DWP's major Universal Credit change to affect millions
A landmark High Court ruling has mandated that the Department of Work and Pensions (DWP) must overhaul its approach to deducting housing costs from Universal Credit payments. The court found the current system, which allows landlords to automatically have money deducted from a tenant's Universal Credit without DWP officials consulting the claimant, to be "unfair" and "unlawful".
Consequently, the DWP will now be required to engage 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 Nathan Roberts, a Universal Credit recipient and renter.
In early 2024, Roberts had more than £500 taken 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 disagreement with his landlord over claimed neglect of property repairs.
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His Universal Credit income amounted to £1,218 monthly, which included a standard allowance of £364.74, a housing element of £459.64 for rent, and an additional £390.06 due to his disabilities. The landlord's claim of being owed two months' rent put the tenant, Nathan, at risk of eviction due to growing arrears.
To prevent further debt, the Department for Work and Pensions (DWP) can deduct money from a person's monthly payments to cover rent and repay arrears, reports the Mirror. Nathan was informed by the DWP that his housing component would cease and an additional £44.74 would be deducted to clear the rental arrears.
Nathan contested the DWP's decision, arguing they had not considered whether the deduction was in his best interest nor had they initially informed him about the application for the deduction. He maintained there were no arrears and that he was engaged in a "genuine rent dispute" with the landlord regarding the property's habitability.
Despite Nathan's claims, the DWP's actions were part of its policy. Decision makers at the DWP follow a computer program's guidance on inputting information and are presented with the outcome to determine.
Claimants are not consulted prior to these decisions, which are often automatically approved for both social and private landlords. A legal representative from Garden Court North Chambers representing Nathan suggested that the DWP might be making "hundreds of thousands of deductions" from Universal Credit recipients annually without prior verification, describing it as "clearly arbitrary and an abuse of process."
The case presented the argument that: "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 expressed concerns over the current system, deeming it unfair towards Universal Credit tenants facing rent arrears deductions and rent diversion requests without a chance to argue their case. He pointed out that the process left tenants disempowered and excluded.
Additionally, Justice Fordham mentioned a "real possibility" that the computerised system might be directing DWP officials to sanction deduction requests without full consideration of tenants' interests, hearing only "one side of the story". In Nathan's specific scenario, the judge highlighted that rent withholding, as a last recourse for tenants in repair disputes, could be jeopardised by uninformed DWP decisions.