example of where, in one weekend, £1.6 billion was averted.

For that purpose, the amendment genuinely is unnecessary. The statutory inquiry, I hope, will not be the longest-running statutory inquiry because that is not what the country needs to consider. It would not be the best use of government resources to initiate their own further inquiry and honour this amendment.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I am slightly torn. Yes, we have the Covid inquiry but we also have a country that faces ongoing risk. I was, entirely coincidentally, speaking this morning to someone who was expressing concern about stocks of medical supplies that the Government were holding or not holding. They are being told that the Government were waiting for the Covid inquiry to report and then would look at what might happen. I am afraid that the reality is, of course, that we do not have an influenza virus out there saying, “Just wait until the Covid inquiry has reported and then we can think about attacking Britain”. I am not sure that this is the right way forward, but we need to hear from the Government more generally—I understand that that may not be within the Minister’s portfolio—and maybe the noble Baroness could write to me at a future date. However, we need to think about being ready, in this age of shocks, for all the threats that could potentially hit us—particularly health threats. We should learn from the mistakes that were undoubtedly made under the previous Government. That is an important issue. We need to see more urgency from the Government. The answer of waiting until the Covid inquiry reports really does not hack it in this age when we are facing so many threats.

[Baroness Coffey (Con)]

Before the noble Baroness sits down, it is important to stress, when thinking of prevention of issues and being ready for them, that I am quite confident that the Government have continued a lot of the activity of the previous Government. I will give an example. Although it was for a short time, when I was Secretary of State for Health and Social Care we were being asked to write off hundreds of millions of pounds on Covid vaccines because we had, in effect, anticipated what could have happened. In the end, thankfully that was not needed. That is not a case of fraud, but the noble Baroness was stretching us into preparedness for the future. That is still a key module of the statutory public inquiry now under way. But it would be worth looking at some of the Select Committee investigations that happened, perhaps much more quickly, and some of the government responses that had been provided to them.

[Baroness Bennett of Manor Castle]

I will stay sat down.

[Baroness Finn (Con)]

My Lords, while I recognise the concerns that underpin this amendment in the name of the noble Lord, Lord Palmer, it is both unnecessary and potentially duplicative, given the extensive scrutiny already taking place through existing and robust channels, as my noble friend Lady Coffey made clear. First and foremost, we must acknowledge that a comprehensive public inquiry is under way into the Government’s response to the Covid-19 pandemic. That inquiry, established under the Inquiries Act 2005 and chaired independently, has broad terms of reference, including examination of procurement processes, ministerial decision-making and the use of public funds. The amendment risks pre-empting, duplicating or even undermining that process by imposing a parallel and more narrowly framed exercise before the formal inquiry has concluded its work.

Let us be clear: the Covid-19 pandemic presented an unprecedented national emergency. Ministers, civil servants and public bodies were called on to make swift, high-stakes decisions in the face of an unfolding crisis. They did so with little warning, under extraordinary pressure and with the primary objective of protecting lives and livelihoods. In that context, decisions were taken at pace to ensure that vital supplies were sourced, support was distributed rapidly, and services could continue to operate. Was the system perfect? No—but to assume that those who contributed to the effort to tackle Covid were doing so for malign reasons is inaccurate. However, that is not to say that we should not seek to recover money where errors were made, and it is of course right that we take steps to realise this outcome, which has been the guiding principle of all our engagements with the Bill: public money should be recovered.

We should therefore make full use of the mechanisms that already exist to assess and recover losses. The National Audit Office, the Public Accounts Committee and internal departmental review bodies have all examined pandemic-related spending and made a series of recommendations, many of which are already being implemented. Indeed, the Public Sector Fraud Authority continues to track and pursue recoveries on this matter. To impose an additional reporting requirement through the Bill, especially one that compels Ministers to publicly acknowledge failings before the full picture is known, would not serve the cause of accountability; rather, it risks creating a politicised and partial process, which may generate more heat than light and overlap confusingly with the broader inquiry now under way.

Let us not lose sight of the bigger picture. The Bill is about strengthening the framework to combat public sector fraud going forward; it is not the right vehicle for relitigating decisions taken in the darkest days of a national emergency. The public inquiry will give us the full breadth and depth of insight that is needed, with the benefit of time, evidence and impartial examination. In the meantime, let us not cast unfair aspersions on public servants and Ministers who, in the face of enormous uncertainty and unimaginable pressure, acted on the whole with integrity, urgency and a profound sense of duty.

I urge noble Lords to recognise that the proper process is already in place and that we must allow it to do its job without prejudging its conclusions. For these reasons, I respectfully oppose the amendment.

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[Lord Davies of Brixton (Lab)]

Could the noble Lord wait, please?

As the noble Lord has reminded me, my noble friend’s amendments are in the next group. My noble friend Lord Sikka will not be here and the lead amendment will not be moved; however, the issues raised in those amendments are directly relevant to this group. In order for us obtain further clarification, it would be helpful to the Committee if my noble friend the Minister could, in our discussion on this group, give a broad indication of the response that would have been made to the following group so that those Members who are interested can consider what has been said and take a view on whether the specific issues that would be raised in the next group, but are germane to this group, should be raised on Report. I think that it would be helpful to have the matter that would be raised in the following group clarified in answer to this group because, to be honest, they totally overlap.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I will speak now, as I think it is probably the appropriate moment; I am sorry if I have jumped in over the noble Viscount, Lord Younger. On the next group, I was going to apologise to the noble Lord, Lord Sikka, and say that I would have signed his amendments had I seen them and organised myself in time; however, the noble Lord, Lord Davies, is absolutely right that the two groups fit together.

There are just a couple of things that I want to say in relation both to the amendments addressed by the noble Baroness, Lady Finn, and to those tabled by the noble Lord, Lord Sikka. Independence is absolutely crucial but I am not sure that writing in the word “independent” is quite the right way to approach this. I am not a lawyer but how you define whether someone is independent strikes me as a difficult task; it might exclude someone who has donated a large amount of money to a political party in order then to be appointed to that job, for example, but there are a lot more finer cases than that. This is why I preferred the amendments put down by the noble Lord, Lord Sikka, which would allow a review by the Treasury Committee; to me, that is genuinely independent oversight of a body to ensure that it is independent. None the less, I will address this group of amendments, together with those from the noble Baroness, Lady Finn.

I will pick up the points made earlier by the noble Baroness, Lady Fox, who is not currently in her place, about the level of public distrust that has arisen since the situation with Covid procurement. I was recently on LBC television talking about defence procurement—a subject that is very much in the news at the moment—when I was quite surprised to see, across a broad political spectrum of people, the level of distrust that there is around government defence procurement and the issues that have arisen in that space. As the noble Baroness, Lady Finn, said, these are really important issues of public trust. We know that we have a huge problem with public trust in our institutions at the moment.

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[Lord Vaux of Harrowden (CB)]

My Lords, we have been debating Part 1, which gives substantial powers to the Cabinet Office when the Minister has reasonable grounds to suspect fraud, and we are about to kick off on Part 2, which gives substantial powers to the DWP. Those include police-style powers to enter private premises, search them and seize property, as well as powers to demand information. Those are potentially very intrusive powers, so it is essential that they can be exercised only when it is genuinely appropriate to do so.

The two amendments in this group cover both Parts 1 and 2, and they provide essential clarification as to how the DWP and PSFA should interpret the legal threshold for most of the investigative powers in the Bill, which is the requirement to have “reasonable grounds” of suspicion of fraud.

The amendments are intended to ensure that, when the DWP and PSFA are exercising their investigative powers under this Bill, reasonable grounds do not include generalisations or stereotypes of certain categories of people—for example, that members of a particular social group are more likely to be involved in fraudulent activity than others. Investment in data analytics and other emerging technologies, such as AI, for fraud risk detection is inevitably, and probably rightly, increasing. The Government have signalled their intention to turbocharge AI and to mainline AI into the veins of the nation, including the public sector.

The Government are, as we speak, trying to pass the Data (Use and Access) Bill, which would repeal the current ban on automated decision-making and profiling of individuals. The DWP has invested heavily in artificial intelligence, widening its scope last year to include use of a machine-learning tool to identify fraud in universal credit advances applications, and it intends to develop further models. This is despite a warning from the Auditor-General in 2023 of

“an inherent risk that the algorithms are biased towards selecting claims for review from certain vulnerable people or groups with protected characteristics”.

The DWP admitted that its,

“ability to test for unfair impacts across protected characteristics is currently limited”.

There are real concerns about the inaccuracy of algorithms, particularly when such inaccuracy is discriminatory, when mistakes disproportionately impact a certain group of people. It is well evidenced that machine-learning algorithms can learn to discriminate in a way that no democratic society would wish to incorporate into any reasonable decision-making process about individuals. An internal DWP fairness analysis of the universal credit payments algorithm, which was published only due to a freedom of information request, has revealed a “statistical significant outcome disparity” according to people’s age, disability, marital status and nationality.

This is not just a theoretical concern. Recent real-life experiences in both the Netherlands and Sweden should provide a real warning for us, and are clear evidence that we must have robust safeguards in place. Machine-learning algorithms used in the Netherlands’ child tax credit scandal learned to profile those with dual nationality and low income as being suspects for fraud. From 2015 to 2019, the authorities penalised families over suspicion of fraud based on the system’s risk indicators. Tens of thousands of families, often with lower incomes or belonging to ethnic minorities, were pushed into poverty. Some victims committed suicide. More than a thousand children were taken into foster care. The scandal ultimately led to the resignation of the then Prime Minister, Mark Rutte.

In Sweden in 2024, an investigation found that the machine-learning system used by the country’s social insurance agency is disproportionately flagging certain groups for further investigation over social benefits fraud, including women, individuals with foreign backgrounds, low-income earners and people without university degrees. Once cases are flagged, fraud investigators have the power to trawl through a person’s social media accounts, obtain data from institutions and even interview an individual’s neighbours as part of their investigations.

The two amendments that I have tabled are based on paragraph 2.2 of Code A to the Police and Criminal Evidence Act 1984, in relation to police stop and search powers, which states that:

“Reasonable suspicion cannot be based on generalisations or stereotypical images of certain groups or categories of people as more likely to be involved in criminal activity”.


These amendments would not reduce the ability of departments to go after fraud. Indeed, I argue that by ensuring that the reasonable suspicion is genuine, rather than based on stereotypes, they should improve the targeting of investigations and therefore make the investigations more effective, not less so.

The Bill extends substantial intrusive powers to the Cabinet Office, the PFSA and the DWP, and those powers must be subject to robust safeguards in the Bill. The use of “generalisations or stereotypes”, whether through automated systems or otherwise, should never be seen as grounds for reasonable suspicion. I hope the Minister will see the need for these safeguards in that context, just as they are needed and exist in relation to stop and search powers. I beg to move.

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to follow the noble Lord, Lord Vaux of Harrowden, and to speak in favour of Amendments 75A and 79A, to which I have attached my name and which noble Lords will see have rather broad support in political terms—perhaps not the broadest I have ever seen but it is certainly up there. I must also pay tribute to Justice, a cross-party law reform and human rights organisation that is the UK section of the International Commission of Jurists, which has been most determined in ensuring that these issues are raised in this Bill, in this context.

I have already addressed these issues in the Chamber in a number of amendments to the Employment Rights Bill that I tabled and spoke to. I am not going to repeat all that I said there, but I cross-reference those amendments. If noble Lords want to find out more about this issue, there is an excellent book by the researcher Shannon Vallor, The AI Mirror, which is a useful metaphor for understanding the risks whereby we live in a biased society in which those biases risk being reflected back to us and magnified by the use of artificial intelligence and algorithms. That is very much what these two amendments seek to address.

The noble Lord has already given us two international examples of where using AI, algorithms, stereotypes and generalisations in investigations has gone horribly wrong. I have to add a third example, which is the infamous case in Australia of “Robodebt”. That was an automated debt recovery and assessment programme, from the rough equivalent of the DWP, that was exercised in Australia. There was controversy before and through its implementation, and it was an unmitigated disaster. I point the Minister and others to the fact that there was a Royal Commission in Australia which said the programme had been

“a costly failure of public administration in both human and economic terms”.

I note that the House of Representatives in Australia passed a public apology to the huge number of people who were affected.

In a way, I argue that these amendments are a protection for the Government, that this will be written into law: there is a stop that says, “No, we cannot allow things to run out of control in the way we have seen in so many international examples”. I think these are truly important amendments. I hope we might hear positive things from the Minister but, if not, we are going to have to keep pursuing these issues, right across the spectrum. I was very taken: Hansard will not record the tone of voice in which the noble Lord, Lord Vaux, said that the Government wish “to mainline AI”, but it is important to note that a concerning approach is being taken by the Government to the whole issue of artificial so-called intelligence.

[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.

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[Baroness Anderson of Stoke-on-Trent]

I am so sorry to have disappointed the noble Baroness, but I will be writing to all Members to answer the questions I have outlined.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I am sorry for the Minister’s knees: I apologise in advance. But before she theoretically sits down, in her response, she said that the DWP is essentially relying on existing practices and that this is going to be a continuation of practices that exist in the DWP. In that context, it is important to raise the fact that the Equality and Human Rights Commission has opened an investigation into the treatment of disabled and chronically ill people by the DWP, which suggests that there are real issues here. I note in this context that the EHRC had been going to come to an arrangement with the department, but then decided that the situation was so serious that it had to open a formal investigation. I guess what I am asking is: can the Minister assure me that what is being proposed in the Bill is going to take into consideration previous issues and, hopefully, correct them?

[Baroness Anderson of Stoke-on-Trent]

The noble Baroness will be very aware that we now have several days of Committee before us on stage 2 of the Bill, and I look forward to discussing this and many issues with her as the Committee stage progresses.

Public Authorities (Fraud, Error and Recovery) Bill

Baroness Bennett of Manor Castle Excerpts

Committee stage
Monday 16th June 2025 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure briefly to follow the noble Lord, Lord Vaux, who made a typically powerful case. I echo his comments, particularly on the need for safeguards on the face of the Bill. We need only look across the Atlantic to see how badly things can go wrong and how important it is that there are laws on which future Governments—I am not at all referring to this Government—can be held to account.

I support all the amendments in this group, but I will focus particularly on Amendment 79, in the name of the noble Lord, Lord Sikka, which would insert:

“A copy of the information notice must be sent to the parties affected by the notice”.


In considering that amendment, I looked at reports today from the horrific case of Nicola Green, the mother of a teenager with cerebral palsy, who was pursued by the DWP for more than a year, having been accused of fraudulently claiming nearly £3,000 in carer’s allowance. The DWP—this is the point of the story that is relevant to this amendment—wrote to her employer without her knowledge to try to take money from the pay of this part-time college worker who works less than 14 hours a week. That is a demonstration of how people need awareness so that they can know what is going on. To finish the story of Ms Green, last month the tribunal judge ruled in her favour and said that she had done absolutely nothing wrong. The DWP did not attend the hearing and then said that it was planning to appeal against the judge’s ruling. A few days ago, the Guardian got involved and Ms Green has now been told that she will not be pursued and she will receive information on how she can claim for compensation.

That is one case, but what we are looking at here is when a case is getting started, if we assume that there are reasonable grounds, as the noble Lord, Lord Vaux, has outlined should be put on the face of the Bill. If the DWP asks for this information and it has got something horribly wrong and has misunderstood the whole situation, as we know happens all too often, the claimant who knows about the information request will be in a position—hopefully, without going through the year of turmoil that poor Ms Green has gone through—to be able to stop the matter at that point.

Amendment 79 is, therefore, a terribly important amendment. I hope that we might hear from the Minister an ironclad, watertight statement that this will happen anyway, but if that is not what we hear, I will encourage the noble Lord, Lord Sikka, to bring the amendment back on Report, because it is an absolutely crucial issue.

[Lord Palmer of Childs Hill (LD)]

My Lords, these amendments in the names of the noble Lords, Lord Sikka and Lord Vaux, on the information-gathering powers of the DWP, provide greater clarity and safeguards regarding the collection and consequences of information requests under the Bill.

Amendments 76 and 78 both address liability and aim clearly to establish which party is responsible for any consequences arising from the provision of incorrect information. This clarification will, I hope, be important in ensuring that all parties understand their responsibilities and the potential implications of their actions, thereby promoting fairness and reducing uncertainty.

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[Baroness Bennett of Manor Castle (GP)]

I thank the Minister for giving way. It is important that we identify something here. I mentioned that case study because there are, of course, many carers in this situation. As I understand it, the DWP is considering prosecuting carers where it regards the outstanding sum to be more than £5,000. In November, the Guardian reported that more than 250 unpaid carers were potentially facing prosecutions for fraud under DWP guidelines. I fully acknowledge the points made on this—the noble Viscount, Lord Younger, made some useful points—but I think that there are two different sorts of case here. There are undoubtedly criminal gangs organising frauds, where, yes, you would not want to do so in those cases, but in the cases of these carers you know that it is one person and this may cause issues. There are two different use cases here that might need to be approached in two different ways.

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[Lord Verdirame (Non-Afl)]

My Lords, I agree with many of the concerns that have been expressed in connection with this group, but I will say a few words specifically in support of Amendment 79B in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer. As it stands, paragraph 1(1) in new Schedule 3B affords a very broad discretion to the Secretary of State. It says that the Secretary of State may, for the named purposes,

“give a person of a type mentioned in paragraph 2 a notice … requiring the person to take the following steps”.

On its face, this is an unfettered discretion—or, rather, it is a discretion limited only by the purpose. Other than those purposes, the discretion does not, on its face, have a limit. The power that the Secretary of State has under this clause is very broad because, on receiving those notices, the banks or financial institutions will have to take those two steps. Perhaps later we will explore the step in connection with the eligibility indicators, which is potentially quite intrusive.

It seems to me that the language proposed in the amendment would identify a standard—reasonable satisfaction—that would have to govern the exercise of this discretion. In that respect, together with a number of other amendments also proposed by the noble Lord, Lord Vaux—but particularly in the context of this power—the amendment seems extremely sensible. I urge the Government to consider it and, in due course, accept it.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I attached my name to the Clause 74 stand part notice tabled by the noble Baroness, Lady Kramer, and Amendment 80 tabled by the noble Lord, Lord Davies. The stand part notice is a simple solution, but the amendment of the noble Lord, Lord Davies, effectively, has the same impact, which is ensuring that you can investigate only when there is cause to investigate. I do not care which way it is done, but it is very clear—I associate myself with every word said by the noble Lord, Lord Davies of Brixton, here—that we are now at the sharp end of the Bill. As the noble Lord said and as I understand it, this is unprecedented in British law. This is going trawling; it is a fishing expedition and a mass intrusion. As the noble Lord said, quoting the DWP itself, it is about “‘persons unknown’ at scale”—that is an extremely telling phrase.

To put this in context, today the High Pay Centre put out its annual report on fat cat pay, which exposed what a hugely unequal society we have. It found that, on average, the top payees in organisations were getting 52 times as much as the median paid worker. The most extreme case of this that it found was the security and waste group Mitie, whose CEO was being paid 575 times the median salary of the workers. That is a comparison to the median but of course we know that many of those Mitie workers will be on the minimum wage or very near the minimum wage, and they will be in receipt of the benefits explicitly identified in the Bill. They will face their bank accounts being trawled through without their knowledge, while the CEO, with that lovely and enormously high pay level, does not face the same intrusion. This is a fundamental inequality in our society that is actively dangerous in terms of building the divisions within society.

The noble Lord, Lord Palmer, powerfully introduced the clause stand part notice, but I note his Amendment 89, which would ensure that the Bill may be used only in relation to the benefits listed in the Bill. I will not do the full Henry VIII story but, as is very obvious—it was made clear in the briefing I think we all received from the Justice organisation—with the Henry VIII powers, the Government can extend this to any other benefit. The one that immediately comes to mind, given how much it is in the headlines at the moment, is the personal independence payment—PIP—and the issues and the level of fear that already exist around that. I cannot remember the specific occasion, but I suspect that the Minister will have joined me, under the previous Government, in questioning Henry VIII clauses. This would shut the door on a Henry VIII clause, and it urgently needs to be done. I commend the noble Lord, Lord Palmer, for identifying that and putting the amendment down.

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There are two ways to do it: either we throw everything in at the beginning and Parliament approves it, but then we can do anything we want; or we start here and say, “If the situation changes, we will make an appropriate change with parliamentary oversight”. The fact that the DPRRC and the Constitution Committee have not objected suggests that we are in the right place.

[Baroness Bennett of Manor Castle (GP)]

My Lords, the Minister made a powerful point about the position of the current Opposition. As she identified, the old-age pension being covered in the former iteration of the Bill caused an enormous amount of concern. Obviously, all the groups we are talking about are potentially vulnerable, but old-age pensioners are particularly vulnerable and prone to be stressed and worried about this situation. Can the Minister assure me that the Government will not put the old-age state pension underneath the Bill?

[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.