The Department for Work and Pensions (DWP) is set to scrap its automated benefit deduction system, which has allowed private landlords to claim rent arrears directly from millions of universal credit claimants without their consent.
This decision follows a court ruling in January 2025, where a judge declared the system unlawful and unfair. The ruling came after a legal challenge from Nathan Roberts, a private tenant who had his benefits deducted automatically despite being in a dispute over property repairs.
Now, the DWP has confirmed that it will re-evaluate the entire deduction process to ensure fairness for both tenants and landlords.
What Was the DWP’s Automatic Deduction System?
The automated program, introduced in 2017, allowed private landlords to request deductions from universal credit payments when tenants were in rent arrears.
- 10.3 million deduction requests have been processed since the system began.
- £479 million has been deducted from benefit claimants’ payments.
- Landlords could request up to 20% of a claimant’s monthly universal credit without informing them.
This system was designed to prevent eviction, but critics argue it has instead pushed struggling tenants further into debt.
Why Is the System Being Scrapped?
The decision comes after a landmark legal case where Judge Mr Justice Fordham ruled the system was unfair.
- The judge highlighted the lack of human oversight, stating that DWP staff were following automated decisions rather than considering a claimant’s best interests.
- The lack of consultation with tenants meant people had money deducted without their knowledge or consent.
- The system ignored disputes between landlords and tenants, like in Nathan Roberts’ case, where he was also challenging property repair issues.
Following the ruling, the DWP refunded Mr Roberts’ deductions and admitted they were taken in error.
DWP’s Response and Future Plans
Work and Pensions Secretary Liz Kendall has promised to “right the wrongs” in the benefits system.
- The department is now urgently reviewing the deduction system to ensure fairness.
- A new approach will aim to balance landlord rights and tenant protections.
- The changes are part of a broader reform of health and disability benefits to make the system more just and effective.
Kendall stated:
“We will continue to listen to people’s concerns and transform our benefits system to one of fairness, not punishment.”
Legal Experts and Campaigners React
Lawyer Emma Varley, who represented Nathan Roberts, welcomed the DWP’s response:
- She called it a “positive, if belated, step”.
- However, she warned that real changes must be made to improve decision-making at the DWP.
Campaigners argue that this case is part of a wider pattern of unfair benefit policies and are calling for further reforms.
Compensation for Other Benefit Claimants
The DWP recently announced compensation for around 57,000 benefit claimants, following another court ruling.
- Many claimants will receive up to £5,000 each.
- The case involved disability benefit recipients, whose incomes were not properly protected when switching to universal credit.
This ruling, combined with the scrapping of automatic deductions, signals a major shift in how the DWP manages benefits.
The DWP’s decision to scrap the controversial deduction system marks a significant victory for benefit claimants. The system, originally designed to prevent evictions, has instead pushed thousands into financial hardship by allowing landlords to take rent payments without consent.
Following a high-profile court case, the government now faces pressure to reform benefit policies further and ensure claimants’ rights are protected. As the review process unfolds, both tenants and landlords will be watching closely to see what new measures are introduced.
For now, those affected by unfair deductions should seek legal advice and stay informed about their rights and compensation options.
FAQ’s
Why is the DWP scrapping the benefit deduction system?
The DWP is scrapping the system after a court ruled it unfair, as landlords could deduct rent payments from universal credit claimants without their consent.
Who was affected by the DWP’s deduction system?
Millions of universal credit claimants had up to 20% of their payments deducted for rent arrears, often without knowing or agreeing to it.
What did the court rule about the deduction system?
The court ruled that the system was unlawful and unfair because DWP agents were relying on automated decisions instead of considering claimants’ best interests.
Will claimants receive compensation for past deductions?
The DWP refunded the claimant in this case, but it is unclear whether broader compensation will be offered. Legal experts are calling for further action.
What changes is the DWP making to the benefits system?
The DWP is reviewing the deduction process and planning major reforms to health and disability benefits to make the system fairer.
