There is no intention to “delve into” state pensioners’ bank accounts, a Government official has insisted as a minister was quizzed on new data powers aimed at tackling fraud and error in the system.

The Work and Pensions Committee heard that measures within the Data Protection and Digital Information Bill would be primarily aimed at trying to find and stop fraud in the benefits system.

But MPs raised concerns with Work and Pensions Secretary Mel Stride about whether bank accounts of anyone claiming the state pension could be accessed under new powers.

It's come as a great surprise I think to a lot of people that the Government thinks it's appropriate to take powers to look into the bank accounts of everybody claiming the state pension

Sir Stephen Timms, the Labour chair of the committee, said: “I think you’ll appreciate it’s come as a great surprise I think to a lot of people that the Government thinks it’s appropriate to take powers to look into the bank accounts of everybody claiming the state pension.”

The powers are about enacting the Government’s fraud plan, published in May 2022, to tackle the nearly £9 billion fraud issue, the Department for Work and Pensions’ (DWP) director general for labour market policy and implementation Katherine Green said.

The latest Public Accounts Committee report, published on Wednesday, said that more than 200,000 pensioners have been left out of pocket by a total of £1.3 billion while some £8.2 billion has been overpaid in benefits in the past financial year due to fraud and error in the system.

The committee heard that the majority of fraud is related to Universal Credit claims, but there is a “very small” amount of fraud and error in pensions related to people living abroad.

This is absolutely not a particular intention right now at all to access or to delve into the accounts of pensions specifically

Ms Green told the committee: “I think as the Secretary of State has said, it’s simply that the power is constructed in a way that would allow that, should that be necessary, should there be future evidence.

“We would not expect that at all, as we know and as the published statistics and the annual report and accounts say, most of the fraud we’re experiencing is within the UC (Universal Credit) system. So this is absolutely not a particular intention right now at all to access or to delve into the accounts of pensions specifically.

“We know where the fraud is, we know what we want to prioritise, and it’s within Universal Credit and that’s absolutely what we would intend to prioritise.”

Asked for specific examples of pensions fraud, the DWP’s director general for disability, health and pensions Katie Farrington said suspicions might arise if there were “lots and lots of transactions being carried out in a different country”.

She said: “At the moment, we do not see large evidence of fraud and error in relation to state pension.

“Where we do see some fraud and error in relation to state pension is about people living abroad, and where the state pension would be frozen. And if you were resident in this country, your state pension would be uprated. So it’s a very small number of cases at the moment.”

She said the powers would “give the Government the freedom and the ability to tackle fraud, where it does arise”.

We wouldn't be exercising these powers on any other grounds (other than) that there was a signal given, in terms of the data that we were seeking, that there could be, or a reasonable expectation there might be, error and fraud involved

Ms Green said there would be no direct access to people’s bank accounts through the powers, but that the power would allow the department to “ask for bulk data from financial organisations such as banks, where we have an indication where there is fraud and error”.

Seeking to reassure the committee, Mr Stride said: “We wouldn’t be exercising these powers on any other grounds (other than) that there was a signal given, in terms of the data that we were seeking, that there could be, or a reasonable expectation there might be, error and fraud involved.”

He said while there is a “very low level” of fraud regarding pensions currently, “it’s not inconceivable at some time in the future that might change”.

Mr Stride added: “Of course this is all subject to the affirmative procedure and the statutory instrument going through the House so it would be finally for the House to decide whether these measures were proportionate and acceptable.”