The Department for Work and Pensions (DWP) is preparing to implement a rigorous new crackdown on fraud among Universal Credit claimants. Under proposed reforms, the government aims to recover an additional £1.2 billion in incorrectly paid benefits by 2031.
Chancellor Rachel Reeves is expected to approve these measures, which form part of the wider Fraud Bill designed to enhance the DWP’s debt recovery and enforcement capabilities. Currently, the DWP can recover overpayments by deducting affordable amounts directly from ongoing benefits or PAYE earnings, with limits set at 40% of the debt for the first deduction and 20% for subsequent repayments.
The new Bill seeks to expand these powers to recover debts from individuals who are no longer receiving benefits or are not in the PAYE system, aiming to reclaim more taxpayer funds without burdening the courts unnecessarily. Importantly, strict guidelines are included to ensure deductions do not exceed reasonable amounts or cause hardship in meeting essential living expenses.
READ MORE: EV Drivers Could Face Up to 18p Per Mile Despite Rachel Reeves’ New 3p Charge Plan
READ MORE: Royal Mail Issues Crucial Christmas Posting Deadlines for UK Households
In cases where fraud is suspected, the government may impose penalties up to 100% of the amount owed if there is evidence of conspiracy to defraud. To avoid or mitigate penalties, claimants are advised to gather and present thorough evidence such as financial records and payment histories.
Additionally, the Bill permits financial institutions to charge administration fees when acting on DWP deductions, allowing banks to cover costs of managing repayments.
Despite the government stance, concerns have been raised about the impact on vulnerable individuals. Labour MP Debbie Abrahams cautions that the Bill might discourage some of the most at-risk groups from engaging with the DWP, potentially eroding trust in the system.
The Labour Party government has yet to comment on the proposed changes.