The Department for Work and Pensions (DWP) is set to introduce tough new enforcement powers from October, allowing it to recover benefit overpayments directly from bank accounts, including joint accounts, and to seek driving licence suspensions for persistent non-payers. These measures, which stem from the Public Authorities (Fraud, Error and Recovery) Act 2025, are designed to recoup £14.6bn over five years by tackling overpayments, errors, and unpaid benefit balances.
Under the Act, the DWP can issue Direct Deduction Orders (DDOs) to claw back cash directly from bank accounts without needing a court order. In the most serious cases, courts can also strip persistent non-payers of their driving licence. The newly published Code of Practice sets out clear rules and safeguards for how DDOs will be applied to joint bank accounts.
How Direct Deduction Orders Will Work
The Code of Practice outlines several key safeguards for joint accounts. First, the DWP will work on the standard assumption that each named holder owns an equal share of the funds, deducting only from the liable person's share. Second, joint accounts will only be targeted if recovery from a sole account is not reasonably possible, or if both account holders share responsibility for the debt. Third, all account holders will receive individual notifications before any cash is removed. If non-liable parties can provide evidence that the funds do not belong equally to both parties, the DWP will adjust or halt the deduction.
Work and Pensions Minister for Transformation Andrew Western emphasised that the policy is designed to treat taxpayers fairly while offering support to those willing to co-operate. He said: "Hard-working taxpayers deserve a system that pursues those who deliberately dodge their debts, and that is exactly what these new powers deliver." He added that anyone facing financial difficulty should get in touch promptly to discuss a manageable payment arrangement. "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."
Driving Licence Suspensions
The powers will be introduced in stages starting in October. Anyone who is no longer receiving benefits but has received a letter regarding an unpaid balance is urged to respond immediately to stop enforcement action. The DWP explained that previous regulations made it difficult to reclaim money from former benefit claimants who were not paying tax through PAYE. "Previously, the DWP had few options to pursue people who were no longer claiming benefits or in PAYE employment, meaning some who could afford to repay were simply choosing not to. That loophole is now closed."
Strict safeguards will apply to driving licence suspensions, ensuring they are reserved solely for higher debts and never leave people unable to work or care for relatives. The DWP added: "Courts can only impose a driving ban where the debt is at least £1,000, and no one can be disqualified if they have an essential need for their licence, for example, work that relies on driving, such as a courier or caring responsibilities. Any ban is initially suspended as long as repayment terms are kept to."
Impact and Next Steps
These new powers are expected to significantly increase the DWP's ability to recover debts from former claimants who have avoided repayment. By closing the loophole that allowed some individuals to escape paying, the DWP aims to recover a substantial portion of the £14.6bn identified over five years. For those affected, the key is to respond promptly to any correspondence from the DWP to arrange a manageable payment plan and avoid more severe enforcement actions.
