The UK government is implementing new measures to combat fraud within the social security system, placing increased scrutiny on benefit claimants. These measures include capital limits and bank monitoring to identify potential discrepancies and prevent overpayments.
The Department for Work and Pensions (DWP) is implementing stricter measures to combat fraud within the social security system. Under a new government initiative, benefit claimants will face increased scrutiny, with specific thresholds triggering fraud alerts. This crackdown comes amidst reports that fraud and error in the social security system cost taxpayers approximately £10 billion annually, with a staggering £35 billion misallocated since the pandemic to those not entitled to it.
The forthcoming Public Authorities (Fraud, Error and Recovery) Bill mandates banks and building societies to monitor account balances that exceed the limits for claiming income-based benefits. Currently, claimants must report their savings to the DWP when they reach certain levels, according to Birmingham Live. The Bill aims to recoup £1.5 billion for the DWP over five years and is part of broader plans to save £8.6bn over the same period, marking 'the biggest welfare fraud and error budget package in recent history.'For 2024-2025 and into 2025-2026, the DWP has confirmed the continuation of capital limits on benefits. Rules set by the DWP, and confirmed to continue into the next financial year, state there is a capital limit of £16,000 if you are claiming any of these means-tested benefits: A person's capital includes: savings accounts, current accounts, fixed deposits, ISAs, investments, and online accounts with PayPal, credit unions, betting websites or other places where cash can be stored and left to accumulate. It means that a claim is stopped when someone has a total of £16,000 or more in their accounts. Any capital you have that's between £6,000 and £16,000 is treated as if it gives you a monthly income of £4.35 for each £250, or part of £250, regardless of whether it does or not. For instance, if you have £6,300 in a savings account, £6,000 of it will be ignored and the remaining £300 will be treated as giving you a monthly income of £8.70. This amount is then deducted from your monthly Universal Credit payment. Those on income-based JSA, income-related ESA, Income Support and Housing Benefit have £1 per week deducted from their benefits for every £250, or part of £250, of savings over £6,000. These benefits are typically paid into accounts every two weeks. So, in these cases, if you have £6,300, you would lose £2 per week off your payment, meaning £4 is deducted when it goes into your account every fortnight. Claimants are also warned that non-essential spending or giving money away to remain under the limits for benefits can be viewed as what's known as 'deprivation of capital'. This means the DWP treats your claim as though you still had the money. Once your capital is below £16,000, you are allowed to reapply for benefits.During a parliamentary discussion on new legislation, Work and Pensions Secretary Liz Kendall expressed: 'Our new eligibility verification measure will enable us to require banks or other financial institutions to provide crucial data to help identify incorrect benefit payments people might be getting, including fraudulently, such as if someone has too much in savings, making them ineligible for a benefit, or if they are fraudulently claiming benefits abroad when they should be living in the UK. People should not be getting benefits they are not entitled to, and the alerts will make the process of identifying potential fraudsters much simpler, quicker and easier.' She also noted, 'However, we know that people lead busy lives and sometimes genuine mistakes happen. 'The measure will help there too, by finding and putting errors right quickly, preventing people from building up large debts that they then need to repay. I am absolutely determined to reduce benefit mistakes by stopping them from happening in the first place and to avoid debts building up, with all the worry and distress that causes. That is why I have launched the independent investigation into the overpayment of Carer's Allowance, in order to learn lessons about what went wrong and ensure that does not happen again.' 'I want to stress to the House that, under our eligibility verification measure, the DWP will not be able to access people's bank accounts or look at what they are spending. We will not share any personal information with banks. Once an alert has been issued, any final decision about someone's benefits will always be taken by a human being and the state pension will be excluded from the measure. There will also be independent oversight of the power on the face of the Bill, with the requirement to produce reports and lay them before Parliament.
Benefit Fraud Social Security UK Government Capital Limits Bank Monitoring Public Authorities (Fraud Error And Recovery) Bill Welfare Reform
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