The Department for Work and Pensions (DWP) may carry out checks on benefit claimants’ bank accounts in a bid to tackle fraud. New proposed powers to be granted to the government department mean that banks and building societies will be able to more closely follow individual accounts to check if any benefit rules are being broken.
These new powers are expected to start being tested this year, starting with new back account checks and then potentially moving onto powers that would allow the DWP to also seize items, search properties, and take money out of people’s bank accounts.
However, it is not yet clear what kind of benefits will be targeted in this crackdown, with the government alluding that bank monitoring powers will be used to check breaches of benefit eligibility rules. Earlier this year, it said: “New requirements for banks and building societies to flag where there is an indication that there may be a breach of eligibility rules for benefits – preventing debts accruing.”
Under current rules, the DWP is only able to request the details of a bank account holder’s transactions as long as it has reasonable grounds to suspect fraud is taking place. According to government figures, £8.3 million was lost to fraud and error in the welfare system in 2022/23.
Meanwhile, the DWP said it paid out £894 million to people who failed to declare that their income was too high to be receiving any benefits. While it is ultimately up to a claimant to report any changes to circumstances that may affect their benefits to the DWP, new proposals under the Data Protection and Digital Information Bill would require banks and building societies to share information with the DWP on all bank accounts in which benefits are paid into.
A Government impact assessment on the new measures said: “The policy has been designed in collaboration with operational colleagues, whereby a period of ‘test and learn’ will begin in 2025 with a limited number of banks and building societies.”
“The purpose of this approach is to get the data sharing agreement between DWP and third-party data holders right, before implementing the policy on a larger scale. After the focused test and learn, the policy will begin gradual roll-out (from 2027/28), with it reaching full scale by 2030/31.”
“Unprecedented financial surveillance powers”
However, the new proposed rules have been criticised by privacy advocates and disability rights groups. Jasleen Chaggar, legal and policy officer at Big Brother Watch, told MPs: “On the eligibility verification measures—what we are calling the bank spying powers—we are recommending that they be removed in their entirety.
“These really are unprecedented financial surveillance powers. There are no other laws like this in this country. They permit generalised mass surveillance of everybody’s bank accounts.
“It is not just benefits claimants who will be targeted; it is everyone’s accounts, including yours and mine, will be scanned using algorithmic software to make sure that these eligibility indicators are not met.”
She added: “Even if you are a benefits recipient, you can appoint an individual—a parent, a guardian, an appointed person or your landlord—to receive the benefit on your behalf, so these people will also be pulled into the net of surveillance. We do not really see a way in which these measures could ever be proportionate.”
Disability RIghts UK also warned that the prospective use of algorithms to shift through a large amount of accounts could constitute an infringement on the right to privacy and could also result in false positive matches for benefit fraud or error. It highlighted that disabled people who depend on care and support may wrongly trigger fraud detection and have their benefits suspended as a result.
It notes that this is because many disabled people on benefits set up their bank accounts to pay for their social care – accounts which hold capital and may be misidentified as fraudulent. Mikey Erhardt, Policy Officer at DR UK, said: “These powers are a sledgehammer to crack the tiniest nut.
“These new powers would see disabled people deprived of the presumption of innocence, adding to the victimisation we already face in a punitive welfare system that often seeks to sanction people into work.”
At the time of writing, the Data Protection and Digital Information Bill had reached the Committee Stage in the House of Lords, further details can be found here.