DWP gains new authority to seize funds and suspend licences over unpaid debt
The Department for Work and Pensions can now directly deduct money from claimants' bank accounts and seek court orders to suspend driving licences for those who refuse to repay debts.
A government minister updated Parliament on expanded powers for the Department for Work and Pensions introduced by the Public Authorities (Fraud, Error and Recovery) Act 2025. The legislation lets the DWP issue Direct Deduction Orders to recover unpaid benefits directly from a claimant's bank account after an affordability test, and to petition courts for temporary driving-licence bans when debtors can afford repayment but refuse.
While the debt-recovery provisions began in June 2026, the supporting regulations for licence withdrawals will not be enforced until October, meaning no licences have yet been withdrawn. The Act also authorises the DWP to send Eligibility Verification Notices to banks to cross-check declared income and savings. The Public Sector Fraud Authority has received broader investigative powers across the public sector. The update followed a parliamentary question from MP Andrew Snowden, answered by Parliamentary Under-Secretary Lilian Greenwood.
Why it matters
It shows how the government is strengthening tools to recover welfare debt and enforce compliance.
In this story
