Universal Credit and Pension Credit are among several financial aids for people in the UK. However, the Department for Work and Pensions (DWP) cautions that claimants may face cuts ranging from 5% to 20% in very exceptional circumstances.
These reductions, known as ‘third party deductions’, occur when a benefits claimant owes money for court fines, rent, Council Tax or energy payments. The usual procedure involves a set amount being deducted until the debt or debts are fully settled, with a cap of three debts being repaid simultaneously via this method.
For those on Universal Credit, each debt owed results in a 5% deduction from your benefit payment, but for rent payments the reduction can range from 10 to 20%. Those receiving other benefits, such as income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA) and Income Support may also have £4.55 a week cut for each debt owed.
The DWP’s list of those affected is below:
- Income Support
- income-based Jobseeker’s Allowance (JSA)
- Universal Credit
- income-related Employment and Support Allowance (ESA)
- Pension Credit
Third party deductions are usually requested on behalf of an organisation which is owed money from an individual. These are approved by the DWP under exceptional circumstances where the organisation has tried several other ways of retrieving the funds.
“You’ll be told how much will be deducted by letter or in your Universal Credit journal,” the DWP’s advice explains. “…If you want to pay more than the fixed rate towards your debts, you must arrange this with the organisation you owe money to.”
Cuts to pay off ‘fuel debt’ – owing money for gas and electricity – are more commonly termed as Fuel Direct. Individuals keen to pay off their ongoing bills can also contact a supplier to set up deductions that cover energy use.
The DWP continues: “Contact your supplier to set up deductions for your ongoing bills. They’ll need your consent to request this for you. You can give consent on the phone. It does not need to be in writing.
“Agree an amount with them that covers the cost of the energy you use. You can stop deductions for ongoing bills at any time. Contact the office that pays your benefit to request this.
“If you choose to stop making gas and electricity payments, contact your energy supplier to arrange a different way to pay. If you want to change the amount you pay, contact your supplier.
“If you owe money but cannot afford more deductions to your benefits, your supplier can tell you what help is available for people on low incomes. They may be able to arrange a different way for you to pay.”
If you disagree with the cuts made to your benefits, you can request for a mandatory reconsideration. This challenge must be made within one month of the decision, and when doing so you’ll need to provide a ‘good reason’ for disputing the findings.
This may include the following instances:
“Some decisions cannot be reconsidered. Others can go straight to an appeal,” the DWP adds. “Your original decision letter will say if this applies to you.”
For further information, head to the DWP’s website.