Georgia Gould MP: speeches 2025

Speeches

• 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.

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

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  I am sorry to have arrived late. Clause 6 will provide essential powers to obtain communications data from telecommunications providers, as and when necessary, as part of an investigation into fraud against the public sector. As a result of the clause, the PSFA will be listed under column 1 of schedule 4 to the Investigatory Powers Act 2016 and will thereby be granted the power to request communications data—the how, where, what and when, as opposed to the content, of communications—for the purposes of investigating suspected fraud against the public sector. The clause will not give the PSFA surveillance and covert human intelligence powers. The precise listing of the PSFA in schedule 4 will not permit self-authorisation to use the relevant powers; a request for communications data in the course of a criminal investigation must be approved by the independent Office for Communications Data Authorisations. The powers also come with extra oversight from the Investigatory Powers Commissioner’s Office, which will inspect the designated communications data single point of contact that facilitates the lawful acquisition of communications data and effective co-operation between the IPCO and public authorities that have these powers. I welcome the Opposition’s support for Government amendment 1, which is necessary to align us with the Home Office’s new approach to restrict powers to specific teams in other Departments within the same schedule. The amendment will change the way the Department appears in schedule 4 to the Investigatory Powers Act, as it will restrict the use of the powers to the Public Sector Fraud Authority only, not the Cabinet Office as a whole. The amendment will ensure that the use of the powers is properly restricted and that there are no unintended consequences for other parts of the Cabinet Office. I commend clause 6, as amended by Government amendment 1, to the Committee. Amendment 1 agreed to. Clause 6, as amended, ordered to stand part of the Bill. Clause 7 Police and Criminal Evidence Act 1984 etc powers Question proposed, That the clause stand part of the Bill.

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

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  I thank the shadow Minister for those questions. As he said, these are important powers, and it is critical that the right training is in place. I reassure him that all these authorised officers will have relevant training to the standard that police officers have for the use of the PACE powers. As he set out in his remarks, an application for search warrants must be made to a magistrate, so there is already an external body ensuring that they will be used correctly. Another critical component of the PSFA’s use of the powers is that if an authorised officer is visiting a property, they will be accompanied by a police officer and will not go their own, so we have not included powers of arrest because of the nature of the PSFA investigations as separate to the Department for Work and Pensions. The powers sit within a range of safeguards, some of which have been mentioned. To remind Members, His Majesty’s inspectorate of constabulary and fire and rescue services will also oversee the use of all these powers, as it has experience of doing that. The powers will be overseen in any serious circumstances by the Independent Office for Police Conduct. Question put and agreed to. Clause 7 accordingly ordered to stand part of the Bill. Schedule 1 agreed to. Clauses 8 and 9 ordered stand part of the Bill. Clause 10 Acting for another public authority Question proposed, That the clause stand part of the Bill.

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

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  The first point to clarify is that before any investigation and any debt recovery are started, there would be a vulnerability test on that individual, and that would be part of the basis for the decision making. As for whether there was a voluntary agreement about the recovery of debt, a conversation would happen with the individual, but there is a limit to the amount that would be recovered—up to 40% of their assets in their bank account for fraud and 20% for error. In terms of whether people would try to frustrate the process by unnecessarily reviewing it, one of the features of the Bill is that it can include interest on the money that is paid, so that is a disincentive to continue to drag out the process, and the matter can be resolved as quickly as possible—and voluntarily. On the initial phase of the PSFA’s investigatory and debt recovery work, if there is a limited number of officers, we do not expect a high burden on the court system—we expect less than double digits to be taken through initially—and we believe that the provision around interest is a key disincentive against frustrating the process. Question put and agreed to. Clause 10 accordingly ordered to stand part of the Bill. Clauses 11 and 12 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 (Fourth sitting) · Hansard source

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  Clause 7 and schedule 1 cover the investigative powers in the Police and Criminal Evidence Act 1984. Clause 8 will give the PSFA a legal route to apply to a court for an audit in relation to property that has come into its possession in the course of a fraud investigation. Clause 9 will bring the PSFA under the oversight of the Independent Office for Police Conduct for serious complaints about its use of PACE powers. Clause 7 will designate authorised investigators with the necessary authority to use limited provisions from PACE within the remit of public sector fraud investigations. These include powers to apply to the courts for a warrant to enter and search premises and to seize evidence, and special provisions to apply to the courts to gain access to certain types of material that are regarded as excluded material or special procedure material. These are criminal investigation powers and will only be used in criminal investigations to enable all reasonable lines of inquiry to be followed and all relevant evidence to be collected. PSFA staff must be specifically authorised by the Minister before they can use the powers in the clause. Authorised investigators will be able to access and process evidence under the same conditions applicable to the police, ensuring that robust investigative protocols are followed. PACE has its own code of practice, and authorised investigators will adhere to the provisions that apply to the PSFA’s PACE powers, in particular PACE code B, which deals with the exercise of powers of entry, search and seizure. Clause 7 is fundamental in reinforcing the Bill’s objective of combating public sector fraud effectively by equipping investigators with powerful investigative tools, governed by long-standing safeguards. The provision of such powers is essential and reflects our commitment to holding to account those who defraud public resources, maintaining the integrity of public administration. Schedule 1 will modify the provisions of PACE adopted in clause 7 so that they apply to authorised investigators within the PSFA when they are conducting criminal investigations into fraud offences committed against the public sector. Clause 7 will enable these modifications to have effect; they include equating authorised investigators with constables for the relevant sections of PACE, clearly defining the range of their responsibility and authority. An amendment to replace “articles or persons” with “material” in schedule 1 is specifically intended to clarify the scope of investigations conducted by the PSFA. By defining the term more narrowly with reference to “material”, it reflects the fact that the PSFA will not be conducting searches of individuals. While detailed stipulations regarding the retention and handling of seized material are set out in PACE, schedule 1 will provide the essential adaptations necessary for the authorised investigators to carry out their roles effectively while adhering to established legal safeguards. Overall, schedule 1 is necessary to equip authorised investigators with precise, tailored powers from PACE so that they can enforce the legislative aim of combating fraud within the public sector. Clause 8 will give the PSFA a legal route to apply to a court for an order in relation to property that has come into its possession in the course of a fraud investigation. The order will determine who the property should be returned to and whether changes need to be made to the property before it is returned or, if appropriate, destroyed, subject to suitable safeguards. The PSFA will not routinely need to use this power. It will use it only in three specific situations: first, when there is conflicting evidence as to who the property should be returned to; secondly, when it is not possible to return property to its owner, and the PSFA is otherwise liable to retain it indefinitely; or, thirdly, when it has been identified that the property could be used in the commission of an offence. Clause 8 will protect the PSFA in situations in which it could otherwise face having to retain property indefinitely, at ongoing cost to the taxpayer, and where it cannot return the property to its owner. It will ensure effective management and disposal of items, helping to prevent misuse while reducing the administrative burden. The use of a magistrates court to determine the appropriate course of action is a critical safeguard. This external judicial oversight ensures transparent and lawful disposal decisions. A mandatory six-month waiting period is built into the process before property can be disposed of or destroyed. This period will allow any interested parties to make claims on the property. However, if a magistrates court orders that the property be returned to its owner, there is no waiting period for that return. Further application to court can be made if initial orders do not resolve ownership or disposal issues, ensuring ongoing flexibility and fairness in property management. Equipping the PSFA with these powers is vital for appropriately concluding fraud investigations and reflects similar practices in other Government Departments. I turn to clause 9. The PSFA’s use of PACE powers will be subject to robust internal and external scrutiny. Elsewhere in the Bill, clauses 64 and 65 set out provisions under which His Majesty's inspectorate of constabulary and fire and rescue services will work with the PSFA. Clause 9 amends the Police Reform Act 2002 to extend the functions of the director general of the Independent Office for Police Conduct to include oversight of public sector fraud investigators and enables them specifically to consider the PSFA’s use of PACE powers and associated investigations. In doing so, this clause enables the IOPC to be engaged where necessary to investigate death, serious injury, accusations of staff corruption or serious complaints against the PSFA’s use of PACE powers, although we hope that none of those will come to be. The amendments made by clause 9 also include allowing the Minister to issue regulations conferring functions on the director general in relation to these investigations. In practice, this enables the Minister to detail in due course the specific remit of the IOPC in relation to the PSFA. This clause represents a typical approach to engaging the IOPC in legislation, similar to that of other law enforcement agencies. The clause will also enable the sharing of information between the director general, the Minister and those who act on their behalf. Additionally, it will enable the sharing of information with the Parliamentary Commissioner for Administration to facilitate potential collaborative investigations with the IOPC. The clause will ensure that any information sharing complies with existing data protection and investigatory powers legislation. Incidents and complaints will be either self-referred from the PSFA or referred to the IOPC via a third party. Any potential cases of serious injury or death that occur in the exercise of the PSFA’s PACE powers would be automatically referred to the IOPC for review. The use of the independent complaints function offered by the IOPC is a key element of the oversight landscape, ensuring that the PSFA is held accountable to the highest standards in the exercise of PACE powers, and providing confidence to the public that the Government take their responsibilities in using the powers seriously. I went through a lot of detail there, but I know that the Committee is concerned about the proper oversight of powers, as it should be.

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

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  As I have set out, the Bill provides the key powers to investigate suspected fraud against the public sector. However, to be able to deliver a holistic counter-fraud service and recover vital funds lost to fraud and error, powers are needed to act on behalf of other public authorities for recovery action. That is what clause 10 outlines. The PSFA will already have conducted investigations before the recovery phase and will know the background to the case and the people and businesses involved. It will be able to leverage that information and those relationships to secure recovery, prioritising voluntary repayments first. It will then be able to utilise the proposed recovery powers already used across Government to get back fraudulent funds where people can afford to repay their illicit gains but are refusing to engage with us. The recovery of fraudulent funds is complex, as is fraud itself. In 2021-22, the Government’s fraud landscape report found that only 23% of fraud losses were recovered. That is not good enough. Having a central recovery function within the PSFA will allow it to develop the expertise and capability required to drive effective recovery action on behalf of other public bodies. Providing the option to keep some of the recovered funds, subject to agreements with the public bodies concerned, helps to fund the development of that recovery expertise and provides value for money for the Government and taxpayer. Clause 11 outlines the requirement to issue a recovery notice before proceedings can be brought to a court or tribunal. The notice must outline what the Government believe is owed and why. It must also provide information as to how the amount can be voluntarily repaid. Once issued, the liable person has a minimum of 28 days to respond. The recovery notice will effectively signal the end of the PSFA investigation. During an investigation, a suspected liable person will already have had the opportunity to make their case and provide evidence to support their position. This provides the liable person with further opportunities to positively engage on the matter, either through voluntary repayment or by providing additional evidence. It also provides them with ample opportunity to prepare for a potential future court or tribunal proceeding. The issuing of a recovery notice is therefore an important step that promotes fairness and transparency in proceedings by providing a liable person with an overview of the position. Clause 12 provides a key safeguard for the use of the recovery powers. During an investigation, the PSFA will collect and assess evidence to determine whether a liable person or business received payments made as a result of fraud or error. It will outline its reasonings in the recovery notice. However, it will be able to use the proposed recovery powers only if a liable person agrees and a court or tribunal has made a final determination of what is owed. We will not be making unilateral decisions as to what is owed. Instead, this process firmly embeds independent judicial decision making. If a liable person disagrees with the determinations, they can present their case in a court or tribunal. If a liable person agrees, we do not need to seek confirmation from a judge, making important judicial time and cost savings and ensuring that we do not further overburden the judicial system. Those are all important steps in commencing our recovery action. The positive impact of the Bill is predicated on being able to effectively recover funds identified as being lost to fraud or error. We have already agreed that recovery is a vital new core function of my Department, and it is one that we should strive to ensure can operate effectively to return money lost to fraud and error to the public purse.

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

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  Q Concerns were raised earlier that the PSFA would take its eye off the ball on prevention and the wider area of work, and become an agency focused only on enforcement. It would be helpful if you could address and answer those concerns. Mark Cheeseman: The Public Sector Fraud Authority has two elements to it. One is overseeing Government and how individual Departments are doing in dealing with fraud and what they are doing on it; the Bill itself says that Departments would refer cases to the PSFA and ask for them to be dealt with under it. The second is providing some of the services that support Departments around taking action on fraud where it happens. The biggest difference we will make, alongside that, is through prevention. We heard from witnesses earlier about the use of data and analytics. We have a data and analytics service that works with public bodies to use that to find and prevent fraud up-front. We also have a risk service that works with other parts of the public sector to understand the risks they face, in order again to prevent those risks by putting in controls. While there will always be that balance, there will also always be some element of fraud that is still committed. We will not be able to design a system where there is no fraud risk or design out fraud. There will always be cause for an efficient, effective and proportionate part of the machine to take action on those instances of fraud and to investigate them thoroughly and properly.

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

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  Thank you very much.

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

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  Q I want to build on the earlier line of questioning about Ministers’ sign-off. My under-standing is that the powers will be delegated to authorised officers and there will be no ministerial sign-off on any part of the investigation. That will rightly be separate. I think it would be helpful if you could clarify how that will work in practice. Mark Cheeseman: Yes. Apologies—that was a slip when I answered earlier. Yes, the powers of the Minister—it is written as “the Minister” in the Bill—are delegated to authorised officers, who sit in the PSFA. They would be qualified to the standards of the profession, and they would be taking the decision. What I was referring to earlier is that any review decision, if someone asked for a review, would be taken by a separate authorised officer. There are a number of provisions in the Bill to enable people within the process to make an information-gathering request or to ask for something else to be reviewed.

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

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  Q Thank you both for your evidence. First, to Joshua, on the NAO’s reports on fraud, the PSFA measures hopefully build on many of those recommendations. I would welcome your assessment of the PSFA measures in that light and of any areas where you think we should go further. Joshua Reddaway: I think you are referring to the report we did in March 2023, after the PSFA had just been established. We very much wanted it to be a baseline for the challenges it was trying to deal with. We basically said that there needed to be a cultural change across all of Government, that 84% of the resources were in DWP and HMRC, and that covid really exposed that the Government did not have the capability in other Departments. I have to say that, from our point of view, we saw fraud as essentially a welfare and tax issue for many years, so it was a bit of a surprise to start bringing it out to the other Departments a bit more. I would interpret the Bill as being about giving the powers, particularly on the enforcement side, and in the meantime, the PSFA has been doing quite a lot on the prevention side. The prevention side is primarily where I would be focused because that is where the biggest gains are to be had in dealing with the cultural changes that are needed across all of Government. Mind you, I do not read the Bill as being against that; I see it as supplementary. We would be very disappointed if the PSFA became exclusively an investigation and enforcement-type agency. The impact assessment thinks it can get roughly £50 million over 10 years from enforcement. Like I say, every million counts, but that is very tiny compared with the challenge that the PSFA is trying to meet. Is that the sort of thing you are interested in?

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

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  Q As an adviser to the PSFA, you have seen the organisation grow. What is your assessment of where the PSFA is in tackling public sector frauds, and how the Bill moves us on? John Smart: That is a big question. I have been involved with the Cabinet Office for over 12 years, so the inception of the PSFA came about while I was working there. In the 18 months since it was formed, the PSFA has gone a long way to reach a better understanding of where the issues sit across Government. Clearly, it plays best outside the DWP and HMRC. My passion has been identifying where fraud is taking place, which I have worked on for the past 10 years, and trying to quantify the fraud occurring within Government. As you all know, that is very hard to quantify because it is hidden and therefore unknown. The PSFA has gone a long way and is continuing to flush out where resources should be committed to preventing, investigating and deterring fraud across Government outside HMRC and the DWP. That is critical. When I first started asking Departments where frauds were within the Departments, they replied, “There’s nothing to see here.” At least now, particularly because of the work the PSFA has been doing, there is recognition that there is a real issue to be addressed, and that it is not just expenses fraud, or whatever they used to think it was.