DWP profit crackdown – what it means for you together with financial institution ‘snooping’

Labour has confirmed it will allow the Department for Work and Pensions (DWP) to access benefit claimants’ bank accounts as part of new fraud measures.

The new Government announced the plans at the party conference this week which are – in essence – a continuation of the plans drawn up by the former Tory government. The new “Fraud, Error and Debt” bill – first announced in Prime Minister Keir Starmer’s speech – will require financial institutions such as banks to share data that may help identify benefit fraud.

According to the Government, the new bill is expected to save the taxpayer £1.6billion over the next five years. Labour say the current level of fraud within the benefit system was costing the taxpayer almost £10billion a year and since the pandemic a total of £35billion of taxpayers’ money lost.

In his speech, Starmer said the legislation was essential if the Government was to “maintain support for the welfare state”. So what does this mean for benefit claimants? Here we explain everything we know about the new measures so far and how it could impact you.

What new powers will the DWP have?

In the release explaining the new powers, the Government said it was to introduce new powers in three areas of the DWP. Firstly, the Government said the benefits department would be given new powers to “better investigate” suspected fraud and new powers of search and seizure. This would allow the DWP to take “take greater control investigations” into criminal gangs.

This year, a criminal gang was jailed for more than 25 years after falsely claiming more than £53million in Universal Credit. This was the largest benefit fraud case seen in England and Wales. The Government says that nature of fraud has also become more sophisticated, meaning without new legal powers, DWP cannot properly keep pace with the changing nature of fraud to tackle it robustly enough.

Alongside this, the DWP will also be given powers to recover debts from individuals who can pay money back but have “avoided doing so”. Currently, if you are overpaid your benefit – and are still receiving them from the DWP – you will have money taken off your payments to repay the money back. So you will receive less each month until you have fully repaid and how much you repay each month is decided by you and the DWP on how much you can afford.

Another measure – which was first proposed by the former Tory Government – is to require banks and financial institutions to share bank account data with the DWP. The Government state that the DWP itself will not have access to bank accounts and the data it receives will not be shared with third parties. This measure has a similar vain as one from HRMC, which sees third party companies which allow users to make money such as Vinted, Depop, eBay etc share data if HMRC for tax purposes.

The Government also said it would be working to help protect vulnerable customers from racking up debt. Labour said it would be training DWP staff to the “highest standards” on the appropriate use of any new powers, and will also introduce new oversight and reporting mechanisms, to monitor the new powers to make sure they are not being misused by the DWP.

Alongside this, the government will be bringing forward a new “Code of Practice” to provide further assurance on the safe use of the powers. Rules within this Code have not been confirmed as of yet and will be consulted on during the passage of the Bill. The release added: “This legislation delivers on the Government’s manifesto commitment to safeguard taxpayers’ money and demonstrates the Government’s commitment to not tolerate fraud, error or waste anywhere in public services, including the social security system.”

The new proposals have received backlash, just as the former Tory’s proposals did. Commenting on the announcement, direct of Big Brother Watch Silkie Carlo said that even though the majority want fraud to be dealt with, the new proposals bordering on “spying” and risk a “Horizon-style injustice”. They said: “Everyone wants fraud to be dealt with, and the Government already has strong powers to investigate the bank statements of suspects.

“But to force banks to constantly spy on benefits recipients without suspicion means that not only millions of disabled people, pensioners and carers will be actively spied on but the whole population’s bank accounts are likely to be monitored for no good reason. A financial snooper’s charter targeted to automate suspicion of our country’s poorest is intrusive, unjustified and risks Horizon-style injustice on a mass scale.”

Caroline Selman, a researcher for the Public Law Project charity, added that the bill raised questions about whether ministers had learned lessons from the last proposal. She said: “If they are serious about building trust in Government use of technology, introducing invasive powers of surveillance with a high risk of harm is not the way to do it.”