The Department for Work and Pensions (DWP) is facing criticism over new legislation that could grant authorities access to private bank accounts in a bid to crack down on benefit fraud.
The Fraud, Error and Debt Bill, introduced by the Labour government, is expected to pass later this year, sparking concerns over mass surveillance and potential overreach.
The proposed legislation aims to revive a similar initiative from the previous Conservative government, which stalled due to the general election. If enacted, banks will be legally required to share financial data with the government to help identify fraudulent benefit claims.
However, critics argue that these new powers could extend far beyond benefit claimants. “It is not just benefits claimants who will be targeted,” warned Jasleen Chaggar, legal and policy officer at Big Brother Watch, during a parliamentary committee session. “It is everyone’s accounts, including yours and mine.”
She further cautioned that individuals indirectly linked to benefits recipients — such as landlords, guardians, or parents — could also be subject to scrutiny under the proposed measures.
Labour insists the bill will usher in the “biggest fraud crackdown in a generation,” estimating that the reforms will save taxpayers £1.5 billion over five years. The DWP maintains that safeguards will be put in place to protect vulnerable individuals, with trained staff ensuring appropriate use of the new powers. Additionally, oversight mechanisms will be implemented to monitor compliance and prevent misuse.
One of the most contentious aspects of the bill is the introduction of eligibility verification powers. These would allow the DWP to compel financial institutions to provide data on individuals suspected of exceeding the savings threshold for benefits.
Currently, those applying for Universal Credit must have no more than £16,000 in savings, except under exceptional circumstances. The initial focus of these powers will be on Universal Credit, Pension Credit, and Employment and Support Allowance — benefits that have historically seen high rates of incorrect payments.
Despite assurances from the government, privacy advocates and financial experts have voiced strong opposition to these measures.
Helena Wood, director of public policy and strategic engagement at Cifas, called the proposed powers “very new and incredibly intrusive.” She warned that they could become a “blanket, phishing-style power” typically reserved for criminal investigations, raising concerns over proportionality and potential abuses.
Disputes Over Parliamentary Oversight
Another point of contention is the lack of a finalized code of practice to govern the implementation of the new surveillance measures. Andrew Western, DWP minister for transformation, defended the decision to delay its publication.
“We are simply not able to bring forward a final code of practice. It would not be possible to do that without knowing what is in the Bill.”
Andrew Western
However, Conservative MP Mike Wood likened this approach to “King Henry VIII powers,” referring to legislative clauses that allow ministers to alter laws without parliamentary approval. The comparison was swiftly rejected by Western, who insisted that the government remains committed to transparency and accountability.
In response to growing concerns, a DWP spokesperson dismissed claims that the bill represents an overreach. “We do not recognise this characterisation of our Fraud, Error and Recovery Bill,” the spokesperson stated.
The DWP argues that these reforms are essential to protecting public funds, with the bill expected to contribute to wider efforts aimed at saving £8.6 billion by 2030.
As the bill progresses through parliament, the debate over its implications continues. While the government champions it as a necessary step in tackling fraud, privacy campaigners and financial experts warn of potential risks to civil liberties.
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