New DWP fraud powers could monitor people on benefits going on holiday abroad

The Secretary of State for Work and Pensions has told Parliament people entitled to claim benefits have “nothing to worry about” from new powers designed to end multibillion-pound fraud in the welfare system. Liz Kendall sought to assure MPs over the scope of the changes contained in the Public Authorities (Fraud, Error and Recovery) Bill, amid concerns it could act as a “snoopers’ charter”.

The Bill seeks to allow the Department for Work and Pensions (DWP) to recover money directly from fraudsters’ bank accounts and have the power to obtain statements from people they believe have enough cash to pay back welfare debts, but are refusing to do so. The DWP boss also wants to be able to gather information from more third-party organisations such as airlines and check if people are claiming benefits from abroad.

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Ms Kendall said: “The Bill will update the DWP’s information-gathering powers for investigating fraud. At the moment, we have the power to require information from only a limited list of third parties. This does not include key organisations and sectors that could help to prove or disprove suspected fraud, such as airlines.”

She also explained how the new ‘Eligibility Verification’ check will allow banks to provide DWP with “crucial data to help identify incorrect benefit payments” being issued to people.

Ms Kendall explained: “Our new eligibility verification measure will enable us to require banks or other financial institutions to provide crucial data to help identify incorrect benefit payments people might be getting, including fraudulently, such as if someone has too much in savings, making them ineligible for a benefit, or if they are fraudulently claiming benefits abroad when they should be living in the UK.

“People should not be getting benefits they are not entitled to, and the alerts will make the process of identifying potential fraudsters much simpler, quicker and easier.”

In later remarks, she clarified the DWP will not have direct access to bank accounts. She said: “The DWP will not be able to access people’s bank accounts or look at what they are spending, we will not share any personal information with banks.

“Once an alert has been issued, any final decision about someone’s benefits will always be taken by a human being and the State Pension will be excluded from the measure (Eligibility Verification).

“There will also be independent oversight of this power on the face of the Bill, with a requirement to produce reports and lay them before Parliament.”

Courts could also suspend fraudsters’ driving licences following an application by the DWP, if they owe welfare debts of more than £1,000 and have ignored repeated requests to pay it back.

The Liberal Democrats asked Ms Kendall to withdraw the legislation and warned it is “far too much of a Big Brother Bill, it is far too much of a snoopers’ charter”.

Ms Kendall said: “This Bill will help deliver the biggest ever crackdown on fraud against the public purse, which has now reached an astonishing £55 billion a year.

“This includes: fraud against our public services, like those who abuse the tax system; dishonest companies who use deception to win public contracts and manipulate invoices; and benefit fraud by criminal gangs and individuals, which now stands at a staggering £7.4 billion a year.”

Ms Kendall accused the Conservatives of having “completely failed” to update the powers of the DWP to combat fraud, and described the Bill as “tough” on those trying to “cheat” the system but “fair” to those claimants who make “genuine mistakes”.

Independent MP Richard Burgon (Leeds East), who lost the Labour whip after rebelling to support moves to scrap the two-child benefit cap, sought assurances over how the powers will be used against individuals.

He welcomed moves to pursue organised criminal gangs, adding: “I put in a written question to the Department for Work and Pensions asking about the amounts lost in Personal Independence Payments (PIP) fraud and the answer came back that in 2022/23 only 0.2 per cent rate was fraudulently claimed by PIP claimants.

“So will the Secretary of State agree that whilst they pursue criminal organised gangs, it’s really important that we make clear that there cannot be any hostile approach to disabled people claiming PIP or disabled people more widely using the benefits system as they deserve to.”

Ms Kendall replied: “People who are genuinely entitled to claim benefits have nothing to worry about from this Bill, but we do believe that £7.4 billion wasted every year on benefit fraud must be cracked down on.”

Labour MP Dame Meg Hillier, who chairs the Treasury Committee, sought assurances people affected by errors would “not have money taken out of their bank accounts”.

Ms Kendall replied: “I think that the measures introduced in this Bill will actually help us spot and then prevent those errors in the first place because people make genuine mistakes and we do not want them to build up errors and debt that they have to repay.”

Ms Kendall said the Information Commissioner’s Office has reviewed the UK Government’s proposals and is “very clear the measure now more tightly scopes the information that can and cannot be shared, specifies much more clearly those in the scope of the power, requires a code of practice that will be a statutory code of practice before measures are taken”.

Liberal Democrat work and pensions spokesman Steve Darling said: “Clearly, defrauding the benefits system is wrong. One only has to reflect on the level of disinvestment that we’ve seen under the previous government of many of our public services to know how this can bleed the system dry.”

He later added: “Whilst one understands the aspirations of this Bill, it is far too much of a Big Brother Bill, it is far too much of a snoopers’ charter, and I would suggest to the minister that they withdraw this Bill.”

Former shadow chancellor John McDonnell, currently sitting as an Independent after losing the Labour whip, backed efforts to tackle fraud but warned of a “real fear” among people who claim benefits.

He said: “This is a step towards a mass surveillance exercise and the problem I have with it is it’s that phrase, ‘The road to hell is paved with good intentions’.

“I fear once you start down this path of surveillance in this way then others will come back with further proposals where we go further.”

SNP MP Kirsty Blackman (Aberdeen North) said: “All of this legislation, all of this work that’s being done, is to recoup a fairly insignificant amount of money. It’s going to put people through absolute hell.”

The Conservatives welcomed the Bill in principle.

Shadow work and pensions secretary Helen Whately said: “Of course the Government should go after fraudsters, but I do also worry that some of this power could be abused and, in its current form, it may breach laws on the state taking someone’s property without due process, so I would be interested to hear if experts within the legal sector have been consulted on the legislation as drafted.”

MPs voted to approve at second reading of the Public Authorities (Fraud, Error and Recovery) Bill by 343 to 87, majority 256.