A test of new Department for Work and Pensions (DWP) plans to monitor bank accounts has found tens of thousands of benefit claimants breaking the rules. The DWP asked two high street banks to trial the measures to assess their feasibility.

One anonymous bank identified 713,000 accounts held by individuals receiving Universal Credit, Pension Credit, or ESA (Employment and Support Allowance). Over a three-month period, it found that 60,000 accounts had too much money in them for the individuals to be entitled to benefits.

In another 3,000 accounts, there was evidence of ‘abroad fraud’ where the account holder was either living overseas while claiming UK benefits or going on holiday for longer than is permitted under DWP travel rules. Accounts were checked for signs of being accessed from another country for more than four weeks in a row.

The average monthly balance of the 60,000 accounts suspected of breaking rules on capital limits was £50,000. The maximum savings allowed for claiming Universal Credit and ESA is £16,000, while for Pension Credit – a supplement for pensioners on a low income – it is £10,000.

Currently, the DWP can only check accounts if it already suspects fraud or as part of the initial verification of a benefit claim. The new powers would allow regular monitoring of accounts to ensure people qualify for state support, reports Birmingham Live.

Benefit claimants face certain restrictions when it comes to time spent abroad. For those on Universal Credit, the limit is up to a month, while ESA and Pension Credit claimants have a four-week cap. The State Pension can be claimed from abroad, but Pension Credit is not available to top it up.

The Department for Work and Pensions (DWP) has detailed its data-gathering initiative with banks in an Impact Assessment, revealing that initial checks were conducted in July, August and September 2022. Out of 713,000 monitored accounts, 58% were linked to Universal Credit, 22% to ESA and 20% to Pension Credit holders.

The DWP said: “Among these, approximately 60,000 accounts were in risk of breaching the capital rule (8%) and 3,000 accounts in risk of breaching the abroad rule (less than 1%). For accounts at risk of breaching the capital rule, the average monthly balance was £50,000 and about 50% of those accounts were joint accounts.”

It added: “The above results of the small-scale tests with two banks and building societies indicate a strong potential for the use of banking data to identify possible capital and abroad fraud and error across a range of means-tested benefits.”

Furthermore, the report references earlier surveillance conducted in 2017, where a bank examined a select number of cases and identified 549 accounts with potentially suspicious activities under the Proceeds of Crime Act. The DWP reviewed the cases and discovered that 176 (32%) of these had excess savings, making them ineligible for the benefits they were receiving, while another 58 (11%) had foreign transactions indicating an extended stay abroad beyond four weeks.

In 58 per cent of these cases where individuals had surplus capital, the DWP reported a ‘positive outcome’, with actions taken including a DWP compliance interview that can halt or suspend benefits, criminal investigation, administrative penalty or prosecution. Similarly, in 66 per cent of potential ‘abroad fraud’ cases, the DWP also reported a ‘positive outcome’ where benefits were stopped due to rule violations.

These new measures are part of the Data Protection and Digital Information Bill, currently under consideration in the House of Lords. If the legislation is passed, it will come into effect in 2025 with a limited number of banks and building societies. Once a successful data-sharing agreement has been established between the DWP and banks, the policy will begin a phased roll-out from 2027/2028 and reach full scale by 2030/2031.

Read more @yahoo