The Department for Work and Pensions (DWP) has launched a programme to integrate open banking technology into the Universal Credit system. It is move that on the surface promises to modernise and streamline benefits administration. However, this initiative may grant the DWP extensive powers to scrutinise claimants’ private financial data. These are powers that many fear will exacerbate an already intrusive and punitive welfare system.
The DWP: looking at every purchase a claimant makes?
Universal Credit currently supports some 7.5 million claimants. Many of them depend on prompt and empathetic administration to cover essential living costs. The DWP’s new strategy aims to replace manual evidence checks—such as paper bank statements—with a digital model. This is where claimants consent to share banking data via open banking application programming interfaces (APIs).
The DWP frames this as a step towards efficiency and reduced bureaucracy. However, it underplays the degree to which such access amounts to state surveillance of claimants’ personal financial lives. This is going further than previous announcements around DWP inspectors being able to demand banks hand over claimants’ data.
Open banking technology was originally designed as a tool to empower consumers to share financial data with third-party providers under strict controls. Yet, when repurposed by a government department with powers over social security eligibility and payments, it raises red flags about privacy, consent, and potential misuse of highly sensitive data.
The DWP is effectively legislating to harness open banking APIs to peer inside every transaction a claimant makes. This is a level of intrusion unprecedented in the welfare state.
This invasive approach aligns with broader trends within the DWP towards increased data gathering and automated decision-making, often justified as measures to combat fraud and error—which reportedly cost the welfare system £8 billion annually.
Unfettered access to bank accounts
The DWP has invested more than £70 million in artificial intelligence (AI) systems intended to scrutinise claims and flag suspicious activity. Yet AI’s blunt instruments generate unfair suspicions, freeze payments unjustly, and deepen the stigma faced by vulnerable individuals.
The department’s recent halt to routine suspensions of Universal Credit claims flagged by AI in January 2024 highlights the flawed nature of technology-first approaches. It partly acknowledges that human judgment and compassion must temper automated systems.
However, embedding open banking within Universal Credit threatens to intensify the “surveillance welfare state” rather than dismantle it.
Despite the government’s aspirations to enhance transparency and claimant engagement, the tender documents reveal alarming gaps in how data access, use, and safeguards will be communicated.
Without robust transparency, claimants may neither fully understand nor trust how their financial information is being accessed and analysed. The risk of data misuse, breaches, or wrongful exclusions remains high unless the DWP commits to not only technical safeguards but also clear accountability and independent oversight.
Furthermore, the DWP’s open banking plans come amid contentious debates over proposed reductions in Universal Credit payment rates. Many recipients already experience deep financial insecurity. The prospect of further scrutiny into their bank accounts risks escalating stress, anxiety, and mistrust, reinforcing a welfare system that too often punishes rather than supports.
DWP snooping: beyond the pale
The DWP positions open banking as a leap forward in digital government. However, it is far from this. Modernisation should not be equated with mass data collection or expanded surveillance powers.
The government must ensure that claimant voices are not sidelined in technology procurement and rollout. Real reform demands genuine consultation, safeguards against discrimination, and transparency that empowers claimants—not just expedites bureaucratic processes.
Overall, the DWP’s drive to adopt open banking in Universal Credit risks entrenching a model of hyper-surveillance and automated scrutiny at the expense of privacy and social justice.
Claimants deserve an accountable, respectful welfare system that sees them as partners, not subjects to be monitored. Without strong safeguards, this technological intervention threatens to deepen barriers. It will alienate vulnerable people. And it will compromise the very support DWP Universal Credit is meant to provide.
Featured image via the Canary
