Contribution
My Lords, fraud against the public sector takes money away from vital public services, enriches those who seek to attack the Government and damages the integrity of the state. This Bill is part of the Government’s response to this urgent and challenging problem. The Bill gives functions and powers to the Minister for the Cabinet Office, which will be exercised by authorised officers and investigators based in the Public Sector Fraud Authority.
I hope it will assist your Lordships’ House if I remind noble Lords of the PSFA’s mission. The PSFA is the UK Government’s centre of expertise for the management of fraud and associated error against the public sector. It leads the Government’s counterfraud function, which brings together the approximately 16,000 people who work in government departments and public bodies to fight fraud. The standards and guidance that the function creates, led by the PSFA, must be used in central government and can be used more widely in the public sector and beyond to improve the robustness of how we understand, prevent and respond to fraud.
These two amendments would make significant changes to the Government’s intention in bringing forward this Bill on how the PSFA works. They would change the impact of the Bill and are unnecessary to be put into law, so we cannot accept them.
On Amendment 2, the noble Baroness, Lady Finn, offered a version of this amendment in Grand Committee that simply deleted line 10, which I resisted because removing that line without putting something else in its place would have created uncertainty and potentially conflicted with the preservation of public authorities’ own fraud functions in Clause 2(5). It is clear this draft has been influenced by the debate on the original, and I thank the noble Baroness for it; however, the new version goes further and dramatically changes the impact of the Bill.
Amendment 2 would create an extensive new power for the Minister for the Cabinet Office and change the relationship between the PSFA and the public authorities it works with. The Government’s intention is that the PSFA offers a public sector fraud service, collaborating with public authorities which have been attacked by fraudsters to take action to investigate, enforce and recover the funds. Collaboration is vital in the Government’s fight against fraud. Noble Lords will be aware that last month the Government announced that, in the previous 12 months since April 2024, over £480 million was prevented from going into fraudsters’ pockets. Driving this kind of cross-government collaboration is what the PSFA is for. We can do more, which is why we need the Bill, but the PSFA is already working.
I firmly believe that the normal mechanisms of government can ensure that counterfraud co-operation happens, as it is already happening in the work of the current pilot unit in PSFA. In issues of national importance, there will also be some moral and public pressure for something to be done, so I believe it is not necessary for the Minister to have a directive power in law to investigate on their own initiative. We truly believe that the collaborative approach outlined in the Bill combined with the normal operations of government will ensure the PSFA has the access it needs.
The definition of public authority in Clause 71 is broad and this amendment would affect different public authorities differently. For central government departments, it would mean that a Minister below Secretary of State level could direct and override Secretaries of State. For local authorities, the amendment would mean a new power for central government to take over a responsibility without their consent. The Local Government Act 1999 already has powers to this effect, and we do not want to create a new one specifically for fraud.
Amendment 19 would require departments to conduct an internal review if, following a PSFA investigation, it is confirmed that they have lost more than £50,000 to overpayment or fraud. All losses on this scale should already be investigated and reported on. There are established audit, assurance and reporting processes for this. In addition, the facts of this case would already have been established by the PSFA, and learning taken from it would be shared across government to aid the prevention of fraud. This amendment would create an extra burden on the department and replicate the work of the PSFA. It is unnecessary, as its core aim will be addressed through other activities. Therefore, after my very persuasive arguments, I encourage the noble Baroness, Lady Finn, to withdraw her amendments.