The Department for Work and Pensions (DWP) has been granted new powers to directly access accounts held at 15 of the UK’s largest banks. This is part of the Labour Party government’s Plan for Change, aimed at tackling fraud, reducing errors in the welfare system, and recovering taxpayers’ money.
These measures are designed to address the growing cost of fraud and error, which currently costs the UK taxpayer nearly £10 billion annually. Since the pandemic, an estimated £35 billion has been incorrectly paid out to individuals not entitled to the money.
By leveraging these new powers, the DWP aims to save up to £1.5 billion over the next five years while supporting legitimate claimants to access benefits efficiently.
New Powers
The DWP will now be able to check the accounts of claimants held at the 15 major banks where 97% of benefits payments are made. These banks include:
- Bank of Scotland
- Barclays
- Halifax
- HSBC
- Lloyds Bank
- Metro Bank
- Monzo Bank Limited
- NatWest
- Nationwide
- Santander
- Starling
- The Co-op
- RBS
- TSB
- Yorkshire Bank
The new powers are supported by the Data Protection and Digital Information Bill, which could also extend these measures to other banks if necessary.
Fighting Fraud
Fraud and error in the social security system are significant contributors to the welfare bill. Georgia Gould, Minister in the Cabinet Office, stated:
“These new powers will give us the tools to fight fraud wherever we find it in the public sector, recovering taxpayers’ hard-earned money from those stealing from the public purse. We are changing this to make sure there is nowhere to hide for fraudsters.”
The DWP emphasized that these powers are not meant to criminalize legitimate claimants. Many individuals may have savings exceeding benefit thresholds for valid reasons, such as injury compensation.
Overpayments are often caused by genuine claimant errors, and the department has assured that banks should not take any action to de-bank individuals based solely on the data provided.
Collaboration with Banks
The government worked closely with UK Finance and the listed banks to establish a framework for data sharing. This collaboration ensures that the process is transparent and compliant with data protection laws.
The DWP clarified that the measures are intended to detect and prevent fraud while ensuring genuine claimants are not unfairly targeted. In cases where overpayments are identified, the department will seek to recover the funds efficiently without penalizing individuals acting in good faith.
A Balanced Approach
While the crackdown on fraud is necessary to protect public funds, the DWP aims to balance this with the need to support claimants. Legitimate claimants who have made errors in their applications or who possess authorized savings will not be unfairly penalized.
The Plan for Change is a critical step in addressing inefficiencies and fraud within the welfare system, ensuring that taxpayer money is used appropriately while helping those who genuinely need support.
SOURCE – LINK
FAQs
Which banks are included in the DWP’s checks?
Fifteen major UK banks, including Barclays, HSBC, and Santander.
What is the purpose of these new powers?
To tackle fraud, recover funds, and reduce errors in welfare payments.
Will legitimate claimants be penalized?
No, the DWP assured no action will be taken without cause.
How much does fraud cost the social security system?
Fraud and error cost around £10 billion annually.
Can other banks be added to the list?
Yes, the Data Protection Bill allows for more banks to be included.
