Budget confirms DWP to get 'direct access to bank accounts' in benefit fraud crackdown

Reeves confirmed that the benefit department's counter-fraud team would be given new powers and would use "innovative" methods to prevent illegal activity

The government confirmed its plans for cracking down on benefit fraud in the budget this week, so here's what was said.

On Wednesday, Chancellor Rachel Reeves announced a raft of measures which would help the Department for Work and Pensions (DWP) combat welfare fraud. Reeves told the Commons on Wednesday: “I am also taking three steps to ensure that welfare spending is more sustainable.

"First, we inherited the last government’s plans to reform the work capability assessment. We will deliver those savings as part of fundamental reforms to the health and disability benefits system that the Work and Pensions Secretary will bring forward. Second, I can today announce a crackdown on fraud in our welfare system often the work of criminal gangs."

Reeves confirmed that the benefit department's counter-fraud team would be given new powers and would use "innovative" methods to prevent illegal activity. One of its new powers will give the DWP "direct" access to bank accounts to recover debt. Reeves says this package will help it save £4.3billion a year by the end of its forecast.

It is understood that the debt power applies to those where an overpayment has been identified, and steps such as mandatory reconsideration and appeals will be taken before the debt is recovered from the bank accounts. The DWP is also expected to make multiple attempts to contact people to offer negotiations for repayment plans. The DWP says additional safeguards will be in place to ensure affordability and vulnerability.

This was detailed in its previously announced Fraud, Error and Debt Bill which said: "Staff will be trained to the highest standards on the appropriate use of any new powers, and we will introduce new oversight and reporting mechanisms, to monitor these new powers. DWP will not have access to people's bank accounts and will not share their personal information with third parties.

"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."

In the Budget documents, the DWP and HMRC will take on an extra 3,180 additional fraud and error staff, which the Government says will help £800million in 2029-30. New investments will also be made to verify changes to Universal Credit changes. Reeves said it will also be extending the Targeted Case Review, which it says will help spot incorrect Universal Credit claims.

The DWP is under pressure to tackle huge losses to benefit fraud and error, which more than doubled in cash terms since the pandemic to £9.7billion in 2023-24. The biggest area of benefit fraud, accounting for two-thirds of the total, is in universal credit.

Labour's plans mirror the former Tory government's, which was set to heighten the “surveillance” of benefits claimants. The Tories saw immense criticism for the proposals and the Labour Party is facing this now. Campaigners warned it risks “criminalising” innocent claimants.

Ruth Talbot, founder of Single Parent Rights, told the Big Issue: “The government’s rhetoric on welfare reform is really concerning. The plans to give the DWP greater access to bank accounts is especially worrying. We only have to look at the Post Office scandal to know that there’s no guarantee that government departments always get it right.”

Speaking last month, Mikey Erhardt, a campaigner at Disability Rights UK, said: “The Government’s latest plans are essentially a digital sledgehammer to crack the tiniest nut. These new powers could see millions deprived of the presumption of innocence, adding to the criminalisation we already face in a punitive welfare system that often seeks to sanction people into work, whether we are able to or not.”