DWP Moves Closer to Gaining Power to Access Bank Accounts and Suspend Licenses in Fight Against Benefit Fraud
The Department for Work and Pensions (DWP) has taken another significant step toward increasing its fraud recovery powers to combat benefit fraud, with a new amendment to the Public Authorities (Fraud, Error and Recovery) Bill. This amendment would grant the DWP fraud powers to recover money directly from fraudsters’ bank accounts and obtain their bank statements if it is believed they have sufficient funds to repay welfare debts but refuse to do so.
One of the most notable aspects of the amendment is the potential for courts to suspend the driving licenses of individuals who owe more than £1,000 in welfare debts and have failed to respond to repeated requests for repayment. This move is part of the government’s broader efforts to clamp down on benefit fraud, which has cost the taxpayer billions in recent years.
The legislation has already sparked considerable debate, and earlier this week, the government suffered a narrow defeat in the House of Lords, where peers voted to give the Public Sector Fraud Authority (PSFA) more power to investigate suspected fraud. The amendment, which passed with a majority of six votes, would allow the PSFA to initiate proactive investigations without needing an invitation from the public authority suspected of being defrauded.
The move has been criticized by some government officials, who argue that empowering the PSFA to act without prior approval from public bodies could undermine collaboration and efficiency. However, proponents of the amendment, including Shadow Cabinet Office minister Baroness Finn, have called it a necessary step in strengthening the fight against fraud. Finn argued that the PSFA had been hamstrung by its previous limitations and was “empowered yet toothless.” She emphasized that relying on public authorities to voluntarily invite the PSFA to investigate fraud was impractical, as it could expose potential failures and reputational risks.
In her remarks, Finn made a compelling case for proactive fraud investigations, stating that allowing the PSFA to act independently would close a glaring loophole. She argued that without these powers, fraudsters and complacent officials could easily avoid detection. However, Labour frontbencher Baroness Anderson of Stoke-on-Trent disagreed, asserting that the PSFA was already effective through collaboration with public authorities. Anderson argued that the new powers were unnecessary, as the existing moral and public pressures for action were sufficient.
Despite this, the amendment passed with substantial support, including votes from 163 Conservative peers, 24 crossbenchers, and even one Labour peer. The bill will now return to the House of Commons, where MPs will review the changes in a process known as “ping-pong,” where the two Houses of Parliament work to reach an agreement on the final version of the legislation.
The DWP’s push to access bank accounts and suspend driving licenses is part of a broader government strategy to address the estimated £9.5 billion in benefit overpayments recorded for the year leading up to March. A significant portion of this overpayment is attributed to fraud. In response, the government is intensifying its efforts to ensure that individuals who defraud the system are held accountable.
In addition to the proposed powers for the DWP, the government also faced pressure to establish clear fraud risk management duties for public authorities overseeing large spending programs. An amendment to this effect was rejected in the House of Lords, with peers voting against it by a margin of 47 votes. Despite the defeat, the ongoing debate reflects the growing recognition of the need for stronger measures to combat public sector fraud and safeguard taxpayer money.
As the Public Authorities (Fraud, Error and Recovery) Bill continues its journey through Parliament, its provisions are expected to significantly reshape the government’s approach to fraud detection and recovery, with a particular focus on ensuring that those who have the means to repay welfare debts do so promptly.
