By james art Rachel Reeves said she wanted to ensure welfare spending was “more sustainable”.
Labor has previously said fraud and error in the social security system costs the government almost £10bn a year.
A July report by the Department for Work and Pensions (DWP) said public attitudes to fraud were “softening” with the effects being felt across the multi-billion pound benefits system.
The £266.1bn welfare budget “is a deliberate target for both organized crime groups and opportunistic individuals”, the department’s annual report warned.
On Wednesday, the new Labor government’s first budget said its package of measures to tackle fraud would save £4.3 billion a year by the end of 2029-30.
Mrs Reeves said: “Today I can announce a crackdown on fraud in our welfare system, which is often the work of criminal gangs.
“We will expand the DWP’s anti-fraud teams, using innovative new methods to prevent illegal activity and provide new legal powers to tackle fraudsters, including direct access to bank accounts for debt recovery.”
The government also said it would introduce reforms to health benefits and disability benefits early next year “to ensure the system supports people who can work to stay in or start work in a way that is fair and fiscally sustainable’.
Ms Reeves told the House of Commons that her party had “inherited the last government’s plans to reform the Work Capability Assessment (WCA)” and pledged to “deliver these savings as part of fundamental reforms to the health and benefits system disability”.
Under the Conservative proposals, welfare eligibility would have been tightened so that around 400,000 more people on long-term write-offs would be assessed as needing to prepare for work by 2028/29, reducing the bill for benefits of approximately £3 billion.
The Government’s £240m Get Britain Jobs package has already been announced ahead of Budget day, with the Treasury saying it will include work, skills and health support for disabled and long-term ill people.
The Joseph Rowntree Foundation, a social change organisation, said the government had “failed to explain how they will save £3bn from the benefits bill”, meaning people on welfare have been left with “no security and more anxiety , instead of the respect they deserve”.
Disability charities, including United Response, which supports people with intellectual disabilities, people with autism and people with mental health needs, accused Labor of maintaining negative rhetoric about welfare.
Saphir Beamish, its head of communications, said: “It is the wrong decision to continue with the rhetoric around tightening workability assessments alongside a ‘fraud crackdown’.”
“Negative framing of welfare continues to stigmatize and increase anxiety for people with intellectual disabilities who feel frustrated that the focus is on saving money rather than helping people with disabilities.”
James Taylor, executive director of strategy at disability equality charity Scope, welcomed the investment in localized disability employment support but added: “Making changes based on savings rather than disability support , it will be catastrophic.”
He added: “Strengthening restrictions will not help more disabled people into work, it will only make their lives more difficult.”
With details of the reforms not expected until 2025, he said “disabled people are once again in the dark about the future of the benefits system, creating a huge amount of anxiety”.
Richard Cramer, chief executive of Sense, said the decision to continue the previous government’s reforms was “deeply worrying for disabled people” and “risked undermining the well-being of disabled people” with potentially “devastating” consequences.
Anti-poverty charity Z2K described the decision as “bitterly disappointing” as it expected disabled people living in poverty to “bear the brunt of these cuts”.
The charity said: “The Government has said it wants to restore trust between the DWP and disabled people. But reverting to the same old failed approach of reducing income seriously jeopardizes these efforts before they’ve even begun.”
Also on Wednesday, Work and Pensions Secretary Liz Kendall confirmed in a written statement that benefit rates, including Universal Credit, will be increased by 1.7% from April across Britain, in line with the rise in the Consumer Price Index (CPI). .
Chief Secretary to the Treasury Darren Jones also confirmed in a written statement that Child Benefit rates will rise in the UK from April in line with CPI.
This will bring the rate for the eldest child to £26.05 per week from £25.60 and for the other children to £17.25 per week from £16.95.
Meanwhile, the increase in the Carer’s Allowance weekly earnings limit to the equivalent of 16 hours on the national wage – described by Ms Reeves as the biggest increase since the allowance was introduced in 1976 – has been welcomed by charities.
The new cap, which means a carer can now earn more than £10,000 a year while receiving the allowance, will allow around 60,000 more carers to access the financial help, the government said.
The Carers Trust said the move gave hope to many and insisted it should be among the “first steps towards a desperately needed overhaul of this grossly inadequate benefit”.