Public Authorities (Fraud, Error and Recovery) Bill

Baroness Finn Excerpts

2nd reading
Thursday 15th May 2025 Lords Chamber

[Baroness Finn (Con)]

My Lords, it is both a pleasure and a privilege to open my remarks by looking forward to and welcoming the maiden speech of my noble friend Lady Spielman. Throughout her career, she has embodied the highest ideals of public service: courage in the face of complexity, integrity under pressure and an unswerving commitment to the public good. We are fortunate to have her voice in your Lordships’ House.

The Public Authorities (Fraud, Error and Recovery) Bill arrives with a plain but powerful ambition: to protect public money from fraud. On this side of the House, we welcome that ambition, support it and wish to see it succeed. I have a note here to thank both Ministers, but I genuinely mean it when I say how wonderfully constructive they have been and how massively informative in the briefing sessions. I also thank the officials, who have patiently responded to numerous queries and questions posed.

But let me be clear: support for the goal must not mean silence about the means. As the Minister said, fraud is theft from the taxpayer and an insult to every citizen who plays by the rules. Every pound stolen is a pound denied to pupils in our classrooms, patients in our hospitals and families in need of homes. To tolerate fraud is to tolerate contempt for those who entrust us with their hard-earned money. We must act, but we must act wisely.

Before I entered your Lordships’ House, I worked across several departments of government, including the Cabinet Office during the coalition years when my noble friend Lord Maude of Horsham led vital reforms to introduce efficiency savings in government. We learned then what remains true now: fraud is not merely a technical failure; it is a cultural one. We encountered resistance. It was not indifference exactly, but something worse: a quiet preference for ignorance; a fear that exposing long-running frauds might implicate those who should have stopped them; a culture in which it was safer to overlook than to uncover. Ambition became cautious and initiatives dwindled to a timid “proof of concept” exercise. Today it is called “test and learn”, yet 15 years later one wonders how much more learning we really require.

What of the Cabinet Office’s role in this Bill? The Government propose granting expansive new investigatory and enforcement powers to the Public Sector Fraud Authority within the Cabinet Office. These powers include the authority to compel sensitive financial disclosures, seek court warrants to enter premises and seize evidence, access personal bank records without any duty to inform those whose accounts are being accessed and impose substantial penalties. All such powers are to be exercised administratively by officials ranked no higher than higher executive officer and without explicit ministerial authorisation.

Clause 3 permits officials to compel citizens to reveal extensive financial details. Clause 7 grants powers akin to those of police to seek warrants for searches and seizures. Clauses 50 and 53 enable officials to impose civil penalties without sufficient scrutiny. Yes, the Bill proposes an independent reviewer under Clause 64 to oversee these powers, but a closer look reveals that this reviewer possesses no statutory authority to halt or reverse potentially abusive or inappropriate decisions. Even more concerningly, their terms, resources and remit are entirely controlled by the Minister whose decisions they are tasked to oversee. Such arrangements risk creating oversight in name only—an illusion of accountability rather than genuine scrutiny. The Cabinet Office’s enforcement unit, we are told, will lead this charge. But who are they? How many officials are there in this unit? To date, we have been told it is 25, but will this information be published? What expertise do they possess and what data will they use? These questions remain unanswered.

It remains entirely unclear precisely what types of fraud these sweeping new powers will enable the Cabinet Office to investigate. The Government’s Explanatory Notes suggest that the Public Sector Fraud Authority will focus on fraud beyond the traditional domains of HMRC and the DWP. Yet this raises an immediate bureaucratic contradiction. If departments currently lack the powers or resources to tackle such fraud effectively, surely the logical step would be to empower them directly. Conversely, if departments already possess sufficient powers but prefer not to use them, we risk creating a perverse incentive for them to keep straightforward fraud cases in-house while transferring politically sensitive, legally complex or reputationally hazardous investigations on to the Cabinet Office—effectively outsourcing responsibility for difficult decisions.

Even more troublingly, the Cabinet Office is under no statutory obligation to accept cases referred by other departments, and the Government have provided no clarity at all regarding which types of fraud the Cabinet Office intends to investigate or decline. Compounding this confusion, the Cabinet Office has recently announced significant staffing cuts. We therefore face the surreal scenario of departments attempting to offload their most complicated and resource-intensive fraud cases on to another department that is undergoing headcount reductions and will therefore be ill equipped to pursue them. The inevitable outcome will be bureaucratic gridlock, with challenging cases bouncing endlessly between departments, responsibility blurred, accountability evaporating and serious fraud quietly slipping into administrative oblivion.

The scale of the problem we face is staggering. The National Audit Office reports that detected public sector fraud amounted to £3 billion last year, with the true scale estimated at possibly £28 billion. Benefit payments alone lost £10.2 billion to fraud and error, while temporary Covid schemes were exploited to the tune of £10.5 billion. Yet the Bill’s impact assessment forecasts just £22.8 million as a best-case scenario in financial return from the Cabinet Office’s new powers. We cannot allow a situation where the Cabinet Office is allowed to act like a second-rate bailiff, extracting modest sums through draconian means while ignoring the massive haemorrhage of taxpayer funds that continues in plain sight.

This side of the House supports the fight against fraud, but we will not support it blindly. Our goal must be a lean, sharp, just system that deters dishonesty, recovers stolen funds and never forgets the dignity of the citizens it serves.

I look forward to today’s debate and to Committee, where this House can do what it does best: improve legislation, ensuring that it not only sounds good in a press release but works effectively in the real world. We share the Government’s ambition and we welcome the Bill’s purpose, but we owe taxpayers something far better than good intentions. We owe them a system that truly works.