UK Government Prepares to Launch Massive Attack On Financial Privacy, Targeting Benefits Claimants and State Pensioners

“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:

The Bill uses developments in electronic transactions and artificial intelligence to place the poor, disabled, sick, old and pregnant women under surveillance. It gives Ministers and government agencies powers to direct businesses, particularly banks, and financial institutions, to mass monitor individuals receiving welfare payments, even when there is no suspicion or any sign of fraudulent activity. No court order is needed and affected individuals will not be informed. The Bill enables Ministers to make any further regulations without a vote in parliament.

For interested readers living in the UK, the campaign group 38 Degrees has set up a petition demanding that it should be Britain’s scandal-tarnished MPs, rather than the British public, who have their personal finances closely scrutinised. The creator of the campaign, Lee Morgan, wrote a letter to Baroness Jenny Jones, a former deputy mayor of London for the Green Party, expressing his “deep concerns regarding the government’s recent proposals to grant arbitrary access to citizens’ bank accounts” . That letter included the following paragraphs:

While I understand the importance of ensuring financial transparency and preventing illicit activities, the proposed plan seems to compromise the fundamental right to privacy. Granting the government unrestricted access to citizens’ bank accounts without clear guidelines or oversight poses a significant threat to personal liberties…

[T]he essence of democracy lies in the empowerment of citizens and the protection of their rights. Arbitrary access to bank accounts infringes upon the right to privacy, a cornerstone of individual freedom. A government granted unchecked authority risks transforming into an entity that undermines the very principles of a democratic society, as citizens become subjects of unwarranted surveillance.

Moreover, the potential for abuse in such a system is profound. History has shown that unchecked power can lead to authoritarianism, with governments exploiting broad authority for personal, political, or discriminatory purposes. Citizens must resist any erosion of checks and balances that prevent the abuse of power, as arbitrary actions have the potential to oppress individuals, stifle dissent, and foster an environment of fear.

The right to privacy and protection against arbitrary intrusion is not only a legal safeguard but a critical component of personal autonomy. Citizens should resist any encroachment on this autonomy, as it underpins the ability to freely express opinions, engage in private transactions, and lead lives without fear of unwarranted government interference. A collective stand against arbitrary access to bank accounts is a defence of the very essence of individual liberty.

After receiving the letter, Baroness Jones raised the issue in the House of Lords:

💷 @GreenJennyJones: "Would MPs be okay if the banks had the ability to raise red flags on THEIR accounts?"

Bank spying powers are being justified as a measure to deal with benefit fraud.

This unprecedented invasion of our financial privacy must end. pic.twitter.com/IKMJb1zuY7

— Big Brother Watch (@BigBrotherWatch) January 7, 2024

Also speaking in the House, Lord Prem Sikka said:

“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. The government has already undermined people’s right to protest and withdraw labour, now comes snooping and 24/7 surveillance of the bank, building societies and other accounts of the sick, disabled, elderly, poor and unfortunate – all without a court order.”

The Palantir Connection

There is, of course, a US angle to this story. In August 2023, The Guardian reported that the CIA-seed funded Silicon Valley firm Palantir had written to Tom Pursglove, the UK disabilities minister, to brief him on technology it had developed, promising that it could help the Department for Work and Pensions (DWP) rapidly “recover large amounts of fraud”.

For the moment there is no confirmation that Palantir will actually be providing the technology for the DWP’s financial data dragnet, but the timing is suspicious. If true, it means that Palantir will be simultaneously managing the health data of around 50 million NHS patients, helping the UK government hunt down benefits cheats by spying on the financial data of potentially millions of working and middle class families, and providing data services to the UK military. That is a lot of sensitive data for one company to handle, especially one so closely tied to the US military-intelligence industrial complex.

I have said this in a previous post but it bears repeating: Since decoupling from the European Union, its rules and regulations, the UK government has taken the country in a progressively more authoritarian direction. This is, of course, a generalised trend among ostensibly “liberal democracies” just about everywhere, including EU Member States, as they increasingly adopt the tech-enabled trappings and tactics of more authoritarian regimes, such as restricting free speech, cancelling people and weakening the rule of law. But the UK is most definitely at the leading edge of this trend.

Unfortunately, the problem of unfettered financial surveillance is likely to get a whole lot worse rather than better if/when central bank digital currencies (CBDCs) go live. Given their programmable nature, CBDCs will make it even easier for commercial banks, through their prospective role as “public interface providers” (PIPs), to “de-bank” politically inconvenient customers, at the behest of the government or central bank, or impose other limits on people’s financial activity.

Governments and central banks in the West insist that digital central bank money will be convenient, safe and stable. They also promise never to use it as a tool of surveillance or control, that it will not be programmable, and that it will coexist with cash, not supplant it. But the word of most governments and central banks holds little weight these days.

Here’s Edward Snowden explaining why CBDCs are “extraordinarily dangerous,” using the Central Bank of Brazil’s smart contract with Ethereum (which we actually covered here last August) as a case in point:

👁️ "They can see every bill everywhere all the time"@Snowden explains why #CBDCs are extraordinarily dangerous to privacy as we know it.

YOU can email your MP to tell the Gov't to shelve plans for a UK Spycoin ⤵️https://t.co/p44pkJndDb

Credit | @Logos_network pic.twitter.com/qJUENhOggv

— Big Brother Watch (@BigBrotherWatch) January 5, 2024

If the Central Bank of Brazil’s recent actions provide a taste of some of the dark ways in which CBDCs could — and will, if launched — be used (i.e., to freeze, confiscate, or move funds belonging to an account holder), the British government’s actions offer an indication of who is likely to be on the receiving end most of the time (i.e., the working and middle classes, and certainly not the political, financial and business elite). That is probably why there is still no public debate, let alone consultation, regarding their development and eventual roll out.