DWP bank checks find 63,000 benefit claimants breaking rules

A trial of new Department for Work and Pensions (DWP) plans to monitor bank accounts has revealed tens of thousands of benefit claimants breaching the rules. The DWP enlisted two high street banks to test the measures for their feasibility.

An anonymous bank identified 713,000 accounts held by individuals receiving Universal Credit, Pension Credit, or ESA (Employment and Support Allowance). Over a three-month period, it discovered that 60,000 accounts had too much money in them for the individuals to be entitled to benefits.

In another 3,000 accounts, there was evidence of 'abroad fraud' where the account-holder was either living overseas while claiming UK benefits or going on holiday for longer than is permitted under DWP travel rules. Accounts were scrutinised for signs of being accessed from another country for more than four weeks consecutively.

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The average monthly balance of the 60,000 accounts suspected of violating rules on capital limits was shockingly £50,000. The maximum savings allowed for claiming Universal Credit and ESA is £16,000, while for Pension Credit - a supplement for pensioners on a low income - it's £10,000.

At present, the DWP can only inspect accounts if it already suspects fraud or as part of the initial verification of a benefit claim. The new powers would permit regular monitoring of accounts to ensure people qualify for state support, according to Birmingham Live.

Benefit claimants face restrictions on the time they can spend outside the UK, with Universal Credit allowing up to one month away, and ESA and Pension Credit permitting four weeks. State Pension recipients can still claim while living abroad, but cannot receive Pension Credit as a top-up.

The Department for Work and Pensions (DWP) conducted initial checks in July, August, and September 2022, as part of its plans for data collection from banks. Out of 713,000 accounts checked, 58% were linked to Universal Credit, 22% to ESA, and 20% to Pension Credit holders.

The DWP disclosed: "Among these, approximately 60,000 accounts were at risk of breaching the capital rule (8%) and 3,000 accounts at risk of breaching the abroad rule (less than 1%). For accounts at risk of breaching the capital rule, the average monthly balance was £50,000 and about 50% of those accounts were joint accounts."

"The above results of the small-scale tests with two banks and building societies indicate a strong potential for the use of banking data to identify possible capital and abroad fraud and error across a range of means-tested benefits."

The report also referenced checks conducted on behalf of the DWP in 2017. During this time, another bank scrutinised a limited sample of cases and flagged 549 accounts as potentially suspicious under the Proceeds of Crime Act.

Upon reviewing these cases, the DWP found that 176 (32%) had excess savings, rendering them ineligible for the benefits they were claiming. Furthermore, an additional 58 (11%) had foreign transactions suggesting an overseas stay exceeding four weeks.

In 58 per cent of instances where individuals had surplus capital, the DWP reported a 'positive outcome'. Measures taken included a DWP compliance interview that could halt or suspend benefits, criminal investigation, administrative penalty or prosecution.

Likewise, in 66 per cent of potential 'abroad fraud' cases, there was a 'positive outcome', with benefits being halted due to rule breaches.

These new measures form part of the Data Protection and Digital Information Bill, currently being debated in the House of Lords. If approved, the legislation will be implemented in 2025, involving a select number of banks and building societies.

Once a successful data-sharing agreement between the DWP and banks is in place, the policy will commence a phased roll-out from 2027/2028 and reach full scale by 2030/2031.