The DWP's 'third party deductions' guidance is unlawful because a decision-maker must give the claimant the opportunity to provide information before a decision is made.
Summary
A benefit claimant must be given the opportunity to make representations and provide information before a 'third party deduction' (TPD) decision is made. Failure to do this would be in breach of the obligation of fairness. The DWP's TPD scheme guidance will have to make this clear.
Background
A TPD allows for a direct payment to be made from a person's benefit to a third party such as a utility company. The deduction is made for debt, including energy and water arrears, and can also include a payment for ongoing liability.
The claimant (Timson) was in receipt of income-related employment and support allowance (ESA) and had utility arrears.
Deductions had previously been made for water arrears, energy arrears, and ongoing usage for both. These deductions were not in place when Timson made their claim for judicial review.
Relevant legislation for TPD from legacy benefits
The Social Security (Claims and Payments) Regulations 1987 SI 1987/1968 allows for third party deductions to be made from certain legacy benefits, for example ESA.
They provide that deductions for water and energy can only be made if they are in the interest of the benefit claimant's family or, if single, the claimant themselves. There is no requirement for a claimant to consent to the deduction.
Claimant's challenge
Timson challenged the DWP's policy for deciding whether to make a TPD because it causes unlawful decisions to be made.
The policy is set out in the Decision Maker Guidance manual (DMG, for example paras 46296 to 46360) and the Overview document.
Claimant's arguments
Timson argued that the policy is unlawful because it:
implies that decision-makers do not have an obligation to seek representations and information from the claimant before deciding whether to impose a TPD
directs the decision-maker that the claimant's consent is not a relevant consideration
directs the decision-maker to ignore the circumstances of the client
Timson argued that the DWP cannot know whether a TPD is in a claimant's best interests unless they have asked the claimant to make representations and provide information.
The court's decision
The High Court held that the DWP's policy was unlawful.
The judge thought the policy wrongly implies that decision-makers are under no obligation to contact the claimant for representations or information.
Before they make a TPD decision, the decision-maker must ask a claimant if they have representations to make. The claimant might have information to provide to assist the DWP to decide whether the TPD would be in the interest of the family. This could include details of the claimant's financial circumstances and whether there are other ways they could pay.
The judge said "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."
Unsuccessful arguments
The judge decided that whether the claimant consented to a TPD is not a relevant factor when deciding if it is in the claimant's best interest.
The judge did not accept that the guidance directs the DWP to ignore the claimant's circumstances.
Comments
This is an important judgment. Claimants of legacy benefits facing the prospect of a TPD being made will have the opportunity to explain their circumstances and make representations to the DWP before a decision is reached.
Third party deductions from universal credit
The judgment might also have a positive impact on how the DWP exercises their discretion when deciding whether to make third party deductions from universal credit, as the relevant guidance for decision-makers also refers to the interests of the claimant and their family.