Driving license can be taken away from benefit fraudsters

Convicted benefits fraudsters who fail to pay taxpayers could have their driving licenses taken away under a government plan to crack down on fraud.

People who repeatedly cheat the system and have debts of £1,000 or more can be punished with a driving ban of up to two years.

Work and Pensions Secretary Liz Kendall said the law would mean “huge consequences for fraudsters who cheat and circumvent the system”.

The plans also include new powers to force banks to hand over account information about benefit claimants to help target checks, echoing a plan announced by the previous Conservative government.

But it may face stiff opposition from banks and privacy campaigners.

The draft law will also give more powers to the Public Sector Fraud Authority, giving it more time to investigate complex cases of fraud that occurred during the pandemic.

Current laws mean that repeat benefits fraudsters can already be imprisoned in the most serious cases.

Ministers have estimated that greater access to banking data could save taxpayers £1.6 billion over five years, by helping DWP investigators to more effectively identify suspicious claims.

But campaign groups have warned that it would invade claimants’ right to financial privacy, and could lead to legitimate claimants being unfairly screened.

In a letter to Kendall in September, the directors of Big Brother Watch and Age UK described the plans as “massive financial surveillance powers”, which they said would be “a serious and disproportionate intrusion into the country’s privacy”. Would represent an intrusion”.

Currently, the department can only request financial information where it has reason to suspect fraud, and only in individual cases.

The previous government argued that sweeping powers to obtain large amounts of banking information would help investigators catch previously undiscovered fraud cases.

But a Tory bill to implement the plan failed to pass Parliament before the July election.

Under that scheme, financial institutions will be required to send information to the DWP about bank accounts receiving benefit payments that indicate a “potential risk” of fraud or error, or face fines if they do not comply.

An official assessment of the law said the system would be “fully automated, running within existing banking systems” and would be gradually introduced from 2027.

At the time, Labor attacked the Tory legislation as “poorly worded” – while Tory ministers argued that broader powers were necessary to ensure they could apply to all types of future banks, including Accounts with new, online-only providers are also included.

Conservative Shadow Work and Pensions Secretary Helen Whiteley said the government’s bill is a “continuation” of work started by the previous government and that Labor must “do more to tackle the growing welfare budget”.

Since entering government, Labor has pledged that only “very limited information” will be shared with the department under its equivalence scheme, but has not yet detailed how its system will work.

DWP minister Andrew Western confirmed last year that this would include cases where claimants are “living abroad” without notifying the department, although no time frame has yet been specified.

If accounts have more than £16,000, which is the usual savings threshold to be able to claim Universal Credit, they may also be flagged.

In a change to Tory plans, the government has said the new powers will not be used to target state pension payments.

Ministers have tried to reassure critics by insisting the DWP will not have powers to “access” bank accounts.

But campaigners have told the BBC they believe this is a “wrong direction”, as the measures would give the DWP the power to direct banks to access information on its behalf.