The Department for Work and Pensions (DWP) has been cautioned by MPs over its “significant” new powers to access bank account information, as concerns mount over fraud, error and public trust.
In a report examining benefit fraud and error, the Public Accounts Committee (PAC) said the DWP must ensure its enhanced authority to compel banks and financial institutions to share data is used proportionately and transparently. The Committee also pledged ongoing scrutiny of how the Department addresses thousands of cases involving carers wrongly pursued for overpayment debts.
As of December last year, the DWP has gained fresh powers enabling it to require financial institutions to provide information to verify claimants’ eligibility for benefits. In criminal investigations, it can compel third parties to disclose data and, in certain circumstances, recover money directly from individuals’ bank accounts without a court order. While the Department told MPs it has safeguards in place, the PAC said it has yet to fully explain how these powers will be exercised in a way that maintains public confidence. The Committee has called for annual reporting detailing how frequently the powers are used and what outcomes they achieve.
The report also underscores long-standing weaknesses in benefit administration. Due to persistent levels of fraud and error, the DWP’s accounts have now been qualified for 37 consecutive years by the UK’s chief auditor. In 2024-25, overpayments totalled £9.5bn, down slightly from £9.7bn the previous year, equating to 3.3% of overall benefit expenditure. The Department has said reducing the rate to 2.8% by 2028-29 would be “impressive”, but the PAC has urged ministers to adopt a more ambitious target.
Underpayments linked to official error also rose, from £1.1bn in 2023-24 to £1.2bn in 2024-25. Overpayments caused by mistakes within the DWP, local authorities or HMRC increased from £0.8bn to £1bn over the same period. The Committee criticised what it described as a disproportionate focus on claimant fraud, arguing that official error—largely within the Department’s control—has not received sufficient attention.
Meanwhile, unfulfilled eligibility, where individuals fail to inform the DWP of changes in circumstances, climbed to around £3.7bn in 2024-25, up from £3.1bn a year earlier. This issue particularly affects disability benefits claimants who may not report a deterioration in their condition. The PAC has recommended that the Department assess how effectively it encourages people to update their details.
The report further examines the case of 26,000 carers who were incorrectly recorded as having overpaid carer’s allowance due to flawed guidance. Around 200,000 cases will need to be reviewed, a process expected to take two years. The Committee found that weak, fragmented leadership allowed the issue to persist and said it would monitor how the Department implements recommendations from the 2025 independent review.
Sir Geoffrey Clifton-Brown, Chair of the Public Accounts Committee, said: “Make no mistake, the DWP’s new powers to reach further into citizens’ lives are significant. Our Committee of course firmly supports government in its responsibility to ensure people are paid the correct benefits.
“But 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 overreach mitigated against right from the outset.
“Indeed, 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.
“Our report finds beyond doubt that current ambitions to address unacceptable levels of benefit fraud and error are not stretching enough. More could be done on a cross-government basis to improve the accuracy of benefit payments, and the Department has not yet taken a proper look in the mirror to address official error rather than focusing entirely on claimants.
“But our report marks the now 37th year in which the DWP has had its accounts qualified by the UK’s chief auditor due to material levels of fraud and error. As PAC Chair, I would say to the Department’s leadership directly: we are just three years away from what would be a sad and embarrassing milestone.
“Urgent action must be taken per our recommendations for the DWP to have something to celebrate in the years to come.”
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