Contribution
My Lords, this amendment, tabled in my name and that of my noble friend Lord Younger of Leckie, seeks to insert a new clause establishing clear fraud risk management duties for all public authorities that oversee major spending programmes—that is, those involving annual disbursements exceeding £100 million. The purpose of this amendment is straightforward but fundamental. It is to ensure that the Public Sector Fraud Authority does not become, as it very easily could, an external body to which departments can simply outsource responsibility for managing fraud risk, rather than taking ownership of it themselves.
We have heard a great deal, rightly, about the scale of public sector fraud and the cost to the taxpayer, but as we look to the future, the real question is not simply how the PSFA will investigate or recover those losses; it is how we build a culture of counterfraud across the public sector—one in which every department, agency and accounting officer takes personal and institutional responsibility for preventing fraud at source.
This amendment aims to do exactly that. It would require all public authorities responsible for large spending schemes—those worth more than £100 million a year—to register those schemes with the PSFA, conduct fraud risk assessments and prepare annual fraud measurement plans. Those plans would have to use robust, statistically valid methods to estimate fraud and error rates, such as representative sampling or equivalent techniques. The PSFA would then independently verify those reported figures, publish an annual report comparing departmental self-assessments with its own verified data and assign each authority a red, amber or green rating to reflect the adequacy of its fraud management arrangements. Those ratings and the underlying data would then be published, both in each department’s annual accounts and in the PSFA’s report to Parliament.
Finally, where there are significant discrepancies or failings, the PSFA would have the power to require the relevant authorities to submit an action plan within 30 days setting out how they will correct the deficiencies. Compliance with these duties would then be subject to audit by the Comptroller and Auditor-General, bringing this entire framework within the scrutiny of Parliament.
This is a serious proposal that goes to the heart of what we have been saying throughout the passage of the Bill. Fraud is not a problem that can be solved by a single agency, however capable. It must be the business of the entire public sector. We cannot allow a situation to develop where departments and public bodies come to see the PSFA as an external safety net—somewhere they can pass the buck to when something goes wrong. If we are not careful, that is precisely what will happen. Officials will say that fraud is the PSFA’s job, Ministers will reassure Parliament that the PSFA is on the case and, in the meantime, the very culture of accountability that we are trying to build will start to erode.
This amendment reverses that logic. It would make counterfraud a statutory discipline—something that must be embedded, measured and reported on within each department and public authority. It would give the Minister for the Cabinet Office the information and oversight that they need to see at a glance where problems lie across government, and it would allow Parliament, through the Comptroller and Auditor-General, to see how public money is being protected and where it is being put at risk. In short, it would ensure that no official, no Permanent Secretary and no department can hide behind the PSFA. It would place responsibility exactly where it belongs—on those who spend and manage public money.
This approach also has a longer-term benefit. If departments develop and strengthen their own internal counterfraud capability, the need for PSFA intervention should gradually decline. That is what success should look like: not a PSFA burdened with firefighting every scandal across government but a public sector that has learned, embedded and internalised the discipline of fraud prevention. That is the culture shift we need. It is how we stop treating counterfraud as an emergency response and start treating it as an essential part of good public administration.
This amendment would give practical effect to that ambition. It would give the PSFA oversight, the Minister visibility and Parliament the means to scrutinise what is and is not being done across the system. If the Government are serious about tackling fraud at scale, then this is how they can demonstrate it: not by concentrating power in one central authority but by building a resilient, accountable and transparent network of fraud management across the public sector.
The amendment would strengthen not just the Bill but government itself. It would embed responsibility where it belongs and ensure that accountability, transparency and culture change go hand in hand. I beg to move.