DWP can now take money directly from your bank account

Under the Public Authorities (Fraud, Error and Recovery) Act, officials can bypass the courts when reclaiming some benefit debts, marking a significant shift in enforcement.

As Sir Geoffrey Clifton-Brown, chair of the Public Accounts Committee, explains: “Make no mistake, the DWP’s new powers to reach further into citizens’ lives are significant.

“Our committee of course firmly supports Government in its responsibility to ensure people are paid the correct benefits.

“But it is essential that these extensive new powers – of compulsion of disclosure over banks and financial institutions, of recovering funds directly from people’s accounts without the aid of the courts – have the risk of over-reach mitigated against right from the outset.”

When can DWP take money from people’s bank accounts?

The power applies where:

A claimant owes money due to benefit overpayments

• Fraud or serious non-compliance has been established
• The person has the means to repay but refuses to engage

Instead of pursuing lengthy court action, DWP can issue a formal recovery notice and instruct a bank to deduct funds directly.

Ministers say the measure targets those who deliberately avoid repayment – not vulnerable claimants struggling to pay.

How direct deductions work

The process includes:

1. Identifying confirmed debt owed to DWP
2. Assessing affordability and financial position
3. Issuing notice before recovery action
4. Instructing the bank to transfer funds

Safeguards are written into the legislation, including oversight and reporting requirements.

The government says it will not seize funds without due process, and that protections exist for hardship cases.

Why the new powers are being introduced

The DWP cites data that benefit fraud and error cost £9.5 billion in 2024–25, around 3.3% of total benefit spending.

The Act is expected to save £1.5 billion by 2029/30, according to the Office for Budget Responsibility, as part of wider plans to save £14.6 billion by 2030/31.

Ministers argue that without stronger recovery tools, significant sums remain unpaid for years.

Minister for Transformation Andrew Western MP says: “It is right that as fraud against the public sector evolves, the government has a robust and resolute response.

“The powers granted through the Bill will allow us to better identify, prevent and deter fraud and error, and enable the better recovery of debt owed to the taxpayer.”

Concerns about how the DWP will use these new powers

However, the Public Accounts Committee has warned that such “significant” powers must be used proportionately to maintain public trust.

MPs have called for:

• Clear transparency over how often direct deduction powers are used
• Reporting on their impact
• Strong safeguards to prevent misuse

The committee also noted that DWP’s accounts have been qualified for 37 consecutive years due to fraud and error — raising questions about internal controls.

What this means for claimants

For most benefit recipients who report changes and respond to DWP letters, there will be no impact.

But if you:

• Ignore repayment requests
• Refuse to engage over confirmed debt
• Deliberately withhold information

Money could now be taken directly from your account without court action.

Experts say the safest approach is simple: engage early, respond promptly, and seek advice if you cannot afford repayments.

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A DWP spokesperson said: “We have introduced major reforms to ensure people are paid the correct benefits, to recover overpayments and to help save billions of pounds for the taxpayer.

“The powers in the Fraud, Error and Recovery Act have numerous safeguards and will be independently overseen.

“We will not have access to claimants’ bank accounts when checking they are receiving the correct benefits.

“We are forecasting an ambitious reduction in fraud and error levels to 2.8% by 2028-29, the lowest level since tax credits were introduced in 2003-04.”