Source · Select Committees · Work and Pensions Committee
Recommendation 10
10
Rejected
Deductions from the Department are contributing to hardship for struggling households, who are already trying...
Recommendation
Deductions from the Department are contributing to hardship for struggling households, who are already trying to tackle rising costs. We have heard that for some, deductions are pushing them into destitution and leading them to depend on food banks. The Government has urged creditors to accept reduced monthly payments or write off debts, but isn’t following its own advice. We recommend that deductions are paused, and then only restored gradually as the rate of inflation 38 The cost of living reduces, or when benefits have been uprated to reflect the current rate of inflation. If the Government is not willing to pause deductions then it must increase awareness of existing options such as short-term pauses, and ensure that those who are struggling can get accessible and practical debt advice. The Government should also consider the Committee’s recommendations on deductions and debt in our 2020 ‘Universal Credit–the wait for a first payment’ report. We would welcome a response by the end of 2022. (Paragraph 55) Pension Credit
Government Response Summary
The government does not believe pausing deductions by default is in the claimant’s best interest, as the impact of any future benefit uprating would clearly be diminished if it coincided with the re-introduction of any paused deductions. However, DWP will work with claimants to review their financial circumstances and consider a temporary reduction in their rate of repayment and refreshed guidance will be provided to UC agents.
Government Response
Rejected
HM Government
Rejected
While deductions for benefit overpayments were paused at the height of the pandemic, this was primarily to allow Debt Management staff to be reassigned to help process the surge in new UC claims made at that time. The Department does not believe that pausing deductions by default is necessarily in the claimant’s best interest. The impact of any future benefit uprating would clearly be diminished if it also coincided with the re-introduction of any paused deductions. While claimants will have retained more of their award in the interim, they may nonetheless feel no better off as a result. Furthermore, pausing third- party deductions could result in an increase in enforcement action by third parties and would result in families losing out on essential Child Maintenance payments. If the Government is not willing to pause deductions then it must increase awareness of existing options such as short-term pauses, and ensure that those who are struggling can get accessible and practical debt advice. UC agents have access to guidance should any claimant raise hardship concerns. This includes considering if an advance deferral is appropriate, signposting claimants directly to Debt Management and signposting to external support provided by organisations such as Citizens Advice, Money Helper and National Debt Line. From August 2022, refreshed guidance for UC agents will ensure claimants who request an advance are encouraged to only apply for the support they require and are fully aware of the impact of taking an advance on the phasing of their future monthly award. DWP is committed to supporting claimants who contact us if they feel unable to afford the repayment of benefit overpayments. DWP Debt Management will work with claimants to review their financial circumstances and consider a temporary reduction in their rate of repayment. The review period for such arrangements has also recently been extended. Notifications sent by Debt Management make this support clear, and there is also a range of information available on the Gov.uk website. Claimants who do contact Debt Management are routinely referred to the Money Advisor Network, who work in partnership with DWP to offer free independent and impartial advice.