The Department for Work and Pensions (DWP) has been issued a warning against its “intrusive” anti-fraud measure to monitor benefit claimant’s bank accounts.
Labour’s new Fraud, Error and Debt Bill is currently making its way through Parliament and is set to come into force later this year. The legislation is set to give the benefits department new and extensive powers to help it crackdown on fraud within the social security system. One of these new powers – and its most controversial – will give the DWP access to bank accounts to recover debt.
Under the plans, banks and other financial institutions will need to comply with government requests to share data to identify benefit fraud. The government has confirmed that DWP will not have access to people’s bank accounts and will not share their personal information with third parties.
In a recent committee stage reading of the bill, Jasleen Jasleen Chaggar, legal and policy officer at Big Brother Watch, told MPs that it was “not just benefits claimants who will be targeted, it is everyone’s accounts, including yours and mine.”
They added: “Even if you are a benefits recipient, you can appoint an individual, a parent, a guardian, an appointed person or your landlord, to receive the benefit on your behalf, so those people will also be pulled into the net of surveillance.”
The DWP is under pressure to tackle huge losses to benefit fraud and error, which more than doubled in cash terms since the pandemic to £9.7billion in 2023-24. The biggest area of benefit fraud, accounting for two-thirds of the total, is in Universal Credit. Although the bill will initially focus on Universal Credit, it will also look at Pension Credit and Employment and Support Allowance (ESA) as levels of incorrect payments are highest.
Labour says the new raft of measures will form the “biggest fraud crackdown in a generation” noting that the package will help save £1.5billion a year by the end of its forecast.
The bill also contains safeguarding measures to protect vulnerable claimants. It states, “Staff will be trained to the highest standards on the appropriate use of any new powers, and we will introduce new oversight and reporting mechanisms to monitor these new powers.”
However, the department has not yet published this new code of practice. Defending this decision, Andrew Western DWP minister for transformation told the session that “we are simply not able to bring forward a final code of practice,” adding that “it would not be possible to do that without knowing what is in the Bill.”
However, several experts have taken issue with the “eligibility verification powers” proposed in the bill. These will give the DWP the power to require banks to provide data to help identify when an applicant is not meeting the eligibility criteria for a benefit they have applied for. For example, you cannot have more than £16,000 in savings to be eligible for Universal Credit, except in exceptional circumstances.
Speaking at a separate committee session, Helena Wood, director of public policy and strategic engagement at Cifas, called the powers “very new and incredibly intrusive.” She said they could become a “blanket, phishing-style power” that would usually be confined to civil or criminal investigations. She added: “I think that part of the Bill requires a little more thought and proportionality pulling up front.”
A DWP spokesperson said: “We do not recognise this characterisation of our Fraud, Error and Recovery Bill. The Bill includes an Eligibility Verification Measure which will require banks to share limited data on claimants who may wrongly be receiving benefits – such as those on Universal Credit with savings over £16,000 which does not involve access to benefit claimants’ bank accounts.
“We have an obligation to protect public funds, with this Bill set to save the taxpayer £1.5 billion over the next five years, part of wider plans that will save £8.6billion by 2030.”
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