A High Court ruling has mandated that the Department for Work and Pensions (DWP) must overhaul its approach to deducting housing costs from Universal Credit payments. The court found that the DWP's practice of automatically approving landlord requests to take money from Universal Credit payments without consulting claimants is "unfair" and "unlawful".
As a result, the DWP will now be required to communicate with claimants before redirecting funds from their payments to landlords for supposed rent arrears. The legal challenge against the DWP was brought to court on January 16, 2025, by a Universal Credit recipient and tenant named Nathan Roberts.
In early 2024, he experienced more than £500 being subtracted from his Universal Credit payment upon his landlord's request. At that time, Nathan, who holds a law degree and previously worked in a police control room, was embroiled in a dispute with his landlord over claimed neglect in property repairs.
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Nathan's Universal Credit income amounted to £1,218 monthly, which comprised a basic allowance of £364.74, a housing element of £459.64 for rent, and an additional £390.06 due to his disabilities.
The landlord informed the DWP that he was owed two months' rent, putting the tenant at risk of eviction should the arrears increase. In such situations, the DWP deducts money from a person's monthly payments to cover the rent and reduce the arrears, aiming to prevent debt escalation, reports the Mirror.
Nathan was notified by the DWP that his housing component would be stopped, with an additional deduction of £44.74 to address the rental arrears. Nathan contended that the DWP had sanctioned the deduction without considering whether it was in his best interest and had not initially informed him about the application for the deduction.
He maintained that he had no arrears and was engaged in a "genuine rent dispute" with the landlord regarding the property's habitability. Nonetheless, the DWP's actions were intentional, reflecting department policy.
DWP decision-makers are directed by a computer program to enter specific data, and the system dictates the outcome. Claimants are not contacted prior to decisions, which are often automatically approved for both social and private landlords.
A legal representative from Garden Court North Chambers representing Nathan stated that the DWP could be making "hundreds of thousands of deductions" from Universal Credit annually without prior consultation with individuals, describing the practice as "clearly arbitrary and an abuse of process."
The case presented the argument: "Even if in theory the decision maker could unplug the computer and exercise their own discretion, the reality is that its instructions will be followed. The computer program is in effect a highly directive policy."
Mr Justice Fordham criticised the current system where tenants who receive Universal Credit and could be negatively impacted by deductions for rent arrears and rent diversion have no chance to offer their viewpoint before these deductions are sanctioned. He pointed out that this method excluded and disenfranchised the tenants.
Moreover, Justice Fordham mentioned there was a "real possibility" that DWP officials might be influenced by the computer into sanctioning deduction requests without considering if postponing or refusing the request would serve the tenants' best interests, as they were only hearing "one side of the story". In relation to Nathan's case, he noted in situations such as a dispute over repairs, when withholding rent could be the "only leverage which a tenant has," DWP officers could inadvertently undermine the tenant's legal safeguarding.
While claimants do have the right to contest these decisions, the process is drawn out and internal, suggesting reversals of the deductions could take months even if they are successful.
He pointed out that there were "real-world impacts" on tenants who, despite possibly winning challenges through lengthy internal DWP appeal processes, would not see the deductions reversed for months, resulting in them receiving less benefit. Nathan had his appeals against the DWP decisions rejected three times after a three-month deliberation.
However, the verdict was overturned shortly after the DWP learned that legal action was being taken against it. Following the recent ruling, the DWP is now required to include tenant safeguards within these procedures, potentially shielding "tens of thousands" of tenants annually.
A spokesperson for the Department for Work and Pensions stated: "We are now carefully considering this judgment. Millions of people rely on our welfare system every year and it is vital that it can be accessed by all who need it."
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