The new powers are part of a plan to crackdown on benefit fraud which is costing the system around £9.5billion
The Public Authorities (Fraud, Error and Recovery) Bill is set to start its rollout from 2026, according to government-published fact sheets. Data from the Department for Work and Pensions indicates that the bill could result in savings of £1.5 billion over the subsequent five years.
The new legislation includes provisions such as driving restrictions of up to two years for repeat offenders who fail to repay falsely claimed benefits, enhanced powers for the DWP to reclaim money directly from fraudsters’ bank accounts, and an Eligibility Verification mechanism.
This Eligibility Verification Measure allows third-party entities, like banks, to identify potentially fraudulent benefit claimants. However, it does not provide the DWP with direct access to individual bank accounts despite widespread concerns when the plans were first announced.
It will not permit investigators to monitor the spending habits of benefit recipients. Instead, it will simply enable banks to work with department investigators in identifying individuals who have exceeded the eligibility criteria, as reported by the Daily Record.
For instance, if a Universal Credit recipient has savings exceeding the permitted threshold of £16,000. This can occur unintentionally when legitimate claimants are unaware that a change in circumstances affects their benefits eligibility.
As a result, the new powers could stop people from unknowingly racking up debt with the DWP and deter fraudsters from exploiting the welfare system. The Factsheets also indicate that there will be mechanisms in place to ensure “appropriate, proportionate, and effective use of the powers” to protect legitimate claimants.
According to guidance on Gov.uk: “The Government will begin implementing the Bill measures from 2026. For the Eligibility Verification Measure, the Government will implement a ‘test and learn’ approach to ensure the new powers to tackle public sector fraud are being used proportionally and effectively.
“DWP and the Cabinet Office will continue to work with industry to implement the new measures, consult stakeholders on Codes of Practice and publish guidance.”
The DWP will also be able to request data from additional third-party organisations. Such as airlines, to check if individuals are claiming benefits while abroad, which may contravene eligibility criteria.
The factsheet also outlines potential penalties for banks and other financial institutions that overshare information and other safeguards that will protect legitimate benefit claimants.
The new measures in the bill will also empower the Public Sector Fraud Authority to:
- Utilise its expertise on behalf of other departments
- Enhance detection and prevention of incorrect payments through new information gathering and sharing powers
- Employ robust non-criminal sanctions and civil penalties as an alternative to criminal prosecution and to deter fraud
- Boost the government’s ability to reclaim public money, through new debt recovery and enforcement powers
- Exercise new powers of entry, search and seizure to alleviate the pressures on the police in the most serious criminal investigations
- Better manage fraud in future emergencies building on lessons learned during COVID-19