The Department for Work and Pensions (DWP) has been granted sweeping new powers to combat fraud and recover debts, including the authority to directly deduct money from individuals' bank accounts. The Public Authorities (Fraud, Error, and Recovery) Act has now received royal assent, introducing a major shift in how the government tackles benefit overpayments and fraud.
Direct Deductions and Bank Checks
Under the new law, the DWP can take funds directly from the accounts of those identified as 'benefit cheats, fraudsters and debtors'. This power is aimed primarily at individuals who have left the benefits system but are refusing to repay money they owe.
Before any deduction is made, the DWP must issue a formal notice of its intention. Investigators are also required to first request and examine at least three months of bank statements to confirm the debtor has sufficient funds available for repayment.
In a separate but significant measure, officials can now contact banks to verify the eligibility of claimants. This will initially apply to three key benefits: Universal Credit, Pension Credit, and Employment and Support Allowance (ESA). The legislation allows for this verification process to be expanded to other benefits in the future.
Extreme Sanctions for Persistent Debtors
The Act also introduces one of its most severe sanctions: the power to suspend a person's driving licence. This is reserved for cases where the DWP has repeatedly tried and failed to recover a debt of £1,000 or more from a debtor who refuses to settle.
Minister for Transformation, Andrew Western, stated that the bill is essential for delivering a benefits system that both claimants and taxpayers can trust. An independent overseer will be appointed to monitor the use of these new powers and ensure they are applied appropriately.
Legislative Context and Oversight
The Act formally became law after receiving royal assent in the House of Lords. The government argues these measures are designed to deter fraud and improve the recovery of taxpayer money.
With these enhanced capabilities, the DWP's approach to fraud and debt recovery enters a new phase, balancing stronger enforcement with promised independent scrutiny.
