DWP handed new powers to take money directly from bank accounts in 2026

The legislation completed its parliamentary journey in December, equipping the welfare department with what ministers describe as "modern fraud prevention powers" designed to catch those defrauding the system, prevent excessive payments, and safeguard public funds.

Implementation of the new measures will be phased in throughout 2026.

The new law, which secured Royal Assent on 2 December, will target benefit claimants who have been instructed to return overpayments but decline to comply.

Welfare officers will receive access to banking data under the new framework, enabling them to verify that recipients are obtaining correct payment amounts and to identify potentially fraudulent claims.

However, the Government has emphasised that the DWP will not be permitted to view individual spending habits or access accounts to check benefit eligibility, with no personal information being disclosed by the department.

Minister for Transformation Andrew Western stated: "The powers granted through the Bill will allow us to better identify, prevent and deter fraud and error, and enable the better recovery of debt owed to the taxpayer."

Officials maintain these capabilities are designed to match the increasing sophistication of modern threats facing the welfare system.

The legislation also empowers the DWP to seek court orders suspending driving licences for individuals with welfare debts surpassing £1,000 who have repeatedly ignored repayment demands.

These measures are projected to deliver savings of £1.5billion for taxpayers by 2029/2030, according to figures certified by the Office for Budget Responsibility.

The crackdown forms part of a broader Government commitment to recover £14.6billion from fraud, error and debt activity by the end of 2030/31, which includes deploying up to 3,000 additional staff and enhancing investigative capabilities.

Benefit fraud and error resulted in £9.5billion in overpayments during 2024-2025, representing 3.3 per cent of total benefit expenditure.

Cabinet Office Minister Josh Simons declared: "Previous governments have sat back and accepted that fraud is inevitable. We will not. We are transforming the state's defences against those who seek to defraud the taxpayer and restoring fairness."

He added: "This new law gives the Public Sector Fraud Authority and government departments the powers and tools to proactively pursue and recover billions of pounds lost to criminals and error."

The Government has pledged that personnel will receive rigorous training to ensure appropriate application of the expanded powers.

New oversight and reporting systems will accompany the changes to guarantee proportionate use and protection of vulnerable customers.

The time limit for bringing civil claims against pandemic-era fraudsters has been doubled to twelve years.