Published: 17 Mar 2021 by Sophie Earnshaw

It can be extremely tough to get off the streets and into settled accommodation. But for those who make it, the system is stacked against them.

In December 2019, we revealed that people who had just got off the streets and into a settled home were facing massive ‘deductions’ in their Universal Credit. People who had recently moved into settled accommodation after years of living on the streets had been hit with high level deductions to their universal credit personal allowance for court fine payments, including fines for begging under the Vagrancy Act 1824. It came to light that this was not a one-off case of incorrect decision-making where claimants had requested deductions be lowered, as the law allows, and refused, but that the DWP has a blanket policy of always cutting benefit by the maximum amount possible, regardless of personal circumstances. This has left people struggling to cover essential living costs, including food and bills.     

The High Court has today ruled that this inflexible policy and practice is unlawful.

The case: R (Blundell & Ors) v Secretary of State for Work and Pensions

In February 2020, we launched a legal challenge on behalf of four people, all of whom have a long history of rough sleeping, and were affected by these ‘maximum deductions’. We challenged the deductions policy and decisions to apply the ‘maximum deduction rate’ to universal credit (UC) in all cases where there is a court fine payment, regardless of the claimant’s personal circumstances.

Deducting the maximum amount of 30% from the claimants’ UC standard allowance left our clients with as little as £51 per week to live on. This resulted in our clients being unable to cover the cost of bills and food, as well as travel to medical appointments, the Jobcentre, or interviews for work. These deductions also had a massive impact on people’s mental health.  Our clients were getting to grips with managing a tenancy after years on the streets, and the deductions felt like yet another hurdle they had to deal with at a critical time.

Our Argument

Shelter argued that the DWP’s deductions policy and approach to deductions unlawfully removes an important discretion prescribed by law.  Regulation 4 of The Fines (Deductions from Income Support) Regulations 1992) provides the DWP discretion to deduct a minimum of 5% from peoples’ UC to pay back court fines (and a maximum of £108.35). But the DWP’s blanket policy removes this discretion by setting a fixed maximum deduction of 30% and doesn’t allow claimants to request a lower deduction even in exceptional circumstances where they’re facing hardship.

The DWP’s main defence of its policy is that UC claimants can return to the magistrates’ court to request a direct repayment plan; however, this is completely impracticable. The deductions regime is an effective means of repayment of debts and is there to ensure that social obligations are met. It works for the court, and it works for the claimant provided that the deduction rate is at a level that is fair, and will not push them into financial hardship and further into debt because they cannot pay their bills.

The case was heard at the High Court before Mr Justice Kerr via a remote hearing on 12 and 13 January 2021. Shelter’s claim was heard together with a second claim brought by Hackney Community Law Centre acting on behalf of a disabled UC claimant.

The Judgment

The court found that DWP’s deductions policy was unlawful because it ‘fetters discretion’: i.e. it prevents decision makers from taking a UC claimant’s personal circumstances into account when setting the deduction rate.

The court ruled that by setting a fixed rate for deductions from UC for fines, and the DWP’s inflexible approach in making decisions on these cases, removes the discretion provided for in the relevant legislation. This is unlawful.

Responding to the DWP’s defence of an ‘alternative route’ through the magistrates’ court, Mr Justice Kerr states:

‘The deductions regime is paternalistic: the debtor cannot be left to pay off court fines voluntarily; they must be made to do so, for their sake and society’s.  The Secretary of State’s passivity leaves unperformed the duty upon her to make that happen in appropriate cases.’

The High Court ruled that the DWP’s policy and practice in its present form was not lawful. The judge ordered that the relevant section in the deductions policy relating to fines be amended to reflect the judgment.

Read the full judgment here.

What the judgment means for claimants

This judgment means that the DWP must change the deductions policy and guidance to include discretion for DWP decision makers. This means UC claimants can ask the DWP to lower the amount deducted for court fine payments if they are struggling to get by. Pending changes to the policy, welfare benefit advisors and claimants can apply the judgment when making requests for the deduction to be lowered. This will hopefully help those people already struggling on already very limited means.

The DWP applied for permission to appeal the decision, and this has been granted by the High Court. However, as explained above claimants can rely on the judgment immediately.

Shelter instructed Richard Drabble QC from Landmark Chambers as lead counsel and Tom Royston of Garden Court North.

If advisors would like a detailed summary of the case, please email sophie_earnshaw@shelter.org.uk