**DWP Set to Receive New Bank Monitoring Powers to Target Benefit Fraud**
Fresh measures aimed at clamping down on benefit fraud in the UK are on the horizon, as the Department for Work and Pensions (DWP) prepares to collect limited personal data from banks about people in receipt of means-tested benefits. The move forms a key element of Labour’s new Fraud, Error and Debt Bill, described by ministers as the most ambitious attempt to combat benefit fraud in a generation.
Set to come into effect in 2026, the new legislation provides the DWP with powers to request certain financial information from banks and other third parties on individuals who claim means-tested benefits, such as Universal Credit, Pension Credit, and Employment and Support Allowance. The Government claims these safeguards could protect as much as £1.5 billion in taxpayers’ money over a five-year period, by preventing erroneous or fraudulent claims.
Details revealed in Parliament by Baroness Maeve Sherlock, a minister of state for the DWP, have shed more light on the specific procedures that will be adopted under the new law. The crux of the approach lies in what is being termed the ‘Eligibility Verification Measure,’ a provision that compels financial institutions to share particular details about benefit claimants under investigation by the DWP.
It is important to note, however, that the department will not be granted free access to individual accounts nor will it be able to scrutinise bank transactions. Instead, banks will be expected to share select information only if there is reason to believe a claimant has breached eligibility rules—for example, if they have savings above the £16,000 threshold for Universal Credit. The information sought will be limited to simple details, such as the account holder’s name, date of birth, sort code, account number, and basic evidence to establish whether eligibility rules may have been violated.
Ministers have emphasised that these powers are designed solely for verifying whether claimants are financially entitled to receive certain benefits. Officials expect banks and other financial organisations to cooperate in a phased rollout over a twelve-month period, beginning with a handful of institutions and gradually expanding as the system beds in.
Significantly, the DWP will also be able to seek similar information from other third-party organisations, including airlines. This aspect aims to determine whether any individuals are claiming benefits from abroad while potentially failing to meet UK eligibility criteria—another area of concern for the department in recent years.
A spokesperson for the DWP, commenting on the new measures, stated: “Our Fraud, Error and Recovery Bill includes an Eligibility Verification Measure which will require banks to share limited data on claimants who may wrongly be receiving benefits—such as those on Universal Credit with savings over £16,000. These powers will not enable us to see what people are spending their money on, nor to directly access bank accounts. They are firmly directed at preventing fraud and correcting genuine claim errors sooner, to stop people accumulating unmanageable debt.”
Baroness Sherlock has indicated that the department expects to issue somewhere between 5,000 and 20,000 Direct Deduction Orders per year, based on the experiences of related government departments like HMRC and the Child Maintenance Service.
For those who deliberately defraud the system, the consequences are set to become tougher. Proposed penalties under the new Bill could include driving bans lasting up to two years for convicted benefit cheats who fail to repay the money they owe, as part of a wide-ranging effort to deter fraudulent behaviour.
Privacy campaigners and claimants’ groups have already raised concerns about the scope of the data-sharing provisions, wary of any creeping increase in government access to personal financial details. The DWP, however, insists that only the minimum information necessary to investigate suspected breaches will be requested, and that financial institutions could face penalties if they provide anything beyond what the law allows.
As Parliament continues to scrutinise the Bill, public debate is expected to intensify. While the government asserts that these new powers are crucial for safeguarding public funds and ensuring fairness, critics underscore the importance of ensuring safeguards to protect the privacy and rights of benefits recipients as these changes take effect.