The Department for Work and Pensions (DWP) will begin directly seizing cash from benefit claimants' bank accounts from October under new powers designed to claw back overpayments and tackle fraud. The move is part of a wider crackdown that also includes the potential cancellation of driving licences for serious offenders.
New Powers to Deduct Debts Directly
Under the new rules, the DWP can issue a direct deduction order to a bank or building society, requiring them to transfer money owed from a claimant's account to repay debts. This applies to debts linked to Universal Credit, Employment and Support Allowance (ESA), and Pension Credit.
The DWP confirmed: "Money owed to DWP can now be recovered from an individual’s bank account by issuing a direct deduction order to their bank for repayment."
Eligibility Verification Notices and Bank Checks
The DWP will also use Eligibility Verification Notices (EVNs) to compel banks and other financial institutions to share data on specified accounts. This helps the DWP verify a claimant's entitlement and identify incorrect payments. Once an account is flagged, the DWP may request statements or information about other accounts held with the same bank.
Before making a deduction, the DWP will assess whether the individual can afford the repayment without causing financial hardship, particularly amid the ongoing cost of living crisis. The powers cover banks, building societies, credit unions, and any institution that accepts deposits or issues electronic money.
Government's Crackdown on Fraud
The measures were announced by the previous Labour government under Sir Keir Starmer, as part of efforts to reduce the soaring welfare bill. Former DWP secretary Liz Kendall, now replaced by Pat McFadden, said at the time: "We are turning off the tap to criminals who cheat the system and steal law-abiding taxpayers' money. This means greater consequences for fraudsters who cheat and evade the system, including as a last resort in the most serious cases removing their driving licence."
Kendall added: "People need to have confidence the Government is opening all available doors to tackle fraud and eliminate waste."
Impact on Claimants
While the DWP insists it will avoid causing financial hardship, the new powers have raised concerns among welfare rights groups. The ability to deduct money directly from bank accounts could affect claimants who are already struggling to make ends meet. However, the DWP argues that the measures are necessary to protect public funds and ensure that benefits are paid correctly.
