Labour MPs revolt over plans to raid benefits claimants' bank accounts
Labour have adopted the former Conservative government's plans for debt recovery in an attempt to make up the annual £9.7 billion in benefits overpayments the Department for Work and Pensions (DWP) says it makes due to fraud or error.
The Public Authorities (Fraud, Error and Recovery) Bill would give the DWP the power to require banks to provide data to help identify when an applicant is not meeting the eligibility criteria for a benefit for which they have applied.
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The bill would allow the Government to demand bank statements to identify debtors who have sufficient funds to repay what they owe through fraud or error in a claim.
The DWP would then have the power to recover money directly from bank accounts of those not on benefits or in PAYE employment who are identified as having the means to pay.
Under the plans, those who repeatedly fail to repay funds could fall prey to a suspended DWP disqualification order that would disqualify them from holding a driving licence.
'A poverty penalty'
Work and Pensions Secretary Liz Kendall said the bill is necessary to deal with a "broken welfare system", adding that the use of "direct deduction orders" could save £500 million a year once fully rolled out.
Liz Kendall (Image: Lucy North/PA Wire) Yet she is facing opposition from her own backbenches, as amendments tabled by Labour MP for Poole, Neil Duncan-Jordan, which would force the Government to drop key parts of the bill, is gaining support from a number of Labour MPs.
The amendments, backed by 17 named Labour MPs, would ensure that only those suspected of fraud rather than being the victim of an error were subjected to surveillance, 'allowing the government to target criminality without monitoring the public', Duncan-Jordan said.
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The Labour MP is also proposing to remove the power to apply to a court to strip people of their driving licences due to debt, describing the policy as a 'poverty penalty'.
Among those to have supported Duncan-Jordan's amendment are Zarah Sultana, Richard Burgon, Nadia Whittome and Clive Lewis. The only Scottish Labour MP to have backed the amendment is Brian Leishman, the MP for Alloa and Grangemouth.
Brian Leishman (centre) (Image: PA) The banking industry has raised concerns that it will be forced to hand over account information of claimants in cases where there are indications they may have been paid benefits incorrectly.
The legislation is seen to potentially clash with the obligations of banks under a Financial Conduct Authority consumer duty to protect customers who are vulnerable due to their financial situation.
A DWP spokesperson said: 'We have an obligation to protect public funds, and it is right that we modernise our approach to catching fraudsters and overpayments.
'All the powers in the bill are underpinned by a principle of fairness and proportionality and do not involve mass surveillance of people's bank accounts.
'This includes utilising limited data from banks to help verify entitlement to benefits, helping us detect errors earlier and minimise debts accruing for claimants.'
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