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DWP to surveil bank accounts of benefit claimants for fraud

The UK government has outlined how it plans to tackle benefit fraud by giving the Department for Work and Pensions new powers compelling banks to collect and share data on claimants’ bank accounts

The UK government plans to monitor the bank accounts of benefit claimants, claiming the measure will improve the detection of fraud in the welfare system.

Ahead of the King’s Speech in early November 2023, ministers told The Telegraph that new anti-fraud plans seeking to expand government access to bank account data would be implemented in upcoming legislation to deal with the increasing number of people on out-of-work benefits, which has risen to 5.4 million people since the onset of the pandemic.

According to the Autumn Statement: “The government will...take further action on fraud and error by legislating to increase the DWP’s access to data on benefit claimants that is held by third parties (e.g. banks).

“This will enable DWP to better identify fraud in the welfare system, especially in detecting fraudulent claims where there is undeclared capital, which is the second highest type of welfare fraud. These extra powers are estimated to generate around £300m per year savings by 2028-29.”

It has since been confirmed that these new powers to monitor bank accounts are included in an updated version of the government’s forthcoming Data Protection and Digital Information Bill.

Under the current Universal Credit (UC) set up, people are barred from claiming if they have more than £16,000 in savings, but the Department for Work and Pensions (DWP) believes that some people are still doing so despite being over this savings threshold.

Unlike the current regime where DWP must request the details of a suspected fraudsters bank account, the new system would require banks to run proactive checks for red flags of fraud on people’s accounts, on either a monthly or weekly basis.

“These new powers send a very clear message to benefit fraudsters – we won’t stand for it. These people are taking the taxpayer for a ride and it is right that we do all we can to bring them to justice,” said secretary of state for work and pensions Mel Stride.

“These powers will be used proportionately, ensuring claimants’ data is safely protected while rooting out fraudsters at the earliest possible opportunity.”

DWP has long been pushing for new legislation that would allow it to access benefit claimants bank account data. Under it’s £900m ‘fraud plan’ launched in May 2022, for example, the department set out its long-term plan to fight benefit fraud against the welfare state, and called for new “powers to boost access to third-party data” and modernise its information-gathering capabilities.

“Better access to data held by third parties, in particular banks, would be hugely beneficial in identifying fraud and error in the welfare system, especially in detecting undeclared capital in claims,” it said. “In Universal Credit alone, this type of fraud was estimated to be £0.9bn in 2020-21. It would also help us to check if someone is fraudulently claiming benefits from abroad.”

It added that any new anti-fraud legislation will require banks to transfer account data to the DWP “at scale.” It also called for new powers for DWP officers to make arrests, as well as to conduct search and seizures, so that they can move quickly against fraudsters.

Commenting on the plans, Child Poverty Action Group (CPAG) CEO Alison Garnham said: “It’s in claimants’ interests to ensure benefit payments are paid accurately and steps to reduce fraud and error are welcome, but we do not believe invasive steps such as those proposed are appropriate – it shouldn’t be that people have fewer rights, including to privacy, than everyone else in the UK simply because they are on benefits.

“Targeting benefit claimants to snoop on their bank accounts is a clear overreach of government powers and a worrying slippery slope in terms of stigmatising and collectively punishing claimants.”

If MPs think this is a good idea, let us ask them to go first
Jenny Jones, House of Lords

Speaking in the House of Lords on 8 November, Jenny Jones described the plans to “spy on the bank accounts of those receiving benefits” as a “new low in this government’s constant vile behaviour”.

“Never in our history have a government intruded on the privacy of anyone’s bank account without very good reason. Now we are treating all people on benefits as potential criminals. If MPs think this is a good idea, let us ask them to go first,” she said. “With all the cases of corruption, second jobs and undeclared incomes, would MPs be okay if the banks had the ability to raise red flags on their accounts? That seems to make sense – to test the system before we use it on other people.”

According to reports in the Financial Times, HM Revenue & Customs disclosed in freedom of information requests that UK residents had £850bn in financial accounts overseas in 2019 (the latest year HMRC has released statistics for); £570bn of which was based in tax havens.

Out of those claiming UC, 90% are regularly going without essentials, while around half of claimants ran out of money to buy food and could not buy more during summer 2023.

The DWP’s latest figures estimate that just 3.6% of all benefits (£8.6bn) were overpaid due to fraud or error for the financial year ending 2023.

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