Fraudsters face tougher action as government gains new powers to tackle benefit fraud

·       Fraudsters and debtors face tough consequences including direct deductions from bank accounts as the Public Authorities (Fraud, Error, and Recovery) Act receives Royal Assent today.  

·       New powers to investigate fraud, identify benefit overpayments and recover debts expected to save £1.5 billion by 2030, as part of wider action to save £14.6 billion by 2031.  

·       Measures restore fairness in the social security system and show Government on the side of hardworking taxpayers. 

Benefit cheats, fraudsters and debtors who can afford to repay but refuse will have money taken directly from their bank accounts or lose their driver's licence under tough new laws approved today.  

The Public Authorities (Fraud Error and Recovery) Act gives the Department for Work and Pensions extra powers to catch fraudsters, prevent overpayment and protect taxpayer's money.   

As a result, DWP are now set to save the taxpayer £1.5 billion by 2029/2030 by being given now access to new data, modern tools and more powers to investigate fraud and recover money lost to benefit overpayments. This is part of Government's commitment to savings of £14.6bn up to the end of 2030/31 from fraud, error and debt activity, which includes investment to deploy up to 3,000 additional staff and strengthen our data, analytics and investigative capability. 

This comes as the Chancellor announced plans at the Budget to accelerate efforts to drive out incorrectness by extending the Targeted Case Review, which will save an additional £1.2 billion in 2030-31. This ensures the government can fund measures like the scrapping of the two-child limit to lift 450,000 children out of poverty, drive up living standards and deliver on the Plan for Change.   

Minister for Transformation, Andrew Western MP said:  

“It is right that as fraud against the public sector evolves, the government has a robust and resolute response.  

“The powers granted through the Bill will allow us to better identify, prevent and deter fraud and error, and enable the better recovery of debt owed to the taxpayer.  

“A benefits system people can trust is essential for claimants and taxpayers alike – through this Bill that's exactly what we'll deliver.”  

The government has chosen to act decisively with modern fraud prevention powers that match the sophistication of today's threats, after inherited out-of-control levels of fraud and error were costing the taxpayer around £10 billion a year.   

Under the new powers, DWP will now also get data from banks to help ensure those who receive benefits are getting the correct payments, helping prevent people falling into debt and helping DWP spot fraudulent claims.   

Under this Eligibility Verification Measure, no personal information will be shared by DWP, which will not have access to people's bank accounts in verifying eligibility or be able to see where people are spending their money.        

Protections are central to the Bill, making sure there is proportionate and effective use of the powers, and that DWP is protecting vulnerable customers. Staff will be trained to the highest standards on the appropriate use of new powers, and we will introduce new oversight and reporting mechanisms.    

The Cabinet Office's Public Sector Fraud Authority will also be given more powers under the legislation progressing through to the House of Lords today.    

Cabinet Office Minister, Josh Simons said:   

“Previous governments have sat back and accepted that fraud is inevitable. We will not. We are transforming the state's defences against those who seek to defraud the taxpayer and restoring fairness.  
   
"This new law gives the Public Sector Fraud Authority and government departments the powers and tools to proactively pursue and recover billions of pounds lost to criminals and error.
 
"We are ensuring there is no hiding place for those who cheated the taxpayer during the pandemic, doubling the time limit for bringing a civil claim to twelve years."   

ENDS

Notes to Editors:  

·       The Public Authorities (Fraud, Error and Recovery) Act received Royal Assent on 2 December.  

·       The Public Authorities (Fraud, Error and Recovery) Act applies to reserved matters in GB (benefit administration is a devolved matter for Northern Ireland).  

·       The Consultation for Codes of Practice will be launched in December.   

·       Benefit fraud and error cost £9.5 billion in overpayments during 2024-2025, equivalent to 3.3% of total benefit spending.  

·       The Act is expected to save £1.5 billion by 2029/2030 as certified by the Office for Budget Responsibility.   

·       These plans, as part of wider action, meaning that since the Autumn Budget 2024, the government has committed to save £14.6bn from fraud, error and debt activity by 2030/31.  

·       Claimants should report any changes in circumstances promptly to avoid overpayments.