The UK government is introducing new powers to combat benefit fraud, including the ability to monitor bank accounts. These measures, spearheaded by the Department for Work and Pensions (DWP), aim to tighten control over fraudulent claims while recovering significant public funds.
With potential savings of £1.5 billion over the next five years, the initiative forms part of a larger plan to save £4.3 billion by 2029/30.
Aims of the Initiative
Fraud and error in the UK’s social security system currently cost taxpayers nearly £10 billion annually. Since the pandemic, £35 billion has been incorrectly paid to individuals not entitled to the money. To address these challenges, the DWP plans to scrutinize accounts at 15 major banks and building societies, which receive 97% of all benefit payments.
Georgia Gould, a Minister in the Cabinet Office, emphasized the importance of these new powers, stating, “These tools will allow us to fight fraud wherever it occurs, ensuring taxpayer money is recovered and fraudsters have nowhere to hide.”
Banks Under Monitoring
The new powers will focus on accounts held at the largest financial institutions in the UK. The banks involved are:
- Bank of Scotland
- Barclays
- Halifax
- HSBC
- Lloyds Bank
- Metro Bank
- Monzo Bank Limited
- NatWest
- Nationwide
- Santander
- Starling
- The Co-operative Bank
- Royal Bank of Scotland (RBS)
- TSB
- Yorkshire Bank
The Data Protection and Digital Information Bill allows for the inclusion of other banks if necessary, ensuring a comprehensive approach to monitoring.
Transparency
The DWP has assured the public that these measures are not intended to penalize claimants unfairly. Discussions with UK Finance, banks, and other institutions clarified that data obtained under this policy should not be assumed to indicate financial wrongdoing. Many claimants may have legitimate reasons for holding savings exceeding benefit limits, such as injury compensation.
Additionally, the DWP acknowledged that some overpayments result from genuine claimant error. In these cases, claimants will not face penalties or de-banking but will instead be contacted to rectify the situation.
Benefits of the Crackdown
This initiative is expected to significantly reduce fraudulent claims, ensuring that public funds reach those genuinely in need. By increasing transparency and improving oversight, the government aims to restore trust in the welfare system while addressing the misuse of taxpayer money.
Broader Implications
While the government is optimistic about the potential savings, some critics have raised concerns about privacy and the risk of penalizing honest claimants. Balancing fraud prevention with respect for individual rights will be essential in maintaining public confidence.
SOURCE – LINK
FAQs
Which banks are monitored under the new DWP rules?
15 major UK banks, including HSBC, Lloyds, and Barclays.
What is the goal of monitoring bank accounts?
To prevent benefit fraud and recover overpaid public funds.
Can claimants with high savings be penalized?
No, legitimate reasons for savings will be considered.
How much does fraud cost the UK annually?
Fraud and errors cost taxpayers nearly £10 billion yearly.
Will other banks be included in the monitoring?
Yes, additional banks may be added under the new legislation.
