The government is considering granting itself the authority to review pensioners’ bank accounts as part of new measures to prevent benefit fraud.
This proposal, which is a part of the Data Protection and Digital Information Bill, has sparked concerns among senior MPs. They fear that the legislation, encompassing all social security payments including state pensions, might lead to excessive surveillance.
Under these plans, banks would be required to share customer data with the Department for Work and Pensions (DWP) when there are indications that a recipient might not fulfil the eligibility requirements for their benefits. The DWP estimates that around £8 billion annually is lost due to fraud and overpayments.
Although the focus is on reducing fraud and errors in benefits like Universal Credit, the legislation could also affect millions of state pension recipients, potentially subjecting their bank accounts to government scrutiny.
Sir Stephen Timms, the head of the work and pensions committee, has expressed scepticism about the government’s justification for extending certain social security payments under new regulatory measures. He emphasized that the government should only exercise intrusive powers when necessary, and he believes the current proposal overreaches.
While acknowledging the rationale for such powers in relation to means-tested benefits like Universal Credit, Sir Stephen questioned the necessity of these powers for state pensions, Personal Independence Payment, and child benefits. He pointed out the lack of concrete plans for using these powers and urged the government to reconsider the scope of the legislation as it moves through the House of Lords.
Under current regulations, the Department for Work and Pensions (DWP) can only investigate a person’s bank account if there’s an existing suspicion of fraud. It’s the responsibility of claimants to report any significant financial changes that might affect their eligibility for benefits.
The bill, now under review in the House of Lords, aims to implement mechanisms for flagging suspicious activities to the government, thereby enabling account checks. The initial series of inspections is scheduled to begin next year.
The government has assured that the legislation does not intend to introduce surveillance powers, and the DWP will not have direct access to bank accounts or share personal information with third parties.
John Edwards, the Information Commissioner, recently expressed his reservations to government officials regarding the proposed powers, highlighting a lack of “appropriate safeguards”. In his letter, Edwards acknowledged the government’s legitimate goal of addressing fraud and overpayment issues but expressed doubts about the proportionality of the measures, citing insufficient evidence to justify them.
He pointed out that while there have been no fraud-related overpayments in state pensions, there was an overpayment of £100 million in the state pension. This overpayment was largely due to claims from individuals living abroad who are not eligible for pension increases under the pensions triple lock.
It’s important to note that only residents in the European Economic Area, Gibraltar, Switzerland, and countries that have a social security agreement with the UK are entitled to receive these pension increases.
