Public Authorities (Fraud, Error and Recovery) Bill

Lord Palmer of Childs Hill Excerpts

2nd reading
Thursday 15th May 2025 Lords Chamber

[Lord Palmer of Childs Hill (LD)]

My Lords, I congratulate the noble Baroness, Lady Spielman, on her maiden speech, and we welcome her to the House.

I rise as a Liberal Democrat to speak in firm opposition to the Public Authorities (Fraud, Error and Recovery) Bill. While we all share a goal of preventing fraud and ensuring the integrity of public funds, the Bill, under the guise of fraud prevention, risks entrenching mistrust, undermining civil liberties and further marginalising our most vulnerable citizens. The Minister said that the Bill seeks to challenge the fraud that lines the pockets of criminals—but it goes well beyond that. This legislation should concern anyone who values fairness, proportionality and compassion. My noble friend Lady Kramer spoke about whistleblowing, and I trust that the Minister will also focus on that in her reply.

I turn to those in receipt of carer’s allowance. Many of us in this House will have heard the harrowing stories of carers, often quietly heroic individuals, who face harsh penalties for minor and often unintentional administrative errors. They are not fraudsters; they are parents caring for disabled children, spouses supporting terminally ill partners or elderly people looking after loved ones with dementia. The reality is that carer’s allowance rules are notoriously complex: just a few extra hours of work or a slight rise in income can lead to an overpayment, which many do not even realise until months later, when they receive a demand to pay thousands of pounds.

Under the Bill, such individuals would face expanded surveillance, automatic bank deductions and potentially public shaming, all without clear distinctions being made between honest mistakes and intentional fraud. This is not justice—this is cruelty wrapped in bureaucracy. The Bill proposes sweeping powers to access banking data, as many noble Lords have suggested. Let us be clear: these are bank spying powers that would allow the Department for Work and Pensions to trawl through the bank records of millions of people, not because they are suspected of a crime but because they receive support they are legally entitled to. At a briefing with the Minister, I raised that in this Bill there is no mention of things that all accountants know about, such as the garnishing of bank accounts, which already exist for the collection of debts.

The powers constitute a fundamental assault on the right to privacy. They normalise mass surveillance of the poor, while doing nothing to address the significantly larger issue of tax fraud, which costs the Treasury nearly six times more than benefit fraud but receives a fraction of this attention. The noble Lord, Lord Sikka, referred to this. The problem is that the fine line between tax avoidance and tax evasion is sometimes a grey line. It is also how HMRC and its predecessor, Inland Revenue, tackle the problem when they find that someone has evaded tax. It is generally done by a financial penalty. I am reminded of the anecdotal story of the person told of the financial penalty for his unaffordable error who said, “Could I pay in cash?”.

Where is the proportionality that the noble Lord, Lord Vaux, pointed out earlier in this debate? As the right reverend Prelate said, affordability assessments are needed. Furthermore, the Bill dangerously conflates fraud with error. According to the DWP’s statistics, fraud accounts for just 2.8% of benefits expenditure, yet the narrative pushed by this legislation implies widespread deceit among claimants. In truth, many overpayments arise from the bewildering complexity of the system or administrative mistakes by the DWP itself, mistakes which cost the public £800 million last year. Is it right that someone with a disability who disclosed all their financial details in good faith can be told months later that they owe thousands due to a departmental oversight? Is it right that a carer on the brink of burnout is treated as a criminal because of a minor miscalculation?

One case shared by Turn2us was that of a woman in her 60s, housebound with several disabilities and complex mental health needs. After disclosing her private pension when applying for universal credit, she was told she had been overpaid and faced monthly deductions, even from her personal independence payment and non-means-tested benefit. Her crime was being honest in a broken system. Her punishment was perpetual financial stress and a complete loss of trust in the very institution meant to support her.

I understand the purpose of the Bill, but it is focused on those who can least afford it, and very often, those who can afford it are still going to get away with cheating the system. The Bill does not fix that system; it weaponises it.