The Department for Work and Pensions (DWP) has issued a four-month warning to thousands of people, urging them to watch for letters as new debt recovery powers take effect this week. Under the Public Authorities (Fraud, Error and Recovery) Act 2025, the DWP can now take money directly from bank accounts without a court order and, in severe cases, seek driving bans for those who refuse to repay owed money.
New Powers Target Deliberate Debt Avoidance
The rules, which came into force this week, are part of a government crackdown on individuals who no longer receive benefits but still owe money and are refusing to pay. The DWP estimates this will save billions of pounds over five years. Letters will be sent to ex-claimants detailing the action that will be taken if they do not make contact and arrange repayment.
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."
Enforcement Begins October 2026
The DWP will begin enforcing these powers from October 2026, giving debtors a final four-month window from this week to repay or set up an affordable repayment plan. The department advises anyone who receives a letter and owes money to act immediately, adding: "The application of these powers can be avoided entirely by getting in touch with DWP within the next four months. Where it would help, staff can also point individuals towards free debt advice and support services."
Driving Bans as Last Resort
In the most severe cases, courts can impose a driving ban for debts of at least £1,000. However, no one can be disqualified if they have an essential need for their licence, such as work that relies on driving or caring responsibilities. Any ban is initially suspended as long as repayment terms are adhered to.
Previously, the DWP had limited options to pursue people who were no longer claiming benefits or in PAYE employment, allowing some who could afford to repay to avoid doing so. The new legislation closes this loophole.
Additional Powers Under the PAFER Act
Other powers under the Act, not yet in force, include the Eligibility Verification Measure, which will allow the DWP to require limited data from banks and financial institutions to identify incorrect benefit payments. The DWP says this will ensure claimants are paid accurately and allow errors to be resolved sooner.
The DWP added: "This is part of Government’s commitment to savings of £14.6 billion over the next five years from fraud, error and debt activity, which includes investment to deploy up to 3,000 additional staff, and strengthening our data, analytics and investigative capability. New Debt Recovery powers under the PAFER Act are part of wider DWP plans to crack down on fraudsters who exploit the benefits system and steal from those who most need our help."
