Debt-by-design in social security: unlawful administration of ‘Third party deductions’

The largest creditor to those accessing food banks in the UK is not a private company or a bank, but the Department for Work & Pensions (DWP) (Trussell Trust 2022). Of the 4.1 million households in receipt of Universal Credit – the flagship working-age benefit in the UK – 1.8 million have money deducted by the DWP to service a debt (CPAG, 2022). Debt is built into the design of the social security system. Claimants owe money to the DWP for a range of reasons: they have had an ‘advance payment’ to help them through their wait for the first Universal Credit award, have been overpaid benefits (as a result of a DWP error or otherwise), been awarded a hardship loan, or they owe money to a ‘third party’ – such as a utility company or housing provider – who claims it back via their benefits (so-called, ‘Third Party Deductions’ (TPDs)). In R. (on the application of Timson) v Secretary of State for Work and Pensions [2022] EWHC 2392 (Admin) the court examined whether the operation of the TPD scheme in respect of so-called ‘legacy benefits’ was lawful. Characterised elsewhere in this journal by Griffiths and Cain (2022) as the DWP’s ‘free debt collection service’, under a wideranging scheme, the DWP can deduct up to 25% of a Universal Credit or legacy benefit award to repay arrears to utility providers (or other creditors, such as landlords). In finding that the guidance issued by the DWP to decision-makers was unlawful, Timson offers an insight both into the reality of the TPD process and its importance for thousands of households on legacy benefits and – by extension, given the similarity of the scheme – Universal Credit. This note outlines the decision in the case before turning to three broader points: the insight the case offers into the practical operation of the TPD scheme, its welcome interrogation of guidance in light of common law principles, and the court’s acknowledgement that redress after a decision is not always sufficient where an adverse outcome can cause real hardship. The claimant in Timson was unable to work as a result of significant disabling physical and mental health problems and was in receipt of means-tested benefits, including income-related employment and support allowance – a ‘legacy benefit’ which is being gradually replaced by Universal Credit. In common with thousands of others in receipt of means-tested support, TPDs had been made from her benefits to pay utility companies in respect of her water and fuel usage. She argued that the operation of the scheme was unlawful in two respects. First, under common law grounds, the written guidance