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Response to October 2016 editorial

I was interested in the article on page 3 of the October edition of Legal Action regarding deductions from universal credit for payment to landlords in respect of rent arrears. However the article seemed somewhat unclear about the exact terms of the relevant regulations that apply to this topic.

There seemed to be some confusion between the maximum amount that can be deducted for all purposes (generally 40%) and the maximum amount that can be deducted for a particular purpose. The maximum amount that can be deducted in respect of rent arrears is 20%. This is provided for in paragraph 7(5) of Schedule 6 to the Universal Credits etc Claims and Payments Regulations (SI 2013/380). It is reported in the article that the DWP were regularly making deductions of 40% for rent arrears alone. If this is happening it is illegal and should be challenged. It seems remarkable that you say that ' ... a large Citizens Advice service in the north of England reports ...' that this is happening and yet they are apparently doing nothing about it.

It might be added that when universal credit was introduced in 2013 the deduction level for rent arrears was 5%, which, as you explain in the article, was in line with the figure used in the existing benefits to be replaced by universal credit. Indeed 5% remains the maximum deduction rate from universal credit for most other purposes (eg mortgage arrears or fuel debts).

The change to 20% was effected by an amendment made by SI/2014/2888 from November 26th 2014. The Explanatory Memorandum to the amending regulations hints fairly plainly that the change came about as the result of heavy lobbying on the part of representatives of social landlords. The landlords fear that rent arrears will increase massively as a result of the introduction of universal credit. This is because generally the element of universal credit intended to cover rent will be paid to the claimant rather than direct to the landlord as is usually the case for the existing benefits. The DWP seem to have decided that as a quid pro quo for this arrangement, the social landlords would have to be given a greater opportunity to recover arrears quickly.

I hope these comments are useful.

Arnold James