My Lords, I will address, first, the exclusion of Clause 128 and, secondly, Amendment 219 in my name.
I spoke at Second Reading to oppose Clause 128. I was a little too late to put my name to the clause stand part notice in the names of the noble Baronesses, Lady Kidron and Lady Chakrabarti, and the noble
Lords, Lord Clement-Jones and Lord Anderson. I would therefore like to address a few things relating to that before I move on.
This clause creates two kinds of citizen: those who are entitled to financial privacy and others who are not entitled to any privacy, just because they happen to be poor, old, sick, disabled, infirm and unfortunate. Hopefully, the Minister can explain the rationale for creating this form of discrimination. This discrimination will particularly affect women, because a lot of women receive social security benefits, and people of colour, who are generally paid poorly and often have to rely upon universal credit and other benefits to make ends meet. Hopefully the Minister will also be able to tell us how this squares with the levelling-up agenda. Certainly this clause does not really provide any fairness at all.
I have received lots of emails and letters and met individuals who are very concerned, as earlier speakers articulated, that they will be made homeless because their landlords will not want their bank accounts to be put under surveillance. What assessment have the Government made of the impact that this clause may have on future homelessness?
5.30 pm
Many individuals have their benefits paid into a joint bank account. Under this, the third party, who does not receive any benefits, would be under surveillance. One lady wrote to me whose brother is in a mental institution and receives a very small state pension; no banks would open an account for him because they did not feel that they should grant one. Now his state pension is paid into her bank account to buy him clothes, shoes and the occasional bar of chocolate, and she is petrified that she will be under surveillance. What would this person in a mental institution do?
At Second Reading and even beforehand, the Minister said that the state pension is categorised as a benefit. What exactly is a “benefit”? Unlike most social security benefits, the state pension is taxable, based on national insurance contributions for a number of years and payable only on attaining a certain age. So by what logic is it considered a benefit? I hope the Minister can clarify.
At Second Reading, he referred to fraud prevention as a reason for having Clause 128, but was unable to provide any financial numbers on the state pension. When pressed, he said:
“Although proportionately fraud in the state pension is very low”—
whatever that means—
“it is still there. That will not be the initial focus, but the purpose is to future-proof the legislation rather than to have to keep coming back to your Lordships’ House
”.—[Official Report, 19/12/23; col. 2217.]
Does “initial focus” mean that the Government have a timetable? If so, can they share it with us? What exactly is the extent of this fraud on the state pension? Who has committed it and how many people have been prosecuted? What kind of amounts are involved? Why are the rest of the pensioners, who have never committed any fraud, subject to this monitoring?
What does the Minister mean by “future-proof”? I do not know whether he has taken a ride in Doctor Who’s TARDIS—I have not and do not know what
the future is, but the Minister said that this will “future-proof” the legislation. Why is that not followed through in other laws? For example, we could link benefits, public sector wages and personal allowances to inflation. That would certainly future-proof them, but there is no attempt whatever to apply this principle across our laws, so why is it being singled out? I do not know.
There is a more serious problem. I have received correspondence from pensioners who live abroad. Many recipients of the state pension live abroad, and the government website tells them:
“Your State Pension can be paid into … a bank in the country you’re living in … You can use … an account in your name … a joint account … someone else’s account—if you have their permission and keep to the terms and conditions of the account”.
Can the Minister name the countries which have agreed that the UK Government can snoop 24/7 on the bank accounts of their citizens or at least those of people resident there? What treaties have they signed with foreign Governments and what happens to the right of privacy, which is valued in those countries?
Many people have joint accounts, or the money is paid into “someone else’s account”, to use the Government’s phrase, which means that the third party with no contractual relationship with the UK Government will also become subject to surveillance. Can the Minister explain how many foreign Governments have agreed to this? According to the DWP website, certain benefits, such as maternity allowance and bereavement allowance, can also be paid to people living abroad. What agreements have been made with other countries? How many foreign banks have agreed that they will assist the Government in snooping on accounts held there when the banks are not supervised by the UK regulatory authority? There is clearly an international dimension, about which so far we have heard absolutely nothing from the Government.
I turn now to Amendment 219, which follows on from many of the points made by the noble Baroness, Lady Kidron, and my noble friend Lady Chakrabarti. As drafted, Clause 128 is really a weapon in the Government’s war on the old, the sick, the disabled, the infirm and the unfortunate. The Government camouflage this by claiming that it is about fraud prevention even though no power of any kind is taken to snoop on the bank accounts of tax dodgers, money launderers, profiteers and their enablers, which include accounting firms, law firms, financial services experts and others. If the Government are serious about checking fraud, they need at the very least to take powers of surveillance of the bank accounts of all individuals and organisations that receive money from the public purse, as well as all those organisations and individuals that prevent money flowing to the public purse by their actions.
In September 2023, a report by the Public Accounts Committee, Tackling Fraud and Corruption Against Government, stated that,
“in addition to the £10 billion of tax fraud and £6.4 billion of benefit fraud last year … government lost somewhere between £2.5 billion to £28.5 billion from fraud and error, but it does not know exactly where or how”.
It referred to “fraud and error”. The Government have no idea how much of this is due to fraud and how much is due to error; therefore, they are really floundering.
Surely the Government’s logic in terms of fraud detection and prevention through surveillance ought to apply to this £28.5 billion too. If my suggestion were adopted, it would certainly help with fighting fraud.
Of course, the full extent of fraud is not known. A document published on 14 March 2024, Government Counter Fraud Functional Strategy 2024-27, estimates that fraud and error each year is between £33 billion and £59 billion, but, again, the Government are not going after the bank accounts of those who may be benefiting from it. Not only are billions at risk; billions have already been written off. The Department of Health and Social Care’s accounts for 2023 refer to £9.9 billion possibly being written off due to fraud or error.
I apologise; I have two elements to address, as I said earlier, so, if noble Lords will permit me, I will finish what I have to say. The Government are taking legal action against PPE Medpro, a company controlled by the noble Baroness, Lady Mone, and Mr Doug Barrowman, but no powers have been taken to look at their bank accounts. No powers have been taken to follow the money. Without access to their bank accounts, it is hard to know how exactly the money from these contracts flowed.
The noble Lord, Lord Agnew, resigned live in this House on 24 January 2022. Why? He said it was because the Government had no fraud strategy. He said:
“Schoolboy errors were made: for example, allowing more than 1,000 companies to receive bounce-back loans which were not even trading when Covid struck”.
He went on,
“three out of the seven main lenders account for 87% of loans paid out to companies already dissolved
”.—[Official Report, 24/1/22; col. 20.]
.
None of this can happen without the involvement of banks, accountants, lawyers, financial services experts, company formation agents, directors and other advisers, so why are the Government not taking on powers to focus on those individuals?
There are also companies that have regularly short-changed the public purs,; for example, by overcharging the NHS for drugs. They, too, are clearly depleting the public purse. UK emergency services were overcharged by £200 million a year for a communications network. No companies faced any surveillance. Energy companies are overcharging, and defence companies have overcharged the Government by millions. Serco and G4S have overcharged the Government for monitoring services. What I am saying is that the bank accounts of any company, individual or organisation receiving public money ought to be given the same monitoring treatment as the Government are proposing for those receiving public money in the form of benefits and pensions.