Public Authorities (Fraud, Error and Recovery) Bill

At the moment, however, it is difficult for public authorities that have been defrauded, or the PSFA or other authorities, to take the kinds of actions that the public expect against these and other much larger frauds that take place. It is extraordinary that they cannot get the necessary information to prove the offences and do not have the powers to take enforcement action or recover funds.

Part 1 of the Bill puts this right. It builds the foundational structure for a long-lasting change in how public authorities take action on fraud where they cannot do so now. First, the Bill will provide the PSFA with powers to obtain search warrants from the court to enter premises and seize evidence as part of fraud investigations. So in the skills case I mentioned, the PSFA would have been able to go into the so-called provider’s premises and seize payroll and enrolment records to prove whether it was entitled to the funding. These powers will be used only when approved by the courts, and the police will continue to be responsible for arresting suspects if required.

Secondly, the Bill contains measures for the PSFA to compel businesses and individuals to provide information where there is a suspicion of fraud against the public authority, and to penalise them if they do not. In the youth group case, PSFA could have required business records to be provided using these powers. Separately, the Bill also provides powers to allow the PSFA to request communications from telecom providers using the Investigatory Powers Act 2016, authorised and overseen by the Investigatory Powers Commissioner’s Office. When fraudsters conspire to attack the state, this power will enable investigators to connect to their network and show who is involved. The Bill also enables information-sharing between the PSFA and other parties in the course of a fraud investigation, which is vital in tackling multi-agency cases.

Thirdly, the Bill introduces the power to impose civil penalties on behalf of other public authorities against those who have committed or have tried to commit fraud. These penalties can be used as an alternative method of taking action against fraudsters, compared to often lengthy criminal prosecutions. The introduction of civil penalties for fraud means that there can be meaningful consequences for breaking the law, even when criminal prosecution is not appropriate or viable.

Fourthly, the Bill will introduce new debt recovery powers for the PSFA, so that we can get public money back from those who can afford to repay but refuse to do so. This includes powers to recover fraud-related or error-related debt from an individual’s earnings, using a deduction from earnings order, or directly from financial accounts using a direct deduction order. These are broadly similar to existing powers used across government, including by HMRC. I reassure your Lordships’ House that there will be strong safeguards in place for these powers, to ensure that vulnerability is considered and deductions are affordable and fair. The PSFA’s authorised investigators and officers will be highly trained, to the same standards as the police, for the criminal powers in Part 1 and will be members of the Government Counter Fraud Profession, which sets high standards of professionalism, ethics and integrity that members must meet.

Finally, to address some of the fraud we saw over the pandemic, the Bill will double from six to 12 years the time limit for civil claims to be brought in alleged cases of Covid fraud, giving public authorities more time to investigate complex cases relating to those who exploited a national emergency for personal gain. It is an affront that some people used the time of a national crisis to loot the public purse, and this Government are committed to taking action, of which this is the first step.

Part 2 is focused on addressing fraud and error in the social security system. Here, the Bill will modernise, extend and strengthen DWP’s existing counter-fraud powers, bringing it in line with other bodies such as HMRC. It introduces new powers that will improve DWP’s access to important data that can be used to find and prevent fraud and error more quickly and effectively and, crucially, improve DWP’s ability to recover money from taxpayers. Taking each of these in turn, first, there are comparable powers to those I described for the PSFA, which will allow authorised investigators in the DWP to apply for and obtain search warrants to enter premises and seize evidence relevant to fraud investigations. These powers will be used by specialist DWP serious and organised crime investigators. This will reduce DWP’s reliance on the police and, as in the PSFA’s case, these powers will be used only when approved by the courts; the police will continue to be responsible for arresting suspects.

Secondly, the Bill will update DWP’s information-gathering powers for investigating fraud. At present, DWP has the powers to require information from only a limited list of third parties. This does not include key organisations and sectors that could help to prove or disprove suspected fraud—for example, airlines, which might hold travel records that are relevant to investigations of fraud conducted overseas. To add to that, there is limited ability to require responses to requests to be sent electronically; currently, DWP cannot make someone provide this information digitally. This approach is somewhat outdated in a digital age and underlines that the changes in the Bill are long overdue. The Bill widens who the DWP can compel information from, and it will enable us to require the information to be provided digitally by default. This is comparable to the information-gathering provisions I described for the PSFA earlier.

Thirdly, the Bill makes provisions for the DWP’s new eligibility verification measure, which will enable the department to require banks and other financial institutions to provide crucial data to help identify incorrect benefit payments that people might be getting as a result of not meeting the rules for their benefit—for example, if someone has too much in savings, which could make them ineligible for a benefit, or if they are fraudulently claiming benefits while living abroad when they should be living in the UK. This data will mean that we can identify potential incorrect payments much sooner for key eligibility criteria.

We know that people lead busy lives and sometimes genuine mistakes happen. That is why this measure is so important, as it will help to identify not only potential fraudulent cases that require further investigation but errors too, ensuring that the DWP can correct errors quickly, and preventing people building up large debts that they then need to repay. In response to considerable misinformation about this measure, I want to stress to your Lordships’ House that under the eligibility verification measure, the DWP will not be able to access people’s bank accounts or look at what they are spending, nor will it be able to share any personal information with banks. Furthermore, this data will be considered without the presumption of any wrongdoing. No decision about benefit entitlement will be made from the data gathered through this measure alone; and, crucially, any final decision about someone’s benefit entitlement will always be taken by a human being. The Information Commissioner has noted that this proposal addresses many of the concerns the commissioner held about the previous Government’s proposals.

The fourth element of Part 2 is about broadening DWP’s abilities to punish fraudsters using a financial penalty as an alternative to seeking prosecutions. At the moment, DWP can give financial penalties only in cases of benefit fraud. Part 2 extends our ability to use them in the cases of fraud against any type of DWP payment. For example, if we have a future grant scheme similar to the Kickstart employment scheme, we will be able to ensure that that money could be recouped. This will ensure that more fraudsters committing a wider range of fraud can be dealt with swiftly without going to court.

Finally, the Bill contains new debt recovery powers for DWP. These powers will enable the DWP to recover money in cases where a person owes the department money but is not in receipt of a benefit or in Pay As You Earn employment, where there are existing powers. This will be used only where people repeatedly refuse to agree to affordable voluntary repayment terms with DWP. In these cases, the Bill will enable DWP to obtain from banks the bank statements of these debtors, to verify that they have sufficient funds to pay. Having considered this information, DWP debt enforcement agents will determine what is an affordable deduction, with maximum limits for regular deductions set out in the legislation. DWP can then recover the money from their bank accounts, through either a one-off lump sum or regular deductions. This will be done in a fair and manageable way, with time for the person to make any representation, and the right to appeal. No one will be pushed into hardship because of this action.

As a last resort, if someone owes DWP more than £1,000 and puts their money out of reach of our other recovery methods, DWP can apply to the court to disqualify that person from driving for up to two years. This is similar to the powers the Child Maintenance Service has been able to use for the last 25 years in cases where a parent repeatedly refuses to make payments to support their child, and it has proved somewhat effective in encouraging debtors to engage with the process. A court will not be able to make a DWP disqualification order if it considers that the person needs a driving licence for work or for another essential purpose, such as if the person is disabled or a carer. This disqualification order will always at first be suspended, and repayment terms will be set by the court. A person will be disqualified from driving by the court only if the repayment terms the court has set are not met without good reason. This measure is for people who have repeatedly refused to engage with DWP’s debt management system and have actively frustrated the process of debt recovery. It is an important power that is designed to bring debtors to the table to agree voluntary, affordable and sustainable repayment plans with the DWP.

We are clear that an individual keeping money to which they are not entitled is serious and will result in serious consequences. These powers ensure fairness in debt recovery, seeking to guarantee that those who are no longer on benefit or in paid employment are not treated more favourably and able to evade repayment of money owed to the public sector.

Parts 1 and 2 come with strong new safeguards, including provision for independent oversight and reporting. The Cabinet Office and the DWP will commission His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services to undertake inspections on the use of the new investigations powers that both departments are using. The DWP will make a similar arrangement with His Majesty’s Inspectorate of Constabulary in Scotland and the Independent Office for Police Conduct will handle any serious complaints that arise from the use of the new powers of entry, search and seizure for the PSFA and the DWP. The Police Investigations and Review Commissioner will deal with similar matters for the DWP in Scotland.

Separately, the Minister for the Cabinet Office will appoint an independent person to inspect the PSFA enforcement unit’s use of the powers in the Bill. Their work will complement and build on the oversight provided by the inspectorate. The Secretary of State for Work and Pensions will also appoint an independent person to oversee the use and effectiveness of the DWP’s new eligibility verification measure in line with the legislation and the code of practice. Both independent persons are required to provide reports to respective Ministers which must be published and laid in Parliament.

Codes of practice will accompany relevant parts of the Bill and, where appropriate, will be consulted on. Drafts of relevant codes will be made available to noble Lords ahead of Committee. Across the Bill, provision is made for persons subject to the powers to make representations, request reviews or appeal against decisions. These routes will be clear and provide opportunities to challenge the Government’s approach.

Many of the measures in this Bill are not novel to government. Instead, they modernise existing powers and bring the DWP and the PSFA in line with other public bodies, such as HMRC. Overall, this Bill will help deliver the biggest crackdown on public sector fraud in a generation. It is expected to save £1.5 billion over the next five years as part of wider action in the DWP’s efforts to save £9.6 billion.

The Bill delivers the biggest upgrade to the DWP’s counterfraud powers in more than 14 years. It brings in new powers to tackle fraud right across the public sector by empowering the Public Sector Fraud Authority, and not before time. Our approach is tough but fair. It is tough on criminals who cheat the system and steal from taxpayers, and tough on people who refuse to pay back money, but fair on claimants, by spotting and stopping errors earlier and helping people to avoid getting into debt. It is fair on those who play by the rules and rely on the social security system, and it is fair on taxpayers, by ensuring that every pound is spent wisely, responsibly and effectively on those who need it. I beg to move.

What of the Cabinet Office’s role in this Bill? The Government propose granting expansive new investigatory and enforcement powers to the Public Sector Fraud Authority within the Cabinet Office. These powers include the authority to compel sensitive financial disclosures, seek court warrants to enter premises and seize evidence, access personal bank records without any duty to inform those whose accounts are being accessed and impose substantial penalties. All such powers are to be exercised administratively by officials ranked no higher than higher executive officer and without explicit ministerial authorisation.

Clause 3 permits officials to compel citizens to reveal extensive financial details. Clause 7 grants powers akin to those of police to seek warrants for searches and seizures. Clauses 50 and 53 enable officials to impose civil penalties without sufficient scrutiny. Yes, the Bill proposes an independent reviewer under Clause 64 to oversee these powers, but a closer look reveals that this reviewer possesses no statutory authority to halt or reverse potentially abusive or inappropriate decisions. Even more concerningly, their terms, resources and remit are entirely controlled by the Minister whose decisions they are tasked to oversee. Such arrangements risk creating oversight in name only—an illusion of accountability rather than genuine scrutiny. The Cabinet Office’s enforcement unit, we are told, will lead this charge. But who are they? How many officials are there in this unit? To date, we have been told it is 25, but will this information be published? What expertise do they possess and what data will they use? These questions remain unanswered.

It remains entirely unclear precisely what types of fraud these sweeping new powers will enable the Cabinet Office to investigate. The Government’s Explanatory Notes suggest that the Public Sector Fraud Authority will focus on fraud beyond the traditional domains of HMRC and the DWP. Yet this raises an immediate bureaucratic contradiction. If departments currently lack the powers or resources to tackle such fraud effectively, surely the logical step would be to empower them directly. Conversely, if departments already possess sufficient powers but prefer not to use them, we risk creating a perverse incentive for them to keep straightforward fraud cases in-house while transferring politically sensitive, legally complex or reputationally hazardous investigations on to the Cabinet Office—effectively outsourcing responsibility for difficult decisions.

Even more troublingly, the Cabinet Office is under no statutory obligation to accept cases referred by other departments, and the Government have provided no clarity at all regarding which types of fraud the Cabinet Office intends to investigate or decline. Compounding this confusion, the Cabinet Office has recently announced significant staffing cuts. We therefore face the surreal scenario of departments attempting to offload their most complicated and resource-intensive fraud cases on to another department that is undergoing headcount reductions and will therefore be ill equipped to pursue them. The inevitable outcome will be bureaucratic gridlock, with challenging cases bouncing endlessly between departments, responsibility blurred, accountability evaporating and serious fraud quietly slipping into administrative oblivion.

The scale of the problem we face is staggering. The National Audit Office reports that detected public sector fraud amounted to £3 billion last year, with the true scale estimated at possibly £28 billion. Benefit payments alone lost £10.2 billion to fraud and error, while temporary Covid schemes were exploited to the tune of £10.5 billion. Yet the Bill’s impact assessment forecasts just £22.8 million as a best-case scenario in financial return from the Cabinet Office’s new powers. We cannot allow a situation where the Cabinet Office is allowed to act like a second-rate bailiff, extracting modest sums through draconian means while ignoring the massive haemorrhage of taxpayer funds that continues in plain sight.

This side of the House supports the fight against fraud, but we will not support it blindly. Our goal must be a lean, sharp, just system that deters dishonesty, recovers stolen funds and never forgets the dignity of the citizens it serves.

I look forward to today’s debate and to Committee, where this House can do what it does best: improve legislation, ensuring that it not only sounds good in a press release but works effectively in the real world. We share the Government’s ambition and we welcome the Bill’s purpose, but we owe taxpayers something far better than good intentions. We owe them a system that truly works.

On the second part of the Bill, I take on board the concerns of UK Finance that the Bill risks not achieving its objectives. The role given to banks to verify eligibility for benefits and recover money seriously needs a rethink to provide proper customer safeguards. It makes no allowance for people of low financial capability, for example, nor even for those hiding funds to escape domestic abuse. I am really concerned that it creates two classes of citizen: those with full rights in our society, protected by the FCA’s consumer duty, for example, and a lower class, defined as benefit recipients, who are investigated without cause and treated as a suspect class.

Listening to the finance industry, it is absolutely clear that bad actors, especially the gangs, will have no difficulty at all working around all the new rules and programmes. The Minister must be aware that any serious crackdown on fraud has to tackle the organised crime gangs who conspire to commit welfare fraud on an industrial scale. Last year, one gang alone was convicted of defrauding £53 million of universal credit. That was a very rare success, unfortunately. Since I cannot find it anywhere, can the Minister say today what percentage of welfare fraud is the work of these organised gangs? I suspect that the number is very large.

The main tool in this Bill is to initiate fishing expeditions and, from wide experience across the fields of investigation and fraud, they are the laziest and most ineffective way of fighting wrongdoing. If anyone doubts the capacity of the DWP to get schemes such as this one wrong, look at the carer’s allowance scandal, which particularly exercises my colleagues. My noble friend Lord Palmer of Childs Hill will elaborate, but 136,730 people are at present caught in outstanding debt for carer’s allowance overpayments which were not their fault, but for which their lives are being devastated. I fear that, in the way this Bill is crafted, they and people like them will be among the primary targets, even though they never actually committed fraud; they just failed to understand impossibly complex rules or to identify the DWP’s mistakes.

The DWP must of course crack down on fraud, but it needs to be informed by best practice. On that basis, I believe this Bill needs a significant rethink.

That net recovery is a very small proportion of the estimated losses: 2% to 5% recovery is a very small return when set against the imposition of what is a very intrusive power that will force banks to scan all their accounts for benefit payments and eligibility indicators. It is worth pointing out that this scanning requirement is not a one-off; it is potentially effectively continuous for periods of up to 12 months, which can be extended as and when. Let us be clear that, while the banks will provide information to the DWP only on those accounts and connected accounts which meet the criteria set out, in order to achieve that the banks will have to scan all accounts to find the information. The Government already have significant powers. What assessment have they undertaken of what could be achieved if those existing powers were used more effectively?

It would be much better to prevent fraud and error in the first place, rather than after the event. Is the Minister satisfied that the DWP is doing everything reasonable to that effect? Levels of fraud and error seem extremely high. Surely there is more we could do up front, which might remove the need for some of these changes. A redesign of benefits and claim processes, such as removing cliff edges—the carer’s allowance is a good example of that—or making the process clearer and easier could go a long way to reducing claimant error. For example, we know that the pension credit forms are so long that they put people off even applying.

Then there is the philosophical question of carrying out blanket surveillance without suspicion. This raises the danger of making benefit claimants feel like second-class citizens and spied on, and that we inherently distrust them. Disability groups have already raised this concern, and today’s report from the Work and Pensions Select Committee reinforces it. According to its chair:

“We heard evidence that the process … of engaging with the DWP … too often led to mental distress … Deep-rooted cultural change of the DWP is desperately needed to rebuild trust”.

It is quite hard to see how the measures in this Bill will contribute to rebuilding that trust. Another philosophical question is whether it is right to treat fraud and error in the same way, particularly when the error is by the DWP and not by the claimant.

The Minister rightly referred to some of the new safeguards that have been introduced into this incarnation of the Bill, and I will probe a few of them. A number of codes of practice must be issued under the Bill before actions can be taken. I was going to ask, “When can we see those?”, but I am very grateful that the Minister has confirmed that we will see them before Committee. Instead, I just ask: can they be sent directly to those of us taking part in this debate, and as soon as possible before Committee, so that we have time to digest them?

The Minister has explained that only very restricted information can be requested from the banks, and I agree that that is a significant step forward from what we had before. However, that could be undermined by the enhanced investigatory power clauses, which will allow much more intrusive information to be to be obtained if DWP has reasonable grounds for suspicion that a person has committed an offence. Does the existence of an eligibility indicator under the verification processes constitute reasonable grounds for suspicion? If that is the case, it would drive a coach and horses through the safeguard of restricting the information in the first place.

Related to that, what are the consequences of an eligibility indicator being raised? What further investigations need to be carried out before, for example, a benefit is put on hold? I have heard a number of times—it was repeated earlier—that a human must be involved in any such decisions, but I can find nothing that says that in the Bill. Can the Minister point me to where that is? I have also heard nothing about what level of human interaction that will constitute and what level of seniority and qualification is required.

I also welcome the introduction of the independent reviews of the exercise of these new functions. However, the provisions for these independent reviews are somewhat lacking: they do not set out the timings, they are very limited in scope and there is no definition of what would constitute an “independent person”. In particular, the independent reviewer will not be required to opine on the proportionality of the powers and their use, which is a very serious omission. I am sure that we will revert to those matters later in the process.

The eligibility verification rights are limited to three specific benefits—universal credit, employment and support allowance, and pension credit—which, again, is another improvement on the previous version. I was quite surprised by the inclusion of the last one, as the main issue with pension credit is that it is woefully under claimed, rather than there being too much money being paid out. I am interested to understand why that was included. Those three can be added to by regulation, so are there any plans for them to be added to?

There is also an obvious loophole in the eligibility verification process, because it applies only to linked accounts within each single bank. A fraudulent claimant can easily avoid that by having accounts in different banks. Does that mean that deliberate fraud is unlikely, in practice, to be identified under this Bill? That would somewhat reduce its point. Has that loophole been taken into account when calculating the expected savings?

As the noble Baroness, Lady Kramer, mentioned, the banking industry has also raised some concerns about the Bill, including—among other things—potential conflicts with its existing financial crime duties; possible tensions between the Bill and firms’ existing consumer duty and vulnerability guidance; the diversion of resources from wider economic crime capacity; and issues around safeguards for bulk data access. I would be interested to understand what meetings the Minister has had with organisations such as UK Finance to ensure that such concerns have been, and will be, addressed.

There are lots of other matters that I could raise, but given the time, I will raise just one more: the driving licence disqualification clauses. That seems extremely arbitrary, so I would like to understand more about the logic that was applied to that and what other measures might have been considered.

I acknowledge that the Bill has been greatly improved from its previous incarnation, but quite a lot of issues remain. The Minister has been generous with her time and, as always, constructive in her approach, so I very much look forward to further discussions and debates as we go through the next stages, as well as to the maiden speech from the noble Baroness, Lady Spielman.

I welcome the department’s plans to review and improve its safeguarding practices through wider reforms on disability benefits. Ensuring that people are always treated with respect is a necessary step towards earning trust, and it is particularly timely—as the noble Lord, Lord Vaux, pointed out—that this debate coincides with the publication of the Work and Pensions Select Committee report on safeguarding claimants. Fraud, error and recovery will inevitably overlap with the department’s safeguarding responsibilities, and that committee’s report highlights some of tragedies that have happened to people—made particularly vulnerable by their circumstances—who interact with a system that can often feel complicated and impersonal. I wish the Minister and her department well in reviewing safeguarding and in making the important changes needed for the sake of those people.

The expansion of social security means that millions of people are potentially within the scope of this Bill. Half of all children live in a family that interacts with the system in some form, and there is concern that expanding the DWP’s recovery powers through direct deduction orders might risk affecting children at risk of poverty. It would be good to have the Minister’s reassurance about the affordability assessments to be made before recoveries occur.

There is considerable concern too, already voiced in this debate, about removing driving licences and the comparatively low threshold at which this could happen, even if court approval must be sought. This too could impact children who are not at fault for the actions of their parents, as they might miss out on activities, opportunities and vital services if their parents are no longer able to drive—this is particularly an issue in rural areas.

At a time of competing priorities and limited financial resources, a Bill that focuses on cracking down on fraud has arrived in this House before the publication of the child poverty strategy. In the diocese where I serve, I hear more about the latter than the former, and the Government should be wary that the Bill does not inadvertently limit their room for manoeuvre in reducing child poverty.

I also wish to express some concern or caution about the risk of overreliance on automated algorithmic systems to monitor the bank accounts of welfare recipients. With any reliance on automated systems, we know that there is a chance for error, presenting a risk of false positive matches. Errors resulting in wrongful benefits investigations would have profound consequences for some of the poorest people in society, disproportionately impacting disabled and elderly people, carers, single parents and those seeking work. While occasional human error is inevitable in the maintenance of a complex system, there is a need to ensure that we harness technology appropriately and always involve people in potentially sensitive decisions affecting them.

The Government have included in the safeguards for the Bill that there will be human intervention in further investigations—of course, I welcome that—but I urge them to clarify how they will ensure that there is indeed human oversight and whether a human being will be involved in the initial decision on whether to investigate an individual.

At their heart, the issues we are considering today are not only about money, they are about people. The Bill presents an opportunity to deal with one challenge facing the social security system, and I look forward to hearing how it ties in with other important issues in that area that the Government are seeking to address.

It is also right—and it has not been mentioned much today—that the Bill strengthens the specific enforcement powers for the £10 billion lost through Covid-related fraud. I will share just one anecdote with the House on this matter. I am, as declared in my register of interests, the British Council’s vice-chair. In Covid, when our teaching exam centres were closed, the FCDO provided a Covid-related liquidity loan of £200 million. The Treasury now wants it repaid in full, and the British Council happens not to have the resources to repay. So at this week’s board meeting we authorised cuts, closures and a VS scheme to help pay back that Covid-era loan. Those British Council employees who last month applied for the VS scheme want to know that the Government are being equally assiduous in chasing down the dodgy companies which deliberately mis-sold PPE to a nation at the heart of a national emergency.

I turn to Part 2 of the Bill, which I had assumed would be the most controversial. I want to address the issues we have heard about concerning the scale of fraud. The key insight, as others have said, is that fraud is low for most benefits: for personal independence payments it is zero; for attendance allowance it is zero; for the state pension it is 0.1%; for incapacity benefits 0.3%, and so on. The fraud rate for every benefit sampled is below 4%, with the exception of universal credit: for universal credit, the fraud rate is 11%. There is limited fraud in the system, but universal credit stands out. The overall scale of overpayment each year is £10 billion: three-quarters relates to fraud and 88% relates to universal credit. That is the issue that needs to be addressed. It has to be right to bring enforcement into the 21st century and not require the DWP, as the Minister has said, to rely on 20 year-old regulations that simply are not fit for purpose in a digital age.

They are also not fit for tackling organised crime. Here, I talk about the benefit gangs. This time, I turned away from the dry DWP statistics, and I turned to the court reports, and they are both frightening and illuminating. In May last year, just after Rishi Sunak announced the election and when the business managers in this place and in the other place were horse-trading which legislation would make it onto the statute book, in that very week, at Wood Green Crown Court, there was the case of five defendants who admitted stealing over £50 million from the taxpayer. It involved 5,000 to 6,000 fraudulent universal credit claims, with some people living, as we have heard, in Bulgaria. The putative claimants received the money for just two months, and then the gang kept the rest for themselves. These false claims were backed by an array of forged documents, burner phones and photoshopped pictures. The raids on one of the defendants’ flats turned up £750,000 in cash. It was billed as the UK’s biggest ever benefit scam.

However, this was not an isolated incident. In 2022, there were similar court reports and more bogus benefit claims and money laundered through cryptocurrency transactions. In fact, in late 2022, the Public Accounts Committee was demanding action—finally, here we are.

I will sum up the concerns that have been raised about the specific enforcement measures in the Bill. It is common ground that the DWP needs to harness data. It is almost common ground that the investigative legwork should not fall primarily to the police but to trained investigators. It is largely common ground that we need to move away from self-reporting by claimants as the basis for eligibility. I say to the noble Lord, Lord Vaux, that, quite simply, the public want the Government to check claimants’ eligibility.

So the question is whether we can be assured of the proportionality and effectiveness of the eligibility checks. Many of the fears that have been raised can properly be allayed, but there are one or two that I want to touch on. The DWP will not be able to access bank accounts, yet we must tackle the gangs. I disagree with the fatalism of the noble Baroness, Lady Kramer, that the gangs will evade anything that we do so we should not bother with deeper investigatory powers. The reality, as we all know, is that fraudsters have, in recent years, become increasingly sophisticated in the ways that they steal people’s money. The banks have risen to that challenge when it comes to their own customers, and we are simply asking them to step up in the same way on behalf of the taxpayer.

I urge the Government—this has come up—to be careful in the selection of the individual who oversees eligibility verification measures to ensure that they are independent. All noble Lords know that it is not easy to criticise a government department from the inside. Look at the experience of prison inspection over two decades: it is a challenge to speak up. I suggest that it is a role for a courageous leader, and I encourage the Minister, my noble friend Lady Sherlock, who will sum up, to look for someone like herself. In her former life, on the advocacy side, she was a fearless champion of fairness. In her summing-up remarks, I would welcome her assurance, as we have heard today, that the independent person’s annual report will be laid before the House and properly debated.

In conclusion, it must be right that fraud in the public sector is an evolving challenge and that legislation needs to keep pace. It is right to enable better recovery where public money has been stolen or overpaid. People want to see us tackle fraud, waste and criminality. By tackling those who exploit the system and recovering the money for those who need it, we will, as the right reverend Prelate said, uphold the integrity of the system and trust in government. I commend the Bill to the House.

In welcoming my noble friend Lady Spielman and in looking forward to her maiden speech, I warn her that I have, over the years, become something of a cracked record on the subject of economic crime and the need to increase the weapons that this jurisdiction has at its disposal to deal with it. I have argued long and hard, but not always successfully, for the increase in the ambit of the criminal “failure to prevent” regime. The Economic Crime and Corporate Transparency Act 2023 introduced provisions relating to the corporate failure to prevent fraud offences. Those provisions will come into force this coming September, so no one could accuse this or the previous Government of undue haste.

However, those provisions will affect only large organisations, defined as those meeting at least two of three criteria: a turnover of over £36 million, a balance sheet of over £18 million, or more than 250 employees. That, as I have never been slow to point out, covers only 0.5% of the United Kingdom’s corporate economy and is the equivalent of prosecuting only burglars taller than six feet six. I apologise to the noble Lords, Lord Vaux and Lord Cromwell, and to the noble and learned Lord, Lord Thomas of Cwmgiedd, because they have heard me make this tired joke endlessly, particularly during the Committee and Report stages of the Economic Crime and Corporate Transparency Bill. I am sure that they are heartily sick of it, but I am still unconvinced that that limitation was either necessary or sensible.

There are many large artillery pieces before us in the Bill, which are designed to smash fraud in the welfare system, in government more widely and in other sectors. But do those guns come with gunners and shells? In imperial China, the warlords who fought their local rivals knew that they could succeed because they had no fear of an empty cannon. If their revolt was against the Emperor’s rule, they could comfort themselves with the thought that heaven is high and the Emperor is far away. Local and effective action is required to defeat fraud. Is this Bill, like most criminal justice Bills, far too long, overcrowded with extraneous provisions and designed for its rhetorical effect rather than to improve the investigation and prosecution of fraud?

Until the police outside the City of London Police are once again resourced, staffed and trained to understand and deal with fraud—to gather the evidence and to present it coherently to the Crown Prosecution Service for it to prosecute—the types of fraud that do not currently attract the attention of the SFO, which is concerned with large and complex financial crime, will, I fear, continue to go largely ignored or be brushed aside. The duty officer at the police station will continue to sigh sympathetically and simply tell the poor victim to see a solicitor. If a large proportion of the 40% to which I have referred is beyond the capacity of the police to cope with, we will have a problem and your Lordships’ House should require some convincing that the measures in the Bill, well intended as they may be, will hit the target. Have the Government audited the work of the Public Sector Fraud Authority and do they have any empirical evidence that increased Cabinet Office involvement will achieve what is promised by the Bill?

The noble Lord, Lord Vaux, in his delightfully quizzical way, made some highly important and effective points, wrapped up in questions that this Government must answer. We all look forward, either later today or in Committee, to his receiving the answers.

Finally, I refer to some arguments raised in the other place about state interference in the private affairs of others without adequate due process. To take just one example, the now Independent but former Labour Member of Parliament, Zarah Sultana—so no political ally of mine—complained when the Bill was being discussed there that there are

“powers in the Bill that force banks to trawl through our private financial data, scanning for indicators of fraud and error—indicators that are not publicly disclosed—and flag those individuals to the Government. These powers will allow the Department for Work and Pensions to seize money directly from bank accounts without due process, suspend driving licences and even search properties and personal devices. They are not the hallmarks of a free and democratic society but the tools of an Orwellian surveillance state”.—[Official Report, Commons, 3/2/25; col. 611.]

Whether that Member of Parliament is exaggerating or not and whether she is right or wrong, the Government must meet those arguments with seriousness and persuade us that they are behaving in a proportionate and humane fashion in putting those measures into the Bill.

Like my noble friend Lady Finn, I am concerned that Ministers are giving themselves powers to take punitive actions without the intervention of the courts or adequate ability for respondents to make representations on their own behalf. This is not just a question of process but of constitutional propriety.

Finally—this question has been raised on a number of occasions this afternoon—will the Department for Work and Pensions’ driving disqualifications affect the cost of drivers’ post-disqualification vehicle insurance? We need clarification on this so that we are not double penalising those who fail to pay their DWP debts.

Decisive action is clearly needed, and the measures outlined in the Bill are precisely what is needed. I agree wholeheartedly with my noble friend Lady Anderson when she says that this legislation is both “tough and fair”.

The measures in the Bill are timely and necessary. They will enable the Cabinet Office to deal more effectively with cases of fraud and error outside of the benefits and tax systems. I agree with the noble Baroness, Lady Alexander, that it makes a great deal of sense to give these powers to the Cabinet Office, and to develop the necessary expertise to deliver them. These powers and processes, readily available to certain other government departments, will provide the Cabinet Office and Public Sector Fraud Authority with the capacity they need to pursue those who perpetrated Covid fraud, along with other instances in the future.

I hope that, at a time when all noble Lords are anxious to protect the public purse, this legislation offers a route towards effective action and an efficient means of redress. By providing the Cabinet Office and the PSFA with the necessary powers for information-gathering, dissemination of information, search and seizure and the collection of communications data, we will enable the Government rightly and fairly to identify where significant fraud has taken or is taking place.

By providing the rights and approving the methods by which to recover these moneys lost to fraudsters, and by providing a framework for Ministers to impose civil penalties, we empower the Government to take action to recoup losses and ensure that justice is done. Furthermore, as has already been pointed out, if banks are using ever more sophisticated digital resources and capabilities to reduce the painful impact of fraud on individual members of the public, it follows that government should work with banks to reduce the negative impact of fraud on the public more broadly.

By prolonging the timeframe within which Covid fraud can be investigated and the perpetrators dealt with, we can maximise the moneys returned to the public purse, bring to book those who continue to benefit from a crime against their country and their neighbours, and send a clear message that a toxic culture among some, whereby fraud is considered a lesser crime, will not be tolerated—without breaking bones or spilling blood, as the noble and learned Lord just said. As I understand it, only £1.5 billion of the Covid fraud moneys has so far been recovered, which means that there is a lot more to be done and a lot more time is needed.

Finally, as already stated, these measures are tough and fair. The Government’s insistence on oversight and safeguarding requirements is welcome and necessary. It clearly makes sense to use legislation such as the Police and Criminal Evidence Act and models of investigation and action that are established in law and already effective in practice. The proposal to use the HMICFRS as a specialist inspectorate, along with the appointment of an independent chair and oversight team in the PSFA, should provide proper oversight to ensure that the Bill is implemented effectively and fairly.

At a time when millions rely on food banks and wider social support from the kind of charities and civil society organisations that we have mentioned earlier—and which served so faithfully through the pandemic—every penny stolen from the Government is a penny that cannot be used to help the most disadvantaged to escape poverty. Those who have defrauded the public purse are not simply stealing from the Government’s bank account; they are stealing from their neighbours, from those most in need, from those who are more deserving of our support and most in need of our care. This Bill seeks redress at least some of the damage done by those who have all too easily defrauded the public in years gone by; puts vital measures in place to confront a worrisome criminal culture which has become all too prevalent in our country; and provides a means by which to deter and deal with such behaviour in future.

With this, we return to the start. Financial documents are moral documents, and financial policies are moral policies. As noble Lords together, I hope that we will provide moral leadership in passing this Bill. I commend it to the House.