Benefit cheats could be stripped of driving licences

To combat welfare fraud, the government plans to impose driving license suspensions on welfare fraudsters who fail to repay taxpayer debts. Under the new regulations, individuals who repeatedly defraud the system and owe £1,000 or more could face driving bans of up to two years.

Secretary of State for Work and Pensions, Liz Kendall, stated that this legislation will mean “tougher penalties for fraudsters who cheat and evade the system.” Additionally, the new plan includes granting the government new powers to compel banks to hand over welfare applicants’ account information to assist in investigations, similar to plans announced by the previous Conservative government. However, this move is likely to face strong opposition from banks and privacy advocates.

The proposed law will also give the Public Sector Fraud Authority greater powers, allowing it more time to investigate complex fraud cases that occurred during the pandemic. Current laws stipulate that repeat welfare fraudsters can be imprisoned in the most serious cases. Government departments estimate that broader access to banking data, by more effectively assisting investigators at the Department for Work and Pensions in identifying suspicious applications, could save taxpayers £1.6 billion over five years.

However, campaign groups warn that this would infringe upon applicants' financial privacy and could lead to legitimate applicants being wrongly investigated. In a letter to Kendall in September, the directors of “Big Brother Watch” and “Age UK” described the plans as “mass financial surveillance powers” and stated that they would “seriously and disproportionately infringe on the privacy of citizens.” Currently, the department can only request such financial information on a case-by-case basis when there is reasonable suspicion of fraud.

The previous government argued that broader powers to access bank information in bulk would help investigators uncover previously undetected fraud cases. But a Conservative bill aimed at implementing the scheme failed to pass parliament before the July election. Under the scheme, financial institutions would be required to send information to the Department for Work and Pensions regarding bank accounts receiving welfare payments that indicate a “potential risk of fraud or error”, or face fines. An official assessment report stated that the system would be “fully automated, operating within existing banking systems,” and would be rolled out gradually from 2027.

At the time, Labour criticized the Conservative legislation as “ill-defined,” while Conservative ministers argued that broad powers were necessary to ensure they applied to all types of future banks, including emerging online bank accounts. Conservative Shadow Secretary of State for Work and Pensions, Helen Whately, stated that the government’s bill was a “continuation” of work initiated by the previous government, and that Labour “must do more to address the growing welfare budget.”

Since taking office, Labour has pledged that under its equivalent scheme, only “very limited information” would be shared with the department, but has not detailed how its system would work. Minister for Work and Pensions, Andrew Western, confirmed last year that this would include situations where applicants were “living abroad without notifying the department,” although a timeline has not been determined. Accounts holding more than £16,000, the usual savings limit for claiming Universal Credit, could also be flagged.

In contrast to the Conservative plan, the government has stated that the new powers will not be used to target state pension payments. Ministers have sought to reassure critics by emphasizing that the Department for Work and Pensions will not have “access” to bank accounts. However, campaigners told the BBC that they view this as “misleading,” as the measures would give the Department for Work and Pensions the power to instruct banks to access information on its behalf.