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Deductions from UC for Court Fines

 

Inflexibility in DWP’s Policy on Deductions from UC for Court Fines Declared Unlawful

The High Court, in the case of Blundell & Ors, R (On the Application Of) v Secretary of State for Work and Pensions [2021] EWHC 608 (Admin), ruled that the DWP had acted unlawfully in failing to make individual decisions on how much to deduct from a claimant’s UC to pay court fines.
The DWP has decided not to appeal against this decision, meaning the High Court's decision is final.
 

What did the DWP do that was considered unlawful?

The DWP had “fettered their discretion”. In other words although the regulations give the deduction rate of £108.35 a month as the maximum that can be deducted from a UC claimant's award for court fines - ie suggesting a lower amount could be taken - the DWP have been choosing to apply a blanket policy of deducting the maximum allowed under the regulations without giving any consideration to the claimant's circumstances.
 

What happens if a UC claimant is ordered to pay a fine?

A magistrate’s court may apply to the DWP asking for payments to be deducted from Universal Credit (and some other benefits) to pay off the fine: a Deductions from Benefits Order (DBO).

A magistrates' court has a broad range of powers to vary the payment terms at any time, including allowing payment by instalments, to vary the number of instalments, to vary the amount of any instalment, and to withdraw the benefits deduction application.
 

What happens if the claimant is struggling to pay?

It has been the DWP’s policy to deduct at a fixed rate and not to alter it. So if a claimant states they are in financial hardship the DWP has been telling them they have no option but to apply to the magistrate’s court for a variation in the order. 

But due to the Court ruling the DWP cannot use this blanket approach anymore.

So the claimant should contact the Debt Management Centre (Debt Management (C), Mail Handling Site A, Wolverhampton, WV98 2DF  tel: 0800 916 0647) and ask for a lower repayment rate, preferably backed up by a financial statement showing their income and outgoings. It is at the DWP's discretion whether or not to reduce the rate - but they cannot refuse to consider the application or tell them they have no option but to apply for a variation with the courts.

If the DWP refuse to consider the application for a lower rate the claimant should refer the DWP to the High Court decision.

 

Why was the DWP's advice to apply to the magistrate's court a problem?

1. Having a Deductions from Benefits Order (DBO) is better than a direct arrangement with the court because it  means the fine is taken at source from the Universal Credit award: the claimant is not at risk of defaulting by choosing not to pay.
It has been shown that default is much more likely where a debtor must arrange direct payments to the magistrates' court.
The judge, Mr Justice Kerr argued:

'The court cannot save the debtors from themselves by taking their money at source to pay off their fines. … the debtor cannot be left to pay off court fines voluntarily; they must be made to do so, for their sake and society's.' (paragraph 89).

2. Nearly all UC claimants must have a bank account to receive UC payments. But if a claimant becomes overdrawn the bank will not pay out direct debits or standing orders to pay court fines.

3. Vulnerable debtors with court fines may not have the confidence or ability or support to apply to the court. For those who do, the court, rather than making a variation to the order, frequently tells them (correctly) that the court cannot change the rate of deduction from UC - and so they are sent from pillar to post.

4. The magistrates' court or fines officer will not necessarily know what the effect, if any, of varying the payment rate will be on UC deductions and therefore on alleviating financial hardship. If a DBO is removed for a court fine payment, under the current policy the maximum of the standard allowance could still be taken for the other deductions, so varying the payment rate won’t necessarily help.
 

What was the Court's decision and the outcome?

Mr Justice Kerr drew a distinction between what is allowed in the Regulations* and what the policy says.
The Regulations* allow discretion in the amount deducted whereas DWP policy makes no provision for reducing the deduction rate for fines on the ground of financial hardship.

He stated:

The deductions policy prevents what the legislation requires:
The Fines Regulations give the Secretary of State discretion to deduct "any sum" from fines, within the set parameters, or no sum at all;
while the deductions policy sets a deduction rate fixed arithmetically with no possibility of departure from it in individual cases
.’
……

‘The Secretary of State's policy and practice are not lawful in their present form. There would be no legal difficulty if the deductions policy admitted of exceptions, even rare exceptions, in individual cases. The claimants themselves accept that. But it does need revising to enable that to happen. For those reasons, the first ground of challenge (fettering of discretion) succeeds.'
…….

‘I will hear the parties on the appropriate form of relief. Subject to hearing argument, I do not propose to quash the policy. There are many parts of it that are good in law and untouched by this judgment. Severance of the good parts from the bad may not be easy. I am minded to grant a declaration in a form which I hope will be agreed between the parties.

The ruling is here [2021] EWHC 608 (Admin)


*What do the Regulations say about discretionary powers?

The making of deductions from Universal Credit is regulated by by the Fines (Deductions from Income Support) Regulations 1992 - which has been updated to include deductions from UC – and by the Universal Credit, Personal Independence Payment, Jobseeker's Allowance and Employment Support Allowance (Claims and Payments) Regulations 2013.

The Fines Regulations give the DWP discretion to deduct "any sum" from fines, within the set parameters, or no sum at all.
The Claims & Payments Regulations state that deductions may be made from benefit and direct payments may be made to third parties on behalf of a claimant.  in accordance with … Schedule 6 and 7. Schedule 6 governs deductions from benefit and direct payment to third parties.

So a discretionary power is enshrined in the regulations. This is why it was deemed that the policy is unlawful in fettering that discretion.

 

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