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

Tens of thousands of benefit claimants have been found flouting the rules in a test of new DWP plans to monitor people's bank accounts. The Department for Work and Pensions says it asked two high street banks to try out the measures to see if they were viable.

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

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Astonishingly, 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's £10,000.

At present, 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.

There are restrictions on the time benefit claimants can spend overseas. For Universal Credit, no more than a month at a time is allowed, and for ESA and Pension Credit it is four weeks. Although people can still claim their State Pension while living abroad, it's not possible to get Pension Credit to boost the amount.

In an Impact Assessment of its plans for data-gathering by banks, the DWP says these initial checks took place in July, August and September 2022. Of the 713,000 accounts monitored, 58 per cent belonged to Universal Credit claimants, 22 per cent to people on ESA and the remaining 20 per cent to Pension Credit recipients.

It said: "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.

"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 says earlier checks were carried out for the DWP back in 2017. On that occasion, another bank looked at a limited sample of cases and reported 549 accounts as having potentially suspicious activity under the Proceeds of Crime Act.

The DWP reviewed the cases and found 176 (32%) of these had excess savings which meant people were not eligible for the benefits they were receiving while another 58 (11%) had foreign transactions that indicated someone was staying abroad for longer than four weeks.

The DWP said that in 58 per cent of these cases where people had surplus capital, there was a 'positive outcome' with action taken including a DWP compliance interview that can halt or suspend benefits, criminal investigation, administrative penalty or prosecution. And in 66 per cent of the potential 'abroad fraud' cases, the DWP also reported a 'positive outcome' where benefits were stopped due to rule violations.

The new measures are part of the Data Protection and Digital Information Bill, currently going through 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 the DWP and banks have established a successful data-sharing agreement, the policy will start a phased roll-out from 2027/2028 and reach full scale by 2030/2031.

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