By Nicholas Dawson

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Benefits specialists have voiced worries over new powers enabling DWP officials to directly take money from a person’s bank accounts. New legislation making its way through Parliament will permit investigators to extract sums from bank accounts where someone owes money to the DWP or another public body. The provision, dubbed a ‘direct deduction’, aims to help retrieve funds when people are refusing to pay their debts. Currently, the DWP can reclaim outstanding money by imposing deductions on PAYE wages or reducing benefit payments. But this new method would allow them to take amounts straight from bank accounts. The sum can be removed as a single payment or in stages, based on the available funds. When officials wish to make a direct deduction, they must request a minimum of three months’ worth of bank statements to ensure the person has enough cash available. Rebecca Lamb, external relations manager at free budgeting advice organisation Money Wellness , warned that these powers could have significant harmful consequences. 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 per cent of the claimant’s standard allowance, down from the previous 25 per cent. Government figures 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 asked to provide information about bank accounts linked to benefit claimants. However, the DWP has assured that it will not have direct access to people’s bank accounts when using these powers. Secretary of State for Work and Pensions , Liz Kendall, previously announced the new legislation, saying: “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.” She added: “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.”