Latest as DWP to monitor benefit claimants' bank details in major fraud crackdown

Millions of benefit claimants face having their bank accounts monitored by the Government under controversial new “snooping” powers being ushered in by Labour.

The Department for Work and Pensions (DWP) will soon be able to compel banks to hand over private financial details as part of what ministers call the “biggest fraud crackdown in a generation”.

The sweeping measures are contained in the Fraud, Error and Debt Bill, now making its way through Parliament. Ministers insist the changes will help identify those wrongly claiming benefits, such as people with more than £16,000 in savings who are not entitled to Universal Credit.

But critics have accused the Government of creating a “system of mass financial surveillance” that could see innocent people caught in the net.

Baroness Maeve Sherlock, a DWP minister in the House of Lords, revealed new details of the policy this week – including the key provision known as the Eligibility Verification Measure, which will force banks to comply with official data requests.

This will allow DWP agents to demand personal details from financial institutions, including a claimant’s name, date of birth, sort code, account number – and crucially, whether the account appears to breach benefit eligibility rules.

Baroness Sherlock said: “The information that can be requested under an Eligibility Verification Notice will include basic information about the account holder, such as name and date of birth, and the sort code and account number.

"Agents may also request information about whether the account meets eligibility requirements.”

The powers will be rolled out in stages over the next 12 months, starting with a small group of banks.

Officials say the crackdown is designed to recover an estimated £1.5 billion over five years by tackling fraud and correcting errors early – before they spiral into large amounts of unmanageable debt.

A DWP spokesperson said: “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.”

But the plans have already sparked a backlash from privacy campaigners, who claim the new powers go far beyond what is necessary.

Civil liberties group Big Brother Watch told The Independent: “It threatens to usher in an unprecedented system of mass financial surveillance.”

Adding to the concerns, Baroness Sherlock confirmed the DWP will also gain powers to seize money directly from people using Direct Deduction Orders – similar to those used by HMRC and the Child Maintenance Service.

She said the department expects to make between 5,000 and 20,000 deduction orders every year.

The DWP claims these measures are a vital tool to recover money swiftly where overpayments have been made. But critics fear they could lead to hardship for families already struggling with the cost-of-living crisis.

Work and Pensions Secretary Liz Kendall has insisted the powers are necessary to “restore trust in the welfare system” – but opposition voices are likely to grow louder as the bill nears the statute books.