From October, the Department for Work and Pensions (DWP) will be able to revoke driving licences of benefit claimants who owe more than £1,000, as part of new powers under the Public Authorities (Fraud, Error and Recovery) Act 2025.
New powers to clamp down on welfare debt
The Act grants the DWP extensive powers to recover debts, including withdrawing money directly from bank accounts without a court order. For driving disqualification, the measure can only be considered where the outstanding debt is at least £1,000 and it is not reasonably possible to recover the debt by any other means.
The disqualification period cannot exceed two years, and courts cannot impose a ban if the individual has an essential need to drive, such as for work or caring responsibilities. The individual must make any essential need clear to the court.
How to avoid disqualification
To prevent being disqualified, the person can settle the debt in full or agree to and maintain an affordable repayment plan directly with the DWP. If an immediate disqualification order ends or is revoked within 56 days because the debt is repaid in full, the individual may have their licence returned or replaced by the DVLA without a fee.
If the disqualification period exceeds 56 days, the individual must apply to the DVLA to renew their licence and will face a fee. Persistent breaches of a suspended order could lead to more than one immediate disqualification order, potentially totalling more than two years.
Government savings and minister comments
The DWP claims these measures could save up to £1.5 billion over the next five years. 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."
Minister Satvir Kaur added: "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."
Phased implementation and further measures
The new measures will be phased in from October 2026, giving those in debt a final opportunity to settle or arrange a repayment scheme. Officials have urged anyone no longer receiving benefits who owes money to the DWP to 'act now'. The DWP said: "Previously, the DWP had few options to pursue people who were no longer claiming benefits or in PAYE employment, meaning some who could afford to repay were simply choosing not to. That loophole is now closed."
Further measures under the PAFER Act, to come into force later, include the Eligibility Verification Measure, which will allow the DWP to request limited data from banks and financial institutions to help pinpoint incorrect benefit payments. This is part of the Government's pledge to achieve savings of £14.6 billion over the next five years by tackling fraud, error and debt, including deploying up to 3,000 additional staff.
