Millions of benefit claimants are set to have their bank accounts checked under sweeping new powers being rolled out by the Department for Work and Pensions.
But the Department for Work and Pensions (DWP) has confirmed that one benefit will be exempt from the monitoring rules, offering relief to some households.
The Fraud, Error and Recovery Bill introduces measures permitting the DWP to request financial data from banks regarding those receiving specific means-tested benefits.
Whilst Universal Credit, Employment and Support Allowance, and Pension Credit fall within the scope of these checks, one benefit cannot be added to the list, even through future parliamentary regulations.
Recipients of the state pension will remain exempt when the DWP gains authority to examine benefit claimants’ banking information in 2026.
The Government has explicitly ruled out including state pension payments in forthcoming anti-fraud legislation, ensuring retirees are not drawn into the new regime.
Government guidance confirms: “The state pension is explicitly excluded from the power and cannot be added by regulations.”
The new enforcement powers form part of what Labour describes as “the biggest fraud crackdown in a generation”, targeting an estimated £7.4billion lost annually to benefit fraud and aiming to recover £1.5billion in taxpayer funds across five years from 2026.
The Eligibility Verification Measure represents the central mechanism for these checks, enabling the DWP to request banking information from financial institutions.
This power specifically targets recipients of Universal Credit, Employment and Support Allowance, and Pension Credit, focusing on breaches of eligibility such as exceeding the £16,000 savings limit for Universal Credit.
Retirees are not apart of the new regime
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Should ministers wish to extend these powers to additional benefits, parliamentary debate and approval would be required.
The legislation establishes a framework for identifying claimants who may have breached entitlement rules, while setting boundaries to prevent excessive scrutiny.
The DWP’s access to financial information will face strict limitations, with transaction data remaining off-limits to government investigators.
Banks and financial institutions may only provide restricted data that helps identify potential eligibility breaches, without revealing spending habits or purchase details.
A DWP factsheet states: “Any information shared through the Eligibility Verification Measure will not be shared on the presumption or suspicion that anyone is guilty of any offence.”
The state pension is explicitly excluded from the power and cannot be added by regulations
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GETTYFinancial institutions face penalties for exceeding these boundaries, particularly if they disclose transaction information beyond permitted parameters.
The system is designed to flag accounts that might exceed benefit thresholds rather than to scrutinise individual purchases.
The department will then investigate flagged cases to prevent overpayments and identify potential fraud, but cannot directly access claimants’ bank accounts or monitor their spending patterns.
Those who refuse to repay fraudulent claims face potential driving bans lasting up to two years under the new enforcement regime, one of several punitive measures designed to recover misappropriated funds.
The DWP’s investigative reach will also extend beyond domestic banking, with authority to request information from airlines and other international organisations.
The expansion aims to target those claiming benefits whilst living overseas
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GETTYThis expansion aims to target individuals claiming benefits whilst living overseas, potentially breaching residency requirements.
Former work and pensions secretary Liz Kendall emphasised: “People who are genuinely entitled to claim benefits have nothing to worry about from this Bill, but we do believe that £7.4billion wasted every year on benefit fraud must be cracked down on.”
She added: “I think that the measures introduced in this Bill will actually help us spot and then prevent those errors in the first place because people make genuine mistakes and we do not want them build up errors and debt that they have to repay.”
The department anticipates identifying between 50,000 and 100,000 benefit overpayments annually once the system reaches full capacity.
Implementation will follow a phased approach, allowing businesses adequate time to develop appropriate procedures.
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The DWP plans a gradual deployment using a test-and-learn methodology, ensuring systems function effectively before widespread adoption.
This measured rollout aims to refine processes whilst minimising disruption to financial institutions and benefit recipients.
Officials stress that the measures target fraud prevention rather than punishment of genuine errors.
The system seeks to identify discrepancies before they accumulate into substantial debts, protecting claimants from unintentional overpayments.
The legislation maintains that legitimate benefit recipients face no threat from these measures, with safeguards built into the verification process to distinguish between fraudulent claims and honest mistakes.