The DWP has clarified how new powers to directly take funds from benefit claimants’ bank accounts will be used. New measures coming into law will allow investigators to directly deduct an amount from a person’s bank account if they owe funds.
In cases where officials want to do this, they also have to request at least three months of bank statements for the person’s account. This is to make sure they have the money available to pay up.
Cabinet under secretary, Georgina Gould, explained how the powers would be used to her fellow MPs. She said: “Direct deduction orders are a vital mechanism to recover funds from a liable person who can afford to repay their debt but refuses to do so.”
She spoke about the safeguards in place to ensure the powers are used properly. And she detailed the steps of the process leading up to taking the funds from the person’s bank account.
There will first be an investigation by the Public Sector Fraud Authority (PFSA) into the case. Ms Gould said: “The decision to make the direct deduction order will be made by a trained, authorised officer within the PSFA who will work to the standards of the Government counter-fraud profession.
“The investigation must determine, to the civil standard of proof, that money is owed to the public sector as a result of fraud or error.”
If officials determine there is money owed, there is a second step before they proceed to deduct the amount. The minister explained: “We will seek voluntary engagement and repayment, and only after those efforts have been unsuccessful will direct deduction orders be used.”
The legislation mandates that officials have to notify the person that they plan to deduct the funds and to give them an opportunity to make representations, giving them at least 28 days’ notice.
Officials can only deduct the funds after the timeframe for making appeals has expired or after any appeals against the decision have concluded.
Referring to these conditions, Ms Gould said: “There are clear restrictions as to when these powers become available, ensuring that their use is not unfettered.”
She also provided details about how much the deductions can be: “Direct deduction orders can be either regular, requiring regular deductions, or lump sum, requiring a specific amount to be deducted.
“Both types of orders can be issued for the same account, to ensure operational flexibility while considering and protecting vulnerability. Copies of direct deduction orders must be sent to the liable person, the joint account holders, if applicable, and the bank where the account is held.”
Although much of the focus has been on how the DWP could use the new powers, the bill is intended more broadly to help “public authorities” tackle fraud and recover owed funds. NHS fraud officials spoke about how they could use the new measures.
Alex Rothwell, chief executive of the NHS counter-fraud authority, told MPs previously: “The bill will be incredibly helpful for us to recover more money from people who have been suspected of fraud.” He spoke further about the type of cases where his team may use the new powers.
He said: “When it comes to pursuing criminal justice outcomes in relatively low value cases – perhaps individuals who have taken £5,000 or £10,000, who have been exited through human resources processes or who have simply left the organisation – the bill gives us an incredible opportunity to recover more funds, and I think we would use it extensively.”
