DWP to go through bank accounts of claimants on 8 benefits

The Department for Work and Pensions is set to be granted sweeping new powers to monitor the bank accounts of millions of benefit claimants in a bid to clamp down on fraud and overpayments.

Under proposals in the Public Authorities (Fraud Error and Recovery) Bill, which is due to come into force from April 2026, banks will be required to flag accounts that may suggest a claimant is ineligible for certain benefits. A full rollout of the scheme is expected between 2029 and 2031.

Currently, the DWP can only request transaction details if it has "reasonable grounds" to suspect fraud.

But the new legislation would significantly expand that authority, using algorithms to identify suspicious activity and allowing the DWP to act more quickly against cases of fraud, the Daily Record reports.

Rather than checking all bank accounts directly, the system would see banks report potential red flags automatically, such as savings above the £16,000 threshold for Universal Credit.

Accounts showing inconsistent financial activity could also be flagged for investigation.

The measures are designed to save taxpayer money, prevent benefit fraud and avoid costly overpayments. The DWP has also suggested that in certain cases, debts could be reclaimed directly from accounts without the need for a court order.

A spokesperson said the reforms will help ensure benefits are paid "accurately and fairly," while protecting the system from abuse. The department has pledged to adopt a "test and learn" approach, with safeguards to protect vulnerable claimants from unfair treatment.

However, the plan has already raised concerns about privacy and the potential impact on people who rely on benefits.

Critics warn the expanded powers could leave some claimants feeling criminalised or unfairly targeted if mistakes occur.

The changes are expected to affect people on means-tested benefits, including:

• Universal Credit

• Housing Benefit

• Income Support

• Income-based Jobseeker's Allowance (JSA)

• Income-related Employment and Support Allowance (ESA)

• Council Tax Support/Reduction

• Tax Credits (Working and Child Tax Credit)

• Pension Credit

The DWP argues the enhanced powers are vital to safeguarding taxpayer funds and protecting the integrity of the welfare system.