DWP checks find 63,000 benefit claimants breaking rules after big bank account monitoring

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

One 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 found 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 checked for signs of being accessed from another country for more than four weeks in a row.

The average monthly balance of the 60,000 accounts suspected of breaking rules on capital limits was astonishingly £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.

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

Benefit claimants are subject to restrictions on the amount of time they can spend abroad. For Universal Credit, this is limited to no more than a month at a time, while for ESA and Pension Credit, it's four weeks.

While State Pensions can still be claimed by those living overseas, it's not possible to receive Pension Credit to supplement the amount.

In an Impact Assessment regarding its plans for data collection from banks, the DWP revealed that these initial checks were conducted in July, August, and September 2022. Of the 713,000 accounts scrutinised, 58 per cent belonged to Universal Credit claimants, 22 per cent to individuals on ESA, and the remaining 20 per cent to Pension Credit recipients.

The DWP stated: "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 mentioned earlier checks carried out on behalf of the DWP in 2017. During that period, another bank examined a limited sample of cases and reported 549 accounts as potentially suspicious under the Proceeds of Crime Act.

The DWP has reviewed the cases and discovered that 176 (32%) of these had excess savings, making them ineligible for the benefits they were receiving. Additionally, another 58 (11%) had foreign transactions indicating an overseas stay exceeding four weeks.

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

Similarly, in 66 per cent of potential 'abroad fraud' cases, there was a 'positive outcome', with benefits being stopped due to rule violations.

These new measures are part of the Data Protection and Digital Information Bill, currently under consideration in the House of Lords. If passed, the legislation will come into effect in 2025, involving a limited number of banks and building societies.

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

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