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Rebellion Within Labour Over Controversial Welfare Fraud Measures

Keir Starmer is encountering dissent within his party regarding a proposal that would enable the government to take direct actions against welfare fraud. These measures could include accessing people’s bank accounts and revoking driving licenses as part of a larger initiative to address benefit overpayments.

The government’s objective is to recover approximately £9.7 billion a year, stemming from incorrect payments identified by the Department for Work and Pensions (DWP) due to fraud or mistakes. To achieve this, they have incorporated Conservative strategies aimed at enhancing debt recovery methods.

The proposed fraud, error, and recovery legislation would empower the DWP to require banks to supply data necessary for identifying applicants who may not meet the criteria for the benefits they seek.

This bill would authorize the government to access bank statements to locate individuals who possess the financial means to repay overpaid benefits resulting from either fraud or error in claims. Moreover, it would give the DWP the authority to withdraw money directly from bank accounts of recipients not on benefits or in PAYE employment, targeting those deemed able to settle their debts.

Individuals who consistently fail to repay funds could face a suspension order from the DWP, which would lead to the revocation of their driving licenses.

Liz Kendall, the current secretary of state for work and pensions, has asserted that these powers are essential to rectify a “broken welfare system.” However, she faces mounting resistance from members within her own party.

Proposed amendments by Labour MP Neil Duncan-Jordan from Poole would compel the government to abandon significant components of the bill. This proposal is now gaining traction among more Labour MPs under Starmer’s leadership.

Duncan-Jordan’s amendments, which have garnered support from 17 Labour MPs, aim to limit the monitoring to those suspected of committing fraud, in contrast to individuals who may simply be victims of erroneous claims. “This will enable the government to focus on criminal actions without surveillance of citizens,” Duncan-Jordan stated.

Additionally, he seeks to eliminate the government’s authority to petition the courts to revoke driving licenses due to debts, labeling this policy a “poverty penalty.”

In a recent piece for the Guardian, Duncan-Jordan criticized Starmer’s government for what he characterizes as a revival of Conservative strategies focused on extensive surveillance of individuals reliant on state support.

He highlighted that the legislation would compel banks to engage in financial monitoring of welfare recipients, predicting that due to the high volume of accounts, this process would largely depend on algorithmic assessments.

“If the software indicates a possible overpayment, regardless of whether it stems from fraud or error, the bank will notify the DWP for further inquiry,” he observed. “In this scenario, welfare recipients are presumed guilty merely for seeking state assistance.”

Duncan-Jordan emphasized the need for the government to learn from past errors, referencing the Post Office scandal where an unreliable computer system wrongfully implicated numerous individuals in fraud.

“The potential for a similar crisis on a much larger scale is clear when millions are subjected to monitoring. This will disproportionately affect disabled individuals, caregivers, pensioners, and the most economically vulnerable, subjecting them to wrongful investigations and cumbersome appeals processes to establish their innocence,” he warned.

Kendall has noted that implementing “direct deduction orders” for recovering funds from claimants could ultimately lead to a savings of £500 million annually for taxpayers once fully operational.

For the fiscal year 2023-24, DWP projections suggest a total of £9.7 billion in benefit overpayments due to fraud or error.

However, the banking sector has expressed concerns regarding its obligations to provide the personal account information of claimants in instances suggesting erroneous benefit payments.

There are apprehensions that the proposed legislation might conflict with banks’ responsibilities under the Financial Conduct Authority to safeguard vulnerable customers from financial exploitation.

Last week, the Guardian reported that a government regulatory policy committee had flagged issues concerning the understatement of the legislation’s impact on the most impoverished segments of society, particularly in relation to the intended direct deductions from bank accounts.

A spokesperson from the DWP stated, “We hold a responsibility to protect public funds, and it is crucial that we modernize our strategies for identifying fraud and overpayments. All provisions of the bill are rooted in fairness and proportionality and do not entail broad surveillance of individuals’ bank accounts.”

Furthermore, they articulated, “This includes the use of limited data from financial institutions to assist in verifying eligibility for benefits, ultimately helping us detect mistakes sooner and reduce debt accumulation for claimants.”

Source
www.theguardian.com