The Department for Work and Pensions (DWP) has announced new enforcement powers to recover money from individuals who owe at least £1,000 in overpaid benefits. These measures include driving bans of up to two years and direct deductions from bank accounts for those who refuse to repay.
This initiative comes as the government intensifies efforts to clamp down on benefit fraud, particularly undeclared financial assets, which account for around £1 billion in fraudulent Universal Credit claims annually.
Key Changes in DWP’s Fraud Crackdown
1. Driving Ban for Non-Payment
The government now has the authority to request a court order to disqualify individuals from driving for up to two years if they:
- Owe more than £1,000 in overpaid benefits.
- Refuse to engage with the DWP regarding repayment.
- Have the financial means to repay but continue to avoid doing so.
While described as a last resort, this measure mirrors existing powers used by the Child Maintenance Service for parents who fail to pay child support.
2. Monitoring Claimants’ Bank Balances
The DWP has confirmed that Universal Credit claimants’ bank accounts will be monitored to detect balances exceeding the capital limits for benefit entitlement.
Undeclared financial assets are the third-largest source of fraud in Universal Credit, with an estimated £1 billion per year being paid out to ineligible claimants.
3. Direct Deductions from Bank Accounts
If an individual refuses to engage with the DWP regarding repayment, the government can:
- Request their bank statements to verify they have funds available.
- Recover the money directly through a one-off lump sum or regular deductions.
- Allow time for the person to appeal or make representations before enforcement.
What the Government Says About These Powers
Work and Pensions Secretary Liz Kendall explained the reasoning behind the tougher measures during a House of Commons session:
- Financial Penalties Without Court Prosecution
- The DWP can now impose financial penalties for fraud, covering all payments, not just benefit fraud.
- This ensures quicker action against fraudsters without going through lengthy legal processes.
- Targeting Those Who Refuse to Pay
- The new powers do not apply to benefit claimants or those in PAYE employment, as repayments can already be deducted from wages or benefits.
- Instead, they target individuals who have left the benefit system and are self-employed or living off savings but refuse to repay.
- Fairness in Enforcement
- Courts will consider individual circumstances before issuing a driving ban, particularly for those:
- Who need their car for work.
- Who are disabled or carers.
- However, avoiding repayment simply because of geographic location will not be an acceptable excuse.
- Courts will consider individual circumstances before issuing a driving ban, particularly for those:
Kendall emphasized:
“The measure is for people who have repeatedly refused to engage with the system. Keeping public money to which they are not entitled is serious and will result in serious consequences.”
Criticism and Concerns
Some MPs have raised concerns about the potential impact of driving bans on individuals in rural areas where public transport options are limited.
Ben Lake, Plaid Cymru MP, questioned whether the policy might disproportionately affect claimants in remote areas.
Kendall responded:
“The court will always look at whether the person needs a car for their job, but we cannot allow fraud to go unchecked in different parts of the country. The measure is about getting money back fairly and effectively.”
Why Is the DWP Taking These Measures?
The government’s intensified crackdown on benefit fraud follows:
- A rise in fraudulent Universal Credit claims, especially through undeclared financial assets.
- A need to recover billions lost in fraudulent claims to protect the public purse.
- An effort to impose stricter penalties without lengthy court cases.
These new powers aim to force engagement from debtors who have the ability to pay but refuse to do so.
The DWP’s new fraud recovery powers represent a significant shift in how benefit debts are collected.
- Driving bans and direct bank deductions will now be used against those who refuse to repay.
- Claimants’ accounts will be monitored to detect savings exceeding benefit entitlement limits.
- Courts will consider individual circumstances but will not tolerate deliberate non-payment.
While these measures are expected to help recover public funds, concerns remain about how they might impact vulnerable or rural claimants.
If you owe money to the DWP, it is essential to engage with them to set up a repayment plan to avoid facing these new penalties.
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FAQ’s
What are the new DWP penalties for unpaid benefit overpayments?
The DWP can impose driving bans of up to two years and make direct bank deductions for those who refuse to repay overpaid benefits.
Who will be affected by the new DWP fraud measures?
The measures target those who owe over £1,000 in benefits, have the financial means to repay, but refuse to engage with the DWP.
Can the DWP take money directly from my bank account?
Yes, if you refuse to repay, the DWP can request your bank statements and recover money through lump sum payments or regular deductions.
Will the driving ban apply to everyone who owes money to the DWP?
No, courts will assess if the person needs a car for work or essential travel before issuing a driving disqualification.
How much money is lost to benefit fraud each year?
The government estimates around £1 billion is lost annually due to Universal Credit fraud, primarily from undeclared financial assets.
