Written statement on Public Authorities (Fraud, Error and Recovery) Bill - Jan 22

Secretary of State for Work and Pensions (Liz Kendall): I would like to inform the House that today the Government is taking steps to deliver on its manifesto commitment to safeguard taxpayers' money through the introduction of the Public Authorities (Fraud, Error and Recovery) Bill.

This Bill brings forward reforms to help identify, prevent and deter public sector fraud and error, and enable the better recovery of debt owed to the taxpayer. This Bill is expected to deliver benefits of £1.5bn over the next five years, as scored by the independent Office for Budget Responsibility (OBR).

Fraud against the public sector is a significant and constantly evolving challenge which requires a robust and resolute response. This Government will not tolerate fraud or waste anywhere in public services.

I previously informed the House on 8 October 2024 of the Government's plans to bring forward legislation that will extend and modernise DWP's powers to stop fraud in its tracks, recover money lost to fraud and, crucially, help protect claimants who may already be on the edge financially from racking up debt. These powers will be tough on criminals, fair for claimants and provide confidence to the taxpayer that money spent is reaching those who need it, and not those who seek to exploit the system.

Fraud and error in the social security system currently costs the taxpayer around £10bn a year and, since the pandemic, a total of £35bn of taxpayers' money has been incorrectly paid to those not entitled. This Government is committed to preventing fraud and error from happening in the social security system and, where it cannot be prevented, we will identify those committing fraud and recover the debt owed. Just as we do not tolerate tax evasion, this Government will not tolerate fraud against the social security system.

The DWP measures in this Bill will:

• Modernise DWP's investigation powers to help prove or disprove suspected fraud more quickly. Some of the powers which DWP relies on to investigate fraud are over 20 years old – DWP needs to keep pace with offenders who exploit the social security system and improve our access to information. New independent oversight will review and report on the use of the new investigation powers.

• Allow DWP to take greater control in our investigations into serious organised crimes through new powers of entry, search and seizure. New independent inspection and complaints procedures will be included to ensure the appropriate use of these powers.

• Bring greater fairness to debt recovery by allowing DWP to recover debts from individuals who can pay money back but have avoided doing so. It will also enable DWP to apply to the court for a Suspended Driving Disqualification Order, to disqualify a debtor from holding a driving licence, where all other attempts at recovery have failed.

• Through our Eligibility Verification Measure, require banks and other financial institutions to examine their own data sets to highlight where someone may not be eligible for the benefits that are being paid. This will help us to identify incorrect payments and prevent debts accruing for claimants. DWP's use of the powers will be overseen by an independent person whose report will be laid before Parliament. The powers will not give DWP access to any claimant's bank accounts, nor any information on how claimants spend their money. DWP will not share any personal information with banks or other financial institutions and a member of DWP staff will always be involved in any further investigations and decisions.

• Update the penalties regime by extending the penalties we can apply for fraud to non-benefit payments (e.g. grants) to ensure there is fairness in dealing with fraud across the social security system.

• Introduce new and important safeguards on the face of the Bill, including reporting mechanisms and independent oversight to ensure the powers are used proportionately and effectively. As is the case now, any decision taken about someone's benefit entitlement will always be made by a human being.

We will ensure that every pound of taxpayers' money is spent with the same care with which working people spend their own money.

Today I can also confirm that this Bill will now go further to tackle fraud, error and debt across the public sector by also giving the Public Sector Fraud Authority (PSFA) within the Cabinet Office powers to investigate and address fraud against the public sector on behalf of other departments and public bodies. These powers are based on similar powers held by other Government departments, specifically HM Revenue and Customs (HMRC) and the Department for Work and Pensions (DWP). The public sector response to fraud and error has historically focused on the areas with the highest known losses – generally tax and social security. This remains a priority. However, this focus has meant that some government departments have limited powers and resources to act on fraud and error. As a result, outside of tax and social security at least £3bn per year is being lost to fraud and error.

Fraud against the public sector remains unseen, and all too often, those who attack our public services for their own gain face limited consequences, but it is not a victimless crime. It is public services that suffer, and it is the taxpayer who is the victim.

These losses are unacceptable, and waste enormous sums of public money which could be put to good use to improve lives. It is essential that all parts of government have access to the capabilities and tools required to tackle fraud, error and debt.

The PSFA (within the Cabinet Office) measures in this Bill will:

• Give the Cabinet Office information sharing and information gathering powers, that will enable the PSFA to compel the production of information from information holders as part of a fraud investigation.

• Allow the PSFA to take control of investigations into public sector fraud at the request of the affected public authority, reducing reliance on the police and ensuring all parts of government have access to the capabilities necessary to tackle fraud.

• Improve the government's ability to recover losses, as a result of fraud or suspected fraud against public authorities, through new debt recovery and enforcement powers. This could be directly from an individual's earnings or bank accounts to recover fraud-related debt identified through PSFA investigation, or from an application of a penalty on behalf of a public authority.

• Introduce new clear, strong non-criminal sanctions to provide an alternative to prosecution to reduce the dependence on costly, time-consuming criminal routes. This will also serve as an important deterrent against fraud in the public sector.

• Extend the time limit for Covid frauds so that we have 12 years to take action, preventing the time period for claims against some fraudsters ending potentially as early as March 2026.

• Introduce independent oversight to ensure the powers are used proportionately and effectively.

This Bill will provide confidence to taxpayers that the Government is taking every step to protect public services and taxpayers' money by stopping those who exploit the system.

Statement from

Department for Work and Pensions

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