The DWP says tens of thousands of benefit recipients have broken the rules in a test of the DWP’s plans to monitor people’s bank accounts.
The government is trying to introduce legislation that will force third parties – such as banks and building societies – to share information with the DWP.
In its drive to “tackle fraud and errors relating to the benefits system”, the department has asked two unnamed banks to use internal data to identify accounts that receive specific types of benefits and meet the DWP’s risk criteria for capital and foreign rights rules.
It meant identifying accounts that received means-tested benefits with savings in excess of capital limits and/or that were accessible abroad for more than consecutive weeks.
One of the banks found that more than 60,000 benefit recipients violated the rules, according to a report published in September 2023.
For the months of July, August and September 2022, it was found that 713,000 accounts received Universal Credit, Pension Credit and Employment & Support Allowance (ESA).
Among them, about 60,000 accounts were at risk of violating the capital rule (eight percent).
The average monthly balance for these accounts was £50,000, and around half of them were joint accounts.
The unnamed bank also found 3,000 accounts at risk of violating the foreign rule (less than one percent).
Another pilot in 2017, at the request of the DWP, examined a limited sample of cases containing personal information.
It resulted in 549 bank accounts being reported by the bank to the DWP as Suspicious Activity Reports (SARs) under the Proceeds of Crime Act 2002.
Of these, 176 cases (32 percent) related to the capital eligibility rule, while 58 (11 percent) related to the foreign eligibility rule.
However, the sample of cases assessed in the 2017 test is derived from suspicious activity reports and is not random, meaning the numbers are likely to be higher than a randomly selected sample.
The DWP report states: “The above results from the small-scale tests with two banks and building societies indicate strong potential for the use of banking data to detect potential capital and foreign fraud and errors across a range of means-tested benefits.”
Currently, the DWP can only request details of a bank account holder’s transactions if there are reasonable grounds to suspect fraud.
However, the Data Protection and Information Bill, which is currently at report stage in the House of Lords, would give the ministry new powers to monitor the financial activities of benefit recipients.
The DWP could request data from third parties such as banks and financial organizations if the legislation comes into force.
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The DWP could request data from third parties such as banks and financial organizations if the legislation comes into effect
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The UK government says this would help reduce benefit fraud and save taxpayers up to £600 million over the next five years.
However, civil liberties campaign group Big Brother Watch (BBW) has warned that the potential for “extensive surveillance, high error rates and disproportionate impact on people in vulnerable positions is enormous”.
Disability Rights UK warned that there are concerns that the new powers will also cause disabled people with care and support needs to wrongly trigger fraud indicators, potentially leading to their benefits being suspended and being forced into intrusive interviews by DWP fraud investigators.
The organization pointed out that many disabled people open bank accounts to pay for their social care, and that these accounts contain capital that could be wrongly identified as fraudulent.
A DWP spokesperson said: “This is an information gathering force. It is not a supervisory power or an investigative power.
“It requires third parties to look at their own data and only provide minimal, relevant information to DWP if it may indicate that a claimant does not meet the eligibility criteria for the benefit they are receiving. DWP does not receive data on the vast majority of claimants who comply with the rules around benefit entitlements.
“We have a duty to handle taxpayers’ money responsibly – and that’s why we’re cracking down on fraud and error. This is supported by our £900 million Fraud Plan, which will strengthen our anti-fraud operations and root out those who steal from the most vulnerable.”