A big change in welfare policy is coming in the UK. The Department for Work and Pensions (DWP) plans to let banks share certain data from benefit claimants’ accounts with the Government. This change is part of the Public Authorities (Fraud, Error and Accountability) Bill, aimed at reducing benefit fraud and ensuring support goes to those who truly need it.
The new rule, called the DWP Eligibility Verification Measure (EVM), allows banks to send limited banking data to the DWP about people receiving means-tested benefits like Universal Credit, Pension Credit, and ESA. The aim is to find potential overpayments or ineligible claims based on account balances. While the DWP says it won’t share transaction details, many privacy advocates and vulnerable households are worried about government monitoring.
Ministers say this isn’t about widespread surveillance, but critics disagree and fear it could lead to mass data collection. Some MPs are concerned it might result in banks flagging millions of accounts without any specific reason, leading to wrongful investigations and causing anxiety for benefit claimants nationwide.
Why Did the Government Introduce This Rule?
Fraudulent and mistaken benefit payments cost UK taxpayers billions each year. With rising inflation and pressure on public services, the Government wants to reduce these losses. A new DWP rule aims to improve fraud detection by allowing banks to send automatic alerts when claimants exceed savings limits, like the Universal Credit limit of £16,000.
The Government sees this as a modern update to old fraud checks. They believe that by sharing digital data, they can make quicker and more accurate assessments to stop further losses. This update is part of their strategy to combat welfare fraud and fits into broader efforts to digitise public services.
However, critics worry that this solution may be too extreme for the issue at hand. Civil rights groups caution that allowing banks to monitor many accounts could lead to increased surveillance and loss of trust. Without strong protections, privacy concerns will grow, especially for innocent individuals who might be wrongfully suspected.
How Does the DWP Eligibility Verification Measure Work?
This initiative revolves around the Eligibility Verification Measure. It doesn’t allow the DWP full access to claimants’ accounts. Instead, banks will use algorithms to find unusual patterns, mainly when account balances exceed certain limits.
The DWP has clarified what they will not receive:
- No access to transaction-level data.
- No insight into how money is spent.
- No full bank statements.
They will get automated alerts, like flags for balances over the eligibility limit. These alerts go into the current DWP systems and need a trained person to review them. In theory, this helps prevent unfair actions based solely on algorithms.
However, MPs are concerned. Even with human checks, the number of automated bank checks is risky. If the system looks at millions of accounts, even a small error could lead to many wrongful investigations. This raises important questions about benefit system surveillance in today’s data-focused world.
Why Privacy Experts and MPs Are Worried
Legal experts, privacy advocates, and MPs have reacted strongly. They warn that this system could make benefit claimants feel like second-class citizens. Many are more worried about fairness, civil liberties, and trust in institutions than about preventing fraud.
Among the main issues raised:
- People could be flagged without reasonable suspicion.
- Automated checks might misunderstand legitimate financial activity.
- Vulnerable groups may be disproportionately affected.
Critics say that when the Government starts gathering data in large amounts, it creates a risky situation. Today, it might target benefit claimants; tomorrow, it could involve more people. The difference between checking for fraud and watching the public becomes unclear.
Another worry is the Government’s choice to ignore a Lords amendment that would have allowed an independent reviewer to oversee how these powers are used. This review would have kept the use of these powers fair and proportional. By rejecting this oversight, ministers have increased privacy concerns among people who are already doubtful about the plan.
Who Will Be Affected by the New DWP Bank Checks?
This regulation focuses on people who receive means-tested benefits, where savings and income affect their eligibility. The following groups may be affected:
- Universal Credit
- Pension Credit
- Employment and Support Allowance (ESA)
- Jobseeker’s Allowance (JSA)
Banks will automatically check accounts linked to benefit payments to see if claimants go over the Universal Credit savings limit of £16,000. Even short-term increases in bank balances, like receiving gifts or temporary transfers, can raise concerns.
Claimants should know that their eligibility is now partly judged by their banking information, even if they aren’t being watched closely. It’s important to understand your rights and responsibilities regarding DWP bank checks. If there’s a mistake, claimants should feel confident to appeal and explain their situation.
Can DWP Freeze or Take Money from Your Bank Account?
A common myth about this rule is that the DWP can take money from accounts or freeze funds. This isn’t true. The law doesn’t let the DWP take money without going through a legal process. Instead, it allows for:
- Banks to alert DWP when eligibility thresholds are breached.
- DWP to investigate possible overpayments.
- Recovery of confirmed overpayments through agreed plans or legal orders.
The bill also allows the government to suspend driving licences for people who owe over £1,000 in welfare debts and won’t pay. This has raised concerns about strict measures against vulnerable individuals.
However, there are protections in place. People can appeal decisions, ask for reassessments, or get help from professionals to understand their rights. Clarkwell & Co. Chartered Certified Accountants offer services to help with these issues, as detailed on our HMRC Investigation Services page. Their support is crucial for defending against incorrect claims or automated decisions.
What Protects Claimants From Wrongful Investigations?
While the rules may sound intimidating, several layers of protection have been put in place:
- A human officer must review any case flagged by EVM.
- No transactional spending data is shared.
- Banks face penalties for oversharing information.
Experts say that with such a large operation, mistakes will happen. If the system checks 10 million accounts, a 1% error rate means 100,000 false alerts.
If you are wrongly flagged, you can challenge it. Start with a Mandatory Reconsideration, and you can go to a Tribunal if necessary. The complaints system provides extra protection too.
Clarkwell & Co. gives special support for benefit investigations, particularly those with complex eligibility rules. They help ensure that no claimant faces bureaucratic challenges alone.
What Should Claimants Do If They Receive a DWP Inquiry Letter?
If the DWP starts an investigation or sends you a letter about your eligibility, stay calm. Many investigations happen automatically and don’t always mean you’ve done something wrong.
Here’s what you should do:
- Carefully read and understand the letter.
- Respond within the deadline.
- Collect and organise relevant financial documentation.
- Seek professional help if you’re unsure how to proceed.
Support from accountants who know benefit laws and data tracking can be very helpful. At Clarkwell & Co., our experienced team can assist clients with DWP requests, appeals, and repayment issues. For investors or business owners, now might be a great time to look into SEIS and EIS Tax Relief Services in London to keep your finances in order and compliant.
Is This the Start of Financial Surveillance?
The UK is starting to use new data-sharing powers from the DWP. While the main goal is to stop fraud, this raises concerns about government overreach. Claimants are worried not just about reviews of their eligibility, but also about losing their financial privacy.
As digital technology spreads, the government must keep public trust by being transparent and having proper oversight. Monitoring benefit claimants’ bank accounts is a new way to manage social support.
If you receive means-tested benefits or plan to apply, stay informed and organised. Keep your records in order. Mistakes can happen, but you can also take steps to protect yourself. Clarkwell & Co. can help you understand the DWP’s data use and investigations, as detailed on our service pages for Accountants in Central London and Professional Accountants in Camden.
