A disabled former police officer has won a legal challenge against the Department for Work and Pensions over its policy of allowing utilities to automatically deduct hundreds of pounds a year from individuals’ benefits without their consent.
Helen Timson, 51, from Leicester, claimed it was illegal and immoral that the DWP allowed water and energy companies to deduct up to 25% of a claimant’s monthly benefit income at source without carrying out any checks on the claimant. Hundreds of thousands of claimants are believed to be covered by the deductions.
The High Court ruled that the DWP’s operation of the scheme was unlawful because officials’ failure to give the plaintiffs an opportunity to contest the firms’ request meant they were unable to determine whether the deduction was in the plaintiffs’ best interests.
The judge, Mr Justice Cavanagh, said the failure to allow claimants to provide evidence to DWP officials about whether the deduction was affordable, whether the debt was owed at all or to discuss more favorable alternative repayment methods was a “breach of the duty of fairness ”.
Timson had had benefits deducted on several occasions without her consent. Once an energy company wrongly deducted £81 a month for a year and a half for a non-existent debt. When she asked the DWP to stop the deductions, it refused, contrary to its own guidance, claiming it had no power to do so.
On another occasion, she challenged a benefit deduction made by Southern Water in respect of arrears and current consumption. When the deduction was eventually removed and replaced with a more manageable standing order scheme, her debt payments were reduced by £31 a month.
Timson, who is unable to work due to physical and mental health conditions, said it was far from in her best interest to have the deductions made, it had left her with little control over her finances and made it difficult to buy enough food , pay the rent or afford to travel to hospital appointments.
She said she was “over the moon” at the ruling, adding: “The fact that the DWP now have to seek representations from benefit claimants before making the decision to withdraw money from their benefit is the least they should have done.”
The court heard that utilities would claim third-party deductions by submitting Excel spreadsheets to the DWP listing the names of large numbers of customers who had fallen into arrears. These bundles of debtor names contained no information about the nature of the debt or the circumstances of the customers.
Although the DWP is only required to approve deductions if they are “in the interests of the claimant or their family”, the court heard officials gave the green light to the deductions without consulting or informing the claimant or making any attempt to assess whether it would be in the claimant’s best interests interests.
Timson’s lawyer, Emma Varley of Bindmans LLP, said the DWP now needed to change the way it ran the scheme to ensure claimants were informed about and able to challenge the utilities’ deduction claims
Persons claiming legacy benefits are potentially covered by the third party deduction scheme. The court heard DWP figures that just under 200,000 deductions were made for water debts in May 2021 and 63,000 for gas and electricity debts in February this year.
A spokesperson for the DWP says so: “We are carefully considering the verdict and will respond in due time.
“The third party relief scheme strikes a fair balance between ensuring that undisputed debts to essential utilities are paid and helping to protect vulnerable people and their families by protecting them from the potentially serious consequences of failing to deal with those debts.”