The Department for Work and Pensions (DWP) has issued a major update to those who pay rent and claim Universal Credit.
The department announced this week that it was going to examine the controversial system, which automatically lets landlords take a cut of a claimant’s benefit to cover rent arrears. The move comes after a major high court ruling last month that described the system as “unfair” and “unlawful.”
Currently, a computer program automatically approves landlord requests to deduct up to a fifth of someone’s monthly Universal Credit payments for outstanding rent repayments without them being consulted by either their landlord or DWP. this practice led to major concerns that the system – which aimed at helping people avoid issues with their landlords such as eviction – may be pushing the poorest into further debt.
The DWP was taken to court over this by one Universal Credit claimant called Nathan Roberts, who had over £500 docked from his benefit payment at the request of his landlord, who claimed he owed two months of rent payments. However, at the time, the claimant – who is a law graduate and former police control room worker – was in a dispute with his landlord over its alleged failure to carry out repairs.
Nathan was receiving £1,218 a month from Universal Credit, which included a standard allowance of £364.74, a £459.64 housing component for rental costs, and a £390.06 incapacity top-up for his disabilities. At the time, the DWP informed Nathan that he would no longer be receiving his housing component, and a further deduction of £44.74 would be taken on top to clear the rental arrears.
Claimants can challenge the decision. However, this requires a lengthy internal process, which means they would not be able to reverse the deductions for potentially several months if successful.
Nathan argued that the DWP had accepted the deduction without asking him if it was in his best interest and had failed to inform him of the deduction application in the first place. He also said that he did not have any arrears and that he was in a “genuine rent dispute” with the landlord over the habitability of the property.
In the hearing, the judge said that in a dispute over repairs, where withholding rent may be the “only leverage which a tenant has,” DWP decision-makers may “unwittingly and unknowingly” damage the tenant’s protections. He added that there were “real-world impacts” on tenants, who, even if they successfully challenged the decision through lengthy internal DWP appeal processes, would not be able to reverse the deductions for months, during which they would be on reduced benefit. The Work and Pensions Secretary confirmed this week that the DWP would not appeal the court decision.
The department will now examine this process and consider better ways of ensuring landlords receive the rent they are owed in a “fair and proportionate” way while benefit claimants are protected from falling into debt. The move comes as the DWP works to “fix the broken welfare system to make it fairer and ensure it improves living standards which will unlock economic growth”.
Work and Pensions Secretary Liz Kendall said on Tuesday that the department was determined to “right the wrongs” that have persisted in the benefits system for “too long”. She said: “The automatic approval of landlords’ requests for tenants’ benefits to be deducted is one of these.
“As well as urgently reviewing this system, I am bringing forward major changes to the health and disability benefits system so that it works for everyone, underpinned by the biggest employment reforms in a generation. We will continue to listen to people’s concerns, and transform our benefits system to one of fairness, not punishment.”
The Minister for Social Security and Disability, Sir Stephen Timms MP, added: “The benefits system needs urgent reform and we are taking action across the board to do this – whether that’s tackling the huge accumulation of debt by Carer’s Allowance recipients through no fault of their own, or this automatic deduction of benefits purely at the request of a landlord.
“Combined with our efforts to Get Britain Working and our upcoming health and disability benefits reform, all of this will lead to better support for those who need it, and open doors for those who can work.”
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