There are fears that the Labour government is echoing similar pledges made by the Conservative government to heighten the “surveillance” of benefits claimants.
Campaigners warn it risks “criminalising” innocent benefit claimants in a bid to save the government money and comes as another blow to vulnerable people amid controversy over the winter fuel payments.
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.”
The DWP lost £7.4bn due to fraud in the benefits system last financial year. But this is a “small minority” of cases, with just 2.8% of welfare claimants found to be fraudulent.
By comparison, it is estimated that £23bn in benefits and financial support goes unclaimed each year.
This is believed to be because of the difficulties accessing benefits, stigma and people not knowing that they might be eligible for benefits.
Shelley Hopkinson, head of policy and influencing at Turn2us, said: “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.”
Ministers have repeatedly raised concerns over a £22bn “black hole” in public finances, and the crackdown on fraud is expected to save the government £1.6bn over the next five years.
However, campaigners fear it will come at a cost for vulnerable people. Silkie Carlo, director of Big Brother Watch, said: “Starmer’s benefits bank spying proposals sound alarmingly similar to the powers Labour fought just a few months ago in opposition.
The Conservative government had proposed a Data Protection and Digital Information Bill, which was fiercely criticised by campaigners and dropped after the general election.
The DWP has stressed that this new bill would contain safeguarding measures for vulnerable welfare claimants, and staff would be trained to the highest standards on the appropriate use of new powers.
It will also not have access to people’s bank accounts and will not share their personal information with third parties.
“Everyone wants fraud to be dealt with, and the government already has strong powers to investigate the bank statements of suspects,” Carlo added.
“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.
“This is yet another insult to pensioners, an attack on Britain’s poorest people, and an assault on the presumption of innocence.”
It comes after the DWP has faced controversy over its handing of benefits overpayments – as reported by the Big Issue, the government is deducting money from millions of benefits claimants to repay debts, including those caused by its own mistakes.
The Big Issue recently reported on the case of a woman who was mistakenly accused of owing the DWP £28,000. A single mother was also falsely accused of owing the DWP £12,000, when actually they owed her money.
Erdhardt said: “Given the DWP’s well-documented history of negligence, there is a serious risk that claims mistakenly flagged as fraudulent will trigger burdensome appeal processes and the incorrect suspension of the financial support we need – leaving people unable to eat, purchase essential medication or keep a roof over their heads, all in service of what accounts in reality to a decimal place on a spreadsheet.
“This speech could have been a moment to announce a social security system built on respect, dignity, and support that enables us to live the lives we deserve – not spending millions to create an uncontrollable digital panopticon. Legislation of this kind has no place in a society that purports to care about its members, not least its disabled ones.”
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