The Department for Work and Pensions (DWP) is set to implement new enforcement powers from October 2026, aimed at recovering outstanding debts more effectively. In the weeks leading up to the rollout, the department has been contacting thousands of individuals who owe money, urging them to settle their debts to avoid further action.
These measures are made possible under the Public Authorities (Fraud, Error and Recovery) Act 2025. Notably, the DWP will gain the authority to approach a person’s bank directly to recover debt without requiring a court order, marking a significant change from previous practices. Furthermore, in the most serious cases-where debts reach at least £1,000-the DWP can apply to the Magistrates' Court to request disqualification from driving for persistent non-payers, with safeguards in place to protect those who rely on driving for essential needs such as employment or caring responsibilities.
The new powers will be phased in from October 2026, which has sparked increased scrutiny. James McMurdock, an Independent MP for South Basildon and East Thurrock, recently questioned the DWP about the expected number of warning letters to be sent ahead of enforcement. In response, Andrew Western, Minister of State for the department, emphasised that these recovery powers are a last resort. He explained that the measures are designed to encourage voluntary repayment from individuals who are no longer receiving benefits or in suitable PAYE employment but who have the means to pay.
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Minister Western stated, “These powers will encourage voluntary repayment of debt owed to DWP from those no longer in receipt of benefit or in suitable PAYE employment, as well as ensuring that there is recourse for those who have the means to repay but do not.”
He also detailed the protections associated with driving disqualification orders, noting that a court cannot grant such an order if the individual has an essential need to drive. Initially, any disqualification will be suspended provided the individual adheres to the repayment terms set by the court.
Impact assessments related to the Public Authorities (Fraud, Error and Recovery) Act have been published online, providing estimates on debtor numbers, debt amounts, implementation costs, and potential savings. The DWP has indicated it will publish data on these measures through its usual channels, including the Annual Report and Accounts.
In June, the DWP advised that anyone no longer receiving benefits who owes money and receives a new letter should act promptly to avoid enforcement action. They also highlighted the availability of free debt advice and support services for those who need assistance.
Previously, the DWP had limited options to pursue individuals no longer claiming benefits or in PAYE employment, allowing some who could repay to avoid doing so. The forthcoming powers aim to close this gap.
Additional powers under the Act include the Eligibility Verification Measure, allowing the DWP to request limited data from banks and financial institutions to identify incorrect benefit payments more swiftly, ensuring accurate payments and faster resolution of errors.
These initiatives form part of the Government’s broader commitment to secure £14.6 billion in savings over five years by combating fraud, error, and debt. This includes plans to increase staff numbers by up to 3,000 and enhance data, analytics, and investigative capabilities.
Minister Western concluded, “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.”
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.”