Universal Credit secret cuts hit-list revealed as DWP claws back benefits with penalties. The Government insists debt deductions are done in a way that protects vulnerable claimants.
An astonishing Universal Credit benefit cuts hit-list has been revealed. The debt management guide – shown to Birmingham Live by the DWP and detailed below – indicates how the Department for Work and Pensions has made clawing back cash through sanctions its No 1 priority.
These financial penalties are imposed if it believes claimants have broken the rules – such as failing to turn up to jobcentre appointments.
But in one case the DWP sent appointment letters to the wrong address and in another a sanction was imposed on a Birmingham claimant following two ‘missed appointments’ with a work coach, despite evidence from a doctor that they were too ill to attend.
And one crane driver who lost his job was forced to eat from bins and steal from supermarkets because of a Universal Credit blunder.
Ryan Webb said his local jobcentre halted his UC payments after he failed to turn up for a meeting – even though they only sent details of the appointment a month after it was supposed to take place.
But the DWP insists its deductions are designed to protect vulnerable claimants from falling into poverty. Those on the new benefit face also face cuts to their payments to pay back arrears such as overdue rent, utility bills and council tax.
How many claimants are hit
More than half of Universal Credit claimants have had their payments cut, figures have shown.
It was revealed earlier that 532,000 Universal Credit claimants had some of their payments deducted in October 2018. Six thousand claimants had reductions of 40 per cent of their allowance or more, while 129,000 claimants had deductions of between 31 and 40 per cent.
How local authorities are also affected
The way in which debts are reclaimed is also having an impact on local authorities.
Councils are now finding it more difficult to recover some of the cash they are owed – such as unpaid council tax – because it has moved further down the DWP’s list of debt recovery priorities.
In many cases, people are already paying back the maximum amount in deductions and so these other debts cannot be recovered.
What Birmingham City Council said
Birmingham City Council is currently trying to recover millions of pounds in such debts.
Tim Savill, assistant director of revenues and benefits at the city council, said in a report that the authority was trying to crack down on rent arrears and added: “The rollout of full service UC is starting to impact on other related areas of council financial activity – council tax collection and housing benefit overpayment recovery.
“The council can apply to the DWP to recover unpaid council tax from certain state benefits.
“Prior to the introduction of UC, deductions could be made from Income Support, Job Seeker’s Allowance, Pension credit and Employment and Support Allowance.
“The amounts deducted have a statutory limit of £3.70 per week.
“If other debt is being recovered through this method, the DWP operates a priority order. There is also a ceiling on the maximum weekly recovery level of all debts – once reached, other debts are held.
“Under UC, council tax has moved down the priority order of debt to be recovered. There are a number of debts which are to be repaid ahead of those in the priority schedule such as fraud penalties and the UC advance loan repayment.
“Since UC full service has been implemented the council has only been successful in receiving deductions on 2,200 of the 7,500 cases with an outstanding debt. A total of £1.4 million of debt is awaiting recovery – and it is not known when this will be recovered.”
He added: “Recovering housing benefit (HB) overpayments has also become more difficult. “Applications for HB debt recovery through UC can be made in a similar way to council tax.
“Housing Benefit Fraud overpayments are the 17th priority, Housing Benefit normal overpayments are the 19th priority out of a total of 23 possible deductions. This means in many cases no recovery action is possible as the maximum debt threshold has been reached before HB overpayment deductions can commence.
“The council currently has nearly £10 million debt awaiting recovery from UC. This debt would previously have been recovered at £11.10 per week from housing benefit.”
The DWP response
A DWP spokesman told Birmingham Live: “Priority of deductions are carefully designed to protect vulnerable claimants. The top priority is paying rent and fuel arrears, to keep people in their homes, warm and with the lights on – council tax payments are a lower priority.
“Universal Credit has a co-ordinated approach to making deductions from benefits, simplifying the current complex arrangements.”
DWP documents say The Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Claims and Payments) Regulations 2013 Schedule 6 states what deductions may be made and what payments may be paid direct to third parties.
It also details the maximum amount deductible and the order of priority. The maximum amount that can be deducted from Universal Credit is an amount equivalent to 40 per cent of the claimant’s standard allowance.
There are two exceptions:
- Deductions for normal consumption of utilities do not count towards the 40 per cent maximum
- If a sanction or penalty is being applied, or if an advance is being recovered, priority deductions i.e. housing and fuel costs are still taken even if the total amount of deductions is higher than the 40 per cent
A maximum of three third party deductions are taken at any given time and if the claimant is receiving insufficient Universal Credit to meet the deductions the priority order listed below is applied.
The Universal Credit cuts hit-list – the secret priority list for deductions
This is how the DWP prioritises the recovery of deductions from Universal Credit. Sanctions imposed as a punishment for breaking conditions of a claim are clawed back first, then advances that have been paid to tide claimants over in the five-week wait for the first payment.
Families have recently been warned to watch out for a scam relating to the advance loans.
The DWP’s repayments priority list shows rent arrears seventh, energy bill debts eighth and council tax debts in ninth place.
Here it is in full:
1. Fraud Sanctions
2. Conditionality Sanctions
3. UC Advance of benefit (New claim or Change of Circumstances)
4. UC Advance of benefit (Benefit Transfer)
5. Budgeting Advance
6. Owner-occupier service charges arrears
7. Rent, including service charges, arrears (minimum deduction rate 10%)
8. Fuel arrears (Gas and/or Electricity)
9. Council Tax or Community Charge arrears
10.Fines or Compensation Orders (minimum deduction rate 5%)
11.Water charges arrears
12. Old Scheme Child Maintenance
13. Flat Rate Maintenance
14. Social Fund loans
15. Recoverable Hardship Payments
16. Housing Benefit and DWP Administrative Penalties
17. Housing Benefit, Tax Credit and DWP Fraud overpayments
18. Housing Benefit and DWP Civil Penalties
19. Housing Benefit, Tax Credit and DWP normal overpayments
20. Integration loan arrears
21. Eligible loan arrears
22. Rent, including service charges arrears (maximum deduction rate of up to a maximum 20 per cent, inclusive of the minimum 10% applied above)
23. Fines or Compensation Orders (maximum deduction rate of up to £108.35, inclusive of the 5 per cent applied above)