The new benefit payment law that checks bank accounts for fraud, explained
The government has announced plans to crack down on benefits fraudsters by allowing officials to check claimants’ bank accounts.
A so-called “snooper’s charter” that was originally proposed by the Tory government is set to be reintroduced by Labour in an effort to save over £1 billion in potential scams over the next five years.
In his speech to the Labour Party Conference on Tuesday, prime minister Sir Keir Starmer said that “to maintain support for the welfare state”, he would need to “legislate to stop benefit fraud”. A press release outlining the proposals to check bank accounts was published by the government on the same day.
However, some campaigners have condemned the proposals, describing them as an invasion of privacy, while others say many overclaims are “made in error”.
Here, Yahoo News UK breaks down the new benefits payment law and the reaction to it…
What is it?
The Fraud, Error and Debt Bill is the government’s plan to crack down on benefits fraud.
It essentially gives the Department for Work and Pensions (DWP) more powers to catch scammers faster and to “prevent customers from getting into debt sooner”.
The government is introducing the measures to combat what it says is a £10 billion cost to taxpayers every year as a result of benefits fraud.
How would it work?
Among the new powers afforded to officials include allowing banks and financial institutions to share data that “may show indications of potential benefit overpayments” – something that has privacy campaigners concerned.
Other powers will allow the DWP to take greater control of investigations into criminal gangs defrauding the taxpayer.
The government said the new bill will include enhanced measures to protect vulnerable claimants, while the DWP will also be able to recover debts from claimants who can pay money back but have avoided doing so.
The government insists the DWP will not have direct access to people’s bank accounts and safeguards will be established to ensure that personal information is not shared to third parties by the DWP.
What has the reaction been?
Campaigners have warned the government that the proposals could be a breach of privacy, while others say that the language used is “stigmatising” to those who make claims legitimately.
A spokesperson for Turn2Us, a charity focused on those struggling financially, told Yahoo News UK: “It's vital that people feel supported and confident to access the support available to them. The government should avoid using stigmatising language around social security, which could push more people away from the support they desperately need and trap more families in poverty.”
Disability charity Scope said that disabled people’s trust in the DWP and the benefits system “is at an all-time low and needs rebuilding”. A spokesperson added: “The rising cost of living has already pushed disabled people beyond breaking point.”
Public and Commercial Services (PCS) union general secretary Fran Heathcote said DWP and Job Centre staff want “to help people, not trip them up”.
She said the UK “has some of the lowest levels of benefits in Europe”, adding: “Those that do overclaim often do so in error, struggling to navigate a complex system, or because they can’t make ends meet on our poverty-level benefits. The government should focus on making our social security system less punitive and more supportive.”
Silkie Carlo, the director of privacy campaigners Big Brother Watch, told The Guardian that the government “already has strong powers to investigate the bank statements of suspects”. She said that the new powers would mean millions would be “spied on”, claiming “the whole population’s bank accounts are likely to be monitored for no good reason”.
When questioned about the proposals on Wednesday, the prime minister told BBC Radio 4’s Today programme that long-term benefit claimants should have to look for work. He said those people “also need support” – but admitted that “there will be hard cases” and those claiming benefits should also be looking for work.
Health secretary Wes Streeting also told Sky News it was up to the government to get people back to work quickly after sickness – but said ministers would not “tolerate” benefits fraud.
What does the public think?
Despite the concerns from some campaigners, the public broadly supports the government's proposals to allow access to the bank accounts of those suspected of claiming benefits that are not entitled to.
According to a YouGov survey taken after Starmer’s speech on Tuesday, nearly two-thirds of people (64%) support the proposal in some way. Of those, 29% said they strongly support it, while 35% said they tend to support it.
Just under a quarter (24%) said they opposed the proposals, with 10% saying they strongly opposed checking people’s bank accounts, while 14% said they tend to oppose it.
On the wider issue of benefits fraud, a study by the National Centre for Social Research, published in October last year and using responses from 2016 onwards, found that most people thought it was wrong – but that attitude had decreased over time. The study found that there has been a growing tolerance towards benefits fraud.
It also found that most people thought the government at the time was not doing enough to tackle the issues, with 61% holding the view in 2022, compared to 54% in 2016.
How big is the benefits bill?
According to data from Statista, the government is expected to spend around £258.4 billion on benefits in 2023/24. This figure is up from the previous year when benefit expenditure stood at £242.5 billion.
Figures from the DWP show that the figure is set to rise again next year, with £305.6 billion forecast to be spent in 2024/25. While increased, the amount is £1.2 billion lower relative to the expenditure forecast at the previous government’s autumn statement in 2023.
Total welfare spending is forecast to be 11% of GDP and 24.9% of the total amount the government spends in 2024 to 2025, the DWP added.
Over half of the money (£167.6 billion) in the next year will go to pensioners, while another £138 billion will be spent on working age and children welfare – which includes universal credit.
The DWP added that £89 billion will be spent on benefits to support disabled people and people with health conditions, with another £35.3 billion going on housing benefits.
