Mike Wood
MP for Kingswinford and South Staffordshire · Conservative · United Kingdom
“The overwhelming cytokine storms, microvascular clotting and rapid progression to acute respiratory distress syndrome and multi-organ failure seen in covid intensive care units are classic manifestations of viral sepsis.”
“Up to 50% of sepsis survivors suffer prolonged physical, cognitive and psychological impairments from debilitating fatigue and cognitive brain fog to severe muscle weakness and post-traumatic stress disorder.”
“That makes it so difficult to have a meaningful figure for the number of cases, deaths and serious disabilities as a result of sepsis. We really need more consistency in the way that is coded, as well as a guide to best practice. I join the Minister in offering my condolences to the hon.”
“Absolutely. Of course, some infections are almost unavoidable, but where infections such as UTIs can clearly be reduced with the right care and precautions, we must do everything we can to reduce those risks. Every Member in this Chamber has constituents whose lives have been permanently transformed by sepsis.”
“Like many in politics, my behaviour can at times appear to some people to be a little idiosyncratic; fortunately, Laura realised that, even for a Member of Parliament, that was not entirely normal behaviour.”
“The international theme for this year could not be more apt: “Invest in Sepsis—Save Lives.” The World Health Organisation recognises sepsis as one of the leading causes of death and disability globally, estimating that sepsis-related illnesses account for one in every five deaths worldwide.”
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“One of the things is that if frontline staff are not picking up vulnerabilities, or they are not trained in how to sort out affordability, in empathic listening or in all the protocols about how to have different types of conversations with people in different types of vulnerable situations—if those things are not in place—some of the processes in the Bill will not be as effective. It comes down to the training for frontline staff, and the capacity and processes to then follow up on what has actually been disclosed, that will enable those repayment plans to be put in place before those later processes. If those are not in place, that could cause some real issues.”
“Clause 22 outlines how much can be directly deducted from a liable person’s bank account, while clause 23 specifies the information that must be included in direct deduction orders. These provisions are central to the enforcement mechanism and yet there are many questions that remain about their practical implementation and fairness. As we have said many times in Committee, it is very difficult to assess how the system will work without seeing a draft code of practice. As Anna Hall from the Money and Pensions Service said when giving evidence last Tuesday, “the code of conduct will be the critical thing.”
“In the case of non-fraudulent claims, where the Minister is not satisfied that there has been fraud on the part of the liable person, I would be inclined to go with the Government’s figure of 20%. That is reasonable in the case of errors, and it obviously allows for longer-term recovery where a genuine mistake has been made. Where there is deemed to have been fraudulent activity, it does not make sense to give those responsible the protection of protecting 60% of the money that they have stolen.”
“To conclude, the effectiveness of these provisions will depend heavily on the codes of practice on staff training and on fair procedures. Further clarification is needed to ensure deductions are proportionate, transparent and do not cause undue hardship, particularly in cases of fraud and financial vulnerability. But where there has been demonstrable fraud, the Opposition see no reason to protect 60% of credit in a bank account where it may be linked to conscious efforts to defraud the taxpayer. I would welcome the Minister’s response to those concerns.”
“Obviously, the Bill allows for sums to be recouped through regular earnings. Where money is in a bank account, we have established that the money is there from the information notices and other measures in the Bill. If the full amount that has been defrauded is available within the account, it seems to make little sense not to be able recover that sum from the account, rather than relying on a deduction of earnings order. Clause 23(5) requires banks to comply with direct deduction orders. Have the financial institutions been consulted on those obligations and are they content with them? As was said earlier, the evidence that we heard last Tuesday suggested that many financial institutions did not seem to have a grasp of what those obligations and burdens might look like, as well as the costs that would arise.”
“I thank the Minister for giving us some clarification on that, but the direct deduction is different from an earning attachment where there is likely to be another similar amount coming in the following month. The Minister suggested I might have £200,000 in my account, which I think would raise a few eyebrows all around. But if all £200,000 had been the result of fraud from the public sector, and I chose to put that regular direct deduction order in place, my understanding of clause 22(3) is that in the first month the maximum that could be deducted would be 40% of £200,000—which is £80,000.”
“That would leave £120,000, which would mean that in the second month, presumably the most that could be deducted if no further money had been paid into the into the account would be £48,000.”
“Given the Minister’s reassurances, I will not press amendment 19 to a Division now, but we may wish to come back to the matter on Report. I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause s 22 and 23 ordered to stand part of the Bill. Clause 24 Bank’s administrative costs Question proposed, That the clause stand part of the Bill.”
“As the Minister said, the clause allows for deductions from a liable person’s account to include reasonable costs incurred by the bank in processing the deduction order. While the clause will ensure that banks can recoup legitimate administrative expenses, several important questions arise about fairness, oversight and overall financial impact.”
“Does the Minister have discretion to determine the best course of action, or are there prescribed steps that must follow? If funds are unavailable in the specified account, is there a process to check whether the liable person has other accounts in their name with other financial institutions that may have sufficient funds? Would the Minister have the power to issue a further general information notice to a bank in order to identify other accounts that could be used for recovery?”
“The clause outlines the procedure when a bank account does not contain sufficient funds to fulfil a direct deduction order. The key provisions are as follows. For lump sum deduction, if the full amount is not available, no deduction is made and the Minister is notified. For regular deductions, if the necessary funds are not available, an attempt is to be made again on the same day the following week. If funds remain insufficient, no deduction is made and the Minister is notified. I have some key questions and concerns as to what happens next. Once the Minister is notified, what are the next steps? Does the notification trigger further action to recover the money through other means? Is there a set timeframe in which the Minister must decide on further steps?”
“Given the significant responsibilities placed on banks and the potential impact on individuals, further clarity is needed on how banks will be guided in assessing disadvantage and hardship, how the code of practice will address these concerns and ensure practical implementation, what penalties will apply if an account holder frustrates the deduction process or if a financial institution fails to prevent such frustration, and what appeals or exceptions exist for necessary transactions that unintentionally interfere with the deduction order. Those clarifications are essential for ensuring that the system is both effective and fair.”
“Is there an appeal mechanism if an account holder can prove that a transaction was necessary and not an attempt to evade the deduction? For example, what would happen if someone urgently needed to pay rent or buy medicine and did not realise it would interfere with the deduction order? Would there be any flexibility in cases of financial difficulty, and how would that be assessed?”
“It would be helpful if the Minister could clarify how these concerns will be addressed in the code of practice and provide as much specificity as possible. Clause 27 states that account holders must not take actions that frustrate the direct deduction process, such as closing the account, moving funds elsewhere to evade the deduction or engaging in other actions that undermine the effectiveness of the recovery process. The matter of penalties for non-compliance needs to be looked at carefully. What penalties will be imposed if an account holder deliberately frustrates the deduction order? Would non-compliance be treated as a civil offence, or could it lead to criminal penalties in cases of deliberate obstruction? If the financial institution failed to prevent it, would that be a civil offence, or would it be seen as a regulatory issue?”
“How can banks assess the potential immediate impact of blocking transactions, including preventing spending on essentials—for example, food or utility bills—and any consequences that might arise from that? How will they consider longer-term financial obligations, such as rent or mortgage payments, disruption to which could cause significant hardship? The lack of a code of practice makes it difficult to properly scrutinise these measures. The code of practice is expected to provide crucial details on how banks should balance enforcement with protecting individuals from undue harm, but we will have to wait until after we have made decisions in Committee and in the Bill’s remaining stages to see it.”
“Clause 26 places significant responsibilities on banks once a direct deduction order has been issued. The bank must ensure that the account is not closed while a deduction order is active, prevent transactions that would reduce the balance below the required deduction amount—for example, the transfer of funds—and ensure that these actions do not cause disadvantage to the liable person. I have a few questions about those responsibilities. How are banks expected to assess disadvantage or hardship, based on what is likely to be very limited information available to them about their account holders? What guidance or criteria will be provided to banks to determine what constitutes a disadvantage to the liable person?”
“How and when might deductions be suspended or restarted and will there be oversight of these decisions? Is debt recovery pursued from estates after death? Are fraud and error debts written off, and if they are to be pursued, through what mechanism? What additional information might banks be asked to provide under clause 31? Does that place an unreasonable burden on them? Given that the Minister has indicated that a code of practice will govern these processes, it is again deeply frustrating that that document has not been made available for scrutiny during the passage of the Bill through this House. We therefore ask that the Minister provides as much detail as possible on how the Government expect those provisions to be implemented in practice.”
“Will she address concerns about whether the Minister and the PSFA have the practical capacity to handle these decisions in a timely manner? What resources will be allocated to the PSFA to ensure that this can be done without unnecessary delay? Decisions about deductions, variations and revocations are all made by the Minister or their delegate with no independent oversight. Might an independent appeals body provide fairer scrutiny? In the absence of such an independent appeals body, might there be the risk of judicial review in certain cases? To fully understand how these provisions will work in practice, we will require further clarity from the Minister on many of those issues. What circumstances justify varying a deduction order and which criteria will guide these decisions?”
“Will there be any other mechanism to ensure that the deductions are not taken in the meantime, at what can obviously be an extremely busy time? Are banks expected to proactively check for death notifications, or will the Government notify them in the absence of a family notification? If deductions continue after death, what mechanisms exist for refunding the estate? We have also raised wider concerns in relation to other parts of the Bill about ministerial power and the lack of independent, third-party oversight. These clauses, like many others, grant significant power to the Minister regarding deductions, variations and revocations, but they do not require oversight from an impartial third party outside the Cabinet Office or the PSFA.”
“Once more, the lack of a draft code of practice makes it difficult to scrutinise the provision effectively. What safeguards will be in place to ensure that deductions are not arbitrarily suspended or restarted? Will there be any independent oversight of these decisions? Restarting deductions, in particular, risks a negative impact and potential financial harm for the subject. Clause 33 follows on from clause 30 and states that a bank must stop deductions once it becomes aware that the account holder has died. Again, we do not disagree with the mechanism in relation to these clauses, but how does the Minister expect banks to be informed of a person’s death in a timely manner? Will that be through the usual process following a death, whereby an executer is perhaps conducting the deceased’s financial affairs?”
“Is there a limit on how frequently banks and other financial institutions must comply, in order to prevent these measures from becoming overly burdensome and onerous? Clause 32 allows the Minister to suspend and later restart deductions by notifying the bank. Will she clarify the circumstances under which she would expect deductions to be suspended? Might that include cases in which the liable person has appealed the deduction, for example, or in which the person’s financial situation has changed? Perhaps they have lost their job or there is a change in family circumstances. Will the provision apply where the Government wish to reassess eligibility for deduction, or where the bank raises concerns about the impact of deductions on the account holder?”
“Clause 31 allows the Minister to issue another information notice to a bank to obtain details necessary to decide whether to revoke or vary a deduction order. Powers under the clause closely resemble those used for the original information request, so many of the concerns we have raised about those requests obviously apply to this clause as well. What additional information might the Minister expect banks to provide the second time around, and if the original information notice was already comprehensive, what new details could justify issuing a further request? Does this suggest that banks may be asked to monitor accounts over a longer period than was indicated in the original information request? How often can the Minister request additional information?”
“Clause 30 states that a direct deduction order must be revoked when the full payable amount has been recovered or the liable person has died. What happens to the outstanding sum that would otherwise be payable after a death? Does it mean that if the liable person dies, the Government will either not seek to recover funds or must do so through mechanisms other than this legislation? In most cases of debt collection, there are provisions to recover debt from a deceased person’s estate. Why does the clause not specify that, or is it provided for in other parts of the Bill? If the estate has sufficient funds, will the Government pursue repayment through probate or will they write off the debt entirely? Would there be any exceptions where the Government may still seek repayment?”
“Where would, for example, the Public Sector Fraud Authority stand compared with other creditors who are owed either secured or unsecured debts? Let me turn to the process and authority for variation decisions. How will those variations be processed? What timeframe is expected for a decision after a variation request is submitted? Given that the Minister will delegate these functions to the PSFA, what level of seniority within the PSFA will be required to approve variations? Will it be as for the issuing of other notices, or will a more senior level be required? To return to the question of codes of practice, will there be internal guidelines within the PSFA to ensure consistency and fairness in decision making and that similar applications are treated similarly?”
“Clause 28 gives account holders the right to request a variation to a deduction order, perhaps in a change of circumstances, and clause 29 empowers the Minister to make such variations. I have some questions for the Minister about the measures. Under what circumstances might she expect the Minister for the Cabinet Office to vary an order, and what criteria would be used to determine whether a variation is justified? Might that include financial hardship, changes in financial circumstances or new evidence regarding the debt? Would variations be considered if a person has multiple debts and can demonstrate that repaying at the original rate would cause undue hardship because of those other repayments? What is the status of any payable amount in relation to sums owed to other creditors?”
“To fully understand how the review process will work, further clarity is needed from the Minister on the types of issues that can be successfully challenged in a review; whether the 28-day limit can be extended in exceptional circumstances, and if not, why not; and the rights that joint account holders have to request a review. Can she also confirm that Government amendment 2 does not impact the substantive rights of individuals seeking a review? As with almost every other part of the Bill, it is concerning that the code of practice has not been made available, but perhaps the Minister can provide some additional detail and context, to fill some of the gaps.”
“If not, why has a stricter approach been taken here than in other legislation? Clause 34 does not specify whether a joint account holder has the same right to review a deduction order as the primary liable person. Can a joint account holder initiate a review separately, and if so, on what grounds? If a joint account holder does not agree with deductions being taken from their shared account, what recourse do they have? Government amendment 2 appears to be purely technical, removing duplicated provisions. However, can the Government confirm that the amendment does not limit or restrict the review process in any way?”
“Could a review consider whether the deductions are fair in relation to other debts or financial obligations that the person has, such as child maintenance? Clause 34 sets a strict 28-day deadline for a review request, and there does not appear to be an ability to extend that timeframe, even in exceptional circumstances. By contrast, in employment tribunals the standard time limit for lodging an appeal is three months, and the Employment Rights Bill currently before Parliament proposes extending it to six months. In other legal contexts, extensions are generally granted where the delay was due to exceptional circumstances, such as illness, bereavement or lack of access to legal advice. Might the Government consider allowing some flexibility in this timeframe to allow for such exceptional circumstances?”
“Clause 34 provides the mechanism for account holders to request a review of a ministerial decision to make, vary or refuse to vary a direct deduction order. However, the scope of the review is limited, as the person cannot challenge the existence of the debt or the amount owed at that stage, unless the order incorrectly states the amount. Given that limited scope of review, what can be challenged? Given that the review cannot dispute the existence or amount of the debt, what exactly can be reviewed? In what types of cases would the Government expect a review to be successful? For example, could a review be granted on hardship grounds, or could a review be successful if the deductions cause significant financial difficulties, such as impacting essential living costs?”
“What proportion of cases is expected to be resolved internally rather than requiring a tribunal appeal, and what steps are being taken to ensure that the tribunal system is adequately resourced for any additional caseload? As with almost all elements of the Bill, some aspects will be clearer when there is finally a draft code of practice, but given that the Committee will not see it during our consideration of the Bill, will the Minister address those questions and provide some transparency and detail, to ensure that individuals subject to direct deduction orders are treated fairly and have genuine access to justice?”
“If the vast majority of cases are expected to be settled internally, that reduces the burden on the tribunal system, but what safeguards are in place to ensure fairness and prevent conflicts of interest? If a significant number of appeals do reach the tribunal, are the Government confident that the tribunal system has the capacity needed to handle them? Could the Minister provide clarity on why the 28-day appeal period is so rigid? Will the Government look at whether there is scope for it to be extended in exceptional circumstances? Will the internal review mechanism serve a meaningful function, or might the first-tier tribunal act as the better first-instance review? Was the decision based on legal, practical or resource considerations?”
“Having this two-stage process potentially extends the time for reviewing and appealing rather longer, and goes against what I think the Minister and the Bill intend. Is it intended to resolve most issues at the early stage to avoid referral to the first-tier tribunal, and if so, what confidence does the Minister have that the PSFA’s internal review process will be sufficiently robust? Given that it is part of the initial decision-making process, fairness must not only be done, but be seen to be done, to avoid the need for recourse to the first-tier tribunal. Does the Minister have an estimate of how many cases would be expected to be resolved in the PSFA review process, against how many might need to proceed to the tribunal?”
“Although I understand the need to recover money owed to the taxpayer as quickly as possible, we need to ensure that justice can be done without procedural requirements unfairly and unnecessarily impeding someone for what might only be a question of days, or possibly a week or two, in circumstances that few of us would wish to be in. The first-tier tribunal is a respected independent body, so it is extremely welcome that appeals can be made there. The tribunal, however, only gets involved after the internal review by the PSFA or officials acting on behalf of the Minister. Is it the Minister’s expectation that the internal review process will filter out most of the reviews and provide some resolution before they get to the tribunal?”
“The clause allows individuals to appeal to the first-tier tribunal if they disagree with the decision to make, vary or refuse to vary a direct deduction order. This right of appeal, however, is available only after the individual has completed the review process under clause 34. The appeal must be made within 28 days of the review outcome. I ask again, regarding the strict 28-day appeal deadline, why there is no provision for extension under any circumstances. In the previous grouping, I mentioned other tribunals where either longer periods of time to make the application are available or there is provision for extending the deadline in cases of genuine hardship or exceptional circumstances, or in most cases, both. It comes back to the question why the stricter approach has been taken in this Bill, compared with other areas of law.”
“Are those set out in this legislation robust enough to prevent misidentification or errors? Ensuring clarity and consistency in how deductions are applied across both types of financial institution will be critical to prevent unintended gaps in enforcement.”
“Whereas traditional banks have well-established compliance frameworks, making it relatively straightforward for them to implement direct deduction orders, electronic money service providers may operate differently, often without physical branches and storing funds in pooled accounts rather than individual ones. Whereas banks may have concerns around how the direct deduction orders interact with their existing legal obligations such as safeguarding funds for overdraft protection or outstanding debt, the practical questions that arise with electronic money service providers are around how direct deductions will be handled for digital wallets that do not hold fixed balances. Will the money providers be required to prioritise Government deductions over pending transactions, or are there existing verification mechanisms?”
“Clearly, the intention behind this broad definition is to ensure that all financial entities where individuals may hold funds are captured under the Bill’s provisions, preventing fraudsters from circumventing recovery mechanisms by moving money into non-traditional accounts. However, we would like to hear the Minister’s view on whether there are any practical differences in execution between financial institutions; a key concern is that direct deduction orders and information notices might not be executed uniformly across different types of financial institutions due to variations in their operational structures.”
“As the Minister said, this clause establishes the definition of a bank, among other things, for the purposes of the Bill, ensuring that financial institutions responsible for holding and transferring funds fall within its remit. However, the definition is broad enough to include both traditional high street banks—institutions with long-established infrastructures for compliance and regulatory oversight—and electronic money service providers such as digital banking platforms PayPal and Revolut, which operate under electronic money regulations rather than conventional banking licences.”
“Under the Bill, Parliament is being asked to approve a framework without any clarity on its implementation, while being told to accept that further critical details will be determined by ministerial discretion, and that the code of practice will be published at some point during the Bill’s progress through the House of Lords and without proactive scrutiny from the House of Commons. Can the Minister explain why this approach has been taken? Can she look at where the use of the affirmative resolution procedure would be more appropriate in ensuring that there is active parliamentary consent for what might be powers quite fundamental to the purpose of the Bill and might have a significant impact on individuals, financial institutions and many businesses?”
“These regulations are largely subject to the negative resolution procedure under this clause, which means that they will potentially become law without debate or a vote unless actively prayed against within Parliament. The use of the negative resolution procedure is clearly concerning given our lack of sight of the basics, such as a draft code of practice. The negative resolution procedure may be appropriate for minor technical amendments, but it really is not for measures that could directly impact on individuals’ finances, financial institutions and the broader regulators framework, particularly when the House of Commons has been given so little information to consider the context of the framework legislation within which those regulations are being issued.”
“The clause grants the Minister extensive powers to introduce further regulations governing the operation of direct deduction orders. Specifically, the Minister will be able to regulate the manner in which notices and orders are issued by the Minister; the process by which banks and financial institutions provide information to the Minister; the methodology for calculating the amounts to be deducted from an account; the legal obligations of banks in relation to compliance with direct deduction orders; the costs that banks may recover, either under clause 24 or from the Minister, and the interaction of direct deduction orders with other similar financial recovery mechanisms.”
“Parliament cannot be expected to sign a blank cheque when it comes to the application of these financial recovery mechanisms, particularly when key details remain unknown and are deferred to future regulations. Until the House has had the opportunity to scrutinise the code of practice, and to assess how these provisions will be applied, it is wholly inappropriate to proceed on the basis of the negative procedure that would apply under much of the clause. We urge the Minister to reconsider, and to ensure that Parliament is given the opportunity to properly scrutinise, and approve, these critical regulations. Finally, would the Minister commit to strengthening the scrutiny provisions in the clause, rather than expecting Parliament to rubber-stamp measures that remain currently unseen and largely undefined?”
“It is right that the Government have chosen to use the affirmative resolution procedure for those measures, requiring parliamentary approval before such regulations take effect, and we completely agree that that level of scrutiny is appropriate. However, it raises a fundamental question of consistency. If the Government recognise that extending these provisions to cryptocurrencies and new financial models requires a higher level of scrutiny, why do they not apply the same principle to the core framework for direct deduction orders? Why are only some of these significant regulation-making powers subject to affirmative oversight, while others are pushed through with minimal scrutiny and almost certainly no parliamentary debate?”
“So will the Minister commit to publishing responses to consultations under this clause, and how will the Government ensure that such responses are meaningfully reflected in the final regulations? What mechanisms will be in place to ensure that consultation is not merely a box-ticking exercise, but is a genuine dialogue with stakeholders, so that they feel rather more engaged than the representatives of UK Finance indicated that they felt when giving evidence last Tuesday? Under subsection (3) the Minister is granted the power to extend clauses 17 to 36 to other types of financial service providers in the future. Of course that would, and is intended to, allow regulations to cover other types of financial services, such as cryptocurrencies, should they become regulated by the Government.”
“Given the potential financial consequences of direct deduction orders for individuals and businesses, it really is not sufficient for the Government to ask Parliament to trust that these measures will be applied fairly and proportionately after the fact unless we can have a far greater degree of detail now. As my hon. Friend said, the clause does include a requirement for the Minister to consult with representatives of banks and financial institutions, representatives of those directly affected by these provisions, and any other appropriate persons when making regulations; we welcome that provision. However, consultation is of course only meaningful, as my hon. Friend said, if it is conducted transparently and robustly.”
“My hon. Friend is of course absolutely right. We are told that many of these questions will be addressed at a later date, whether through regulation or through a non-statutory code of practice, but we are being asked to consider this Bill now, and scrutinise these clauses when that information is not available. Will the Minister reconsider, and look at where affirmative resolution procedure can be used instead, to ensure that the regulations receive proper and active parliamentary scrutiny, so that the new obligations are imposed only where they have the consent of Parliament?”
“I agree with what the Minister says about future-proofing. The affirmative procedure does apply to the measures in subsection (3), which are effectively about future-proofing. Our concern is those under subsection (2), which are about how the powers are to be exercised from day one. Those regulations are not subject to the affirmative resolution procedure but are fundamental to how the legislation will be implemented. I ask her to reconsider the fact that this does not affect future-proofing but is about ensuring that Parliament can consider the legislation properly and debate and vote on what could be integral regulations affecting a lot of people.”
“The clause grants the Minister the power to issue a deduction from earnings order in cases where an individual is employed and has an amount that is recoverable under the Bill. The effect of such an order would be to require the person’s employer to deduct payments directly from their salary and to ensure that those deductions are paid directly to the Minister in accordance with the terms of the order. The order itself will be provided both to the liable person and their employer and will set out the amount to be deducted, the timing and duration of those deductions and penalties for non-compliance, which would be enforceable under the powers provided in chapter 5.”
“I struggle with my own name at this point in the afternoon, Sir Desmond. I beg to move amendment 20, in clause 41, page 25, line 16, leave out “40% of”.”
“We return to the issue of the code of practice, which will appear at some point before Royal Assent. The Minister is asking the House to legislate for sweeping powers without setting out the practical framework in which they will operate. It would be helpful if we could have further detail on whether elements of the code of practice might be published in draft form at an earlier stage, to allow Parliament to consider them as the Bill progresses, or at least detail as to how the Minister foresees the code of practice addressing the distinction between fraud and error.”