Fraud investigators given power to take money directly from bank accounts

The Department for Work and Pensions (DWP) will be given new powers to crackdown on benefit fraud – by taking money straight out of bank accounts and wages.

This change also requires private companies, like airlines, to share details with investigators.

It’s the biggest update to DWP’s powers in 20 years.

How will DWP’s new powers work?

At the moment, benefit fraud investigators can only recover debt by taking people who have overclaimed benefits to court. This can take time and cost a lot.

With the new rules, DWP will be able to take money directly from someone's bank account or payslip and even claim assets from a person’s estate after they’ve died.

While DWP can currently ask banks, utility companies and employers for evidence of fraud, inspectors will also be given more power to gather details from private companies during their investigations.

This means they can keep a closer eye on people, including tracking their movements through international flights and ferries.

The government is set to introduce the fraud, error and debt bill soon, which builds on ideas from the previous government.

The Tories wanted to allow officials more access to bank information, but many saw this as ‘excessive’.

Labour say their laws will be “proportionate and targeted”, and won’t affect state pensions.

Why is this change happening?

Work and Pensions Secretary Liz Kendall has said the current rules are outdated. Fraudsters are getting cleverer, and inspectors are struggling to keep up with their methods.

Last year, benefit fraud cost taxpayers a whopping £7.3bn. The situation worsened after the pandemic, when checks on universal credit applications relaxed.

These new measures aim to save taxpayers about £1.6bn over the next five years. This comes as Rachel Reeves plans to raise £40 billion in her upcoming budget.

‘A step too far’

Sebrina McCullough, our director of external relations, says it’s “right” for the government to hold intentional fraudsters to account and make sure people only claim what they’re entitled to.

But she says the new laws won't help restore public trust:

“The government has existing powers to access and investigate bank accounts for people they suspect of fraud. To propose legislation that forces banks and building societies to report data on a mass scale is a step too far.

“The government says it wants to rebuild trust with the nation, the first step shouldn't be creating what is essentially a surveillance charter on how people earn, spend and save.

“There is a very real risk that harm will be created and it is unlikely to achieve the stated objective of preventing large-scale fraud. 

“We await the full detail of the legislation but suggest at this point that it is more likely to harm vulnerable people than it is to prevent large-scale fraud.”

What is benefit fraud?

Benefit fraud means claiming money you're not entitled to, such as:

• not reporting or wrongly reporting your income
• claiming benefits while having a job
• pretending to be ill or injured to receive benefits
• not mentioning you live with someone who helps with bills
• faking your finances to appear poorer than you are

Fraud doesn't always have to be intentional. You can accidentally commit 'fraud by omission' if you forget to update your situation, like when someone moves in who helps pay for things.

Mistakes can happen, so it's best to tell DWP whenever your situation changes.