The Department for Work and Pensions (DWP) is initiating a significant new clampdown on Universal Credit, targeting fraudulent claims and incorrect payments.
Government's £1.2bn Savings Plan
Chancellor Rachel Reeves is expected to approve plans designed to raise an extra £1.2 billion in savings by identifying incorrect DWP payments up to the year 2031. This move forms a central part of the government's strategy to recover taxpayer money lost to fraud and error.
Expanded Powers and Protections
Under the new Fraud Bill, the DWP is broadening its debt recovery and enforcement powers. The changes aim to address a disparity in how debts are recovered, specifically targeting those who are no longer on benefits or enrolled in the PAYE system, thereby avoiding lengthy court processes.
Currently, the DWP can recover money through affordable deductions from ongoing benefits or directly from earnings. These deductions are capped at 40% of the standard allowance for the first payment, reducing to 20% for subsequent payments.
The new Bill introduces further safeguards. It limits the maximum amounts that can be regularly deducted directly from an individual's bank account to prevent excessive hardship and explicitly states that deductions must not prevent individuals from meeting their essential living expenses.
Implications for Claimants and Critics' Concerns
For households concerned about being affected, experts advise them to proactively "gather evidence". This includes compiling documents that detail your financial history and payments, which can be crucial in disputing any incorrect claims.
The government also has the power to impose a financial penalty if it suspects a person has conspired to commit fraud. This penalty cannot exceed 100% of the amount owed.
A new provision allows financial institutions instructed by the DWP to make deductions to take an administration fee from the debtor's account to cover their costs.
However, the crackdown has drawn criticism. Labour MP Debbie Abrahams stated that while tackling fraud is right, the Bill risks disincentivising the most vulnerable from engaging with the DWP. "To many, the bill will be seen as more evidence not to trust the DWP, and not to engage," she added.
The Labour Party government has been approached for comment on these concerns.
