The Department for Work and Pensions (DWP) has confirmed that benefits claimants who persistently fail to repay debts could lose their driving licences for up to two years, with the first disqualifications potentially lasting until October 2028. The new powers, introduced under the Public Authorities (Fraud, Error and Recovery) Act 2025, allow the DWP to ask a court to strip driving licences from those who deliberately avoid repaying welfare debts.
The changes, which come into force in October 2026, have prompted urgent warnings to claimants. The DWP says that losing a licence can be avoided entirely if individuals contact the department within the next four months to arrange repayment. Staff can also point people towards free debt advice and support services where this would help.
New Powers Explained
Under the Act, the DWP will first seek a suspended order from the court, which sets repayment terms. Actual disqualification will only occur if the individual fails to comply with those terms without a reasonable excuse. In such cases, the DWP can apply for an immediate disqualification order, which may last for up to two years from the date of disqualification.
Because the new powers start in October 2026, a two-year disqualification could extend until October 2028. The DWP confirmed the details, stating: "A suspended order will always be made in the first instance, and under this order, the court will set repayment terms. Actual disqualification will not result provided the individual complies with the payment terms set by the court."
Government Response
Labour Party Work and Pensions Minister for Transformation Andrew Western said: "Hardworking taxpayers deserve a system that pursues those who deliberately dodge their debts, and that is exactly what these new powers deliver. To anyone with an outstanding debt - our door is open and DWP will always work with you to find an affordable way to repay. But for those who can pay and won’t - we’re going further than ever before to claw back cash and crack down on fraud."
Previously, the DWP had limited options to pursue individuals who were no longer claiming benefits or in PAYE employment, meaning some who could afford to repay were simply choosing not to. The new measures are part of the biggest crackdown on welfare debt in a generation, aimed at recovering funds from those who deliberately evade their obligations.
