New Fraud Bill to give DWP investigators extra powers on top of monitoring bank accounts announced last year

The Prime Minister has committed to introducing a new Fraud Bill in the next Parliament which will give the Department for Work and Pensions (DWP) similar powers to HM Revenue and Customs (HMRC). The measures in the Bill will give the DWP powers to carry out warrants for searches, seizures and arrests, to enforce civil penalties to a wider group of people, and provide new ways to gather information from more data streams as part of investigations into suspected benefit fraud.

Prime Minister Rishi Sunak announced the new measures on Friday and said they will be in addition to legislation already being introduced through the Data Protection and Digital Information Bill which will enable DWP to receive information from third parties such as banks.

The PM said: “We cannot allow fraudsters to exploit the natural compassion and generosity of the British people.”

He continued: “We’ve already cracked down on thousands of people wrongly claiming Universal Credit, including those not reporting self-employed earnings or hiding capital and we’ll save the taxpayer £600 million by legislating to access vital data from third parties like banks.

“We’re using all the developments in modern technology, including Artificial Intelligence to crack down on exploitation in the welfare system that’s taking advantage of the hardworking taxpayers who fund it.

“We’re preparing a new Fraud Bill for the next Parliament which will align DWP with HMRC so we treat benefit fraud like tax fraud with new powers to make seizures and arrests.”

The PM added: “We’ll also enable penalties to be applied to a wider set of fraudsters through a new civil penalty.

“Because when people see others in their community gaming the system that their taxes pay, it erodes support for the very principle of the welfare state.”

The UK Government said this is one of the most significant reforms to benefit fraud laws in more than 20 years and will deliver savings to the taxpayer of £600 million by 2028/29.

It added that this plan will deliver a welfare system that’s “fit for the future by providing vital support only to those who need it most, ensuring they are supported to live with dignity and independence, whilst making sure that everyone who can work is expected and supported to do so”.

Bank account monitoring for fraud

Under current rules, the DWP is able to request bank account holders’ banking transaction details on a case-by-case basis if there is reasonable grounds to suspect fraud.

However, new powers through the Data Protection and Digital Information Bill would allow the DWP to access the personal data of benefit claimants by requiring the third party served with a notice, such as a bank or building society, to conduct mass monitoring without suspicion of fraudulent activity - which has been the topic of much parliamentary debate since it was announced last year.

More than 24,100 people have signed an online petition created by Wendy Scott which argues that “most benefit claimants are not fraudsters” and calls the proposed new approach to accessing bank accounts “too aggressive an approach towards benefit claimants”.

However, in its response to the petition on February 5, the DWP said: “We must modernise and strengthen DWPs legislative framework to give those fighting fraud the tools they need to stand up to future challenges and minimise the impact of genuine mistakes that can lead to debt.

“The third party data gathering measure enables DWP to request data from third parties so we can more proactively detect fraud and error in the welfare system.”

DWP goes on to explain how “data is a powerful tool to understand whether someone is entitled to benefit” adding that it already uses “several data streams to help verify a person's claim or entitlement to benefit which has helped significantly reduce other types of fraud and error”.

DWP said: “This measure will provide better access to data to establish whether someone is entitled to benefit, making it harder for fraudsters to steal from the taxpayer. The measure will also address error by ensuring claimants are in receipt of the correct amount of benefit that they are entitled, preventing people from inadvertently getting into debt.

“There are a number of misconceptions about this measure, namely, it does not grant DWP access to any bank accounts and it does not allow DWP to see how claimants are spending their money.”

DWP clarified that the measure will require third parties to look within their own data and provide “relevant information” to the Department that “may signal where claimants do not meet the eligibility criteria for the benefit they are receiving”.

“DWP will only receive data on accounts matching criteria DWP prescribes, these will be linked to eligibility criteria for benefits that, if met, may require further consideration to ensure a claim is correct through our business-as-usual processes,” DWP explained.

The full written response from the DWP can be read on the petitions-parliament website here.

At 100,000 signatures the ‘Do not introduce regular bank account checks for benefit claimants’ petition would be considered by the Petitions Committee for debate by MPs in Parliament.

Join our Daily Record Money WhatsApp community here to receive alerts on the latest money news from benefits to shopping deals.