The Department for Work and Pensions (DWP) is gearing up for what it calls the "biggest fraud crackdown in a generation," introducing sweeping new powers to tackle benefit fraud that could affect millions of claimants across the UK. Central to this effort is the Fraud, Error and Debt Bill, set to take effect in 2026, which will grant the DWP enhanced authority to access limited financial information from banks and other third-party organisations to verify eligibility for means-tested benefits.
Labour ministers argue these changes are necessary to protect taxpayers' money, aiming to safeguard an estimated £1.5 billion over the next five years. The legislation specifically targets benefit fraudsters—those who claim benefits they are not entitled to, such as individuals with savings exceeding £16,000 who still receive Universal Credit.
Baroness Maeve Sherlock, a minister of state for the DWP, recently outlined key details of the new powers during discussions in the House of Lords. She explained that the primary mechanism, known as the Eligibility Verification Measure, will compel banks to provide the DWP with limited data about claimants. This includes basic account holder information such as name, date of birth, sort code, and account number, but crucially excludes transaction details. The DWP will not have direct access to bank accounts, nor will it be able to monitor individual spending habits.
"The information that can be requested under an Eligibility Verification Notice will include basic information about the account holder, such as name and date of birth, and the sort code and account number," Baroness Sherlock said. "Agents may also request information about whether the account meets eligibility requirements." This means the department can flag individuals potentially breaching benefit rules and then scrutinise those cases to prevent overpayments or fraud.
Beyond banks, the DWP will also be able to gather information from other third-party organisations, including airlines, to verify if claimants are receiving benefits while abroad, which could violate eligibility criteria. This comprehensive approach reflects a broader strategy to close loopholes and ensure benefits are awarded fairly.
One of the more controversial aspects of the Bill is the introduction of Direct Deduction Orders, a power that will allow the DWP to directly withdraw funds from individuals’ bank accounts to recover overpaid benefits. Drawing on experience from HM Revenue & Customs and the Child Maintenance Service, Baroness Sherlock estimates that between 5,000 and 20,000 such deduction orders will be issued annually. This measure aims to recover funds swiftly but has raised concerns about potential financial hardship for vulnerable households.
To deter persistent benefit cheats, the legislation also proposes penalties including driving bans of up to two years for individuals who refuse all opportunities to repay debts owed to the state. This tough stance underscores the government's commitment to restoring public trust in the welfare system, as emphasised by Work and Pensions Secretary Liz Kendall.
Despite the government's assurances, these new powers have sparked significant opposition from privacy advocates and civil liberties organisations. Groups such as Big Brother Watch have warned the measures risk creating an unprecedented system of mass financial surveillance. They argue that the scope of data collection extends beyond what is necessary to tackle fraud and could ensnare innocent claimants, raising serious concerns about privacy and civil rights.
A DWP spokesperson responded to these criticisms by clarifying that the Fraud, Error and Recovery Bill's Eligibility Verification Measure restricts banks to sharing only limited data and explicitly prohibits sharing transaction information. The spokesperson said, "As well as tackling fraud, the new powers will also help us find genuine claim errors sooner, stopping people building up unmanageable debt. This measure does not give DWP access to any benefit claimants' bank accounts." The department insists that the phased rollout, starting with a small number of banks over 12 months, will allow for careful implementation and monitoring of the new powers.
The timing of this crackdown comes amid growing public concern about the integrity of the welfare system and the cost-of-living crisis that has placed additional strain on both claimants and government resources. While the DWP stresses the importance of protecting public funds and ensuring fairness, critics worry that the measures could exacerbate financial difficulties for vulnerable people and erode privacy rights.
As the Fraud, Error and Debt Bill continues its progress through Parliament, the debate is expected to intensify. Supporters highlight the urgent need to address benefit fraud and errors that cost taxpayers billions, while opponents caution against overreach and the unintended consequences of widespread financial scrutiny.
In the coming months, the government will begin its phased implementation, working closely with selected banks to test the Eligibility Verification Measure. The DWP anticipates this approach will enable it to identify and address fraudulent claims more effectively while minimizing disruption to genuine claimants.
Ultimately, the success of this "biggest fraud crackdown in a generation" will hinge on balancing robust fraud prevention with respect for individuals' privacy and the fair treatment of all benefit recipients.
