The Department for Work and Pensions will also be taking money direct from accounts as well as 2-year motoring bans – new details emerge
People who have had benefits taken due to fraud will also face being banned from driving (Image: Getty)
The Department for Work and Pensions has announced it will revoke the driving licences of certain individuals who have been claiming benefits for up to two years. Through the Public Authorities (Fraud, Error and Recovery) Act 2025, representing a substantial clampdown on welfare debt, the Government has been granted extensive powers.
Under the legislative change – which comes into force from October – officials will additionally be authorised to withdraw money directly from people’s bank accounts. Regarding driving licences, the official act states: “This measure can only be considered by DWP where the outstanding debt balance is a minimum of £1,000 and where it is not reasonably possible to recover the debt by any other means.”
It targets those who have been claiming benefits fraudulently – the three benefits with the highest fraud rates are Universal Credit, Pension Credit and ESA. Individuals who have had their benefits withdrawn and from whom the DWP is attempting to recoup the fraudulently-obtained money are being targeted.
The code of practice states: “In accordance with the Act DWP cannot use the disqualification from driving power for individuals who, at the time of application, are entitled to and in receipt of a DWP benefit. When considering an application under this power, the court must first determine whether the individual had the means to repay their debt to DWP but did not, without reasonable excuse. The court cannot make the order if it considers the individual has an essential need to drive, including where it is essential to earn a living. The individual will need to make any essential need clear to the court.”
To prevent being disqualified, the person can settle the debt in full or agree to and maintain an affordable repayment plan directly with DWP, thereby avoiding further action. It adds: “If an immediate disqualification order ends or is revoked within 56 days of being made because the individual has repaid the debt in full, they may be entitled to have their licence returned or replaced by DVLA without incurring a fee.”
Following the conclusion of an immediate disqualification order, if the disqualification period exceeded 56 days, the individual will be required to apply to DVLA to renew their driving licence and will face a fee for doing so. The disqualification period under an immediate disqualification order cannot exceed 2 years.
The DWP warned: “In some circumstances, where the individual persistently breaches the suspended order by failing to pay without reasonable excuse, more than one immediate disqualification order may be given. This could bring the total time of disqualification to greater than 2 years in total. DWP must apply to revoke an immediate disqualification order whenever the debt has been paid in full. DWP will notify the court that the debt has been repaid, and the court will notify DVLA that the order has ended. DWP will confirm to the individual that the debt has been repaid.”
Those who owe money to the DWP are now receiving letters demanding repayment. Under the Public Authorities Act 2025, the most sweeping crackdown on welfare debt in a generation, the DWP can now go directly to an individual’s bank to recoup money owed, without requiring a court order.
In the most severe cases, it can also petition a court to remove persistent offenders’ driving licences.
Under proposals put forward by the Department for Work and Pensions (DWP), officials will be empowered to seek court orders stripping benefit fraudsters of their driving licences if they owe the taxpayer in excess of £1,000, or if they have repeatedly ignored previous demands for repayment. Labour claims all of this could save the DWP as much as £1.5 billion over the next five years.
Work and Pensions Minister for Transformation Andrew Western said: “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 said: “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.”
The new measures will be phased in from October 2026, affording those in debt a final opportunity to settle what they owe or arrange a manageable repayment scheme ahead of that cut-off date.
Officials have urged anyone no longer receiving benefits who owes money to the DWP and has received the new letter to ‘act now’. The enforcement of these measures can be avoided altogether by contacting the DWP directly.
The DWP said: “Previously, the DWP had few options to pursue people who were no longer claiming benefits or in PAYE employment, meaning some who could afford to repay were simply choosing not to. That loophole is now closed.
“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, for example work that relies on driving, such as a courier or caring responsibilities. Any ban is initially suspended as long as repayment terms are kept to.”
Further measures under the PAFER Act, set to come into force at a later date, include the Eligibility Verification Measure, which will grant the DWP authority to request limited data held by banks and financial institutions to help pinpoint incorrect benefit payments, ensuring claimants receive accurate payments while allowing mistakes to be identified and addressed more promptly.
This forms part of the Government’s pledge to achieve savings of £14.6 billion over the next five years through tackling fraud, error and debt, which encompasses investment to deploy up to 3,000 additional staff, alongside bolstering data, analytics and investigative capabilities.