Public Authorities (Fraud, Error and Recovery) Bill

Written evidence submitted by Money Advice Trust to Public Bill Committee – Public Authorities (Fraud, Error and Recovery) Bil l (PAB09)

We understand the Government’s priority to tackle and reduce public sector fraud and error. Minimising fraud is pertinent to a well-functioning social security system. However, it is essential that this is done with comprehensive, effective safeguards in place, which take into account affordability and vulnerability. In our evidence response, we focus on part 2 of the Bill , on social security fraud, error and recovery.

1. Direct deduction s from bank accounts

1.1 It is vital that this new power is accompanied by appropriate safeguards on affordability and vulnerability, including through the debt recovery code of practice , particularly for self-employed people who are mo re likely to be subject to this power (due to sitting outside the PAYE system) .

1.2 It is common for self-employed people to have more money sitting in their bank accounts that the DWP may think can be deducted, but is actually needed for the individual . For example, savings to pay a tax bill, or from seasonal trade where they take large profits for a period , which then have to last them across the year. 

1.3 DWP must carefully consider the direct deduction imposed in each case, and take into account the costs people are facing . Without any robust assessment of whether the direct deduction payments are affordable for the individual, this can often result in hardship . Many people tell us they’ve gone without essentials like food or heating, or not been able to afford to pay other bills, like their rent or energy, because of unafforda b le deductions from benefits .

1.4 We are engaging with the DWP on this code of practice for debt, but believe there should be Parliamentary scrutiny over it so they can confirm it is robust enough. 

1.5 Opportunities for engagement must be plentiful in nature, and people need to be given suitable time to challenge any direct deduction orders imposed. Schedule 5, 5(4) should be extended from 28 days to appeal the direct deduction to 60 days . This would bring it in line with the current Breathing Space (Debt Respite Scheme) period , which gives people time to seek debt advice .

1.6 Processes relating to government debt collection and enforcement can often overlook reasons why people are not engaging. This could be linked to fear, or the impact of mental health conditions, as well as accessibility barriers. Processes must therefore be designed to be as supportive as possible , rather than assume a lack of engagement means someone is evading payment. Communications should be compassionate, focusing on the support that can be offered and should not threaten the use of these powers at an early stage.

1.7 In order for these powers to truly be exercised as a last resort, improving communications to get people to engage sooner rather than later, and ge t t ing them the support they need is key. To improve communications, DWP should look to work with and engage the debt advice sector .

2. Powers to verify eligibility with financial institutions

2.1 The introduction of the power to verify eligibility with financial institutions presents the risk that ultimately, more people will be subject to fraud investigations , even if they are found to be innocent of any offence. If powers are expanded in future to other areas of eligibility, this risk is even higher. 

2.2 We want to see a clear commitment from the DWP (ideally on the face of the Bill, but at very least via clear Ministerial commitment to Parliament) that people will not have their benefits suspended before an investigation complete s and any wrongdoing has come to light.  

2.3 When investigating fraud, there needs to be clear and accessible processes for people to engage – from our experience, we know that a lack of engagement does not necessarily mean avoidance of payment .

2.4 Allowances must be made for people that need support with processes , namely those who have English as an additional language, those without internet access or who struggle with navigating digital devices, and those who are either disabled , or have a long-term physical or mental health condition. For these groups of people, reasonable adjustments must be made (whether it be access to a translator, or help to fill out forms correctly).

3. About the Money Advice Trust and the people we support

3.1 As one of the UK’s leading debt advice charities, the Money Advice Trust’s mission is to help prevent financial difficulty and remove problem debt from people’s lives. We run National Debtline and Business Debtline – which offer free, independent and confidential debt advice by phone, webchat and online.

3.2 In 2024, our National Debtline advisers provided help to more than 118,000 people over the phone and via our digital advice tool . We also helped more than 32,000 people via webchat.

3.3 Our Business Debtline advisers helped almost 38,000 small business owners and self-employed people over the phone and via our digital advice too l , and 15,400 people via webchat.

3.4 Benefit overpayments is one of the most common, priority debt type amongst callers to National Debtline – a quarter (2 5% ) of callers are dealing with this debt. [1]

For more information on our submission, please contact Jasmin Dhaliwal, Public Affairs and Policy Officer, jasmin.dhaliwal@moneyadvicetrust.org .

March 2025