The article quoted in the OP specifically says that,
Convicted benefits cheats who fail to pay back the taxpayer could be stripped of their driving licences, under government plans to crack down on fraud.
If someone is guilty of genuine benefit fraud, they should really be facing a prison sentence, rather than the threat of their driving licence being removed.
Having said that, the benefits system is complex and it's very easy to fall foul of the rules. I'm not sure that I trust the government and its agencies to properly differentiate between actual benefit fraud, a simple misunderstanding of the rules by claimants and payments that are incorrectly calculated by DWP (Department of Work and Pensions) staff.
It wasn't so long ago that there was an issue with claimants of Carers Allowance:
Some carers had to pay back thousands of pounds to the government, pushing them into financial distress.
www.bbc.co.uk
Carers have said they were not aware they had been wrongly overpaid the benefit because many did not realise they had exceeded the earning limit for it - which is capped at £151 a week, or just over 13 hours work on the minimum wage.
The government gives an £81.90 allowance for people who care for someone for more than 35 hours a week. But anyone who earns even a few pence more than £151 a week from other work is required to repay all of their Carer's Allowance.
The DWP is utterly ruthless when it decides to reclaim overpayments. My mother was encouraged to put in a claim for Pension Credit and it was awarded. However, it failed to take into account the small Forces pension that she received, despite that income being declared from the outset. If my mum had been in debt to a bank or a credit card company, they'd have been obliged to take into account her ability to pay the debt back; not so with the DWP - it tried to claw back the money in as short a time as possible and there was no negotiation.
My mum didn't drive, but I'd be horrified if someone like her was deprived of their driving licence because of some bureaucratic blunder.