The Department for Work and Pensions (DWP) is set to receive significant new authority to combat benefit fraud, including the ability to directly deduct money from individuals' bank accounts.
New Powers for Direct Recovery
Under forthcoming legislation, DWP fraud investigators will be granted powers to directly take funds from a person's bank account if they owe money to the department and are refusing to repay it. This measure is designed to recover funds from individuals who have left the benefits system.
Currently, the DWP can only reclaim overpaid cash through deductions from ongoing benefit claims or via PAYE earnings. The new direct deduction power will require officials to first examine at least three months of bank statements to confirm the individual has sufficient available funds. The department must also provide advance notice before any money is taken, which can be collected as a lump sum or through regular instalments.
Stricter Sanctions for High Debts
In cases where the DWP attempts to recover funds but is unable to secure repayment, debtors could face further penalties. If the outstanding amount exceeds £1,000, the individual may even be disqualified from driving.
Rebecca Lamb, external relations manager at the debt advice charity Money Wellness, commented on the new measures. She stated that the legislation will likely be effective in preventing fraud and mistaken payments within the benefits system.
"We await the full implementation of the bill to better understand the full impact," Ms Lamb said. Addressing potential concerns about the measures targeting the wrong people, she added, "As with any new bill or policy, there’s an element of risk. But we’re confident... that the Government understands those risks and will be cautious as it rolls out the policy."
Expanded Bank Account Checks for Key Benefits
The new bill also introduces powers for officials to check the bank account information of people claiming specific benefits. This will initially apply to those receiving Universal Credit, Employment and Support Allowance, and Pension Credit.
The legislation allows for the scope of these checks to be expanded to other benefits in the future. Ministers have confirmed that while the DWP will be able to request data from banking providers, it will not have direct, live access to people's bank accounts.
Furthermore, DWP fraud investigators will see their information-gathering powers broadened. They will now be able to request details from any relevant third-party information holder connected to a person suspected of fraud, a significant expansion from the current restricted list of organisations.
To oversee the use of these substantial new powers, the bill mandates the appointment of an independent person. This individual will be responsible for ensuring the powers are used only when necessary and that they are effective.
Ms Lamb from Money Wellness emphasised the importance of proportionality, stating, "Any efforts to recover funds from people need to be reasonable and proportionate, making sure they still have enough to cover everyday living costs. The main focus should be on tackling organised criminal networks that are defrauding the system."
