A woman withdraws money from a cash point
The Department for Work and Pensions (DWP) has revealed when new bank checks on benefit claimants will begin under its new ‘snooping’ powers. This means that banks and building societies will have to constantly monitor people’s accounts for any activity that breaks the rules.
Government data shows a shocking £8.3 billion was lost to fraud and error in the welfare system in 2022/2023, mostly due to fraud committed by claimants. In Universal Credit, the DWP said it had paid out £894 million to people who hadn’t declared they’d got too much money to be on benefits, Birmingham Live reports.
There is a capital limit of £16,000 for those on Universal Credit, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Housing Benefit and Income Support. Benefit claims are stopped if savings exceed that level – and shouldn’t be approved in the first place if someone has that much when applying.
But currently, the DWP can only ask to check an individual’s account if it already suspects fraud has been committed. It also relies on claimants themselves to report any changes in circumstances – including large cash deposits – that mean they’re no longer entitled to benefits.
The government has put forward new rules in the Data Protection and Digital Information Bill. These rules say that banks and building societies must share information with the Department for Work and Pensions (DWP). They need to tell the DWP about accounts getting benefit payments. This is to find out if anyone has too much savings or if they are away from the UK for too long.
The biggest banks in Britain, which deal with nearly all benefit payments for the DWP, will have to watch people’s accounts. They will look for signs that someone might be cheating. The law could also include other places where people keep money in the future. This is so that cheaters can’t hide their money to not get caught.
The DWP plans to start trying these new rules in 2025. They want to use them properly starting in 2027. They hope that by 2031, all banks will be doing this. Here is the plan for how it will happen:
The government has looked at how these new rules will work. They 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.”
Here are the key dates for the DWP bank checks timetable, along with the savings made from stopping fraud and error:
- 2025 – testing of new bank account checks begins
- 2025/26 – savings generated of less than £10m in the first year
- 2026/27 – savings of £40m
- 2027/28 – gradual rollout of full powers with savings of £170m
- 2028/29 – savings of £310m
- 2029/30 – savings of £430m
- 2030/31 – new powers operating at full scale with all 15 banks, generating savings of £530m
- 2031/32 – savings of £560m
- 2032/33 – savings of £540m
- 2033/34 – savings of £510m
- 2034/35 – savings of £480m
- Total savings in the period covered by projections: £3,580m
The savings mainly come from detecting capital fraud and abroad fraud. Capital fraud – having too much money to claim benefits – is the main reason for the savings, making up £3.1 billion out of the total £3.6 billion.
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