Rent arrears deductions from universal credit payments cause extra hardship and should be reduced
Universal credit (UC) is now being rolled out across the country, albeit much more gradually than its political architects wished. Legal Action believes the rules around deductions from the benefit for debts owed to third parties, including social landlords, are being applied inconsistently across the country by the Department for Work and Pensions (DWP) and are further impoverishing benefit claimants.
Combining six existing social security benefits into one payment has proved to be a complex task. UC was a flagship policy announced by Iain Duncan Smith at the Conservative party conference in 2010. The process of introducing the new benefit to all parts of the country was supposed to have been completed by next year, but IT and other problems have put forward the timetable. According to the latest forecast from ministers, it will be March 2022 before the job of implementing UC has been completed.
The Universal Credit Regulations 2013 SI No 376 (UC Regs) allow for deductions of up to 40 per cent from the basic ‘standard allowance’ (reg 111), the part of the benefit that covers living costs. For single claimants under 25, this can mean they are left with £151.06 a month to pay for expenses such as food and fuel.
In some areas, the rules are being applied such that claimants are left with little or no money to live on. A solicitor in the south of England who spoke to Legal Action said they have come across cases in which the DWP has deducted 40 per cent from the allowance for arrears of rent (which falls under ‘housing costs’ in the UC Regs) and much of what remains to recover short-term advances of UC. The DWP has denied that over 40 per cent of any claimant’s benefit will be deducted.
Meanwhile, a large Citizens Advice service in the north of England reports seeing some clients who have suffered the 40 per cent deduction for rent arrears, but that in most cases the figure is 20 per cent. Another Citizens Advice service approached by Legal Action said that while the DWP locally appeared to want to set 40 per cent as a standard amount to be paid towards rent arrears, social landlords in the area were insisting that such payments were lowered to more affordable levels.
Single claimants under 25 can be left with £151.06 a month to pay for expenses such as food and fuel.
In two county courts, it seems social landlords are seeking suspended possession orders (SPOs) despite the fact that tenants are having deductions made from UC for arrears of rent at 40 per cent. District judges in these courts have been unwilling to depart from the arrangement when granting SPOs. The DWP argues it does not have the power to deduct a lesser sum, as the amount is set by the secretary of state and claimants have a separate right of appeal on this to a tribunal (see below).
Barrister Desmond Rutledge believes the root of the problem is that the changes to social security law have introduced deductions for rent arrears at a higher rate than the courts have previously used. The current rate of deductions for rent arrears of £3.70 a week is based on five per cent of the personal allowance for the mainstream means-tested benefits (income support, income-based jobseeker’s allowance and income-related employment and support allowance) that UC replaces. According to Rutledge, where more than one deduction for payment to a third party is being made from an individual’s award of UC (eg for council tax arrears, repayment of eligible loans, or fines), the upper limit of 40 per cent should apply. However, the statutory language makes it clear the DWP has discretion to apply deductions at a lower rate, and in the case of third-party deductions (which include housing costs) claimants have the right to appeal the level set.
All of the housing specialists to whom Legal Action has spoken regarding this issue, including LAG housing law authors Diane Astin and John Gallagher, believe what is happening in some county courts appears to contravene the Pre-Action Protocol for Possession Claims by Social Landlords. If an agreement has been reached to cover the arrears of rent through a deduction from benefits, a landlord should not be seeking a SPO (as one of the main aims of the protocol is to encourage such negotiated arrangements to avoid court action) and the court should not be granting one, since it cannot be reasonable to do so. This, in turn, is based on established case law to the effect that courts should take into account the ‘very important factor’ of an arrangement for direct payments to the landlord (Second WRVS Housing Society Ltd v Blair (1987) 19 HLR 104 (CA)).
The Pre-Action Protocol for Possession Claims by Social Landlords also states that they should try to ‘agree affordable sums’ to be paid towards rent arrears (para 2.2). Legal Action suggests that a deduction of 40 per cent, or even 20 per cent, is far from being affordable for any claimant. The DWP has confirmed that these decisions are currently a matter for local Jobcentres. Legal Action believes the DWP should adopt a national policy of only allowing, in most circumstances, a five per cent deduction of the standard allowance for UC, which is more in line with the level of deductions made from the benefits it is intended to replace. Anything else risks already very poor people having to make impossible choices between necessities like food and keeping a roof over their heads.

About the author(s)

Description: Steve Hynes
Steve Hynes is a freelance consultant and writer. He was previously director of LAG. He is a well-known commentator in the written and broadcast media...