A disabled former police officer has won a legal challenge against the Department for Work and Pensions over its policy of allowing utility companies to automatically deduct hundreds of pounds a year from individuals’ benefits without their consent.
Helen Timson, 51, of Leicester, argued it was unlawful and immoral that the DWP enabled water and energy firms to draw down up to 25% of a claimant’s monthly benefit income at source without undertaking any form of check with the claimant. Hundreds of thousands of claimants are understood to be subject to the deductions.
The high court ruled the DWP’s operation of the scheme was illegal because officials’ failure to give claimants the opportunity to challenge the firms’ request meant they could not be in a position to decide whether the deduction was in the claimants’ interests.
The judge, Mr Justice Cavanagh, said the lack of opportunity for claimants to provide DWP officials with evidence as to whether the deduction was affordable, whether the debt was even owed, or to discuss more favourable alternative repayments methods was a “breach of the obligation of fairness”.
Timson had suffered benefit deductions on several occasions without her consent. One one occasion an energy company wrongly deducted £81 a month for a year and a half for a nonexistent debt. When she asked the DWP to stop the deductions, it refused, in contravention of its own guidance, arguing it had no power to do so.
On another occasion, she challenged a benefit deduction made by Southern Water in respect of arrears and ongoing usage. When the deduction was eventually removed and replaced with a more manageable standing order arrangement, her debt payments reduced by £31 a month.
Timson, who is unable to work because of physical and mental health conditions, said that far from it being in her interests to have the deductions made, it had left her with little control over her finances, and made it difficult to buy sufficient food, pay the rent or afford to travel to hospital appointments.
She said she was “over the moon” about the judgment, adding: “The fact that the DWP now need to seek representations from benefit claimants before making the decision to deduct money from their benefit is the very least that they should have been doing.”
The court heard that utility companies would request third-party deductions by submitting Excel spreadsheets to the DWP containing the names of large numbers of customers who had fallen into arrears. These bundles of debtor names contained no information on the nature of the debt or the customers’ circumstances.
Although the DWP is required to approve deductions only if they are “in the interests” of claimant or their family, the court heard officials green-lighted the deductions without consulting or informing the claimant, or making any attempt to assess whether it would be in the claimant’s interests.
Timson’s solicitor, Emma Varley of Bindmans LLP, said the DWP would now have to change the way it operated the scheme to ensure claimants are informed about, and able to challenge, utility firms deduction requests
People claiming legacy benefits are potentially subject to the third-party deductions 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 DWP spokesperson said: “We are carefully considering the judgment and will respond in due course.
“The third-party deductions scheme strikes a fair balance between ensuring uncontested debts for essential utilities are paid, and helping protect vulnerable people and their families by shielding them from potentially severe consequences of failing to address these debts.”