Alison McGovern said it would provide an additional “tool in the box” to chase repayments.

The Department for Work and Pensions (DWP) has warned benefits claimants who owe at least £1,000 and fail to repay it could face stringent new measures, including a driving ban.

The DWP stated that revoking claimants’ driving licences would be a last resort. Those who repeatedly cheat the system and have debts of £1,000 or more could be punished with a driving ban of up to two years.

Labour Party Work and Pensions Minister Alison McGovern said it would provide an additional “tool in the box” to chase repayments.

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The plans also include new powers to force banks to hand over account information about benefit claimants to help target investigations, echoing a scheme announced by the previous Conservative Party government.

Pressed on whether the power to disqualify drivers would provide an additional deterrent, McGovern told BBC Breakfast it would provide a “backstop” to chase repayment from those determined to “evade collection”.

Ms McGovern, who was providing an update back in January for millions who claim benefits, added that the department already tries to collect fraudulently claimed benefits via banks or the PAYE system, but the licence powers could help with those who still “don’t want to co-operate”.

The directors of Big Brother Watch and Age UK described the plans as “mass financial surveillance powers” which they said would “represent a severe and disproportionate intrusion into the nation’s privacy”.

Labour has pledged that only “very limited information” will be shared with the department under its crackodnw. DWP minister Andrew Western confirmed last year this will include cases where claimants are “living abroad” without notifying the department, although a timeframe for this has yet to be specified.

Accounts could also be flagged if they are holding more than £16,000, the usual savings limit for being able to claim Universal Credit, it has been warned.