Baroness Finn (Con)

My Lords, I began by thanking the noble Baronesses opposite for their constructive engagement with us on the Bill. Our meetings with the Ministers have been genuinely useful, and I welcome the spirit of good faith and collaboration with which the Minister has approached our discussions. Tackling fraud against the public purse is a shared ambition across this House and it is in that constructive spirit that we have brought forward the amendments in this group. As drafted, Clause 2 provides that the Minister may “investigate or take enforcement action in respect of suspected fraud against another public authority … only at the request of that public authority”. In other words, the Public Sector Fraud Authority can act only if invited to do so; indeed, that was the word used by the noble Baroness in Committee. This is an extraordinary limitation to place on an organisation whose very purpose is to root out fraud across government. The Bill seeks to confer considerable powers of investigation and enforcement upon the Cabinet Office, yet the exercise of these powers is ultimately hamstrung by the restriction in Clause 2. The effect is to create a PSFA that is at once empowered and yet toothless: an authority that has wide-ranging powers on paper but which cannot use them unless those potentially under scrutiny choose to permit it. It cannot be right that a public authority suspected of fraud has the power to decide whether to be investigated. To rely on departments or agencies to invite in the PSFA to look at themselves or their work is, frankly, far too weak. There are obvious disincentives: the reputational risk, the potential embarrassment and the possibility of drawing attention to failings that might otherwise have gone unnoticed. As my noble friend Lord Maude of Horsham notably observed in Committee, assuming that departments will voluntarily expose their own shortcomings is a triumph of hope over experience. If we are serious about protecting the taxpayer, the PSFA must be able to act proactively—to initiate investigations where credible concerns arise and not to wait passively for a polite invitation that may never come. I have been in government and I know how these things work. We cannot rely on good will; we must be both forthright and proactive in tackling this issue, which is an offence against every single person in this country. Fraud against the taxpayer is not a matter to be settled or not by an informal phone call between Permanent Secretaries, as we were told could currently happen. Such a situation must be backed up by a statutory mechanism that ensures action is taken swiftly and decisively. Of course, such discussions can and should happen in the first instance, but there needs to be a way to compel such action if necessary. Our amendment would therefore enable the Minister for the Cabinet Office, through the PSFA, to undertake proactive investigations or recovery actions in respect of suspected fraud against a public authority on their own initiative, where it is in the public interest to do so. It would preserve the authority’s own internal fraud functions under subsection (5) but would finally give the PSFA the power it needs to do its job properly. This amendment is not about centralising control or creating a culture of interference. It is about closing a glaring loophole, one that every complacent official and every fraudster will otherwise see coming a mile off. It is about ensuring that when the PSFA becomes aware of fraud that awareness marks the beginning of an investigation and not the point at which the system grinds to a halt while waiting for consent to be granted. Alongside this, and in the same spirit of strengthening accountability, we have tabled a second amendment—one which we raised in Committee and return to today—as we believe the Government should take this opportunity to outline how they are working to create a counterfraud duty and culture across public authorities. Amendment 19 would require that, where a recovery made under Clause 10 exceeded £50,000, “the public authority on whose behalf the amount was recovered must conduct an internal review into the circumstances giving rise to that recovery” and provide that review to the Minister within three months of completion. This is a practical, proportionate proposal to ensure that public bodies learn from their mistakes. It seeks to prevent the creation of a pass-the-buck-to-the-PSFA mentality. The PSFA cannot and should not become a convenient dumping ground for departmental failures. Fraud and error often originate within the systems and processes of individual departments. Responsibility for preventing and detecting it must therefore remain with them. I hope, in her remarks on this Amendment 19, that the Minister can set out to this House how this culture is being created, and how authorities are going to be held accountable for the mess in their own houses without simply leaning on the PSFA. This is a big opportunity for us to get this right. If we want to tackle fraud, then we cannot create a mighty but toothless body with expansive powers on paper but which has no power to go after fraud when it should. We risk creating a situation in which the PSFA is legally unable to tackle fraud, and where it goes unchecked when it is known about but not formally referred to the PSFA. The noble Baroness may stand up and say that she expects many cases to be referred to the PSFA, but this misses the central point, which is that the PSFA must be able to tackle all fraud of which it becomes aware and can have a role in stopping. It is not a question of which cases are referred to the PSFA, but which cases will be missed because the PSFA was not invited to go in after it. This is simply not good enough. We must be really clear now in giving the PSFA the power to tackle wrongdoing proactively. I beg to move.