The DWP will be granted new powers under Sir Keir Starmer’s Government that will allow them to request information from benefit claimants’ bank accounts.

The new Fraud, Error and Debt Bill will require banks and other financial institutions to share data that may help identify benefit fraud.

It is part of a package of measures aiming to catch fraudsters faster and hopes to save £1.6bn over the next five years.

It comes as the latest figures showed the DWP lost £9.7bn in benefit fraud and error in the 2023-24 financial year.

(Image: PA)

The DWP said: “Staff will be trained to the highest standards on the appropriate use of any new powers, and we will introduce new oversight and reporting mechanisms, to monitor these new powers. DWP will not have access to people’s bank accounts and will not share their personal information with third parties.

“This legislation delivers on the government’s manifesto commitment to safeguard taxpayers’ money and demonstrates the government’s commitment to not tolerate fraud, error or waste anywhere in public services, including the social security system.”

However, campaigners have criticised the plans, saying they “deprive millions of the presumption of innocence” and add to the “criminalisation” of benefit claimants.

Silkie Carlo, of Big Brother Watch, said: “Everyone wants fraud to be dealt with, and the government already has strong powers to investigate the bank statements of suspects.

“But to force banks to constantly spy on benefits recipients without suspicion means that not only millions of disabled people, pensioners and carers will be actively spied on but the whole population’s bank accounts are likely to be monitored for no good reason.

 “A financial snooper’s charter targeted to automate suspicion of our country’s poorest is intrusive, unjustified and risks Horizon-style injustice on a mass scale.”

Mikey Erhardt, a campaigner at Disability Rights UK, said: “The government’s latest plans are essentially a digital sledgehammer to crack the tiniest nut.

“These new powers could see millions deprived of the presumption of innocence, adding to the criminalisation we already face in a punitive welfare system that often seeks to sanction people into work, whether we are able to or not.”

Shelley Hopkinson, head of policy and influencing at Turn2us, added: “Our social security system is a safety net that most of us will need at some point in our lives. It’s vital that people feel supported and confident to access the support available to them.

“The government should avoid using stigmatising language around social security which could push more people away from the support they desperately need and trap more families in poverty.”