Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what estimate he has made of the number of claimants who would be within the scope of Clause 128 and Schedule 11 of the Data Protection and Digital Information Bill; and how many receive (a) the state pension, (b) Personal Independence Payment and (c) child benefit as the only relevant benefit.

Fraud is a growing problem across the economy, accounting for over 40% of all crime in 2022. This problem exists in the welfare system too, with fraud becoming increasingly sophisticated and on a scale not seen in the past. The introduction of the third party data measure is key to helping DWP tackle and reduce fraud and error which amounted to £8.3bn last year (2022-23).

The legislation is clear that the proposed power can only be used to help establish eligibility for DWP benefits that are being paid to individuals. This power requires third parties to look within their own data and provide relevant information to DWP that may signal where DWP claimants do not meet the eligibility criteria for the benefit they are receiving. This data may signal fraud or error and require a further review by DWP – through business-as-usual processes - to determine whether wrongful payments are being made. Only minimal information will ever be shared by designated third parties with DWP where there is a three-way relationship - between DWP, the claimant and the third party - to enable us to make further enquiries. No personal information will be shared by DWP with third parties.

DWP cannot exercise this power in relation to Child Benefit, because Child Benefit is not a DWP payment as the legislation sets out. Last year, DWP administered payments of £230.5 billion through the welfare system and we know the vast majority of these claims are paid correctly and accurately. Our measure will only impact a minority of people who are potentially receiving more money than they are eligible to receive.

As the Regulatory Impact Assessment sets out, the initial use of this power will be focused on identification of potential capital and abroad fraud and error in Universal Credit, Employment and Support Allowance, Pension Credit and Housing Benefit (passported from Pension Credit) cases. Failure to declare or under-declaring capital is consistently in the top causes of Fraud and Error and cost £894m million in Universal Credit overpayments, £138m in Pension Credit and £167m in ESA in 2022-23. The current powers DWP has are limited and leave the Department unable to address this challenge at scale. The third-party data gathering measure will enable DWP to better access relevant data which will help identify fraud and error in the system.

As trends in fraud and error change, it is right we have the ability, in the future, to exercise this power across all benefits and payments that are administered by DWP.

Affirmative regulations, and a statutory Code of Practice, will need to be brought forward before the Department can use these powers to define the specific data holder in scope and to outline other elements relating to the use of the power.