DWP latest on powers that will allow bank accounts to be 'monitored'

Labour's new Fraud, Error and Debt Bill represents a key element of DWP strategies to tackle benefit fraud and will grant fresh powers to the department to seek information from claimants' bank accounts. The Fraud, Error and Recovery Bill has been confirmed to take effect from 2026, with the provisions being rolled out to safeguard a total of £1.5billion of taxpayers' money over the subsequent five years.

The legislation is designed to target benefit fraudsters. The fresh powers have been brought in as part of a series of measures Labour claims will constitute the "biggest fraud crackdown in a generation." Further details have now been provided on the proposals for the DWP to monitor people's bank accounts closely,

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Under the changes, benefit cheats could face driving bans for periods of up to two years if they reject all chances to repay the money they owe.

Currently under discussion in the House of Lords, additional details on how these powers will operate have been disclosed by Baroness Maeve Sherlock, a minister of state for the DWP.

The primary power that will allow the DWP to request banks to share financial information with its agents is termed the Eligibility Verification Measure, reports the Liverpool Echo.

The DWP will be able to collect information from additional third-party organisations such as airlines to verify if people are claiming benefits from abroad and potentially breaching eligibility rules. The financial department will not have direct access to the bank accounts of millions of people on means-tested benefits including Universal Credit, Pension Credit and Employment and Support Allowance.

The Department for Work and Pensions will identify individuals who may have exceeded the eligibility criteria for means-tested benefits, such as the £16,000 income threshold for Universal Credit. If a person is identified, the department will then investigate that claimant to prevent possible overpayments and potential cases of fraud.

The legislation only permits banks and other financial institutions to share limited data and excludes the sharing of transaction data. This means DWP will not be able to see what people are spending money on.

A DWP factsheet states: "Any information shared through the Eligibility Verification Measure will not be shared on the presumption or suspicion that anyone is guilty of any offence. Banks and other financial institutions could receive a penalty for oversharing information, such as transaction information."

Baroness Sherlock explains that the information the institution can be asked to share includes details about the account holder, including their name and date of birth. Agents can also request the bank account's sort code and account number, as well as details about how the account meets eligibility.

Ministers claim the government is bringing in these powers to establish whether someone qualifies for a benefit they are receiving or have requested based on their financial circumstances.

Baroness Sherlock said the measures will be rolled out over 12 months, using a "phased approach" and working with a limited number of banks at first. Drawing on its use by HMRC and the Child Maintenance Service, Baroness Sherlock says DWP anticipates it will issue between 5,000 and 20,000 Direct Deduction Orders annually.

A DWP spokesperson told The Independent: "Our Fraud, Error and Recovery 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.

"As well as tackling fraud, the new powers will also help us find genuine claim errors sooner, stopping people building up unmanageable debt. This measure does not give DWP access to any benefit claimants' bank accounts."