The High Court has determined the Department for Work and Pensions (DWP) must change its housing cost deduction process from Universal Credit. The court branded the DWP’s present system, which allowed landlords to automatically claim money for rent arrears from a claimant’s Universal Credit without scrutiny from officials, as “unfair” and “unlawful”.
As a result of the verdict, the benefits department is now obliged to consult with UC claimants before transferring funds to landlords for rent arrears, rather than simply arranging automatic deductions. A case challenging the DWP was heard in the High Court on January 16.
It was brought to court by Nathan Roberts, a Universal Credit recipient actively engaged in a dispute with his landlord about repair work. Nathan, who is a law graduate and previously served in a police control room, had over £500 taken from his Universal Credit at his landlord’s request in 2024.
At the time, Nathan’s Universal Credit consisted of £1,218 monthly, including a standard allowance of £364.74, £459.64 towards rental costs, and a disability supplement of £390.06.
The landlord’s claim of two months’ unpaid rent put a tenant at risk of eviction, prompting the DWP to intervene by deducting money from his monthly payments to cover the rent and arrears. The DWP informed Nathan that his housing component would cease, with an additional £44.74 taken to clear the rental arrears.
Nathan challenged the DWP’s decision, arguing they hadn’t considered his best interests or properly notified him about the deduction application. He insisted there were no arrears, framing the situation as a “genuine rent dispute” due to the property’s condition.
Despite Nathan’s objections, the DWP’s approach was intentional, rooted in policy rather than error. Decision makers follow a computer program’s guidance, often resulting in automatic approvals for deductions without prior consultation with claimants, affecting both social and private tenants.
A legal expert from Garden Court North Chambers highlighted the potential scale of the issue, suggesting the DWP could be making “hundreds of thousands of deductions” from Universal Credit recipients annually without prior checks, branding it “clearly arbitrary and an abuse of process.”
The case put forward the argument: “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 ruled it was unfair for tenants on Universal Credit to face rent arrears deduction and rent diversion requests without a chance to make representations before approval. He pointed out that the current system left tenants excluded and disempowered.
Justice Fordham also highlighted a “real possibility” that DWP officials might automatically approve deduction requests influenced by the computer, without considering whether it was in the tenant’s best interest, as they were only hearing “one side of the story”. In Nathan’s specific situation, the judge mentioned that during a dispute over repairs, where withholding rent might be the “only leverage which a tenant has,” DWP decision-makers could inadvertently undermine the tenant’s protections. Although claimants have the right to challenge decisions, the internal process is lengthy, potentially leaving them unable to reverse deductions for several months, even if they win.
He pointed out the “real-world impacts” on tenants, who could be stuck with reduced benefits for months even after successfully challenging decisions via lengthy internal DWP appeal processes, unable to reverse deductions made. Nathan’s appeals against the DWP were rejected three time following a three-month review period. However, the department reversed its decision shortly after being notified of impending legal action.
The recent judgement compels the DWP to add tenant safeguards in its proceedings, offering protection to “tens of thousands” of tenants annually. Responding to the ruling, a Department for Work and Pensions spokesperson stated: “We are now carefully considering this judgment. Millions of people rely on our welfare system every year and it is vital that it can be accessed by all who need it.”