I beg to move amendment 7, in clause 89, page 55, line 6, leave out from “unless” to the end of line 14 and insert—

“(a) the liable person agrees, or

(b) there has been a final determination by a court or tribunal that it is necessary and proportionate to exercise a power under Schedule 3ZA.”

This amendment would mean that the Secretary of State can only exercise powers to recover amounts from a person where the person agrees or where a court or tribunal has determined that such recovery is necessary and appropriate.

With this it will be convenient to discuss clause stand part.

It is a pleasure to have you back in the Chair this afternoon, Sir Jeremy. The amendment covers direct deduction orders relating to social security payment debt of individuals who are no longer on benefits and not employed within the pay-as-you-earn system, as well as the use of powers to disqualify debtors from driving—a power I oppose, and we will debate that when we come to schedule 6.

The clause introduces the power for the Department for Work and Pensions to recover funds directly from a person’s bank account without a court warrant. The Secretary of State may make a direct deduction order in respect of a recoverable amount, where the debtor is no longer on benefits and is not employed within the PAYE system. As I understand it, the powers apply to all benefits under sections 71 to 78 of the Social Security Administration Act 1992, including universal credit, and employment and support allowance. The powers apply to not only overpayments caused by deliberately fraudulent behaviour, but negligent oversight, incorrect statements and failure to disclose information. A DDO may be issued in relation to a joint account, if that is the only account that the debtor has.

The amendment would replace the conditions for such powers under proposed new section 80A(5) of the 1992 Act and would mean that the Secretary of State can only exercise powers to recover amounts from a person where the person agrees that the payment is due, or where a court or tribunal has determined that such recovery is necessary and appropriate. The language and wording almost exactly mirrors that in clause 12, on page 9 of the Bill, which provides that protection for debtors to public authorities. If the likes of potential covid fraudsters and corrupt company directors get the protection of a court or tribunal decision, it is difficult to understand why a benefit recipient should not get the same.

It is worth noting that we already have powers to address the scenario where a debtor is no longer on benefits and not in PAYE employment. In such cases, the DWP can recover overpayments through county court enforcement proceedings. I am aware that the DWP argues that the county court method of enforcement is slow and resource-intensive. However, that is not a good reason to jettison judicial oversight from a process that allows the Government to take money directly from individuals’ bank accounts.

My amendment 7 seeks to address the concern that those powers hand an extraordinary amount of discretion to the Secretary of State, as there is no threshold to determine what constitutes hardship or what would be fair in all the circumstances. Furthermore, as far as I can see, no floor is defined for the amount of money that must be left in the debtor’s bank account.

I understand that the DWP maintains that the power is like those used by His Majesty’s Revenue and Customs and the Child Maintenance Service, but that is not comparing like with like. Child maintenance is money owed—already defined to be affordable—by one parent to ensure provision for their dependant who does not live with them. That differs from an individual claiming money from the social security system who has been overpaid, potentially through no fault or a simple mistake of their own, where restitution may be extremely difficult to manage fairly and affordably.

Furthermore, I understand that HMRC powers have safeguards: before the powers are exercised, debtors must receive a face-to-face visit from an HMRC agent; and HMRC must retain at least £5,000 across the debtor’s accounts. By contrast, the Bill leaves those protections to the DWP’s discretion, based on the debtor’s representations and covertly obtained bank statements.

The amendment is also needed because the direct deduction powers as drafted would not be powers of last resort. For example, there is no requirement for the minimum number of times a liable person has failed to engage with the DWP before the powers can be exercised; there is no definition of whether someone has been given a reasonable opportunity to settle the debt; and there is no requirement for an in-person visit from the DWP. Such safeguards matter, because benefit recipients may not be engaging due to incapacity, illness, mental health problems or other genuine reasons. If those circumstances are ongoing, this will be an ineffective deterrent to force people to engage and repay their debts.

The amendment would mirror protections in part 1 of the Bill by limiting the availability of direct deduction order powers to cases where the debt is accepted, either by the debtor or by judicial determination. That would prevent the DWP from lowering the legal threshold at which funds can be removed directly from an individual’s bank account. I hope that we will come back to this issue at a later stage, as I really do want some action on it.

It is a pleasure to serve under your chairship again, Sir Jeremy. Amendment 7 would introduce a new requirement for the direct recovery from account power, restricting its use to cases where the debtor agrees or where a court or tribunal determines that the exercise of the power is necessary and appropriate. I am not clear whether the amendment would do exactly what the hon. Member for Brighton Pavilion intends, which I believe is to place the restriction on all the new DWP recovery powers proposed in the Bill, but I will address the amendment as I think it was intended.

Although I share the view that there should be protections in place to ensure that the direct recovery power is used proportionately and appropriately, I do not agree that the amendment is necessary. In my view, the Bill already contains sufficient safeguards. The amendment would also introduce unnecessary burdens for courts and tribunals, create avoidable inefficiencies and, ultimately, reduce the amount of taxpayers’ money that the power would bring back into the public purse.

The Department has long-standing powers under sections 71 and 71ZB of the Social Security Administration Act 1992 to recover public money wrongly paid in excess of entitlement. Those provisions include a strong framework, including rights of reconsideration and appeal against the overpayment decision. The DWP already has powers to recover such overpayments through deduction from benefits and PAYE wages under sections 71, 71ZC and 71ZD of the 1992 Act.

The power in the clause is aimed at recovering taxpayers’ money owed by debtors who persistently evade repayment and refuse to engage with the DWP to agree affordable repayment terms, even though they have the means to do so. It is highly unlikely that those debtors, who, until this point in the debt recovery process, have ignored all reasonable requests by the DWP to work with it to agree repayment terms, would suddenly willingly agree to the DWP recovering the money they owe directly from their bank account. It is therefore highly likely that, under the amendment, the DWP would be required to seek a determination from the court or tribunal that a direct deduction order is necessary and appropriate.

The DWP can already seek lump sum recovery from a debtor’s bank account through the courts by applying for a third-party debt order. The very rationale for introducing this power is to recover more than £500 million of public money over the next five years without using court time unnecessarily. The amendment would create entirely avoidable inefficiencies.

The Bill already makes sufficient provision for a debtor to challenge a direct deduction order if they do not agree with it, first through the right to make representations concerning the terms of the order prior to any deductions being made and, following that, through a right of appeal to the tribunal. That is in addition to the debtor’s existing mandatory reconsideration and appeal rights concerning the decision that there is a recoverable overpayment that must be repaid.

In addition to those safeguards, the Bill includes sufficient provisions to ensure that the power is used appropriately and proportionately. Specifically, it provides that it is a last-resort power that can be used only if recovery is not reasonably possible by deductions from benefit or PAYE earnings. The debtor can avoid the power entirely at any point by working with the DWP to agree affordable and sustainable repayment terms.

Separately, the disqualification from driving power can be exercised only at the discretion of the court. Again, that provision includes necessity and proportionality considerations by requiring disqualification to be suspended provided that the debtor makes the payments ordered by the court, and ensuring that an order cannot be made if the court considers that the debtor has an essential need for a licence.

Lastly, the amendment would be likely to reduce the expected deterrent impact of the direct deduction power. Although the DWP will take the appropriate action, in line with legislation, to address debtors who persistently evade repayment of taxpayers’ money when they have the financial means to repay, the power is expected to encourage debtors to agree affordable and sustainable repayment with the DWP without the need to proceed with an order.

Making such an amendment would lessen the power’s effectiveness, meaning that the DWP would have to take this action more frequently than envisaged and potentially subject debtors to court proceedings where the DWP would not have as the Bill is currently drafted. I hope—but I suspect possibly not—that I have reassured the hon. Member for Brighton Pavilion that the Bill contains sufficient provisions and safeguards.

Is it fair to say, for the reasons that the Minister outlined on the removal of the deterrent, that this amendment would not only assist some who seek to commit fraud but cost the DWP in its internal legal responsibilities and duties, as well in what it has to contribute to the court process to pay for what the amendment would require, in the sum of tens of millions of pounds?

I would not put a specific value on it, but my hon. Friend may well be right with the sort of figures that he suggests. Yes, there would be additional costs from the preparation in advance of court appearances, as well as the administrative costs of applying to the court itself. I think we would bear a significant burden, were we to agree to this amendment. Having outlined my reasons, I will resist amendment 7.

Clause 89 inserts proposed new section 80A into the Social Security Administration Act 1992, and it sets out which debts can be recovered by the new DWP recovery powers introduced in part 2 of the Bill. The new recovery powers are, firstly, the power to recover from bank accounts via direct deduction orders and, secondly, the power to disqualify a person from holding a driving licence.

The introduction of this clause ensures that the DWP can apply the new recovery powers to relevant social security debts. The clause is crucial to ensure that the new recovery powers in clauses 90 and 91 are used proportionately, appropriately and as intended by making them a power of last resort. By that, I mean that the DWP can use the new powers only after a debtor has been given all reasonable opportunities to repay the money owed, and only where recovery by existing powers is not reasonably possible.

The DWP debt stock stands at over £9 billion. As set out in the impact assessment, there is approximately £1.7 billion of off-benefit debt where individuals are able to avoid repayment, as the DWP is currently unable to recover effectively and efficiently in these cases. The Department’s current recovery powers are limited to deductions from benefits or PAYE earnings, meaning that those with other income streams and capital can choose not to repay their debt. The powers are vital to tackle those who repeatedly and persistently evade repayment, bringing £565 million of taxpayers’ money back into the public purse over the next five years.

These powers are expected to have a deterrent effect and to encourage many debtors to agree to repay without the powers being used. Debtors will be notified of the powers and their potential to be used to recover the money owed, should the individual continue to evade repayment. Let me be clear: where someone keeps money to which they are not entitled and repeatedly refuses to repay, the DWP will recover that money through these new powers. I commend the clause to the Committee.

It is a pleasure to serve under your chairmanship again, Sir Jeremy. Clause 89 sets out how money is to be recovered. It specifies that the Secretary of State cannot recoup the money from someone’s bank account or disqualify them from driving until they have given the liable person a reasonable opportunity to settle their liability, notified the liable person that the Secretary of State may exercise the power to recover the amount, if the liability is not settled, and the Secretary of State must also have given the liable person a summary of how the power would be exercised.

We support the recovery of money that has been fraudulently claimed, and I believe it is pretty clear that we need to do it. However, when the money has been given out in error, particularly to vulnerable claimants, as has been mentioned this afternoon, will the Minister explain how those vulnerable claimants will be communicated with? How will the DWP ensure that funds can be managed in a way that is sustainable for the individual who has to make those repayments? I hope that would also reassure the hon. Member for Brighton Pavilion.

Green party amendment 7 would mean that the Secretary of State can exercise powers to recover amounts from a person only where the person agrees or where a court or tribunal has determined that such recovery is necessary and appropriate. We in the official Opposition question why the Secretary of State should be prevented from recovering amounts that have been fraudulently claimed, unless the person in question agrees. The amendment seems to us to entirely frustrate the purpose of clause 89, which may well be its intent.

Would the hon. Member care to comment on the fact that in clause 12, actual fraudsters are given the option to either have a court agree, or for them to agree to repay the amount?

In terms of the Cabinet Office powers that we debated under part 1 of the Bill, I think we are not comparing apples and apples; we are comparing apples and pears. I am not the Government, so it is not my Bill, but ultimately we have heard the figures—indeed, I have shared the significant amount of fraud we are talking about—and if I were in the Minister’s shoes, I would say that the number of cases is not comparable. I continue with my view that this is different from the first part of the Bill.

I would be interested to hear an explanation from the hon. Member for Brighton Pavilion about why she does not believe that money that has been fraudulently claimed from the DWP should be paid back. However, I have a question for the Minister off the back of amendment 7, which is similar to the question I asked him about clause 89. Regarding the concerns about the definition of hardship and vulnerability that the hon. Member for Brighton Pavilion mentioned, what might those levels be? I appreciate that that is potentially difficult to include in the Bill, but it would be interesting to know what is defined as a level of hardship that would have an impact on repayment, and how that would be determined.

I will spend a moment setting out the process around the establishment of communications prior to deduction from a bank account and the affordability considerations that we undertake.

A person who is not paid under PAYE, or is in receipt of benefits, is identified and referred to the DWP’s debt management team initially to recover the debt. The debt management team makes multiple attempts, by letter or phone, to contact the person over at least four weeks to agree a voluntary repayment plan. If no contact can be made at that point, the case is referred to the DWP debt enforcement team, who will make at least four further separate attempts at contact, by letter or phone. That will include, at a minimum, two written notifications setting out the debt amounts owed, how the DWP may enforce the recovery of the debt, and with signposting to debt support to ensure that support is offered to vulnerable people.

If there is still no contact made, the person has repeatedly refused to engage and agree a voluntary plan. At that point, the DWP will check that the person has not made a new claim for benefit or entered PAYE employment, to check the person is suitable for this sort of recovery action. The person’s bank can then be contacted by the DWP to provide three months of bank statements from their accounts to check the affordability for any deduction, and to help the DWP work out the right amount, and frequency, of any deduction. The deductions must be line with caps in legislation. For regular deductions, that must not exceed 40% of the amounts credited into an account over the period for which bank statements are obtained. This will ensure that no one is forced to repay more than they can afford, so no one is pushed into financial hardship due to the recovery of debt.

Once that affordability assessment is complete, the DWP must write to the person to outline the debt that is being recovered—in other words, what has been overpaid and what is owed—the amount and frequency of the deduction, and how the deduction will be made, which in this case is from their bank account. The letter must outline the opportunities for the person to make representations to the DWP about any circumstances that the Department should consider before making the deduction, and it must also outline their right for the deduction decision to be reviewed. The person has a month to make representations or request a review. The letter must also outline appeal rights, including that if a person has made representations or asked for a review and the deduction order has been upheld, they may appeal the decision to the first-tier tribunal.

If there is no contact, one month after notifying the person of the proposed deduction the DWP will instruct the bank to deduct money, and repayments will be made directly to the DWP from the person’s bank account until the debt is repaid. That shows that it is quite a rigorous process, with a number of attempts to make contact with the person and a number of safeguards in rights to object and rights to appeal. In addition, for particularly vulnerable people, we have the vulnerability framework; part of that process supports people through referrals to advice services. We work with the Money and Pensions Service in particular, and frequently refer people to its services frequently.

For specific vulnerabilities and in particular cases, there is discretion to consider waiving the debt. That is unusual, but it is clearly an important safeguard for extreme cases—for instance, where domestic violence or financial coercion is involved. That is applied very much on a case-by-case basis; it is not a power or a policy that we would expect to use regularly.

I hope I have given the Committee an indication of the support and process for vulnerable people, and the number of humps in the road, as it were, before we get to the point at which we make a deduction.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 89 ordered to stand part of the Bill.