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DWP suspends third party deductions for arrears – unannounced

A number of housing associations have been advised that current third party deductions for arrears and applications for deductions have been suspended.

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A number of housing associations have been advised by DWP contacts that the current third party deductions for arrears and applications for deductions have been suspended, though there has not been a formal notice.

The first sign of this decision came when some associations were given a 'heads up' by their contacts in the DWP that third party deductions, which include payments to reduce rent arrears, were to be suspended from 21 April for three months. Some days earlier, the DWP had announced that it was suspending recovery action associated to benefit overpayments, Tax Credit debts being managed by DWP and social fund loans, but, at that point, third party deductions were not included.

The change of approach is believed to have been influenced by the need for manual intervention to set up the deductions. As was made clear by DWP Director General of Universal Credit, Neil Couling, at his appearance before the Work and Pensions Select Committee on 23 April, the DWP has managed to process the huge upsurge in claims - over 1.5 million since the onset of the emergency - thanks to the automation in the system. Although the rate of new claims has receded from its peak of 10 times the normal rate, it is still running at three times its pre-crisis levels.

It is not known whether this also affects new requests for managed payments to landlords, or Scottish choices direct payments to landlords, although exisiting arrangments seem to be unaffected, as they may be an automated process. SFHA is seeking clarification.

SFHA Policy Lead Jeremy Hewer said: "While we appreciate that the DWP is making serious efforts to get the flood of new claims processed and paid on time, it is disappointing that it was not able to give proper notice of the change, which would have allowed landlords to engage with those affected and to make voluntary arrangements wherever possible.

"What this means is that housing associations and co-operatives will see a further dip in their income, and individuals affected will remain in debt for longer."

SFHA has also submitted written evidence to the Work and Pensions Select Committee inquiry into the five-week wait, arguing that it needs to be replaced by earlier payment and a revised assessment process. A copy of the submission is available on the SFHA website.

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