Public Authorities (Fraud, Error and Recovery) Bill

Committee (4th Day)

15:45:00

Clause 72: Information notices

Amendment 76

Moved by

76: Clause 72, page 40, line 12, at end insert— “(6) P is liable for all errors arising from the information provided.”Member's explanatory statement This amendment seeks to clarify which party is liable for the consequences of providing incorrect information.

My Lords, there are four amendments in this group. Three are mine; the fourth belongs to the noble Lord, Lord Vaux, and is of a different kind altogether, so I shall let him address that one. I shall just speak to Amendments 76, 78 and 79. Amendments 76 and 78 seek a statement from Ministers about liability for errors. The Government will be demanding information from banks about the transactions, income and wealth of individuals who have never committed any crime or misdemeanour. Such individuals should have the right to know that they have been targeted and treated as second-class citizens. They would be denied financial privacy simply because they are poor, old, sick, disabled and unfortunate. They may wish to lobby their Member of Parliament against what they might regard as unjust law. Amendment 79 asks that all the parties affected by the information notice must receive a copy of that notice. If the measure about curbing fraud on the public purse is really appropriate, because the Government are really concerned about how the public purse is being depleted, perhaps it should have been applied first to Members of this House and the other House. After all, who can forget the expenses scandal? Yet this idea of surveillance of bank accounts is applied not to Members of this House or the other House but only to those who receive benefits. Again, that indicates that something is not appropriate. Throughout the passage of this Bill, Ministers have said little about who will be liable for the consequences arising from any errors in the information notices issued by DWP or in the information supplied by banks to DWP or about the erroneous assessments and decisions that might be made by DWP’s reliance on that information. Who would be liable for this new flood of errors? Unlike in the past, this time millions of people would be subject to surveillance; it is not on a case-by-case basis but en masse. If erroneous assessments are made, what compensation would they be entitled to, especially as those affected will not be able to afford legal advice? The Bill does not provide free legal advice to the victims who may be affected by errors made by DWP or the banks. The Government have yet to say how many bank accounts would be subjected to surveillance. If people have half a dozen bank accounts, that could be 60 million-plus bank accounts. If those accounts have just 10 transactions a year, that is 600 million transactions. How many transactions are banks going to trawl through, and what sense will they make of it? I am sure that the Minister will give us that information today. In view of the large volume of notices, bank accounts and transactions, errors are inevitable. The DWP already makes thousands of errors every year, and now it will be issuing even more information notices, which means inevitably more errors. It will be issuing information notices without any personal knowledge of the affected benefit claimants or their exact personal circumstances before it reaches a judgment. A 1% error in matters relating to universal credit could affect 75,000 people and ultimately have life-affecting consequences for thousands of individuals. Banks make errors too in the normal course of their business. The Post Office scandal shows that no computer system or algorithm is ultra safe. So, the Government must be prepared and have some idea of what errors will be made, how many will be made, how many people will be affected and what kind of compensation may be payable. There is a warning about things to come from Australia, where what has become known as the Robodebt scandal happened against a background of scapegoating welfare recipients. People received letters saying they owed thousands of dollars in debt for wrong claims relating to benefits. Those so-called wrong claims were made because the algorithm used by the government departments and the banks was considered to be error prone. More than 500,000 Australians were affected by the policy and were forced to repay amounts by taking out loans, selling their property and using their savings. Just like in the Post Office scandal, many were named and shamed. People were made to feel like criminals. Eventually, the courts declared the policy to be illegal, and billions of dollars have been paid in compensation. Is that the fate that awaits this country too? I am sure that the Government have been ultra careful with the Bill, but no matter how careful they are, errors will happen. Given the DWP’s record, people will be wrongfully prosecuted, moneys will be wrongfully clawed back and people will be scarred and will suffer. Banks will make errors too in the provision of information. So, each party needs to be aware of the liability position, and that is exactly what my amendment seeks to ensure. I beg to move.

My Lords, my Amendment 77 is, as the noble Lord, Lord Sikka, has just said, slightly different from the others. I thought about degrouping it, but I decided that life was too short. Amendment 77 would introduce a reasonableness test—a discussion we have had before—so that an authorised officer must “reasonably” consider that it is “necessary and proportionate to require the specified information”, rather than just “consider” that it is necessary and proportionate. We have had a number of debates about a reasonableness test as we have gone through the various days in Grand Committee. Ensuring that an authorised officer should “reasonably” consider, rather than just arbitrarily “consider”, is an important safeguard against misuse of these powers. Last Monday, the Minister, the noble Baroness, Lady Anderson, argued against a similar change in Amendment 29, saying: “In addition, having thrilled the Committee with my recitations from Managing Public Money last Wednesday, I am excited to be able to quote from another government page turner, The Judge Over Your Shoulder. All ‘public law powers’ must be exercised with ‘reasonableness or rationality—following a proper reasoning process and so coming to a reasonable conclusion’. Making a Minister’s belief a ‘reasonable’ belief therefore has no effect, because they are already subject to it”.—[Official Report, 9/6/25; col. GC 159.] The Judge Over Your Shoulder—known by the rather inappropriate acronym JOYS—was a new one on me, so I looked it up. The Government describe this exciting publication as: “Guidance to help you navigate the legal frameworks within which public bodies, particularly Government, make decisions … Currently in its 6th edition, it is used to communicate with clients on what to expect when working with government lawyers, allowing for effective collaboration and lowering the risk of legal challenge. The guidance is highly regarded across the legal profession”. Most importantly, it goes on to say: “The guidance remains a lay person’s guide to Administrative Law”. So I am afraid that the noble Baroness’s argument does not hold up to scrutiny. The document is not even official guidance for civil servants; it is merely a lay person’s guide, has no legal status whatever and cannot be used as evidence that public law powers must be exercised with reasonableness or rationality. Unless the Minister can come up with something that actually has some legal force on civil servants and Ministers, the need for these reasonableness tests, which we have been debating throughout this Bill, remains. As I have said before and will keep repeating, the noble Baroness will not always be in her position. While I completely believe that she would ensure that these powers are exercised reasonably, that may not always be the case for future Ministers or future Governments. We need to legislate for the future, not just for the present situation, so safeguards should be on the face of the Bill to be effective. In my view, a requirement to act reasonably is a very important safeguard.

My Lords, it is a pleasure briefly to follow the noble Lord, Lord Vaux, who made a typically powerful case. I echo his comments, particularly on the need for safeguards on the face of the Bill. We need only look across the Atlantic to see how badly things can go wrong and how important it is that there are laws on which future Governments—I am not at all referring to this Government—can be held to account. I support all the amendments in this group, but I will focus particularly on Amendment 79, in the name of the noble Lord, Lord Sikka, which would insert: “A copy of the information notice must be sent to the parties affected by the notice”. In considering that amendment, I looked at reports today from the horrific case of Nicola Green, the mother of a teenager with cerebral palsy, who was pursued by the DWP for more than a year, having been accused of fraudulently claiming nearly £3,000 in carer’s allowance. The DWP—this is the point of the story that is relevant to this amendment—wrote to her employer without her knowledge to try to take money from the pay of this part-time college worker who works less than 14 hours a week. That is a demonstration of how people need awareness so that they can know what is going on. To finish the story of Ms Green, last month the tribunal judge ruled in her favour and said that she had done absolutely nothing wrong. The DWP did not attend the hearing and then said that it was planning to appeal against the judge’s ruling. A few days ago, the Guardian got involved and Ms Green has now been told that she will not be pursued and she will receive information on how she can claim for compensation. That is one case, but what we are looking at here is when a case is getting started, if we assume that there are reasonable grounds, as the noble Lord, Lord Vaux, has outlined should be put on the face of the Bill. If the DWP asks for this information and it has got something horribly wrong and has misunderstood the whole situation, as we know happens all too often, the claimant who knows about the information request will be in a position—hopefully, without going through the year of turmoil that poor Ms Green has gone through—to be able to stop the matter at that point. Amendment 79 is, therefore, a terribly important amendment. I hope that we might hear from the Minister an ironclad, watertight statement that this will happen anyway, but if that is not what we hear, I will encourage the noble Lord, Lord Sikka, to bring the amendment back on Report, because it is an absolutely crucial issue.

My Lords, these amendments in the names of the noble Lords, Lord Sikka and Lord Vaux, on the information-gathering powers of the DWP, provide greater clarity and safeguards regarding the collection and consequences of information requests under the Bill. Amendments 76 and 78 both address liability and aim clearly to establish which party is responsible for any consequences arising from the provision of incorrect information. This clarification will, I hope, be important in ensuring that all parties understand their responsibilities and the potential implications of their actions, thereby promoting fairness and reducing uncertainty.

16:00:00

Amendment 77 would introduce a reasonableness test requiring authorised officers to consider whether the information requested is necessary and proportionate. In my view, this test would be a valuable addition to ensure that the exercise of powers remains balanced and does not impose undue burdens. Meanwhile, Amendment 79 aims to enhance transparency by requiring that affected parties be informed when information is requested. Together, these amendments focus on improving accountability and protecting the rights of individuals and organisations involved in information gathering.

The speeches from the noble Lords, Lord Sikka and Lord Vaux, and the noble Baroness, Lady Bennett, have added more information. What the noble Lord, Lord Sikka, and others are aiming to stop is a comedy of errors. Indeed, these amendments would help to stop that in the information-gathering powers being given to the Department for Work and Pensions. I commend these amendments in the names of the noble Lords, Lord Sikka and Lord Vaux.

My Lords, I offer my support for most of the proposals in this group of amendments, which strike me as largely thoughtful, proportionate and consistent with the principles that we have returned to time and again throughout this Committee stage: clarity in law; accountability in process; and fairness in the exercise of power. As we know, we have spent three days carefully scrutinising the powers set out in this Bill—powers that are, by any measure, significant. In that context, it is right that we continue to ask whether the safeguards accompanying these powers are sufficient and, where they are not, how they could be strengthened in a practical, proportionate and legally coherent way. We believe that these amendments are consistent in furthering that principle. First, I have taken note of the cautionary tale arising from the Australian experience, as raised by the noble Lord, Lord Sikka. Amendments 76 and 78, which seek to clarify liability for errors or omissions in information provided under Clause 72, are rooted in a basic but essential legal principle: parties need to know where responsibility lies. If someone is being compelled to provide information under threat of penalty, it must be clear whether they or a third party acting on their behalf will be held liable for any inaccuracies. Without clear statutory guidance, we risk confusion and, worse still, unjust outcomes where individuals may be penalised for honest mistakes or information errors outside their control. These amendments would address that problem in a measured way by introducing transparency and clarity into the process. Amendment 77 addresses a slightly different but equally important concern. As the noble Lord, Lord Vaux, outlined so eloquently, we are focusing on proportionality and reasonableness in the exercise of investigatory powers. The amendment would insert a reasonableness test requiring that an authorised officer must reasonably consider the request for information to be necessary and proportionate. To my mind, this is simply good law. It reflects what is already expected in broader public law standards, but writing it clearly into the legislation would give both officials and the public confidence that such powers are bound by objective legal norms. It would strengthen decision-making, improve accountability and, perhaps most important, provide a clearer basis for redress if powers are exercised in an overly broad or inappropriate manner. However, I note from the remarks made by the noble Lord, Lord Vaux, that we cannot—or should not—say, “Oh, joy of joys”, in respect of the guidance provided. With clarity established as to where responsibility lies, by necessity a process will have to be put in place and be tested to make sure that there is oversight and sign-off. If the Minister is not minded to accept Amendments 76 and 77, can she outline in detail what the process is? If she cannot do so, I ask her to write to me and to copy in all those noble Lords who are involved in today’s Committee. The Minister may say that this is all part of the as-yet-unfinished “test and learn”, but a full answer is requested. I think I have picked up that she may be able to enlighten us in this respect at the beginning of this fourth day in Committee. I hope so. However, I must express my concerns and ultimately oppose Amendment 79 in the name of the noble Lord, Lord Sikka, on the grounds that it risks undermining the effectiveness of the very system that we are seeking to strengthen—although I note the example given, the sad story of Ms Green, highlighted by the noble Baroness, Lady Bennett. The amendment would require that a copy of every information notice issued under Clause 72 be sent to all parties affected by that notice, including, crucially, the individual who is the subject of the investigation. Fraud investigations, particularly in the social security context covered by Clause 72, often rely on timely access to accurate information before the subject of the investigation is made aware. This is not a matter of secrecy for secrecy’s sake; it is a matter of preserving the integrity of the evidence and preventing interference with the process. If a person suspected of fraud is notified that they are under investigation or even that information about them is being requested from a third party, there is a very real risk that they may destroy or tamper with evidence, close accounts, alter records or otherwise act to frustrate the inquiry before it has a chance to develop properly. This is not speculative; it is a well-established principle in law enforcement and regulatory practice. It is not clear when this notice would be sent, but there is an assumption in the amendment in the name of the noble Lord, Lord Sikka, that it would be sent immediately—perhaps he could clarify that when he winds up—in which case, I rest my case. There is a reason why investigators, whether in HMRC, the police or other regulatory bodies, are often permitted to conduct inquiries without giving advance notice to those under scrutiny. To do otherwise, as I said, would be to tip off the very individuals whose conduct is in question and, in doing so, jeopardise the ability of investigators to properly undertake their duties. Investigators would be hampered at the outset, fraudsters would have an early warning and those operating within the system in good faith, including civil servants, local authorities and partner organisations, would find it significantly harder to detect and prevent abuse. This is particularly true in cases of organised or sophisticated fraud, where timely access to third-party data may be the only way to build a case before the trail goes cold. It is also true in cases where vulnerable individuals, perhaps manipulated by others, may be at risk of harm if alerted prematurely. I will return to that theme later today. Of course, we must always strive for fairness and accountability, but there is a distinction between eventual transparency and instant notification. There are appropriate points in the process when the subject is made aware of action against them and can engage in a process of review, but to mandate notification at the earliest investigative stage before facts are even established would, I believe, give potential wrongdoers an unearned advantage. Therefore, I respectfully suggest that the practical consequences of this amendment would be counterproductive and potentially damaging to the very goals of the Bill. We need a fraud enforcement system that is lawful, proportionate and fair but also capable of operating effectively in the face of growing and increasingly complex threats to public finances. That is why I cannot support this amendment. To conclude, a balance must always be struck between individual rights and the broader public interest. In this case, that balance lies in ensuring that information requests are reasonable, that liability is clear and that powers are used with restraint and purpose but not in mandating disclosures that could derail legitimate investigations. I therefore welcome Amendments 76 to 78, but I am afraid that I urge caution about and ultimately oppose Amendment 79.

My Lords, I thank all noble Lords who have contributed to this short debate and I welcome the Committee to Part 2 of the PAFER Bill. We are on to the DWP and it will be a joy to travel in this ship together with my happy fellow travellers. Before answering the specifics of the amendment, I want to reflect on some of the comments made by my noble friend Lord Sikka, because he helpfully highlighted a couple of the confusions that have permeated some of the discussion around the Bill. The Bill contains a number of different measures and, in most cases, they apply to different people. In his speech, my noble friend spoke as though these information-gathering powers applied to all those people to whom, for example, an eligibility verification notice will be sent. In fact, that is not the case at all. A number of the amendments coming up next are about the eligibility verification measure, so I will return to any comments about it then. These information-gathering powers are quite different. They are specifically aimed at people of whom there is a reasonable suspicion of fraud by a named individual. This is a particular category of person. Clause 72 makes provision for expanded information-gathering powers. There are existing powers in the Social Security Administration Act 1992, but they enable DWP to compel information only from a set list of organisations. That approach is restrictive and can delay or prevent the gathering of information that is relevant to proving or disproving a criminal benefit fraud investigation. So new Section 109BZB, inserted into the 1992 Act by this Bill, will update those powers to enable DWP to obtain relevant information from any information holder in respect of a DWP criminal investigation. That kind of information can be vital in proving or disproving an allegation of fraud. Amendments 76 and 78, tabled by my noble friend Lord Sikka, concern liability for incorrect or incomplete information provided by an information holder in response to an information notice. The Bill is clear that information providers must comply with the information notice and should also be aware of their own data protection obligations in doing so. Information about those obligations will be included in the code of practice, and the information notice must specify the potential consequences for failing to comply. Section 111 of the Social Security Administration Act 1992 sets out offences for intentionally failing to provide required information, as well as delaying or obstructing an authorised officer. In those circumstances, DWP can take action. So introducing a separate statutory liability for all errors is not necessary and would, in my view, actually place an unfair burden on information holders, particularly when mistakes are unintentional or minor. Amendment 77, tabled by the noble Lord, Lord Vaux, would insert “reasonably” into subsection (1)(b) of new Section 109BZB. I hope to persuade the noble Lord that we in fact have a very good case here. I think that it will be easier to write. There may be some disagreement about his comments about JOYS—this will be another theme, I think; I suspect that “Ode to Joy” jokes and other joy jokes will abound. But I will write, because I want to talk specifically about the amendment that he has tabled today and how that affects the DWP parts of the Bill. The current drafting of subsections (1)(a) and (1)(b) of new Section 109BZB in Clause 72 sets out that, prior to issuing an information notice, an authorised officer must have “reasonable grounds to suspect” that a DWP offence has been committed and must consider it “necessary and proportionate” to require the information. Both those steps have to happen, so I would argue that the drafting already captures the intent of the amendment. We have been doing this for some time. The department already has these information-gathering powers, with well-established training and guidance in place to ensure that they are used appropriately and in line with the existing law. Authorised officers are trained and accredited before they can use those powers and they have to adhere to the code of practice. The existing guidance makes it clear that they have to consider all the facts, justify their decisions and record their reasoning. That will apply in the same way to the new expanded powers as it does to the current powers. For those reasons, we are confident that the principle of reasonableness is clear in the drafting of Clause 72 and we further support it. I can see that the noble Lord is itching to get to his feet.

I understand the noble Baroness’s point. It was because it said “reasonable grounds” in the first half that the fact that it was missing in the second half—paragraph (b)—stuck out: you have to have reasonable grounds, but then you just have to consider. But my point is more than that. Let us imagine the worst-case scenario, where a future Government decide to go for an all-out DOGE approach to whatever. I have no doubt, as I said, that the noble Baroness and the department at the moment will follow the guidance, et cetera, that she laid out, but that is just guidance and it can be torn up on a whim. If a new Government decide to go all out, there is no reasonableness safeguard; they can just say, “We consider it necessary”, and there does not need to be any reasonableness attached to that. That is the concern. It is not about now; it is about where we might be in a year or five years’ time that worries me.

I see where the noble Lord is going with this and I am happy to pick up the conversation outside. I do not think that the distinction is big enough for it to be a problem, because the reality is that a reasonable suspicion is not just a hunch: it has to be based on an objective test, it requires up-to-date and accurate information and it must be something that an ordinary reasonable person would consider a legitimate cause for suspicion given the same information. So, for information gathering to be legal and justified, the intrusion into a person’s privacy must be necessary, proportionate and in accordance with the legislation. We think that that is belt and braces, but I am happy to pick that up with the noble Lord because I think that we want the same thing. The only question is: do we need any more ways of saying it? Finally, Amendment 79, in the name of my noble friend Lord Sikka, would require DWP to copy the information notice to all parties, including the subject of the information request. The noble Viscount, Lord Younger, has explained the obvious reason why this is the case: since these powers apply only to named individuals about whom there is a reasonable suspicion of fraud, telling somebody at the outset could clearly prejudice the investigation and potentially enable them to conceal or destroy evidence.

16:15:00

I thank the Minister for giving way. It is important that we identify something here. I mentioned that case study because there are, of course, many carers in this situation. As I understand it, the DWP is considering prosecuting carers where it regards the outstanding sum to be more than £5,000. In November, the Guardian reported that more than 250 unpaid carers were potentially facing prosecutions for fraud under DWP guidelines. I fully acknowledge the points made on this—the noble Viscount, Lord Younger, made some useful points—but I think that there are two different sorts of case here. There are undoubtedly criminal gangs organising frauds, where, yes, you would not want to do so in those cases, but in the cases of these carers you know that it is one person and this may cause issues. There are two different use cases here that might need to be approached in two different ways.

Obviously, I am not going to comment on individual cases. As the noble Baroness will be aware, there is an inquiry going on into the carer’s allowance on which we hope to report in the near future, so we will learn more from that. Let me be clear here: this is the question of whether somebody should be told in good time that they are being investigated. Clearly, that would be a problem. There is a reason why that precise problem is recognised in data protection legislation, which sets out the circumstances in which the DWP and other government departments can process data for law enforcement purposes without notifying the relevant data subject. To pick up the noble Baroness’s point, it is not as though somebody would never know because, if a fraud investigation uncovered reasonable suspicion of fraud, at some point, for a case to go anywhere, there would have to be an interview under caution with the person suspected of it. The conversation about what had happened would take place at that point, so it is not as though they are never going to know about it; they would have to know about it. We are talking about how they are told, including in what way and at what time. Although I understand where my noble friend Lord Sikka is coming from, the reality is that his proposal would make it impossible to investigate fraud effectively and would allow those who wish to avoid appropriate action on their problems the opportunity to get away with it. The final comment from the noble Viscount, Lord Younger, was about oversight. As with the review of investigations, the oversight of these measures will be carried out by His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services. I hope that that reassures him. I hope that all that has helped to assure the noble Lords and that, on that basis, they will withdraw or not press their amendments.

I am very grateful to everyone for their contributions to this debate. I want to come back on a couple of issues. I fully understand the arguments made against Amendment 79, but at the moment the individual becomes aware that something is afoot only much later in the day. Individuals rarely have time to seek legal advice. They often cannot afford legal advice. Early notification that they are subject to scrutiny, especially when they have never committed a crime and are just under suspicion, would mean that they may be able to save the DWP some time, effort and money on needless investigations. They may even be able to go to the local citizens advice bureau or somewhere else to get some advice. Leaving it until a much later stage inevitably means that there will be a lot of psychological stress for people. They will probably throw in the towel, a bit like the sub-postmasters, and think, “I’ve got to get off this merry-go-round. I will plead guilty even though I am not, because I cannot really contest anything with the Government”. So, I understand the arguments made, but I think that the current position of not telling the benefit claimants much earlier on really will lead to problems. The Minister referred to the information provider’s duty for data protection and so on, but I have a concern, given that the DWP will make errors. It has a history of making thousands of them. Given that banks make errors in providing information, once DWP officials have received the information from the bank, they have to interpret that information and make sense of it. There will be misinterpretations, which will have serious consequences for the people affected. The question to which I still have not heard an effective answer is: who will be liable? Who will pay the compensation? Will it be the public purse? Will it be the banks? The DWP will have a statutory relationship with the bank and hence can demand information, but banks are normally required to preserve confidentiality or financial information, and a bank will not ask anything from the individual concerned. It cannot at that point be said to owe a duty of care to somebody with whom it does not actually communicate, especially when that duty of care is eroded by the Bill. So the question remains: who will foot the bill, which could run into billions of pounds, if we end up with a similar situation to the one in Australia? I hope that the Minister can clarify that situation about who will foot the bill.

Before the noble Lord sits down, I want to raise something, which is more of a question to the Minister and the team behind her. When I was in post, I became perhaps infamous, particularly when I did not understand something, for asking for a flow chart, and I wonder whether this is such a case where a flow chart would be extremely helpful. By that I mean that, when a process starts, what happens? One answers yes or no to questions and then it follows through with the safeguards included. I would find that incredibly helpful, and I suspect the team has one already. If there is one, I would find it helpful to see how the system works and where the safeguards are.

I have never seen a flow chart, but some of these powers are not necessarily part of the same process, so they would not necessarily appear on the same piece of paper. But if I have any other way of explaining it, I would be very happy to do that. Since I am on my feet, I reiterate that if the DWP is asking for information about an individual and it gathers information, it will most likely be doing so from a number of sources. An authorised officer will then review the information, and if there is felt to be a case for fraud, they will then interview the suspect under caution, who will be given the opportunity to get appropriate advice. There will be a process of engaging and discussion, but even before it gets to that stage, it is entirely possible that somebody will have reached out to find out the reason why an overpayment has been made. So, there are plenty of opportunities, and this specific amendment relates specifically to the extension of an existing power, which is used only when there is reasonable suspicion of fraud by a named individual. So, I do not think this amendment would help achieve the kind of things that have been discussed, and I urge the noble Lord to withdraw the amendment.

I am very grateful to the Minister for that reply, which gives us plenty to think about—and perhaps a flow chart would be helpful in due course. For the time being, I beg leave to withdraw my amendment.

Amendment 76 withdrawn.

Amendments 77 to 79A not moved.

Clause 72 agreed.

Clause 73 agreed.

Clause 74: Eligibility verification

Debate on whether Clause 74 should stand part of the Bill.

My Lords, I give my wholehearted support to the stand part notices in the name of my noble friend Lady Kramer who, as noble Lords might gather, is in the Chamber for the Employment Rights Bill—I should perhaps also be there, but that is why noble Lords have me and not my noble friend Lady Kramer. The opposition to Clause 74 and Schedule 3 standing part of the Bill is both principled and pragmatic, and would ensure that the Public Authorities (Fraud, Error and Recovery) Bill strikes the right balance between combating fraud and protecting the rights and dignity of individuals. The removal of the requirement for banks to examine claimants’ bank accounts, proposed in both Clause 74 and Schedule 3, would restore a vital safeguard for personal privacy and prevent an unnecessary intrusion into the lives of those who rely on public support. This approach would uphold commitments to civil liberties, ensuring that anti-fraud measures do not come at the expense of fundamental rights, as mentioned by the noble Lord, Lord Sikka, on the previous group. I commend my noble friend Lady Kramer’s leadership in recognising that the fight against fraud must never become a pretext for overreach and unwarranted surveillance. Equally, Amendments 79B and 80, supported by my noble friend Lady Kramer and others, would wisely align eligibility verification safeguards with those already established for suspected fraud and, crucially, would limit the use of such powers to cases where there is genuine suspicion of wrongdoing. These changes will prevent fishing expeditions—I am sure that there will be fishing expeditions—and protect innocent welfare recipients from undue scrutiny. My own Amendment 89 to Schedule 3 would ensure that the Bill applies only to the benefits explicitly listed and would further clarify and limit the scope of these powers, which could be pretty heavy, providing certainty and reassurance to the public. Together, these amendments would strengthen the Bill, making it more proportionate, transparent and just. I urge your Lordships to support this package, which embodies the best traditions of parliamentary scrutiny and my party’s belief in both fairness and effective government.

My Lords, I speak to my Amendment 79B and thank the noble Baroness, Lady Kramer, for her support for it. It is a very simple amendment that would make the giving of an eligibility verification notice subject to the same safeguard that already applies to all the other information-gathering powers within the Bill—namely, that the Secretary of State must be satisfied that issuing an EVN is necessary and proportionate for the purpose for which it is issued. The Minister will no doubt have noticed that I have taken the liberty of inserting “reasonably” into the amendment, as we have just been discussing. Otherwise, the wording is aligned with the safeguard in Clause 3(1)(a), in relation to the Cabinet Office Minister requiring information, and to the wording in Clause 72, in relation to the Secretary of State for the DWP requiring information about suspected fraud under new Section 109BZB(1)(b). This safeguard applies everywhere in the Bill whenever the required information relates to suspected fraud. Rather strangely, however, it does not appear in Schedule 3, where there is no suspicion. That seems the wrong way round. Surely it is even more important that the giving of an information notice should be necessary and proportionate in cases where there is no suspicion. I am assuming that this omission is in fact an oversight and that, given that it appears everywhere else in the Bill, the Minister will simply accept it. If not, she will need to explain why the exercise of these important and intrusive suspicionless information-gathering powers should not have to be, at the very least, necessary and proportionate in the same way as the exercise of the other information-gathering powers have to be. I will take a little bit of convincing, I am afraid.

My Lords, I will speak to my Amendment 80. There is a certain amount of overlap with other amendments not just in this group, obviously, but in other groups. The mysteries of the grouping of amendments are beyond my pay grade, but we are in a situation where we are bound to discuss the same subject again and again—and, I suspect, again. I will read with interest what my noble friend the Minister said in replying to the previous debate. At the conclusion of all these overlapping debates it would be useful to the Committee if she could write a letter explaining how this whole thing fits together.

16:30:00

I listened to my noble friend’s speech and the obvious question is: why do you need the powers in this Bill? She seemed to say, in effect, that everything works all right now, so what extra is there in this Bill that cannot be done at the moment? Of course, the answer to that question is mass suspicionless surveillance of ordinary working people.

It is worth emphasising the issues. I will emphasise again that we need to understand the nature of what is being proposed by the Government. No one supports fraud; that is not the issue. Clearly, it is wrong in the benefits system as much as it is anywhere else, but what we have here is an unacceptable level of mass intrusion into citizens’ private affairs. I will emphasise it again: the Government are taking powers to undertake mass intrusion into private affairs without due cause. My amendment would simply require that there are reasonable grounds before going into anyone’s private affairs. I would have thought that that goes without saying but, instead, what we have is intrusion looking for suspicion. The suspicion is not there. We know that fraud takes place, but we do not know who is doing it, so looking at everyone in a particular category is, by definition, suspicionless. If there is no suspicion, there is no reasonable cause.

I will restate the point because we need to understand the immensity of these provisions. Because it involves benefit claimants and because the word “fraud” is being tossed around, the extreme nature of what is being proposed is hidden. It is right that fraudulent uses of public money should be dealt with robustly by the Government, but under the current rules the DWP is able, as my noble friend explained, to request bank account holders’ bank transaction details if there are reasonable grounds to suspect the fraud.

In its impact assessment, the DWP tells us:

“DWP currently has the power to compel prescribed information holders to share data on individuals if fraudulent activity is suspected but does not have the power to compel Third Parties to share data that is signalling potential signs of fraud and error”.

There are already multiple powers and processes by which the DWP exchanges data with third parties; it is all set out in the impact assessment. The Government must reduce benefit fraud and error, but there are effective and proportionate means of doing so, including the proper use of existing powers. It is particularly unfortunate in this case, as this extraordinary proposal is entirely disproportionate to the revenue that the Government expect to raise via its use. The Government’s own analysis shows that if it works as hoped—and there must be some doubt about that—this unprecedented bank intrusion is expected to generate less than 1.4% of the estimated annual loss to fraud and error. We have to offset the intrusion into citizens’ private affairs against the potential gain.

This power would force banks and building societies to trawl through all customers’ accounts in search of people connected to benefit payments. The proposed measure forces third-party organisations to trawl through all customers’ accounts to, as the impact assessment says, verify a claimant’s entitlement to benefits. That is not the job of the bank.

To conduct this highly complex monitoring and provide such extensive customer information to the DWP, the bank will have to process the data of all bank account holders in the relevant groups and run automated surveillance scanning according to unknown search criteria supplied by DWP. The whole proposal depends on the scale of the exercise. The DWP says as much in its impact assessment, which says it is looking for

“data that is signalling potential signs of fraud and error on ‘persons unknown’ at scale”.

In other words, the DWP is saying that it does not know who these people are but that it will look at people’s bank accounts “at scale”, which means mass surveillance.

I recall that at a briefing meeting my noble friend gave an example of two people living next to each other, one complying with the rules and the other not complying with the rules, with the implication that those who comply with the rules will be happy to see this mass suspicion and surveillance. However, if you tell them that this is the price—that the Government will have the power to look at their bank account when they have done nothing wrong—they might be far less happy to see these powers being extended.

Helena Wood, director of public policy and strategic engagement at CIFAS, the UK fraud prevention organisation, told the Commons Select Committee that

“this is very much at risk of being a blanket, phishing-style power without any recourse to the limitations and the bars that others have to reach to use … powers that would be either a civil or criminal investigation”.—[Official Report, Commons, Public Authorities (Fraud, Error and Recovery) Bill Committee, 25/2/25; col. 15.]

My noble friends on the Front Bench, here and at Second Reading, have emphasised that there will be human intervention, with decisions not being left to a computer algorithm. If that is correct, I struggle to see how this will be an effective way of proceeding. The whole point of this sort of exercise is to interrogate masses of data. It will be looked at by some form of algorithm. Perhaps we are talking about different stages of the exercise, and I ask my noble friend the Minister to explain that, if she cares to provide further details to the Committee before Report.

How will the promise of human intervention be exercised at the stage at which bank accounts are interrogated? That is done by an algorithm and the computer. It is only at the subsequent stage, when cases are thrown up, that there will human intervention. That is wrong; it is an extension of the state’s powers in a way that is totally unwarranted in relation to the scale of the benefits achieved by the exercise.

My Lords, I agree with many of the concerns that have been expressed in connection with this group, but I will say a few words specifically in support of Amendment 79B in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer. As it stands, paragraph 1(1) in new Schedule 3B affords a very broad discretion to the Secretary of State. It says that the Secretary of State may, for the named purposes, “give a person of a type mentioned in paragraph 2 a notice … requiring the person to take the following steps”. On its face, this is an unfettered discretion—or, rather, it is a discretion limited only by the purpose. Other than those purposes, the discretion does not, on its face, have a limit. The power that the Secretary of State has under this clause is very broad because, on receiving those notices, the banks or financial institutions will have to take those two steps. Perhaps later we will explore the step in connection with the eligibility indicators, which is potentially quite intrusive. It seems to me that the language proposed in the amendment would identify a standard—reasonable satisfaction—that would have to govern the exercise of this discretion. In that respect, together with a number of other amendments also proposed by the noble Lord, Lord Vaux—but particularly in the context of this power—the amendment seems extremely sensible. I urge the Government to consider it and, in due course, accept it.

My Lords, I attached my name to the Clause 74 stand part notice tabled by the noble Baroness, Lady Kramer, and Amendment 80 tabled by the noble Lord, Lord Davies. The stand part notice is a simple solution, but the amendment of the noble Lord, Lord Davies, effectively, has the same impact, which is ensuring that you can investigate only when there is cause to investigate. I do not care which way it is done, but it is very clear—I associate myself with every word said by the noble Lord, Lord Davies of Brixton, here—that we are now at the sharp end of the Bill. As the noble Lord said and as I understand it, this is unprecedented in British law. This is going trawling; it is a fishing expedition and a mass intrusion. As the noble Lord said, quoting the DWP itself, it is about “‘persons unknown’ at scale”—that is an extremely telling phrase. To put this in context, today the High Pay Centre put out its annual report on fat cat pay, which exposed what a hugely unequal society we have. It found that, on average, the top payees in organisations were getting 52 times as much as the median paid worker. The most extreme case of this that it found was the security and waste group Mitie, whose CEO was being paid 575 times the median salary of the workers. That is a comparison to the median but of course we know that many of those Mitie workers will be on the minimum wage or very near the minimum wage, and they will be in receipt of the benefits explicitly identified in the Bill. They will face their bank accounts being trawled through without their knowledge, while the CEO, with that lovely and enormously high pay level, does not face the same intrusion. This is a fundamental inequality in our society that is actively dangerous in terms of building the divisions within society. The noble Lord, Lord Palmer, powerfully introduced the clause stand part notice, but I note his Amendment 89, which would ensure that the Bill may be used only in relation to the benefits listed in the Bill. I will not do the full Henry VIII story but, as is very obvious—it was made clear in the briefing I think we all received from the Justice organisation—with the Henry VIII powers, the Government can extend this to any other benefit. The one that immediately comes to mind, given how much it is in the headlines at the moment, is the personal independence payment—PIP—and the issues and the level of fear that already exist around that. I cannot remember the specific occasion, but I suspect that the Minister will have joined me, under the previous Government, in questioning Henry VIII clauses. This would shut the door on a Henry VIII clause, and it urgently needs to be done. I commend the noble Lord, Lord Palmer, for identifying that and putting the amendment down.

16:45:00

My Lords, we have heard some important and powerful speeches. I broadly support all the amendments in this group. There is concern outside the House around these eligibility verification notices—people are genuinely worried about them and they are, I think, right to be—but I want to ask the Minister something directly. This Bill has been dubbed “the bank spying powers Bill”. There has been a lot of publicity about it. I know that campaigns such as Big Brother Watch have been gathering up signatures. There was an article in the newspapers today about it. I have heard Ministers, in debates, describe those kinds of descriptions as over-the-top hyperbole and say that it is absolutely ridiculous to talk in this way. I think that paranoia is inevitable when things are not accountable or clear. I just want to say that I genuinely do not understand how the highly complex monitoring that this Bill demands, in order to provide information to the DWP, can happen unless it uses the processing of the data of all bank accounts. If you ask a bank to provide information on a group of people, the only way it can find out who that group of people is is algorithmically—I will come back to this—which means looking at the data of all bank accounts. That is one of the reasons why the idea of spying powers is raised. Have I got that wrong? Can the Minister clarify whether that is hyperbole and what the reality is? That would be especially helpful before I speak to my amendments on algorithms so that I do not make a mess of what I say.

My Lords, I support all the amendments in this group, but I want to make a brief comment on Amendment 89. It is inappropriate for the Government to have powers to extend to and include other benefits, because each benefit may well have a different dynamic as to whether there is a possibility of fraud. If you look at the DWP statistics, you will see that some of the other benefits have a very low incidence of fraud; it is universal credit that is out of line, compared to the rest. I do not think that the Government should be allowed powers to add to those three benefits. That would be highly draconian. If the present Government, or a future one, feel that there is a need, they should bring primary legislation. At that time, we can also take the opportunity to smooth the rough edges of this Bill, which might have become visible by then.

My Lords, I rise to speak to this group of amendments, beginning with the Clause 74 stand part notice in the name of the noble Baroness, Lady Kramer, which was moved by the noble Lord, Lord Palmer. In our view, Clause 74 is not only necessary but foundational. It establishes the power to issue eligibility verification notices, which enable authorised officers to request information relevant to verifying a person’s entitlement to public funds or services. This is not an ancillary function; it is a mechanism that enables the Bill to work. We broadly support Amendment 79B, which proposes the addition of a reasonableness test to the Secretary of State’s power to issue eligibility verification notices under Schedule 3. Throughout this Committee stage, we on these Benches have consistently returned to a set of core principles that should underpin the powers granted by this Bill: proportionality, accountability and clarity in the exercise of discretion. This amendment is very much in keeping with those principles. It would not constrain the function of the powers in question; instead, it would help to ensure that they are used lawfully, wisely and in a way that retains the confidence of both the public and those institutions asked to assist in their implementation. Specifically, this amendment would require that the Secretary of State be “reasonably satisfied” that issuing an eligibility verification notice is both necessary and proportionate to the objective of identifying incorrect benefit payments. That is, by definition, not an unreasonable bar. It is not designed to frustrate the aims of the Bill or delay the work of the Government. On the contrary, it would simply formalise the expectation that the powers conferred under Schedule 3 should be exercised with care and justification. This point is particularly relevant when we consider the position of banks and other financial institutions, which may be required under this provision to provide customer information. For those institutions, it is critical that the system is seen to be operating within a clear and lawful framework. They are being asked to co-operate in a sensitive and complex process. Ensuring that the Secretary of State is “reasonably satisfied”, and that this standard is explicitly in the Bill, would help to provide clarity, legitimacy and protection for all parties involved. As the noble Lord, Lord Vaux, and the noble Baroness, Lady Bennett, made clear on the previous group of amendments, legislation needs to be made for the future and, as such, reasonableness safeguards must be on the face of the Bill. Moreover, this amendment would reinforce public confidence in the system. When members of the public know that strong powers, such as those that allow government access to eligibility-related data, are being exercised only after a specific, documented and reasonable assessment of necessity and proportionality, they are far more likely to view those powers as legitimate. Trust, as we know, is a critical currency in any enforcement regime. This amendment would not obstruct the use of eligibility verification notices. It would simply require that they be issued on the basis of reasonable grounds, with a clear and proportionate purpose. It would bring consistency to the Bill, reassurance to the institutions involved and greater credibility to the broader anti-fraud effort that we all wish to support. We oppose Amendment 80, which would substantially limit the exercise of eligibility verification notices under Schedule 3 to the Bill by requiring that they may be issued only where the welfare recipient is already suspected of committing a DWP offence. I suggest that this amendment risks undermining the core function of eligibility verification and, in so doing, would weaken the entire framework that the Government are proposing to put in place to detect and prevent fraud. Let us be clear about the purpose of the eligibility verification power: it is not primarily an enforcement power but rather a tool of assurance and risk management, designed to help to identify cases where payments are being made incorrectly. The core problem with this amendment is that it conflates suspicion with verification. It assumes that an authorised officer must already suspect a DWP offence before reviewing financial data. In practice, however, it is often the financial data itself—the information provided in an account—that gives rise to that suspicion in the first place. I turn to Amendment 89. We support the principle behind this amendment, which seeks to ensure that the powers contained in this Bill—substantial powers, we must all acknowledge—are exercised only in relation to the specific benefits explicitly listed in the Bill. This is not a wrecking amendment, nor one that seeks to undermine the Government’s legitimate goal of strengthening our response to fraud and error. Rather, it is about ensuring that when we legislate new powers, they are accompanied by a clear, democratic mandate and appropriate parliamentary scrutiny. The provision that this amendment seeks to remove would grant Ministers the ability, by regulation, to extend the application of these powers to further benefits beyond those originally listed. I submit that such an extension should not be done by regulation alone but rather with the explicit consent of Parliament through primary legislation or a tightly scrutinised process. The powers outlined in Schedule 3, including access to personal financial information, the issuance of eligibility verification notices and the ability to act on suspicion of fraud, are not minor administrative tools. They represent a significant expansion of state capacity to inquire into private affairs in the name of public interest. That may well be justified in many cases, but it is only right that Parliament retains control over when and how these powers are extended to new areas of social security. Supporting this amendment means drawing a line in the sand that the list of benefits to which these powers apply is not open-ended and that any extension should come back before Parliament for proper consideration. If, in future, a compelling case is made to include additional benefits, let that case be made here, in public, with scrutiny and accountability. That is how we ensure confidence in the law, in enforcement and in our broader welfare system. This is not about resisting action on fraud but about ensuring that the tools we use to combat fraud are clearly grounded in public consent, which gives the system legitimacy. It is about protecting the balance of power between executive action and legislative oversight. We have made the argument throughout Committee that clarity, transparency and accountability must be woven into the fabric of the Bill. This amendment speaks directly to those principles. It ensures that the powers in this legislation are not allowed to expand by stealth but only by clear, deliberate parliamentary decision. I hope that the Minister will see this not as a restriction but as an opportunity: to reinforce the legitimacy of the powers the Government seek and to show that we are committed not only to effective fraud prevention but to the principled governance of that process. For that reason, we support this amendment. Finally, in addressing the stand-part notice of the noble Baroness, Lady Kramer, on Schedule 3, we understand that this is an area of concern for many noble Lords across the Committee, but we do not feel that removing the schedule from the Bill is necessarily the most constructive way to go about this in Committee. I appreciate that this is probing, and we therefore hope that the Government will use this opportunity, in responding to the stand-part notice of the noble Baroness, Lady Kramer, to address the concerns that we and many other noble Lords have raised in Committee, even if we do not support the noble Baroness’s stand-part notice.

My Lords, I am grateful to noble Lords who spoke on this. I promise not to speak for long on this but, since it is the first time we have discussed the eligibility verification measure, I will, for the record, try to explain how it works, and, I hope, help the noble Baroness, Lady Fox—I apologise for my failure to explain it to her hitherto. I will have a go at doing that, and I will talk to the amendments as we go. Clause 74 introduces new Section 121DB and Schedule 3B to the 1992 Act. They contain the provisions for the eligibility verification measure, which enables the Secretary of State to issue a bank or other financial institution with an eligibility verification notice, or EVN, which will help the DWP identify incorrect payments in the social security system. Ensuring that the right person is paid the right amount at the right time will help prevent both fraud and genuine errors, meaning that people do not accidentally build up debts, with all the concern that that causes. As I set out at Second Reading, this is a data-requiring measure. It will enable the DWP to ask for data from banks to help identify incorrect payments and verify eligibility for specific benefits. It is about requiring banks to look within their own data and provide limited, relevant information on the accounts they have identified that match the eligibility indicators provided by the DWP. Just to clarify, we will ask the banks to look at accounts into which we make benefit payments, and we will give them the criteria, which clearly can only be things related to eligibility for the benefits under question. That limited information will help the DWP to identify where claimants do not meet eligibility criteria for the benefits they are receiving. Getting access to information is key to addressing the whole fraud and error challenge. But if your Lordships think about other areas, we have seen how the DWP getting access to data such as earnings information from HMRC has massively reduced income-related overpayments. In fact, if you look at people on PAYE and universal credit, earnings-related fraud and error have pretty much been wiped out by getting access to earnings data directly from HMRC. I will speak to Schedule 3 in a few moments. Let me look first at Amendment 79B from the noble Lord, Lord Vaux, which seeks to ensure that an EVN may be issued only when the Secretary of State is satisfied that it is necessary and proportionate to do so to achieve the aim of identifying incorrect benefit payments. This is the nub of it. Clearly, I agree that the power must be proportionate and necessary before we use it. We are bringing forward the legislation because we believe it is necessary, and we have already taken enormous steps to ensure that it will be used proportionately. The reason it is necessary is that taxpayers deserve to know that every pound of their money is being spent wisely, and that benefits are being paid to those who need them and are legally entitled to them. This measure will improve the DWP’s access to important data to help verify entitlements, to ensure payments are correct, and to stop overpayments building up and debt accruing. The National Audit Office made a telling point in the Commons at the evidence stage, basically saying, “If you want to enforce the eligibility criteria that Parliament has set, such as capital limits, you have to provide the DWP with a tool that goes a bit further than just asking people”. We do not know of other ways to get the necessary information to be able to pursue the kind of overpayments and fraud that are out there. However, I just remind the Committee that the measure has been designed with hugely strict safeguards, most of which are in the Bill, and they are supported with further detail in the code of practice, of which noble Lords have seen a draft, to ensure that the power is being used fairly and proportionately. The legislation sets out the benefits in scope, of which more later, and the type of information that can and cannot be shared under the power, and includes provisions to bar financial institutions from sharing transaction information or special category data.

17:00:00

The Bill is also explicit, which was not the case in previous iterations, that only financial institutions are in scope. It is clear about the uses of the information gathered under this power. Every new EVN—for example, relating to a different eligibility indicator or benefit type—will be subject to internal checks for Article 8 ECHR compliance before being issued. This will involve ensuring that the EVN complies with the legislation and that any interference with Article 8 is necessary and proportionate for the purpose of helping to identify correct payments.

Finally, but importantly, the Bill sets out that the Secretary of State must appoint an appropriate body or person to conduct annual independent reviews of the use of the power to help ensure that the power is exercised responsibly and effectively. Having said that, I hear the point made by the noble Lords, Lord Vaux and Lord Verdirame. We want the same end on this, I think. I am happy to keep listening on this point, to see whether we feel that we are in the right place and to carry those conversations on, but I take their point; I do not think we want different things.

Turning to Amendment 80, it is possible to say that my noble friend Lord Davies and I probably have different objectives at this point of the Bill. This amendment seeks to reduce the DWP’s use of EVNs to only those cases where the department already had reasonable grounds to suspect that a person was committing an offence. As the noble Baroness, Lady Finn, pointed out, that would in effect make the power redundant. I realise that that is the point of my noble friend’s amendment. I accept that; we simply take a different view on what is necessary and proportionate to address the problem of fraud.

Let me say a word on that. In 2024-25, benefit fraud and error overpayments stood at £9.5 billion. Without taking new steps, Parliament is simply going to resign itself to those losses. When money is this tight, I want all the money available for benefits to go to the people who need it and are entitled to it under the law. It simply cannot be right to leave those overpayments unaddressed when we know that new approaches such as this one will reduce the loss.

My noble friend Lord Davies asked for a sense of scale. When it comes to the nature of fraud, no single measure is a silver bullet. No one thing will get rid of all fraud. However, this important measure will make a significant difference. This measure alone, as scored by the OBR, is expected to save up to £940 million over the next five years, with additional savings beyond that. That is a significant sum of money. Therefore, the judgment is on whether the action that we are taking is proportionate to the scale and to the contribution that this could make in tackling overpayments of different kinds. We believe that it is. I respect the fact that my noble friend takes a different view, but the Government’s argument is that this measure is proportionate to the nature of the challenge and the alternatives available; that is our case. To restrict it in this way would mean, in effect, having to have a suspicion of fraud before we even had the information. The DWP manifestly cannot suspect fraud before it has even been established that a benefit has been overpaid.

However, this measure is not just about fraud; it is about detecting all overpayments, whatever the cause, as quickly as possible. This will be in the best interests of claimants, the DWP and the taxpayer; crucially, it will prevent claimants building up large debts. I keep saying this but let me be clear: information shared by financial institutions at this point is done without suspicion or presumption of wrongdoing on the part of the claimant. As my noble friend said, the DWP has the power to request information from financial institutions where there is a reasonable suspicion of fraud; that is done under different provisions.

Amendment 89 would seriously limit the DWP’s ability to respond to any changes in fraud and error rates—indeed, to respond to any structural changes in the benefit system. We know that universal credit, pension credit and ESA currently have some of the highest overpayment level rates of all benefits. We know that financial institutions hold data that could help us verify a claimant’s eligibility for those benefits; that is why they are in scope of the measure and listed in the Bill. However, we also know that fraud and error trends change over time. Fraud, in particular, goes where there are weaknesses in the system. We need to be aware of that. If the presumption is that some benefits are easier to target than others, we may expect to see fraud moving in those directions.

If this amendment were to go through, and we saw that fraud and error rates were rising around a benefit not currently in scope and we knew that financial institutions held data that would help us tackle this, we would not be able to do anything about it until there was another piece of DWP primary legislation—and they are not that common. Being able to add to the list of benefits in scope is crucial because it means that the DWP can continue to respond to fraud and error in the system for whichever benefits are most affected. However, that would be done not by ministerial diktat but by the affirmative procedure and going through Parliament. We think that is proportionate and, I have to say, the DPRRC and the Constitution Committee found no concerns with this way of doing it.

I pause momentarily to look the noble Baroness, Lady Finn, straight in the eye and say that this is in stark contrast to the previous iteration of the Bill under the previous Government, in which every single benefit was in scope from the outset, including the state pension, which was explicitly included. When I engaged in conversation to find out which benefits were included, it was every single benefit mentioned in social security legislation, including some which probably had not been used in years and some that might never be used again.

When I came into this job, I specifically said that I did not want to see that. The previous iteration by the previous Government would have allowed the Government to seek information of any kind from any kind of organisation on literally any benefit, for any purpose. We came in and limited it to only financial institutions and only information about benefits, narrowing it down to only the specific purposes needed in this Bill.

There are two ways to do it: either we throw everything in at the beginning and Parliament approves it, but then we can do anything we want; or we start here and say, “If the situation changes, we will make an appropriate change with parliamentary oversight”. The fact that the DPRRC and the Constitution Committee have not objected suggests that we are in the right place.

My Lords, the Minister made a powerful point about the position of the current Opposition. As she identified, the old-age pension being covered in the former iteration of the Bill caused an enormous amount of concern. Obviously, all the groups we are talking about are potentially vulnerable, but old-age pensioners are particularly vulnerable and prone to be stressed and worried about this situation. Can the Minister assure me that the Government will not put the old-age state pension underneath the Bill?

My Lords, I am grateful to the noble Baroness for giving me the opportunity to recover my voice and to say that not only will we not do it but the Bill says explicitly that the measure cannot be used on the state pension, so there is no question of it being used for that. The case load is really straightforward. Fraud in the state pension is so low that it is the one area where the NAO does not qualify the accounts. We have to have a rationale. The reason we have chosen these three benefits initially is specifically because they are the areas where fraud is significant, and we know the information is out there that could make a difference. I can absolutely reassure the noble Baroness on that point: without amending primary legislation, this measure cannot be used on the state pension, and the Government will not do that. Any subsequent Government would have to change the law to be able to do it. I am grateful to the noble Baroness.

My Lords, I intervene briefly to add a little history on the reason we included pensions. As the noble Baroness, Lady Bennett, may know, there is some fraud in the pensions area, to the tune of £100 million. This, I admit, is not as much as the £9.5 billion in welfare fraud that the Minister cited, but I just wanted to put the record straight; there was a reason for including pensions. Secondly, you can have it one way or the other. We thought it would be good to put all benefits in scope in primary legislation, but I accept that another way of doing it is to limit it to the three benefits, as this Government have done, with a view to having secondary legislation for including others. I understand that.

I am grateful. The noble Viscount is quite right: there is some fraud in the state pension. It was a judgment about proportion, having compared the size and value of the case load. It is very small. The fact that the affirmative procedure is used means that there will have to be a debate. The Government cannot simply on their own start investigating new benefits without anyone knowing about it, so that makes a difference. The Bill is clear that, to help make this measure proportionate, only the minimum amount of information necessary is shared with DWP by the banks. That can include only details about the account, such as an account number and sort code; details to identify the individuals, such as names and dates of birth; and details about how the individuals appear to be breaching the eligibility criteria for their benefit. But still at that point, no one is suspected of having done anything wrong; the presumption of innocence remains, because further inquiries are needed to establish whether a benefit has been incorrectly paid. Some people may have disregards in place that mean they are allowed to have more money than is normally used in the benefit rules. For example, normally you are allowed to have only £16,000 maximum in capital to be entitled to universal credit, but there are reasons why you might have more than that. Some forms of compensation payments are disregarded, for example. There may be a perfectly good reason, which will be investigated at that point—and that will be that. Others may have made a genuine mistake that has led to an overpayment of benefits, which it is important to correct as quickly as possible for the individual and the organisation. However, there will be some cases, especially in the early stages, that ultimately lead to fraud being identified; that conclusion will never be drawn from these data alone. As is the case now, any claim where a suspicion of fraud arises is referred to our specialist investigation team, which has to undertake a thorough investigation, following all reasonable lines of inquiry before any determination can be drawn. Just to reassure my noble friend, whether he accepts it or not, in fraud and error cases, decisions on entitlement will be made by a DWP staff member.

It is clear that we are talking about two different stages here. The first intervention into the bank accounts of individuals will be done algorithmically. The DWP will provide the banks or whoever with the set of criteria that they should apply, and the banks will run it through their computers and that will throw up cases. No individual will be involved at that stage. Cases that are highlighted then referred to the DWP are the ones where human intervention will start. But there are the two stages, and the human intervention is at the second stage, not the first.

I think that we are going to repeat ourselves at each other. This is essentially a data-requiring measure—it is a data push. The data is coming across to DWP, and that data will be used with other data, and where there is an indication that there may be an overpayment, it will be dealt with either by reaching out to the individual or, if there is a possibility that it is fraud, it will be referred for a fraud investigation. Any decision on benefit entitlement and fraud and error is made by a DWP staff member.

I hope that the Minister will forgive me for making the point, but it is crucial. The bank will send a data file with cases that it has flagged. Will cases from that data file be identified by humans or by the DWP algorithmically?

I think that we are talking at cross-purposes here. The information will be sent across to DWP, and DWP will take information on an individual and, if there is a signal that an individual may have a breach in eligibility criteria and may have more money in their bank account than is permitted, that information will be looked at and taken together with other information and a DWP staff member will make a judgment about what to do about that. I do not think that I can be any clearer than that.

I am standing up to be helpful to the Minister. For fear of being rather like a long-playing record, I think that a flow chart would be incredibly helpful—so I am pressing my case for a flow chart. That is all that I shall say.

My Lords, I am not a flow chart gal, but if anyone is capable of turning this into a useful flow chart, I shall have a look into it. I fully accept, being an observant person, that not everybody in the Committee agrees with these measures. It is clear that they can make a difference to tackling fraud and error. We think that they are proportionate, but I accept that some Members do not think that, and that is obviously completely legitimate. We simply take a different view. In the next few groups of amendments, we get to look at different aspects of how that would work, but it is the Government’s view that the scale of fraud is such that it needs to be tackled. If there were other, simpler ways in which to do it, we would have used them by now. This is a source of data that will help us to tackle fraud and error in overpayments, which we do not have at the moment. We do not see any other suitable ways in which to do it, so we think that it is proportionate. We have wrapped it around in safeguards as much as possible.

The Minister has been very helpful. There are obviously disagreements philosophically, but what is confusing is that the financial service representatives have suggested that this is a trawling exercise—the quote given was of a “fishing exercise”. The Minister has stressed, “Don’t worry: when we go to the banks and ask for this information, it is suspicionless. We are not treating people as though they have done anything wrong; we are simply finding out”. That is a huge admission that the state—the Government—is going to the banks and demanding that they provide information for no other reason than that these people are on benefits.

17:15:00

I understand that one can say that this is a good way of getting money back from people who are committing fraud, but I am always worried about putting to one side issues around due process. It is true that you could probably catch a lot of criminals if you put bugs in people’s houses and listened in to all their conversations—we would all know what they are about to do in terms of committing crime. Generally speaking, however, we do not do that sort of thing in a modern, free society because we are aware of the difficulties in relation to people’s privacy and rights—it is a pain in the neck living in a democracy; it is so much easier in China where you do not have to worry.

It is reasonable for us, as a Committee, to keep pressing—and we no doubt will—as to whether it is appropriate for a Government to use private banks in this particular fashion. No doubt some money will be gained this way, but at what cost?

I will jump in quickly before the Minister continues. She has been very helpful in explaining how this is going to work. I should say, as I have before, that I think this is infinitely better than it was when we saw it a year or so ago—I just put that on the record again. However, there are two questions about how it works on which I would like clarification. First, I think the Minister indicated that the banks would not have to trawl all bank accounts, but I do not think that that is right. The logic must be that the DWP provides the criteria that it wants to look at, which is whether someone is in receipt of benefits and, secondly, whether there is a flag. In order to identify whether they are on benefits, the banks will have to trawl through all the accounts to find that out. That seems a necessary step—they have to spot the indicators in the accounts. More importantly, though, this is not a one-off exercise under the Bill. They do not just send it once and then go away. The Bill allows for these things to be periodic within 12 months, and they can then be extended. I am interested to understand what the Government intend by “periodic”. Under the way that it is currently written, they could be saying, “I want you send us this data every day—or indeed every hour or minute—for the next 12 months”, and they could then extend it. What is the plan in terms of the periodicity of this?

Let me deal with the noble Lord first, because that will be quick and I am conscious of the time—I have already gone over the 20 minutes. The DWP will tell the banks, “We have a reference number and these are the accounts at your bank into which we pay benefits; please look only at those accounts, not those of anyone else”. I have been saying this all the way along the line, but I have clearly failed to get this across. The noble Lord may recall the previous discussions when we were asked why you could not look at every bank account, and the reason is—

I am still not convinced that that is correct. I think that what happens is that there is an indicator that goes with the payment of the benefit, and we are then asking the banks, first, to identify all accounts where that indicator exists—so they have to look at all accounts to identify which those are—and, secondly, for those accounts, whether there are any with an eligibility indicator that is flagged. My reading is that it is in fact quite clear, and it is also clear in the code of conduct and the other stuff.

In as much as we will say to the banks that we would like them to look at the accounts into which we pay benefits and will give them the reference numbers. Clearly, it is up to the banks how they identify those. I think it unlikely that they will take each bank account, look at it individually and make a decision, but it is up to them. We simply want them to look at those bank accounts and to tell us whether, within those bank accounts, they believe that the particular eligibility indicator that we have given them is correct. Regarding frequency, we will negotiate that with the banks. The previous Government looked at an earlier iteration of this and ran two proofs of concept to establish that it would work and be effective. We now have to take the powers in order to be able to start doing this. So, we have agreed that we will work with a small number of banks and work out bit-by-bit how this works, bring over information as we can manage it, make sure that the system works, and build up as we go. We will determine from that how often we will need to do that and how it works. That has to be determined; we could not determine that in advance because we need the powers in the Bill to be able to start the process. In response to the noble Baroness, Lady Fox, it is a question of proportionality. Clearly, we already ask the Revenue to tell us how much people earn in order to determine whether or not they meet the earnings criteria for, for example, universal credit. We could simply allow people to tell us, but when we did that, some of them got it wrong; many of them made mistakes; sometimes it changed, and sometimes they deliberately did not tell us. So now, we simply get information directly from the Revenue. We think that the power is proportionate. Whenever someone compares it to something that feels disproportionate, such as spying or putting bugs in everyone’s houses, I think that we can either claim that this is a mass surveillance power like China would use and then wonder why people are getting paranoid about it, or, while I do my best to be specific about what we are trying to do, we can all try to have a measured conversation about whether or not it is reasonable, while fully accepting that for some people the line will be in a different place than for others for reasons of both philosophy and proportionality. I fully accept that. I have done the best I can in 25 minutes. On that basis, I urge noble Lords to agree that the clause stand part.

My Lords, I thank the Minister for that tour de force. I am afraid the problem is that we all have different ideas about what is proportionate. From what I have heard, I do not think what the Government are suggesting is proportionate, and that is where the problem arises. I come from the feeling that there is a presumption of innocence, and this seems to me almost a presumption of guilt. The Minister has not taken the point about the nervousness of banks. If a bank gets even a modest inquiry—anyone who has a bank account knows that this happens if there is a certain inquiry on your bank account—signs go up in the algorithm used by the bank saying, “We’ve got to look at this”. Anyone who is a Peer or an MP knows that their affairs can be looked at more closely just for that very reason. I hope that, on Report, we can deal in greater detail with how nervous the banks will be about what is proposed. I hope the Minister can come back and give us reassurance from real banks—joint-stock banks—that have said how they view this. I think they will view it wanting to be on the safe side. However, at this stage, I will not press my noble friend Lady Kramer’s clause stand part notice.

Clause 74 agreed.

Schedule 3: Eligibility verification etc

Amendments 79B and 80 not moved.

Amendment 81

Moved by

81: Schedule 3, page 78, line 19, at end insert— “(9) Before giving a person an eligibility verification notice, the Secretary of State must be satisfied that the costs that will be incurred by the person in responding to the eligibility verification notice will be proportionate and reasonable for that person to incur, or the Secretary of State must agree in advance to repay all or some of the costs to the person.” Member's explanatory statement This amendment is intended to probe how the Secretary of State will ensure that they do not impose undue costs on the banks and to what extent the banks will be able to recoup these costs.

My Lords, I hope that my Amendments 81, 89C and 91 are fairly self-explanatory and that we are getting into more detailed points, which might be easier, rather than points of philosophy. Amendment 81 relates to the costs that the eligibility verification process will impose on the banks and other financial institutions that must respond to the notices. It is intended to probe how those costs will be treated. We have already had various debates on third-party costs at earlier stages in Grand Committee, but in relation to the DWP clauses around eligibility verification, there is an important difference, which is that, so far, the Government have not made any real attempts to quantify the impact that the EVM process will have on the banks or other financial institutions. The impact assessment says about the EVM: “The cost to Data holders has not been estimated at this stage; estimates will be included in a subsequent IA”. It goes on to give a bit more detail of the impact on third parties, banks and institutions, saying: “There will be transition costs and on-going costs for businesses. The impact assessment outlines some indicative costs to business, however at this stage we are unable to provide a robust assessment of business costs for validation. This is because the operational solution for the measure is currently being developed, alongside further engagement with banks. We have committed to work in partnership with banks to develop the most appropriate implementation route. Estimates will be included in a subsequent IA”. Later, the IA refers to set-up costs to banks of around £41.25 million, although that is not based on any substantive evidence. The Bill itself is entirely silent on the costs of the eligibility verification regime to banks and other financial institutions, and how they might be treated. As we have discussed, this is not about the impact on the banks alone; it is also about the possibility of the unintended consequence of making banks less willing to provide services to benefit claimants. We had a long debate on that previously, and I shall not repeat the arguments. Amendment 81 would require the Secretary of State to satisfy themselves that the costs to the banks will be proportionate and reasonable or, where that is not the case, to agree to repay some or all of the costs to the banks. This is not a situation where the costs can be recovered from the fraudster, because there may be no fraudster. The banks will, effectively, be working for the Government in this case, so it is appropriate that the Government should cover any unreasonable costs. Amendment 91 also looks at the costs of the EVN regime. It would add to the scope of the annual independent review—as an aside I very much welcome that independent review; it is a big step forward in the safeguards around this—so that it would now also report on whether the use of EVNs has been proportionate to the costs incurred both by the department and by third parties such as banks. As I have said, there has been no meaningful attempt yet to evaluate the costs to third parties, particularly because the work is ongoing to work out what those will be, so there must be some mechanism to ensure that the costs are proportionate, and the independent review would be the logical and sensible place to do that. Amendment 89C is more technical; it is designed to deal with a concern raised with me and others by UK Finance. This concern is that the existence of an eligibility indicator might constitute grounds to suspect fraud and therefore impose obligations on the bank to take actions such as closing or freezing the account or issuing a suspicious activity report under the various obligations that the banks already have. It is worth hearing what the impact assessment has to say in this respect. It says: “In discussion with the banking sector, the Department has been clear that any data received under this measure should not be seen as indicative of any financial crime. Many claimants will have a legitimate, authorised reason to hold savings in excess of capital benefit rules (disregards for injury compensation, for example) and in many cases, overpayments could have been caused by genuine claimant error. Given this, the Department has been clear that there should be no action to risk claimant bank accounts because of the measure”. So that sounds good. Part 2 of Schedule 3 already goes some way towards this, but UK Finance has made it clear that it does not see the existing wording in Part 2 of Schedule 3 as adequate, as it covers only the suspicious activity report element. UK Finance agrees that there has been extensive engagement with DWP on this but makes the point that, despite this engagement, there is currently no agreed deconfliction on banks’ financial crime obligations. The amendment simply says that information that results from a EVN should not be treated in that way, and should not of itself be treated by the bank as grounds to suspect fraud. The “of itself” is important there. I will be interested to hear what the Minister has to say, given the industry’s remaining concerns. Why does she disagree with UK Finance on this? An alternative way of dealing with this concern would be to ensure clear guidance from the FCA, which does not seem to be happening. Why are the Government not simply pressing the FCA for such guidance? Amendment 83, tabled by the noble Lord, Lord Davies of Brixton, does something similar, with reference to conflicts between the Bill and the duty of care that banks owe to their customers, and I look forward to hearing what he has to say in that respect. I beg to move.

17:30:00

My Amendment 83 is a probing amendment. I want to know more about the Government’s thinking on this. As the noble Lord, Lord Vaux, indicated, this is sparked by the comments of UK Finance, which represents, broadly speaking, those who will have to comply with this legislation, interrogate customers’ bank accounts and provide the DWP with information, so its views are very germane. It submitted a briefing for Second Reading, and a number of its points still stand, except to the extent that there has been any engagement between the DWP and UK Finance since Second Reading. I would be interested if the Minister could brief the Committee. It is still, however, relevant to mention my points. I will focus on one in particular, as my amendment does. UK Finance raised a range of concerns that need to be taken seriously. I will outline them, just to put this into context. It is concerned about the potential conflict with its duties to deal with financial crime. It regarded this as a diversion from its capacity to deal with economic crime, and it was concerned that there were insufficient safeguards for bulk data access. I would be interested if the Minister could address those issues, either now or in correspondence. My amendment focuses on the other point that it raised. It said: “Risks of financial harm: Tensions between the Bill and firms’ existing obligations under the FCA’s Consumer Duty and Vulnerability Guidance could result in harm to vulnerable consumers. Bad actors learn workarounds quickly, so the powers may end up impacting most acutely people inadvertently making—or subject to—errors”. That is a massive criticism of the Bill’s provisions, and it is important that it should be addressed explicitly, either in correspondence or in reply to this debate. I want to paraphrase in very broad terms the attitude of UK Finance towards the Bill. The truth—although it would not say it in quite these terms—is that it does not like it. It wishes that it was not here because of the pressure that it would place on it in all sorts of ways. That is outlined in its briefing. I will address more directly the issue of financial harm to vulnerable customers. The Government need to say extensively and explicitly how they expect financial institutions to reconcile their undoubted duty of care towards their customers and their obligations under the Bill. To put this into context, the Child Poverty Action Group says that “the eligibility verification measure would mean people face more suspicionless surveillance and intrusion into their privacy simply by virtue of being benefit recipients. We believe it is fundamentally unfair and potentially unlawful to subject these families to surveillance that the rest of the population does not face, simply because they are on a low income”. I already quoted the concerns of Helena Wood of CIFAS. There is no doubt that the provisions of the Bill will be of massive concern to individuals, and that should be a major issue in how the Government implement the Bill—I have made plain my objections in principle—and how it will be handled in relation to vulnerable customers. I have an amendment—let us hope we get to it on Wednesday—about the affordability assessment. Having an affordability assessment is not my idea; it is in the Government’s briefing note, but they do not explain what they mean by it. We will have a debate on Monday about the nature of that affordability assessment. But that in itself will put pressure on customers. Just being there, it will create pressure, particularly for people struggling with poverty and who have problems with their mental health. It is essential that the affordability assessment will be able to understand the individual circumstances, but the process of implementing that assessment will in itself create harm for the consumer. I cannot see an easy way through on this, but the Government need to address the issue and tell us what they will do to ensure that this conflict is avoided.

My Lords, there was extensive conversation about the role of banks in the debate on a previous day in Committee, and I probably got carried away with my own hyperbole when I said that they were being coerced into being involved, on which the noble Baroness, Lady Anderson, corrected me. However, I think we can say that they are compelled to be involved and that financial penalties, which will become increasingly punitive, will be levied if they do not do as the Government request. If they get those penalties, the cost might not be an issue but there would certainly be reputational damage. We need to have some context here and recognise that the banks are not queuing up to do this. That is an important point, which the noble Lord, Lord Davies of Brixton, has made. There is a reluctance about some of the things that are happening with the Bill, which I think the Government can admit to. In all the literature they have produced and in conversations we have had so far, the Government have reassured those of us who are worried about privacy. We are constantly being reassured that there are limitations on the type of data the banks will share. On the other hand, the way in which the Government are dealing with that is by saying that the banks will be fined—there will be a penalty—if they overshare or if they provide inaccurate information, so I fear that this penalty will, again, have the impact of pushing the blame or responsibility on to banks for any errors. That makes me nervous, because it is not clear to me how they will not see anyone on benefits as just a pain in the neck for them, since they will now have to go through the exercise of checking, which they are being compelled to do or they will be fined or get into trouble, and if they get the information wrong or hand over the wrong information, they can be fined again. Inevitably—this is why I am interested in these amendments—the banks will associate these eligibility verification notices and the work being asked of them for those on benefits, and they will view such people as creating more work and more jeopardy. I also think the banks are being held responsible for things they should not necessarily be responsible for. I would be interested to know how the Minister feels, because I think it is a reasonable query at this point to ask, “Isn’t there a problem with private banks being asked to be government inspectors?” I think it was one of the MPs who said that the purpose of banks is not to act as an arm of the state. How should private banks respond to the fact that the state is asking them to do a huge amount more in relation to this clamp-down on DWP welfare fraud? It seems to me that, ultimately, we are asking the banks to do what the Government should be doing, and the banks will get the blame if things go wrong. They are the ones who will be doing the surveillance, no matter which way we look at it.

My Lords, I warmly welcome the spirit and substance of these amendments, which would collectively strengthen the Public Authorities (Fraud, Error and Recovery) Bill by ensuring that our approach to tackling fraud is not only effective but fair and—that word again—proportionate. Amendment 81 from the noble Lord, Lord Vaux of Harrowden, rightly probes how the Secretary of State will prevent undue costs being imposed on banks and seeks to clarify the mechanisms for cost recovery. This, I believe, is an essential safeguard, ensuring that our financial sector partners are not overburdened by compliance costs, which could ultimately impact customers and the wider economy. Similarly, Amendment 91, which calls for an independent review of the eligibility verification powers with a focus on the proportionality—that word again—of costs incurred by both the department and banks, is a welcome step towards transparency and accountability in the implementation of these new powers. I am particularly supportive of Amendment 83, which would place the duty of care that financial services providers owe to their customers at the forefront, ensuring that data sharing with the DWP does not override these fundamental responsibilities. This is a crucial point. While we must be resolute in our effort to combat fraud—on which I am sure we all agree—we must not do so at the expense of the trust and the rights of individuals. It is a very fine line to draw. Amendment 89C from the noble Lord, Lord Vaux, would remove the risk that the mere existence of an eligibility indicator could trigger unnecessary action against account holders, thereby preventing unintended harm to individuals. Taken together, these amendments would ensure that the Bill’s powers are exercised with restraint and with full regard to the interests of both institutions and individuals. We must not let it trigger unnecessary actions against account holders under the Proceeds of Crime Act. I support these amendments in their entirety.

My Lords, I speak in support of Amendments 81 and 91 in the name of the noble Lord, Lord Vaux, which seek to introduce proportionate and principled safeguards into the operation of eligibility verification notices: namely, that the Secretary of State must first be satisfied that the costs to the person receiving the notice are reasonable and proportionate, or else agree to reimburse those costs in whole or in part, and that this be subjected to an independent review. This is not a marginal or administrative detail; it goes to the heart of how we structure and sustain effective partnerships between the Government and the private sector, and particularly to how we treat the banking sector as a key actor in the fight against public sector fraud. Throughout our deliberations on the Bill, my noble friend Lady Finn and I have returned time and again to the importance of ensuring that the powers are exercised responsibly, with due regard to proportionality and fairness. This amendment is a natural extension of that principle. It recognises that, when we ask third parties—in this case, banks and financial institutions—to support fraud detection by responding to eligibility verification notices, we are asking them to divert time, resources and personnel to do so. This of course comes at a cost, and it is only right that these costs are acknowledged and handled fairly. As has been said, the banking sector plays an essential role in supporting government anti-fraud objectives. Banks will help to identify irregularities, flag risks and support enforcement action. But if we want this co-operation to continue and to deepen, we must treat banks as strategic partners, not simply as tools to be leveraged without regard to impact. This amendment would ensure that we are not shifting the financial burden of fraud prevention on to the shoulders of institutions that are neither the source of the fraud nor the primary beneficiaries of its reduction. It would also introduce a basic but important fairness test, that if costs are disproportionate, they should be recognised and potentially reimbursed. Given the scale and frequency with which these powers may be used under the new framework, we should recognise that banks may be required to undertake substantial internal data searches, compliance checks or system queries, potentially at short notice. As the noble Baroness, Lady Fox, pointed out in her excellent remarks, to do so effectively, banks will need to allocate skilled staff and technological resources. It is only reasonable that we ensure that such work is feasible and fairly compensated where appropriate. Furthermore, the precise detail on how this mechanism will work is still vague from the Government. I shall not mention flow charts again, for fear of being shouted down, but maybe we need a spreadsheet—although perhaps I shall be shouted down on that basis. Can the Minister give some detail as to how the “test and learn” with the banks is going as regards the operability of the system? In particular, what are the anticipated costs to the banks? It is understandable that the Government may not be able to answer this, as they may say that it will depend on the number of potential cases emerging and issues emanating for each case, which will vary. However, I would imagine—and I think that I said this at Second Reading—that the ongoing test-and-learn process will be able to highlight an average per case cost. If there is no information available, how do we know that the costs are not astronomical or even unsustainable for the system established? I hope that the Minister can enlighten us on that.

17:45:00

The noble Lord, Lord Vaux, made an excellent point earlier about the regularity of checking accounts. The Minister stated that the two test-and-learn processes have reached the point of proof of concept, and I realise that. However, it would be helpful to know what the costs of this are and how they are recognised.

This amendment does not weaken the powers in the Bill; it strengthens their legitimacy. It reinforces the idea that public/private co-operation works best when it is built on partnership, not pressure. It sends a clear signal that the Government recognise the vital contribution of the banking sector in tackling fraud, and that this contribution should not come at unreasonable or unacknowledged cost. It is a thoughtful, proportionate and constructive proposal, and I urge the Committee and the Minister to view it in that spirit.

I would not normally be inclined to support the noble Lord, Lord Davies, as he will know, but here I cautiously welcome the principle behind Amendment 83, tabled by the noble Lord. The amendment seeks to ensure that financial services providers are not placed in the untenable position of breaching a reasonable duty of care to their customers when responding to eligibility verification notices issued under this Bill. This is a legitimate concern, and one that deserves serious reflection. The financial services sector is bound by well-established duties of care, trust and confidentiality in its relationship with its customers, and under the aegis of the likes of the FCA. The noble Lord, Lord Vaux, raised the importance of the role, input and oversight of the FCA. These obligations are foundational to the stability and integrity of the financial system, and we should not lightly dismiss the potential conflict that may arise when the state compels those institutions to disclose sensitive information.

That said, we must also place this concern in context. The core purpose of the Bill and the power to issue eligibility verification notices is to combat fraud, error and abuse of public funds. These are not trivial matters. When public money is stolen through fraud, it is not a victimless crime; it is money that could and should have been used to support some of the most vulnerable members of our society. It is therefore right that we empower government to act swiftly and effectively to recover those funds.

The question for the Minister is how we balance these competing duties: the duty of care owed by financial institutions to their customers and the duty of the state to protect the public purse. In my view, the balance must fall, carefully but firmly, on the side of recovering fraudulently obtained public money. When a reasonable suspicion of fraud exists, the priority must be ensuring that public funds are recovered and that abuse of the system is addressed. I ask the Minister what discussions have taken place between the banks and financial institutions, and the relevant regulators such as the FCA, over these matters.

We must be vigilant; we should not allow this provision, if adopted, to become a broad loophole that allows institutions to withhold critical data simply out of an abundance of caution or a desire to avoid administrative difficulty. If there is public money at stake, the Government must retain the ability to act.

Finally, I want to speak in support of Amendment 89C in the name of the noble Lord, Lord Vaux. It goes directly to a concern that we on these Benches have, and have raised consistently throughout the passage of the Bill, around the need for clarity and fairness in how the information obtained through the eligibility verification is treated—particularly when it concerns individuals who may be at risk of disproportionate or premature action. At its heart, this amendment seeks to protect account holders from a serious and unjust consequence—namely, the risk of being debanked or subject to premature action—simply because information provided under an EVN might be misinterpreted as an indicator of criminality under POCA.

The current drafting of the Bill leaves the door open to that possibility. Upon receiving or acting on information obtained through an EVN, financial institutions may conclude or feel that they are legally obliged to conclude that they are now in possession of “knowledge or suspicion” of criminal property, as they could under POCA. We need to be clear that the presence of an eligibility verification notice is not in itself evidence of guilt, nor a finding of fraud; it is a tool of inquiry only, not a conclusion of wrongdoing. I believe that this amendment provides the necessary clarification. It makes clear that the mere existence of such a notice should not in itself be taken as sufficient grounds to meet the first condition under POCA and, in doing so, it reinforces a crucial legal and moral distinction between suspicion sufficient to warrant investigation and suspicion sufficient to impose real-world sanctions on an individual.

Let us imagine the implications if we fail to clarify this. An individual could find themselves locked out of their bank account and unable to pay rent, to buy food or to access wages, all on the basis of a notice issued not because they are guilty but because further verification is needed. I believe that that would be a grave injustice and would do serious damage to the legitimacy of the very fraud enforcement regime it was trying to strengthen. This amendment would not weaken enforcement; it would strengthen it by drawing a clear boundary.

To conclude, clarity in law is not a luxury; it is a duty. If we are to demand co-operation from financial institutions and to ensure fairness for those caught up in fraud investigations, we must ensure that the legal framework we are creating does not give rise to unintended and disproportionate consequences. For all these reasons, I strongly support Amendment 89C and urge the Government to do the same.

My Lords, I am grateful to all noble Lords who have spoken on this group of amendments. Amendments 81 and 91 in the name of the noble Lord, Lord Vaux, speak to the costs that banks may incur as a result of this measure and asks whether they are proportionate to the savings achieved. Let me say, first, that we acknowledge that, clearly, there will be new requirements on banks as a result of this proposed legislation. It is right that additional asks on banks are scrutinised, and I am grateful to the noble Lord for giving the Committee the opportunity to do that. I can assure the Committee, first, that we are bringing the legislation forward precisely because we believe that it is necessary; and, secondly, that we have taken steps to make it proportionate. We have already been through why we think that it is necessary, in our debate on the previous group, so I will not dwell on that again; let me just say that, given the scale of the savings and the lack of alternatives, we think that this legislation is necessary and that the safeguards make it proportionate. Various noble Lords asked about the cost. We have estimated, based on initial consultation with industry sources, that the set-up cost will be around £40 million across the sector and that there will be some limited ongoing compliance costs for data holders; further information on that estimate can be found in the published impact assessment. We recognise that there is more work to do with industry to consider the costs further. That is why we committed to publishing a further, updated impact assessment within 12 months of Royal Assent: to update the estimate, taking into account the ongoing work with industry, and to ensure that there is transparency on the costs as we move forward. I assure the Committee that the Government take burdens on business seriously. We are committed to keeping requirements and costs proportionate and to a minimum; this has been a key aim at the forefront of our close and regular engagement with the finance sector. We are not starting from scratch here. As we have discussed, the previous Government tested this approach through two proofs of concept. We know that it works. We continue to work closely with UK Finance and the finance sector on the delivery of a policy to minimise costs; I can reassure my noble friend Lord Davies both that there have been a number of meetings and Bill forums with UK Finance in recent weeks and that it will carry on working closely with us. A few banks—a small group of them—are already working closely with us on the design and build of the digital solution that will be used to facilitate the transfer of information, in order to ensure that it is developed in a way that works for the sector. I just want to put on the record our appreciation to those banks for their valued input. Let me say, however, that the Government can be held to account. The independent reviewer must consider whether the measure has been effective at helping to identify incorrect payments. The independent reviewer could also report on the burdens and costs that financial institutions might experience as part of that assessment. If financial institutions believe that Government are overreaching, they also have the right of review and appeal. Financial institutions can use the reviews and/or formal appeals processes to dispute an EVN, including if they determine that complying with an EVN would be unduly onerous. This is set out clearly in Parts 3 and 4 of new Schedule 3B, as inserted by the Bill. For those reasons, we believe that the amendment is not necessary. Amendment 83 would require financial institutions, when asked to provide data to the DWP under this provision, not to provide it if they reasonably consider that doing so would conflict with their duty of care towards their customers. My concern is that this amendment assumes that we are asking banks and other financial institutions to look into the individual data that they provide to the DWP. That is absolutely not the policy intent. Let me again remind the Committee that information shared by financial institutions is done so without suspicion or presumption of any wrongdoing on the part of the claimant. This type of data-sharing is not new to government. The Government already have similar powers to request data from financial institutions or third parties. Noble Lords will be aware, I am sure, that HMRC has the power to obtain data at scale from banks on interest-bearing accounts to support its work in gathering up taxes from all of us. For financial institutions, the duty of care owed to their customers includes obligations on a range of matters, including treating their customers fairly, taking reasonable steps to protect their customers against fraud and scams and providing fair-value services. There is nothing within the eligibility verification measure that would affect or impede these duties from being fulfilled. This amendment would also have a practical impact: it would put greater burdens on financial institutions. The EVM is simply a data-requiring power; it does not ask financial institutions to make any assessments about the data shared. Asking them to do that would fundamentally change the basis of the policy and increase the burdens on them. I have already said that we have been working closely with the finance industry, and I can assure the Committee that we will carry on doing so. I speak finally to Amendment 89C, which seeks to remove the risk that information that arises only as a result of complying with an EVN could by itself cause a bank to have to take specific reporting action against the account holder under the Proceeds of Crime Act 2002. I am grateful to the noble Lord, Lord Vaux, for raising this, and I hope to persuade him that the current provision already addresses this issue. As I have said, the EVM is a data-requiring measure; it is not decision-making power. Information is shared by financial institutions without suspicion or presumption of any wrongdoing on the part of the claimant or account holder. EVM information will be used by the DWP to support our normal processes to help verify a claimant’s eligibility for the benefit that they are receiving. However, to give certainty on this point, we have already created an exemption in Schedule 3 that amends the Proceeds of Crime Act 2002 to make it clear that failure to disclose offences will not be committed if the information that the individual or institution has is only as a result of an EVN. To be clear: if the only reason that the institution has the information is as a result of an EVN, they will not be guilty of a failure to disclose offence under POCA. We have reflected this point in the EVM code of practice. This recognises that, while EVNs are not intended to indicate any wrongdoing, the DWP cannot legislate categorically for whether a person knows that there is other information a financial institution may be aware of. We are not in a position to dictate to someone else whether they must or must not know or suspect something. This amendment seeks to prevent a person from knowing or suspecting that an offence is being committed if the information that leads them to that conclusion has arisen solely as a result of EVM. In other words, it seeks to legislate for a person’s state of mind—whether they know or suspect something—which we do not think is the way to do it. Our provision maintains the focus on the information available and aligns with the existing POCA exemption for information obtained, for example, as a result of carrying out specific immigration checks. I always try to explain things in language that I would understand. My understanding is that, as currently drafted, the clause says that you cannot be guilty of a specific offence if you do not report somebody under SARS where the information comes only from an EVN. This amendment would fully exclude someone’s ability to suspect someone who may be acting suspiciously, and that cannot be possible. I hope that that makes sense to the noble Lord, Lord Vaux. He may want to reflect on it and come back to me, but that is the reason why we think that this is not the way forward and why what have done is the right way. I therefore believe that the current exemption, as drafted, is sufficient and aligns with the DWP’s intent that data returned by financial institutions does not in itself suggest any suspicion of fraud. I will address some of the other comments made, starting with those of the noble Baroness, Lady Fox. I accept that there is a question about what is appropriate out there, but banks already have to do a range of things, including, as I said, HMRC having to report on interest-bearing accounts. We believe that the burdens are proportionate. After the set-up costs, we will see the details to be worked through with them, but once the systems are set up, we do not believe that this will be an extensive burden. Therefore, we hope that that will not be too much of a problem.

18:00:00

The noble Lord, Lord Vaux, asked about the FCA’s view on endorsing the code of practice. In its regulatory role, the FCA will consider all relevant industry and government guidance, including the DWP’s code of practice. We are working closely with the FCA, alongside the finance industry. It is not their role to endorse any government guidance, but we are working with them to try to make sure that it meets the needs of everybody.

We previously discussed debanking, and I do not want to go back over it in any detail. However, to be clear, it is crucial to all this that there is no suggestion of wrongdoing in the information passed across, and that will be made clear in the code of practice. We are alive to the concerns expressed about debanking, and we are determined to work with the industry and the FCA to make sure that no such concerns have any unintended consequences. Our expectation is that, as this evolves, the levels of burden and the systems there are such that this will not be a significant problem, but we are not complacent and we will keep an eye on it.

I hope that that has answered noble Lords’ questions, and that the noble Lord, Lord Vaux, will feel able to withdraw his amendment.

My Lords, I thank all noble Lords who have taken part in this debate and for their support for my amendments. We tabled these cost amendments primarily because we do not know what the costs are but we know that things will evolve in the future, and therefore it seems sensible that the independent reviewer should at the very least have a look at that. The Minister used the word “could”, but I would still like that to be “should”. We may well come back to that point at a later date. The Minister mentioned that, when we are sending an EVN in, we are not requiring the banks to look into the data that is being provided to the DWP. That is naive. I do not think that any bank will ever just trawl through, pull a load of data out and send it up without checking it, because there are liabilities here to the banks. If they send a load of stuff up that is incorrect and people suffer as a result, guess who will end up getting it in the neck? It will be the bank that provided the incorrect data. It comes back to the debate we had earlier on the amendment in the name of the noble Lord, Lord Sikka, about who is liable. That is slightly naive; there are genuine, real costs here. The banks will be required to review, check and make sure that what they are providing does not cause them problems with their customers, hence the questions on breach of duty of care. With respect to Amendment 89C—the UK Finance amendment, if we want to call it that—the Minister said that she would try to persuade me. I need to look at what she said more closely to see whether I have been persuaded. However, to be brutally honest, it is not me she needs to persuade—it is UK Finance. I urge her to have further discussions with UK Finance as soon as possible on this matter, because it seems that it is still exercising financial institutions and the industry. There is a lot in the impact assessment to say that they should not have a problem with this, and the Minister has given an explanation as to why she does not think they should, but they are still worried about it, so the department and the Minister still have work to do to make sure that UK Finance is comfortable. If it is uncomfortable, that is not a good way to start this relationship. The Minister said that the job of the FCA was not to endorse government guidance, and I agree, but that is not what I was asking. The FCA should provide guidance to the industry that says, “If you provide this information, it does or does not have this effect”. It is for the FCA to give guidance in that respect, rather than endorsing what government guidance says. It ought to be proactive. To be honest, it should be involved in this process to make sure that it is happy that this does not cause a problem to the industry, and give guidance to the industry accordingly. Again, I hope that that discussion is going on. I touch, finally, on the debanking issue, because it has been raised. It is a bit of a misnomer. The bigger concern to me is not that people’s bank accounts will be withdrawn—that is unlikely. More likely is that banks will become less willing to provide future bank accounts. It is not active debanking, but a slow erosion of willingness to provide services to particular groups of people. We have seen for ourselves as PEPs that banks do not like to provide us services as a result of the PEP rules. It will not be any different here. If we make it more difficult and expensive to provide accounts, it will slowly erode over time. It is not debanking in the sense of the closing down of Nigel Farage’s bank account approach, but more the erosion that I worry about. Having said all that, I think that we will come back to one or two of these issues at the next stage. I beg leave to withdraw the amendment.

Amendment 81 withdrawn.

Amendment 82

Moved by

82: Schedule 3, page 79, line 22, at end insert— “(4) The Secretary of State must publish the eligibility indicators.”Member’s explanatory statement This amendment requires the Secretary of State to make public the eligibility indicators against which the banks are required to check their customers’ accounts.

My Lords, my Amendments 82 and 88 attempt to bring much-needed transparency and clarity to how and why banks are being asked to check their customers’ bank accounts via EVMs. I also support Amendment 89ZA by the noble Lord, Lord Vaux. Amendment 82 would require the Secretary of State to make eligibility indicators publicly available. As noble Lords will have gathered by now, I am opposed to eligibility verification notices in general and in principle. However, if they are to remain in the legislation, we need to maximise the transparency around them to guard against overreach. Amendment would 88 requires codes of practice to “to include scrutiny provisions about the algorithms used by banks and the effectiveness of the eligibility verification measure” in this clause. At present, there is insufficient oversight in the Bill. We know that algorithms are central to the Bill. That is in line with the Government’s commitment to turbocharge data analytics and AI into public services in general and fraud risk detection in particular. Under this Bill, thousands of decisions regarding the collection and review of the private financial information of people receiving benefits will be—de facto at least—automated. That is a high-risk way to facilitate making decisions; especially those of a sensitive nature. Yet there is no other way for banks, building societies and so on to conduct the benefits eligibility checks that the Bill compels them to do without an algorithmic system—we have already touched on that—but the Bill does not include the specific eligibility search criteria of the algorithm involved. These amendments seek to address this lack of oversight. The Explanatory Notes offer examples of search criteria, such as capital holdings or the legal limits of stays abroad, but there are no provisions to limit the criteria or provide transparency on them. That lack of transparency makes me question whether the Government are using the most appropriate mechanisms for their ends here, given the complexity of benefits eligibility per se, individuals varied circumstances and the sheer scale of the population’s financial accounts, joint accounts and so on. It is unclear, and certainly no evidence has yet been provided that I am convinced by, why the Government think that banks are better placed than the DWP to conduct these complex assessments, especially when it involves outsourcing unconsented automated surveillance to third parties such as banks. These are all things that we have already discussed, so what I am specifically looking at here are the difficulties in relation to what we are asking banks to do. There is no information in the Bill specifying who is responsible for supplying the algorithms required for this surveillance. Can the Minister clarify whether the DWP will provide third-party organisations such as banks with its existing search methodology? Will third parties be responsible for developing and deploying their own? I can understand that this might be being worked on. I have gathered from some of the things that the Minister has already mentioned that these technical issues might still be being resolved. However, it is not clear in the Bill who or what will decide on the algorithms, and there will be no accountability in relation to what we ask those algorithms to do. In both the cases that I have given, we need to be able to probe how the powers will be put into practice. Can the Minister tell us how much testing has been done on the systems the banks will use? If it has not been done so far, when will we have it? I do not understand why the Bill does not have provisions for quality assurance checks or a periodic review of these new automated systems. Without such quality checks, it seems inevitable that inaccurate information will be flagged and mistakes will occur, at great human cost. We heard similar concerns from the noble Lord, Lord Sikka, today. The noble Lord, Lord Vaux, referenced the Netherlands’ child tax credit scandal, which led to, for example, more than a thousand children being taken into foster care. That was because of algorithmic problems and a particular use of algorithms, with precisely the same ends of tackling fraud. Surely the Minister can see that the constant scanning of millions of accounts in relation to often complex queries and claims will make false positive matches for fraud highly likely. I was trying to listen to what the Minister said earlier about how no decisions will be taken. Maybe we can clarify all that finally here, in terms of my concerns. I am worried that, as a result, a significant number of false positives will lead to account holders’ personal details being wrongly flagged up to the Government for further investigation, which in turn may incur further privacy intrusion—let alone penalties. There have been problematic previous schemes that we should learn the lessons from. Take for example financial institutions’ suspicious activity reports, or SARs, which are used to combat money laundering—a laudable aim. But these SARs already have problems. A 2017 study of a sample of the largest banks found that, of approximately 16 million reviewed, 640,000 SARs were filed, yet only 4% of them resulted in law enforcement involvement. Then there is a DWP pilot: the housing benefit accuracy award initiative, which was used to produce a risk score for housing benefit claimants that was then used as the basis for review of housing benefits by local councils. The algorithm flagged approximately 400,000 cases a year, identifying most of them as high-risk cases. As a consequence, councils were required to conduct file case reviews of those flagged, which involved invasive checks of bank statements, payslips, rent, et cetera. I know someone who was a victim of this and can testify to how awful that experience was. Benefits were suspended where claimants were not compliant or able to produce evidence to support their claim. But data obtained from the DWP by Big Brother Watch, which has been absolutely heroic in alerting the public to the problems associated with the Bill, showed that only one in three people on housing benefits subject to review were in fact being paid the wrong amount. That meant that 200,000 people were placed under suspicion at the hands of an algorithm, despite having done nothing wrong. The algorithm risks are amplified tenfold in the Bill—we should be taking this much more seriously in terms of scrutiny. On recording how people’s data will be assessed and not relying solely on algorithms, we are given assurances in the Explanatory Notes—the Minister has been clear about this—that “a human will always be involved in any further inquiries and any decision taken afterwards that might affect eligibility or benefit awards”. But these assurances are not an adequate safeguard alone, as we have already touched on in earlier groups. On one hand, there is a tendency for human deference to algorithmic outputs—we have all heard the phrase, “The data does not lie”—and I fear that that is what will happen. On the other hand, courts are currently required to presume that computer systems operate correctly, placing the onus upon defendants to provide evidence that the systems they are implicated by are flawed. There is also the small matter of staffing and resources. With many thousands of accounts being flagged to the DWP under the proposed system, it is not clear what is feasible in terms of the scale and nature of human involvement, or whether it will be genuinely meaningful. The Minister only moments ago assured us that members of the DWP would always be involved. Maybe this is the kind of job creation scheme that the Government are involved in, but it seems that that is an awful lot of civil servants who will be required if fraud is happening everywhere, and so on and so forth. So I worry. Indeed, the impact assessment on the Bill acknowledges that the DWP may have to slow the volume of data requests to manage the potential volumes, because there will be so many. If a human decision-maker does not have enough time to properly review a decision—which is my fear—as may well be the case with the deluge of data that DWP will expect to receive from banks, the human input cannot be properly regarded as meaningful.

18:15:00

Helena Wood, director of CIFAS, who has had a lot of outings in this Committee, it has to be said—she will be famous by now—highlighted that

“there is a national shortage of financial investigators across the country”.—[Official Report, Commons, Public Authorities (Fraud, Error and Recovery) Bill Committee, 25/2/25; col. 19.]

But if the individuals tasked with interpreting the information received from the banks are not this kind of financial investigator and do not have sufficient training, that is likely to increase the likelihood of errors.

I am also keen to probe with the Minister how the mechanism for semi-automated decisions fits in with the current data protection framework. As I understand it, GDPR protections no longer apply if algorithms are seen to be assisting the human decision-making process. The NGO Justice points out that this means there is no right to be notified, let alone to complain.

Finally, the lack of accountability in the Bill means that there is a scope for eligibility criteria changing at any time. Surely we need transparency to understand on what basis this eligibility is determined, and, as I say, there needs to be ever-greater scrutiny on exactly who is setting the algorithms and what is determining what those algorithms are checking for. I beg to move.

My Lords, I have Amendment 89ZA in this group—I still do not understand the numbering system that the Public Bill Office uses. Before I move on to that, I want to make a couple of comments on the two amendments that the noble Baroness, Lady Fox, just raised. I have to say that I am a bit cautious about Amendment 82, because if you tell everybody what the eligibility indications are, it becomes very easy to avoid them. There is also a massive, gaping loophole in the Bill, which is that it covers only one bank at a time. I do not know—I would be quite interested to understand from the noble Baroness—whether, having received data from individual banks, the DWP will be amalgamating and therefore will be able to track the sort of concept that, if you have £8,000 in this bank account and £8,000 in that bank account, that puts you up to the £16,000 that would trigger the eligibility indicator. But there is a gaping hole there and, if you publish everything you are looking for, it makes it so much easier to get around it. So I am a little cautious about that one. I am much more sympathetic to at least the spirit behind Amendment 88. We had a long debate the other day around the issues of machine learning, bias, stereotyping and generalisation creeping into decision-making processes, and there is more to do in this Bill around the safeguards around the use of automated decision-making. I know that the noble Baroness will talk about the code of practice, but that is very specific. It requires a human element only where the decision could impact on benefit eligibility. So it does not include stepping into the next phase of an intrusive investigation using the powers in Clause 72, for example. So, whether or not Amendment 88 is the right way to go, there is definitely more that we need to think about in terms of safeguards around the use of algorithmic or machine learning—or AI or whatever—trawling through this, and a number of amendments later cover the same ground a bit. Amendment 89ZA is very simple. It simply says that applicants for benefits should be informed at the time of their application that information relating to their bank accounts may be provided to the Secretary of State, and that people who are already in receipt of benefits are informed within three months of the commencement of the Bill. The information-gathering powers that this Bill creates are a significant step, and are carried out without any suspicion of fraud, so it must be appropriate and fair that people are informed that their bank account information may be provided to the department. I cannot actually see any reason for not accepting this one; it would improve transparency and also make those who are considering fraud think twice if they are being told that their bank account details could be accessed. In fact, I mean “provided”, because technically they are not accessed but provided. As a general principle, as set out in our data protection laws, people have the right to know where their data is going and how it is being used, and I really cannot see any reason why this situation should be any different.

My Lords, I wish to speak broadly in support of Amendment 82 in the name of the noble Baroness, Lady Fox of Buckley. This amendment goes to the heart of something that we should all be able to agree on: that the public have a right to know the rules by which they may be judged and that those tasked with making assessments, such as banks, should not be left to act on unclear or unpublished guidance. This amendment would require the Secretary of State to publish the eligibility indicators that banks are expected to use when checking their customers’ accounts under the new regime. In plain terms, it asks the Government to set out clearly, before these provisions are enforced, what criteria are being used to determine eligibility. This chimes with the opening remarks made by the noble Baroness, Lady Fox. It is difficult to see how a system of such potential consequence to individuals and to financial institutions alike can be implemented fairly, if the basis on which it operates is not published and understood in advance. We have heard throughout the debates on this Bill about the need to balance effective fraud prevention with the protection of individual rights, proper due process, and clarity for institutions involved. Amendment 82 speaks directly to that balance. If banks are to play a front-line role in identifying accounts or individuals under suspicion, they must be given unambiguous and publicly available guidance to avoid the risk of overreach, error or unjustified intrusion. We cannot have a system where accounts are flagged or actions taken on the basis of indicators that are withheld from public view. That would be both untransparent and unjust. We should not legislate for a regime that affects people’s access to their financial resources or that places duties on banks to act in quasi-investigative ways, without knowing exactly how those judgments are to be made. This is not a wrecking amendment—it does not oppose the broader framework of the Bill. It merely insists that, before new powers are exercised, the public and partners involved in delivery know the criteria. That is not too much to ask. In fact, it is the very least we should expect in a system rooted in fairness and good governance. Again, this echoes the remarks made by the noble Baroness, Lady Fox. To pick up on remarks made by the noble Lord, Lord Vaux, there is a balance to be struck between not giving too much away in the interest of transparency so that fraudsters are given fuel to manipulate the system. Can the Minister say where that balance should be struck, as balance there must be? Similarly, I speak in support of Amendment 88, also in the name of the noble Baroness, Lady Fox. I believe it represents a sensible and timely addition to the schedule. As we have discussed throughout the passage of this Bill, the use of data and automated decision-making, particularly through algorithms, is becoming an increasingly central feature of fraud detection and eligibility verification. That in itself is not a problem; it is a reflection of the complexity and scale of modern fraud threats. But it also means that we need clear and consistent standards for how these tools are developed, deployed and scrutinised. The cautionary tale from the Netherlands, highlighted by the noble Baroness, Lady Fox, is very much noted. I am sure that the Committee has noted it. This amendment goes to the heart of the need for standards. By requiring the code of practice to include mechanisms for the scrutiny of algorithms used by those in receipt of eligibility verification notices, typically banks, it creates a shared framework for oversight. This is particularly important when algorithms are applied across several discrete institutions, each of which may have slightly different internal systems, standards or even risk profiles. Without a common baseline, we risk inconsistency, a lack of accountability and potential harm to individuals through opaque or poorly calibrated processes. Moreover, new sub-paragraph (g) proposed in this amendment rightly extends that principle of scrutiny to the powers themselves, and we must also be willing to assess whether they are effective and 100% secure in their specified and sole objective. We must also be willing to assess whether they are proportionate to the outcomes that they set out to deliver. In short, this is a practical amendment rooted in the principles of clarity, consistency and continuous improvement—perhaps part of the test and learn. It does not obstruct the Government’s goals; it helps to make them more credible and accountable, we believe. I express my support for Amendment 89ZA in the name of the noble Lord, Lord Vaux of Harrowden, which I believe strikes a careful and important balance between transparency, accountability and the effective operation of the powers contained in this schedule. At its core, this amendment does something quite simple but significant: it ensures that individuals applying for or receiving relevant benefits are clearly informed—that is, in writing—that information relating to their bank accounts may, under certain circumstances, be shared with the Secretary of State. This is a matter of basic transparency and fairness. I note that this is being proposed at the time the benefit is applied for, and I might describe it—perhaps putting words into the mouth of the noble Lord, Lord Vaux—as part of an induction process when one applies for any benefit in scope. In other words, fair warning is given that a benefit that comes from the taxpayers’ pocket has responsibilities attached to it. Perhaps this should also be placed in the code of practice, and I ask that question of the Minister. If we are to entrust public authorities with powers of this magnitude—which allow for sensitive financial data to be accessed without the individual’s active consent—surely it is right that we also commit to informing individuals of the possibility that those powers might be used. This is not about compromising investigations or alerting fraudsters in advance; it is about ensuring that people understand the system that they are entering and can act responsibly and lawfully within it. Providing this information up front reinforces personal responsibility. As I said earlier, it says clearly to the individual, “If you are claiming public money, there is a legitimate expectation that your eligibility may be subject to verification”. It allows claimants to know the rules of engagement in advance, and it ensures that they cannot claim later to have been caught unawares. At the same time, I recognise, and I think the noble Lord does as well—I hope he does—that this amendment must not inadvertently encourage more sophisticated methods of deception. It is a fine line to walk, and this chimes with my earlier question to the Minister. We must not turn transparency into a user manual for fraud, but I believe that this amendment is framed carefully enough to avoid that risk. It does not disclose when, how or under what criteria information will be requested—only that it may be. That is, I believe, a proportionate step. Ultimately, this amendment supports the legitimacy of the wider regime, and I therefore support it and hope that the Government will see it as a constructive addition to the schedule.

My Lords, I am grateful to all the noble Lords for their comments. Amendment 82, tabled by the noble Baroness, Lady Fox, would require the Secretary of State to make public the eligibility indicators, as set out in EVNs. Although I understand the point that she is making, I am firmly of the view that making public the eligibility indicators will be counterproductive, for reasons alluded to by the noble Lord, Lord Vaux. It is set out very clearly in the Bill that all eligibility indicators have to link to the eligibility criteria for those benefits that are within the scope of the EVN measure: universal credit, pension credit and ESA. Those eligibility criteria are widely available for anyone to see, including on the GOV.UK website. The DWP does its utmost to ensure that customers who claim benefits are clear on the relevant criteria, and they are reminded many times throughout their claim of the need to report changes of circumstances against these key criteria. This is important because there are people out there who are not fraudsters but who make genuine errors, and we do all we can to help people understand the eligibility rules and ensure that changes of circumstances are reported. As the noble Viscount alluded to, there is a fine line between transparency and making things easier for fraudsters, but I do not want to publish the specific eligibility indicators that we will set out in an EVN, because to do so would actually help those who want to commit fraud to circumvent the measure. We know from all kinds of sources that there are people out there who study every single rule and piece of information we put out to try to work out how to get around them and get money to which they are not entitled. The Committee would obviously want us to do everything we can to avoid that. So, to protect the effectiveness of this measure and to help stop fraud, we do not think it appropriate that we publish the eligibility indicators. Turning to Amendment 88, also from the noble Baroness, Lady Fox—

18:30:00

Before the Minister moves on to Amendment 88, I asked about the cross-comparison with datasets from different banks; this goes to the point that the Minister has just been making about it being easy to commit fraud. To what extent will data from bank A be amalgamated with data from bank B to discover whether, when combined, there is an eligibility indicator flag?

An EVN can be used only in relation to the bank account into which the benefit is paid. Therefore, that would be a specific bank account in a specific bank. Of course, the DWP’s authorised investigators have and use a range of sources where they have a suspicion of fraud, and there is a range of mechanisms out there to look at what other information can be gathered in order to make that judgment. I can see that I have not hit on what the noble Lord was asking for.

In the situation where there would be a suspicion of fraud, you have bank A—actually, I suppose it would not have provided the information, would it?

Exactly.

I have just answered my own question.

I apologise for jumping up and down. This is the confusion I have in relation to this area: if you are a fraudster and you are watching this Committee very carefully, as the Minister indicated they are doing—I am sympathetic to the idea that I am perhaps being naive in publishing, “Here you are, fraudsters, this is what you should do”—it seems to me that what you would do is set up multiple bank accounts. In fact, I think it was the Minister for Transformation, Andrew Western MP, who conceded “that we will not have full sight of somebody’s accounts if they bank with more than one institution”.—[Official Report, Commons, Public Authorities (Fraud, Error and Recovery) Bill Committee, 6/3/25; col. 237.] So it seems to me that the fraudsters are over there playing the system. This is a Bill that gives enormous powers, about which I worry. It seems that the eligibility criteria should be known in order for them to be accountable. I do not want to be naive, but the people who actually need the eligibility criteria are those people who might, by error, breach the eligibility criteria, but also, democracy requires it because we need to know how to hold this legislation to account. The fraudsters—the people who are deliberately going out of their way to rip off the welfare system—already know how to play this, if that makes any sense. Even as I was tabling the amendment, I was aware of the fact that I am not saying, “Let’s give the game away completely”; however, we cannot just say, “We can’t tell you anything in case the fraudsters find out”, when there are real loopholes here that the fraudsters are going to exploit anyway.

Related to that, as far as I understand it, some benefits can be paid into foreign bank accounts but they are totally beyond the scope of the Bill, so, presumably, if there is fraud there, it will never really be tackled. Secondly, is it permissible for a UK-resident benefit recipient to request that the benefit be paid into a bank account in the Cayman Islands, the Bahamas, Cyprus or somewhere else?

Just to be clear, this measure is attacking both fraud and error. It looks at overpayments, whatever the source. It is simply one tool among many that is available to the DWP and which will help produce a source of information, which will help to identify incorrect overpayments. Having got that information, the DWP will use the full range of powers and the information available to it. If any fraudsters are sitting down on a quiet Monday afternoon and watching this Committee, they should be warned: the DWP has lots of sources of information; it will investigate them; and it successfully prosecutes many people for fraud. The DWP will use this and other powers to pursue what is there. However, this measure alone has been scored by the OBR to save up to £940 million over the next five years. No single measure will be foolproof alone; it will play its part alongside a range of measures and processes to help root out fraud. I will have to write to my noble friend Lord Sikka on the Cayman Islands. I do not have them at the back of my mind at the moment, I am afraid, but I will let him know if there is an issue over there. I say to the noble Baroness, Lady Fox, that I fully accept that there is a line between giving all details in public and tackling fraud. We have given out a lot of information and a lot of protections here, and we have found ways of making sure that there is oversight. One reason for having oversight is that there are things that we will never be able to put out in public; it is important that somebody has scrutiny and can report to Parliament, independent of the department, on how these powers are being used. We would hope that that picks up the remaining areas of concern. I turn to Amendment 88, also in the name of the noble Baroness, Lady Fox. I will address in turn the two points that it raises. The first is the requirement for the code of practice to include information about the ways in which scrutiny can be applied to the methods that a financial institution may use to identify relevant accounts, for the purposes of the eligibility verification measure. This is not a matter for a code of practice. The criteria that financial institutions must use to identify relevant accounts are described in paragraph 1(2)(b) of new Schedule 3B to the Social Security Administration Act 1992. Accounts must simply meet two tests in order for information to be shared by the financial institution with the DWP: first, the account must receive a relevant benefit payment or be linked to that account; and, secondly, the account in question must meet the criteria that the DWP sets out in the eligibility verification notice. Financial institutions operate in many ways. It must be for each individual financial institution to determine how it identifies relevant accounts. The key point here is that the EVM asks banks to return specified data only where those two tests have been met. It is a data-requiring power; we are not asking banks to do anything more than that. Again, I remind the Committee that it is the DWP that will review all the information received and DWP staff who will make any decisions about entitlement where potential fraud or error is identified. No decisions will be taken using EVM data alone; decisions about entitlement will be made only once the DWP has made further inquiries. On that point, the Bill does not introduce any new use of automated decision-making. The DWP will examine data received from banks under the new power, alongside other data received, to determine whether there has been an incorrect overpayment. As is set out in our personal information charter, which is publicly available, the DWP uses automated processing in some decision-making to help us deliver efficient services. The DWP will not make any decision that has significant effect based solely on automated processing unless the law allows this, and claimants will be informed if we make any such decision. I turn to the second issue in this amendment. It would require the code of practice to contain information about measures that would enable scrutiny of the effectiveness of the EVM. This is, again, an important issue but not one for the code of practice. However, I completely agree with the noble Baroness, Lady Fox, that we must assess how effective the EVM is; that is why, under Clause 75, the independent overseer of the measure must consider the extent to which the exercise of the power has been effective in helping to identify incorrect payments of relevant benefits. Finally, I turn to Amendment 89ZA, which raises the issue of informing claimants that the EVM may be used to require the sharing of information about their relevant accounts with the DWP. Let me take a moment to update the Committee on the ways in which the DWP will inform claimants and relevant account holders about the measure; I hope that this will reassure the noble Lord, Lord Vaux. The DWP has a personal information charter that sets out how it uses and stores personal information. It is publicly available, and claimants are explicitly directed to it at all times when the DWP requests their personal data. We will update the DWP personal information charter to make it clear that the EVM may be used to require the sharing of their personal information; that commitment is made clear in the draft code of practice, which noble Lords have seen. This amendment suggests that we should inform claimants either at the start of their claim or within three months of the EVM becoming operational. Our approach of updating the personal information charter means that customers are much more regularly informed about the EVM; this is because claimants are regularly directed to the document throughout their claim. For the benefit of the Committee, I can confirm that claimants are explicitly directed to it in all DWP claim forms; in change of circumstance and uprating letters; in recorded telephone messages; in DWP agents’ telephony scripts; on digital online services; and in other products where the DWP collects personal data. As noble Lords will know, the draft code of practice, which will be publicly consulted on, makes clear that all those who hold a personal account into which a relevant benefit is paid should be aware that information about them and their relevant accounts may be shared by a financial institution with the DWP if the eligibility indicators specified in an EVN are met.

There is a big difference between pointing someone towards a data protection statement—let us be brutally honest: how many of us have ever read one?—and telling people that their bank account details can be provided to the DWP as a result of having this particular benefit. Nobody has ever read a data protection statement, and I do not suppose that they ever will.

To be clear, their bank details cannot be accessed by the DWP under this measure; their bank details can be accessed by the DWP under its other powers. I know that the noble Lord knows this but I want it to be clear for the record because there is a lot of misunderstanding out there; I hope that he will let me finish my sentence. The DWP cannot access people’s bank accounts using this measure or look at transaction data. It does not see what they spend their money on or any of that. It can simply ask banks to let it know whether a particular criterion is met. I take the noble Lord’s point; we think that this is adequate, but he does not, so I am afraid that we may just have to agree to disagree on this one. Regarding the noble Lord’s other point, on how much data and how many different banks will be involved—and when—we had two choices in doing this: test and learn, which is the subject of much comment; or the alternative, which is a big bang involving all the banks going out together at once, getting their data, bringing it in and going through it. We decided not to do that, as we thought that it would be irresponsible. Test and learn means that, for the first 12 months of the rollout, we will initially work closely with a smaller number of banks and financial institutions, identifying any possible areas for concern, allowing them to be addressed and sorting out teething problems. The measure will then gradually be rolled out with all the relevant financial institutions. The impact assessment says that, in the first year—2026-27—we expect a rollout rate of around 2%, going up to 25% in 2027-28. The idea is that you start very small, make sure that it works, iron out the problems and then grow it as it goes on. I think it was the noble Baroness, Lady Fox, who mentioned that the data could be slowed down. We do not want to bring in data that we cannot process; we want to bring in data that is appropriate. We will bring it in and manage it, as we are able and resourced to do. I hope that that reassures noble Lords; I encourage the noble Baroness, Lady Fox, to withdraw her amendment.

I want a bit of clarity on test and learn. We have had two exercises, which have reached proof of concept. I am confused now because the Minister is, I think, indicating that there are test and learn exercises still to begin. How many are ongoing and how many are due to begin?

Clearly, I am expressing this really badly, because I have said it about 17 times and still have not explained it clearly. When the noble Viscount was a Minister—perhaps it was his predecessor—under the previous Government, they were working with banks to find out whether the proof of concept worked. The answer is that, yes, it does. Test and learn is about saying, “We’re now going to build this up and operate it at scale. How do we do it? What does it look like?” Bit by bit, we will work with a small number of banks; try it out; make sure that the processes, the data pushes and so on work properly; and work with a small number of people who also understand how the sector works as a whole. Then, when it is working, we will roll it out to a wider number. I am sorry if I have not been explaining that clearly, but that is the difference. The proof of concept asks: can it be made to work? The answer is yes. The test and learn asks: what is the best way to set this up so that the systems will work and so that we get the right information at the right time—a time when we are able to work it properly? I hope that that has helped.

I give many thanks to noble Lords for their contributions to this debate. In some ways, it has clarified quite a lot for me; in some ways, I am completely confused. I will go off and read the debate, reflect on it then work out how to bring this issue forward on Report. I thank the noble Viscount, Lord Younger of Leckie, for his supportive remarks in general and the insights that he brought; they are much appreciated. I thank the noble Lord, Lord Vaux, for drawing attention to my dilemmas around transparency. I want there to be more transparency but, as I said, I do not want to be associated with being an idiot—well, that ship might have sailed—in relation to giving the game away. Transparency is important in politics and in terms of trust in a new Bill that will bring about a huge change in the way the state is viewed, in terms of how it relates to citizens on benefits and so on. One of the reasons for this confusion and difficulty is that this Bill insists on treating fraud and error indistinguishably. That is one of the dangers with it. Fraud is one thing, but people who are inadvertently overpaid when errors are made are treated with the same piece of legislation. That is why it was helpful of the noble Lord, Lord Sikka, to remind us earlier that there are people who will play the system—that is one thing—while there are other people who could inadvertently be treated like criminals.

18:45:00

I do not want to worry about the DWP’s welfare, but I am slightly concerned that there will be a deluge of data and I cannot see how that will be helped. I cannot see how the human intervention will happen. I noticed that Minister Andrew Western stated:

“I hope that by embracing new technology, and through data sharing and other mechanisms, we can gradually reduce”.—[Official Report, Commons, Public Authorities (Fraud, Error and Recovery) Bill Committee, 25/2/25; col. 80.]

the number of fraud staff in the DWP over time. I thought, “Don’t get rid of the staff and introduce AI to deal with a huge amount of data created by AI, because, wait, that actually minimises human involvement”. I am still concerned about that.

Lastly, the real point here is that it is always presented so benignly that all that is being asked of the banks is that they do two things: use this algorithm to work out who is eligible for these particular benefits and, the second test mentioned by the Minister, see whether they fit in with the eligibility criteria for an EVM. That requires judgment—it might not be human judgment but algorithmic judgment—but the question is: what are those criteria? What will the algorithm be asked to search for?

The reason why that matters is because the banks are being told that if, for example, they make a mistake and give too much data to the DWP, they will be punished for it. So, they will have to think about exactly what data they provide. Algorithms, as we should know by now, are not neutral technical matters; they are trained, and there are biases in them. It is important that the Bill, which asks the banks to use algorithms to make decisions ultimately about what data they pass on to the DWP, is clear on the algorithmic openness and transparency. That is all the amendment is trying to do. I beg leave to withdraw it.

Amendment 82 withdrawn.

Amendment 83 not moved.

Amendment 84

Moved by

84: Schedule 3, page 80, line 26, at end insert— “Reasonable grounds for suspicion 5A The existence of an eligibility indicator alone does not constitute reasonable grounds for suspicion for the purpose of section 109BZB (1)(a) of the Social Security Administration Act 1992.”Member's explanatory statement This amendment would ensure that an authorised person would need more evidence than the existence of an eligibility indicator alone before exercising more intrusive investigations.

My Lords, Amendments 84 and 85 attempt to strengthen important safeguards around the use of information that is gained through an EVM. The Minister has quite rightly said that the scope of the information the banks can provide in response to an EVM is tightly limited. She is right, and that is a very significant improvement to the previous incarnation of the Bill. As currently framed, the only information that can be provided to the Secretary of State by the bank is specified details about the account, such as sort code and account number; specified details about the account holder, such as name and date of birth; and specified details about how the account meets the eligibility indicators. It is also clear in the Bill that transaction data or special category data may not be provided. So far, so good and, as I said, it is a great improvement. But there is another important potential loophole here. Clause 72 gives the Secretary of State the power to require much more intrusive information if the Secretary of State “has reasonable grounds to suspect that a person has committed, is committing or intends to commit a DWP offence”. So, if the existence of an eligibility indicator alone would meet the threshold of “reasonable grounds to suspect”, then the tightly drawn restrictions on the data that banks can provide under an EVM become somewhat meaningless. It will just move on to the next phase almost automatically. We have had a lot of discussion around automation, and I agree with the noble Baroness, Lady Fox, that given the volumes of data that will be provided over time, it seems extremely likely that it will—in fact, it is extremely unlikely that it will not—be processed automatically by the DWP, which will choose which ones to investigate more deeply. We have heard about the human elements and will come on to those in the second amendment in this group. but the code of practice does not cover the transfer from EVM to Clause 72’s more intrusive data searching. Nothing in the code of practice or the Bill would prevent this eligibility indicator being used as reasonable grounds to suspect and, therefore, the Clause 72 provision being triggered with no other safeguard. There may be many reasons why the existence of an eligibility indicator might be entirely innocent. The impact assessment and the noble Baroness have given the example of authorised disregards and genuine error—and genuine error on the part of both the individual and the department. So it seems that, before exercising the robust and intrusive powers under Clause 72, much more should be required, or at least more should be required, than just the existence of an eligibility indicator alone, and I stress “alone”. That is what Amendment 84 tries to achieve, and I think this is probably in line with what the noble Baroness intends, so I hope that this or something like it will be acceptable. The second amendment, Amendment 85, deals with another critically important safeguard. In response to various concerns raised about the use of algorithms, algorithmic processing, the use of AI and so on, the noble Baroness has stated very clearly that information must be reviewed by a human person before action is taken, and a previous group discussed how bias and stereotyping can creep into automated systems—I will not repeat that. But again, the human element—the human review—does not appear anywhere in the Bill. There is a reference to human decision-making in paragraph 4.31 of the draft code of practice: “No data source is perfect or infallible. That is why in fraud and error, a human will make any final decisions that affect benefit entitlement, and any indications of potential fraud or error will be looked at comprehensively”. But this does not set out any level of seniority or qualification, and it covers only final decisions that affect benefit entitlements and not, for example, decisions to affect the intrusive investigative powers that Amendment 84 is looking at. More importantly, the code of conduct can be changed at will by the department; there is no parliamentary oversight or what have you. As I have said before, I do not doubt the noble Baroness’s intentions in this respect, but the Bill will outlast her tenure and indeed her party’s tenure. Future Governments or Ministers may not have vulnerable people’s interests at heart in the same way that she does. Imagine a future Government applying a DOGE-style approach to this. The requirement for any decision to be taken by a suitably qualified and senior human is such an important safeguard that I believe it must be in the Bill and not left to the whim of any future Government who might wish to simply automate the whole process—and they could do that: they just change the code of conduct. The issue is not about decisions that affect benefit entitlement alone; as I say, appropriate human review should cover also the use of the more intrusive powers under Clause 72, and the code of conduct does not cover that at all. I am very happy to discuss the wording, but the principle of suitably qualified and senior human review before decisions are taken is, for me, one of the key safeguards. I hope the noble Baroness will be able to look sympathetically at this amendment, especially as all it does, I think, is to codify what she has consistently said will be the case. I beg to move.

My Lords, I will be very brief. I very strongly support everything that the noble Lord, Lord Vaux, has said on these two amendments. They are some of the most important amendments that have been debated today because they go to a very fundamental principle. The power in Clause 72, with the new Section 109BZB, is quite significant, and we need to have limits to the exercise of this power in the Bill, both as regards the reasonable grounds—that is Amendment 84—and as regards the human decision-maker. I will not repeat the noble Lord’s reasons because I thought he put his case so compellingly, but I am very much in favour.

My Lords, I am also pleased to welcome Amendments 84 and 85, tabled by the noble Lord, Lord Vaux of Harrowden, which serve to strengthen the safeguards within the Bill. Amendment 84 would ensure that an authorised person must have more than just the existence of an eligibility indicator before embarking on more intrusive investigations. We believe this is a vital protection against overreach, ensuring that individuals are not subjected to unnecessary or disproportionate scrutiny based on limited evidence. Such a safeguard is entirely in keeping with my party’s principles of fairness and proportionality—that word again—and it will help to maintain public confidence in the system by ensuring that investigations are always grounded in robust evidence. Amendment 85, which requires that information received following an eligibility verification notice is reviewed by an appropriately senior person before any changes to benefits or intrusive investigations are commenced, is equally welcome. This amendment introduces an important layer of oversight and accountability, ensuring that decisions with potentially significant consequences for individuals are not taken lightly or without proper consideration. By embedding these checks and balances into the Bill, we would be not only protecting the rights of claimants but upholding the integrity of our counterfraud efforts. I confirm other comments about how important these amendments are, and I hope that we can carry them forward to Report if need be.

My Lords, I rise to speak in support of speak in support of Amendments 84 and 85 in the name of the noble Lord, Lord Vaux of Harrowden. These are thoughtful, proportionate and necessary additions to this schedule, and they speak directly to the themes that we on these Benches, and many across the Committee, have consistently returned to throughout Committee: clarity, fairness and safeguards for the individual in the exercise of significant state powers. Amendment 84 seeks to ensure that the mere presence of an eligibility indicator is not, in and of itself, treated as constituting reasonable grounds for suspicion, as required under new Section 109BZB(l)(a) of the Social Security Administration Act 1992, before certain investigatory powers can be triggered. This is of fundamental importance. The Bill proposes a system whereby data provided by financial institutions, under an EVN, may trigger further investigatory steps. But what is an eligibility indicator? It is, in essence, a flag: a signal generated through algorithmic or rule-based analysis that a particular feature of a person’s financial behaviour may be anomalous or potentially inconsistent with benefit entitlement. As I have said before, we must be absolutely clear: an eligibility indicator is not a finding of fact. It is not, in itself, evidence of wrongdoing. Amendment 84 simply ensures that the existence of a flag must be the beginning of a process and not the end of one; that further evidence or analysis must be applied before escalation; that human judgment must play a role, as has been mentioned today; and that when the state exercises its powers, especially when those powers touch on privacy, dignity or the right to subsistence, it does so on the basis of reasonable grounds. This is a proportionate safeguard. It respects the need to act on suspicious patterns, but it also respects the rights of the individual and the integrity of the system. Amendment 85 builds on this principle by adding an additional layer of oversight—namely, that any action to suspend or amend a person’s benefits or to initiate intrusive investigatory steps must first be reviewed by a person of appropriate seniority and experience, authorised by the Secretary of State. Again, this is not an attempt to frustrate or delay the enforcement regime—it is a recognition that decisions on subsistence-level support must be taken with proper scrutiny by individuals equipped with the training, authority and awareness to make such decisions with the necessary care. We must also remember that these are not abstract powers. They affect real and often vulnerable people, whose entire financial well-being may rest on the outcome of these decisions. A mistaken suspension of benefits, based on an unreviewed flag or misinterpreted data, can mean missed rent, no food on the table or the spiral into debt and instability. Also, it is possible that, if the system did not work as intended, individuals who suffered wrongful financial detriment—or, worse, reputational detriment—could take legal action. If we are to maintain public trust in these powers, it is vital that there is confidence in not only their lawfulness but their soundness. A requirement that an appropriately senior official reviews and signs off on such actions is not a high bar. It is, in many ways, the least that we should expect of a responsible and accountable system. Can the Minister confirm, as she did the other day in respect of the Cabinet Office debates, the exact level of an appropriately senior official? I should add that this chimes with remarks I made in our debate on a previous group about the need to have a so-called four eyes principle of oversight by a human being on decisions made—a fail-safe system for the monitoring of decision-making. The noble Lord, Lord Vaux, outlined the arguments in this respect very well. Together, these amendments would provide what so many across the Committee have called for: safeguards that ensure that the system operates justly as well as efficiently. They would not remove powers or obstruct action. They would embed standards of evidence, scrutiny and accountability into the decision-making process—standards that we would demand in any area of public life where the stakes are this high.

19:00:00

To conclude, this Bill rightly equips the state to recover public money and respond to fraud, but our job in this Committee is to ensure that those powers are not just powerful but proportionate; that they are not only swift but fair; and that those affected by them, especially the most vulnerable, can have confidence that decisions are made with care, with oversight and with due regard to context and consequence. That is what I believe these amendments seek to achieve, so I commend the noble Lord on bringing them forward and urge the Government to consider them very seriously. They would improve the Bill; uphold the principles that we have championed in Committee; and strengthen the legitimacy of the enforcement regime that this legislation clearly seeks to build.

I am grateful to all noble Lords. The noble Viscount just described these amendments as thoughtful and necessary. I think that they are characteristically thoughtful, but I hope now to persuade the noble Lord, Lord Vaux, that they are not in fact necessary. This is a good one, so I offer the noble Lord this. First, to be clear, Amendment 84 would require an authorised person to need more evidence than just that provided through the EVM before carrying out an investigation under new Section 109BZB, which is to be inserted into the Social Security Administration Act 1992 by this Bill. I agree that the fact that an account meets an eligibility indicator set out in an EVN does not on its own constitute reasonable grounds for suspicion and cannot on its own be used as grounds for exercising fraud investigation powers under new Section 109BZB of the Act. The meeting of an eligibility indicator does not mean that a benefit has necessarily being overpaid. As I have made clear before, the EVM information does not come with a tag of suspicion attached. The fact that an account meets an eligibility indicator does not mean that there are any grounds for suspicion of fraud or other offences; it does not even mean that a benefit has necessarily been overpaid. Paragraph 3(1) of the EVM legislation makes it clear that eligibility indicators indicate only that a benefit may have been, or may be, incorrectly paid. Whenever the DWP reviews a claim following the receipt of EVM information, it will initially look into its own systems to cross-reference between the data received via the EVM and the information that the customer has previously provided to the department. The DWP’s existing powers under Section 109 of the Social Security Administration Act 1992 can be used only where there is a reasonable suspicion of fraud, and only DWP-authorised officers will be able to request information under new Section 109BZB. The requirement for reasonable suspicion before exercising powers under new Section 109BZB is set out in that section. This means that, before a case is referred to an authorised officer for a criminal investigation and these information-gathering powers are used, certain criteria must be considered: there must always be a reasonable suspicion of fraud, and all information requested must be necessary and proportionate for the investigation. Amendment 85 would require information received following an EVN to be reviewed by an appropriately senior person before a person’s benefits can be amended or suspended, or before further investigatory powers can be used. Again, I hope to persuade the noble Lord, Lord Vaux, that this is not necessary. First, as I said, the eligibility verification measure is a data-requiring power, not a decision-making power. We have been clear that the limited data shared by financial institutions does not suggest any wrongdoing on its own. Data will be used, if appropriate, by DWP officials to make further inquiry and to ensure that the benefits being received are correct in line with the claimant’s circumstances and the relevant benefit eligibility criteria. Obviously, the noble Lord does not specify what “an appropriately senior person” is. Let me assure him that these DWP officials are already trained to make these decisions, and they do so every day as part of the DWP’s business-as-usual activity. Decisions on claims and applications are made by trained officials on the Secretary of State’s behalf every day. This applies across many of the DWP’s processes with claims and applications; those decision-makers are usually administrative or executive officer grade. When fraud is suspected and DWP wishes to use the power under new Section 109BZB of the Social Security Administration Act 1992, this can be used only by a DWP authorised officer of executive officer grade who has been trained and accredited. Only these authorised officers are able to request information under these powers, and they must always have reasonable grounds to suspect a DWP offence and consider it necessary and proportionate to require the specified information. In all cases, before any decision is made, officials will look at any indications of fraud and error comprehensively. For example, DWP will look within its own systems to check for any inconsistencies between the data received via EVM and the information the customer has provided to DWP. There could, for example, be a disregard in place, which means that a claimant can have more money than normally allowed under the benefit rules. Alternatively, a DWP staff member may reach out to the claimant to request further information. In such cases, an appropriately trained and skilled staff member will make any decisions that affect benefit entitlement or changes to a claim. The suspension of a claim would be used only as a last resort and only after repeated attempts to contact the claimant and checking for any known vulnerabilities. I hope that, in the light of that, the noble Lord is reassured and will feel able to withdraw his amendment.

My Lords, I thank all noble Lords who have taken part in this debate for their support on this. I welcome the clear statement from the noble Baroness that she agrees—which is a very good start—that the eligibility indicator in itself would not be reasonable grounds. I need to go back and carefully read what she said to understand exactly what is guidance, what is code, what is Bill, et cetera. But I am reassured by a lot of what she says. I suppose my caution still comes back to this point: my worry is not with the noble Baroness but with a Government in five or 10 years’ time of a rather different hue and with slightly less squeamishness, shall we say, about some of this stuff. Are these safeguards robust? We are giving substantial new powers to the department, therefore these safeguards need to be robust and not changeable at will by a future Government. That is what I want to dig into and understand a bit better when I go back into this. So we may come back to this, and I hope we will discuss it further between now and Report. But, in the meantime, I beg leave to withdraw the amendment.

Amendment 84 withdrawn.

Amendment 85 not moved.

Amendments 86 and 87

Moved by

86: Schedule 3, page 85, line 27, leave out from “(1)” to end of line 33 and insert “may not be brought after the end of— (a) the period of 14 days beginning with—(i) the day on which the eligibility verification notice was given, or(ii) if the person seeks a review of the notice under paragraph 13, the day on which the person is notified of the outcome of the review, or(b) such longer period (if any) as the Tribunal considers reasonable in all the circumstances.”Member’s explanatory statement This amendment means that the tribunal can extend the time limit for appealing against an eligibility verification notice.

87: Schedule 3, page 86, line 13, at end insert “, or (b) such longer period (if any) as the Tribunal considers reasonable in all the circumstances.”Member’s explanatory statement This amendment means that the tribunal can extend the time limit for appealing against a penalty imposed for a failure to comply with an eligibility verification notice.

Amendments 86 and 87 agreed.

Amendments 88 to 89ZA not moved.

Amendment 89A

Moved by

89A: Schedule 3, page 88, line 23, leave out “by one or more individuals” and insert “solely by the recipient of one of the benefits referred in paragraph 19(1)” Member’s explanatory statement This amendment and another in the name of Lord Sikka seeks to restrict the DWP’s powers in relation to eligibility verification solely to bank accounts held in the name of the benefit claimant only.

My Lords, good laws should consider unexpected negative consequences and eliminate them before any legislation is implemented. One consequence of the Bill could be that it might increase homelessness and financial exclusion. This arises because DWP’s powers of surveillance apply to bank accounts to which benefits are paid even though the account is not wholly under the control of the benefit claimant. These include bank accounts in the name of landlords and others. I am sure the Minister will be able to give us more information about how that will be dealt with. A perennial problem is that some landlords and letting agents might refuse to let property to individuals receiving housing benefit or housing costs payments through universal credit, as they fear that rent might not be paid in full or on a timely basis. Housing benefit is usually paid directly to the tenant but, under certain circumstances, it can be paid directly to the landlord. Examples include circumstances where the tenant is unable to manage his or her finances, and may be considered to be vulnerable because of addictions, medical conditions, learning disabilities or physical disabilities. There may be evidence that the claimant consistently does not pay the rent and uses rent money to fund other aspects of his or her lifestyle. The claimant may well have fallen eight weeks behind in rent payments. Under these circumstances, benefits can be paid directly to the landlord. Of course, if the benefits are overpaid, the DWP already has powers to recover the overpayment from landlords without extended surveillance of the bank accounts. It is not clear, therefore, why the Government are taking on additional powers. Under this Bill, the landlord’s bank account receiving the benefit will become subject to an information notice and related surveillance. It is not clear what the information notice sent to the landlord’s bank account would want to know. It cannot be whether the landlord has excessive savings or income above some ceiling, as the balance of that account and transactions leading to that balance have no influence on the claim of the tenant for any benefit. The money is paid to the landlord on behalf of the claimant whose circumstances are nothing to do with the financial position of the landlord. The landlord’s bank account, or accounts, may contain transactions about the letting business, rental payments from other tenants, tax payments, savings, investments, dividends, capital transactions and more. Such transactions are nothing to do with the benefit claimant whose rent is paid into the landlord’s bank account. Can the Minister explain what the DWP would want to know about the landlord’s bank account? Faced with erosion of financial privacy, a landlord might refuse to have benefits paid directly into his bank account and refuse to let property to anyone receiving benefits, as that would be the only way of retaining financial privacy. The result could be increased homelessness. This is the fear that many disabled people have already expressed to me at various meetings, especially as their accommodation is adapted to their needs. They fear that other landlords would not incur the expenditure to provide them with suitable accommodation. It would be helpful if the Minister would explain whether landlords can refuse to have benefits paid directly into their bank accounts, and what would prevent them refusing to let property to people on benefits. Of course, it is not just landlords who face this surveillance. For a variety of reasons, benefit claimants may be unable to open or manage a bank account. Many banks refuse to open a bank account for individuals sectioned under the Mental Health Act. Indeed, I have experienced that problem directly because, in my family, we have a person who has recently passed away who was sectioned, but no bank would give him a bank account. Every bank that we visited on the high street said, “Sorry, he cannot have a bank account”. Under these circumstances, the only option is to have a joint account into which some money or the benefits are paid. However, that person, the other bank account holder, then comes under surveillance. As I understand it, the third party whose name is on the joint bank account would definitely be subject to an information notice or surveillance. This will persuade many to refuse to be a joint bank account holder. In the case of a joint bank account, the money attributable to the benefit claimants may not easily be determined without detailed investigation. It is not quite clear what the bank would tell the DWP, because the bank can only look at a bank account; it cannot tell which money belongs to the claimant and which money to somebody else. Can the Minister explain how the joint account holder’s money would be separated from that of the benefit claimant’s? Faced with loss of privacy, joint account holders may terminate their involvement, causing hardship and financial exclusion. Of course, the Government can insist that no benefit claimant is denied their bank account; that would go some way towards alleviating this problem—but no other Bill actually insists on that. What assessment has been made of the unexpected negative consequences, and what steps are the Government taking to eradicate them?

19:15:00

Finally, when somebody is not considered capable of maintaining a bank account, they can grant power of attorney to somebody to manage a bank account for them. Does this provision mean that the person who exercises the power of attorney will now come under scrutiny, or that their bank account will come under scrutiny? Perhaps it will not—it is something that I have looked for in the Bill, but I have not been able to find any information in the Bill or in the accompanying Explanatory Notes. I beg to move.

My Lords, I welcome Amendments 89A and 89B, tabled by the noble Lord, Lord Sikka, which seek to ensure that the Department for Work and Pensions eligibility verification powers are restricted solely to bank accounts held in the name of the benefit claimant. The noble Lord, Lord Sikka, said a lot about this, and I agreed with it. These amendments are a measured and proportionate response to concerns about the scope of data-gathering under the Bill. By limiting DWP powers in this way, we would provide vital reassurance to claimants and their families that only their own accounts, not those of partners, relatives or unrelated third parties, will be subject to scrutiny. This approach would uphold the important principle of privacy and ensures that the fight against fraud does not inadvertently cast too wide a net, potentially impacting innocent individuals. Further, these amendments would reinforce the Bill’s existing safeguards, which already stipulate that eligibility verification notices may be issued only for the purpose of identifying incorrect payments of relevant benefits and only in relation to accounts in receipt of specified benefits. By making it explicit that only the claimant’s own accounts can be examined, we would strengthen public trust in the system and demonstrate our commitment to fair and proportionate use of government powers. So many people have joint accounts and accounts with more than two names on them, and I am not sure what would happen in those circumstances. You can see that, when Tom Bloggs or Sarah Bloggs have an account, there may be a reason to look at them—but if it is held by Sarah Bloggs and Tom Jones, what happens then? There is a danger here that people will be brought into the net, because accounts held in several names are very common, and I am not reassured from what I have read that they will not be dragged in in some way. I support the amendments from the noble Lord, Lord Sikka, in this case.

My Lords, I shall speak briefly to this group. For once I shall be helpful to the Government, as I rise to speak in opposition to Amendments 89A and 89B in the name of the noble Lord, Lord Sikka. These amendments would limit the scope of Department for Work and Pensions eligibility verification powers, as we see it, so that they apply only to bank accounts held solely in the name of the benefit recipient, including joint accounts from scrutiny. I recognise the intention behind this proposal, which is to protect privacy and the financial autonomy of those sharing bank accounts with benefit claimants—the noble Lord, Lord Sikka, very eloquently set out his stall—but I respectfully argue that the amendments would create a significant and problematic loophole in the integrity of the fraud and error detection system. Let us be clear: if these amendments were adopted, a person under investigation for suspected misrepresentation of assets or income could very easily shield those resources simply by transferring them into a joint account, potentially with a spouse, relative, or even a third party. Under the proposed wording, such an account would then fall outside the reach of the DWP’s verification powers, regardless of whether the claimant retained full control over the funds or continued to benefit from them. Perhaps the Minister can help me and the Committee in understanding how the DWP test-and-learn mechanism might have highlighted such an issue, and how it might have provided such a solution. This is not a theoretical risk. We know from operational experience that individuals engaged in fraudulent activity will often use exactly such mechanisms to conceal income or capital. The ability to move money to a joint account is a clear weakness that could be exploited by those who—we must remember—are believed to have stolen money from the taxpayer. Under the current drafting of the Bill, the Government rightly allow verification of accounts held by or accessible to the claimant, including joint accounts. This does not mean that third parties will have their data or finances indiscriminately accessed. There are safeguards in place. The department will not be able to view or interfere with every joint account at will, only those, as the Minister indicated earlier, where eligibility indicators suggest a relevant connection, and only where necessary to verify benefit entitlement. These powers are proportionate and targeted. The amendments, however, would tie the hands of investigators, even where there is a clear and compelling reason to examine whether the claimant has access to or control over funds that affect their entitlement. In so doing, they would introduce a gaping loophole in the very process that is meant to protect taxpayer money and ensure fairness across the system. Let us not forget the public interest at stake here. We are talking about a welfare system that supports millions of people, but also one that must command public confidence and demonstrate that it is both compassionate and resilient to abuse. Creating a known and easily exploited blind spot, as these amendments would, risks undermining that confidence and inviting avoidable losses to fraud or error. Moreover, this is not a question of criminalising or persecuting people who live with others or hold joint accounts for legitimate reasons. It is about ensuring that where state funds are being claimed on the basis of need, the system has a fair and proportionate—to use that word again—ability to verify the facts, including the assets and income to which the claimant may have access. No one benefits from a system where loopholes are left open, least of all the people whom the welfare state exists to support. These amendments may be well intentioned, as I said earlier, but they would weaken the ability of the department to carry out its responsibilities effectively, and in doing so would undermine both the fairness and sustainability of the benefits system. I therefore urge noble Lords not to support these amendments. Let us uphold the principle that verification powers should be robust, proportionate and resistant to manipulation—and not inadvertently create a rule that the dishonest can use to their advantage. Finally, I feel that I might have written a speech for the Minister, but I am sure that she will tell me that I am completely wrong and, perhaps, rebut some of my points.

My Lords, I thank noble Lords, especially the noble Viscount, for doing some of my work for me; I am very grateful. I cannot support my noble friend’s amendments, but I am grateful to him because he has raised a point that people need to understand, and this Committee is exactly the right place to understand the issue. It might be worth taking a step back. There will be two ways of getting information. We could either go to banks and say, “Here is Mr John Smith, please give us everything you know about him”, but then we would have to give personal information about the individual to the banks, which they do not have. Or we could do what we have decided to do, which is to say: “This is the account into which we pay the money. Please give us the information from that account according to these criteria”. We have gone with the second, because we will not be giving out personal information to financial institutions. However, that does have some consequences, which I will go through one at a time. First, DWP benefits can be—indeed, are—paid into joint accounts held by one or more individuals. It is therefore essential for financial institutions to share information about joint accounts and any linked accounts that include a relevant benefit payment. Perhaps the most critical reason why we need joint accounts to be in scope of the EVM is that both pension credit and universal credit are household benefits; by that, I mean that eligibility for these benefits will depend on the circumstances of those in the household, including incomes and savings held by both account holders, not just by one individual. It is therefore vital to receive information on joint accounts. In cases where the relevant benefit is paid into a joint account, information about both account holders and other linked accounts may be shared by the financial institution with the DWP. Again, I have explained why: it is because we cannot give out personal information about them. Once the information is shared, the DWP will then identify the benefit claimant and delete any information that is not relevant to the claim. That is made clear in the code of practice, which noble Lords have had a chance to see; this will be relevant in a moment to the points that the noble Lord made about landlords. It is worth pausing here. Unlike previous iterations—it may be that the noble Lord is thinking back to some of those—this measure specifically excludes certain accounts from its scope: business accounts, credit card accounts, mortgage accounts, and a lot of other accounts that were previously in scope but are not anymore. On landlords, if a benefit is paid into a landlord’s account then, yes, that will come back, but, basically, the test will then be: is the account or person a benefit claimant? If not, the information will be discarded and destroyed. Although it is possible, for the reasons I have explained, that a landlord’s account could be identified by a bank if it matches the eligibility indicators and is not a business account, the DWP can easily identify landlords having a housing benefit paid directly to them once we have received the data from a bank. The DWP will screen out these cases and disregard their data. I hope that that assures the noble Lord and that he can in turn assure those who were concerned. The question of appointees is something that I raised under a previous iteration of this; I simply have not been able to find a way around it. Corporate appointees and businesses are excluded, but, for personal appointees, we simply have not been able to do that. Of course, the appointee’s account will have the benefit paid into it, if the benefit is relevant. The only thing you could do is exclude anyone you knew was an appointee, but then many appointees are claimants in their own right, so you simply could not do that either. All I can say is that, by receiving from institutions, we will filter out any information that is not relevant; I hope that that will reassure the noble Lord. We are interested only in information on benefits paid by the DWP to benefit claimants; that is for them. If the appointee is holding the benefit for that individual, that is in scope—of course it is—but not if it is for other purposes; likewise goes for landlords. Those with powers of attorney will be treated in the same way as appointees. Again, if the money is for the benefit claimant and it is about that, we can look at it; if it is not, we cannot. I hope that that will reassure my noble friend and that he can withdraw his amendment.

I thank the Minister and the noble Viscount, Lord Younger, for their illumination of, and contribution to, this issue. I am not really that convinced by their replies, to be honest. The reason is that a landlord can simply say, “I just won’t rent a property to anyone on benefits”. That way, the whole bank account—into which not just the benefit claimant’s benefit but other things go—is outside the scope of any DWP inquiry. In time, we would notice that the amount of accommodation, especially for disabled people, had shrunk because of this piece of legislation. I think that many people would be dissuaded from becoming joint bank account holders with somebody who receives benefits for the same reason: they value financial privacy. We have to remember that this Bill is removing financial privacy only from people who are generally old, sick, disabled or unfortunate—everybody else can enjoy financial privacy. That would be the response. So, in due course, there would be very heavy and negative social consequences. As I said earlier, the Minister can alleviate some of these by ordering banks or by creating legislation that says that the banks cannot refuse anyone a bank account. That way, many more people can have a bank account and the landlords, family members and friends may well be less likely to be subject to surveillance. This is something I will mull over for the next stage, but, for the time being, I beg leave to withdraw this amendment.

Amendment 89A withdrawn.

Amendments 89B and 89C not moved.

Schedule 3, as amended, agreed.

19:30:00

Clause 75: Eligibility verification: independent review

Amendment 90

Moved by

90: Clause 75, page 43, line 22, leave out “person” and insert “panel, at least 50% of which is made up of persons elected by recipients of the benefits in question,” Member’s explanatory statement This amendment seeks to clarify whether the Government will take account of the views of recipients of the benefits in question in any independent review of eligibility verification measures.

My Lords, there are three amendments in this group. Amendments 91A and 91B are tabled by the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer. All three seek to strengthen the review into the impact of eligibility verification on vulnerable persons. I will just speak to my Amendment 90. Amendment 90 seeks to clarify whether the Government will take account of the views of recipients of the benefits in question in any independent review and suggests that this would be best achieved by ensuring that at least 50% of the review body is elected by benefit claimants. The proposed review under the Bill is welcome, even though it creates another quango. One difficulty is that regulators and reviewers are all too often appointed to advance political aims and objectives rather than serve the people. One needs to look no further than regulators of water and energy—the Independent Water Commission is currently reviewing the water industry, but its terms of reference exclude consideration of public ownership of water, even though that is favoured by many, including those who are experiencing high customer bills and sewage floating in rivers at the bottom of their gardens. I am seeking the representation of the people directly affected. All too often, Governments claim that regulatory and review functions are best carried out by individuals with some experience of the field. None has more experience of the field than benefit claimants—after all, they are directly impacted. They will know the frustrations of answering 243 questions to apply for pension credit; they will also be subjected to financial surveillance and may be concerned about that. They are also affected by the DWP’s errors, including erroneous prosecutions, as we heard earlier. They have direct experience of that, and are therefore eminently qualified to directly participate in the review process. This Bill refers to an independent review by a reviewer, but that reviewer will essentially be a political appointee. The review team is unlikely to include benefit claimants or someone experiencing hardship due to benefit cuts, confusing DWP forms or inconsistent application of DWP rules. Such a person and his or her team are unlikely to be able to bring the daily experiences of benefit claimants into the review. It is vital that the experience of the people on the receiving end of this legislation is brought directly into the review—their words and their worldview, not filtered through what was heard by somebody on some regulatory body or review commission. Quite often, there are cosmetic consultations or token discussions with the affected people. That is not really appropriate here. Amendment 90 would empower benefit claimants and enable them to elect individuals to carry their worldviews into any review. The person so elected would be accountable to the claimants, whereas the proposed reviewer would not be accountable to any benefit claimant. There is absolutely nothing that they can do about it—they cannot force that person to consider their worldviews deeply. I fully appreciate that extending democracy may well be a contentious issue, even in Parliament, and that empowering people may well be contrary to some government department’s policies. Nevertheless, I would like to see greater representation of benefit claimants in any review that is carried out under the Bill. I beg to move.

My Lords, I will speak to Amendments 91A and 91B in my name in the group, and I thank the noble Baroness, Lady Kramer, for her support in this. As the noble Lord, Lord Sikka, just said, these two amendments are designed to expand the scope of the independent review and the powers of the independent reviewer. I was very pleased to see the introduction of an independent review around the EVN powers; it adds an important safeguard. But as drafted, the scope of the review is quite limited, covering only whether the exercise of the powers has complied with Schedule 3B and with the code of practice, and whether it has been effective in identifying or assisting in identifying incorrect payments. It does not cover any of the other impacts that the exercise of the powers might have beyond that; we talked in the previous group about the costs, for example. We have previously discussed and raised concerns about the effects that the Bill could have on vulnerable people, so I will not repeat those again—we have had quite a lot of debates around it. However, the possibility of those impacts on vulnerable people is both real and important, so it should be considered once those powers are in force, and, frankly, the obvious place for that is the independent review. So Amendment 91A would simply add an assessment of the impact on vulnerable persons to the scope of the independent review. Amendment 91B is about the powers of the independent reviewer to obtain information. As it stands at the moment, they have no information-gathering powers. All the Bill says is that the Secretary of State “may” disclose information to the independent reviewer, and that is not good enough. For the independent review to be meaningful, the reviewer must have the legal ability to obtain all the information that he or she considers necessary to carry out the review. That is what Amendment 91 attempts to achieve: to allow the independent reviewer to request whatever they feel necessary to carry out the review, and to put a requirement for the Secretary of State to disclose what is requested. I rather hope that neither of those is particularly controversial as amendments go. Just generally, I should say that these are the last amendments that I have tabled, which may relieve the Minister, so I just wanted to say that I hope that she accepts the spirit in which all of them have been put forward. I accept that the Bill is much less concerning than its predecessor was, and I hope that she sees the amendments as generally constructive, aimed primarily at ensuring that the safeguards against misuse of these powers are both robust and, importantly, permanent. I will be very happy to meet with her between now and Report to see whether we can find common ground on some of them.

My Lords, it is another sort of spirit that I want at the moment. I am pleased to welcome these thoughtful amendments, which significantly enhance the transparency, accountability and fairness of the Bill. Amendment 90 from the noble Lord, Lord Sikka, seeks to ensure that the voices and experiences of benefit recipients are taken into account in any independent review of eligibility verification measures. This is a vital step in building trust and legitimacy for these new powers, ensuring that those most affected have a say in how the system is reviewed and improved. Listening to recipients will provide invaluable insights, helping to identify unintended consequences and ensuring that the system remains responsive and humane. Similarly, Amendments 91A and 91B are tabled by the noble Lord, Lord Vaux of Harrowden, and my noble friend Lady Kramer, who is busy in the Chamber on the Employment Rights Bill, where I should have been. These are crucial safeguards. Amendment 91A requires that the independent review specifically considers the impact of eligibility verification on vulnerable persons, ensuring that our most at-risk citizens are not overlooked or disproportionately affected. Amendment 91B strengthens the review process by obliging the Secretary of State to disclose all information reasonably requested by the independent reviewer rather than leaving disclosure to ministerial discretion. These changes will create a more vigorous and effective oversight regime, fostering public confidence that the powers are being exercised justly and transparently. I support these amendments.

My Lords, in speaking for the Opposition, I should say that there is quite a bit to say, but I have cut down my remarks in the interests of time. I think the Committee will be pleased to hear that. I regret that once again I oppose an amendment by the noble Lord, Lord Sikka, whose proposed change to Clause 75 seeks to replace the appointment of an independent person with that of a “panel, at least 50% of which is … elected by recipients of the benefits in question”. Although I understand the sentiment behind this proposal—namely, to ensure that the voices of benefit recipients are heard in the process of oversight—I respectfully submit that this amendment is not the right way to achieve that goal. It is very democratic in spirit but unworkable. I will begin with the practicalities. This amendment, if accepted, would introduce a highly complex, costly and poorly defined mechanism for oversight. The idea of electing panel members from among benefits recipients across all forms of social security is, on the face of it, well-meaning, as I said, but in practice it presents serious challenges. Who would organise and administer such elections? How would the eligibility to vote or stand be determined? What benefit types would qualify and what mechanisms would ensure proportional representation across regions, demographics and types of support? Those questions are not trivial; they go to the core of whether such a panel could ever be considered credible, workable or legitimate in the eyes of the public, including the very claimants it is intended to empower. I also suspect that it would take an age to establish. Those are rather harsh remarks, but I wanted to make those points. Moreover, we must ask what value this mechanism adds that is not already achievable through more conventional, proven models of independent oversight. There are already established ways to ensure that claimants’ experiences and perspectives inform the design and review of eligibility verification processes through public consultation, user engagement panels, stakeholder round tables and the commissioning of qualitative research from trusted bodies. Those are the serious proposals the Minister must consider, and I am sure she will, in the formulation of the Bill. The proposal put forward by the noble Lord, Lord Sikka, is surely a probing one, although I do not think he said that—but it does not stand up to scrutiny. For example, we must also consider the principle at stake here. Although it is right that we take account of the views of claimants whose lived experience is, I admit, vital in shaping fair and effective policy, it is not clear why 50% of an independent review body should be drawn exclusively from that group and no other. If the logic is that those affected by a policy should have a say in reviewing it, then surely one should equally argue that those funding the system—namely, taxpayers—should have a similar right to elect members or, indeed, that professionals with technical expertise in fraud prevention, digital systems or legal due process should be the ones appointed. In other words, this proposal risks becoming an exercise in representational logic that ticks a few boxes but is ineffective. On the other hand, Amendment 91A in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer, speaks to principles that we on these Benches have returned to time and again, which I will not repeat now. Clause 75 establishes an independent review of how the Secretary of State’s powers are being exercised. It is only right and essential that when we assess how these powers are working in practice, we also assess how they are affecting those who are most at risk of being overlooked, misunderstood or wrongly penalised by the system. That is precisely what Amendment 91A would ensure. It would add a single but vital criterion to the scope of the review—the need to examine the impact on vulnerable persons, not as an afterthought or a footnote but as a formal and explicit part of the oversight process. Why does this matter? We know from evidence, experience and common sense that those with vulnerabilities are more likely to struggle with complex paperwork, to misunderstand official communications and to have irregular financial arrangements that do not fit neatly into bureaucratic templates. Those individuals are not necessarily gaming the system; they are trying to get by. But unless the operation of the Bill is sensitive to their needs, they could too easily become the collateral damage of a system designed to root out frauds. Let us be clear: it is entirely possible to take tough action on fraud and take care not to harm vulnerable people in the process. It is not a question of either/or; it is a matter of how we build safeguards into the system so that it delivers justice, not just efficiency. Amendment 91B, also in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer, addresses a critical point of principle—namely, that the independent reviewer must be genuinely independent. At present, Clause 75 allows the Secretary of State to determine what information may be disclosed to the independent reviewer. In our submission—and, I suspect, in the views of the noble Lord, Lord Vaux, the noble Baroness, Lady Kramer, and other noble Lords—this is not the way to construct a genuinely independent mechanism of review. We cannot have a system in which the Secretary of State can control the flow of information to the independent reviewer. We believe that this amendment would restore some balance.

19:45:00

My Lords, my noble friend Lord Sikka’s Amendment 90 would require the independent oversight of the EVM to be carried out by a panel of people, at least half of whom would be elected by recipients of benefits in the scope of the measure. First, I can clarify for the benefit of the Committee that the independent person in the Bill could be an individual, a group of persons or a panel. However, in appointing the person, we want to be clear that the Government will follow the direction of the Governance Code on Public Appointments throughout the process. In accordance with that code, it is for the Secretary of State to appoint an appropriate person or persons to the role of independent overseer, as set out in Clause 75, because, as the code says: “The ultimate responsibility for appointments and thus the selection of those appointed rests with Ministers who are accountable to Parliament for their decisions and actions”. However, the process will be overseen by the Commissioner for Public Appointments to ensure that it is robust and fair; this is in line with precedent. My noble friend accused us of allowing some forms of politics to invade these decisions. I must say that the Secretary of State has a track record of appointing well-respected and experienced people to review the DWP’s work, even when that kind of oversight is not required. For example, in December she appointed Liz Sayce, the former chief executive of Disability Rights UK and formerly chair of the Social Security Advisory Committee, to lead the independent review into overpayment of the carer’s allowance; she also wanted Charlie Mayfield to lead a joint DWP and Department for Business and Trade review into the factors behind the growing levels of inactivity. I can assure the Committee that we will similarly look for relevant and independent expertise in this area. Clearly, the independent reviewer will have the discretion to engage with not only benefit claimants but any other key stakeholders whom they may consider appropriate, and we do not need to legislate for them to exercise that discretion. The review must consider the extent to which the Secretary of State has complied with the legislation and the code of practice. The independent overseer will then consider the extent to which the Government have complied with the many safeguards outlined in the legislation and the code. So, the independent review is in the interests of all those who receive a payment for a relevant benefit and will help ensure that their rights are protected. Amendment 91A in the name of the noble Lord, Lord Vaux, would require the independent reviewer to include in their annual report any impact that the EVM may have on vulnerable persons. Although I obviously agree that the DWP needs to consider carefully the vulnerabilities that our customers may have, I do not think that this amendment is necessary given the nature of the measure and the existing safeguards, including the oversight and reporting provisions. Again, I remind the Committee that this measure will actually help some of our customers, including those who are vulnerable. We know that people make genuine mistakes; access to this important data will help us find those mistakes sooner and enable us to correct them. Detecting overpayments earlier will help prevent claimants accruing large debts to the department in cases where an overpayment is recoverable. The key issue is that this is just a data-requiring power. It will simply require a bank to share limited information where benefit-receiving accounts meet the eligibility criteria specified in a DWP notice. The process of a bank sharing data through this measure will have no direct impact on the person’s claim of vulnerabilities. The measure is not about targeting anyone; it is about ensuring that claimants are paid the correct amount of benefit. It is only then that, under the DWP’s long-standing business-as-usual processes, people may experience changes to their benefit award—for example, where, following further inquiries, it is determined that the payment is not correct or that they do not meet the eligibility rules for the payment. A major aspect underpinning the issues raised by the noble Lord, Lord Vaux, is a broader question as to how the DWP supports vulnerable people in those processes. Layers of support already exist in the DWP to ensure that customers who are vulnerable or have complex needs have the right support put in place. DWP staff regularly conduct vulnerability checks and are proactive on this; when we do identify vulnerable individuals, we ensure that they receive the necessary support and adjustment. We have specially trained staff to support our most vulnerable customers, and they have access to a wide range of guidance to support them. Across our various benefits and services, colleagues record any support needs provided by the customer to ensure that, whenever a claimant speaks to the DWP, it is aware of how best to help them. As I have already set out, in cases of fraud and error, a DWP staff member will be the one making decisions affecting benefit entitlement. Finally, I remind the Committee that the independent reviewer will report annually on how the powers have been exercised in line with the legislation and how effective they have been at identifying incorrect payments. They will be able to cover any issues they deem relevant, including the impacts the measure is having and what that means for DWP customers. Asking the independent reviewer to assess impacts on vulnerability would, by necessity, take the scope of the review far broader than the EVM, as it would need to focus on wider parts of DWP business. To accept this amendment would therefore fundamentally change the scope of the annual review. Lastly, I understand what the noble Lord, Lord Vaux, is trying to achieve with Amendment 91B, but I do not believe it is necessary. The legislation already allows the Secretary of State to disclose information to the independent reviewer for the purpose of the reviews under new Section 121DD, and I assure the noble Lord that the DWP will of course work openly and collaboratively with the independent reviewer. We will provide them with the information requested and work with them to help identify the information they need to complete their review, sharing this under the existing provisions. Should any incentive be needed, if the independent reviewer did not consider that they had received all the information they needed, the report they published and laid before Parliament would no doubt reflect this. It would be clear for Parliament to see and scrutinise it and hold the Government to account on it. However, I am confident that that situation will not arise because our deterrent will be quite enough. Nevertheless, to provide further assurance to the Committee that the Secretary of State will provide everything relevant, I am happy to commit to make this clear in the code of practice for the measure, but I would rather not legislate unnecessarily. To close, I know that the noble Lord knows that the inclusion of this oversight matters to the whole Committee; it matters to me as much as it matters to him. The Government have not resisted calls for transparency and have a strong track record of working openly with independent reviewers, such as the independent review of carer’s allowance overpayments. Since the noble Lord, Lord Vaux, mentioned that Amendment 91B is his final amendment, I want to say that I very much take his amendments in the constructive spirit in which they are intended. This is what the House of Lords Committee is for—to make sure that we pursue the aims of the Bill and that we do so in the most constructive and appropriate way possible. I look forward to carrying on engaging with him. For now, I hope that my noble friend Lord Sikka, whom I am sure I will see in future, will feel able to withdraw his amendment.

My Lords, I am very grateful to the Minister and the noble Viscount, Lord Younger, for their contributions. The argument that something is costly and timely has been made for centuries against universal suffrage, but somehow we overcome that objection and recognise that people can be elected on to all sorts of bodies. In the rest of Europe, workers are elected on to company boards; nobody said that is costly and time-consuming. Perhaps we are yet to catch up with that kind of democratic revolution. Regarding the cost, I understand the point made, but what has not been asked is: what is the cost of not doing it? There is also a cost associated with not doing something—in this case, not bringing the direct experience of those impacted by this legislation: those whose lives may be ruined, who may be named and shamed in the neighbourhood, who may perhaps end up losing somewhere to live or who cannot buy food or anything. There is a huge social cost that is basically being ignored. The cost of not doing it is more injustice and more exclusion. Of course, if the Government want to reach a halfway solution, they could bring the NGOs and civil society organisations representing the disabled, poor, old and sick into this review, but that is not what I think I heard from the Minister—although I hope that, in time, that will be thought through again. Nevertheless, I wanted to fly the flag for democracy and public accountability. For the time being, I beg leave to withdraw my amendment.

Amendment 90 withdrawn.

Amendments 91 to 91B not moved.

Clause 75 agreed.

Committee adjourned at 7.54 pm.