Georgia Gould MP: speeches

Speeches

• 4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source

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  Clause 36 establishes a number of definitions for terms used in the direct deduction order section, including the meaning of “bank” as a person who is authorised to accept deposits or to issue electronic money. This definition is supported by reference to appropriate legislation and regulation. The clause confirms that references to amounts in accounts must be in credit, thus ensuring that we do not push people into overdrafts. It also sets out how a person can hold an account by having their name to it, either solely, jointly or as a signatory. It is important that we have clear, agreed definitions for such terms, to aid the operationalisation of these powers and to prevent unwarranted challenges, such as whether a financial institution is in scope of the Bill.

• 4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source

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  I thank the Committee for all those questions. Both the hon. Members for Kingswinford and South Staffordshire and for Torbay will be pleased to know that my notes are very similar: it is critical that we future-proof these powers as financial circumstances change and there is innovation in the sector. Clause 37 will go into some detail about the future ability to lay additional regulations, including regulations expanding the remit of direct deduction orders to cover cryptoassets. I hope that provides some reassurance. More broadly, we discussed at the start of this process the range of information-gathering powers in an investigation. As part of that process, investigators will want to follow the money and get a wide picture of the assets that a person or organisation holds, the different accounts they might have and where their money is as part of an investigation. As the investigation moves to debt recovery, investigators will bear all that in mind. If they are not able to recover money through the direct deduction order process, there are other avenues available, although not within this Bill. As I said earlier, they could apply to the courts to seize wider assets; in a criminal case, they could use the Proceeds of Crime Act 2002, and I can give assurance that they will of course work with law enforcement where necessary. If it is not possible to recover money through the banks, there is also the ability to put that deduction on earnings. There is a wide range of options available to investigators, but the critical thing is that these are circumstances where the Government have been defrauded, and the investigators will use every avenue to recover that money for the taxpayer. On the question of where the direct deduction order sits in terms of priorities, it is a non-priority order, so secured priority debts would take precedence. Non-priority orders go by date order, and further guidance will be published on that point. Question put and agreed to. Clause 36 accordingly ordered to stand part of the Bill. Clause 37 Regulations 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 44 outlines the duty of a liable person to inform the Government of any changes to their employment while they are under a deduction from earnings order. It also establishes the responsibility of the employer to let us know if the liable person leaves their employment. If the liable person takes up new employment elsewhere and informs their new employer of their deduction from earnings order, the new employer must also inform us. There is precedent for this approach in child maintenance service legislation—in section 32 of the Child Support Act 1991—with its similar deduction from earnings attachment powers. Failure to comply with these obligations could result in an authorised officer issuing a non-compliance penalty under chapter 5. There will be review and appeals rights to penalties, as well as a published code of practice. The purpose of deduction from earnings orders, and indeed all our recovery activity, is to effectively and efficiently recover debt so that vital funds can be used for the collective good. We will also support people changing jobs, if that is what they want to do. However, we will not support them if they are doing so to try to frustrate repaying what they owe. It will be a very simple process to let us know of changes in employment, and someone employing a person on a deduction from earnings order will already be regularly engaging with us on the repayment, so this will add minimal impact to the employer. So there is minimal impact on the liable person and minimal impact on the employer, but maximal impact in ensuring the straightforward collection of moneys owed. I commend clause 44 to the Committee.

• 4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source

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  I thank Members for their questions. I will start with the points that have been made about future-proofing and how important it is for the Bill to both learn from its application and stay up to date with all emerging technologies and ways of working. We cannot future-proof a Bill without providing a degree of flexibility, and that is what this clause offers. Rightly, there is a lot of detail on the face of the Bill about how these powers will be exercised, and these regulations allow some of that detail to be varied according to best practice, but they are not Henry VIII powers.

• 4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source

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  Let me take those questions in turn. The process of review is similar to the one we previously discussed: the decision will first be reviewed within the PSFA by an authorised officer of a higher grade, and then go to a first-tier tribunal. It will be up to the first-tier tribunal whether it takes late applications, and then there will be the ability to go to an upper tribunal. In terms of the information about a change in an individual circumstance, it would be up to the individual to inform the PSFA. It will not be doing its own monitoring of any change in circumstances. The authorised officers will give the individual clear guidance on how to contact the PSFA about the change of circumstances. As for why a deduction from earnings order might be suspended and restarted, that would potentially be due to a change in the liable person’s employment or financial circumstances, or as part of administrative adjustments. Suspension allows for appropriate reassessment, ensuring that deductions remain fair and aligned with the individual’s current situation. For instance, if a liable person changes jobs, the suspension enables the updating of payment arrangements with the new employer. Additionally, it may be necessary to suspend deductions temporarily in the case of financial hardship to prevent undue burden to the liable person. The flexibility to suspend and restart ensures that the debt recovery process is effective and equitable.

• 4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source

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  I thank the Committee for the range of questions and the opportunity to provide clarification. The decision on the set-up of the system was made on the basis of existing best practice in Government, particularly in His Majesty’s Revenue and Customs, so there is precedent for its working. The intention of the PSFA is to recover debt as quickly as possible, but in a way that is proportionate and does not leave anyone in financial hardship. If an individual applies to vary the amount they are paying back, the internal review and the more senior officer will look to resolve that matter in a proportionate way, and to avoid things needing to go to a tribunal. However, it is important to have independent safeguards in place. We expect cases to be resolved successfully by teams that are well trained, have all the information available to them and can take a case-by-case approach that is fair and proportionate, but in the event that an individual is unhappy with the outcome of the initial review, they can appeal to the tribunal. We expect the initial impact to be very small: our expectation is that we will be dealing with four DDOs, so even if they all go to tribunal, it is a small number, and this is an established process. We have deliberately chosen the first-tier tribunal because it is the most accessible and fastest part of the justice system. We hope that these powers are successful and can be grown, and I think we will learn a lot from the first phase of working in this way. We think the powers will be particularly focused on high-value and severe cases of fraud, and the team will work to ensure that we prioritise those cases. This feels like a proportionate use of resources, and we have consulted the Ministry of Justice, which has agreed that the first-tier tribunal is the most appropriate forum to hear DDO appeals. On the 28-day point, I said in my previous answer that we want to recover fraud as quickly as possible and are keen to not have undue delays, but the points about exceptional circumstances are well made. I appreciate the questions and I am happy to take them away and ensure that there is appropriate flexibility. On the wider point about exceptional circumstances, the important thing about these powers is that they will be exercised by authorised officers, highly trained in investigation and debt recovery, who will have due regard to the best practice on debt within Government and the wider system and will take a case-by-case approach to individual circumstances and respond to exceptional circumstances. That is why we have multiple and independent points of review. Again, I have referred repeatedly to the independent oversight that will look at all those processes and report into Parliament. Question put and agreed to. Clause 35 accordingly ordered to stand part of the Bill. Clause 36 Meaning of “bank” etc 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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  This is a large grouping of clauses that cover the heart of this part’s new civil penalties, so the Committee will understand if I cover these issues in some depth. Clause 50 grants essential civil powers to give the PSFA a range of options with which to tackle fraud cases. These powers may be used against individuals in England and Wales. Having access to both criminal and civil powers will allow the PSFA to be more flexible and take on a broader range of cases. This access also removes unnecessary pressure from our already overburdened courts, as criminal cases are often complex and time-consuming. That means that the PSFA can deal with more cases and in a more cost-effective and efficient manner. Penalties are a key part of the deterrent message that this Government wish to send by delivering the Bill: that fraud will not be tolerated. It is not enough to simply recover money lost to fraud and error. A clear message must be sent that fraudulent actions have consequences. That is why the Bill allows penalties of up to 100% of the fraud loss. That power reflects the broad range of fraud the unit will encounter. There is a well-established precedent of the effectiveness of civil penalties across Government—for example, in HMRC, the Treasury and the Environment Agency. The introduction of a robust civil penalties regime shows that there are meaningful consequences for breaking the law, even when prosecution is not appropriate or achievable. Aligning with other Departments—for example, HMRC and Treasury—the PSFA will issue civil penalties to the civil burden of proof. The PSFA will not offer offenders a choice between a civil penalty and a criminal prosecution. Criminal prosecution and civil penalties will be two distinct options for dealing with fraud cases. An authorised officer must prove an offence to the civil standard of proof—that on the balance of probabilities, evidence shows it is more likely than not that fraud occurred. The test will be informed by the professional experience, expertise, judgment and objectivity of an investigator and will be tested against legal expertise. Final determinations will be cleared by senior experienced investigators within the PSFA. This strong power is justified by the type of fraudsters we are pursuing. The PSFA can also pursue the recovery of incorrect payments as a result of genuine error via its debt recovery powers. However, we will not be penalising individuals and businesses who make genuine errors. We are targeting those who deliberately seek to defraud the public purse. The unit will also not be issuing penalties for payment resulting from official error. This key power is underpinned by robust oversight and layers of protection for individuals and businesses. We will be talking shortly about the safeguards that have been put in place to ensure there are sufficient opportunities for individuals and businesses to make representations, request internal reviews of decisions and appeal to the relevant courts. Every opportunity has been given to ensure that no one will be penalised in error or unfairly. I turn to clause 51. We know that there is a broad range of fraud attacks against the Government, from one-off cases by individuals to complex and organised attacks from supposedly legitimate businesses. It is therefore essential that the PSFA has the necessary powers to issue a civil penalty not only to any individual who commits fraud, but to any business that does so. There is precedent for this power being successfully used across Government, for example in HMRC and the Home Office, which penalise businesses in relation to tax matters and for employing illegal workers. Having the power to impose a penalty on an individual on behalf of a business, in addition to on the business itself, is essential to ensure that businesses and employees may be held accountable for their actions.

• 4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source

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  I thank hon. Members for the range of questions and comments. Before I go into the detail of their points, it will be helpful to take a step back and talk about why were are introducing these powers for the Public Sector Fraud Authority in this way. At the moment, the powers do not exist for serious cases of fraud that sit outside tax and welfare, and the powers we are discussing as part of the PSFA element actively exclude tax and welfare, which are dealt with elsewhere. There is a real gap: there are currently no civil powers to investigate very serious cases of fraud against Government, often led by organisations, in relation to procurement and grants. As we heard in oral evidence, the extreme pressure on the police means that such cases are often not a priority. To get a case investigated by the PSFA team, in almost all cases a different public sector organisation would have to refer into the team, so a threshold would be met at that point. The team looks at the cases in front of it and decides which to pursue after considering things like the value and the harm to the wider public sector. We are talking about really serious instances of fraud. The majority will involve organisations, not individuals, but there are instances where individuals, both within organisations and separately, will have committed serious fraud and will be covered by the legislation.

• 4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source

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  The shadow Minister in his previous comments raised a number of concerns about there being too much flexibility in the Bill, but amendment 20 seems to contradict some of those points. I have been very clear as we have gone through the Bill that we want to draw on existing powers and protocol in Government to ensure that we are taking on practice that we know has worked elsewhere. The 40% cap is in place in other circumstances, so we think that it is fair and proportionate, and it aligns with other practice. We have already discussed this issue, as part of the debate on amendment 19, but we strongly sympathise with the desire to recover money quickly from fraudsters. The total deductions in an affected period must, as with a regular direct deduction order, not exceed either 40% or 20% of a liable person’s net earnings—40% is the maximum for frauds, and 20% the maximum for error. These direct earnings orders apply only to individuals, not companies, as the shadow Minister indicated. These powers are not new; we are making them available to the PSFA, rather than creating brand-new powers, which provides assurance of their effectiveness and proportionate use. The total deduction maximum of 40% is in line with the DWP’s existing direct earnings attachment powers and the Child Maintenance Service’s deduction from earnings orders powers. This appropriate and necessary flexibility in approach is provided for in the Bill under the direct deduction powers in two ways. First, the previously discussed lump sum direct deduction orders are not capped. If funds are available and the proposed deduction does not cause hardship, we can seek a higher level of deduction. Secondly, a lump sum direct deduction order can be issued and then a regular direct deduction order can be established. That is a better route than allowing for a high level of deductions; it builds on established practice and remains proportionate yet impactful. Crucially, it limits the disincentive to earn that an uncapped deduction from earnings order would create, consequently resulting in ineffective and inefficient recovery of public funds. I hope that I have provided reassurance: authorised officers can apply the appropriate debt recovery method to ensure efficient recoveries. Clause 41 provides the conditions under which a deduction from earnings order may be made. We have ensured that the amount of debt we collect is fair. A key consideration throughout the creation of the debt measures was to robustly prevent hardship, learning from best practice across Government. We have also ensured that there is proportionality in the way we approach fraud-related debt versus debt accrued due to error. The definitions are set out in the Fraud Act 2006. The challenge was to balance these needs with the necessity to send a strong deterrent message to those who have the means to pay their fraud and error-related debt to Government but refuse to do so. That is why we have established maximum limits based on whether debt was accrued due to fraud or error. Clause 41 caters for this by ensuring that the terms of the order will not cause the liable person—or person living with, or financially dependent on, the liable person—hardship in meeting ordinary living expenses. The terms of the order are also required to be otherwise fair in all circumstances. The hon. Member for Kingswinford and South Staffordshire raised a number of questions on the training of authorised officers. One very positive step of the setting up of the Public Sector Fraud Authority under the previous Government has been the professionalisation of those who work in fraud across Government. PSFA authorised officers will be trained to professional standards and will use clear best practice standards. We will set out further details in regulations and public guidance, but what is critical and I hope offers some reassurance is that this provision will follow the Government debt management function standards, which are publicly available and which I will share with the Committee after this sitting.

• 4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source

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  The clause establishes the process to request an internal review of decisions made by authorised officers on direct deduction orders. The liable person or other account holders, in the case of a joint account, will have 28 days from being notified of an order, or a decision pertaining to a request to vary an order, to request a review. They cannot use the internal review to challenge the amount owed, as I just set out; that will already have been settled. Instead, this review can be used to challenge, for instance, whether a direct deduction order is the most appropriate form of repayment, or whether the deduction amount is fair and affordable. Internal reviews are important as they provide a straightforward and affordable way for the liable person to present a challenge to direct deduction order decision making. The reviewing officer will be a trained authorised officer of a higher grade than the original decision maker. They may decide to uphold, vary or revoke the direct deduction order. That decision will be based on an assessment of the material held and any relevant new information provided by the liable person. If a liable person disagrees with their decision, there are further appeal rights, which we will come on to shortly. Government amendment 2 seeks to remove a provision in clause 34(7)(b), which states that if a direct deduction order is varied, the varied order must be given to the bank and a copy provided to the liable person and other account holders. This provision is not needed because the requirements to give the varied order to the bank, the liable person and other account holders are already provided for in clause 29(5), (6) and (8). This amendment seeks to simplify the drafting and provide clarity, while not amending or removing any policy process or safeguards.

• 4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source

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  I thank the shadow Minister for those questions. The circumstances in which someone might request a review include the ones that you set out. Primarily, it will be around affordability. There are clear provisions in the Bill on affordability and living expenses for individuals and their dependants. In terms of why the review by an internal officer can only focus on variation, it is important to remember that in these circumstances, a court will have determined the amount owed—there will already have been an independent process that has determined that. This is about the affordability of those payments. There might be other debts, and there are established processes to deal with that. If people are unhappy with the internal review, they can still appeal to the first-tier tribunal, which has wider powers to vary than the initial review. I think that answers your question. In terms of the 28-day limit, it is important to remember that the money we are seeking to recover is from people who have been proved to have defrauded the state. It is really important that we get that money back, but I am happy to look at whether there is flexibility and to keep that under review. I think those were the main questions you asked.

• 4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source

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  Clause 35 establishes the process to lodge an appeal of review decisions around direct deduction orders. Appeals will be heard at the first-tier tribunal. Appeals can be lodged only following an internal review by an authorised officer of a higher grade than the original decision maker. The liable person, or other account holders in the case of a joint account—the shadow Minister asked about that, and it is important to clarify that a joint account holder can also request a review and an appeal—will have 28 days from being notified of an internal review decision to lodge an appeal. They cannot use the appeal to challenge the amount owed; that will already have been settled by agreement or in court or tribunal proceedings. During an appeal, the tribunal may instruct the bank to pause the effect of a direct deduction order. The tribunal judge may decide to uphold the appeal and vary or revoke the direct deduction order accordingly. They could also decide to throw out the appeal. We are developing strong, effective oversight of all our measures in the Bill. It is important that there is the opportunity for independent tribunal oversight of these powers. Tribunals provide accessible justice and will be able to provide additional review where necessary. Ultimately, this is about being fair to the taxpayer, ensuring that money lost to fraud and error is returned, but it is also about being fair to those who have received that money and ensuring that proper and due process is followed throughout.

• 4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source

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  Clause 43 and clauses 45 to 49 set out clear processes for the variation, suspension and revocation of deduction from earnings orders and establish the review and appeal rights. There have been many questions about those rights, which form a critical part of the Bill. Clause 43 defines the circumstances under which the operation of deduction from earnings may be suspended. An order may be suspended and restarted at any time. For that to happen, notification must be provided to the employer to which the order was originally given. We must then notify the liable person if the requirement to make deductions and payments is suspended or restarted. The clause is necessary in order to provide flexibility, by allowing us to suspend and restart orders as needed. That ensures responsiveness to changes in circumstances, while maintaining clear communication with employers and liable persons, and a fair and transparent debt recovery process. Clause 45 outlines that a liable person can apply to vary a deduction from earnings order. The applicant must be notified of the decision on the application. The clause is essential to the Bill, as it is a key safeguard that protects the liable person, giving them the opportunity to notify us, for example, of any changes in circumstances that would impact what they can repay. That ensures that the debt recovery mechanism is fit for purpose and for use, by allowing the order to remain appropriate and in line with the circumstances of those affected. Clause 46 allows for a deduction from earnings order to be varied on application by the liable person or otherwise. That will be achieved by giving a revised version of the order to the employer and giving a copy of the revised version to the liable person. Where we propose to vary a deduction from earnings order, we must give the liable person an opportunity to make representations about the proposed variation. Clause 46 safeguards the use of the powers. By allowing the deduction from earnings order to be varied, with an opportunity for representations to be made, the clause enables flexibility in the debt recovery process. That ensures that repayments remain fair and appropriate, while ensuring transparent communication with the employer and liable persons. Clause 47 provides the authority to revoke a deduction from earnings order. The order must be revoked if the payable amount has been recovered. If the direct deduction order is revoked, notice must be given to the employer and the liable person. The clause is necessary to ensure that deduction from earnings orders are promptly revoked once the payable amount has been recovered, preventing overpayments and ensuring transparency with employers and liable persons. Clause 48 establishes the process to request an internal review of decisions made by our trained authorised officers around deduction from earnings orders. The liable person will have 28 days from being notified of an order, or of a decision pertaining to a request to vary an order, to request a review. They cannot use the internal review to challenge the amount owed, as that will already have been settled—that is similar to previous clauses. Instead, the review can be used, for instance, to challenge whether a deduction from earnings order is the most appropriate form of repayment or whether the deduction amount is fair and affordable. The reviewing officer will be of a higher grade than the original decision maker. They may decide to uphold, vary or revoke the deduction from earnings order. The decision will be based on an assessment of the material held and any relevant new information provided by the liable person. Internal reviews provide a straightforward and affordable way for the liable person to present a challenge to deduction from earnings order decision making. Clause 49 establishes the process for lodging an appeal of a review decision around deduction of earnings orders. Appeals will be heard at the first-tier tribunal. Appeals can be lodged only following an internal review. The liable person will have 28 days from being notified of the internal review decision to lodge an appeal. They cannot use the appeal to challenge the amount owed; that will already have been settled. The tribunal judge may decide to uphold the appeal and vary or revoke the deduction from earnings order accordingly. They could also decide to throw out the appeal. We are developing strong and effective oversight of all measures in the Bill. It is important that there is the opportunity for independent tribunal oversight of these powers to ensure that fair, due and proper process is followed. Together, these clauses set out clear and transparent processes concerning deduction from earnings orders. That is important so that the liable person knows their rights, employers know their obligations, and the Government can fairly and collectively recover what is owed. Having outlined the key provisions in clauses 43 and 45 to 49, I commend them to the Committee.

• 4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source

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  As the hon. Member set out, the clause authorises regulations to be made regarding employers’ administrative costs. That will be used to introduce a cap on the charges that can be imposed under the clause. That cap can be adjusted in line with inflation and to ensure that the charges remain reasonable at all times. That is in line with the approach taken by the DWP, which outlined the amount that an employer could charge for its administrative costs under regulation 20(9) in part 6 of the Social Security (Overpayments and Recovery) Regulations 2013. The amount specified in that regulation is £1, and we expect to mirror existing regulations, but this measure gives us the power to keep the amount under review in line with inflation. An impact assessment has been published, and we expect the impact on businesses to be minimal. There is existing practice on this that works well. Question put and agreed to. Clause 42 accordingly ordered to stand part of the Bill. Clause 43 Suspension of deduction from earnings orders 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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  It is a pleasure to serve under your chairship, Sir Desmond. I look forward to another constructive afternoon of discussion. Clauses 28 to 33 set out clear processes for the variation, suspension and revocation of direct deduction orders. They mirror approaches already used across government for comparable powers and ensure alignment with standard debt recovery practices used by Government Departments such as the Department for Work and Pensions. Clause 28 outlines that any holder of an account subject to a direct deduction order can apply to vary the direct deduction order during its lifetime. This key safeguard protects the liable person and joint account holders by giving them the opportunity to be notified of any changes in circumstances at any time since the initial order was made. That relates to some of the important conversations we had this morning about safeguards. If the application to vary the direct deduction order is in relation to a joint account, other joint account holders must be given an opportunity to make representations. Clause 29 allows a direct deduction order to be varied on application by an account holder or at the proposal of our trained authorised officers. That will be achieved by providing a revised version of the order to the liable person and any other account holders, giving them an opportunity to make representations about the proposed variation. The varied order takes effect when it is given to the bank or, if later, in accordance with the terms of the order as varied. The order can also be varied so that it applies to another account held by the liable person, including an account with a different bank, if the variation is requested by the liable person and, if applicable, other account holders consent. The clause outlines the process for when a direct deduction order is varied to apply to an account administered by a different bank or to apply to a joint account. Clause 30 provides the authority to revoke a direct deduction order. There are some circumstances in which an order can be revoked, but the two circumstances in which it must be are when the payable amount has been recovered or when the liable person has sadly died. The order must be revoked as soon as is reasonably practicable after becoming aware of such circumstances. Clause 31 concerns further information notices that can be given to the bank to determine whether to revoke or vary a direct deduction order. If the further information notice concerns a joint account, each account holder other than the liable person must be made aware that the notice will be given and of its effect. That must be done before giving the notice to the bank. A further information notice requires the bank to provide statements of the account held by the liable person for the three months prior to the notice being given or a longer period as may be specified in the notice. The information given may also be used for the purposes of exercising the core functions only as outlined in clause 1. That is a key safeguard in the Bill to limit the circumstances in which the information given can then be used. However, it is also essential in ensuring that decisions regarding variations or revocations of direct deduction orders are based on the most current and comprehensive financial information, thus safeguarding both the Government’s recovery efforts and ensuring that the amount of deductions remains proportionate and fair. Clause 32 defines the circumstances under which the operation of direct deduction orders is suspended. A regular direct deduction order may be suspended and restarted at any time. Clause 33 sets out what happens in the unfortunate circumstance that a liable person dies during the period of a direct deduction order. Should such a circumstance arise, a bank will cease to be subject to a direct deduction order on becoming aware of the liable person’s death. In all cases where a deduction order is altered or proposed to be so, the liable person, any joint account holders and the relevant bank will be notified. These clear communication requirements safeguard the interests of all account holders involved. Collectively, the clauses outline clear and transparent processes so that the liable person, any joint account holders and the banks carrying out such orders understand how they can be varied, suspended or revoked. They enable necessary flexibility in the debt recovery process so that the orders reflect the changing circumstances and financial realities of those affected, thereby ensuring fair and appropriate payments. It is important that we maintain integrity and fairness in our approach to debt recovery and allow for review and appeals. Establishing clear, responsive and fit-for-purpose processes supports that approach, ensuring that the debt recovery mechanism is future-proofed and that the debt recovery process remains responsive and fair. Having outlined the key provisions in clauses 28 to 33, I commend them to the Committee.

• 4 Mar 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Sixth sitting) · Hansard source

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  How the Bill is exercised in terms of the deduction calculations and the notices is future-proofing the Bill and ensuring that it meets its stated objectives of preventing hardship and so on, which sit on the face of the Bill. This is about how we do that, not the aims that exist. The regulations will come before Parliament in a proportionate way, as is the normal practice. Even under the negative procedure, parliamentarians will still be able to come back on any of these points. It is a statutory duty of consultation, which ensures that the results of the consultation will be taken seriously and published. I hope that that gives some reassurance. On the question about subsection (2)(c), the hardship considerations are for PSFA and not for the banks. That is why they are excluded, but we will take them very seriously, and I have talked at length about the way they will be embedded in every part of this process. The word “Schedule” can be changed to “clause” in a Government amendment, as that is what it means. I am grateful to the hon. Member for Brighton Pavilion for pointing that out. Question put and agreed to. Clause 37 accordingly ordered to stand part of the Bill. Clause 38 Deduction from earnings orders 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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  Sorry—I think those are the main questions the shadow Minister asked. Amendment 2 agreed to. Clause 34, as amended, ordered to stand part of the Bill. Clause 35 Appeals Question proposed, That the clause stand part of the Bill.

• 27 Feb 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Third sitting) · Hansard source

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  Some points of clarity: the hon. Member for Kingswinford and South Staffordshire asked who would do the reviewing. A more senior officer from within the PSFA would complete that review, not the Minister themselves. The entire process would be overseen by a separate team who are accountable to an independent chair, and critically, who will report into Parliament to provide that level of independence. The other important context is that the Bill also—we will come to this later—provides for the PSFA to become a statutory body, fully independent from the Minister. In the meantime, it is incredibly important that we have this process of oversight and the independent chair, as we discussed. All these issues are important for balance. We have to avoid giving fraudsters the ability to abuse the review process and frustrate investigations. As John Smart told the Committee on Tuesday, months is far too long, and adding a further route to appeal to the tribunal at that very early stage would add months, if not years, to our investigations into suspected frauds. We have tried to balance this very carefully to ensure that there are appropriate routes to review that sit within a system that is independently overseen. I believe that we have found the right balance in the Bill, and I have explained those layers of review. They include internal review, which is the appropriate route that strikes the right balance between fairness and avoiding fraudsters frustrating the process. As I said, the internal reviewer will be a separate authorised officer, who will be—this is a requirement in clause 66—an authorised officer of a higher grade than the original decision maker. The way that these reviews are performed will be subject to oversight/ We will talk later in more detail about the oversight in the Bill, but it will include the inspections by HMICFRS and the day-to-day oversight by an independent chair, which could include live cases. I explained in the previous debate—I did not go through the detail, but I can do so—the stages of an information notice going through if someone still does not agree that they should provide the information. Ultimately, it is really important that if a penalty is issued for non-compliance, the information provider can appeal to the relevant court against that penalty, so there is a formal appeal to a court at the end of the information-gathering process if it gets to that place. However, the intention of the powers—as I said, this will be written into the code of practice—is very much to work alongside those organisations that are gathering information, and to be proportionate to their size and the requests put forward, so I believe we have found the right balance.

• 27 Feb 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Third sitting) · Hansard source

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  First, it is important to set out that these powers will be used by authorised officers who sit within a professional standard. They are highly trained and have a code of ethics that they apply. It is a deliberately limited group of people to ensure that we have full oversight. The kind of decisions that they make will have to be written down, so they can be overseen by the team within the Cabinet Office, which is answerable to the independent chair and to another independent body, and that is likely to be HMICFRS. I think I have already set out, and it is in the Bill, that the reviews on a case-by-case basis will have to be done by another authorised officer who is of a higher grade than the one who made the decision. There will be no set time, but we will set out a range within the wider guidance. The intention of the Bill is to ensure that we prevent and recover fraud against the public sector. We want to be reasonable and proportionate, and as I have said, we will set out further information about the size and scale of organisations and timeframes within the code of practice. What we really need to avoid is organisations that have committed fraud using appeals to frustrate the process and keep this going for ages, so that money is moved and we lose the ability to recover critical public funds. We think that a huge amount of oversight has been put into this overarching package, but we have to ensure that we allow authorised officers to get the information they need and recover fraud. Finally, it is important to remember that, if we go through a process where somebody does not provide that information, and a fine is levied, they are able to apply to the courts at that point. There is that fundamental backstop to the system. Question put and agreed to. Clause 4 accordingly ordered to stand part of the Bill. Ordered, That further consideration be now adjourned. —( Gerald Jones.)

• 27 Feb 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Third sitting) · Hansard source

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  I thank both hon. Members for their constructive comments. This dialogue will be really important in scrutinising the Bill. I also welcome the support for action on fraud, and the acknowledgment that it is a significant issue. On timing, I reassure the hon. Member for Torbay that the powers in the Bill that the PSFA is asking for are all powers that exist elsewhere in government. They have been used and tested; they are just being brought into a new context. At the moment, there are few powers to investigate or recover fraud that happens to the wider public sector, but this part of the Bill seeks to rectify that. There has been a great deal of consultation led by me, the Under-Secretary of State for Work and Pensions and our teams to get us to this point, but we will engage constructively with scrutiny as we move forward. On the cost-benefit analysis, the overwhelming message from witnesses was that these new powers are necessary because there is a gap in investigating and recovering fraud against the wider public sector, and that the Bill will make a difference. On the question of the £54 million and whether that is robust, that is a modest amount given we know that at least £3 billion of fraud happens against the wider public sector. It has come about through a great deal of work from the PSFA in modelling forward the current size of the enforcement team and how the powers are used elsewhere. We can therefore be confident in that figure, but if the powers work well we could grow the capacity and potentially recover more fraud. At the moment, we know that there is fraud going on that the Government cannot investigate. A big part of this will be the deterrent and making it clear that if there is fraud in procurement or grants, there will be real powers to investigate and recover that money. That is really important both for the concrete recovery of money and for trust in how public funds are spent. On the wider points about the importance of oversight, including of the Bill, that has been incredibly important to the Government. We thought deeply about the measures in the Bill and we will discuss that as we go through it. As for the development of the codes of practice, as I hope the Committee will see today, I will refer to the measures that are to be put in the code of practice as we go through the clauses, so that we can have some discussion about that. I reassure the Committee that the definition of fraud in clause 70 is as it is defined in the Fraud Act 2006. That includes the main fraud offences, which are false representation, fraud by failure to disclose information when there is a legal duty to do so, and fraud by abuse of position. Hopefully that provides reassurance on that question, and I look forward to answering any other questions. Question put and agreed to. Clause 1 accordingly ordered to stand part of the Bill. Clause 2 ordered to stand part of the Bill. Clause 3 Information notices

• 27 Feb 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Third sitting) · Hansard source

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  It is a pleasure to serve under your chairship, Mrs Lewell-Buck. I look forward to constructive dialogue with the Committee throughout the day. As the Committee is well aware, fraud against the public sector takes money away from vital public services, enriches those who seek to attack the Government, damages the integrity of the state and erodes public trust. The Bill makes provision for the prevention of fraud against public authorities by the recovery of money paid by public authorities as a result of fraud or error, and for connected purposes. Under part 1, the Bill authorises powers that will be used by the Public Sector Fraud Authority, part of the Cabinet Office, and under part 2, by the Department for Work and Pensions, on which the other Minister in Committee, the Parliamentary Under-Secretary of State for Work and Pensions, will lead. I will now consider clauses 1 and 2 together. Clause 1 gives new core functions to the Minister for the Cabinet Office and sets out what can be recovered by the use of the powers under part 1 of the Bill. It describes what the Government want to achieve with part 1: to investigate more public sector fraud; to get back funds lost to the public purse through that fraud; to take enforcement action against fraudsters, whether through civil or criminal routes; and to support public authorities to prevent and address fraud against them. The functions of the powers under part 1 will be used to deliver. As such, it is necessary that this clause stands part of the Bill. The functions are given to the Minister for the Cabinet Office, but it is important to stress that that is drafting convention, and the Minister will not use the powers personally; instead, in line with the Carltona principles, later clauses set out that the decisions may be taken and powers utilised by authorised officers and authorised investigators appointed by the Minister. Those officials will sit within the Public Sector Fraud Authority and will be experienced investigative professionals trained to Government counter-fraud profession expectations, sitting in a structure led by senior counter-fraud experts. As we heard from the witnesses, that will sit within a system of oversight, to be discussed later in the Bill. The clause also sets out what “recoverable amounts” are. First, that means payments made as a result of fraud or error that have been identified during the course of a fraud investigation to be either fraudulent or erroneous, and which the affected public authority is entitled to recover. Later clauses cover how that entitlement is established. Error as well as fraud is included here, because if an investigation discovers that there has not been fraud, but none the less that a person has received money that they should not have, the debt powers in the Bill can, if necessary, be used to recover it. That is in line with the approach taken by others, including His Majesty’s Revenue and Customs and the DWP, but it is important to stress that the core function of the powers is to investigate and recover losses from fraud. Recovery in that way will normally be when alternative voluntary routes have been exhausted, or a person or business can repay but is refusing to do so. All attempts will be made to engage. Secondly, “recoverable amounts” covers any other amount that a public authority is entitled to recover in respect of that fraud. That covers frauds where no payment has been made, but the fraudster has benefited in some other way—for example, fraudulently not paying what they owe—and the value of that can be determined. Finally, it also includes any interests which would be collectable in those circumstances. Clause 2 sets out how the Minister for the Cabinet Office can carry out the functions in clause 1. The clause excludes HMRC and the DWP from the list of bodies that the PSFA will be able to take this action for as they both have significant resources and expertise in this area, as well as their own powers. Again, we will discuss that later. Importantly, the clause does not remove or supersede responsibilities and functions that other public authorities may have in respect of fraud and the recovery of money. The powers in this part allow the Government to fill a gap and complement what already exists. The intention is that, in exercising these functions, the Minister, and the authorised officers and investigators who will use the powers on behalf of the Minister, are not simply moving investigations and recoveries that would happen anyway into the Cabinet Office. Instead, they will primarily use them in a way that is additive, to take on investigations, recover money and take enforcement action that would otherwise not have been done. Subsection (3) says that the Minister may charge “a fee”. The PSFA does not currently charge for its investigative services, but that gives it authority to do so in the future, consistent with the cost-recovery approach set out in HM Treasury’s “Managing Public Money” guidance. “Public authority” has a broad definition set out in clause 70 and would include, for example, other Government Departments, arm’s length bodies and local authorities. Clause 2(4) says that the Minister is included in the definition of public authority in clause 70 as far as that concerns fraud or suspected fraud against the Minister, or recovery of money for the Minister. That is to ensure that frauds against the wider Cabinet Office and its agencies and bodies can still be investigated by the PSFA. However, to ensure that there is no conflict of interest, it will be set out in guidance that the PSFA will not investigate alleged frauds within the PSFA or allegations against the Minister personally but will refer those to another agency as deemed appropriate on a case-by-case basis. That will help to ensure the integrity of PSFA investigations by keeping responsibility for investigating fraud in the PSFA, or by the Minister, external to that function, to preserve appropriate independence. Finally, subsection (5) ensures that, in giving Ministers these functions, this part does not affect a public body’s entitlement to recover an amount or any functions it has in respect of fraud or recovery. That means existing functions and powers are not taken away from public authorities or superseded by the Ministers’ functions.

• 27 Feb 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Third sitting) · Hansard source

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  I welcome those probing amendments, because they give me an opportunity to provide some clarity and reassurance on those important points. I will respond to them in a second, but on the question of safeguards, as I said in my introduction, we have thought very deeply about them and we are really mindful of the responsibility of these powers, so a broad range of safeguards has been built into both sides of the Bill. On the PSFA measures, all the use of powers will be overseen by a separate team that will be accountable to an independent chair who will transparently report their findings annually to Parliament. The use of the wider powers will be overseen and reviewed by His Majesty’s inspectorate of constabulary and fire and rescue services, which has a lot of experience in this. There are various routes of appeal and review built into the powers, as well as times when applications to court are needed, and we will deal with those in some depth as we go through the clauses. Oversight is absolutely critical, and that is why we have put such a robust oversight system in place. On clause 3, currently any information needed from first parties or connected third parties can be asked for only if they refuse to provide it, and there is no way for the PSFA to compel the information to be produced without having to go through the civil court. The clause enables authorised officers in the PSFA to compel information to be produced that is not excluded, where it is necessary, proportionate and in line with the data protection legislation, from individuals and businesses as part of a civil fraud investigation. As we discussed on Tuesday, those authorised officers will all be highly trained and subject to professional standards and a code of conduct. In particular, clause 3 extends the Minister’s powers to include taking copies of information and requiring the individuals to provide information in a specified form. The power includes imposing duties on an individual to retain information that they already hold for longer than they would normally be required to. For example, that might apply where the PSFA requests contractual notes as part of an investigation that a person may retain for only three years. Where the request is made just before the end of that period, the information notice would also explain that any failure to supply the specified information might result in a civil penalty being imposed. The clause details the requirements of the information notice, including the format, the timeline for compliance and the location for submission. A similar approach is used by HMRC. In practice, authorised officers would engage, where possible, on a voluntary basis before issuing an information notice. The clause also ensures that there are restrictions on the information notice from demanding “excluded material” or “special procedure material”, as defined under the Police and Criminal Evidence Act. I will turn to the amendments, and as I said, I am very grateful for the opportunity to explain how this clause works, which I hope will provide some reassurance. Clause 3(1)(a) and (b) set out a test for issuing an information notice. An authorised officer will have the power to compel information only when it is necessary and proportionate to do so, and only when the information being requested relates to a person whom the authorised officer has reasonable grounds to suspect has committed fraud. On that basis, PSFA authorised officers will request the information only when there are reasonable grounds to do so. The question that amendment 10 raises is, “What is meant by ‘reasonable grounds’?” It must be objectively reasonable for them to suspect fraud, given the information available to them. An authorised officer must genuinely suspect that the fraud has been carried out by the individual, and that belief will be based on facts, information and/or intelligence. Reasonable grounds cannot be supported on the basis of personal factors such as those listed in the amendment, or a hunch. It is critical to set out that authorised officers will be using those facts and will be bound by the public sector equality duty and the Equality Act. The reasonable grounds test is a standard, widely accepted test used by various organisations, including the DWP, the Serious Fraud Office and the police. Further to that, to ensure that the reasonableness test is applied properly in practice, the PSFA will have built in place safeguards. For example, authorised officers must consider all the facts of a case known to them at that time when they decide what is reasonable. Authorised officers must ensure that each decision made relating to the use of the powers is documented and available for checking. Management checks will ensure that those procedures are followed correctly. Information holders can also request a review of a decision to issue an information notice if they feel that there were no reasonable grounds. As I said, there will also be independent oversight of the use of powers by an independent body such as HMICFRS or the new independent chair. I am setting out this detail on the record now, but we will also be transparent about this for those who do not leaf through Hansard . The code of practice envisioned by this legislation for the PSFA elements of the Bill relates to civil penalties. As civil penalties are the mechanism for ensuring compliance with the information gathering powers, we will also set out in the code of practice, and in further published guidance if necessary, how the information gathering powers will be used in practice, as I am doing today. We will also fulfil the commitment that we made on Tuesday to talk about what will be in the codes of practice as we reach the relevant parts of the Bill. Let me turn to the period of compliance. Our approach in the Bill accommodates the variation in size and type of fraud investigations that the PSFA is likely to take on. As such, the Bill allows information providers a minimum, critically, of 10 working days to comply. However, in practice, the information notices will be tailored on a case-by-case basis, with each being judged on its merits and with the time period applied appropriately. Similar approaches are used in HMRC. That, in turn, protects the information holder from being asked to produce information in an unreasonable timescale. On Tuesday, we heard from John Smart, who said: “Some of the smaller organisations might struggle to meet that 10-day requirement”. That is why we will be tailoring the requirement. But, he also said, “I still think it is a reasonable starting point. If you do not start with a reasonable starting point, for the larger organisations you end up deferring decision making and action being taken. I think 10 days is reasonable.” –– [ Official Report, Public Authorities (Fraud, Error and Recovery) Public Bill Committee, 25 February 2025; c. 46, Q81.] As I said before, that is the minimum. Again, we will set out the commitment to tailoring to ensure that we are proportionate and reflect the different types of organisations and individuals who might be asked for information in the code of practice or published guidance. Alongside the time period for compliance, an information provider will have the opportunity to request a review, which would include the ability to vary the time period for compliance if it was considered that a longer timeframe was needed. The current drafting outlines a five-layered process for information holders to request a review of an information notice that they have received. I can go through that detail if Committee members want me to, but I hope that that provides some reassurance on hon. Members’ points.

• 27 Feb 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Third sitting) · Hansard source

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  Clause 3 introduces a civil power that allows authorised officers to compel information from first and third parties, similar to that used by HMRC. Clause 4 introduces a right to request a review of a decision to issue an information notice within seven days of a notice being issued. The policy intention is that this provides adequate time for an individual or business to request a review of a decision to issue an information notice, and sets a time limit for a review that will balance any attempts that might be made to aggravate the information collection process by slowing down the fraud investigation unnecessarily. During the review process, authorised officers will work with information-holders to give them every opportunity to comply.

• 27 Feb 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Third sitting) · Hansard source

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  The critical thing to note here is that we have been very clear in the Bill that 10 days is a minimum. As we heard in evidence, some organisations will find it very easy to provide the information within 10 days; others will find it harder. As I have already set out, we will ensure that responding to different kinds of organisations proportionately is referenced in the code of practice. I previously explained why we believe that the time limits in the Bill for information requests are appropriate, and why we believe that internal review strikes the right balance in preventing fraudsters from frustrating the process. The current drafting includes powers for authorised officers to vary the duration of an information notice in clause 4. The clause allows an information notice to be varied subject to the outcome of an internal review. A variation of a notice can include amending the timeframe to comply with a request if it is found that a longer timeframe is required. We have discussed how the Bill allows information-providers a minimum of 10 working days to comply, which in practice will be tailored on a case-by-case basis, with each case judged on its own merits and the time period applied appropriately. This is a similar approach to that taken by HMRC, for example: an authorised officer would take account of the nature of the information or documents required and how easy it will be for the person to provide or produce them. That, in turn, protects the information-holder from not being asked to produce information within an unreasonable timescale. In response to the amendment, I ran through what the reasonable grounds test will be and the kinds of thinking that authorised officers will have to go through to determine what information they will gather. That includes writing it down so that their thought processes in requiring information can be reviewed.

• 27 Feb 2025 · Public Authorities (Fraud, Error and Recovery) Bill (Third sitting) · Hansard source

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  Yes, the code of practice will be much more operational guidance that will be targeted at the authorised officers and their day-to-day operational practice. It will include the information that I have set out.