Global: UK Government to Review Identity Verification and Bank Data to Combat Benefits Fraud

The UK government has unveiled plans to combat benefit fraud, aiming to save taxpayers £9 billion by 2028. This announcement has sparked controversy among privacy advocates who argue that the government’s strategy involves extensive surveillance of the bank accounts of all benefit claimants.

On Monday, the Department for Work and Pensions (DWP) reported it has saved £1.3 billion (US$1.6 billion) from fraud and error over the past year. A significant portion of this amount, £53.9 million (US$67.1 million), was recovered from a single case involving a group of Bulgarian citizens who used stolen identities and forged documents to commit the largest benefit fraud in UK history.

The DWP also reiterated its commitment to investing £70 million (US$88.6 million) into advanced data analytics, leveraging machine learning to detect and prevent fraudulent claims.

According to the government’s plan, efforts to combat benefit fraud will be strengthened by legislative changes introduced in a late amendment to the Data Protection and Digital Information (DPDI) Bill. Currently passing through the House of Lords, this bill would grant the DWP financial surveillance powers, enabling it to scan customers’ bank accounts for signs of welfare fraud or errors.

The government intends to trial open banking to verify claims of financial hardship, a move that could influence public perception of open banking and its potential applications in digital identity. Additionally, the government plans to review its controls, including the verification of claimants’ identities.

Despite the government’s assertion that these measures could save taxpayers £600 million (US$760 million) over five years, the proposed regulations have raised concerns among financial institutions, lawmakers, and digital privacy organizations such as Big Brother Watch.

“The Department for Work and Pensions’ proposed new bank spying powers are a sledgehammer to crack a nut,” says Mark Johnson, advocacy manager at Big Brother Watch. “These Orwellian plans will compel banks to monitor all of our bank accounts and will subject millions of innocent Brits to suspicionless surveillance, treating them like criminals in the process.”

Big Brother Watch has launched a petition against the amendment, gathering signatures from 270,000 people. In March, the organization, along with over 40 other groups and charities, wrote to Work and Pensions Secretary Mel Stride to express their concerns.

UK banks and lenders have also voiced opposition to the proposed regulation, arguing that it imposes a significant administrative burden, as reported by Politico in March.