Tech News : Alarms Over Mass Monitoring of Benefit Claimants

There are concerns that a new government bill designed to tackle benefit fraud could subject millions of claimants to routine bank surveillance, even when there’s no suspicion of wrongdoing.

What Is the Fraud Bill?

Earlier this month, MPs passed the Public Authorities (Fraud, Error and Recovery) Bill, a piece of legislation aimed at cracking down on fraud within the UK’s benefits system. Ministers say the bill is part of “the biggest crackdown on fraud against the public purse in a generation,” with the Department for Work and Pensions (DWP) set to receive significantly expanded powers.

On the surface, the rationale is clear, i.e. official figures show that in 2022–23, fraud and error across the welfare system cost the government approximately £8.3 billion. The bill is, therefore, intended to help claw some of that money back.

However, critics say the proposals go far beyond tackling professional fraudsters. Instead, they warn the measures will open the door to mass digital surveillance of people on Universal Credit, Pension Credit, and Employment and Support Allowance, regardless of whether they’ve done anything wrong.

What the New Powers Actually Involve

At the centre of the bill is a new Eligibility Verification Measure (EVM), which would allow the DWP to compel banks to monitor claimants’ accounts for signals of fraud or error. While the government currently has powers to request financial information in specific cases where fraud is suspected, this new measure removes that requirement altogether.

This essentially means that banks would be legally required to check accounts for as-yet unspecified “indicators” of ineligibility. Any account that meets the trigger criteria would then be flagged and passed to the DWP for further investigation.

Presumption of Guilt?

Under the new bill, these checks could happen without a claimant’s knowledge, and there’s no obligation to inform individuals if or when they’re being monitored, raising fears about a “presumption of guilt” model baked into the benefits system.

Seize Funds or Revoke Driving Licence

It should be noted that the bill doesn’t stop at data gathering. For example, if the DWP believes someone has been overpaid, i.e. due to either fraud or administrative error, it could apply to seize funds from their account or even revoke a driving licence. In such cases, the bank would be prohibited from informing the customer, who might only realise what’s happened after seeing funds disappear from their balance.

Concerns Over Privacy and Human Rights

Civil liberties groups including Big Brother Watch, Justice, and the Public Law Project have voiced deep concerns about the scope and implications of the bill. In a statement, Big Brother Watch warned that it could “create a two-tier system where benefit claimants are treated as second-class citizens under constant surveillance.”

Baroness Finn echoed these concerns during a House of Lords debate, noting: “Support for the goal must not mean silence about the means.”

Some experts say that removing the “reasonable suspicion” threshold from the process represents a major shift in how personal data can be accessed by public authorities and that it also undermines one of the most fundamental principles of British justice i.e. the presumption of innocence.

“Why should someone on benefits have fewer rights to privacy than anyone else?” asked Labour MP Neil Duncan-Jordan in a recent article (published in The Guardian). “These new powers strip those who receive state support of a fundamental principle of British law.”

Disproportionate Impact on the Most Vulnerable?

Perhaps the most troubling aspect of the legislation for many is who it affects, and how. For example, around 10 million people receive one of the means-tested benefits targeted by the new powers. That includes disabled people, unpaid carers, single parents, pensioners, and others already struggling to get by. Campaigners fear that sweeping surveillance powers will add another layer of stress and complexity to the lives of people least equipped to deal with it.

As Duncan-Jordan, (Labour) MP for Poole, notes: “It is the very poorest—disabled people, carers, pensioners—who will effectively have fewer rights to privacy than everyone else.”

Mistakes

It’s worth noting here that mistakes are actually very common in the benefits system. For example, 75 per cent of claims flagged as suspicious by existing DWP systems are found to have no fraud or error. It’s not surprising, therefore, that many critics argue that introducing automated, suspicionless checks on millions of people risks sweeping thousands into an investigative dragnet needlessly.

Also, when errors occur, the process for appeal can be overwhelming. People living with mental health issues or cognitive impairments may simply not be in a position to challenge wrongful investigations or enforcement actions. As Liberal Democrat MP Steve Darling put it: “The system needs a culture change—not suspicion and punishment.”

Warnings From the Finance Sector

The financial services industry has also raised red flags. According to industry representatives, the bill places banks in a difficult position, i.e. caught between government demands and their duties to protect customers.

There are concerns about how financial institutions will interpret and apply the eligibility criteria, especially when the government has yet to publish a code of practice explaining how the system will work in practice.

One key concern is the automated nature of the process. For example, because of the vast number of accounts involved, banks will almost certainly rely on algorithms to detect potential breaches. However, the DWP’s existing fraud detection algorithms have already been shown to generate bias. Expanding such automation without clear safeguards risks creating what critics have described as “a Horizon-style scandal on a massive scale.”

What Happens When Safeguards Are Removed?

The bill’s critics also warn that it cannot be viewed in isolation. Running parallel through Parliament is the proposed Data Use and Access Bill, which would reduce the legal requirement for human oversight in automated decisions across government.

Critics say that together, these bills could pave the way for widespread, fully automated decision-making in matters that affect people’s livelihoods, privacy, and mobility.

The worry is that together, these bills could pave the way for a future in which life-altering decisions, such as whether to stop someone’s benefits or seize money from their account, are made entirely by algorithms. In such a system, individuals may have no right to know they’re being monitored and no clear route to challenge errors when they occur. Legal experts warn this undermines due process and risks creating an unaccountable surveillance regime driven by automation rather than justice.

Not Just Benefits?

Also, another worry is that the changes may not stop with benefits. For example, although the current bill excludes the State Pension from the EVM powers, legal analysts warn that future governments could extend similar surveillance powers to other groups, citing efficiency and fraud prevention as justification.

Balancing Fraud Prevention With Fairness

Work and pensions minister Andrew Western has defended the proposals, stating: “We are supporting those who need the social security safety net, not the fraudsters who pick holes in it.”

He emphasised that flagged accounts will trigger further investigation, not automatic penalties, and that no action will be taken without assessing whether a payment was incorrect and why. The DWP maintains that the measures are targeted and necessary.

However, even the Department’s own impact assessment suggests the new powers will recover just 2 per cent of fraud and error overpayments over 10 years. Many have questioned whether such a small gain justifies the level of intrusion proposed.

What About Everyone Else?

The implications of the Fraud Bill extend beyond benefit claimants. For banks, it means managing the tension between data protection and state surveillance. For businesses and third-party organisations, especially those working with vulnerable groups, it raises serious questions about trust, data-sharing, and legal compliance.

Also, for society as a whole, it prompts a deeper question, i.e. when does the fight against fraud become something else entirely? As Duncan-Jordan warned: “The welfare state should be there for everyone—but this approach undermines public trust in the system.”

The government insists the bill targets only those abusing the system, but critics say the net is cast so wide that, for millions of ordinary claimants, it will feel more like being treated as guilty until proven innocent.

What Does This Mean For Your Business?

At its core, the Fraud Bill appears to highlight a long-standing tension in policymaking, i.e. how to prevent abuse of public funds without eroding civil liberties in the process. While no one disputes the need to address organised benefit fraud, the concern is that the government’s response appears to conflate fraud with error, and risk with suspicion, thereby sweeping millions of people into a system of opaque surveillance without adequate safeguards or oversight.

It seems that the scale and nature of the new powers show a change in the government’s posture, from supporting claimants to suspecting them. This could have chilling effects not just for individuals navigating the benefits system, but for wider society’s view of the welfare state. If receiving state support means accepting constant monitoring and the loss of privacy rights, people in need may simply disengage altogether.

This presents real risks for frontline organisations and service providers too. For example, many third-sector and community-based organisations work closely with vulnerable individuals who already struggle with trust in institutions. The introduction of automated surveillance and data-driven enforcement may make it even harder for these groups to encourage engagement, access to services, or financial recovery.

It should be noted that UK businesses and financial institutions also face new responsibilities under the legislation. Banks will be placed in the awkward position of acting as both service providers and surveillance agents, potentially undermining their relationships with vulnerable customers. At the same time, any organisation involved in benefit administration, payments, or support services will need to reassess how they manage data, consent, and client care, particularly in light of future changes that may reduce human oversight even further.

Looking ahead, the precedent set by this bill could shape future government policy in ways that reach well beyond welfare. For example, if mass algorithmic surveillance becomes normalised in one part of the public sector, it’s not difficult to imagine it extending to others. Today’s welfare recipients could be tomorrow’s test case for broader systems of state monitoring, from tax compliance to immigration and healthcare.

The question may not be just whether the government can claw back a fraction of fraudulent payments, but whether it can do so without compromising the values of fairness, proportionality, and due process that underpin a healthy democracy. For now, many remain unconvinced.