DWP’s ‘Third Party Deductions’ Scheme to be amended after High Court ruling

26 September 2022

The Department for Work and Pensions’ (DWP) ‘Third Party Deductions’ Scheme will need to be altered significantly following the High Court’s declaration last Friday.

The ruling came as a result of a judicial review challenge and will impact hundreds of thousands of people who receive legacy benefits.

The Scheme gives third parties, such as private utility companies, the ability to apply to the DWP for a proportion of a person’s benefits to be paid direct to them, to repay debt that they say is owed, and to meet ongoing usage costs.

Following the legal challenge, the way that the DWP operates the scheme – and in particular the way that the written guidance is drafted – will need to be significantly amended, specifically by making it clear to DWP decision-makers that benefit claimants should be given the opportunity to make representations and/or provide relevant information prior to the decision to make the deduction being taken.

The previous written guidance, which has been found to be unlawful, did not make it clear that benefit claimants should be offered the opportunity to make representations to the DWP prior to the decision being taken, including as to whether the money is in fact owed, what their financial circumstances are, and whether there might be other ways to pay the debt.

The Claimant, Miss Timson, endured deductions being taken from her disability-related benefit over many years, with the deductions sometimes leaving her unable to pay rent. She also had deductions taken for debts which were not owed.

Miss Timson is represented by Emma Varley and Jamie Potter of Bindmans LLP. Jenni Richards KC of 39 Essex Chambers and Tom Royston of Garden Court North Chambers are instructed as counsel.