The UK Department for Work and Pensions (DWP) has introduced a new strategy aimed at combating benefit fraud. The strategy involves implementing strict capital limits that will trigger alerts when claimants exceed these thresholds, flagging potential discrepancies to financial institutions.
The Department for Work and Pensions ( DWP ) has unveiled a new strategy to combat benefit fraud , introducing strict capital limits that will trigger alerts for potential discrepancies. The government highlights the alarming financial drain of fraud and error in the social security system, estimating a loss of roughly £10 billion annually to taxpayers. Post-pandemic figures reveal a staggering £35 billion misdirected to ineligible recipients.
Under the forthcoming Public Authorities (Fraud, Error and Recovery) Bill, financial institutions will be mandated to monitor customer accounts, flagging those exceeding the designated capital limits for income-based benefits. Claimants are typically required to notify the DWP of any savings exceeding specific thresholds. The Bill aims to recover £1.5 billion for the DWP over a five-year period, contributing to what Labour describes as a comprehensive welfare fraud and error reduction strategy, projected to achieve £8.6 billion in savings across the same timeframe.For the fiscal year 2025-2026, the asset cap impacting benefit claims remains aligned with the 2024-2025 guidelines. The DWP maintains a capital ceiling of £16,000 for several means-tested benefits. An individual's capital encompasses a range of assets, including bank accounts, online accounts with platforms like PayPal and credit unions, savings held at betting websites, and any other location where funds can be stored and accumulated. Reaching a total capital of £16,000 or more will halt a benefit claim. Furthermore, the DWP stipulates that capital exceeding £6,000 is treated as generating a monthly income for benefit calculation purposes. For example, possessing £6,300 in savings would result in £8.70 being deducted from monthly Universal Credit payments. Similarly, individuals receiving income-based Jobseeker's Allowance (JSA), income-related Employment and Support Allowance (ESA), Income Support, and Housing Benefit face deductions of £1 per week for every £250 or part of £250 exceeding £6,000 in savings.The DWP emphasizes that non-essential spending or transferring funds to remain below the benefit limits can be construed as 'deprivation of capital,' meaning the DWP would treat the claim as if the individual still possessed the funds. Once capital falls below £16,000, claimants can reapply for benefits. In a parliamentary discussion regarding the proposed legislation, Work and Pensions Secretary Liz Kendall affirmed to MPs, 'Our new eligibility verification measure will empower us to require banks or other financial institutions to provide crucial data to identify incorrect benefit payments, including those potentially fraudulent. This could involve instances where individuals possess excessive savings, rendering them ineligible for benefits, or fraudulently claiming benefits abroad while residing in the UK. People should not be receiving benefits they are not entitled to, and these alerts will streamline the process of identifying potential fraudsters, making it simpler, quicker, and more efficient.'Kendall further elaborated, 'However, we recognize that individuals lead busy lives and genuine mistakes can occur. The measure will also assist in identifying and rectifying errors promptly, preventing the accumulation of substantial debts that individuals might subsequently need to repay. I am resolute in reducing benefit mistakes by preventing them from occurring in the first place and mitigating the buildup of debts, alleviating the associated worry and distress. This is why I have initiated an independent investigation into the overpayment of Carer's Allowance, aiming to glean valuable lessons from the situation and ensure its non-repetition.' She concluded by emphasizing, 'Under our eligibility verification measure, the DWP will not have access to individuals' bank accounts or their spending habits. We will not share any personal information with banks. Once an alert is issued, any final decision regarding an individual's benefits will always be made by a human, and the state pension will be excluded from this measure. There will also be independent oversight of the power inherent in the Bill, requiring the production of reports to be presented to Parliament.
Benefit Fraud Capital Limits DWP Public Authorities (Fraud Error And Recovery) Bill Liz Kendall Welfare Fraud Eligibility Verification Financial Institutions
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