The Department for Work and Pensions (DWP) is set to utilize pensioner bank account data to combat benefit fraud through new measures. The recently introduced Public Authorities (Fraud, Error and Recovery) Bill empowers the Government to recover funds directly from accounts of individuals involved in benefit fraud. Financial institutions will be mandated to report any suspicious transactions, and the DWP will have the authority to request bank statements for individuals under investigation, although direct access to accounts is not granted.
Expected to take effect from April 2026, the Bill will extend its scope to include Pension Credit claimants, with 1.36 million pensioners receiving Pension Credit as of February 2025. Notably, Pension Credit overpayments amounted to £610 million in April 2025, with fraud contributing £270 million to this total.
This crackdown aligns with the Government’s broader initiative to save £9.6 billion over the next five years, as approximately £7.4 billion was lost to benefit fraud in the previous year. The DWP emphasizes that decisions affecting benefit entitlement in cases of fraud and error will involve human oversight, ensuring fairness and proportionality. The Bill is projected to yield savings of £1.5 billion over the next five years and contribute to the overall goal of saving £9.6 billion by 2030.
Moreover, the Bill includes provisions for DWP crime investigators to seek search warrants to seize evidence from fraudsters, such as computers and smartphones. Additionally, the time limit for civil claims related to Covid fraud will be extended from six to twelve years. With nearly 24 million beneficiaries, the DWP plays a crucial role in providing social security benefits.
DWP minister Liz Kendall has expressed concerns about the current state of the social security system, highlighting issues such as the increasing number of individuals claiming sickness or disability benefits and the high rate of young people not in education, employment, or training. She emphasized the need for reforms to address these challenges and ensure the system’s effectiveness in supporting those in need.