Since 2017, the Department for Work and Pensions (DWP) has deducted tenants’ UC at the request of their landlord if the claimants are in rent arrears.
However, the High Court last month found the deductions are “procedurally unfair”, and hence “unlawful”, as the tenants themselves were not being consulted in the process.
Up to 10.3 million deductions for rent and service charge arrears, worth £479m, have been made via the process, official data obtained by The i Paper through freedom of information laws shows.
Emma Varley, associate at the legal firm Bindmans, which led the case, said: “The impact of the court’s decision is that the DWP, as a matter of procedural fairness, must now ask UC claimants what they think about the proposed deduction before it is made.
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Read MoreThe DWP did not comment on whether compensation will be paid to claimants whose benefits were deducted through the process, but reforms in the way deductions are made are expected in light of the ruling.
“This Labour Government is going to do things differently.”
This process, which does not apply to private renters, was also deemed unlawful in the High Court case.
Polly Neate, chief executive of the housing charity Shelter, described the deductions as “cruel”, adding that they risk pushing people into further financial distress.
“Renters who depend on housing benefit are facing large shortfalls, forcing them to cut back on essentials or skip meals to keep a roof over their heads. Many people use Universal Credit payments to make up the difference which makes unexpected deductions – sometimes made even if they don’t owe rent arrears – especially cruel, pushing people deeper into financial distress.
“But to end the housing emergency for good, the Government must invest in social homes with rents tied to local incomes in the June Spending Review – we need 90,000 a year for ten years.”
“In April, we are introducing a Fair Repayment Rate for Universal Credit meaning that the maximum amount of someone’s benefits that can be deducted, including for rent arrears, is reducing from 25 per cent to 15 per cent.”
DWP Secretary Liz Kendall is believed to be pushing to re-invest much of the money saved into expanding back-to-work programmes for the long-term sick.
Benefit claimants may also have to open up their bank accounts to the Government under plans being considered by ministers to crack down on welfare fraud.
Labour’s plans for benefits
Reforms to the benefits system will be unveiled in the spring as the Government tries to get to grips with the soaring welfare bill.
These changes will be outlined in a Green Paper, which is expected to include an overhaul of Personal Independence Payments (PIP) and other disability benefits.
A review of the eligibility criteria for PIP to reduce number of people entitled to the benefit is expected as part of the reforms.
Meanwhile, Chancellor Rachel Reeves has already announced that she will make savings the previous Conservative government put forward involving reforms of the work capability assessment (WCA).
The Work and Pensions Secretary Liz Kendall will put forward Labour’s own proposals in the spring, but concerns have been raised that hundreds of thousands of people with mobility and mental health problems may have their benefits slashed under the plans.
Reported reforms under consideration would include tightening welfare eligibility rules, cutting the benefits of more than 400,000 people, costing them up to £4,900 a year.
The plans, developed under the Tories, are estimated to save £2.8bn, but have been condemned by disability charities as being a “reckless and dangerous” way to raise funds.
The moves comes as part of the Government’s pledge to carry out “the biggest fraud crackdown in a generation“.
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Read More“The Government is bringing forward the biggest fraud crackdown in a generation, saving the taxpayer £1.5 billion over the next five years, part of wider plans that will save £8.6 billion by 2030,” The DWP said.
Jasleen Chaggar, the legal and policy officer at Big Brother Watch, a privacy campaign group, said the plans would yield “unprecedented financial intrusion”.
Labour’s Renters’ Rights Bill is set to expand protections for private renters, including by allowing them to stay in their home until they decide to end the tenancy by giving two months’ notice.
Under the proposed legislation, the threshold for eviction will be increased from two to three months’ arrears, while the notice period will rise from two to four weeks.
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