The DWP has clarified why it has chosen three particular benefits to be the subject of sweeping bank account checks as part of a new fraud bill.
New powers in the Fraud, Error and Recovery Bill going through Parliament will allow investigators to request banks and financial institutions to identify bank accounts that receive certain DWP benefits, so officials can make sure those receiving benefits are eligible for their payments.
The legislation mentions that these checks will be used initially to check the details of those receiving Universal Credit, Pension Credit and Employment and Support Allowance (ESA), although this could be changed with more benefits included.
The DWP said it had chosen these benefits as they have some of the highest levels of fraud and error. The department also said the banks will have information that can be used to check key eligibility criteria.
A DWP spokesperson said: “We are bringing forward the biggest fraud crackdown in a generation set to save the taxpayer £1.5billion over the next five years, part of wider plans that will save £9.6billion by 2030.
“While overall fraud is low in the welfare system these three benefits have some of the highest levels and so have been included.”
DWP figures show that in the 2023/2024 financial year, there were some £6.46billion in Universal Credit overpayments, £520million in Pension Credit overpayments and £430million for ESA.
The new legislation will also include powers for officials to directly take funds from a person’s bank account where they owe an amount to the DWP and are refusing to pay up.
In these cases, investigators will also request at least three months of bank statements to make sure the person has the funds available.
The amount can be taken as a lump sum or in regular payments depending on the person’s situation. In explaining previously how the powers will work, DWP minister Andrew Western said: “The schedule limits regular direct deductions to no more than 40 per cent of the funds entering the account over the period in which the bank statements have been supplied.
“Regulations can lower, but not raise, the maximum percentage in some or all cases. That safeguards against excessive deductions and brings the powers in line with existing DWP recovery method legislation.”
Turning to the amount that can be taken through lump sum deductions, he said: “There is no legislative cap on lump sum deductions, as we expect to use them only where someone has large available savings.
“However, the DWP must be satisfied that neither lump sum nor regular deductions will cause the debtor, the other account holder or their dependents hardship in meeting essential living expenses.”
The minister also said the powers are needed as currently the DWP can only recover debt by making deductions from benefits or from those on PAYE through a direct earnings attachment.
DWP figures suggest there are around 885,000 people who owe the department money, but are not on benefits and not paying anything back. Around £1.74billion is thought to be owed by this group.