Legislation Watch - The Public Authorities (Fraud, Error and Recovery) Bill

I created Legislation Watch to raise awareness of the Bills currently under consideration in the UK. You can access this link here, which will direct you to a CSV file listing all Bills going through the Commons and Lords. The file indicates the current reading stage of each Bill. While I won't be covering every Bill— as that would be impractical—my focus will be on those that appear to be state surveillance tools, power grabs, or pose a significant and immediate threat to the UK public. If there's a specific Bill you'd like me to cover, please feel free to get in touch and let me know. Today I am covering the The Public Authorities (Fraud, Error and Recovery) Bill.

The Public Authorities (Fraud, Error and Recovery) Bill is a bill introduced to the UK Parliament on 22 January 2025 by Liz Kendall, Labour Secretary of State for Work and Pensions – find it here. The bill is currently at the committee stage in the House of Commons.

Stated aims

The bill is primarily concerned with welfare benefits, such as unemployment benefits, housing benefits, and other social security payments. It states that its aim is to reduce fraud and error in the system, and detect ineligible claims or fraudulent activity, including overpayments.

“To enhance the government's ability to prevent, detect, and recover funds lost due to fraud and errors within public authorities. The bill seeks to establish a comprehensive framework across the public sector to identify, prevent, and deter fraud, as well as to improve the recovery of debts owed to taxpayers resulting from overpayments”.

Key Provisions of the Bill as stated by the Government:

• Enhanced Investigatory Powers: The bill grants the Public Sector Fraud Authority (PSFA) the authority to compel third parties to provide specific information and access certain communications data to support its investigations. It also extends PSFA's powers to allow authorized investigators to enter and search premises under court warrants, enabling the seizure of relevant materials.

• Debt Recovery Measures: The bill introduces new powers for the recovery of assets related to debts and overpayments resulting from fraud against the public sector. The Minister for the Cabinet Office would be empowered to act on behalf of other public authorities in these recovery efforts.

• Information Sharing and Verification: The bill includes provisions for the sharing of information between public authorities and financial institutions to verify eligibility for certain benefits and to identify overpayments caused by errors with the aim of expediting the detection of fraudulent claims and reduce the accumulation of debt by claimants.

Given the bill is still under consideration in Parliament, its provisions are subject to change as it progresses through the legislative process.

What the Bill really does

Allows DWP to access the personal data of welfare recipients by requiring a third party served with an eligibility verification notice (EVN) – (e.g. bank, building society or credit union) – to conduct mass monitoring without suspicion of fraudulent activity. The EVN requires the receiver to give the Secretary of State “specified details” about the account holder, account, and “how the account meets the eligibility criteria” but the extent of such personal details are not specified on the face of the Bill. To conduct such monitoring and provide the extensive customer information required under the bill to DWP, the bank will have to process the data of all bank account holders and run automated surveillance scanning according to unknown search criteria supplied by DWP

Real Negative Consequences of the Bill for the UK public:

1. Privacy implications, particularly related to the sharing of personal financial information between banks and government agencies, leading to significant privacy violations, which are disproportionate and likely an unlawful breach of individuals’ right to privacy protected by the Human Rights Act

2. Disproportionate effect on vulnerable individuals, including the elderly and disabled who are more likely to be claiming benefits

3. Only one purpose limitation: that the Secretary of State may exercise their power to issue an EVN “for the purposes of identifying, or assisting in identifying, incorrect payments of a relevant benefit.” There is no crime threshold to merit the financial privacy intrusion at all. This permits very broad search criteria without accountability and the scope of eligibility criteria could change at any time

4. Access to bank accounts to be granted even where there is no suspicion of wrongdoing, enabling intrusive generalised mass financial surveillance across the whole of the UK population – not restricted to serious crime, or any crime at all and mirrors the snoopers charter provisions that were defeated under the Tory government and which Labour condemned

5. Unjust monitoring of a wide population without specific suspicion, potentially leading to errors and unfair targeting of certain groups. Will drag in joint account holders even if one account holder does not claim benefits at all, as the bill forces third party organisations to trawl all customers' accounts to “verify a claimant’s entitlement to benefits”

6. Suspicion-less surveillance powers undermining the presumption of innocence by allowing the sharing and scrutiny of personal data without sufficient cause or due process, thereby raising the potential for individuals to be investigated and presumed guilty based on financial data alone. A massive overreach and completely undermines the presumption of innocence, a fundamental principle in UK law which forms a core part of the rule of law. Likely breaches the Human Rights Act 1998, which incorporates the European Convention on Human Rights (ECHR) into UK law - specifically, Article 6 of the ECHR which guarantees the right to a fair trial, which includes the presumption of innocence until proven guilty. The presumption of innocence is reflected in various aspects of the UK legal system, including criminal trials, where defendants do not have to prove their innocence but rather the prosecution must prove the defendant's guilt

7. Unnecessary widening of state surveillance of the population because the Government has existing powers to investigate the accounts of fraud suspects and review bank statements of welfare fraud suspects under the Social Security Fraud Act 2001 and the Social Security Administration Act 1992

8. Involves the processing and exchange of sensitive personal data and transaction data, but the bill does not contain sufficient oversight - unspecified “eligibility” search criteria or algorithms involved

9. Creates data protection conflicts for banks and other affected third parties, requiring them to breach their duty of confidence to customers

10. Assault on the welfare system, transforming it into a digital surveillance mechanism

11. Unconnected third parties will face fines for failures to comply with the provisions in the bill

12. The collection and reviewing of private financial information of people receiving benefits will be de facto automated, but there are no provisions in the bill for algorithmic transparency/accountability. Machine automated scanning of millions of bank accounts will lead to false positive matches for fraud or error with serious negative consequences for welfare recipients and very vulnerable individuals. This could lead to “Horizon style” prosecutions based on machine error

13. Could decimate the private rental market. Landlords may choose not to accept individuals in receipt of housing benefits, or treat them less favourably, because landlords accepting housing benefit tenants may be subject to enhanced financial scrutiny, potentially deterring them from renting to the same. This may result in discrimination against benefit recipients, exacerbating housing challenges for vulnerable populations

14. Disproportionate to the revenue the Government expects to raise via its use – likely to recover less than 1.4% of estimated annual loss to fraud and error, but at a massive detriment to personal privacy

15. Banks etc will be required to process highly personal transactional data in ways their customers have not consented to

16. Massive security risk from leaks, loss, theft and hacking due to frequent searches and exchange of mass sensitive personal financial data

17. Includes a clause that allows for the revocation of a driving license for individuals convicted of benefit fraud if they fail to repay the money they owe to the taxpayer. An overly punitive approach that could disproportionately impact those who may already be in financial distress with a very detrimental effect on people's lives, particularly those who rely on their vehicles for work or personal reasons. Also raises concerns that some could be convicted due to machine and/or algorithmic error and end up losing a driving licence unfairly

My View on the Bill

The draconian and intrusive powers proposed in this bill would force banks and building societies to trawl all customers’ accounts in search of people connected to benefits payments. This is one of the biggest assaults on welfare in a generation and is also nothing other than a mass state power grab for blanket surveillance powers to be targeted at everyone. The state would have unprecedented access to financial information contained in bank accounts and be able to levy overly punitive sanctions such as loss of driving licence. The scope for errors in prosecution, given the automated nature of wide bank account data trawling, is very high. We have seen how automated decisions; machine learning and algorithmic trawling can lead to unjust outcomes, and this is well highlighted by the Horizon scandal. This bill is a reinvention of the snooper’s charter, and everyone should be aware that their private financial information will be up for grabs because of it. This bill should of course be stopped, as it is nothing other than the unjust implementation of a surveillance state.

Organisations Voicing Concerns:

• Big Brother Watch: Have expressed strong opposition to the bill, describing it as Orwellian

• Privacy International: This organisation warns that the bill's measures could lead to severe privacy violations, particularly concerning the sharing of personal financial information between banks and government agencies. They emphasise the need for stringent safeguards to protect individuals' privacy and have previously argued that similar provisions as contained in this bill are likely incompatible with the UK’s obligations under the International Covenant on Economic, Social and Cultural Rights (ICESCR)

• Information Commissioner's Office (ICO): The ICO has raised concerns about the eligibility verification measures proposed in the bill. They stress the importance of ensuring that any data sharing complies with data protection laws and respects individuals' privacy rights

Other articles/resources

The Guardian - Labour’s benefit fraud crackdown would allow officials to access bank accounts

Disability News - Bill would force banks to carry out ‘mass surveillance’ of millions of innocent disabled people, MPs are told

Z2K - The (Public Authorities) Fraud, Error and Recovery Bill lacks sufficient safeguards

GB News - Daniel Cichocki, the Economic Crime & Policy Strategy Director, for UK Finance – “new powers create risks for vulnerable customers, or conflict with existing regulatory and legal obligations"