The Department for Work and Pensions (DWP) is set to gain new powers to take money directly from bank accounts of those who owe debts to the Government.
The update comes after the Public Authorities (Fraud, Error and Recovery) Bill passed its third reading in the House of Commons this week.
The legislation will allow the DWP to recover funds from fraudsters' accounts without going through the courts. The bill is now likely to become law once the House of Lords process concludes.
Under the new powers, the DWP will be able to issue direct deduction orders to banks for regular or lump sum deductions from individuals' accounts. This will apply to people who owe money but are no longer on benefits or in employment.
Currently, the DWP can only recover debts from bank accounts by seeking a third-party debt order via the courts, which only allows recovery by lump sum amounts. The new system will enable regular deductions, making repayment more manageable.
They will only be implemented where repeated attempts to negotiate voluntary affordable and sustainable repayment plans have failed.
The Government's new bill could see the DWP awarded "intrusive" new powers, campaigners claim GETTY The powers are expected to have a deterrent effect, encouraging debtors to work with the DWP to agree affordable voluntary repayment plans. Debtors will always have the option of setting up affordable repayment plans in line with existing policy.
Any enforcement action can be stopped if the debtor maintains the repayment terms.
The DWP will conduct affordability and vulnerability checks to ensure repayment terms are manageable. The bill limits the maximum amounts that can be regularly deducted to prevent excessive withdrawals.
It also stipulates that deductions must not cause hardship in meeting essential living expenses for the debtor or their dependents.
Banks may deduct an administration fee from debtors to cover costs of administering the deduction, though this will be capped in legislation.
The DWP will soon be able to access pensioners' bank accountsGETTYDebtors can avoid this fee by agreeing to a repayment plan before a deduction order is enforced. In the most serious cases, the DWP will be able to apply to courts to temporarily disqualify persistent evaders from holding driving licences.
This will only apply where the debt exceeds £1,000 and the individual repeatedly evades repayment.
Like the bank account powers, this will only affect those no longer on benefits or in employment. The measure mirrors arrangements already in place with the Child Maintenance Service, which have proved effective in debt recovery.
When considering driving licence disqualification, the court must determine that the debtor had the means to repay but did not without reasonable excuse.
The court must also consider whether the debtor has an essential need to drive, such as for work or caring responsibilities. Any disqualification will be suspended if the debtor complies with repayment terms set by the court.
The Government has unveiled new rules to clampdown on benefit fraudsters GETTY The Government’s new fraud crackdown bill is expected to save taxpayers £1.5bn over the next five years and forms part of a wider plan to save £9.6bn by 2030. The savings will be redirected to public services under the government's Plan for Change.
The measures come in response to fraud and error in the welfare system, which has cost taxpayers around £10bn a year — totalling £35bn since the pandemic.
Minister for Transformation Andrew Western said the new powers are essential to “protect public funds” and “reduce the risk of people falling further into debt.”
Cabinet Office Minister Georgia Gould added: "People are currently getting away with stealing vast sums of cash because our investigators don’t have the powers they need."
