In 2026, the UK Department for Work and Pensions (DWP) is set to implement significant changes aimed at reducing welfare fraud and ensuring the integrity of the benefits system. These changes, part of the Public Authorities (Fraud, Error and Recovery) Bill, will grant the DWP new powers to access certain financial information of benefit claimants. While the government asserts that these measures are necessary to protect taxpayer money, they have sparked debates about privacy and fairness.
What Are the New Powers?
The DWP will be authorised to issue Eligibility Verification Notices to banks and financial institutions. These notices will require institutions to provide specific information about accounts receiving certain benefits, such as Universal Credit, Pension Credit, and Employment and Support Allowance. The aim is to verify that claimants meet the eligibility criteria, particularly concerning savings thresholds.
For instance, individuals receiving Universal Credit are ineligible if they have savings exceeding £16,000. Banks will be asked to identify accounts where this threshold is breached, enabling the DWP to investigate potential overpayments or fraud.
Which Benefits Are Affected?
The new powers will apply to several means-tested benefits:
- Universal Credit: A monthly payment for those on low income or out of work.
- Pension Credit: A benefit for people over State Pension age to top up their income.
- Employment and Support Allowance (ESA): Financial support for those unable to work due to illness or disability.
Notably, the State Pension is explicitly excluded from these checks and cannot be added in the future, even with parliamentary approval. GB News
How Will the Checks Work?
The process will involve banks identifying accounts that meet the eligibility indicators specified in the notices. These indicators are based on the eligibility rules for the specified benefits. Banks will then provide limited information to the DWP, such as account holder details and confirmation of eligibility criteria being met.
It’s important to note that banks will not share transaction data or personal financial details beyond the scope of the eligibility indicators. This approach aims to balance the need for fraud prevention with respect for privacy.
Why Are These Changes Being Implemented?
The UK government estimates that over £8 billion is lost annually due to welfare fraud and errors. By introducing these new powers, the DWP aims to identify and prevent incorrect payments more efficiently, ensuring that benefits reach those who are truly eligible.
Officials project that the measure will deliver savings of up to £940 million over the next five years, with around £500 million per year once fully rolled out. GOV.UK
What Are the Safeguards?
To address concerns about privacy and fairness, several safeguards have been incorporated into the legislation:
- Independent Oversight: An independent body will review and report annually on how the powers are exercised.
- Code of Practice: The DWP must introduce and consult on a Code of Practice regarding Eligibility Verification Notices.
- Limited Data Sharing: Only specified information will be shared, excluding transaction data and sensitive personal information.
- Human Intervention: A human will always be involved in any decision that may affect benefit awards or eligibility.
- Penalties for Non-Compliance: Financial institutions could face penalties for failing to respond within the timeframe or for sharing prohibited information.
These measures aim to ensure that the new powers are used responsibly and transparently.
Public Reaction and Concerns
While the government’s intentions are to curb fraud and protect public funds, the proposed changes have raised concerns among various groups:
- Privacy Advocates: Critics argue that the measures could lead to unwarranted surveillance and potential misuse of personal financial data.
- Vulnerable Populations: There are fears that the changes may disproportionately affect vulnerable individuals, such as the elderly or those with disabilities, who may not fully understand the new requirements.
- Legal Experts: Some legal professionals have questioned whether the new powers comply with existing data protection laws and human rights standards.
The government maintains that the safeguards in place will protect individuals’ rights and ensure that the measures are applied fairly.
Looking Ahead
As the implementation of these new powers approaches, it will be crucial for the DWP to maintain clear communication with the public and stakeholders. Ensuring that claimants understand the changes and how they may be affected will be key to the success of the initiative.
Additionally, ongoing monitoring and evaluation will be necessary to assess the effectiveness of the measures and address any emerging issues promptly.
In conclusion, while the DWP’s upcoming bank account checks represent a significant shift in the approach to welfare fraud prevention, they also highlight the ongoing balance between safeguarding public funds and protecting individual privacy rights.