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Forum Home  →  Discussion  →  Covid-19 issues  →  Thread

Third party payments being suspended for UC and legacy benefits

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Willie FI
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Not sure if this is the correct section to place this.

We have been contacted recently and been informed that all third party payments from Universal Credit and Legacy benefits will be suspended. We have not been given a start date for this yet.

I can see this causing major problems for Housing Associations.

Elliot Kent
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Hi Willie - where have you heard this? I heard something similar yesterday but the source was pretty ambiguous.

Willie FI
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I got an email from Universal Credit.

I hope you are all doing well in the current circumstances.  I just wanted to drop you a wee note to advise that as well as the suspension of third party deductions from legacy benefits, this has also now been applied for Universal Credit.
An official communications is currently being produced and will reach you soon

Willie

Mr Jim
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Hi,

See this rightsnet link on this subject:

https://www.rightsnet.org.uk/forums/viewthread/15842/

Jim

Glenys
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Still can’t see anything official from DWP about suspending TPDs - no press release or guidance issued?

We’ve had 3 queries so far about UC claimants’ TPDs being stopped - 2 rent arrears and one court fine. 
The housing associations were concerned they hadn’t been told by DWP this was happening.

Has anyone seen any ‘official’ announcement?

Glenys
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Adding to my question - just rung Debt Management Team and their recorded answer still says Advances AND TPDs continue to be recovered….

Willie FI
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Financial Inclusion Co-ordinator Thenue Housing Association Glasgow

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I understand that new guidance will be issued shortly, confirming third party payments to be stopped.

Glenys
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Thanks Willie- let’s hope it comes soon!
Hope you’re keeping well

Daphne
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I have also sent this query up via stakeholders along with screenshot of a journal which says -

We agreed to take some money from your universal credit each month to pay rent or service charge arrears. We were paying this straight to your landlord.

This arrangement has now stopped. We will not pay them any more.

Timothy Seaside
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Is this lawful? Clearly they can decide they’re not going to take deductions for their own debts, but do the regs allow them to suspend deductions for third parties?

This seems like a very bad idea for 3PDs for court fines, rent arrears, water bills and arrears, etc.

For example, how is this going to work out for tenants who have suspended possession orders which require them to pay rent + £31.78 per month off the arrears?

Timothy Seaside
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Just looked at the C&P Regs and third party deductions appear to be at the discretion of the SSWP; “The Secretary of State may deduct an amount from a claimant’s award of universal credit and pay that amount to a third party “

But stopping all such payments must be fettering discretion - it’s really going to be a bad idea for a lot of people.

Glenys
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Found out a bit more.

Apparently a housing officer spoke to someone from DWP who confirmed that they got an email (not sure where from ie how high up) on 14th April. Basically saying that if someone’s MAP ended before 14th April, arrears will be paid in the landlord’s next DWP schedule. Any MAPs that end after 14th April, no arrears will be included.

Timothy Seaside
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Our partnership manager hasn’t heard anything about this and is making enquiries.

It’s beginning to sound to me like maybe individual service centres are misunderstanding the decision to stop recovering DWP debt - and applying it to third party deductions as well.

Although it has a veneer of being helpful and generous, I think the main point of stopping the DWP debt recovery was that it meant they could redeploy debt management staff to help out with all the new claims.

But the regs give the DWP a power to make deductions to pay third party debt, and it’s a well established principle of public law that it would be unlawful for them to make a blanket decision to stop exercising a power altogether (i.e. fettering their discretion). I’d say this was a pretty good example of why fettering discretion is unlawful - because each case needs to be considered on its own facts.

We’ll be getting our next four weekly APA monthly rent (converted from weekly) payments next Wednesday, so perhaps we’ll see something then, or not.

Lee Forrest
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Apparently, some TPDs may not come through this month because they require a manual action to pay (DWP staff have been diverted to deal with the unprecedented number of new claims), any that don’t should apparently come back on stream from the next assessment period.

GrantCBH
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This has happened to us today also. Partnership Manager also unaware. He is investigating for us. We’ve received confirmation of the arrears payments, but our tenant has sent us screen shots of his journal clearly stating that we won’t be getting them…. “We will normally take a further amount from your UC award to pay towards your rent arrears but due to covid-19 we have temporarily stopped these deductions to enable us to pay you more. Once this restriction is lifted we will automatically start making monthly deductions”. Will share any response I get.

RESPONSE from Service Innovation Lead Team (SIL’S)
If you are referring to Rent arrears deductions that normally come out of the UC as a third party deduction then these have been temporality stopped.

All TPDs have stopped as part of temporary measures to help support claimants with any additional financial pressures as a result of the ongoing COVID-19 situation.

I would have thought/hoped a communication went out to LLs to advise them of this so that you know to expect to not receive any rent arrears payments.

There is nothing stopping claimants continuing to pay the deduction directly to yourselves but appreciate this would be difficulty to arrange if you are unable to reach the claimants to have this discussion

At this time there is no indication when TPDs will be re-implemented on UC claims

[ Edited: 24 Apr 2020 at 12:49 pm by GrantCBH ]
Owen_Stevens
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Mims Davies says no plans to suspend third party deductions incurred before the coronavirus outbreak: https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Commons/2020-03-17/30856/

Owen_Stevens
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...and guidance has just been updated to explain that DWP cannot accept new requests for electronic payment schedules at the moment because of coronavirus https://www.gov.uk/government/publications/how-the-deductions-from-benefit-scheme-works-a-handbook-for-creditors

As far as I can tell this is just about changing the method of the payment schedule - does anyone else know more about this?

[ Edited: 28 Apr 2020 at 03:04 pm by Owen_Stevens ]
Glenys
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Just checked and Debt Management recorded answer not been updated yet- still says TPDs continue to be recovered

Daphne
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Inside housing reporting today that the DWP has confirmed that third-party deductions have been halted until 10 May because of administrative pressures.

So seems it’s a temporary administrative decision rather than a policy decision - I’ve emailed via stakeholder forum to ask for more information

[ Edited: 29 Apr 2020 at 11:54 am by Daphne ]
VRW
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We received the following email yesterday - better late than never

For information

An unprecedented number of Universal Credit applications have been made since March. The Department has rightly prioritised the processing of these claims to ensure people get the support they need during the coronavirus outbreak.

This means prioritising our resources and as a result of this we’ve made a decision to pause deductions from existing UC claimants, on behalf of third parties. This includes deductions taken on behalf of landlords relating to rent arrears and service charge arrears. This activity has been paused for one month only, while we work through the huge number of new claims. All deductions will resume on 10 May as normal.

The Government has also announced measures to protect tenants and landlords affected by coronavirus, including extending the three-month mortgage holiday for Buy to Let mortgages. Further guidance can be found on Gov.uk.

During this temporary pause, we would kindly ask you to show understanding and not take further action.

DWP External Affairs | Department for Work and Pensions | Level 4, Caxton House | Tothill Street | London | SW1H 9NA | http://www.dwp.gov.uk | Please consider the environment before printing.

Daphne
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Just has this similar email via stakeholders - confirms that council tax arrears payments also paused - but that APAs for rent paid direct are continuing -

We have received an unprecedented number of new benefit claims and have streamlined our operations to make sure people get the support they need during this time. As part of this, we have temporarily paused third-party deductions from UC – these will recommence on 10 May.

We are in the process of explaining the changes to claimants via their online journal and to third parties, including housing providers who collect arrears via this method.

Third party payments that have been suspended include: Rent arrears, Service Charge arrears and Council Tax arrears. Direct payments for rent will continue and are not affected by this temporary pause.

Elliot Kent
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Sorry but isn’t this exactly what Mims Davies said DWP had “no plans” to do on Monday?

It is concerning for all the reasons she gave. Whilst stopping or reducing deductions may be appropriate in individual cases, stopping all of them on a blanket basis will place people unwittingly in breach of suspended possession orders and increase risks of eviction.

Timothy Seaside
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If it’s only a month suspension then landlords getting 10% of the standard allowance are still going to be about £70 better off than expected at the end of the year because of the temporary increase in SA. So it’s still a bonus (although of course it doesn’t put right the massive damage that UC continues to do to our income).

BC Welfare Rights
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Client sent me this from his journal today:

“Temporary pause on third party deductions from your Universal Credit payment for one month
In normal circumstances, you will be aware that we make a deduction from your monthly payment to help pay off your debts with third parties - landlords or utility companies, for example. We have made the decision to pause these deductions from payments for one month from 10 April, so you may have already noticed a change in your payment.
These deductions are taken manually each month and require significant staff resource which is why they have been paused. This is a temporary measure that will allow us to process and pay the unprecedented number of new claims we have had because of the coronavirus pandemic.
We will tell the relevant third parties why this is happening this month.
If possible we would encourage you to pay them directly as this will help with budgeting purposes. You can contact the third party directly to discuss how to make a payment.
If you have a court fine, repayments from Universal Credit will also be paused this month. You do not need to call HM Courts & Tribunals Service (HMCTS) about this.
This does not affect deductions for UC advances as these are made automatically and will continue as normal.
All third party deductions will resume next month, starting from 10 May.”

I haven’t seen anything about court fines being paused elsewhere. Does anyone know anymore?

Mike Hughes
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Digital by default and yet third party deductions require significant staff resources.

Glenys
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Re court fines - we had a query over a week ago from someone whose court fine repayments had been stopped.

BC Welfare Rights
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I am imagining, perhaps naively, that HMCTS has agreed to UC pausing fine payments and will not take any enforcement action in these cases…but I cannot find any information anywhere that this is the case.

[ Edited: 30 Apr 2020 at 05:46 pm by BC Welfare Rights ]
Scutter
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At the risk of exposing myself to ridicule in my first post here, I’d be interested in contrary views to mine on the basis of this ‘policy’.

Looking at the claims and payment regulations, Schedule 6(5)(4) puts a requirement (‘must’) on the SSWP to give priority to debts in the order they are listed in Sch 6(5)(2). This puts rent debts as the second highest. While acknowledging Sch 6(7) gives massive discretion to the SSWP in deciding ‘cases and circumstances’ I don’t think I agree that this gives them such wide discretion as to change a policy and their own guidance on the fly due to staffing issues. The guidance is very much on a best interests test for the claimant, not what is convenient to the SSWP.

Given the short-term nature of the policy I wonder it may be more helpful afterwards, in challenging decisions to not offer flexibility on debt payments to claimants. If it was in their interests to risk putting them in breach of a suspended possession order (and only notifying them and the landlord after the fact), how could it reasonably not be in their interest to simply lower the rate of deductions when it would not put them at a similar risk?

Timothy Seaside
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Welcome Scutter.

I hope you’re not exposing yourself to ridicule anywhere on Rightsnet - in my experience we take people as we find them and try to get correct answers and help as much as we can.

It is clear that taking deductions is a power rather than a duty. I would agree that where deductions are taken they must be taken in line with the rules in Sch 6, but there is still discretion about whether to take them in the first place. If they opt to take deductions it has to be in the claimant’s interests, but it doesn’t necessarily follow that it has to be in the claimant’s interests to stop the deductions. I can’t see any reason why they couldn’t change their guidance urgently, but as I’ve posted above, I suspect that any guidance which says they won’t exercise the power at all is unlawful as it fetters their discretion.

If I’ve understood you correctly, you are suggesting that we could use the current issue as part of an argument in future cases where we’re trying to get deductions reduced? I don’t think it works for reducing rent arrears deductions (unless the deduction was already 20%) - once a decision has been made to take a deduction for rent arrears, it has to be between 10 and 20% and most of ours are already at 10%. And my experience of getting deductions reduced (within the rules) has always been quite positive anyway.

The government made a conscious decision to increase rent arrears deductions in a previous amendment of the regs, and UC is extremely hard on people with its deductions regime. Compare the 5% deduction for rent arrears from legacy benefits, with the 10-20% deduction now - it’s a crumb of comfort for landlords whose incomes have been hit hard by UC, but for claimants it’s a real burden. It needs a policy change. But I worry that the current government is likely to double down on austerity when this is all over - they really seem to think that poverty is a lifestyle choice.

[ Edited: 4 May 2020 at 08:56 am by Timothy Seaside ]
Glenys
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A housing association has told us that, although the suspension of TPDs was due to end 10th May, they’ve not had any of their applications for them processed.
Anyone know if the suspension has been lifted? or any other announcements?

Daphne
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I’ll send a query up via stakeholder forum…