A Labour member of the House of Lords is warning that a new law could allow landlords’ bank accounts to be monitored by the Department of Work and Pensions.

The Data Protection and Digital Information Bill, now being debated in the House of Lords, will give the DWP powers to check bank accounts of those claiming benefits. 

Landlords with tenants’ rent paid directly from the DWP will be monitored as “connected accounts”  as part of a campaign which the government claims will save £600m over the next five years by reducing benefit overpayments and fraudulent claims.

Lord Sikka says: “Why would a landlord want to receive money from housing benefits directly when it will mean that all of his bank accounts and linked accounts will be looked at? He will simply say no. I have received lots of emails and letters and met individuals who are very concerned that they will be made homeless because their landlords will not want their bank accounts to be put under surveillance.”

One Conservative peer – Lord Kammal – is warning that up to 40% of all bank accounts could in theory be connected in one way or another to the receipt of benefits of some kind and he told the House that: “Putting additional onerous obligations on banks may make them decide that it is too difficult to provide accounts to those in receipt of benefits.”

A letter signed by 20 MPs and Lords and sent to the government last month warns that the Data Protection and Digital Information Bill would require banks to “sift through tens of millions of bank accounts to identify people in the welfare system around 40% of the population” and it warns that: Searching for such signals without reasonable grounds for suspicion would reverse the well-established presumption of innocence.”

The letter says: “We note the tragic events of the [Post Office] Horizon scandal in which innocent people suffered wrongful prosecutions, financial ruin and reputational damage following data used from faulty software in algorithmic systems. We cannot condone powers that risk replicating this disaster on a much broader scale with vulnerable people, many of whom live on the poverty line.”

Viscount Younger, parliamentary under-secretary of state at the DWP, defended the proposed legislation and told the Lords: ”In 2022-23, the DWP paid out more than £230 billion in benefits and payments to people across Great Britain … This figure is forecast to rise to nearly £300 billion by 2024-25, in quite short order, so this is a really serious issue to address. However, more than £8 billion has been overpaid in each of the past three years because of deliberate fraud against the state or because genuine errors have been made.”