The Department for Work and Pensions (DWP) is set to be granted new powers allowing officials to seize funds directly from the bank accounts of benefit claimants under suspicion of fraud. The forthcoming legislation aims to crack down on benefit fraud, giving investigators the authority to request bank statements and retrieve outstanding sums directly from individuals’ accounts.
However, opponents of the impending policy are concerned that innocent claimants could be erroneously targeted, potentially plunging them into severe financial hardship. Sebrina McCullough, director of external relations at the debt and benefit counselling service Money Wellness, emphasised caution: “It is vital that before any agreements to recover money directly from bank accounts are made, affordability checks are completed.”
She pointed out that bank statement details may not accurately indicate someone’s financial status. Under the new protocols, officials will demand a minimum of three months of bank statements to confirm the availability of funds before proceeding with deductions. They also have the discretion to review statements covering an extended period.
Ms McCullough urged the Government to consider alternative approaches: “We’d encourage the Government to first refer these people to free debt advice services, which can work with people to establish their full financial situation and then support them with a sustainable and workable repayment plan. Otherwise, we risk forcing vulnerable low-income households into crisis.”
The expert emphasised the need to consider the broader context to benefit fraud, noting that fraudulent overpayments account for a mere 2.8% of welfare spending, totalling £7.4 billion. This figure compares with £1.6 billion in overpayments due to claimant errors and an additional £0.8 billion attributed to other mistakes.
Yet this pales in comparison with the estimated £20billion in benefits that remains unclaimed as individuals fail to apply for what they are reportedly entitled to. Ms McCullough stressed: “It’s paramount that the Government distinguish ‘intentional fraud’, where, for example, large-scale fraud committed by criminal gangs are exploiting vulnerable individuals, from genuine errors made by people trying to navigate an outdated, overly complex system.
“Any legislation must consider how to prevent fraud, as well as how to use the data available to proactively engage people who should be claiming but clearly do not know they are entitled to additional benefits. The system must be simplified and streamlined.”
Another professional expressing concern about the new measures is Ben Fleming, a financial crime analyst at Ocean Finance. He cautioned: “Mistakes in benefit assessments are not uncommon, and there’s a risk that innocent people might be unfairly scrutinised or penalised. If these checks are applied inconsistently or without clear oversight, it could lead to a disproportionate impact on vulnerable groups who are already struggling.”
Mr Fleming also cautioned that individuals claiming disability benefits may be especially vulnerable under the new regulations. He stated: “Disability benefits like Personal Independence Payment and Employment and Support Allowance could also see heightened checks, as these often rely on subjective assessments that can be manipulated.
“Housing Benefit and Council Tax Reduction schemes might also be targeted due to the financial strain they place on local authorities. These benefits often involve third-party data like rental agreements, making them susceptible to misreporting.”