DWP to scrap system that let landlords deduct £480 million from tenants’ benefits

The department has not revealed whether compensation can be expected in the future. The DWP is set to scrap a controversial computer system that has automatically approved benefit deductions from millions of claimants at the request of private landlords.

Work and pensions secretary Liz Kendall has said she will “right the wrongs” of the deduction system after a judge ruled last month that the program used by her department was unlawful. Tens of thousands of deduction requests are processed each year via the program. Around 10.3 million have been made since 2017 making up a total £479 million, data obtained by The i shows.

The program automatically approves landlord requests to deduct up to a fifth of someone’s monthly universal credit payments to cover rent arrears without the claimant being consulted by either their landlord or the DWP. The department’s decision comes after they lost a legal challenge in January which was brought by a private tenant whose benefits were deducted and automatically paid to his landlord to cover alleged rent arrears and ongoing rent payments. At the time, the claimant Nathan Roberts was also in a dispute about repairs to the property.

Judge Mr Justice Fordham described the system as “unfair” and said there was a “real possibility” that DWP agents were making decisions based on the computer program, rather than considering a claimant’s best interest. The department has said it is now re-examining the entire process to find better ways of ensuring landlords get the rent they are owed in a fair and proportionate way while benefit claimants are protected from falling into debt.

A release from the DWP says that the system was intended to help people avoid issues with their landlord such as eviction, but may actually be “pushing the poorest into debt.”. Work and Pensions Secretary Liz Kendall said she was determined to “right the wrongs that have persisted in the benefits system for too long.”.

“As well as urgently reviewing this system, I am bringing forward major changes to the health and disability benefits system so that it works for everyone, underpinned by the biggest employment reforms in a generation.”. “We will continue to listen to people’s concerns, and transform our benefits system to one of fairness, not punishment.”.

Emma Varley of law firm Bindmans, who represented Mr Roberts, said: “The DWP’s engagement in the outcome of this case is a positive – if belated – step. Precisely what changes are going to be made remains to be seen, but the call for better decision-making overall by the DWP can no longer be ignored.”.

Earlier this month, it was revealed that around 57,000 benefit claimants were set to receive compensation worth as much as £5,000 on average. The decision by the DWP came after a judge ruled the department had not done enough to ensure certain disability benefit recipients incomes were protected in their move to universal credit.