Public Sector Fraud Authority
Monday, 14 September 2026
Contributions
Question
Asked by
Baroness Coffey
To ask His Majesty’s Government why they have transferred the Public Sector Fraud Authority from the Cabinet Office to the Department for Work and Pensions, given the function and powers of the Minister of the Cabinet Office set out in Part 1 of the Public Authorities (Fraud, Error and Recovery) Act 2025.
The Parliamentary Secretary, Cabinet Office, and Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Twycross) (Lab)
My Lords, the Public Sector Fraud Authority’s repositioning into the Department for Work and Pensions reflects the Government’s commitment to tackling public sector fraud. Both organisations will use their unique expertise to tackle fraud and error in welfare and across the public sector. The Treasury will continue to co-sponsor the Public Sector Fraud Authority. A transfer of functions order will ensure that functions under the public authorities Act 2025 are transferred to the Secretary of State for Work and Pensions.
Baroness Coffey (Con)
My Lords, I start by saying that this is not intended to be a dig at the First Secretary of State, who I thought was poorly treated by the previous Prime Minister. However, the Public Authorities (Fraud, Error and Recovery) Act, which we passed only last year, was billed as key to tackling billions of pounds of fraud beyond HMRC and the DWP. It gave many powers solely and specifically to the Minister for the Cabinet Office with regard to tackling fraud and the Public Sector Fraud Authority. How effectively can the powers in this legislation now be deployed? I am surprised to hear that an Order in Council will be sufficient. It is better to get on and just use these powers and not worry about one day’s bad publicity.
Baroness Twycross (Lab)
The functions under the Public Authorities (Fraud, Error and Recovery) Act will still be able to be used. They will be appropriately transferred, as I said to the noble Baroness, to a relevant DWP Minister and they will be able to be exercised in the way that the Act intended. In addition, the Public Authorities Fraud Investigation and Enforcement Service, which was established as a result of the Act, will continue to legally pursue cases of fraud against government while the transfer takes place.
Lord Pack (LD)
My Lords, in response to the Public Accounts Committee’s report earlier this year on using data to tackle public sector fraud, the Government committed to supporting a review of relevant legislation, to be concluded by March next year. Can the Minister tell us what forward planning the Government are doing to ensure that any proposals from that review can be put promptly to Parliament? In particular, will she commit that any necessary secondary legislation will come to Parliament before the end of 2027?
Baroness Twycross (Lab)
This will all take place when parliamentary time allows. I am happy to make sure that the noble Lord gets a briefing from the relevant team about the progress and where it is all going. We want to make sure that we get this right, but I am happy to arrange for a briefing for the noble Lord.
Lord Vaux of Harrowden (CB)
My Lords, when we were debating this Act only about a year ago, the Minister, the noble Baroness, Lady Anderson, explained with her usual clarity that the purpose of the PSFA is to drive cross-government collaboration to tackle fraud across all public authorities. In what possible parallel universe can the DWP be the best department to drive cross-government collaboration? Does the Minister perhaps have some examples of where that might have happened?
Baroness Twycross (Lab)
The DWP is one of the departments that routinely work to tackle fraud, so there is considerable expertise in the department. The Public Sector Fraud Authority will continue to work with all departments and public bodies across the public sector to drive counterfraud performance and accountability, deliver cross-system services and increase counterfraud capability. In our view, this will be further bolstered by its repositioning in the DWP, in that it will be able to learn from existing, mature counterfraud capability in the department to optimise its services, and vice versa.
Lord Redwood (Con)
How much fraud did the PSFA find last year and how much more does it think it will find with the enhanced methods of going about it?
Baroness Twycross (Lab)
The PSFA has a strong record of delivering beyond its annual financial target. In the 2024-25 financial year, it delivered over £480 million in audited counterfraud benefits, which is a return of £34 for every £1 invested. The PSFA has delivered a total of £1.2 billion in savings since its establishment in 2022. Clearly, it could go further, and we are absolutely determined to make sure that it does.
Baroness Wheatcroft (CB)
Fraud was rife during Covid, both in the loans that were granted when they should not have been and in PPE contracts, for instance. Can the Minister tell us how much has been recovered of that fraud and how much is still outstanding?
Baroness Twycross (Lab)
The noble Baroness is right to highlight that there were particular issues in relation to fraud during the pandemic. I will need to write to her about the amount that has been recouped so far, because the figures change on a regular basis. It involves considerable amounts but, obviously, more can be done. I will write to the noble Baroness and make sure that a copy of my letter is placed in the Library.
Baroness Finn (Con)
My Lords, can the Minister confirm whether any investigation, information notice, recovery action or other statutory power has been exercised by DWP Ministers or officials since responsibility for the PSFA was transferred, and whether the Government have taken legal advice on the susceptibility of any such decision to judicial review, if the statutory transfer of functions has not yet taken effect?
Baroness Twycross (Lab)
It is in the process of being transferred. My understanding is that this is not holding up enforcement, but I will need to write with a detailed answer to the noble Baroness’s question.
Lord Watts (Lab)
My Lords, has the Minister noticed that the opposition parties are very keen on fighting fraud in the welfare system, but they are very slow to fight blue-collar fraud and their own fraud?
Baroness Twycross (Lab)
I could not possibly comment on that. What I can say is that public sector fraud wastes public money, drives up the deficit and damages the public sector. We are clear that we want to tackle it, and put structures in place to do this. My noble friend is correct, however, that it is not just public sector fraud that affects the public, and we are determined to do whatever we can to keep the public and the public finances as safe as possible from fraud and error.
Lord Cromwell (CB)
My Lords, these interventions are all very commendable, but are the Government going to get behind the idea of letting those agencies fighting fraud on our behalf retain more of the money they recover so that they can exponentially increase their effectiveness?
Baroness Twycross (Lab)
That is a really interesting proposal. I understand from my amazing noble friend Lady Anderson that a number of trials are under way. I am very happy to meet the noble Lord to discuss this, having offered letters to other people—obviously, I am happy to meet any noble Lord at any point.
Baroness Neville-Rolfe (Con)
My Lords, I was responsible in the Cabinet Office for the fight against public sector fraud—and energetically so. I share my noble friend Lady Coffey’s concern about the move to the DWP, which risks focusing the fight against fraud too narrowly. Is this because it was too awkward a portfolio for the First Secretary of State?
Baroness Twycross (Lab)
Of course not; I find that an absolutely appalling question. The Public Sector Fraud Authority’s repositioning reflects the Government’s absolute commitment to tackling public sector fraud. Both organisations will use their unique expertise to tackle fraud in welfare and across the public sector. The co-sponsoring by the Treasury of the Public Sector Fraud Authority will enable a cross-government perspective as well, and the transfer of functions order will make sure that its functions are transferred to the DWP Secretary of State.
Lord Fox (LD)
My Lords, does the Minister agree that whistleblowers have a big role in uncovering public sector fraud? Does she also agree that there is an awful lot more the Government could do both to encourage whistleblowers and to protect their identities? Will she agree with the measures my noble friend Lady Kramer has been talking about for a long time and bring in an office of the whistleblower to make this happen?
Baroness Twycross (Lab)
The noble Lord is correct; DBIST is undertaking a review into how this can be achieved.
Lord Brooke of Alverthorpe (Lab)
My Lords, will the Minister acknowledge that our most famous whistleblower here in the House of Lords is probably the noble Lord, Lord Agnew, who was very dissatisfied indeed with the way that fraud was being pursued? Can we ensure that his views are again sought to see whether he feels that sufficient change has been introduced?
Baroness Twycross (Lab)
I would be very happy to arrange a meeting with the noble Lord, Lord Agnew, and I thank my noble friend for that suggestion.
Source: UK Parliament Hansard API. Debate ID: 5406100.