The Department for Work and Pensions has confirmed that plans to spy on claimants’ bank accounts will go ahead as a key part of its battle against benefit cheats through two sets of legislation. Monitoring of accounts will start next year and is expected to result in 74,000 prosecutions and 2,500 prison sentences.
Figures show there is a huge £8.3 billion of overpayments from fraud and error in the welfare system, only slightly down on the record level of £8.7 billion in 2021-2022. Most of it is within Universal Credit where there are fraudulent claims worth £5 billion.
The DWP announced: “The Prime Minister has committed to introducing a new Fraud Bill in the next Parliament. The measures in the Bill will give us new powers to carry out warrants for searches, seizures and arrests, to enforce civil penalties more consistently and flexibly, and to a wider group of offenders, and provide new powers to gather information from more information holders as part of DWP led investigations into fraud.
“This is in addition to legislation we’re introducing through the Data Protection and Digital Information Bill which will enable DWP to receive information from third parties [such as banks] that may signal where fraud is being committed. This is one of the most significant reforms to benefit fraud laws in more than 20 years and will deliver savings to the taxpayer of £600 million by 2028/29.”
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Banks will have to report any accounts exceeding the £16,000 maximum savings limit for claiming Universal Credit or other means-tested benefits. They will also look for regular foreign transactions that indicate a claimant is either living abroad and not entitled to UK benefits or is staying overseas longer than the rules allow.
Mr Sunak said in his recent speech on welfare reforms that the Government was preparing a new Fraud Bill which would see benefit fraud treated like tax fraud. It will enable the DWP to make seizures and arrests.
The Government’s Public Accounts Committee has urged the DWP to do more to tackle bogus claims, especially within Universal Credit. The committee says the relaxation of strict rules during the pandemic, so that claims could be processed quickly to help people in need of financial support, has allowed fraudsters easier access to benefits.
The committee questioned whether Universal Credit is less prone to fraud and error than the legacy benefits it is replacing. Members weren’t convinced by the DWP’s rationale that a general rise in fraud within society as a whole is responsible.
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