Legislative Reform (Disclosure of Adult Social Care Data) Order 2025

Considered in Grand Committee

17:07:00

Moved by

That the Grand Committee do consider the Legislative Reform (Disclosure of Adult Social Care Data) Order 2025. Relevant document: 26th Report from the Delegated Powers and Regulatory Reform Committee

My Lords, this Government are committed to rooting out public sector fraud wherever it persists. It is a pervasive crime that takes money away from vital public services and enriches those who steal from the taxpayer. This draft legislative reform order builds on initial work carried out by the last Government. All of us accept that the scale of fraud in the adult social care sector is significant, taking vital public money away from the most vulnerable. In 2020, the Chartered Institute of Public Finance and Accountancy estimated that there was £240 million of adult social care fraud in 2019-20. Examples where fraudsters can target adult social care services include where individuals fraudulently claim a personal support budget from more than one local authority at the same time, and where individuals hide undeclared capital or property ownership in relation to helping fund adult social care, putting the burden on local taxpayers. Of course, there can also be errors in the system: for example, where deceased care home residents can still be in receipt of direct payments from a local authority. There can even be extreme cases of fraud linked to this, whereby individuals siphon money from the accounts of deceased individuals given in error. These are examples of the kinds of fraud that the legislative reform order will help tackle. The draft order will help prevent fraud and error in the adult social care system by resuming the sharing of adult social care data across local authorities in England and Wales. This will allow the National Fraud Initiative, which I will refer to as the NFI, to use this data in its data-matching activities to identify and prevent fraud and error in the adult social care system. This will generate an estimated £2.3 million in prevented fraud loss across the UK every year. The NFI has been operating since 1996, with a long history of identifying and preventing fraud on behalf of public bodies. The NFI specialises in data matching, which involves comparing two or more sets of electronic data to detect potential fraud. Since the NFI began, it has detected, prevented and recovered a total of £2.9 billion in fraud and error. The NFI’s most recent data matching exercise between 2022 and 2024, which took place over a two-year period, prevented, detected and—importantly—recovered £510 million across the UK, the NFI’s best ever result. It is vital to protect public funds that the NFI can appropriately access to the relevant data sources. This draft order will amend paragraph 4 of Section 9 of the Local Audit and Accountability Act 2014—the LAAA—to add a provision that exempts “matched adult local authority social care” data from a restriction on disclosure. The draft order will also amend an equivalent provision of Section 64D of the Public Audit (Wales) Act 2004—the PAWA—to ensure that the draft order has effect in Wales. The data matching programme the draft order seeks to reintroduce is not new. Adult social care data matching was previously undertaken by the NFI on behalf of local authorities and generated annual fraud savings of £2 million across the UK since 2009. However, this ceased when an amendment to the National Health Service Act 2006 in 2016 meant that local authority social care data became included in the definition of “medical purposes” under the NHS Act in new subsection (12A) of Section 251, inserted by the Cities and Local Government Devolution Act 2016. Consequently, local authority social care data became included in the definition of “patient data” under the LAAA 2014 and the PAWA 2004, which refers to data held for “medical purposes” in Section 251 of the NHS Act. This means that the results of data matching using local authority social care data—now classed as patient data—could only be shared with “relevant NHS bodies”. Local government in England and Wales was not designated as relevant NHS bodies for the purpose of data sharing, even though local government is responsible for the provision of social care. This consequence was wholly unintended. Local authorities are overwhelmingly supportive of this draft order. Some 90% of 137 local authority consultation respondents support this amendment and want this data match to be re-established and subject to approval by your Lordships’ House. Data matching will commence this autumn. The draft order will therefore restore the legislative status quo and again allow the NFI to share matched adult social care data with local authorities and tackle adult social care fraud. I beg to move.

My Lords, I begin by thanking the Delegated Powers and Regulatory Reform Committee for its excellent report on this order, which was published on 13 June. I am also grateful to the Business and Trade Committee in the other place for its own report, which was published earlier this month. As the Minister explained, the order seeks to take us back to the status quo before the passage of the Cities and Local Government Devolution Act 2016, which included an amendment to the NHS Act 2006 that prevented the further sharing of this data with local authorities. We do not oppose this order but have a number of questions for the Government. The order is being made under a power to amend primary legislation under the Legislative and Regulatory Reform Act 2006. We have concerns about the growing use of Henry VIII powers by successive Governments, and particularly this Government, who previously committed to use these powers more sparingly. When such powers are used, it means that lower levels of scrutiny are possible. This is one of the many reasons why we are so grateful to the Delegated Powers and Regulatory Reform Committee—the DPRRC—for its excellent work. The 2006 Act is clear that the powers to amend or repeal primary legislation granted to Ministers by that Act are limited to specific circumstances. In this case, the DPRRC has agreed with the Government that the order meets the tests set out in Section 1 of the 2006 Act: namely, to remove or reduce burdens created by legislation. In its report, it noted that the previous Government began this work—I noticed that the noble Baroness mentioned that too—and that in response to the 2023 Cabinet Office consultation, which was targeted at local authorities, 90% of respondents were supportive of this legislative change. We also share the Government’s objective to tackle fraud and error in bringing forward these changes. It is absolutely essential that the Government seek to tackle fraud and error across the public sector, and we have been working—I hope constructively—to improve the provisions of the Public Authorities (Fraud, Error and Recovery) Bill. This legislative order is predicted to deliver £4.6 million in recovered fraud and error every two years. The Government are absolutely right to seek to recover taxpayers’ money whenever it is lost to fraud and error provided it is practical and proportionate to do so.

17:15:00

In this case, the Government hope that recovering these funds will lead to reductions in social care fraud, which would also be a positive result. Again, this is a specific and limited change that takes us to the status quo before the passage of the 2016 Act. We agree that enabling the national fraud initiative to benefit from data sharing enabled by the change is welcome.

While we welcome this order, we have a few questions that we would like to put to the Minister. The Government’s argument for introducing this change is that the benefits of recovering £4.6 million in fraud and error every two years will outweigh any additional burdens placed on other public bodies. Can the Minister confirm how the Government will monitor and report the amounts recovered by the data sharing enabled by this change? Can she confirm how the £4.6 million prediction will be monitored to ensure that it is ambitious enough? I also note that there will now be a £300 increase in the fee payable by local authorities to the NFI for its data-matching service. Can the Minister say what assessment the Government have made of the impact of these additional fees on council finances? What discussions have she or the Government had with local authority leaders on the additional administrative burdens that will arise from the new requirement on local authorities to extract adult social care data from their systems to provide to the NFI to use in its data-matching exercises. This was part of our consultation in 2023, but it would be helpful to understand what the ongoing engagement has been.

I would thank your Lordships, but actually I am going to thank just the noble Baroness, Lady Finn—and the noble Lord, Lord Moynihan, for his for his constructive, supportive presence, as well as my noble friend Lady Blake. I thank the noble Baroness for the points she has raised. She is absolutely right. We are seeking to work collaboratively and constructively on the fraud Bill to make sure that every penny of public money that can be reclaimed is indeed reclaimed, as is appropriate. This is public money, taxpayers’ money. It is only right and proper that we take full responsibility for how we spend it, making sure that fraudsters do not get money they are not entitled to. It is vital we take robust action to tackle adult social care fraud. This draft order provides a way in which we can do just that. I shall respond directly to the points made by the noble Baroness, Lady Finn. The reason why we opted for a legislative reform order is its primary function of amending primary legislation independently of a parliamentary Bill to reduce burdens on public bodies. This draft order will reduce financial and administrative burdens on local authorities by supporting them to prevent adult social care fraud and deliver financial savings. Legislative reform orders fulfil a specific purpose of repealing, replacing or amending legislation that imposes burdens on any person, including a business, voluntary organisation or charity. Legislative reform orders are also subject to greater parliamentary scrutiny than other SIs in the level of committee scrutiny and debate. We felt this was appropriate given that the draft order focuses on adult social care data, which is in a special category. However, we also wanted to make sure we were doing it in a timely and cost-effective way, which is why we did not want to wait for the primary legislation function. With regard to the impact of the order, the noble Baroness made an incredibly important point. One way in which I justified why I was working on this last night on the way back from my “minimoon” in Paris, when my husband said to me, “Your minimoon is now over,” was by pointing out that the measure would get his local authority £25,000 extra per annum for local expenditure. The national fraud initiative involves regular public reporting and will set out the benefits all the way through. With regard to ongoing engagement, the Government actively participate in engagement with local authorities and will continue to do so on this measure. The noble Baroness made an excellent point about the £300 uplift in the likely cost. In England especially, for every £300 that local authorities are going to spend, they will get an 83:1 return. I think that most fair-minded people will consider that to be a good use of public funds. We will continue to work with all local authorities. In England, £25,000 per local authority is expected to be reclaimed every year. For Wales, the figure is £7,000. On the savings being monitored annually, they are subject to audit. On the third point raised by the noble Baroness, NFI fees are consulted on in advance of each biennial exercise and are regulated under the Local Audit and Accountability Act 2014. I believe that answers all the questions raised by the noble Baroness and commend the order.

Motion agreed.

Committee adjourned at 5.20 pm.