DWP starts bank checks in pilot plan and finds 63,000 breaking rules

A pilot scheme by the Department for Work and Pensions (DWP) to monitor bank accounts has discovered tens of thousands of benefit claimants violating regulations. The DWP enlisted two high street banks to test the measures for 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 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.

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

Benefit claimants are subject to certain restrictions regarding time spent abroad. Universal Credit recipients can spend up to a month overseas, while those on ESA and Pension Credit have a four-week limit.

While the State Pension can be claimed from abroad, Pension Credit cannot be used to supplement it.

The Department for Work and Pensions (DWP) has outlined its data-gathering initiative with banks in an Impact Assessment, disclosing that initial checks were carried out in July, August and September 2022. Of the 713,000 accounts monitored, 58% were associated with Universal Credit, 22% with ESA and 20% with Pension Credit holders.

The DWP stated: "Among these, approximately 60,000 accounts were in risk of breaching the capital rule (8%) and 3,000 accounts in 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."

It further added: "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 refers to a previous surveillance conducted in 2017, where a bank scrutinised a select number of cases and identified 549 accounts with potentially suspicious activities under the Proceeds of Crime Act. The DWP reviewed these cases and found that 176 (32%) had excess savings, making them ineligible for the benefits they were receiving, while another 58 (11%) had foreign transactions indicating an extended stay abroad beyond four weeks.

In 58 per cent of these cases where individuals had surplus capital, the DWP reported a 'positive outcome', with actions taken including a DWP compliance interview that can halt or suspend benefits, criminal investigation, administrative penalty or prosecution. Similarly, in 66 per cent of potential 'abroad fraud' cases, the DWP also reported a 'positive outcome' where benefits were 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 the legislation is passed, it will come into effect in 2025 with a limited number of banks and building societies.

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

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