Proposed legislative update could potentially enable department to obtain data on millions of citizens’ accounts, while government projects that expanded powers will see annual benefit fraud prosecutions increase about twentyfold
Laws allowing the Department for Work and Pensions to monitor millions of citizens’ bank accounts “will only impact a minority of people” and “only minimal information will ever be shared” by financial institutions, according to a minister.
The new powers are provided for by recently proposed changes to the Data Protection and Digital Information Bill. If and when these updates pass into law, banks and building societies will be required to proactively provide the DWP with information on account holders who, having understated their income or savings, are suspected of receiving benefits in error or under fraudulent premises. Currently, can only undertake checks of account data for a named individual who is already under suspicion of fraud.
The measures could apply to a cumulative total of more than 10 million people that receive one or more of Universal Credit, Employment Support Allowance, Pension Credit, or Housing Benefit.
PublicTechnology recently reported that government’s formal impact assessment estimates that the new measures will result in about 7,400 benefit fraud prosecutions per year over the coming years – about a third of which will require legal aid support, and 250 of which are expected to result in custodial sentences.
Over the past three years, an average of fewer than 400 prosecutions were brought annually.
Despite the millions of people in scope of the new laws – and the forecast massive hike in enforcement measures – pensions minister Paul Maynard claimed that only a comparatively small number of people will ultimately be affected. And, in these cases, data-sharing will be kept to a minimum, according to the minister.
“The legislation is clear that the proposed power can only be used to help establish eligibility for DWP benefits that are being paid to individuals,” he said. “This power requires third parties to look within their own data and provide relevant information to DWP that may signal where DWP claimants do not meet the eligibility criteria for the benefit they are receiving. This data may signal fraud or error and require a further review by DWP – through business-as-usual processes – to determine whether wrongful payments are being made. Only minimal information will ever be shared by designated third parties with DWP where there is a three-way relationship – between DWP, the claimant and the third party – to enable us to make further enquiries. No personal information will be shared by DWP with third parties.”
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Maynard added: “Last year, DWP administered payments of £230.5 billion through the welfare system and we know the vast majority of these claims are paid correctly and accurately. Our measure will only impact a minority of people who are potentially receiving more money than they are eligible to receive.”
The minister said that the issue the new powers intends to address – claimants deliberately or unwittingly understating capital – was responsible for about £1.2bn lost to fraud and error in the benefits system over the course of the 2022/23 year. The DWP’s total fraud and error losses during the year.
While the application of the bank-monitoring powers will initially focus on UC, ESA, Housing Benefit and Pension Credit, Maynard suggested all of the benefits administered by the DWP will ultimately be brought in scope.
“The current powers DWP has are limited and leave the department unable to address this challenge at scale,” he said, in answer to a written parliamentary question from Labour MP Stephen Timms. “The third-party data gathering measure will enable DWP to better access relevant data which will help identify fraud and error in the system. As trends in fraud and error change, it is right we have the ability, in the future, to exercise this power across all benefits and payments that are administered by DWP. Affirmative regulations, and a statutory Code of Practice, will need to be brought forward before the department can use these powers to define the specific data holder in scope and to outline other elements relating to the use of the power.”
The impact assessment indicated that government plans to test the data-sharing regime with two – unspecified – banks or building societies in 2025, with a full-scale rollout across all institutions from 2030 onwards.
Government indicated that this will encompass all of the 15 banks and building societies that, collectively, receive 97% of all benefit payments. This includes: Bank of Scotland; Barclays; Halifax; HSBC; Lloyds; Metro Bank; Monzo; NatWest; Nationwide; Santander; Starling; The Co-Op; Royal Bank of Scotland; TSB; and Yorkshire Bank.
‘Surveillance should follow suspicion’
The proposed new powers have been subject to much controversy and concern. Among the most vociferous critics of the measures has been privacy campaign group Big Brother Watch.
In a policy analysis document, the organisation said that “there are already multiple powers” on the statute books that allow government to identify and tackle potential benefit fraud.
“Big Brother Watch finds it wholly inappropriate for the UK government to order private banks, building societies and other financial services to conduct mass, algorithmic, suspicionless surveillance and reporting of their account holders on behalf of the state in pursuit of its policy aims,” it added “The government should not intrude on the privacy of anyone’s bank account in this country without very good reason, whether a person is receiving benefits or not. People who are disabled, sick, carers, looking for work, or indeed linked to any of those people should not be treated like criminals by default.
“Such proposals do away with the long-standing democratic principle in Britain that state surveillance should follow suspicion rather than vice versa. It would be dangerous for everyone if the government reverses this presumption of innocence. This level of financial intrusion and monitoring affecting millions of people is highly likely to result in serious mistakes and sets an incredibly dangerous precedent.”