The Department for Work and Pensions (DWP) has been granted new powers to directly check bank accounts at 15 major UK banks. This move is part of the Labour Party government’s Plan for Change, aimed at reducing welfare fraud and ensuring taxpayer money is used appropriately.
The new measures are expected to save up to £1.5 billion over the next five years by identifying incorrect payments and fraud in the social security system.
Why Is the DWP Checking Bank Accounts?
The UK government has taken this step to tackle fraud and errors in the welfare system, which currently cost taxpayers nearly £10 billion annually. Since the COVID-19 pandemic, around £35 billion has been incorrectly paid to individuals who were not entitled to the money. The DWP will now have direct access to financial data from major banks to verify benefit claims and recover overpaid funds more efficiently.
What the Government Says About These New Powers
Georgia Gould, Minister in the Cabinet Office, emphasized the importance of these powers in combating fraud. She stated:
“These new powers will give us the tools to fight fraud wherever we find it in the public sector, recovering taxpayers’ hard-earned money from those stealing from the public purse.”
She also pointed out that fraudsters have previously exploited loopholes due to a lack of government authority to investigate financial activities across different sectors. With these new measures, the government aims to ensure fraudsters can no longer escape detection.
Which Banks Are Affected?
The DWP has confirmed that 15 major banks and building societies will be subject to these checks. These institutions receive over 97% of all benefit payments made to claimants. The banks included in this initiative are:
- Bank of Scotland
- Barclays
- Halifax
- HSBC
- Lloyds Bank
- Metro Bank
- Monzo Bank Limited
- NatWest
- Nationwide
- Santander
- Starling Bank
- The Co-operative Bank
- Royal Bank of Scotland (RBS)
- TSB
- Yorkshire Bank
How Will These Checks Work?
Under the Data Protection and Digital Information Bill, these banks will provide financial information to the DWP, allowing authorities to identify any discrepancies between a claimant’s financial situation and their declared income and savings.
However, the DWP has assured the public that these checks are not meant to assume guilt or financial crime. Many claimants may have legitimate reasons for holding savings above the benefit thresholds, such as injury compensation or other authorized exemptions.
The department has also clarified that no action will be taken to de-bank claimants, meaning individuals will not lose access to their bank accounts due to these checks.
Potential Impact of These Measures
The government expects these new measures to:
- Reduce fraudulent benefit claims
- Recover incorrectly paid welfare funds
- Save taxpayers up to £1.5 billion over the next five years
- Improve public trust in the social security system
While the move is welcomed by many as a step toward financial accountability, some critics have expressed concerns about privacy and potential errors in the system that may wrongly target genuine claimants. The DWP, however, maintains that its goal is to ensure fairness and efficiency in distributing welfare benefits.
With welfare fraud and errors costing billions annually, the UK government is taking a firm stand by allowing the DWP to check bank accounts at 15 major financial institutions. While these checks aim to prevent fraud and recover taxpayer money, the government has reassured claimants that legitimate cases will not be unfairly penalized.
As these measures roll out, it remains to be seen how they will impact both the welfare system and public confidence in the government’s approach to tackling fraud.
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FAQ
Why is the DWP checking bank accounts?
The DWP is checking bank accounts to reduce welfare fraud, ensure fair distribution of benefits, and recover incorrectly paid funds. This measure is expected to save taxpayers up to £1.5 billion over the next five years.
Which banks are affected by the DWP checks?
The DWP will check accounts from 15 major banks, including Barclays, HSBC, Lloyds, NatWest, Santander, Halifax, Metro Bank, Monzo, and others.
Will my bank account automatically be checked?
Only accounts linked to benefit claims may be reviewed. The DWP will check accounts to confirm eligibility and detect discrepancies, but not all accounts will be scrutinized.
Will I lose my benefits if my account is checked?
No, not necessarily. If your financial details comply with benefit rules, there won’t be any issues. The DWP will only act if fraud or errors are found.
Can banks refuse to share customer data with the DWP?
No, under the new law, these banks are required to cooperate with the DWP’s fraud prevention measures to help detect and prevent fraudulent claims.