Benefits experts have raised concerns over new powers for DWP officials to directly take funds from a person’s bank account. Legislation is going through Parliament which will allow investigators to take a sum from a person’s bank account where they owe an amount to the DWP or to another public authority. The measure, known as a ‘direct deduction’,is intended to help recover funds where a person is refusing to settle their debts.

The DWP can currently recover owed cash by imposing deductions on a person’s PAYE earnings or by taking an amount off their benefit claim, but this way they can extract the amout directly from the person’s bank account. The amount can be deducted as a lump sum or in instalments, depending on how much funds the person has available.

When officials want to make a direct deduction, they will have to request at least three months of bank statements for the account, to make sure the person has the cash available. Rebecca Lamb, external relations manager at free budgeting advice group Money Wellness, warned that the powers could have major negative impacts.

She said: “Direct deductions can help recover overpayments, but they can also hit households hard. A 15 percent deduction from Universal Credit, for example, could be around £60 a month, which is a real squeeze if you’re already living on a tight budget.

“One simple way to make this fairer would be a cap on repayments, so people can pay back what they owe without being pushed into financial crisis. Any new rules need to protect people first, while still stopping genuine fraud.”

Before making a direct deduction, the DWP will have to issue a notice to the person, giving them at least 28 days to contest the issue.

Speaking previously about when the powers would be used, Neil Couling, director general of Fraud, Disability and Health and senior responsible owner of Universal Credit, said: “We give the opportunity for people to pay this money back. We don’t go straight to these powers. These are conversations.”

From April 2025, the Government introduced a Fair Repayment Rate, meaning the maximum amount that can be deducted from a Universal Credit claim is 15 percent of the claimant’s standard allowance, down from the previous 25 percent. Government estimates suggested this would mean some families would keep £420 of their claim each year.

The new legislation, which is currently being considered by the House of Lords, also includes powers for bank account checks to verify the eligibility of those on benefits. These powers will be used to request bank account information for those on Universal Credit, Employment and Support Allowance and Pension Credit, to make sure claimants are eligible to receive their cash.

Banks will be requested to hand over information about bank accounts linked to benefit claimants. The DWP has clarified it will not have direct access to people’s bank accounts in using these powers.

In announcing the new legislation, Secretary of State for Work and Pensions, Liz Kendall, said previously: “We are turning off the tap to criminals who cheat the system and steal law-abiding taxpayers’ money. This means greater consequences for fraudsters who cheat and evade the system, including as a last resort in the most serious cases removing their driving licence.

“Backed up by new and important safeguards including reporting mechanisms and independent oversight to ensure the powers are used proportionately and safely. People need to have confidence the Government is opening all available doors to tackle fraud and eliminate waste, as we continue the most ambitious programme for government in a generation – with a laser-like focus on outcomes which will make the biggest difference to their lives as part of our Plan for Change.”