“George Orwell’s iconic novel 1984, published in 1949, raised the spectre of Big Brother. This nightmare has now been brought to reality by a Conservative government supposedly rolling back the state.”
As readers may recall, in the summer of 2023 the term “debanking” briefly became de rigueur in the British press. London-based private bank Coutts’ had just decided to close Nigel Farage’s bank account for what he alleged were political reasons. The resulting scandal claimed two senior scalps — those of Dame Alison Rose, the CEO of Coutts’ parent bank and “Big Four” lender, Natwest Group (formerly known as RBS Group) and Coutts’ chief executive Peter Flavel — and led to a sharp sell off of Natwest shares.
In the wake of the scandal, the UK government has proposed new rules to ensure that British politically exposed persons (PEPs), who have been entrusted with a prominent public function, are treated by banks and other financial institutions as “inherently lower risk” than overseas politicians.
“The Government is fully committed to tackling money laundering, terrorist financing and corruption, but it will always work to ensure this is done in a proportionate, risk-based way that avoids undue burdens on law-abiding citizens,” said Bim Afolami, economic secretary to the Treasury, in mid-December. Unless, that is, you are a recipient of public benefits and/or a state pension.
A Financial Data Dragnet
The government’s Orwellian-dubbed “Data Protection and Digital Information Bill” — which, according to Stephen Cragg KC, “appears to be designed to downgrade the safeguards on the use of personal data for big business and government” — includes a proposal to grant the Department for Work and Pensions (DWP) fresh powers to obtain data from banks and building societies to help detect breaches of eligibility rules for benefits, such as universal credit.
The DWP can already access the financial data of benefit recipients but it must first demonstrate that there is a “reasonable suspicion” of benefit fraud and error. But as the Financial Times reported in December, “the new powers would allow [the DWP] to access anonymised data for a large number of accounts without prior suspicion, enabling it to probe individual accounts in some cases.”
The government argues that the DWP needs these new powers to reduce fraud and error within the welfare system, currently estimated to cost in excess of £8 billion each year. The DWP itself paints itself as a victim of “scaremongering” over the new measures, arguing that the new powers would only be used in cases of suspected fraud or error, not otherwise. Yet what it is essentially demanding is the ability to use a bulk financial data dragnet on benefits claimants while insisting that it will not use said dragnet for the vast majority of people.
“The third-party data-gathering powers that the DWP is taking are only broad to the extent that this ensures that they can be future-proofed,” said Jonathan William Berry, 5th Viscount Camrose, a British hereditary peer and Conservative politician, in a recent session of the House of Lords. “This is because the nature of fraud has changed significantly in recent years and continues to change significantly. The current powers that the DWP has are not sufficient to tackle the new kinds of fraud that we are now seeing in the welfare system.”
A “Significant Intrusion”
The Data Protection and Digital Information Bill already comfortably passed through the House of Commons on 29 November 2023, with a whopping 269 votes in favour to just 31 against. Predictably, the Kier Starmer-led Labour Party was more or less on board with the bill’s proposals. A Labour Party spokesperson said “We support the Bill” before the party’s MPs proceeded to abstain on the vote. The bill now awaits passage in the Lords.
The UK Information Commissioner John Edwards, whose powers will be substantially diluted by the same Data Protection and Digital Information Bill, has warned that granting the DWP the power to probe the bank accounts of welfare recipients would allow “significant intrusion” of privacy rights. He also told parliament that “while the measure is a legitimate aim for government, given the level of fraud and overpayment cited, I have not yet seen sufficient evidence that [it] is proportionate.”
Prem Sikka, a Labour member of the House of Lords and an Emeritus Professor of Accounting at the University of Essex and the University of Sheffield, says the bill, if passed in its current form, will put the bank accounts of 22.4 million people, including 12.6 million recipients of the state pension, under constant financial surveillance…
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Nick Corbishley 