Georgia Gould MP: speeches 2025

Speeches

• 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

• 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.