Georgia Gould MP: speeches

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Speeches

4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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We have published an impact assessment. That says that with the current size of the enforcement unit, we expect there to be about eight cases, so a small number, but of course if the powers work well and we expand the unit, that will increase. As the hon. Member would expect, we have engaged heavily across Government on all these questions. The critical thing is that there is significant deterrence to having to go through a court process—in terms of the interest that is going to grow on the debt, and the fees that would be accompanied by the legal costs and other costs associated with that process. Our hope is that the majority of people will go through a voluntary process—that will be both easier and less expensive for them—and that these powers will be used primarily as a deterrent. Question put and agreed to . Clause 15 accordingly ordered to stand part of the Bill . Clause 16 ordered to stand part of the Bill. Clause 17 Direct deduction orders Question proposed, That the clause stand part of the Bill.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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I welcome the support for the clause. To clarify, the operational costs of running PSFA operations and investigations will not be included in reasonable costs. There is work being done through the test and learn period by the enforcement unit to inform those costs, and guidance will be published in due course. As I have set out previously, there will be independent oversight of the full use of these powers, by a team that will answer to an independent chair. They will report to Parliament and will look at all aspects of the use of these powers, including the cost. If it is not established by agreement, we will have to apply to a court or tribunal to determine what the debt is, so there will be that added aspect of independence. For asset seizing, we can apply for orders through the courts. In evidence we heard from the financial industry, there were questions about how the powers will work together, and there is work going on to respond to some of those questions. Our teams are working very closely with those financial bodies. Question put and agreed to. Clause 13 accordingly ordered to stand part of the Bill. Clause 14 ordered to stand part of the Bill. Clause 15 Payable amounts Question proposed, That the clause stand part of the Bill.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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It is a pleasure to serve under your chairship, Mrs Lewell-Buck. Clause 13 allows the Government to use the proposed recovery powers to recover late penalty payments and associated interest deriving from the civil penalty regime that is introduced in chapter 5 and any additional relevant costs, either awarded by a court or tribunal or incurred in exercising the recovery powers. In all of these cases, money will be owed to the public purse. Once it has been recovered, it can be used for public good. If these sums were to remain unrecovered, it would not have this positive impact. We are building strong safeguards and appeal routes into all our measures, including on the application of penalties. Decisions to impose a penalty will be taken by authorised officers, and we have discussed the training that they will have. It is also intended that the debt recovery powers will be overseen by the independent oversight mechanisms, which we will turn to later in the session. Where we are justified in using the proposed recovery powers to seek payments directly from bank accounts and pay-as-you-earn earnings, we want to be able to use them. The penalties and costs will all derive from the fraud investigations that the Public Sector Fraud Authority will carry out. Clause 14 restricts when chapter 4 recovery powers can be used to recover penalties. They can only be used when the timeframe for appealing a penalty has passed without any appeal being bought or any appeal against the penalty has been finally determined by a tribunal. Penalties are issued for important reasons to encourage compliance and to help make the whole Bill work effectively, and to help make the PSFA effective in its efforts to tackle fraud against the public sector. Penalties are not something that can be put into the back of a drawer and forgotten about. Fraud is an expensive business for Government. It costs us money when people defraud us. It costs us money to investigate, to take proceedings through courts and to pursue recovery. It is not fair that these costs are shouldered by law-abiding citizens. It is right that those who do not follow correct procedures are penalised and have to pay. Clauses 13 and 14 enable us to hold debtors to account, driving up recovery of what is owed by letting us use the recovery powers in a wider but proportionate manner and with the appropriate safeguards and appeal routes in place. However, this has to be done with respect of due and proper process, which is exactly what this clause mandates. These clauses are important safeguards that rightly prioritise the liable person’s right to appeal a penalty decision over the recovery of the penalty. It provides us with operational flexibility to recover a range of debts, driving up the value for money of our operations. I commend clauses 13 and 14 to the Committee.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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I welcome the opportunity to respond to the amendment and to clarify an error that I made in a previous discussion that might have contributed to some confusion. When I talked about the recovery of debt and a limit to the amount that will be recovered, I mentioned up to 40% of assets when I meant to say credited amounts. To be clear, in the instance that the shadow Minister mentioned—say the Member for Kingswinford and South Staffordshire defrauded the Government, they had £200,000 in their account and it was a lump sum, the powers would enable the PSFA to recover that money, with the safeguards of not leaving that person in financial destitution. The 40% is related to ongoing repayments and the speed of repayment. I hope that that gives some reassurance to the hon. Member. To the points that Opposition Members have made about vulnerability and training, the PSFA authorised officers will be highly trained. They are subject to professional training and a code of ethics within that. That includes the kind of professional curiosity that the hon. Member for Torbay talked about. On debt recovery, they will work to establish debt practice, including the debt management vulnerability toolkit, which is publicly available. I would be pleased to send him those documents so he can understand the vulnerability assessments that will be made and scrutinise them. To go through the detail of the clauses, specifically for a regular direct deduction order, the total deductions in a 28-day period must not exceed either 40% or 20% of the amount credited to the account in the relevant period: for fraud, 40% is the maximum; for error, the maximum is 20%. Throughout the Bill, we have sought to bring powers that are used elsewhere into the PSFA, not to create brand new powers for the PSFA. This provides assurance of their effective and proportionate use, and we are doing the same here. The 40% maximum limit is in line with existing legislation, such as the DWP’s existing direct earnings attachment powers and the Child Maintenance Service deduction from earnings order powers.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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Direct deduction orders will be an effective tool in recovering money owed to the public sector. However, it is important that we include measures in the Bill to make clear the obligations of banks and account holders with regard to the orders. Clause 26 introduces restrictions on accounts from the perspective of banks. The bank must ensure that the account is not closed at the request of the account holder. If the notices relates to a lump sum direct deduction order, the bank must also secure that no transactions occur that would reduce the balance below the amount specified on the order, or the bank may transfer the specified amount, or the amount in the account if it is lower, into a hold account created by the bank to protect it. The bank must ensure that no transaction occurs that would result in the hold account’s balance falling below the amount transferred into it. When a bank transfers an amount into a hold account, it must ensure that in doing so, it does not cause any disadvantage to the liable person or any account holder. These provisions are essential and are a key safeguard to ensure that funds required for recovery are preserved while also protecting account holders from any disadvantage, thereby maintaining trust and fairness in the enforcement process. Clause 27 imposes restrictions on account holders to prevent them from taking any action that may frustrate the effect of the first notice or direct deduction order, which the shadow Minister raised concerns about. To clarify, frustrating the effect of the first order in this context means frustrating the effect of the proposed direct deduction order, the terms of which are set out in the first notice. Frustrating the effect of the first notice or the final direct deduction order might include a liable person creating a new bank account in order to redirect the payment of their salary, or the liable person falsifying the extent of their protected essential living expenses. These restrictions are vital to ensure that funds necessary for debt recovery are not deliberately concealed or moved, thereby upholding the fairness and integrity of the public fund recovery system. They are also balanced within the wider direct deduction order measure, which includes review and appeal rights that are also intended to be subject to independent oversight, to be discussed later. Should a person frustrate the effect of the first order or direct deduction notice, a trained authorised officer may decide to impose a penalty under clause 53.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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The clause outlines the information notices that can be given to a bank, how the bank must comply, the information it must provide and how the information can be used. To determine whether to make a direct deduction order, an account information notice or a general information notice may be given. This is crucial in ensuring that sufficient financial information is gathered to facilitate informed debt recovery decisions, thereby enabling the effective recovery of public funds. The information provided by the banks is necessary and proportionate to ensure that the liable person’s financial situation is considered before a direct deduction order is made. This approach is already used by HMRC for its comparable direct recovery of debt, and it is also requested by the DWP in part 2 of the Bill. The information gathered will protect vulnerable people, prevent hardship and safeguard non-liable joint account holders, while acknowledging the vital need to recover public funds lost to fraud and error. Banks must comply with a notice under the clause, and may be liable to a penalty for failure to comply without a reasonable excuse—this will ensure that the measures are adhered to. Furthermore, banks are prohibited from notifying account holders that they have received a notice under clause 19, to avoid tipping off debtors and thereby prevent money from being moved from the account. Overall, the clause is necessary in furthering the effective recovery of public funds. Having outlined the key provisions in clause 19, I commend it to the Committee.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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I am grateful for the shadow Minister’s questions. This clause and his questions really highlight the balance between safeguarding vulnerability—ensuring that people are not left without money to be able to support themselves and dependants—and recovering all the money owed to the Government. Hopefully, the shadow Minister will be reassured that alternative recovery methods will be available, including using other powers in the Bill to gather information on, or recover money from, other accounts held by that liable person. If an individual continues to try to frustrate the process, as the shadow Minister has described, there are civil penalties through deduction orders of £300. If all the powers in the Bill are frustrated, the authorised officers will be able to apply to the courts to seize assets and to use other powers available. There are a number of options to ensure the full recovery of defrauded money to the state. Question put and agreed to. Clause 25 accordingly ordered to stand part of the Bill. Clause 26 Restrictions on accounts: banks Question proposed, That the clause stand part of the Bill.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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I referred in my opening remarks to the positive and ongoing conversations that we are having with banks and the UK finance industry, and that was reflected in the evidence we heard. A UK Finance representative said that a number of conversations with industry have taken place since the measures were announced, and referred to “constructive conversations”. Concerns were raised about safeguards for the charges that banks could put in place under the PSFA measures, and I have already outlined some of the safeguards in place. The deduction of a bank’s administrative costs should not cause the liable person, other account holders, those living with the liable person or joint account holder, or those financially dependent on the liable person or joint account holder hardship in meeting essential living expenses, and they should be fair. There are further protections in the Bill. Clause 37 contains the powers to make further provisions through regulations on the administrative charges that can be imposed by the bank. The powers will be used to introduce a cap on the charges that can be imposed under the clause and adjusted in line with inflation. To give further reassurance to the Committee, this is in line with the powers that HMRC has through the Enforcement by Deduction from Accounts (Imposition of Charges by Deposit-takers) Regulations 2016. For HMRC, the regulations specify that the amount should be “the lesser of…the amount of those administrative costs reasonably incurred by the” bank “and £55.” So there is precedent, and the necessary regulations will be made in due course. In my view, new clause 6 is not required. We have already published the Bill’s impact assessment, which sets out the minimal expected cost to businesses of its measures, where it has been possible to do so, including to banks. The impact assessment has been green-rated by the Regulatory Policy Committee. DWP has also committed to providing estimates in a subsequent impact assessment of the business costs for DWP’s eligibility verification measure, within three months of Royal Assent. So DWP has already come forward to commit to bringing forward that information as part of the package. I am confident that that will provide the necessary transparency that the shadow Minister seeks, and I hope that our commitment again today to provide those costs reassures hon. Members. Equally, we believe that the purpose of amendment 23 is already provided for through the regulation-making powers under clause 37. As I stated, we have consulted and will continue to consult the banks to implement the measures in part 1 of the Bill, as set out in the published impact assessment. In part 1, the costs to banks are expected to be minimal and offset by the ability of banks to recover administrative costs from the liable person. Clause 24 enables the banks to recover administrative costs from the liable person, and clause 37 provides for regulations to be made in relation to the costs that a bank may recover by virtue of clause 24. We intend the regulations to be reasonable for those paying and for the banks. Before introducing such regulations, a consultation must occur with those representing the interests of banks. We are committed to continuing engagement and consultation with the financial services sector through the passage of the Bill and its implementation —indeed, that has been ongoing since evidence was given last week. It is important to put the cost to banks in the context of the amount that will be recovered under the Bill, which we estimate to be £940 million—money that is vital to delivering public services. It is right that every part of the system plays its part in recovering money that was lost to fraud. Having outlined the key provisions in the clause, I urge the Committee to agree that it should stand part of the Bill. I have just received a message: I thought I said that DWP would produce an impact assessment in 12 months, but I said three months. I assure everyone that it is 12 months. Question put and agreed to . Clause 24 accordingly ordered to stand part of the Bill . Clause 25 Insufficient funds Question proposed, That the clause stand part of the Bill.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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Clause 17 introduces direct deduction orders as a method to recover public funds lost to fraud and error from a liable person’s bank account. Direct deduction orders are a vital mechanism to recover funds from a liable person who can afford to repay their debt but refuses to do so. This debt recovery mechanism is not new to Government; the Bill seeks to bring powers that are used elsewhere into the PSFA, not to create brand-new powers for the PSFA. That provides assurance of their effective and proportionate use, and we are doing the same here. The introduction of direct deduction orders is essential to bolster the Government’s ability to recover public funds, ensuring that taxpayer money lost to fraud and error is reclaimed and redirected towards essential public services and the common good. To safeguard the use of these powers, direct deduction orders will be used after an investigation by the Public Sector Fraud Authority into suspected fraud against a public authority. The decision to make a direct deduction order will be made by trained and authorised officers in the PSFA who will work to the standards of the Government counter-fraud profession. The investigation must determine, to the civil standard of proof, that money is owed to the public sector as a result of fraud or error. As I have said, we will seek voluntary engagement and repayment, and only after those efforts have been unsuccessful will direct deduction orders be used. As outlined in clauses 12 and 14, there are clear restrictions as to when these powers become available, ensuring that their use is not unfettered.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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It is important to set out again that these powers will be used in the last instance and, in many cases we hope they will be a deterrent. In the majority of cases, we expect people to engage with the authorised officers and come to a voluntary agreement. If people do not agree, the powers will be used only after an application to a court to determine the ability to recover that debt. In the first instance, we expect these powers to be used in a very limited fashion; the impact assessment talks about fewer than 10 cases a year. There is ample time to work through with banks how these powers are used and ensure that it is proportionate. The shadow Minister raised concerns that the powers are too harsh in some cases and that they will leave people vulnerable in others, which shows the balance involved. The measures have been carefully thought through, and they include safeguards for vulnerability but also the ability to step in if people are deliberately frustrating the process. We will issue guidance to banks on how the three months of bank statements will be determined, and authorised officers will work with banks to ensure that this works effectively. The shadow Minister asked about the penalty. It will be a £300 fixed penalty notice for failing to comply. As with every part of this, people will be able to request a review and, ultimately, to appeal. Question put and agreed to. Clause 26 accordingly ordered to stand part of the Bill. Clause 27 ordered to stand part of the Bill. Ordered, That further consideration be now adjourned. — (Gerald Jones.)
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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That is right.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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The clause sets out the action to be taken if the amount in the account is lower than the amount specified in the direct deduction order. Should that situation arise in relation to a lump sum direct deduction order, no deduction is to be made by the bank, and the bank must notify us as soon as possible. If it occurs in relation to a regular deduction order, the order is to be read as requiring the deduction to be made on the same day the following week. If the amount in the account still remains lower, no deduction is to be made and the bank must notify us as soon as possible. That approach ensures that individuals are not unduly penalised or driven into financial hardship because of insufficient funds, while maintaining the integrity of the debt recovery process through prompt communication and reassessment. Having outlined the key provisions of the clause, I commend it to the Committee.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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I really appreciate the focus on vulnerability and oversight, because with these powers comes a huge amount of responsibility. The questions that have been raised today are really important. First, the joint account holder will be able to make their own representations for review. The starting point will be the equal split, as was set out, but they will be able to make representations and ask to have their rights reviewed as part of the investigative process. On the wider point about vulnerability, which was well made, there is a huge amount of established practice in Government, and the PSFA will seek to learn from that. The Government debt management vulnerability toolkit will be utilised. All the authorised officers will have training in vulnerability and economic abuse. Vulnerability assessments will take place in every single instance of debt recovery and vulnerability will be kept under review. A range of training and safeguards is in place around our approach. On clause 21, I reassure the shadow Minister that there is precedent in HMRC. There can be both an internal review and an appeal, which is set out in clauses 34 and 31. A wider point was made about whether we have looked at different and wider powers. The thing to remember about the powers is that in the majority of cases, but not all cases, we expect them to be used to recover funds from organisations rather than individuals, which is why we have focused on the financial side of debt recovery and penalties. Other powers are used by other Departments. I said earlier that we want to continue to be able to use other legal procedures to pursue recovery, including liability orders, and the Bill will not stop us doing so. We have a range of options in front of us.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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Before I go into the detail of the clauses, I want to take a minute, as we are entering a new chapter, to make some opening remarks about the wider powers. Chapter 4 of part 1 introduces debt recovery powers. In 2021-22, detected fraud and error outside of tax and welfare was £823 million, of which only £190 million—23%—was recovered. Alex Rothwell, from the NHS Counter Fraud Authority, told us in his evidence that the Department recovered only 12% of fraud and error. There is a long way to go in this space, which is why the powers are so important. We know that recovery of fraud-related debt can be challenging. Debt recovery powers are limited to a small number of organisations and are therefore not available across the public sector. The Public Accounts Committee, Home Affairs Committee and National Audit Office have all strongly challenged the Government to do more across the public sector to take action on fraud loss. As part of the Bill, we are bringing debt recovery powers into the PSFA to enable the Government to better recover fraud debt outside of tax and welfare. We heard from Alex Rothwell that these powers will be incredibly helpful for us to recover more money. The powers are not new to Government—HMRC and the Child Maintenance Service already have the power to recover debt from bank accounts, and DWP and the Child Maintenance Service can recover debt from earnings. We will utilise best practice from those organisations in operating the powers. Although we initially expect to use them in just a small number of cases, we hope that this will grow as and when the PSFA enforcement unit expands. We have consulted widely with a range of fraud and debt stakeholders, including public bodies, academics and non-public sector groups. Banks, charities and civil liberty groups have been engaged so that we can incorporate lessons learnt from the experience of debt recovery processes in Government. We know that those in debt can be in challenging situations, which is why the use of the powers will follow best practice across Government, including the Government debt management function standards, and guidance such as the debt management vulnerability toolkit. Importantly, the powers will only be used once efforts to engage and secure voluntary repayment have been unsuccessful. The only people and companies who will face the powers are those who have the means to repay, but who refuse to do so. Those affected by the powers will have the right to make representations, apply to vary orders, request an internal review, and finally, appeal to the tribunal. The powers will be used by trained authorised officers who will be subject to independent oversight. The debt recovery powers in the Bill balance the need to recover public money efficiently, while ensuring that recovery is fair and proportionate, with robust safeguards to protect those in vulnerable situations. Clause 15 refers back to clauses 1 and 13 to define a payable amount as: a payment made as a result of fraud or error, as discovered by an investigation into suspected fraud; a penalty under the civil penalty regime established by chapter 5; and, finally, relevant costs. This creates a limitation as to the debts that the Government will be able to use the chapter 4 recovery powers on, specifically, those determined by and during an investigation into suspected fraud, including from associated penalties. We seek these recovery powers purely to further the counter-fraud activity that we will carry out to tackle fraud against the public sector. We do not intend to become a general debt recovery agency for the Government, and clause 15 confirms that. It reflects the operational context and purpose of the PSFA and its focus on tackling fraud and error. Further to that, clause 16 confirms that we will be able to seek alternative recovery action through the civil courts. Although the Bill will provide the powers to seek recovery directly through bank accounts and PAYE earnings, these might not always be the most appropriate or effective recovery route. For instance, the liable person might hold significant other property assets or keep assets or money abroad. In those cases, it would be unfair for us not to seek recovery. We therefore wish to work through established legal procedures to ensure that we can seek to pursue recovery through the most appropriate and effective mechanisms—for example, liability orders. The importance of clause 16 is that it confirms that the Bill does not limit existing powers. I commend clauses 15 and 16 to the Committee.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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Clause 24 enables a bank to deduct administrative costs that it has reasonably incurred when complying with a direct deduction order from the liable person’s account. This provision is essential to ensure that banks are adequately compensated for the administrative efforts required to comply with the orders, thereby facilitating the efficient operation of debt recovery processes while protecting account holders from undue financial strain. A direct deduction order will then specify how the bank can deduct its administrative costs while complying with the maximum amount of total deductions as specified in the clause 22. Clause 37 contains a power to make further provision through regulations as to the administrative charges which can be imposed by the banks. That power will be used to introduce a cap on the charges which can be imposed under this clause and which can be adjusted in line with inflation and to ensure that the charges remain reasonable at all times. The amount may be deducted by the bank immediately prior to the direct deduction order. To safeguard against that causing unintended hardship, the question of deducting the bank’s administrative costs for the liable person must be taken into account when complying with the hardship considerations outlined in clause 22. That will ensure that the direct deduction order and deduction of the bank’s administrative costs do not cause the liable person, other account holders, those living with the liable person or joint account holder or those financially dependent on the liable person or joint account holder hardship in meeting essential living expenses and that the deductions are otherwise fair in all circumstances. Regarding the burdens on the financial services sector, the Government are extremely mindful of the burdens that the Bill places on industry, including financial institutions. We want to ensure that banks are not subjected to disproportionate burdens or costs in complying with these measures. As I have outlined, that is why we met with key representatives of the finance industry, including UK Finance, individual banks, building societies and the Financial Conduct Authority, to ensure that there is close and sustained engagement on this Bill. We heard directly from UK Finance in evidence last Tuesday. The finance sector has supported the Bill’s objectives and there are constructive conversations already taking place. The direct deduction order powers in this Bill align with those existing powers and we will continue working with the DWP to align direct deduction order processes across both Departments where possible to simplify implementation.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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Among the powers in the Bill there is only the power to recover debt through the ways that I have set out. Question put and agreed to. Clause 17 accordingly ordered to stand part of the Bill. Clause 18 ordered to stand part of the Bill. Clause 19 Requirement for banks to provide information Question proposed, That the clause stand part of the Bill.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Fifth sitting) · Hansard source
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Let me go through those points in turn. The first question was about why someone might need information before three months. There are two critical reasons why: one is to ascertain potential vulnerability and affordability plans—we have talked about safeguarding joint account holders so as to have more information—and the other is to prevent people from evading paying: if more information were needed to ensure that the assets had not been moved. Throughout, we have tried to balance ensuring fairness for the taxpayer and protecting vulnerability. I hope it will give some reassurance that such powers are used effectively elsewhere in Government. We have learned from best practice. I talked through the process of the first notice, and that will be where the individual is informed that that information has been requested. As we have discussed, a number of safeguards are built into the process, and the intention when recovering debt will be to work with the individual and to make it collaborative. If people refuse to pay, only at that point would we apply to the courts or a tribunal, where safeguards are of course in place. To the wider question of what safeguards hold the system to account, as I have outlined and as we will discuss in more detail later, a team answerable to an independent chair will oversee every part of the process, including the ability to look at live cases and at the patterns, to ensure proportionate use of the powers. That individual will report to Parliament. Separately, a fully independent body will review the full use of the powers. We expect that to be His Majesty’s Inspectorate of Constabulary and Fire and Rescue Services. The Bill also includes a provision to make the PSFA a statutory body, and so fully independent of the Minister. While it remains in this smaller phase, where we are testing the powers, the independent safeguards are built in. On the point about the consultation with the finance bodies, I hope the Committee heard in the evidence that UK Finance was clear that we have been having a constructive dialogue on all of the issues. The PSFA has published an impact assessment, which suggests that, in the first instance, banks will need to look at a very small number of cases. We have committed to testing and learning alongside the process as the PSFA grows. There will be established practice for working closely with the banks. We expect the burden on banks for the application of the PSFA powers to be limited. I hope that gives some reassurance on oversight.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source
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I reassure the shadow Minister that there has been consultation with business representatives, and there will be further consultation as we move forward. This is a very simple action. In the event that an employee is already subject to a DEO, the employer will already be in contact with the authorised officer, so it is just a process of informing them of a change in circumstances. An employer would be very unlucky to have more than one individual who was subject to this kind of order and who had defrauded the state. We do not expect this to be a big burden on businesses; it is a small number of people. As I have set out, this provision will be used in the last instance. We want to engage people to pay back the money that they owe collaboratively and voluntarily, and there are real disincentives to getting to this place for employees, but they are there as a safeguard. We do not expect there to be large numbers, and we think that it is a very simple thing for employers to do—indeed, it is very simple for the employee to do. There is a tight timeframe, but if the individual is paying back money that has been shown to be defrauded from the state, and they change jobs, they should be able to inform the PSFA very quickly of the money that they owe.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source
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As the hon. Member set out, these are significant powers and it is essential that safeguards are in place. I assure him that the Public Sector Fraud Authority is committed to safeguards around vulnerability assessments, which will have to happen before any decision is made; maximum deduction amounts, as we have discussed; opportunities for representation, reviews and appeals, with a requirement to consider all representations; and the ability to notify a change of circumstances. The PSFA might decide not to make a deduction from earnings order if it becomes apparent that the deduction might cause a person significant hardship in meeting their ordinary living expenses. As with the other powers we have discussed, if the individual does not agree with paying back the money voluntarily and refuses, the PSFA authorised officer will have to apply to court or tribunal to recover it. So there is an independent process in place to ensure that the ability to recover the debt and all the different processes that I have run through are safeguarded, and that circumstances of vulnerability and hardship are taken into account in the initial decision making. It is made explicit in the Bill, as it will be in the training for authorised officers, that the intention is to ensure that nobody is left in hardship by repayment of debt. That will be the intention of both the voluntary agreement and these powers if a court application is made in the event of a disagreement. There are similar routes of appeal. There is the ability to have a decision reviewed by an authorised officer of a higher grade and to go to a first-tier tribunal if an individual wants to challenge it, so there are significant safeguards in place for the operation of these powers. It will give the hon. Member for Kingswinford and South Staffordshire some reassurance to know that they have been built from existing powers and good practice already in operation in government. Question put and agreed to. Clause 38 accordingly ordered to stand part of the Bill. Clauses 39 and 40 ordered to stand part of the Bill.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source
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I beg to move amendment 2, in clause 34, page 20, line 30, leave out from “review” to end of line 35. This amendment leaves out provision that is not needed; clause 29(5), (6) and (8) makes the necessary provision.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source
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A new employer can inform the PSFA only if they are aware that this is in place. That will be clear in published guidance. If they do not know, they obviously cannot inform us, and they will not be penalised; I want to reassure the shadow Minister on that point. There will be a £300 fixed penalty for failure to comply with the requirement—that is only a genuine failure to comply—and we will provide more information on the penalties as we move forward. Question put and agreed to. Clause 44 accordingly ordered to stand part of the Bill. Clauses 45 to 49 ordered to stand part of the Bill. Clause 50 Penalty relating to fraud Question proposed, That the clause stand part of the Bill.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source
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Clause 42 enables an employer to deduct administrative costs that they reasonably incurred when complying with a deduction from earnings order from the liable person’s earnings. A deduction from earnings order will either specify an amount, or the amount will be calculated in accordance with the order. Regulations can be made regarding the employer’s administrative costs. This regulation-making power will be used to introduce a cap on the charges that can be imposed under this clause, which can be adjusted in line with inflation and to ensure that the charges remain reasonable at all times. This is in line with the approach taken by the Department for Work and Pensions. The regulations relating to direct earnings attachment powers state that employers may take up to a maximum of £1 per pay period for administrative costs. To safeguard against this causing unintended hardship, we must take account of deducting the employer’s administrative costs for the liable person when complying with the hardship considerations and the limitations on the amount to be deducted outlined in clause 41. This will ensure that the deduction from earnings order and deduction of the employer’s administrative costs does not cause the liable person—or those living with a liable person or financially dependent on them—hardship in meeting ordinary living expenses, and that the deductions are otherwise fair in all circumstances. The clause is essential to ensure that employers are adequately compensated for the administrative efforts required to comply with the orders, thereby facilitating the efficient operation of debt recovery processes while protecting liable persons from undue financial strain through compliance with hardship safeguards. I commend it to the Committee.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source
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Clauses 38, 39 and 40 establish the power to administer deduction from earnings orders. A deduction from earnings order is a mechanism by which financial amounts owed can be recovered from liable persons who are in pay-as-you-earn employment. This proposed debt recovery measure is similar to existing powers already held by the Department for Work and Pensions, the Child Maintenance Service and some local authorities. Clause 38 sets out the provisions, process and requirements associated with deduction from earnings orders. The decision to make a deduction from earnings orders will be made by a trained authorised officer. The clause includes a regulation-making power, which states that the Government can make further provision through regulations concerning the meaning of “earnings” for the purposes of the orders. This may include any appropriate provisions in determining what constitutes earnings now and in the future—for example, share options that are payable through the PAYE system in the context of corporate fraud. This is necessary to ensure that we have flexibility in the future to adjust the meaning of “earnings” to be in line with social and economic changes. It makes it harder for people to deliberately alter their earnings arrangement to try and unfairly frustrate paying back what they owe. We are sending a clear message that money owed to the Government as a result of fraud or error must be repaid so that it can be used for public benefit. Clause 39 stipulates what information a deduction from earnings order must contain in order to provide clarity to both employers and liable persons on their obligations. The information that must be included in a deduction from earnings order is the amount of the deductions, how the amounts are to be deducted, when the amount should be paid and the penalties for not complying with the deduction from earnings order. A deduction from earnings order must be given to the liable person’s employer, who must comply with it. A copy of that order must also be given to the liable person. Where a liable person’s employer fails to comply with a copy of that order, they are liable to pay a fixed penalty of £300. Deductions under a deduction from earnings order cannot commence before 22 days after the order is given to an employer. We will already have been engaging with the liable person on securing repayment of what they owe. This provides them with additional notice that an amount will be deducted from their earnings. Clause 40 outlines further requirements that must be taken before a deduction from earnings order is made. The liable person must be given a notice inviting them to make representations on the proposed order. A copy of the notice must be given to the liable person’s employer. The notice must include the terms and amount recoverable and must allow 28 days for representations. That ensures fairness in the debt recovery process as the liable person has time to prepare any response. All representations made must be considered by an authorised officer before they decide to make a final deduction from earnings order in respect of the liable person or make any changes to the proposed orders that are considered appropriate. If the decision is made not to make a deduction from earnings order, we must notify the liable person and their employer. Deduction from earnings orders have been found to be an efficient and effective way to recover money owed to the Government so that it can be used to fund vital public services. It is pertinent to have this power as it affords an opportunity to recover public money lost through fraud and error, which can be immediately put back into delivering our public services that are so vital for the country. Together, the clauses play an essential role in the operation of a deduction from earnings order and align with the core principle of seeking the effective recovery of public funds, balanced by the independent oversight provisions in part 1 of the Bill. They ensure informed decisions are made and communicated, aligning with our principles of transparency and ensuring the use of the powers is safeguarded. Having outlined the main provisions in clauses 38, 39 and 40, I beg to move that they stand part of the Bill.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source
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Clause 37 will future-proof the Bill, so it is critical to the discussion we have just had. It establishes regulation-making powers concerning particular elements of the direct deduction order powers. For instance, it will allow regulations to be made on how notices and orders are given, and how notices and information are to be received; how to make deduction calculations, and how to determine hardship in meeting essential living expenses; the duty of banks in carrying out deduction orders and the administration charges they can apply for doing so; the interaction between direct deduction orders under the Bill and similar orders under any other enactment; and expanding the remit of direct deduction orders to cover other types of financial products or services, such as cryptoassets. The Bill sets out in detail the framework for how direct deduction orders will work. We wanted to set out this level of detail to add to the transparency of how this power will operate and to allow parliamentary colleagues the chance to scrutinise it properly. However, there are elements that are more appropriate to have as regulations. These are elements where we want a degree of flexibility to be able to update them to reflect wider societal, economic and technological changes, as hon. Members have just raised. For instance, why specify how orders should be shared by the Minister when we know that technology changes so quickly? Why should hardship and deduction calculations be static when there are bigger economic forces in play that impact all of us? We are committed to avoiding undue hardship where possible, and flexibility here lets us introduce further mitigation where necessary. Why should we not go after cryptoassets, if we find that they are the preferred asset of fraudsters? We want to be able to pursue funds in the most effective way to return them to the public purse. Where necessary, we will consult, and we want to do so—indeed, this clause creates a requirement to do so in some instances. Finally, regulations will also be subject to either the affirmative or negative procedure so that Parliament is still able to scrutinise them appropriately.
4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source
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I thank the hon. Gentleman for the range of questions, which give me the opportunity to clarify a number of points. First, what happens if a liable person sadly passes away before paying the specified amount? The PSFA will still seek to recover the money owed to the state through the people acting on the estate’s behalf, and it will be recovered using the normal processes. Although there are not specific measures in this Bill, the PSFA will be able to use other existing debt recovery measures. As for the decisions being made, who will be making them and the capacity of the Minister, as I set out, the decisions will be made by authorised officers under the Carltona principle, and the review will be done by a more senior officer than the officer making the original decision. Critically, on any of these measures, it will be possible to appeal to the first-tier tribunal, so an independent appeal route is built into the system. We do not think that there needs to be a separate independent route, but it is important to come back to the fact that this entire system will be overseen in two ways. First, that will be done by a team outside the PSFA, working with an independent chair who will review the use of all of these powers. Secondly, as we have said, there is provision in the Bill for independent scrutiny, which we expect to be delivered by His Majesty’s inspectorate of constabulary and fire and rescue services. The ability to suspend and restart direct deduction orders gives flexibility to the authorised officers who lead the cases. Such circumstances might involve somebody being hospitalised and the orders needing to be stopped and restarted, or somebody agreeing to move to a voluntary repayment. Indeed, as the shadow Minister mentioned, they might bring forward information about their financial circumstances. As for going back to ask for further information from the banks, somebody might set out information about their vulnerability, financial circumstances or living standards, and there might be a need to check that with the bank—“The circumstances have changed, so we need to get more information from the banks.” So there is a provision to continue to gather that information. We will go through the appeals process on later clauses. It is possible that payments might be suspended as part of that appeals process, but critically, in changing and varying the order, a person will be informed of that and they can appeal the variation—the amount and the existence of the order will have already been set through a court process. The impact assessment goes through PSFA resourcing. As I have said, the savings are modest, and we have deliberately kept them modest because of the resourcing available to the team and the officers who are in place. There is resourcing to carry out 40 cases a year under the powers, and that is the expectation. These are new powers for the wider public sector. We hope that they will be effective, generate more income and recover fraud, and there is a strong evidence base for that as these powers are used elsewhere. If that is the case, it will then be possible to grow the operation of the team and increase the resourcing, but we are confident that the resourcing to deliver what is in the impact assessment and in the Bill already exists. Question put and agreed to. Clause 28 accordingly ordered to stand part of the Bill. Clauses 29 to 33 ordered to stand part of the Bill. Clause 34 Reviews

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