DWP policy on direct deductions for fines is unlawful

This case law update looks at the decision of the High Court in Blundell and others R (on application of) v Secretary of State for Work and Pensions (2021)

What the case was about

If a person who has not paid a fine is claiming benefit, paragraph 7A of Schedule 5 to the Courts Act 2003 requires the magistrates to apply for a “deductions from benefit order” (DBO) unless this is inappropriate or impractical. Once they receive the DBO, the DWP has discretion whether to make a deduction or not. If they impose a deduction there is discretion to deduct a minimum of 5% from the claimants universal credit (UC) and up to a maximum of £108.35 under regulation 4 of The Fines (Deductions from Income Support) Regulations 1992.

Claimants will often have deductions from their benefit for payments of other debts as well as the fine, such as rent arrears, council tax and fuel payments. Regulations put a limit on these third party deductions so that:

• no more than three deductions can be made at once
• the total deducted can’t be more than 30% of the claimants UC standard allowance (reducing to 25% from April 2021)

Despite this, issues have arisen where the level of deductions leaves people struggling to pay essential living costs, after all, 30% of a client’s standard allowance means that for a couple on UC £179 could be deducted each month.

For other third party deductions, applications by clients to have their deduction reduced on the grounds of hardship have been relatively successful. However for fines, applications for deductions to be reduced are almost always met with the response that the DWP’s policy is that they will not take less than the maximum.

Shelter brought a judicial review to challenge the DWP, arguing that the policy to apply the maximum regardless of the claimants personal circumstances unlawfully removes an important discretion prescribed by law. The DWP’s main defence of its policy is that UC claimants can return to the magistrates’ court to request a direct repayment plan.

What the court decided

The court found that the DWP’s deductions policy was unlawful because it ‘fetters discretion’. In other words, it ignores the range of possible rates of deduction provided for in the legislation and prevents decision makers from taking a claimant’s personal circumstances into account when setting the deduction rate.

When considering the DWP’s defence that the level of fine repayment is a matter for the magistrates court, the court looked at magistrates court guidance on deductions from benefit. This says:

“The rate of repayment through a deduction is set by the DWP…It is important for magistrates to remember that if a DBO is made, the deduction rate will be fixed by DWP not the court…
The court does not have the power to vary the deduction rate…”

The court also accepted evidence from a debt adviser from Citizens Advice Leeds, who explained that vulnerable clients with court fines are often not able to apply to the court. Those that do are told that the court cannot alter the rate of deduction and are directed to make representations to the DWP instead. They are effectively passed from “pillar to post”.

The court decided that 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.

The judge ordered that the DWP’s deductions policy relating to fines should be amended.

What this means for advisers

This judgment means UC claimants can ask the DWP to lower the amount deducted for court fine payments if they are facing hardship. The DWP can no longer operate a policy of making the maximum possible deduction in every case.

The DWP have appealed but in the meantime advisors and claimants can refer to the judgment when making requests for their fines deduction to be lowered.

Lorraine Charlton works as a debt expert in the Expert Advice team at Citizens Advice.

The information in this article is correct as of the date of publication.

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