DWP reveals date it will start looking at bank accounts and who will be affected

Brits on universal credit, pension credit, and employment and support allowance (ESA) might be about to have their bank accounts looked into in order to check they're not committing benefit fraud.

The new Public Authorities (Fraud, Error and Recovery) Bill aims to protect public money by reducing public sector fraud, error and debt and will enable banks to scrutinise accounts for dubious activity and inform the DWP.

It's hoped these new powers will help the government tackle benefit fraud which costs the UK £8.4bn every year. And it will also help rectify overpayments which cost another £1bn.

The Bill includes proposals for people to face financial penalties as alternatives to cases going to court, Chronicle Live reports. These fines will serve as deterrents against public sector fraud.

If it gets the green light the law could be in force from April next year and will save £1.5bn over the next five years, help boost investment in public services and safeguard the public purse. But it has come under criticism from critics, including Disability Rights UK, Age UK and the Child Poverty Action Group.

In a letter sent to former Work and Pensions Secretary Liz Kendall, they warned that imposing suspicionless, algorithmic surveillance on the public could trigger a Horizon-style IT scandal.

The letter warns: "Pensioners, disabled people, and carers shouldn't have to live in fear of the government prying into their finances."

However, a DWP spokesperson rejected these concerns, saying: "These claims are false. These powers will be used appropriately and proportionately through robust new oversight and reporting rules and our staff will be trained to the highest possible standards.

"The information provided by banks is unrelated to DWP algorithms and any signals of potential fraud will always be looked at comprehensively by a member of staff."

The House of Lords is due to discuss the Bill again on October 21. It forms part of wider plans set out in the Budget and Spring Statement to save £9.6bn by 2030.

In the UK, the loss to benefit fraud for the financial year ending 2025 was £8.4 billion while another billion was lost to overpayments for the same period.

Meanwhile, a former Department for Work and Pensions worker has issued a warning over new 'surveillance' for benefits claimants, according to Birmingham Live.

Stuart Morris, chief technology and product officer at SmartSearch, has warned: "If implemented properly, digital eligibility verification could make a real difference in ensuring benefits go to the right people - without unfairly targeting those who genuinely need support.

"I began my career at the DWP, working on Income Support and Jobseeker's Allowance, before joining the National Fraud Initiative, where I was involved in uncovering more than £50million in fraud through complex data matching. That experience taught me that precision, accuracy and fairness must go hand in hand.

"Benefit fraud is often linked to wider forms of financial crime, from identity theft to organised money laundering. So improving verification isn't just about saving taxpayer money; it's also about disrupting criminal networks that exploit system weaknesses."

"There must also be clear redress for anyone wrongly flagged, because automation errors can be just as harmful as undetected fraud. This cannot become a surveillance exercise."