OAPs under surveillance: Minister admits Government could snoop on the bank accounts of state pensioners in battle against £8bn-a-year cost of welfare fraud - despite Mel Stride saying there's a 'very low level' of swindling in old-age benefits

The Work and Pensions Secretary today admitted the Government could begin snooping on the bank accounts of state pensioners in a bid to battle fraud and error.

Mel Stride told MPs it was 'not inconceivable' that new wide-ranging powers might be used to check on payments of the old-age benefit in the future.

This was despite the Cabinet minister acknowledging there is currently a 'very low level' of fraud and error within the administration of state pensions.

Mr Stride was quizzed by the House of Commons' Work and Pensions Committee amid a backlash over powers being sought in the Data Protection and Digital Information Bill.

MPs have raised the alarm about proposals for the Department for Work and Pensions (DWP) to view benefit claimants' bank accounts for 'social security purposes'.

There are concerns this would allow ministers to view the banking details of any state pension recipients, whose payments are administered by DWP.

But Mr Stride this morning defended the measures as a means of driving down the £8billion-a-year cost of fraud and error in Britain's welfare system.

A senior official stressed DWP would 'not expect' to 'delve into' the bank accounts of pensioners, with the new powers primarily aimed at combating fraud in Universal Credit (UC) payments.

The Work and Pensions Secretary was quizzed by Labour MP Sir Stephen Timms, the committee's chair, about why ministers were seeking powers to inspect the bank accounts of all those claiming the state pension.

Mr Stride stressed that - as the powers in the Bill would be subject to an 'affirmative statutory instrument' - it would 'ultimately for Parliament to decide what finally happens'.

He added there was 'no suggestion' that state pensioners would be having their bank accounts looked into 'at the moment' - although he acknowledged there could be an 'evolution' in where fraud was occurring.

'Its ultimate over-arching aim is to drive down fraud and error,' Mr Stride told MPs.

'There is error and there is some small amount of fraud... within the pensions space.

'These are arguments that are kind of premature in the sense that, we don't have an Act yet.

'But when we do, this is presupposing that a Secretary of State or whoever my successor might be at the appropriate time comes forward to Parliament to seek those powers in respect of pension payments.

'There's no suggestion at the moment that would happen, is my point.'

Mr Stride added that DWP expects to reduce welfare fraud and error by about £600million over the next five years in order to salvage taxpayers' cash.  

'Fraud and error is running at over £8billion at the moment and we're very determined to get that down and we've had some success in doing that, but we want to go still further,' he said.

'We wouldn't be exercising these powers on any other grounds than there was a signal given, in terms of the data that we were seeking, that there could be or reasonable expectation there might be error or fraud involved.

'The evolution point is very important. Whilst at the moment there is a very low level, relatively, of fraud in the pension space, it's not inconceivable at some point in the future that might change.'

Katherine Green, a senior DWP official, also played down the prospect of pensioners' bank accounts being looked at immediately.

'It is a relatively broad power and that is partly to future proof because, of course, fraud is evolving all of the time,' she told the committee.

'What the power allows us to do is basically put controls in place so we can ask for relative data from third parties but only where there is an indication of fraud and error.

'So we will not be accessing individuals' bank accounts directly, the power is so that we can ask for bulk data from financial organisations such as banks where we have an indication where there is fraud and error.

'That is what the power is doing - so absolutely no direct access to bank accounts directly. The legislation does provide a number of safeguards.'

She added: 'It's simply that the power is constructed in a way that would allow that, should that be necessary - should there be future evidence.

'We would not expect that at all. As we know and as the published statistics and the annual report and accounts say, most of the fraud we're experiencing is within the UC system.

'So this is absolutely not a particular intention right now at all to access or to delve into the accounts of pensions specifically.

'We know where the fraud is, we know what we want to prioritise, and it's within UC and that's absolutely what we would intend to prioritise.'

Katie Farrington, a fellow DWP official, also emphasised there was not 'large evidence of fraud and error in relation to state pension'.

'Where we do see some fraud and error in relation to state pension is about people living abroad and where the state pension would be frozen and, if you were resident in this country, your state pension would be uprated,' she told MPs.

'So it's a very small number of cases at the moment. These powers principally we're targeting fraud and error where we know where it exists, which is in relation to UC.

'However, we're seeking to take these powers now to give the Government the freedom and the ability to tackle fraud where it does arise.

'And there is a very small amount of fraud and error now that arises in relation to state pension.'