DWP confirms exactly when it will launch huge benefits crackdown that means banks can identify fraudsters

THE Government has confirmed when it’s planning to bring in controversial new powers aimed at cracking down on benefits fraudsters.

Banks will be drafted in to help identify benefits cheats and convicted fraudsters could be stripped of their driving licences under the new Department for Work and Pensions (DWP) plans.

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New Government documents have revealed it’s planning to bring the measures under the Public Authorities (Fraud, Error and Recovery) Bill in April 2026.

The DWP has said it will be the “biggest fraud crackdown in a generation”.

It’s estimated the new powers could save taxpayers £1.5billion over five years.

Last year, an estimated £7.4billion was lost to benefits fraud – around 2.8% of total welfare spending.

A further £1.6bn (0.6%) was overpaid due to unintentional errors by claimants, while £0.8bn (0.3%) was overpaid because of errors by the DWP.

Chancellor Rachel Reeves has been trying to boost the public purse after it was revealed she needs to plug a £50billion hole in public finances.

The new measures mean banks will help to identify customers who might have breached benefit eligibility rules, such as exceeding the £16,000 savings limit for Universal Credit.

They will share limited data with the DWP but can’t provide transaction details, so officials won’t be able to see how benefit claimants spend their money.

The DWP also won’t gain direct access to claimants’ bank accounts, but it will receive cases flagged for investigation.

Financial institutions face penalties if they overshare information beyond what’s permitted.

Airlines and other third-party organisations might also have to provide information to help detect benefit claims made from abroad that could violate eligibility rules.

According to the Government documents, any information “will not be shared on the presumption or suspicion that anyone is guilty of any offence”.

However officials will gain authority to recover money directly from fraudsters’ bank accounts.

As well as this, persistent benefit fraudsters who fail to repay their debts could face driving bans lasting up to two years.

DWP minister Liz Kendall has pledged to clamp down on benefit cheats, saying back in March: “The social security system that we inherited from the Conservatives is failing the very people that it is supposed to help and is holding our country back.

“The facts speak for themselves. One in 10 people of working age are now claiming a sickness or disability benefit. Almost one million young people are not in education, employment or training – one in eight of all our young people.”

The DWP has said it will have strong safeguards in place, including new inspection and reporting mechanisms.

DWP staff will also receive comprehensive training before using the new powers.

However campaign groups have warned the powers could invade claimants’ rights to financial privacy and it could also lead to legitimate claimants being wrongly investigated.

In a letter to Kendall last year, the directors of Big Brother Watch and Age UK described the plans as “mass financial surveillance powers” which they said would “represent a severe and disproportionate intrusion into the nation’s privacy”.