DWP explains bank statement checks for Universal Credit claimants

The Department for Work and Pensions (DWP) has disclosed that a staggering 7.5 million people in Great Britain, both employed and unemployed, are currently claiming Universal Credit, as per their most recent data. The Department has recently highlighted the importance of checking bank statements and transaction details for those applying for Universal Credit or undergoing a reassessment of their existing award.

In response to a Freedom of Information (FOI) request, the DWP outlined how this information aids them in "understanding the claimant's earnings, other incomes, savings or housing costs" when processing or renewing a claim.

DWP stated: "Transaction details, such as descriptions and amounts facilitate an accurate assessment of a claimant's current circumstances. For instance, it aids us in determining if a claimant possesses other capital which would enable the Department to ascertain if the claimant is now receiving any other income or has expenditures which could influence the amount of Universal Credit they are entitled to."

The DWP also clarified that by closely examining transactions on bank statements, they can "identify unreported changes in circumstances that may affect the amount of Universal Credit received", including changes that might lead to increased benefit entitlement. An example of this would be evidence of an unreported increase in rent from an outgoing transaction."

Where inaccuracies are discovered, claims are corrected retrospectively. Earlier this year, the Government declared what it called 'the biggest fraud crackdown in a generation', aimed at reducing the amount of money lost within the welfare system. The Department for Work and Pensions (DWP) estimates that the Public Authorities (Fraud, Error and Recovery) Bill will help save taxpayers around £1.5 billion over the next five years.

New measures include driving bans of up to two years for benefit cheats who repeatedly fail to repay money they owe. The DWP will also have powers to recover money directly from fraudsters' bank accounts. Additionally, Eligibility Verification will allow third-party organisations such as banks to flag potential fraudulent benefit claims. In a series of 11 new factsheets published by the DWP, more insight is given into how these new measures will be safely implemented and monitored.

It confirms that the UK Government will begin implementing the proposed measures from 2026.These factsheets also provide information on how safeguards, reporting mechanisms and oversight will work to ensure the "appropriate, proportionate, and effective use of the powers".

According to guidance on GOV.UK: "The Government will begin implementing the Bill measures from 2026.

For the Eligibility Verification Measure, the Government will implement a 'test and learn' approach to ensure the new powers to tackle public sector fraud are being used proportionally and effectively. Understand the claimant's earnings, other incomes, savings or housing costs"

DWP and the Cabinet Office will continue to work with industry to implement the new measures, consult stakeholders on Codes of Practice and publish guidance, reports the Daily Record.

"The Department for Work and Pensions (DWP) is set to expand its powers to include gathering data from third parties like airlines, aiming to crack down on claimants who may be illegally collecting benefits while abroad.

Contrary to some concerns, the DWP will not gain direct access to the bank accounts of those receiving means-tested support such as Universal Credit, Pension Credit, or Employment and Support Allowance. Instead, the agency will collaborate with banks to determine whether individuals may have surpassed the financial limits for means-tested benefits – for instance, the £16,000 threshold for Universal Credit eligibility.

The information obtained will then be used for investigative purposes to stop prospective overpayments or fraud allegations. Significantly, the scope of data sharing under the upcoming legislation will be constrained, with prohibitions against disclosing transactional details, thus ensuring the DWP does not observe the spending behaviours of benefit recipients.

Moreover, the factsheet emphasises that oversharing by banks or financial institutions, especially regarding transactions, could incur penalties. It further clarifies: "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 new Bill will fulfil the UK Government's manifesto pledge to protect taxpayers' money - ensuring every pound is spent wisely and effectively:

• New powers of search and seizure - so DWP can control investigations into criminal gangs defrauding the taxpayer.
• Allowing DWP to recover debts from individuals no longer on benefits and not in PAYE employment who can pay money back but have avoided doing so.
• New requirements for banks and building societies to flag where there is an indication there may be a breach of eligibility rules for benefits - preventing debts accruing.
• All the powers will include strong safeguards to ensure they are only used appropriately and proportionately - including new inspection and reporting mechanisms.
• DWP will have a clearly defined scope and clear limitations for the use of all the powers it is introducing, and staff will be trained to the highest possible standards.

The measures in this Bill will enable the Public Sector Fraud Authority to:

• Reduce fraud against the public sector by using its expertise to take action on behalf of other departments, against those who attack the public sector.
• Better detect and prevent incorrect payments across the public sector through new information gathering and sharing powers.
• Use strong non-criminal sanctions and civil penalties to provide an alternative to criminal prosecution and to deter fraud.
• Improve the government’s ability to recover public money, through new debt recovery and enforcement powers.
• Use new powers of entry, search and seizure to reduce the burdens on the police in the most serious criminal investigations.
• Improve fraud management in future emergencies by creating specialist time limited powers to be used in crisis management situations - building on lessons learned during COVID-19.

The Public Sector Fraud Authority will adopt a 'test and learn' strategy when using these powers, trialling different methods and expertise to determine the most effective way to combat public sector fraud.