Public Authorities (Fraud, Error and Recovery) Bill

Report (2nd Day) (Continued)

Clause 91: Recovery and enforcement mechanisms

Amendment 89

89: Clause 91, page 57, line 25, at end insert— “(aa) section 80AA (restrictions on use of further methods),”Member's explanatory statement This amendment is consequential to my other amendment to clause 91.

My Lords, I shall speak to government Amendments 89, 91, 101 and 102; I start with Amendments 89 and 91. I tabled these amendments because it has been clear that, despite all my attempts to reassure noble Lords at earlier stages, concerns continue to be raised as though DWP’s new recovery powers could be applied to debtors who are in receipt of benefits. Indeed, I think that may be the concern of the noble Baroness, Lady Kramer, as the explanatory statement on her Amendment 92 in this group relates to the use of these powers on benefit claimants. To be clear, this is not the case.

The DWP’s new debt recovery measures can be applied only to debtors who are no longer receiving DWP benefits and where we cannot recover from PAYE. However, to further reassure noble Lords and everybody else, we are making it even clearer in the legislation, through new Section 80AA, that the new powers cannot be applied to those receiving benefits from my department. This provides further clarification that a direct deduction order or immediate disqualification from driving order must always be suspended or revoked if the debtor subsequently receives a benefit payment from the DWP while that order is ongoing. I hope that provides further assurance to the House.

Amendment 101 is a procedural amendment regarding the technical mechanisms for DWP to make applications to the court for disqualification orders. The Bill already allows DWP to make an application to the magistrates’ court for a suspended or immediate DWP disqualification order. The purpose of this amendment is to introduce a regulation-making power enabling DWP to set out at a later stage any practical steps necessary for those applications to be made and considered. This engages commonplace procedure rules, dealing with practical matters to ensure cases are progressed fairly and efficiently for all parties involved, such as the type of form used or how notices and orders are served on parties.

My Lords, I will be very brief. I laid Amendment 92 in the same spirit as the amendments that I laid in an earlier group. The part of paragraph 3 of Schedule 5 that I find most difficult is a subset of the requirement for banks to provide information. The overarching requirement instructs banks to hand over to the Government, on request, three months of account statements for them to examine. The schedule says that the information must be used only to help determine whether or not to make a deduction under the Bill. I was trying to find out from the Minister what assurances there are that the use will be that narrow. It may be that I have misread it, but I cannot see any form of transparency or accountability that would provide that kind of assurance. It all seems to be completely internal to the DWP. My first question to the Minister is therefore this: how will the scheme verify that the information is not used for other purposes, because detailed account statements undoubtedly have information that could interest all kinds of people? Most importantly, will that information be destroyed after an investigation is closed?

The part of paragraph 3 that exercised me the most, in the original language of the Bill that came from the Commons, is that which prohibited banks from ever notifying the account holder that their information has been handed over to the state and for what purpose. To the Minister’s credit, that now seems to have been amended to say that the account holder can be told after three months. I am unclear whether that is an automatic notification, notification at the bank’s choice, or notification that requires a request from the account holder. To me, this matters, because I suspect that transparency is the only way to ensure that the information in the account is not used for purposes other than those stated in the Bill.

I am generally exceedingly uncomfortable with the idea that the original version basically required a sort of covert process, in which the information held on an individual by the state was not disclosed to that individual. The Minister has often suggested that the monitoring of accounts is to start a dialogue to see if a person has made a mistake in overclaiming rather than committing fraud. If somebody is not told that their information has been taken, read through, examined and dealt with in detail, I cannot see how they can possibly enter into a constructive discussion to explain what is happening.

My Lords, the amendments in this group tabled by the Government contain a mixture of substantive safeguards and some technical improvements designed to tidy up and clarify the Bill.

The main amendment, government Amendment 91, introduces further restrictions and procedural safeguards around the use of the new recovery methods created by Schedules 5 and 6. It requires that liable persons are properly notified and given an opportunity to settle their liability before enforcement action is taken, and that alternative routes of recovery, such as deductions from earnings or benefits, are considered before more intrusive powers are used. These are sensible and welcome provisions that strengthen procedural fairness and ensure that the new powers are exercised proportionately.

We do, however, note that these changes have come rather late in the passage of the Bill. They are substantive clarifications, going to the heart of how these powers will operate in practice. However, I listened to the explanations from the Minister on an earlier point I made about this and I now understand her position—while not necessarily agreeing with it, I understand it.

The group includes two largely technical amendments. The first, to Schedule 6, allows the Secretary of State to make regulations relating to applications to or appeals from magistrates’ courts in England and Wales, ensuring clarity and consistency in procedure. The second, to Clause 94, aligns the Bill with the Data Protection Act 2018 by confirming that “processing” has the same meaning as in the Act. This is a straight- forward but important clarification. It is my view that these amendments strengthen the fairness and clarity of the Bill, ensuring that it operates in a way that is proportionate, consistent and aligned with existing law. We therefore support them.

On Amendment 92, tabled by the noble Baroness, Lady Kramer, she may not be surprised that we do not support this amendment. It would remove a key part of the machinery that underpins the operation of this Bill—specifically, the ability of the Department for Work and Pensions to obtain limited, relevant bank information to determine whether a direct deduction order should be made. I realise that this chimes with the noble Baroness’s earlier Amendment 45A, so I will not repeat the comments I made then, save to say that this is a considerable change and would strike at the heart of the framework that enables the recovery of money lost to fraud and error.

My Lords, I am grateful to the noble Viscount for his support on these matters. Amendment 92 from the noble Baroness, Lady Kramer, seeks to remove the requirement for banks to provide information to the DWP for the purposes of making a direct deduction order from benefit recipients. I am not sure whether that was her intention or whether she intended to remove it from all, but that is the effect. I therefore need to clarify for the record that these powers cannot be used for those in receipt of benefit, and Amendments 89 and 91 make that even clearer.

They can be used for debtors not on benefit or where PAYE is not possible and for those who refuse to engage with the DWP in those circumstances. In those cases, the ability to request bank statements is a vital safeguard to ensure that the amount of deduction is affordable and does not cause hardship. Put simply, if we do not know how much money someone has and they do not engage with the DWP, we risk taking more than they can afford to repay. For that reason, I cannot accept the amendment. The Bill also requires that we use that information for legitimate debt recovery purposes only. The noble Baroness asked where that is specified. Paragraph 3(10) of Schedule 5 specifies about further use, and paragraph 3(4) specifies that it must be for the purposes of a DDO. I hope that reassures her on that point.

Bank information will be assessed by a dedicated team, and staff will receive specialist training. Banks already provide bank statements for the Child Maintenance Service. The DWP is working with the Money and Pensions Service on the right approach to “ability to pay” checks using the bank statements to prevent undue financial hardship. These checks will consider the debtor’s essential living expenses, such as housing, as the Bill provides that DDOs must not cause the debtor hardship in meeting those expenses. In most cases we would not be able to avoid causing hardship without that information, so using bank statements in this way allows the deduction to be affordable and fair, based on the individual circumstances.

The noble Baroness asked how we can have a dialogue with people if they do not know that we are getting the bank statements. I suppose the whole point is that it is the other way around. We need the bank statements because these are people with whom we are not having a dialogue, because they refuse to engage with us, so we have no way of knowing what is affordable for them other than looking at the information. At any point they can get in touch and negotiate, and then we can have that dialogue, but we need them to do it. If they will not, this is the only way of making sure that those deductions are affordable.

The noble Baroness asked about the three-month point about notifying people about the order. At the three-month point, the order is lifted and then the person can be told, but it is not automatic. I remind the House that individuals will have every opportunity, if they get in touch, to agree an affordable repayment plan before we use these last resort powers. The DWP’s enforcement teams will make a minimum of four additional attempts to contact them before bank statements are requested. This really is a last resort power. Those who cannot afford even the lowest repayment terms will not be forced into making repayments, although they may be asked to provide evidence if their bank statements indicate that repayment is affordable. I hope that explains the rationale for why we need bank statements and reassures the noble Baroness on the questions she has raised, and I encourage her not to move her amendment. I am grateful for the support from the noble Viscount, and I urge the House to support Amendments 89, 91, 101 and 102 in my name.

Amendment 89 agreed.

Amendments 90 and 91

90: Clause 91, page 58, line 2, leave out from “2016” to end of line 12 Member’s explanatory statement This amendment prevents the new methods of recovery from being available in relation to a recoverable amount or a penalty relating to a devolved benefit.

91: Clause 91, page 58, line 18, leave out from beginning to end of line 3 on page 59 and insert— “80AA Restrictions relating to further methods(1) The Secretary of State may not exercise a power under Schedule 3ZA or Schedule 3ZB for the purpose of recovering an amount from a liable person unless the Secretary of State has—(a) given the liable person a reasonable opportunity to settle their liability in respect of the amount,(b) notified the liable person that the Secretary of State may exercise the power for the purpose of recovering the amount if the liable person does not settle their liability in respect of the amount, and (c) given the liable person a summary of how the power would be exercised.(2) The Secretary of State may not—(a) make a direct deduction order under Schedule 3ZA,(b) re-start a requirement to make deductions and payments that has been suspended under paragraph 16 of Schedule 3ZA, or(c) apply for a suspended or immediate DWP disqualification order under Schedule 3ZB,in respect of a liable person if subsection (3) or (4) applies.(3) This subsection applies if it is reasonably possible to recover the amount from the liable person by way of deductions from earnings.(4) This subsection applies if the liable person is entitled to and in receipt of a relevant benefit.(5) The Secretary of State may not exercise the powers under Schedule 3ZB for the purpose of recovering an amount from a liable person unless satisfied that it is not reasonably possible to recover the amount by way of a direct deduction order under Schedule 3ZA.(6) Subsections (7) and (8) apply where a liable person becomes entitled to and in receipt of a relevant benefit at a time when—(a) a direct deduction order under Schedule 3ZA, or(b) an immediate DWP disqualification order under Schedule 3ZB,has effect in relation to the liable person.(7) In a case within subsection (6)(a), the Secretary of State must revoke or suspend the direct deduction order.(8) In a case within subsection (6)(b)—(a) the Secretary of State must notify the court that made the immediate DWP disqualification order that the person to whom the order relates has become entitled to and in receipt of a relevant benefit, and(b) a court officer must make an order (without a hearing) revoking the immediate DWP disqualification order.(9) In this section—“court officer” means a member of the staff of the court in question authorised by the court for the purposes of subsection (8)(b);“deductions from earnings” means deductions from earnings under, or by virtue of, section 71 or 71ZD;“relevant benefit” means a benefit that is—(a) administered by the Secretary of State with responsibility for social security, and(b) recoverable under section 71 or 71ZB.”Member’s explanatory statement This amendment imposes further restrictions on when the new recovery methods introduced by Schedules 5 and 6 of the Bill can be used, including by ensuring that they cannot be used in cases where an amount could be recovered by deduction from earnings or a liable person is entitled to and in receipt of benefits.