Public Authorities (Fraud, Error and Recovery) Bill

Baroness Fox of Buckley Excerpts

Report stage
Wednesday 15th October 2025 Lords Chamber

[Lord Vaux of Harrowden (CB)]

My Lords, I speak very briefly in support of Amendment 2. Before I start, I would like to echo the words of the noble Baroness, Lady Finn, about the exemplary engagement on this Bill, which has been extremely constructive. I am very grateful to both noble Baronesses for that.

The Bill as it is currently written creates a range of powers for the Minister of the Cabinet Office to investigate fraud against public authorities and to recover amounts, but the Minister can use those powers only in relation to other public authorities if requested to do so by that public authority. That does seem somewhat perverse. It is not uncommon for those who manage organisations to hide the fact that they have been subject to fraud, because they could be criticised for allowing that fraud. We could have a situation where the Minister has reason to believe that a public authority has been the victim of fraud—perhaps a whistleblower has tipped them off, as in the last group—but, despite having reasonable suspicion, the Minister would not be able to use these new powers. I do not see how that makes sense. If these new powers are to be effective in reducing fraud, it must make sense that the Minister can use them in any situation reasonably considered to be in the public interest, not only when the public authority requests them.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I find myself in a difficult position: I am not usually one to want to give more power to Ministers of State or bodies like the PSFA. However, I am very sensitive to contemporary events in which local authorities have not necessarily always been open about things happening on their watch. I am thinking of things like the grooming-gangs scandal: things happen, and they are covered up. I therefore want to be in a position where the correct authorities can intervene if they suspect something wrong is happening. In that sense, I do with some trepidation support Amendment 2.

However, I also want to emphasise the importance of the second amendment in this group, Amendment 19, because one of the things that is absolutely crucial to building trust—which I know the Minister has emphasised this Bill can do—is that we have transparency, that we are able to see wrongdoing and that it is open for the public to find out what is happening locally. Otherwise, a culture of secrecy could well continue. These amendments are sensible in engendering real trust in the process moving forward.

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[Lord Vaux of Harrowden (CB)]

My Lords, I rise briefly to add my support for Amendment 3, which would require any information notice to include a statement that the notice does not imply that the person named is guilty of fraud. This is important because a bank that believes a person is guilty of fraud must take actions that may include closing or freezing accounts, issuing suspicious activity reports, and so on.

This has been an area of much discussion as the Bill has gone through Committee, and I know that the financial services industry has raised a number of concerns. Many of those concerns have been dealt with by amendments tabled by the Minister, but this amendment would put it beyond doubt. It adds no onerous obligations, so I urge the Minister to accept it.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, throughout Committee, concerns were raised about the amount of information-gathering power the state will have, particularly the relationship between banks and the information that could be gained. I cannot emphasise enough the plea that these amendments make, particularly Amendment 3: that it is important when such power is being accrued that we do not forget very important principles such as “innocent until proven guilty”.

There is no doubt that if you have information that suggests that somebody could be guilty of fraud, that does not make them guilty. Unless there is a constant reminder that they are being investigated or information is being gathered, they will potentially be subject not only to stigmatised attitudes but to debanking measures and discriminatory actions, as we have just heard.

I really hope the Minister can reassure us that we are not going to be glib about the impact of the powers the Bill accrues to the state, which could destroy innocent people’s lives. That might not be the Government’s intention, but it could be an unintended consequence. Therefore, this amendment is very important, and we need guidance or reassurance, or to hear the ways in which this could be dealt with.

[Lord Palmer of Childs Hill (LD)]

My Lords, we are in a world of information-sharing and information-gathering, and this is where that starts and stops. Amendment 3 would ensure that

“information notices issued to banks and financial institutions include a clear statement that the person to whom the information relates is not necessarily guilty of suspected fraud”.

Amendment 4

“would limit the persons to whom information may be disclosed by requiring the Secretary of State to specify eligible persons in regulations”.

In our view, these are sensible safeguards and regulations. On that basis, we on these Benches broadly support the amendments.

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[Baroness Finn (Con)]

My Lords, this amendment, tabled in my name and that of my noble friend Lord Younger of Leckie, seeks to insert a new subsection in Clause 7 requiring the Minister to publish, within six months of Royal Assent, statutory guidance setting out the process by which authorised investigators are appointed under this part of the Bill.

Clause 7, as it stands, is one of the most powerful provisions in the Bill. It confers on authorised investigators a suite of powers drawn from the Police and Criminal Evidence Act 1984—powers that are usually reserved for police officers. These include the ability to apply for search warrants, seize property and access computerised information. These are not trivial powers; they allow the state to enter homes and businesses, seize personal possessions and compel the disclosure of data. Yet, as currently drafted, Clause 7 defines an authorised investigator as

“an individual who is authorised by the Minister to exercise the powers conferred by this section”.

It is, in effect, circular: an authorised person is whoever the Minister authorises. There is no clarity, no set of criteria and no publicly available process to explain how these individuals are selected, trained or held accountable.

If we are to grant powers of this magnitude—powers that mirror those of the police—Parliament and the public are entitled to know who will wield them and on what basis. The police are subject to detailed recruitment standards, codes of ethics and training requirements, all of which are set out in published documents such as the National Recruitment Standards-Eligibility Criteria for Police Recruitment and Consistent Recruitment Practices. Those standards exist for a reason: because with greater power comes greater responsibility. We should expect nothing less from the Public Sector Fraud Authority or from any civil servants who are to exercise PACE powers on behalf of the Minister. The public will rightly expect the same degree of rigour, impartiality and transparency that they would from a police officer acting under similar authority.

The amendment therefore asks for something very modest: a requirement that the process by which such authorisations are made be set out in guidance published within six months of this provision coming into force. That guidance would need to explain who is eligible, how individuals are assessed, what qualifications or training they require and what oversight mechanisms apply. In doing so, we would provide reassurance to Parliament and the public that these powers will not be exercised lightly and that those who wield them will be suitably qualified, appropriately vetted and properly accountable. We are, after all, creating a precedent here. These powers will not exist in isolation; they could endure for decades, exercised by future officials in future departments. It is therefore essential that we get the governance right at the outset and that we put clear expectations on the record and, ideally, in the Bill.

This is an area where guidance can make a real difference. It would strengthen the operational credibility of the new regime, improve transparency and protect the reputation of the PSFA. It would also provide Ministers with a clear framework to defend and justify their appointments in future. I hope, therefore, that the Government will look carefully at this proposal and, if they cannot accept it today, that they will bring back their own amendment at Third Reading to ensure that the appointment and oversight of authorised investigators meet the same professional standards and ethical safeguards that we rightly demand of our police. I beg to move.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, after Committee this was one area of the Bill that I literally had nightmares about. I think a really dangerous precedent is being set here. I am rather disappointed that the noble Baroness, Lady Finn, will not divide the House on this, because this is one area where inadvertently handing over police powers to civil servants could completely backfire and cause real, serious problems.

I was talking recently to a group of people about some of the problems within the police force. Even though we have vetting and training, there are serious and well-documented problems of corruption, in some instances, or misbehaviour—I hardly need rehearse them. These police officers are charged with enormous privilege to act on behalf of the state. Therefore, we know that even when we have such safeguards in place, people with power can abuse that power.

In this instance, this Bill, however well meaning, intends to give similar powers to people when we have no idea what their training will be, whether they will be vetted and what qualifications there will be. Therefore, this amendment is entirely appropriate. It is rather modest, but it does at least seek to provide some safeguards for what is happening here, which is that the state is setting up a civilian population to act as police officers. To be honest, the public do not know about it. It is shocking. Whenever I have told anyone that this came out in Committee and that it is contained in the Bill, it is the thing that has shocked people the most. I hope not just that we can receive reassurances but that concrete responses are brought forward by the Minister as to what can be done to ensure that this does not go very badly wrong and backfire.

[Lord Palmer of Childs Hill (LD)]

My Lords, clearly, it would be best if something such as who these investigators are was in the Bill so that we have more detail. What we are being offered by these amendments is to require the Minister to outline in statutory guidance the process for appointing authorised investigators. This is by no means as good as having it in the Bill, but I believe that statutory guidance has to be carefully considered, because who is appointed to investigate should be decided not just with a flick of a pen but with more careful consideration. We on these Benches are broadly supportive of this amendment, because we believe it would add additional transparency to the appointment process.

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[Baroness Finn (Con)]

My Lords, this amendment, tabled in my name and that of my noble friend Lord Younger of Leckie, seeks to insert a new clause establishing clear fraud risk management duties for all public authorities that oversee major spending programmes—that is, those involving annual disbursements exceeding £100 million. The purpose of this amendment is straightforward but fundamental. It is to ensure that the Public Sector Fraud Authority does not become, as it very easily could, an external body to which departments can simply outsource responsibility for managing fraud risk, rather than taking ownership of it themselves.

We have heard a great deal, rightly, about the scale of public sector fraud and the cost to the taxpayer, but as we look to the future, the real question is not simply how the PSFA will investigate or recover those losses; it is how we build a culture of counterfraud across the public sector—one in which every department, agency and accounting officer takes personal and institutional responsibility for preventing fraud at source.

This amendment aims to do exactly that. It would require all public authorities responsible for large spending schemes—those worth more than £100 million a year—to register those schemes with the PSFA, conduct fraud risk assessments and prepare annual fraud measurement plans. Those plans would have to use robust, statistically valid methods to estimate fraud and error rates, such as representative sampling or equivalent techniques. The PSFA would then independently verify those reported figures, publish an annual report comparing departmental self-assessments with its own verified data and assign each authority a red, amber or green rating to reflect the adequacy of its fraud management arrangements. Those ratings and the underlying data would then be published, both in each department’s annual accounts and in the PSFA’s report to Parliament.

Finally, where there are significant discrepancies or failings, the PSFA would have the power to require the relevant authorities to submit an action plan within 30 days setting out how they will correct the deficiencies. Compliance with these duties would then be subject to audit by the Comptroller and Auditor-General, bringing this entire framework within the scrutiny of Parliament.

This is a serious proposal that goes to the heart of what we have been saying throughout the passage of the Bill. Fraud is not a problem that can be solved by a single agency, however capable. It must be the business of the entire public sector. We cannot allow a situation to develop where departments and public bodies come to see the PSFA as an external safety net—somewhere they can pass the buck to when something goes wrong. If we are not careful, that is precisely what will happen. Officials will say that fraud is the PSFA’s job, Ministers will reassure Parliament that the PSFA is on the case and, in the meantime, the very culture of accountability that we are trying to build will start to erode.

This amendment reverses that logic. It would make counterfraud a statutory discipline—something that must be embedded, measured and reported on within each department and public authority. It would give the Minister for the Cabinet Office the information and oversight that they need to see at a glance where problems lie across government, and it would allow Parliament, through the Comptroller and Auditor-General, to see how public money is being protected and where it is being put at risk. In short, it would ensure that no official, no Permanent Secretary and no department can hide behind the PSFA. It would place responsibility exactly where it belongs—on those who spend and manage public money.

This approach also has a longer-term benefit. If departments develop and strengthen their own internal counterfraud capability, the need for PSFA intervention should gradually decline. That is what success should look like: not a PSFA burdened with firefighting every scandal across government but a public sector that has learned, embedded and internalised the discipline of fraud prevention. That is the culture shift we need. It is how we stop treating counterfraud as an emergency response and start treating it as an essential part of good public administration.

This amendment would give practical effect to that ambition. It would give the PSFA oversight, the Minister visibility and Parliament the means to scrutinise what is and is not being done across the system. If the Government are serious about tackling fraud at scale, then this is how they can demonstrate it: not by concentrating power in one central authority but by building a resilient, accountable and transparent network of fraud management across the public sector.

The amendment would strengthen not just the Bill but government itself. It would embed responsibility where it belongs and ensure that accountability, transparency and culture change go hand in hand. I beg to move.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, one reason why I support the intention of the Bill is that I have become concerned that major fraud with public money has gone unchallenged for too long. One of my worries about the Bill is when it goes after low-hanging fruit—that is much more in relation to people on benefits, which we will discuss later on Report.

This amendment seems prepared to challenge what has become complacency about public money and waste and seeks to find a mechanism to ensure that it does not become yet another box-ticking bureaucratic exercise. While I am worried about even more bureaucracy, the intention behind the amendment is serious and rightfully puts the focus on where we should be worried: where people in public life have become utterly negligent with the taxpaying public’s money and feel that they will not be penalised. I am happy to go along with this, because I too worry that the PSFA will otherwise simply be a box-ticking exercise—somewhere where these matters will not be fully accounted for and discussed with the public. I will support the amendment should it be pushed further.