The Department for Work and Pensions (DWP) has confirmed that new 'last resort' debt recovery powers will come into force from October 2026. The legislation aims to reclaim debt more effectively and establish greater equity in debt collection for Universal Credit, Pension Credit, and Employment and Support Allowance (ESA).
New powers for debt recovery
As a measure of 'last resort', the DWP will be able to retrieve money owed from an individual's bank account. In the most severe instances, the DWP can petition the court to temporarily suspend a person's driving licence. A recently published Code of Practice outlines how the DWP will deploy these new powers.
Labour Party Work and Pensions Minister for Transformation Andrew Western said: 'Hardworking taxpayers deserve a system that pursues those who deliberately dodge their debts, and that is exactly what these new powers deliver. 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.'
Phased implementation from October 2026
The enforcement of these powers will be phased in gradually from October 2026. The DWP's online service allows claimants to check the amount they owe, understand why repayment is required, review their payment history, settle their debt in full or make a one-off payment, and access help and guidance regarding any outstanding money.
Cabinet Office Minister Satvir Kaur said: 'Fraud against the public sector and unrecovered debt deny our vital frontline services of the funding they deserve. Under these new powers in the PAFER Act, this Government will deliver on its promise to protect hardworking taxpayers and clamp down on those who try to cheat the system.'
Impact on claimants
The DWP has confirmed that benefit payments will be reduced until the full amount has been repaid. The online service can also be used to check when the debt will have been fully cleared. These measures are designed to ensure that those who can pay their debts do so, while protecting the most vulnerable claimants.
