DWP ‘might get issues unsuitable’ with new fraud financial institution checks, MP committee warns

Leading MPs are demanding closer oversight of how the DWP uses the new powers

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A parliamentary committee has demanded more protections as the DWP is given ‘draconian’ new anti-fraud powers. Fresh legislation designed to tackle fraud and incorrect payments provides extensive new authorities to officials.

These include eligibility checks to look at bank account data of people receiving certain benefits. Such reviews will initially check the account information of those receiving Universal Credit, Pension Credit and Employment and Support Allowance, ensuring they qualify for their payments. This measure may be extended to additional benefits.

The recently approved laws also permit investigators to withdraw funds directly from someone’s bank account when they owe the DWP money and refuse to repay the debt. These authorities will target people who owe money and have exited the benefits system.

‘Significant extra powers’

While the legislation mandates that there will be an independent person to oversee these powers, the Public Accounts Committee is demanding further protections. Committee chair, Geoffrey Clinton-Brown, said: “Being able to take money out of people’s bank accounts without a court order, compelling banks and other financial institutions to give information, are significant extra powers that the DWP have got.

“We are concerned particularly in light of the Carer’s Allowance issue, where 26,000 people were sent demands for overpayment of the allowance, when they hadn’t been able to report it properly, and they are going to be refunded. That gives an example of where the DWP could get things wrong, with these quite draconian new powers.”

The committee monitors public spending across Government departments to ensure taxpayer money is being used properly and effectively. They are calling for the DWP to submit yearly reports detailing how these anti-fraud measures are being deployed.

Mr Clinton-Brown said: “We have made a recommendation that the DWP have to report to us once a year, a full report on where and how they have used these powers. If we get the slightest impression that they are being used unreasonably, we will start to have an investigation and call them in and ask them to account for themselves.”

He outlined a case where the committee would demand explanations from the DWP: “Suppose they started to go after people on Universal Credit for a particular aspect. We would want to be assured that the use of that power was reasonable in those cases.”

Despite these concerns, the committee chairman acknowledged that the new powers to directly seize funds from bank accounts may be justified in certain circumstances. He said the powers may be appropriate where a person is persisting in “committing what is a serious effort to defraud the taxpayer”.

The DWP must get it right

Mr Clinton-Brown said: “This is taxpayers’ money. If it’s being overpaid in one area, it’s then putting pressure on the funds available if the Government wanted to increase benefits in another area. I think it is incumbent on the DWP to try and get these things right.”

However, he acknowledged that benefit recipients might feel anxious about DWP officials being granted such sweeping new powers. The Conservative MP said: “I have a lot of sympathy with people over these powers, they will be worried.

“That’s why I think it’s incumbent on the DWP to make it absolutely clear in their communications, by better communications, that it’s only going to be used in the most extreme cases where people have been warned, hopefully several times, before these powers are used.”

The legislation stipulates that should the DWP wish to carry out a direct deduction from a bank account, they must obtain a minimum of three months of bank statements for the account, ensuring the person has sufficient funds.

The DWP is also required to inform the person of their intention to recover the sum, providing at least 28 days’ notice for them to challenge the decision. Mr Clinton-Brown was questioned about what other strategies might be introduced to combat fraud and error within the benefits system.

Further changes to prevent fraud

He suggested that cutting-edge technology, such as AI, could assist with this challenge, alongside improved data sharing between Government departments. He explained: “They [the DWP] do a very good job of linking in with HMRC on things like PAYE, but there are other areas.

“You could imagine, for example, local authorities, the Department for Education, where they could get information. They themselves admit that they could do more to try and reduce the rate of fraud and error.”

When the legislation was passed, DWP minister Andrew Western said: “It is right that as fraud against the public sector evolves, the Government has a robust and resolute response. The powers granted through the bill will allow us to better identify, prevent and deter fraud and error, and enable the better recovery of debt owed to the taxpayer. A benefits system people can trust is essential for claimants and taxpayers alike – through this bill that’s exactly what we’ll deliver.”