The Labour government has cleared the final legislative hurdles for new powers that will allow the Department for Work and Pensions (DWP) to directly recover overpaid benefits from bank accounts. The Public Authorities (Fraud, Error and Recovery) Bill passed through the House of Lords on Tuesday, with implementation expected from April 2026 and full rollout by 2029-2031.
However, state pensioners will be exempt from these checks. Former DWP minister Liz Kendall previously assured that pensioners are not at risk, and the new powers will not apply to their accounts. The measures are aimed at tackling what officials describe as an 'increasing propensity' for dishonesty across British society since the Covid pandemic.
The bill strengthens the DWP's ability to investigate, prevent, and reclaim funds owed to taxpayers. It also enables the Public Sector Fraud Authority (PSFA) to investigate fraud outside the tax and social security systems. The government expects fraud to rise by 5 per cent annually.
During the parliamentary 'ping-pong' process, peers accepted several government compromises, including safeguards on the use of new powers. Shadow Cabinet Office minister Baroness Finn welcomed provisions for human decision-making to protect against 'mechanistic or AI-driven decision-making', and restrictions on authorised investigators' use of reasonable force to property only.
Baroness Finn noted that 'real progress' had been made to strike the right balance between fraud prevention and fairness. However, she criticised the bill for failing to address 'sickfluencers' who encourage others to fraudulently claim benefits online. Liberal Democrat Lord Palmer of Childs Hill expressed concerns about the impact on vulnerable people.
