UK plans to review identity verification, bank data to reduce benefits fraud

The UK government has laid out its plans to prevent benefit fraud – promising to save taxpayers £9 billion by 2028 – amid criticism from privacy advocates who claim that the state wants to crack down on cheaters by surveilling bank accounts of all benefit claimants.

The Department for Work and Pensions (DWP) announced on Monday it has saved £1.3 billion (US$1.6 billion) from fraud and error during the past year. A large portion of this amount, £53.9 million ($67.1 million), came from cracking down on just one case: A team of Bulgarian citizens who used stolen identities and forged documents to commit the largest benefit fraud the country has seen.

The Department also reiterated its plans to invest £70 million (US$88.6 million) into advanced data analytics that uses machine learning to detect and prevent fraudulent claims.

According to the government’s plan, the crackdown on benefit fraud should be bolstered by legislative changes introduced by a late amendment to the Data Protection and Digital Information (DPDI) Bill. The bill, which is currently passing through the House of Lords, introduces financial surveillance powers that allow the Department of Work and Pensions to scan customers’ accounts in search of signs of welfare fraud or errors.

The government plans to trial open banking to check claims of financial hardship, a move which could influence how the public sees open banking in general, and its receptivity to the potential application of the concept in digital identity. The government also plans to review its controls, including claimant identity verification.

Despite arguments that it could save taxpayers £600 million (US$760 million) over five years, the proposed rules have stirred concern from 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.

The group’s petition against the amendment has gathered signatures from 270,000 people. Big Brother Watch and over 40 other organizations and charities also wrote to Work and Pensions Secretary Mel Stride in March.

UK banks and lenders have also pushed against the proposed regulation, saying that it places a significant administrative burden, Politico reported in March.

Article Topics

Data Protection and Digital Information Bill (DPDI)  |  digital identity  |  fraud prevention  |  government services  |  identity verification  |  open banking  |  UK