When the DWP will begin 'monitoring' UK bank accounts

The UK Government has initiated what it describes as 'the largest fraud clampdown in a generation', with the aim of recouping billions lost through the welfare system. The Department for Work and Pensions (DWP) estimates that the Public Authorities (Fraud, Error and Recovery) Bill could save taxpayers approximately £1.5 billion over the next five years.

Stringent new penalties are being considered, including up to two-year driving bans for persistent benefit fraudsters who fail to repay their debts. Additionally, the DWP will have the authority to directly extract funds from culprits' bank accounts.

An Eligibility Verification plan is also in the works, which would allow third parties such as banks to identify potentially fraudulent benefit claims.

The DWP has published 11 comprehensive factsheets to shed light on how these measures will be securely implemented and supervised, confirming that the UK Government intends to commence the proposed changes from 2026 onwards.

These documents also detail the safeguards, reporting mechanisms, and oversight designed to ensure the "appropriate, proportionate, and effective use of the powers".

As per official guidance on GOV.UK: "The Government will begin implementing the Bill measures from 2026. For the Eligibility Verification Measure, the Government will implement a 'test and learn' approach to ensure the new powers to tackle public sector fraud are being used proportionally and effectively.

"DWP and the Cabinet Office will continue to work with industry to implement the new measures, consult stakeholders on Codes of Practice and publish guidance."

The DWP is gearing up to bolster its capability in verifying benefit claims through acquiring information from more third-party organisations, such as airlines, to ascertain that people do not erroneously claim benefits from abroad, flouting the regulations, as reported by the Daily Record.

Importantly, it should be clarified that the DWP will not have unrestrained access to the bank accounts of the millions who receive means-tested benefits like Universal Credit, Pension Credit, and Employment and Support Allowance.

Rather, the DWP will work in tandem with financial institutions to identify claimants whose circumstances may violate the means-tested benefits criteria, for example, having income exceeding the £16,000 cut-off for Universal Credit recipients, and utilise such information to conduct inquiries into possible overpayments or instances of fraud.

The legislation stipulates a clear delimitation regarding the range of data that banks and other fiscal entities are permitted to divulge to the DWP, explicitly excluding any details of transactions, thus precluding the possibility of the DWP tracking benefit recipients' expenditure patterns.

In addition, the accompanying factsheet underscores that excessive disclosure by banks and financial entities, like providing transactional specifics, could invoke sanctions.

Moreover, it clearly 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."

The new Bill will fulfil the UK Government's manifesto pledge to protect taxpayers' money - ensuring every pound is spent wisely and effectively:.

• New requirements for banks and building societies to flag where there is an indication there may be a breach of eligibility rules for benefits - preventing debts accruing.
• All the powers will include strong safeguards to ensure they are only used appropriately and proportionately - including new inspection and reporting mechanisms.
• Allowing DWP to recover debts from individuals no longer on benefits and not in PAYE employment who can pay money back but have avoided doing so.
• New powers of search and seizure - so DWP can control investigations into criminal gangs defrauding the taxpayer.
• DWP will have a clearly defined scope and clear limitations for the use of all the powers it is introducing, and staff will be trained to the highest possible standards.

The provisions in this Bill will empower the Public Sector Fraud Authority to:

• Use new powers of entry, search and seizure to reduce the burdens on the police in the most serious criminal investigations.
• Better detect and prevent incorrect payments across the public sector through new information gathering and sharing powers.
• Reduce fraud against the public sector by using its expertise to take action on behalf of other departments, against those who attack the public sector.
• Use strong non-criminal sanctions and civil penalties to provide an alternative to criminal prosecution and to deter fraud.
• Improve the government’s ability to recover public money, through new debt recovery and enforcement powers.
• Improve fraud management in future emergencies by creating specialist time limited powers to be used in crisis management situations - building on lessons learned during COVID-19.

The Public Sector Fraud Authority will adopt a 'test and learn' strategy when using these powers, trialling various methods and expertise to determine the most effective way to combat public sector fraud.