The Department for Work and Pensions (DWP) must use its powerful new bank account checking powers proportionately to maintain public trust, the government's spending watchdog has warned.
The Public Accounts Committee (PAC) raised concerns about the DWP's newly acquired legal authority through the Public Authorities (Fraud, Error and Recovery) Act 2025. The legislation allows the department to compel financial institutions to provide claimant information and recover funds directly from accounts - in some cases without a court order.
Committee chair Sir Geoffrey Clifton-Brown emphasized the gravity of the new powers. "Make no mistake, the DWP's new powers to reach further into citizens' lives are significant," he said. He stressed that "[...] it is essential that these extensive new powers – of compulsion of disclosure over banks and financial institutions, of recovering funds directly from people's accounts without the aid of the courts – have the risk of over-reach mitigated against right from the outset."
He pointed to the carer's allowance failures as evidence of potential harm. "[...] a separate element of our report, which saw a welcome apology from the DWP's permanent secretary to all those carers wronged by his department, demonstrates the impact that wrongly-implemented powers can have on people's lives," Clifton-Brown said.
Long-standing problems with fraud and error
The PAC's report marks the 37th consecutive year that the UK's chief auditor has qualified the DWP's accounts as unreliable due to significant levels of fraud and error. Clifton-Brown delivered a stark warning to the department's leadership: "[...] we are just three years away from what would be a sad and embarrassing milestone."
Sir Geoffrey Clifton-Brown said the committee's report finds that "current ambitions to address unacceptable levels of benefit fraud and error are not stretching enough." The DWP has set a target to reduce fraud and error levels to 2.8 percent by 2028-29, which would be the lowest level since tax credits were introduced in 2003-04.
The PAC said in its report that the DWP needs to improve cross-government cooperation. "The department also needs to improve its processes and controls to stop overpayments arising in the first place and prevent losses to the taxpayer," the committee stated. "A key element of this is drawing on data held by other government departments to help check claimants' entitlement to benefits."
The committee noted that unfulfilled eligibility - when people fail to claim benefits they are entitled to - rose to £3.7 billion in 2024-25, up from £3.1 billion in 2023-24. It particularly affects claimants of disability benefits, such as personal independence payment, who fail to report that their condition has worsened.
Carer's allowance failures
The DWP is reviewing 200,000 cases after incorrectly recording 26,000 carers as having overpaid carer's allowance. The review is expected to take approximately two years to identify all affected individuals. The department's permanent secretary has issued an apology to the carers wronged by these errors.
A DWP spokesperson defended the new powers and the department's reforms. "We have introduced major reforms to ensure people are paid the correct benefits, to recover overpayments and to help save billions of pounds for the taxpayer," the spokesperson said.
The spokesperson emphasized safeguards in the legislation: "The powers in the Fraud, Error and Recovery Act have numerous safeguards and will be independently overseen. We will not have access to claimants' bank accounts when checking they are receiving the correct benefits."
The department said it is "forecasting an ambitious reduction in fraud and error levels to 2.8% by 2028-29, the lowest level since tax credits were introduced in 2003-04."
The PAC has recommended that the DWP report annually on the frequency and impact of its new powers from the 2025 Act.
Note: This article was created with Artificial Intelligence (AI).
