Benefit fraud crackdown should not see claimants ‘de-banked’ – minister

Benefit claimants risk falling victim to Government “mass fishing” exercises, as ministers receive new powers to look at bank account details to tackle fraud, an MP has warned.

Several MPs urged the Government to consider widening the role of an independent person, whose job will be to keep these powers in check.

Their plea was rejected by 268 votes to 80, majority 188, with minister Andrew Western saying nobody vulnerable or otherwise should be “de-banked as a result” of the new rules.

The Public Authorities (Fraud, Error and Accountability) Bill has cleared both Houses of Parliament, and is going through a tidying up process before it can become law.

It gives ministers the power to issue notices, to look at a limited set of banking information which they believe could help identify where a claimant has been incorrectly paid.

But the authorities would by law need to appoint an independent person to check ministers and banks were complying with the Bill.

Peers tried to expand the independent person’s responsibilities, to look at how much the new processes were costing the Government and financial institutions, and whether they were having an “adverse affect on vulnerable people or on the ability of benefit claimants to access banking services”.

Liberal Democrat work and pensions spokesman Steve Darling said: “We still have concerns that there is a blanket approach to this, and effectively, mass fishing will occur with the proposals as before us.”

He called for “more responsibility” to be given to the independent reviewer “around proportionality and fairness”.

Neil Duncan-Jordan, who had the Labour whip suspended after breaches of party discipline, shared his fear that although the reviewer would have to look at compliance under the Government’s plans, they did not have to consider whether the “eligibility verification measure (EVM) is being used proportionately”.

The Poole MP told the Commons: “It is essential that any consideration of the proportionality of the EVM takes into account the potential harm to individuals.”

Mr Duncan-Jordan added: “If the algorithms are scanning the bank accounts of 10 million people, an error rate of just 1% will result in 100,000 cases where innocent people are wrongly investigated.”

He told MPs: “I’m concerned about what this Bill says about our welfare state, the danger of creating a second-class citizenship where welfare recipients have less civil liberties than the rest of us.

“It turns banks into an arm of the state empowered to trawl through personal data, even when there is no suspicion of wrongdoing, and this strips away a fundamental principle, I believe, of British justice – the presumption of innocence.”

The Conservatives were “disappointed” the Government did not back the Lords’ proposal.

Speaking for the party, South West Devon MP Rebecca Smith said the amendment “tasks the independent reviewer of the mechanism to assess how the system is taking into account the additional needs of vulnerable people, whether it risks benefits claimants from being prematurely de-banked, and the costs to banks and financial institutions of complying”.

She continued: “Throughout the passage of this Bill, members, including those on the Conservative benches, have emphasised the need to protect those who may be more vulnerable, including people facing financial hardship and those with disabilities.

“While we are disappointed that the Government is not today backing the amendment, it is reassuring that they have committed to ensuring that all the points made in both Houses are fed directly into the work of the independent reviewer.”

Mr Western said: “We’re very clear that nobody vulnerable or otherwise should be de-banked as a result of this Bill.

“That was made clear in the code of practice and in amendments we are considering today. There are many existing layers of protection in our existing processes.”

The work and pensions minister added: “We are baking in a human decision-maker at all points throughout the process. We cannot take a decision based on EVM information in isolation. We must consider all other relevant information.

“Practically, that means that we must look at a benefit claim and check for disregards or, for example, for any other reason that someone may perhaps have capital in exceedance of £16,000 before taking any action.”

Mr Western said his officials had discussed the amendment with “the finance industry, who acknowledge that this may place a significant burden on financial institutions, if they are asked to report on costs every year”.

He added: “There is no reason for individuals to lose access to banking services solely because of information shared under EVM.

“We have been clear that this information does not imply any wrongdoing, and this measure simply provides a source of data that feeds into long-standing processes in the Department for Work and Pensions, where layers of support and specialist staff already exist to support those who are vulnerable or have complex needs.”