The Department for Work and Pensions (DWP) has confirmed it will begin using new powers to deduct money directly from people's bank accounts starting in October 2026, without needing a court order. The move follows the enactment of the Public Authorities (Fraud, Error and Recovery) Act 2025 (PAFER Act), which the government has described as the biggest crackdown on welfare debt in a generation.
Letters Sent to Thousands of Debtors
The DWP has begun sending letters to thousands of individuals who still owe benefits debts to the government, giving them a final deadline to pay before the new powers take effect. The letters warn recipients to get in touch and pay up or face consequences. Work and Pensions Minister for Transformation Andrew Western stated: “Hardworking taxpayers deserve a system that pursues those who deliberately dodge their debts, and that is exactly what these new powers deliver.” He added: “To anyone with an outstanding debt - our door is open and DWP will always work with you to find an affordable way to repay. But for those who can pay and won’t - we’re going further than ever before to claw back cash and crack down on fraud.”
New Powers Under the PAFER Act
Under the PAFER Act, which became law on Wednesday, June 24, 2026, the DWP can now go directly to a person’s bank to recover owed money without requiring a court order. In the most serious cases, the DWP can also ask a court to strip persistent debt dodgers of their driving licence. Cabinet Office Minister Satvir Kaur said: “Fraud against the public sector and unrecovered debt deny our vital frontline services of the funding they deserve. Under these new powers in the PAFER Act, this Government will deliver on its promise to protect hardworking taxpayers and clamp down on those who try to cheat the system.”
How to Avoid the Deductions
Individuals who are no longer receiving benefits but owe money to the DWP and receive the new letter are urged to act now. The application of these powers can be avoided entirely by contacting the DWP within the next four months. DWP staff can also point individuals towards free debt advice and support services if needed. Previously, the DWP had limited options to pursue people who were no longer claiming benefits or in PAYE employment, meaning some who could afford to repay simply chose not to. The DWP stressed that this loophole is now closed.
Future Measures
The DWP added in its announcement: “Other powers under the PAFER Act, which will be operational in future, include the Eligibility Verification Measure, which will allow DWP to require limited data held by banks and financial institutions to help identify incorrect benefit payments, ensuring claimants are paid accurately and allowing errors to be found and resolved sooner.”
