DWP GAINS POWER TO SEIZE CASH FROM BENEFIT CLAIMANT BANK ACCOUNTS FROM OCTOBER

The Department for Work and Pensions will gain the power to withdraw money directly from the bank accounts of benefit claimants from October under new legislation. The powers, established under the Public Authorities (Fraud, Error and Recovery) Act 2025, allow the DWP to seize cash without requiring a court order. The government agency will also be able to revoke driving licences in cases where welfare debt exceeds £1,000 and there is no working need for a car, with such bans initially suspended if repayment terms are met. The DWP confirmed that "money owed to DWP can now be recovered from an individual's bank account by issuing a direct deduction order to their bank for repayment."

The new powers form part of a broader welfare reform programme announced by the Labour Party government led by Sir Keir Starmer. The measures target Universal Credit, Employment and Support Allowance and Pension Credit, and aim to tackle fraud and error in the benefits system. The DWP will also issue Eligibility Verification Notices to banks and financial institutions, requiring them to provide data on specified accounts to help verify claimant entitlement and identify incorrect payments. Before issuing direct deductions, the DWP must determine whether individuals can afford the repayments without causing financial hardship. The government stated it is keen to avoid hardship during the cost of living crisis.

The government projects savings of up to £14.6bn over five years from the new approach. Official figures suggest the government spent £333bn on welfare in 2025/26, with welfare spending expected to rise to £400bn by the end of the decade. Since the changes were announced in late June, the DWP has sent letters to debtors warning them to settle their debts. The powers will apply to banks, building societies, credit unions and other financial institutions that accept deposits or issue electronic money.