Banks asked to flag benefit claims in £1.2bn anti-fraud drive

The government has used new powers for the first time to ask banks to help check that benefit claimants are still eligible, in a move it says will save taxpayers £1.2 billion by 2030/31.

The Department for Work and Pensions (DWP) has issued its first Eligibility Verification Notice, requiring banks to flag accounts where the data suggests someone may no longer meet the rules for the benefits they receive. The aim is to catch two of the biggest causes of fraud and error: undeclared savings, and people staying abroad for longer than the benefit rules allow.

A £1.5 billion problem

The department estimates that fraud and error from undeclared savings and time spent abroad on Universal Credit and Pension Credit alone cost the taxpayer £1.5 billion in 2025-26. The new measure can only be used for three benefits: Universal Credit, Pension Credit and Employment and Support Allowance.

It is part of a wider government plan to save £14.6 billion over the next five years by tackling fraud, error and debt. The DWP says a further package of reforms in Wednesday's Budget is expected to save another £1.4 billion between 2027 and 2032, including 2,000 more anti-fraud specialists in Jobcentres and tougher checks on Universal Credit claims made from abroad.

What banks will and will not see

The government stresses that the powers do not give the DWP access to people's bank accounts, transactions or spending habits. Instead, banks will check benefit-receiving accounts against certain eligibility rules and flag cases that may need a closer look.

A flag does not mean anyone has done anything wrong, the department says, and no decision about someone's benefits can be made on the bank's information alone. The measure will start with a carefully managed test phase and will be subject to independent oversight before any wider rollout.

Catching mistakes early

The department also argues the checks will help honest claimants, by spotting incorrect payments sooner. That should mean people get what they are entitled to, while reducing the risk of overpayments building up into debts they then have to repay.

Lilian Greenwood, the Minister for Innovation, Fraud and Debt, said: "We are not interested in where people do their weekly shop or how much they're spending on new clothes. Banks will simply be asked to identify if somebody may no longer meet the rules for the benefits they receive, allowing us to investigate further where necessary."

She added: "With £1.2 billion in savings expected by 2030/31, this is a major step forward in tackling fraud and error, protecting public money and ensuring support goes to those who genuinely need it."

Safeguards

The powers come from the Public Authorities (Fraud, Error and Recovery) Act 2025, and their use is governed by a statutory code of practice setting out the safeguards that must be followed.

For the public finances, every pound recovered or not wrongly paid out is a pound available for other services, and the Budget on Wednesday will set out the government's wider plans for the public finances.