DWP shares update on powers to check benefit claimant's bank accounts

Wales Online

10-05-2025

DWP shares update on powers to check benefit claimant's bank accounts
New legislation would allow the DWP to monitor the bank accounts of people claiming benefits and it's already passed in one of the final hurdles to becoming law
The Department for Work and Pensions (DWP) has provided an update on its intention to scrutinise the bank accounts of benefits claimants. The Labour Party's Fraud, Error and Debt Bill is currently progressing through Parliament and is expected to be enacted later this year. The bill will grant the DWP new, far-reaching powers to tackle fraud within the social security system.
One of these new and contentious powers will allow the DWP to examine the bank accounts of those suspected of having more funds than they declare and to recoup benefit debts. Another provision would enable the department to suspend driving licences.
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Both proposals were approved at the third reading of the Public Authorities (Fraud, Error and Recovery) Bill on Tuesday, April 29, bringing the government a step closer to officially introducing these measures.
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Under the proposed legislation, banks and other financial institutions will be required to cooperate with government requests to share data to detect benefit fraud. However, the government has assured that the DWP will not have direct access to individuals' bank accounts and will not disclose their personal information to third parties, reports the Mirror.
The bill has now reached the House of Lords and has undergone its first reading. The second reading is scheduled for May 15.
However, there is some discord within the Labour Party regarding these measures, with several members voting for amendments aimed at restricting the DWP's ability to inspect accounts.
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The Liberal Democrats have warned that the Bill could result in "Orwellian levels of mass surveillance of those who have means-tested benefits." For money-saving tips, sign up to our Money newsletter here .
In the Commons during the third reading, Work and Pensions Secretary Liz Kendall remarked: "Delivering our plan for change means ensuring every single pound of taxpayers' money is wisely spent and goes to those in genuine need.
"That is what this legislation will help deliver, with the biggest ever crackdown on fraud against the public purse."
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Labour MP for Poole Neil Duncan-Jordan, in a parliamentary debate, advocated for his amendment which would restrict the government's power to scrutinise a claimant's financial records.
His amendment stipulated that the government should only probe the accounts of individuals it "has reasonable grounds to suspect has committed, is committing or intends to commit" an offence. Addressing fellow MPs, he expressed: "The Bill rightly seeks to tackle organised crime and online fraud, but also worryingly ushers in dangerous new powers compelling banks to trawl through financial information."
He continued: "It is the very poorest in our society which are going to be affected most by this legislation. So banks will be able to trawl for financial information even where there is no suspicion of wrongdoing. That's the key point in this debate."
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Labour's Work and Pensions Minister Andrew Western has contested arguments regarding an amendment, insisting it would sabotage the new authority designed to authenticate individuals' benefit eligibility.
He said: "We do require this power because it will enable better data sharing between the private and public sector to help check claimants are meeting the criteria for their benefits and to detect incorrect payments at an earlier stage before any suspicion of wrongdoing has arisen."
Adding clarity, he continued: "It is not a power to be used to respond to suspected fraud. Information will not be shared with the DWP under the assumption that a claimant is guilty of any wrongdoing. The DWP must look into why the account has been flagged by the bank and ascertain whether an incorrect payment has been made."
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He emphasised the DWP's commitment to further investigations to confirm whether benefits had been wrongly distributed, pointing to fraud or error as possible causes. Despite support from 10 Labour MPs for Duncan-Jordan's amendment, it was ultimately defeated in a vote—with a sizeable majority of 153, where 238 members voted against and only 85 supported it.