The Department for Works and Pensions (DWP) announced radical plans to crackdown on benefit fraud. The new Bill was introduced to parliament on Wednesday 23 January and according to DWP estimates, it could help save the taxpayer £1.5bn over the next five years.
The Public Authorities (Fraud, Error and Recovery) Bill would introduce new measures, including allowing the government to recover money directly from fraudsters' bank accounts without a court order.
This has been a growing concern for the Government since a significant spike in fraud and error-related benefit overpayments during the COVID pandemic, which they have stated has continued to be on the rise.
The DWP will also have the power to get bank statements from people whom it believes have enough cash to pay back the debts but are refusing to do so.
Once the bill is made law, benefit cheats could be banned from driving for up to two years if they refuse to pay back the money they owe.
Courts could also suspend their driving licences following an application if they have debts of £1,000 or more and repayment requests are ignored, in the worst-case scenario most serious cases would result in removing the driving licence altogether.
Under the new legislation, the DWP would be able to compel banks to transfer over benefits debt through "direct deduction orders". Banks would be able to charge the claimant a fee to cover their administration costs.
The department (DWP) would be obliged to consider three months' worth of bank statements from the claimant first and consider whether a deduction would mean they would suffer "hardship in meeting essential living expenses".
The UK banking industry has warned that government plans to crackdown on benefit fraud could leave banks at risk of breaking consumer protection rules and could result in a conflict of the Financial Conduct Authority consumer duty leading to penalty charges being imposed for failure to protect customers who are vulnerable due to their financial position.
Current Powers enable the DWP to recover benefits debt from claimants who are employees through the PAYE system, this is handled through the issue of a Direct Earnings Attachment (DEA).
The new system will initially be piloted by a "limited number" of banks and building societies, before being gradually phased in ahead of a full rollout in 2029.