The Department for Work and Pensions is set to receive sweeping new authority to combat welfare fraud through direct access to bank accounts and payslips, though state pension recipients have been explicitly excluded from these measures.
What the new powers entail
Under legislation proposed by the Labour government, DWP investigators will soon be able to recoup overpaid benefits directly from bank accounts and wages. The enhanced capabilities come as officials report an 'increasing propensity for dishonesty' across British society since the COVID-19 pandemic.
During the 2023-24 financial year, a staggering £9.7 billion of taxpayers' money was overpaid in benefits due to fraud and error, representing 3.7 percent of total benefit expenditure. This marks a significant increase from the previous year's £8.3 billion and 3.6 percent rate.
Protection for pensioners and implementation timeline
Former DWP minister Liz Kendall has provided reassurance that state pensioners are not at risk from these new investigatory powers. The exemption means those receiving state pensions can rest easy while other benefit claimants face increased scrutiny.
The powers are scheduled for implementation from April 2026 under the Public Authorities (Fraud Error and Recovery) Bill, with a full rollout expected between 2029 and 2031. The legislation aims to modernise what Ms Kendall labelled the department's 'absurd' two-decade-old investigatory capabilities.
How the bank monitoring system will work
The DWP has clarified that it won't be examining everyone's daily spending habits. Instead, banks will be required to flag accounts showing activity suggesting a person may no longer qualify for benefits.
Eligibility Verification Notices will be issued to banks, detailing specific 'eligibility indicators' that must be checked against accounts receiving DWP benefits. Only minimal information will be shared unless a warning signal is triggered, at which point the DWP may initiate a more thorough investigation.
These changes are expected to primarily impact those on means-tested benefits dependent on income and savings. Any financial activity appearing inconsistent with eligibility criteria could result in an account being flagged for further review.
The legislation received cross-party support after government compromises addressed concerns about human oversight and the use of reasonable force. Cabinet Office minister Baroness Anderson of Stoke-on-Trent stated the bill represents a 'significant step in delivering this Government's manifesto commitment to safeguard public money'.
