The Department for Work and Pensions (DWP) has been granted new powers effective Wednesday, June 24, to issue driving bans to individuals on benefits who commit fraud or refuse to repay debts. Under the Public Authorities (Fraud, Error and Recovery) Act 2025, described by the government as 'the biggest crackdown on welfare debt in a generation,' the DWP can now directly seize money from bank accounts without a court order. In the most serious cases, courts can strip persistent debtors of their driving licences.
New Powers Target Persistent Debtors
The DWP says fraudsters and those who can pay but refuse to repay benefits debts will face 'tough new 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. 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.'
Cabinet Office Minister Satvir Kaur added: '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.'
Gradual Rollout from October 2026
The DWP will gradually enforce these powers from October 2026, giving debtors a final window from today to repay or arrange an affordable plan before that deadline. Anyone no longer receiving benefits who owes money to DWP and receives a new letter should act now. The application of these powers can be avoided entirely by contacting DWP within the next four months. Staff can also direct individuals to free debt advice and support services.
Closing a Loophole
Previously, the DWP had limited options to pursue people who were no longer claiming benefits or in PAYE employment, allowing some who could afford to repay to simply choose not to. That loophole is now closed, the DWP stressed. Courts can only impose a driving ban where the debt is at least £1,000, and no one can be disqualified if they have an essential need for their licence, such as work that relies on driving like a courier or caring responsibilities. Any ban is initially suspended as long as repayment terms are kept to.
Future Measures Under PAFER Act
Other powers under the PAFER Act, to 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.
