DWP's New Bank Account Checking Powers Must Have Risk of Over-Reach Mitigated
The Department for Work and Pensions (DWP) must ensure it uses its significant new bank account checking powers proportionately because public trust is at stake, according to a spending watchdog. The Public Accounts Committee (PAC) has highlighted how the DWP has been given powers to compel banks and other financial institutions to provide information to help verify a claimant's eligibility and entitlement to benefits.
Annual Reporting and Impact Assessment Urged
The Public Authorities (Fraud, Error and Recovery) Act 2025 grants the DWP its new legal powers. The department can force third parties to provide information when conducting criminal investigations, and in some cases recover money owed by people directly from their accounts without a court order. However, the PAC said the DWP has not fully set out how it will use its powers in a way that supports public trust.
In a report, the committee is calling for the department to report in its annual report and accounts on how often it has used the powers given to it in the 2025 Act, and with what impact. This move aims to increase transparency and accountability in the application of these extensive powers.
Concerns Over Public Trust and Proportionality
Sir Geoffrey Clifton-Brown, chair of the Public Accounts Committee, emphasised the significance of these new powers. "Make no mistake, the DWP's new powers to reach further into citizens' lives are significant," he said. "Our committee of course firmly supports Government in its responsibility to ensure people are paid the correct benefits. But it is essential that these extensive new powers – of compulsion of disclosure over banks and financial institutions, of recovering funds directly from people's accounts without the aid of the courts – have the risk of over-reach mitigated against right from the outset."
The PAC's report stressed that the department needs to improve its processes and controls to stop overpayments arising in the first place and prevent losses to the taxpayer. A key element of this is drawing on data held by other government departments to help check claimants' entitlement to benefits.
Addressing Benefit Fraud and Error
The report also highlighted how the DWP has now committed that it will put right the cases of 26,000 carers incorrectly recorded as having overpaid carer's allowance. The PAC's inquiry heard that it will take around two years to identify all those affected, with 200,000 cases to be reviewed.
Furthermore, the PAC noted that people not receiving their full benefit entitlement as a result of not informing the DWP of a change in their circumstances is also a growing problem. Unfulfilled eligibility was estimated to be £3.7 billion in 2024–25, up from £3.1 billion in 2023–24. It particularly affects claimants of disability benefits, such as personal independence payment, who fail to report that their condition has worsened.
DWP's Response and Future Plans
A DWP spokesperson responded, stating: "We have introduced major reforms to ensure people are paid the correct benefits, to recover overpayments and to help save billions of pounds for the taxpayer. The powers in the Fraud, Error and Recovery Act have numerous safeguards and will be independently overseen. We will not have access to claimants' bank accounts when checking they are receiving the correct benefits."
The spokesperson added: "We are forecasting an ambitious reduction in fraud and error levels to 2.8% by 2028-29, the lowest level since tax credits were introduced in 2003-04." This statement underscores the department's commitment to addressing the issues raised while maintaining a focus on efficiency and accuracy in benefit payments.
