The UK government is investigating whether the open banking model could be applied to the welfare system. The move, which would require benefit claimants to grant access to their bank accounts, comes amidst growing concerns over the escalating scale of fraud and error in the welfare system, with losses estimated at nearly £10 billion last year alone. The Department for Work and Pensions (DWP) anticipates these losses will continue to rise by 5 per cent annually for the next five years.
While the Public Authorities (Fraud, Error & Recovery) Bill introduces measures requiring banks to share limited data on claimants who may be ineligible for benefits, such as those with savings exceeding £16,000, a government source argues that it leaves a significant loophole. In its current form, the Bill's eligibility verification measure (EVM) only covers 15 banks identified by the DWP, and more specifically, only the account receiving benefits. This would allow claimants to potentially circumvent detection by spreading funds across multiple accounts.
Instead, the proposed open banking model would grant the DWP comprehensive access to all bank accounts held by claimants as a condition of receiving benefits. Such a move would streamline the verification process and expand fraud detection capabilities.
However, a revised proposal along these lines would face substantial legal hurdles, particularly concerning the right to privacy under the European Convention on Human Rights.
In comments given to The Times, Jasleen Chaggar, Legal and Policy Officer at digital rights group Big Brother Watch, said: "These chilling plans for unprecedented financial intrusion would require benefits claimants to lay their lives bare to the state in order to access support to which they are entitled.
"Mandatory open banking would give DWP civil servants constant access to the bank statements of welfare recipients, revealing deeply private information about their movements, associations, political donations, sexual preferences and religious beliefs.
"This government appears hellbent on creating a two-tier society in which those who dare to seek help from the state are treated as suspects-by-default and required to sacrifice their privacy.
"The government must abandon these plans and recognise that the receipt of state money does not justify stripping disabled people, carers, the elderly, single parents and the poorest in society of their rights and dignity."
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