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Reduced maximum rate at which UC deductions can be made

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JoW
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The reduction from 40% to 30% comes in in Oct 2019. When is it applied from? Any payment date from 1/10/19?

JP 007
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That is fairly good news but I cant find any verification of such a ruling. Its hardly surprising when changes are being slipped in through Statutory Instruments.

JoW
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No I can’t find any details.

davidsmithp1000
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This is important, but like you say, I can’t find anything?

Daphne
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The 40% is in Schedule 6 para 4 of the UC (Claims and Payment) Regs - so there will have to be an amending SI for that and I’m pretty certain that’s not happened yet. Until we have that and what date it is in force from we can’t know - the October 2019 announcement was from the 2018 budget but no specific date was set

Pecc
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I rang Yorkshire Water yesterday to arrange UC deductions for water, I expected to hear the usual which would be deductions fixed at on-going liability plus 5% of standard allowance each month. However I was told that as of October 2019 there are no longer a fixed deductions that Water can request from DWP, they request and are then told by the DWP how much it would be, it could be lower or even higher than what was previously expected, obviously tricky and problematic for clients.

Does anyone know anything about this? I didn’t know until I found this thread about the drop from 40% to 30% but am now aware, perhaps there is more to it?

Timothy Seaside
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Para 9 of Sch 6 of the Claims and Payments Regs doesn’t appear to have changed, so the rules on water deductions are the same as ever - a 5% deduction for arrears and a deduction to cover the ongoing charges.

I am not aware of any announcement in the 2018 budget or anywhere else which would have changed this. In some cases the 30% maximum will cause third party payments for water charges to end or be reduced because the money will all be used up by higher priority debts. But I haven’t seen any sign of any amendment to Para 4, so it seems the 40% hasn’t changed yet.

WillH
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I’m hearing loads of claimants say that the max has changed to 30%...obvious that technically that is not true, but is it possible guidance on overall max has changed? Or is this another myth & in fact there are still 40% deductions out there?
Haven’t seen anyone yet saying their 40% deduction has gone down, nor any current clients who have deductions at that rate.
Any other evidence/steps we can take to find out what’s going on?

Daphne
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I’ll send an email up via stakeholder forum too

WillH
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Thanks Daphne. I feel as if claimants are being told (maybe by JC+/UC service centre/UC helpline??) that the rate has changed but it’s very hard to tell - does seem however that a fairly pervasive perception is that it is now 30%, & I don’t (yet) have the evidence to check this. In any case, it would be good to get the legislation changed!

Elliot Kent
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So this seems like a bit of a fudge, possibly because Parliament was otherwise engaged and DWP couldn’t get the legislation through.

As Daphne points out, the C&P Regs currently set a 40% limit on certain kinds of deductions being made, which notably doesn’t extend to benefit overpayments and advances, but does include sanctions. There appears to have been no amendment to those regulations - so that 40% cap still exists.

The 30% cap then seems to have its own separate existence in the guidance. The 30% limit will apply to advances going forward (but who knows how this is supposed to interact with people who already have advances which they are to repay at 40%) but then there is separately a 30% limit which applies to “all debts and deductions that can be taken from a Universal Credit payment” which presumably also incorporates overpayments and advances (as both are defined as “benefit debt” and a fortiori regular debt).

So does this mean that if someone is repaying an advance at 30%, no other deductions at all will be taken? Because that is quite a shift if so.

Daphne
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My understanding of Schedule 6 para 4 is that the 40% does include overpayments and advances - see para 2(d) (tho they’re not included in the maximum of 3 rule) or have I got that wrong?

And now it seems that they haven’t changed that 40% in the legislation - and I’ve just been told via stakeholders that they don’t think they are going to - so while the guidance limits to 30%, they still have the power legislatively to go above that

Elliot Kent
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The 40% relates only to sanctions and TPDs, so we currently see cases where a claimant has say:
-Deductions for an advance at say £50
-A benefit overpayment taken at 15% - £45
-A TPD for rent arrears at 20% - £63
-Another TPD for council tax at 5% - £15

So total deductions of nearly 60% of personal allowance without offending any of the statutory bars.

But the new guidance isn’t just dropping from 40% to 30% - which wouldn’t help this client as they are only having 25% taken for TPDs - it goes way further than that. Which is good of course - just wasn’t expecting it!

(The reference to s71ZG in the schedule doesn’t regulate advance recovery as Peter and Charles go through in this thread: https://www.rightsnet.org.uk/forums/viewthread/14437/)

Timothy Seaside
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I have to say I think Daphne is right on this. I think s71ZG is talking about recovering advances and so they come within the 40%.

s71ZG says the SOS may recover an amount paid under s5(1)(r)
s5(1)(r) gives a power to make advances in cases of need, or where the actual award can’t be paid straight away.
That sounds very much like a UC advance payment recovery.

I have seen plenty of deductions which support this interpretation, and none which exceed 40%. I’ve seen plenty which are stuck at 40% including the advance, where there are reduced amounts for other third party debts. Perhaps I’ve just been lucky, or perhaps the DWP are treating them differently in different areas? I’m willing to accept that my experience is not statistically significant.

I’ve read the counter arguments Elliott mentions and I can see what they’re saying, but I think they may be overcomplicating the issue. Having said that, I wouldn’t bet my shirt on it. Has anybody actually tried to challenge deductions? It seems to me that this is an area where we could do with some judicial guidance!

Charles
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If advances are being recovered under s71ZG, then they wouldn’t be able to recover at a rate greater than 25%.

Having said that, I do agree that overpayments do come within the 40% (para 5(2)(l) & (n)).

[ Edited: 17 Oct 2019 at 04:44 pm by Charles ]
Timothy Seaside
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Charles - 17 October 2019 04:28 PM

If advances are being recovered under s71ZG, then they wouldn’t be able to recover at a rate greater than 25%.

Okay, so I’m missing something here. Why 25%?

Charles
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This post from the thread Elliot quoted earlier explains it well.

Timothy Seaside
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No, I still don’t get it. Are you saying you think it comes within Reg 11(2)(b)? I don’t think that can be correct - true, an advance payment doesn’t come under 11(3), but neither does it come under 11(4) unless the claimant has earnings which reduce their award.

So the recovery amount would be 15% with earnings less than the work allowance, or 25% if they’re above.

I’d also note that Reg 3 defines a “recoverable amount” as being an overpayment or an item from the subsequent list, which includes s71ZG.

Edit: Sorry, I’ve just reread your post - you said it can’t be recovered at a rate higher than 25%. So yes. I agree. But I’m not sure where that gets us with the argument about whether it comes within the 40% maximum in the C&P regs.

[ Edited: 17 Oct 2019 at 05:28 pm by Timothy Seaside ]
Charles
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It is commonplace for advances to be recouped at a rate of 40%. This proves that DWP are not using s71ZG to recover advance payments (as that would only allow a max of 25%, as you concede).
Rather, they appear to be using reg 10 of the SS(POAOB) Regs.
See the other thread for more discussion on this.

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Daphne - 17 October 2019 09:59 AM

And now it seems that they haven’t changed that 40% in the legislation - and I’ve just been told via stakeholders that they don’t think they are going to - so while the guidance limits to 30%, they still have the power legislatively to go above that

This is worrying me, there has been a policy change, but changing the guidance without changing the legislation allows decision makers (or in reality computer programs) to deviate from the policy with impunity providing the overall deductions are below 40%.

IMO If there are exceptions to the 30% rule it should be legislated for to allow for parliamentary scrutiny. Should NAWRA raise it through the work and pensions select committee?

Timothy Seaside
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Charles - 17 October 2019 06:09 PM

It is commonplace for advances to be recouped at a rate of 40%. This proves that DWP are not using s71ZG to recover advance payments (as that would only allow a max of 25%, as you concede).
Rather, they appear to be using reg 10 of the SS(POAOB) Regs.
See the other thread for more discussion on this.

I haven’t noticed any of my clients’ advances being recovered at 40%, but I accept that this must be happening because you and others are saying so. But why 40% then?

But putting that experience aside (on the basis that the DWP are not necessarily getting it right), I can’t see any reason why a recovery under Reg 10 of the POAB is not a recovery under s71ZG of the SSA.

I would start from the point that the SSA is primary legislation. s5(1)(r) is the provision which allows advance payments to be made. s71ZG is the provision which allows s5(1)(r) to be recovered (1), determines who they can be recovered from (2 &4), and allows regulations to be made to determine rates of recovery (3). So it seems to me that all recovery of s5(1)(r) advances is covered by s71ZG because that is the primary legislation which allows such recovery - unless there is some other primary legislation that allows recovery?

Recovery under Reg 10(a) of the POAD is full recovery from the benefit payment which the advance relates to (so I think this envisages a situation where somebody is simply paid their benefit before they should have been). But recovery under Reg 10(b)(ii) is an ongoing recovery from subsequent payments. I can’t see anything to suggest that this would not be subject to the limits expressed in Reg 11 of the O&R Regs.

Actually the previous paragraph is a bit of a red herring, because if any repayment of a s5(1)(r) is made under s71ZG then it’s caught within the 40% in Sch 6 of the C&P Regs anyway - which is what I was saying at the start.

In response to your point about the introductory text of the POAB Regs, I would suggest that the reason the it mentions s5(1)(r) but not s71ZG is that these Regs are mainly about making payments (under s5(1)(r)), and the provisions in Reg 10 are not regulations which determine recovery amounts (so not under s71ZG); that is done in the O&R Regs and the C&P Regs.

Daphne
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DWP guidance says the 40% covers overpayments and hardship payments but not advances - see para D2038 and D2043 in ADM Chapter D2

Jon (CHDCA)
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Here’s what we’ve been told by our DWP Partner Support Manager:

3.  Reduction from 40% to 30% limit for deductions

From today, 16 October, the maximum amount that can be taken from a claimant’s award for deductions is being reduced from 40% to 30% of their standard allowance.  However, there are some exceptions.  Calculations made for assessment periods ending prior to 16 October will be at 40% and those after at 30%.

If a claimant is only repaying an advance and the repayment amount is over 30% of their personal allowance, then the amount will reduce.

A message will be placed in the journal in these cases to inform the claimant that it may take longer for the advance to be repaid and this will be reflected in the statement.

The various UC guides on gov.uk will be amended to taken into account the above change over the next few days.

Timothy Seaside
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Daphne - 18 October 2019 11:22 AM

DWP guidance says the 40% covers overpayments and hardship payments but not advances - see para D2038 and D2043 in ADM Chapter D2

D2039 says that the 40% includes “recovery of payments on account under specified legislation” - referring to s71ZG. And it would be remarkable if it didn’t because D2038-9 are just trying to put Para 4 Sch 6 of the C&P Regs into a slightly plainer English.

Timothy Seaside
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Jon (CHDCA) - 18 October 2019 11:28 AM

Here’s what we’ve been told by our DWP Partner Support Manager:

3.  Reduction from 40% to 30% limit for deductions

If a claimant is only repaying an advance and the repayment amount is over 30% of their personal allowance, then the amount will reduce.

This would seem to confirm that, at least in your area, they accept that advances are part of the 40%/30% maximum.

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Timothy Seaside - 18 October 2019 10:42 AM

But putting that experience aside (on the basis that the DWP are not necessarily getting it right), I can’t see any reason why a recovery under Reg 10 of the POAB is not a recovery under s71ZG of the SSA.

I would start from the point that the SSA is primary legislation. s5(1)(r) is the provision which allows advance payments to be made. s71ZG is the provision which allows s5(1)(r) to be recovered (1), determines who they can be recovered from (2 &4), and allows regulations to be made to determine rates of recovery (3). So it seems to me that all recovery of s5(1)(r) advances is covered by s71ZG because that is the primary legislation which allows such recovery - unless there is some other primary legislation that allows recovery?

The primary legislation is s5(1)(r) itself. No “recovery” is necessary, nor is it an overpayment. It is simply a benefit payment given in advance. It is then brought into account as legislated for in reg 10. That is after all the meaning of a payment on account.
S. 71ZG is provided for other cases. For example, to recover an advance from another benefit, or a different award ofUC.

In response to your point about the introductory text of the POAB Regs, I would suggest that the reason the it mentions s5(1)(r) but not s71ZG is that these Regs are mainly about making payments (under s5(1)(r)), and the provisions in Reg 10 are not regulations which determine recovery amounts (so not under s71ZG); that is done in the O&R Regs and the C&P Regs.

In my experience, all powers used in regs are listed in the introductory text, down to the smallest detail.

The 40% (and now 30%) limit is, I think, self-imposed by DWP to guard against hardship. See for example the second paragraph on page 4 here.

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Charles - 18 October 2019 03:02 PM

In my experience, all powers used in regs are listed in the introductory text, down to the smallest detail.

My point was that s71ZG includes the power to make regulations about how the recoverable amounts are calculated. The POAB Regs don’t do this, so that’s why they’re not listed - because there’s nothing about calculating recoverable amounts. In the other thread you seemed to be arguing that the absence of s71ZG in the introductory text indicated that advances don’t come under s71ZG.

Your argument then is that a payment on account (if all goes well) is not “recovered”, but merely “brought into account” (which is almost exactly how HB Anorak expressed it in the other thread). And crucially, bringing something into account precludes recovering it. That’s where I am/was uneasy (I can’t decide now, you make a very good argument).

Reg 10(a) is clearly about bringing a payment on account into account, and there is no 40% limit. I can completely agree with that. But the language of Reg 10(b) is different - it talks about the amount being “deducted” from further awards. Doesn’t this sound like recovery?

I’m uncomfortable with the idea that this legislation, taken together, allows a claimant’s SA to be reduced to nothing if it is bringing an advance into account, but limits the total deductions to 40% if an advance is being “recovered” instead. Wouldn’t this mean that my client who took an advance payment in August and then had two payslips counted in her AP and so lost her entitlement, and had to claim again in September, has her advance payment recovery limited to 25%, but if her claim had continued, it would be unlimited? Is that how it’s being treated by the DWP.

Thank you for humouring me. I hope it isn’t too tiresome, but I find these little excursions - testing understanding and delving into detail - very rewarding.

[ Edited: 21 Oct 2019 at 09:52 am by Timothy Seaside ]
HB Anorak
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I would still regard the process that takes place under Reg 10(b) as something other than “recovery”.  If we look at Reg 10 and s71ZG together, we have a complete set of provisions for all eventualities:

Reg 10(a) - payment up front on a new claim, which is subsequently “brought into account”.  There is a power under this paragraph simply to offset in full - but the Secretary of State tends not to do so

Reg 10(b) - payment of an in-award budgeting advance or an up-front award on a new claim (para (b) applies to either) is “brought into account” by deducting part of it from a series of future benefit payments.  In practice this is how up front new claim POAs are brought into account as well as in-award budgeting advances

What these have in common is that they are essentially rescheduling benefit payments - switching it from advance to arrears, either all at once or gradually.

Then s71ZG: this applies where Reg 10 does not because there is no entitlement to the benefit that has been paid on account.  It is recovered as an overpayment.  Without s71ZG there would not be any power to do this, because it is not otherwise a payment of benefit to which s71ZB et seq apply.

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I was thinking about this while swimming on Friday evening and realised that I’ve made a mistake. My mistake (the one I’m aware of - there will be others) was to think of this as a set of regulations which deal with the system as we see it working now. But of course, when these regulations were devised, the DWP attitude to advance payments (like its attitude to APAs) was very different. It’s only because of the public outcry over the six week wait, and subsequent increase in public awareness that advances have gone from being something that you could apply for if you were desperate and knew about them, to something that everybody seems to be offered after their first interview. They have become almost an essential part of the working of UC - and if it’s true that there’s no statutory limit on the deductions that are used to bring them into account then we should be lobbying to change that.

I am going to have to look more closely at the deductions I see, but I know I’ve seen many where they were treated as part of the 40%. As Charles says, this could just be a discretionary decision. But something like this shouldn’t be relying on the discretion of the DWP - it should be in regulations.

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Timothy Seaside - 21 October 2019 09:59 AM

I was thinking about this while swimming on Friday evening ....

I am at the same time worried about you and laughing out loud.