Public Authorities (Fraud, Error and Recovery) Bill

Rebecca Smith Excerpts

Wednesday 5th November 2025 Commons Chamber

[Madam Deputy Speaker (Judith Cummins)]

I call the shadow Minister.

[Rebecca Smith (South West Devon) (Con)]

I begin by echoing the thanks expressed to Members in all parts of the House and in the other place who have contributed to the Bill. In particular, I pay tribute to the excellent work of Baroness Finn, Viscount Younger and Lord Vaux, whose detailed and constructive engagement made the Bill stronger, more balanced and more effective.

This Bill is about protecting taxpayers’ money, ensuring fairness for those who play by the rules, and giving our public bodies the powers that they need to tackle fraud and error wherever they occur. Every pound lost to fraud is a pound taken from taxpayers, public services and the people who rely on them. Tackling fraud and error and sending a clear message to fraudsters that they will not succeed is vital, and this Bill took an important step towards doing that, but there was more to be done, and our colleagues in the other place have done a brilliant job of scrutinising the legislation. I acknowledge that the Government have been incredibly constructive in their approach. Thanks to the determination of Conservative and Cross-Bench peers, a number of important concessions have been made, improving the Bill.

I will touch on several of the Lords amendments. Lords amendment 1 concerns the power of the Public Sector Fraud Authority to conduct proactive investigations. When the Bill was introduced, the PSFA could act only when invited in by another authority. That risked preventing it from acting, even when there was credible intelligence that fraud was taking place. Our Conservative colleagues in the Lords rightly identified that gap, and brought forward an amendment that would empower the PSFA to act proactively where there were reasonable grounds to suspect fraud, without waiting for a formal request. That ability to act swiftly and decisively is essential if we are to stop fraud before more money is lost. The Government’s amendment in lieu reflects the principles in Lords amendment 1, ensuring that the PSFA’s new powers operate in a clear and accountable framework. This is an important issue, so we welcome that concession, which strengthens the PSFA’s ability to intervene early and protect taxpayers’ money.

Lords amendments 30 and 31 relate to oversight and accountability, and would ensure that with new powers came clear lines of ministerial responsibility. Conservative peers raised legitimate questions about how serious investigative powers in the Bill would be authorised, particularly those based on the Police and Criminal Evidence Act 1984. The principle is simple: when Government officials are to exercise significant powers, Ministers must remain accountable to Parliament for how those powers are used. Following discussions, the Government have tabled amendments in lieu of Lords amendments 30 and 31, which we have accepted as a compromise, on the basis that the initial guidance is subject to a “take note” debate in Grand Committee. That would allow Parliament to consider and scrutinise the guidance in full. I would be grateful if the Minister could, in his closing remarks, confirm that this remains the Government’s position. I apologise if he said so already and I did not quite catch it.

Let me turn to Lords amendment 84. Modern fraud prevention increasingly relies on technology, including artificial intelligence and data-driven eligibility checks. Used well, those tools can help to identify patterns and protect public funds, but they must be used responsibly and transparently. Lord Vaux, Viscount Younger and Baroness Finn raised fair concerns; they said that the use of AI or automated eligibility indicators should never amount to reasonable grounds for suspicion on their own. Technology might inform decisions, but it must not replace human judgment, so it is welcome that the Government have listened. Their amendment in lieu makes it explicit that before any intrusive action is taken, such as amending a benefit or launching an investigation, the information must be reviewed by a suitably qualified human officer. We believe that ensures that we get the best of both worlds; we harness innovation to protect the taxpayer, while retaining human judgment to safeguard individuals.

Lords amendment 43 concerns the eligibility verification mechanism and its impact on vulnerable people and financial institutions. The amendment would task the independent reviewer of the mechanism with assessing how the system takes into account the additional needs of vulnerable people, whether it risks benefits claimants being prematurely de-banked, and the cost to banks and financial institutions of complying. Throughout the passage of this Bill, Members—including Conservative Members—have emphasised the need to protect those who may be more vulnerable, including people facing financial hardship and those with disabilities.

We are disappointed that the Government are not backing Lords amendment 43, but it is reassuring that they have committed to ensuring that all the points made in both Houses are fed directly into the work of the independent reviewer. We understand that a meeting will be set up between Members and the independent reviewer after Royal Assent so that these issues can be explored in detail. We will continue to push to ensure that Ministers deliver on those promises, but we hope that this engagement will ensure that the review proceeds with a full understanding of Parliament’s concerns about proportionality, cost and fairness.

As the Minister rightly said, Government amendment (a) to Lords amendment 75 is essentially a technical correction. We have no issue with it, because it tidies up the text but does not alter the substance of the Bill.

Finally, I turn to Lords amendment 97, which concerns the issue of reasonable force by Department for Work and Pensions investigators. We do not believe that it was the Government’s intention that DWP investigators should use force against individuals—that power rightly rests with the police, who are trained in its use and accountable for it. However, that was not clear in the legislation as originally drafted. The explanatory note stated that

“This power will be limited to using reasonable force against things not people”,

but that was not specified in the Bill. After we raised this issue in Committee in the Commons, Lords amendment 97 sought to clarify that DWP officers may use reasonable force only against property, not against people. The Government’s amendments in lieu are a compromise, but the Bill does now distinguish between the use of force against people, and the use of force against property for investigators who are not constables, which was the clarification we were looking for.

In summary, thanks to the thorough work of colleagues in both Houses, the Bill today is better than when it was first introduced. It gives the Public Sector Fraud Authority the power to act proactively, embeds ministerial accountability, ensures the responsible use of technology, protects vulnerable people, and provides clarity on how enforcement powers may be used. There remain areas in which we think the Bill could be further strengthened—there is still nothing in it to tackle sickfluencers, nor were amendments requiring the Government to review the whistleblowing procedures in the civil service accepted. It is regrettable that the Minister missed those opportunities, but it is welcome that the Government were at least willing to listen in other areas, and we had some very good debates on the bits that the Government have not accepted.

Although we will not oppose the amendments that the Government have tabled in response to the Lords’ amendments, this Bill must not be the limit of their ambition. It is the latest step in cracking down on fraud and error, but we need to see continued effort, action and enforcement from this Government, because the message must be clear that fraudsters must not, and will not, succeed. Every pound stolen through fraud is a pound lost to the taxpayer, our public services and those who do the right thing. That is why we will keep pressing for vigilance, transparency and fairness as this Bill becomes law.

[Neil Duncan-Jordan (Poole) (Ind)]

The Minister may remember that on Report, I tabled a number of amendments in the hope of safeguarding the public from seeing their bank become an arm of the state. Today, I will speak about Lords amendment 43, which deals with the scope of the eligibility verification measure. The EVM would give the DWP power to give certain financial organisations an eligibility verification notice. That notice would require the receiver to identify relevant accounts that specified benefits are paid into, assess those accounts against eligibility indicators and, where there is indication that incorrect payments have been or may be made, share specified details of those accounts with the Department.

The Bill includes provision for an independent reviewer to conduct an annual review of the Secretary of State’s powers under the EVM. Lords amendment 43 seeks to expand the scope of that review to ensure that the costs to banks are proportionate, and that any unintended adverse consequences to benefit recipients are identified. At the moment, the independent review of the EVM need only consider the extent to which the Secretary of State and the financial institutions in receipt of a notice have complied with the requirements when exercising the measure, and whether the EVM has been effective in assisting in identifying incorrect benefit payments. It does not require the independent reviewer to also consider whether the EVM is being used proportionately, which is the key to Lords amendment 43. It is essential that any consideration of the proportionality of the EVM takes into account the potential harm to individuals.

In Committee, several witnesses warned that the EVM could result in serious harm to benefit recipients. For example, there is the possibility of an algorithmic error when automated systems are used on a population-wide scale. If the algorithms are scanning the bank accounts of 10 million people, an error rate of just 1% will result in 100,000 cases where innocent people are wrongly investigated.