Public Authorities (Fraud, Error and Recovery) Bill

Can the Minister assure the Committee that if the money allocated to a public authority is retained by the Cabinet Office following a counterfraud investigation, this will not come at the detriment of any policies, programmes or schemes the authority in question was planning or already had in progress? Counterfraud investigations should deter fraud, combat wrongdoing and recover funds. If money has been allocated to a public authority, it seems both sensible and correct that any money recovered should be returned to the relevant authority and not siphoned off into the Cabinet Office.

I understand that Clause 10 states that agreement must be reached between the Cabinet Office and the relevant public authority before any money can be retained by the Minister. However, if a public authority has been subject to a counterfraud investigation, is the Minister certain it will have adequate agency in this discussion to make the case that it should have its money returned to it?

Let us imagine that a council has been subject to a counterfraud investigation by the PSFA. The money has been recovered; those responsible have been removed from office and have been subject to penalties under the terms of the Bill. There is no reason to suspect the council is at risk of being defrauded any further, but the reputational damage has been done. The council may even have lost money to the PSFA under the terms of the Bill, stretching its budgets even more tightly. The council is in a desperate situation, but it has done the right thing. The PSFA is asking to keep the money it has recovered.

Is the Minister certain that, in negotiating with the Cabinet Office over this question, a council in this state would have the capacity, resources and, crucially, agency and perceived legitimacy to do so? What are the reasons the Cabinet Office would give to justify why it needs this money? Would this be a conversation the council could expect to do well in or is this pretty much a done deal—the PSFA will keep keep the money it has recovered and the conversation would be more of a formality? Clarity on these questions now will help us and public authorities understand where they stand in these discussions and the extent to which the Cabinet Office will seek to augment its own budgets as a result of claiming funds originally allocated to public authorities.

In a similar vein, our Amendment 25 seeks to ensure greater oversight of the amounts that can be claimed by the Minister when undertaking their functions and exercising the powers provided for in the Bill. The Minister in the PSFA appears to be in a position to determine their own costs and to recover them under the powers outlined in Chapter 4 of the Bill. Our amendment seeks to incorporate greater oversight in this process, and to ensure that there is a check on the Minister’s powers to recover amounts, by introducing a role for a recognised judicial authority. Requiring a court or tribunal to award the reasonable costs incurred by the Minister will prevent the Minister charging potentially unreasonable costs without appropriate oversight. In our view, this is a sensible measure; we hope that noble Lords will support it and that the Government will adopt it as a sensible check on the power of the Minister under this part.

Our amendments in this group provide the Government an opportunity to address some questions that we have around where the money recovered from counterfraud investigations goes and whether the Government are confident that the discussion between public authorities and the Cabinet Office on this question will be a fair one that ultimately benefits the taxpayer. Furthermore, our Amendment 25 seeks to incorporate greater independent oversight over the amount of money that can be recovered as costs to the Minister to make sure both that this is proportionate and reflective and that there are safeguards on the power of the Minister; I hope that the Government will seek to incorporate it. I beg to move.

I reiterate this point to provide a level of clarity on the issue highlighted by the noble Baroness, Lady Finn. The PSFA would seek to recoup its costs and not necessarily to retain all the funds awarded. We will agree a portion with the public agency that we are acting on when the PSFA takes the case. That will be agreed in advance.

Amendment 25 limits how the PSFA can recoup reasonable costs incurred in exercising the Chapter 4 recovery powers, meaning that only a court or tribunal can award them. There is already scope in Clause 13 for courts and tribunals to award costs in relation to a claim brought by the PSFA, as highlighted by the noble Lord, Lord Palmer. However, this amendment would limit the operational flexibility of the PSFA and create extra burdens on the court system if we had to keep going back to the courts for all costs. A key aim of the Bill is to minimise the burden on the courts while ensuring that there are ample safeguards and protections in place. We already stipulate in the Bill that any costs charged have to be reasonable; we will be transparent about how we work out reasonable costs in our published guidance. However, we should always remember that investigating fraud and recovering losses is an expensive business for the Government. It is not fair that these costs are shouldered by law-abiding citizens. If you have committed fraud against the state, you should pay for this.

On how the PSFA wants to charge for its services, it is important that we recognise that, regarding money between departments and the impact on value for money, it is not uncommon for departments to charge each other for their services. The impact assessment sets out how the powers in the Bill will support the PSFA to recover up to £53.7 million over 10 years under current modelling. A significant proportion of this would otherwise have been lost to government. We create value for money by bringing funds lost to fraud or error back to government so that they can be used for public good. I hope that that explanation reassures the noble Baroness, Lady Finn, and that she will therefore not press her amendments.

These are not abstract points. They go to the heart of whether this legislation creates a fair and credible system, one that public authorities can engage with in good faith and that the public can have confidence in. Our role in opposition is not only to make suggestions as to how the Government could improve their proposals but to ask questions of the Minister and to seek further clarification on the points the Government have considered. I urge the Government, therefore, to reflect on these proposals. They do not diminish the aims of the Bill but rather strengthen them by ensuring that the powers it creates are matched by the accountability and fairness that must always underpin public service. On that basis, I beg leave to withdraw.