DWP Bank Account Monitoring gets green light from Labour with new law

As the Labour Party conference gets underway and the new government cautiously outlines its plans for Britain after 14 years of Tory leadership, the Department for Work and Pensions (DWP) has unveiled new legislation that would give the ministry sweeping new powers to tackle fraud – a move that sounds eerily familiar.

Despite recent reforms to the DWP to review the assessment of disability benefits and treat claimants as “individuals”, the government’s new bill appears to contain some conservative strategies to tackle claimants who receive excessive payments, either unintentionally or through fraudulent means. This includes a controversial policy that would increase the DWP’s powers over banking supervision.

These powers were included in the Tory Data Protection and Digital Information Bill, which was defeated when then-Prime Minister Rishi Sunak called July’s election, leading to a historic Labour victory. Now, however, along with powers to inspect homes and seize assets, the DWP is pressing ahead with its efforts to claw back some of the estimated £10bn that is overpaid or fraudulently claimed each year.

The Department for Work and Pensions has announced that the Fraud, Error and Debt Bill will boost its ability to tackle benefit fraudsters through increased surveillance of bank accounts, a move aimed at keeping pace with the “more sophisticated” nature of modern benefit fraud. The DWP also claims that search and seizure powers will bolster its efforts to “bring greater scrutiny to investigations into criminal gangs defrauding taxpayers.”

The introduction of bank account monitoring could tackle the problem of accidental benefit overpayments, which has particularly affected many carers who inadvertently exceed the £150-a-week Carer’s Allowance threshold, leaving some thousands of pounds in debt. The new system would alert the government when earnings exceed this limit, preventing incorrect payments, the Manchester Evening News reports.

The DWP justifies the need for these measures by arguing that checking the bank accounts of benefit claimants will lead to “greater fairness” in the social security system by enabling it to “collect debts from individuals who could repay the money but have not done so, thereby creating greater fairness in the recovery of debts.”

When the proposals were first tabled by the Conservatives in 2023, it was estimated that around nine million Britons, mainly those in receipt of Universal Credit, ESA and Pension Credit, would be able to have their accounts audited. However, the Benefits and Work forum has suggested that figure could be significantly higher due to a recent spike in Pension Credit applications.

As with previous legislation, it has been confirmed that under these new powers, banks will be the ones carrying out supervisory functions rather than the Department for Work and Pensions (DWP) itself. The complexities of how these powers will work will be revealed during the unveiling of Labour’s Fraud, Error and Debt Bill to parliament.

To allay public concerns, the DWP has reassured: “The Act will also include safeguards to protect vulnerable customers. Staff will be trained to the highest standards on the correct use of new powers, and we will introduce new oversight and reporting mechanisms to monitor these new powers.

“DWP does not have access to people’s bank accounts and will not share their personal information with third parties.”