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23 September 2022

High Court declares DWP’s written guidance in relation to its ‘Third Party Deductions’ Scheme unlawful

4 mins

Hundreds of thousands of people who receive legacy benefits will be impacted by the High Court’s declaration made today, following a judicial review challenge brought by Bindmans LLP’s client, Miss Helen Timson.

The Department for Work and Pensions (DWP) ‘Third Party Deductions’ 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 altered, 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.

As Mr Justice Cavanagh said in the judgment, handed down today following a two-day hearing on 19 and 20 July (paragraphs 213, 215):

‘In my judgment, a failure on the part of the decision-maker to give the claimant the opportunity to make representations and provide information would be a breach of the obligation of fairness.

[..]

In my judgment, the obligation goes further than it went in R(A). In R(A), the obligation was only to consider whether it was necessary to seek representations. In relation to TPDs, I take the view that there is a legal obligation to seek representations in every case, because it is not until the claimant has been given the opportunity to make representations/give information that the decision-maker is in a position to decide whether there are any relevant representations/information that the particular claimant can provide. Unlike the position in R(A), in the present case it is not possible, at least in the great majority of cases, for the decision-maker, looking solely at the information provided by the utility company, to decide whether they would be assisted by representations/further information from the claimants.’

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

Miss Timson said:

I am over the moon about this judgment and can’t thank my awesome legal team enough. The fact that the DWP now need to seek representations from benefit claimants before making the decision to deduct money from their benefit is the very least that they should have been doing.

However, this scheme remains inherently flawed, as it still gives decision-makers the power to determine how other people’s money is spent. 

There is a solution that will stop this injustice and also save the government the expense of employing extra staff to try to determine the ‘interests’ of benefit claimants. I propose that this legislation be changed from ‘interests’ of the benefit claimant to ‘if the benefit claimant consents.’ I invite Chloe Smith, the new Secretary of State for Work and Pensions, to discuss this proposal with me so it’s a win/win for all. 

Emma Varley, solicitor at Bindmans who represents Miss Timson, said:

Our client has demonstrated incredible bravery in challenging this scheme. The judgment will mean that Miss Timson and other benefit claimants will be afforded the crucial opportunity to make representations to the DWP before a decision about how their money is spent is made on their behalf.

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.

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