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DWP challenged over automatic benefit deduction

a person taking money out from their wallet
a person taking money out from their wallet Image credit: birminghammail.co.uk

The Department for Work and Pensions (DWP) has lost its appeal after a former disabled police officer accused the government of allowing utility companies to reduce employees' benefits without their consent. 

Helen Timson, 51, from Leicester, said it was wrong that the DWP gave permission to water and energy businesses to automatically take up to 25% of a claimant’s monthly benefit income without carrying out any form of checks.

High court judge, Mr Justice Cavanagh, said the government had broken the law because claimants were not given the right to challenge the scheme and broke a “breach of the obligation of fairness”.

Timson saw her benefits being slashed without her consent, on one occasion an energy company deducted £81 a month for a year and a half on a debt which never existed.

She also challenged a series of benefit reductions made from Southern Water, when the errors were corrected her debt payments were cut by £31 a month.

She was forced to quit her job due to physical and mental health conditions, having no control over her finances has made it difficult to afford food, rent and travel to hospital appointments.

Upon hearing the court’s decision she told The Guardian: “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.”

The court heard how utility firms requested third-party deductions by submitting Excel spreadsheets to the DWP with the details of vast amounts of customers who had fallen into arrears which contained no information on the nature of the debt or the customers’ circumstances.

Despite the DWP being required to approve deductions only if they are “in the interests” of the claimant or their family, the court heard officials went ahead with deductions without liaising with the claimant, or taking the claimant’s interest into account. 

Timson’s solicitor, Emma Varley from Bindmans LLP, said the scheme must be changed so claimants are notified about the company's deductions and be able to challenge any requests.

A DWP spokesperson said: “We are carefully considering the judgement and will respond in due course.

“The third-party deductions scheme strikes a fair balance between ensuring uncontested debts for essential utilities are paid, and helping protect vulnerable people and their families by shielding them from potentially severe consequences of failing to address these debts.”

Almost 200,000 deductions were made for water debts in May 2021 and 63,000 for gas and electricity debts in February 2022.