The Department for Work and Pensions (DWP) has announced plans to scrap its controversial computer system, which has automatically deducted benefit payments from claimants to cover rent arrears without their consent.
The decision follows a legal ruling that found the system to be unlawful, raising questions about the fairness of deductions made over the years. However, the DWP has not confirmed whether affected claimants will receive compensation.
Unlawful
The deduction system, in place since 2017, has processed around 10.3 million requests, deducting a total of £479 million from Universal Credit claimants. This system allowed landlords to request up to 20% of a claimant’s benefits for rent arrears, with no requirement for the tenant’s consent.
A legal case brought by Nathan Roberts, a private tenant whose benefits were deducted without his agreement, led to the High Court ruling against the DWP. Judge Mr Justice Fordham described the system as “unfair”, warning that DWP agents may have been making decisions based on the computer program, rather than evaluating what was in the claimant’s best interest.
Following the ruling, Work and Pensions Secretary Liz Kendall announced that the system would be scrapped and reviewed, stating:
“I will right the wrongs that have persisted in the benefits system for too long.”
However, while the system will be replaced, the DWP has not confirmed whether claimants affected by past deductions will be compensated.
Impact
The system was intended to prevent evictions, ensuring rent was paid directly to landlords. However, critics argue it may have pushed vulnerable claimants into deeper financial hardship by deducting large amounts from their already limited benefits.
The DWP is now reviewing alternative methods to ensure landlords receive their rent payments without unfairly penalizing claimants.
Compensation Cases
This is not the first time the DWP has faced legal challenges over Universal Credit deductions.
- Earlier this year, the department was ordered to compensate 57,000 benefit claimants, with average payments of £5,000 each. This followed a separate ruling that certain disability benefit recipients were not adequately protected during their transition to Universal Credit.
- In response to Nathan Roberts’ case, the DWP refunded his deducted benefits, admitting they were taken in error.
Despite these precedents, the DWP has not yet confirmed if similar compensation will be provided to others affected by the deduction system.
What Happens Next?
The DWP’s decision to scrap the system is a step forward in addressing unfair benefit deductions, but questions remain.
| Key Issue | Current Status |
|---|---|
| System scrapped? | Yes, the program will be replaced. |
| Will past deductions be refunded? | No confirmation from DWP yet. |
| Alternative system planned? | Under review, details not announced. |
| Further legal action possible? | Potentially, if claimants seek compensation. |
Emma Varley, the lawyer representing Mr. Roberts, welcomed the change but emphasized the need for greater accountability:
“The DWP’s engagement in the outcome of this case is a positive – if belated – step. The call for better decision-making can no longer be ignored.”
With mounting pressure, the DWP may face further scrutiny over whether claimants whose benefits were wrongly deducted should receive compensation.
For now, those affected should stay informed and watch for future announcements from the DWP.
FAQs
Why is the DWP scrapping the deduction system?
The system was ruled unlawful as it deducted benefits without claimants’ consent.
Will affected claimants receive compensation?
The DWP has not confirmed whether past deductions will be refunded.
How much money was deducted from claimants?
Around £479 million has been deducted through 10.3 million requests since 2017.
What was the main issue with the system?
It allowed landlords to request deductions without informing the claimant.
What changes will replace the system?
The DWP is reviewing new methods to ensure fairer rent payment solutions.
