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Our FOIs: Universal Credit - Payments
Below are a selection of FOIs we have, over the past few years, sent to the DWP with the answers
We hope you find these useful.

Just click on the FOI you are interested in to see the full question and the answer.


QUESTION
Could you please send any revised (ie latest) guidance to service centres / work coaches etc on the administration and decisions on Advance Payments? The public guidance does not contain all the info we need - for example whether change in circs advances are still up to an amount equal to 50% of the standard allowance or are now up to 100%.

ANSWER
Please find attached the current version of the guidance you requested.

Click here to see the guidance.
Click here to see the original FOI.


QUESTION
Under the legacy benefit rules, deductions can be made in respect of 'hostel charges'
where the amount equivalent to the ineligible service charges such as fuel and meals
can be deducted from the claimant's IS, JSA, or ESA and paid directly to the hostel
provider.
Are there any plans to bring this rule under UC regs?

ANSWER
We have simplified the third party deduction provisions in Universal Credit, so that some rules that are included in the legacy benefits' legislation are covered in guidance rather than in regulations. Apart from ongoing costs of gas, electricity and water, in Universal Credit the third party deduction scheme only covers arrears, not ongoing liabilities. However, Regulation 58 of the 'Universal Credit, Personal Independence Payment, Jobseeker's Allowance and Employment and Support Allowance (Claims and Payments) Regulations 2013' (see below) does allow for some or all of a claimant's Universal Credit award to be paid direct to a third party, such as a landlord/hostel provider, if it is in the best interests of the claimant and their family to do so. This would be in the form of an alternative payment arrangement, rather than a third party deduction.
"Payment to another person on the claimant's behalf
The Secretary of State may direct that universal credit be paid wholly or in part to another person on the claimant’s behalf if this appears to the Secretary of State necessary to protect the interests of–
(a) the claimant;
(b) their partner;
(c) a child or qualifying young person for whom the claimant or their partner or both are
responsible; or
(d) a severely disabled person, where the calculation of the award of universal credit includes, by virtue of regulation 29 of the Universal Credit Regulations, an amount in respect of the fact that the claimant has regular and substantial caring responsibilities for that severely disabled person.
The Secretary of State may direct that personal independence payment be paid wholly to another person on the claimant’s behalf if this appears to the Secretary of State necessary to protect the interests of the claimant."


QUESTION
Under existing legacy benefit rules a debt of income tax arising from self-assessment
can be paid to HMR&C by deductions from benefit with the claimant's written consent.
This rule does not appear to exist under UC: just wondering if there were any plans to
bring this rule under UC regs?

ANSWER
The only debts that will be recoverable from Universal Credit on behalf of HMRC are
overpayments of tax credits. There are no plans to widen this any further.


QUESTION
Where the claimant has a sanction equivalent to 100% or 40% of their standard
allowance we understand that the only third party deductions that may be made are for
housing costs, rent and service charges and fuel. Can you confirm what happens if the
claimant was having deductions for hardship payments and /or a new claim advance,
and / or a budgeting advance, and/or Child Support Maintenance before the sanction
was imposed? - ie can these deductions continue if there is enough Universal Credit
awarded or does the overriding 40% maximum rule apply, in which cases these
deductions are suspended during the period of the sanction?

ANSWER
If a claimant is having a sanction applied to their Universal Credit award, which is an amount equal to or more than 40% of their Standard Allowance, the only deductions that can be taken at the same time are Mortgage Interest arrears where the lender is not part of the Mortgage Interest Direct Scheme, Owner-occupier service charges arrears, Rent and service charges arrears, Gas arrears or Electricity arrears. This is aimed at protecting the claimant and their family from being made homeless or having their fuel disconnected. All other deductions would cease whilst the sanction was being applied. This would include deductions for a Recoverable Hardship Payment, Universal Credit Advance or Child Support Maintenance.


QUESTION
What is the maximum someone could have deducted from their UC award for
hardship payments and /or a new claim advance, and / or a budgeting advance, and/or
Child Support Maintenance assuming no other deductions / sanctions are being made
and there is enough Universal Credit in payment?

ANSWER
If someone was having no other deductions made, an amount equal to 40% of the
claimant's Universal Credit Standard Allowance could be deducted to recover a Recoverable Hardship Payment. If other deductions were required, which were above Recoverable Hardship Payments on the priority order, the amount taken for the Recoverable Hardship Payment would reduce.
In exceptional circumstances, the deductions for a Universal Credit Advance (New Claim) or a Budgeting Advance can be over the overall 40% maximum deduction rate.
Old Scheme Child Maintenance is deducted at an amount equal to 5% of the claimant's Universal Credit Standard Allowance and Flat Rate Maintenance deductions are currently set at £5 a week (£21.67 a month). However , they are £7 a week for claimant's having deductions made under the 2012 Child Maintenance scheme.


QUESTION
Reg 72(3) of the Universal Credit regs 2013 states:
"Where a person's capital is treated as yielding income, any actual income derived from that capital, for example rental, interest or dividends, is to be treated as part of the person's capital from the day it is due to be paid to the person."
This can mean, for someone renting out a property, what is taken to be their capital rising rapidly - so that they could swiftly be over the £16,000 limit. But is there any account taken of necessary expenses eg maintenance and repairs, insurance etc? I could see no reference to this in the regulations.

ANSWER
The Universal Credit Regulations 2013 make it clear that all capital which is not disregarded is taken into account in the assessment of Universal Credit and what expenses are taken into account in valuing that capital. Our Advice for Decision Makers guide is also publicly available and provides more information. You may be interested in the chapters on the treatment of capital:
ADM Chapter H1
ADM Chapter H2
You should note that Freedom of Information legislation does not oblige us to provide advice on legislation but we have provided an answer in this case.
Where Universal Credit claimants own a property which they do not live in, the value of the property is treated as capital for the purposes of Universal Credit. The value of the property is assessed at the market value of the property less any encumbrances on the property, e.g. mortgages or loans secured against that property, and an amount to cover the costs of selling the property.
Any rental income from the property will be treated as part of a claimant’s capital from the day it is due to be paid. Expenses incurred in renting out the property would not be an encumbrance on the property and would not be taken into account when assessing the value of the claimant’s capital.
The usual capital rules for Universal Credit are then applied. Households who have capital of over £16,000 are not usually entitled to Universal Credit. People with capital between £6,000 and £16,000 will have their Universal Credit reduced by an assumed income of £4.35 per month for each £250 or part of £250 of capital they have over £6,000. Capital below £6,000 is disregarded.
While it is important to encourage saving, it has never been thought right for valuable assets or substantial amounts of capital to be ignored altogether when deciding entitlement to welfare support. It is reasonable that there should be a limit to the amount of savings and the value of assets that claimants can hold whilst still claiming welfare support.
The £16,000 upper capital limit strikes a balance between protecting less well-off people and protecting the taxpayer, whilst at the same time recognising the conscientious efforts of people who have built up capital. This limit ensures that the help which comes from taxpayers, many of whom are themselves on low incomes and have limited capital, is directed to people who need it most.
Click here to see the original FOI.


QUESTION
My question is whether there is any guidance or procedural documentation relating to the process of adding an APA managed payment onto a landlord's schedule of payments.
Specifically: Once the payment has been agreed then, when the claimant's UC award has been assessed, there must be some mechanism and agreed procedure for deducting the appropriate managed payment amount and sending this to the landlord via the 4 weekly schedule:
1. Is there anywhere in the documentation relating to this process that explains what should happen if the schedule is due very soon after the end of the monthly assessment period, meaning there is insufficient time to take it out of that payment?
2. Could you confirm whether this would entail the managed payment being paid in the following schedule due to that landlord?
3. Could you confirm at what point it is too late to do this - ie is it if the schedule would be one day, or two days etc later than the end of the monthly assessment period? Or is it dependent on too many factors to say?

ANSWER
Please see this link, which answers questions 1-3 above
We presume this is the section the DWP refer to:
8.4 How DWP pay the managed payment to landlord

Social landlords


For social landlords who have a tenant getting Universal Credit live service, a Bank Automated Clearing System (BACS) payment will be paid into the bank account nominated by the landlord at the end of the claimants Universal Credit assessment period on a monthly basis.

For social landlords who have a tenant getting Universal Credit full service the Third Party Deductions (TPD) Scheme will be used to pay the Alternative Payment Arrangement (APA) Managed Payment to Landlord (MPTL).

Payments from the TPD Scheme are paid 4 weeks in arrears every 28 days. The 28 day TPD payment cycle equates to 13 payments in a calendar year.Payments from the TPD Scheme are paid 4 weeks in arrears every 28 days. The 28 day TPD payment cycle equates to 13 payments in a calendar year.

Universal Credit payments are paid calendar monthly and equate to 12 assessment periods each year. This means:
DWP will assess what deductions (e.g. APA MPTL) can be made from Universal Credit payments 12 times each year at the end of each assessment period
the APA MPTL is paid in the TPD payment cycle following a Universal Credit payment
when a TPD payment cycle ends before DWP assess what deductions can be made from a Universal Credit payment, then any APA MPTL payment will be paid in the next TPD payment cycle
12 APA MPTL will be paid in 12 of the 13 TPD payment cycles
The first APA MPTL payment from the third party payments system is normally received within 6 to 8 weeks from the date deductions commence, for example, from the end of the assessment period in which managed payments commenced.

The MPTL APA is paid on the same day that landlords normally receive any third party rent arrears deductions and will be paid into the bank account nominated by the landlord.

If you have multiple properties with MPTL’s, then you will receive a single aggregated payment for all your tenants on a 28 day cycle and a schedule will be sent to you with a breakdown of all payments.

For Universal Credit full service tenants DWP will use the landlord’s creditor reference number to pay both rent arrears and the managed payment APA to the landlord.

Payments will be shown as individual transactions, and will include an identifier to show whether the payment relates to rent arrears (RA) or APA (MPTL) payment. A remittance note will be sent to the landlord which shows how the payments have been broken down.

When a managed payment APA or rent arrears deduction is paid through third party deductions, their claimant/tenant reference number will be annotated at the end with either:


RA for rent arrears payments
MP for managed payment
The claimant or tenant reference number shown on the Third Party Payment schedule are 18 characters.

To help with identification of the 2 types of payments, the tenant reference number is 16 characters long, allowing for the RA or MP suffix.

If you have any queries relating to your Third Party Payment schedule you can contact the third party payments contact centre.

Private landlords
For private landlords, a Bank Automated Clearing System (BACS) payment will be paid into the bank account nominated by the landlord at the end of the claimants Universal Credit assessment period on a monthly basis.


Click here to see the original FOI.


QUESTION
I understand that under Schedule 6 of the Universal Credit etc (Claims and Payments) Regs 2013 there is an overall limit (extendable in certain situations) of an amount equal to 40% of the relevant standard allowance, that can be taken from a claimant's Universal Credit award in respect of a list of particular third party deductions (TPDs).
And that if a claimant is having a TPD in respect of rent arrears, at 20%, taken from their award, that they can, at the discretion of DWP, have this reduced, but never lower than 10%.

Could you send me the regulations or guidance that stipulate that where this TPD is reduced, another deduction cannot be taken (or increased) such that the overall limit then goes back up, possibly to 40%, leaving the claimant in no better position than they were before this particular TPD for rent arrears was reduced?
Alternatively, tell me if this is not the case and that therefore this can happen.”

ANSWER
"....There is nothing in the Regulations beyond what you have specified in your query. (However) We do have DWP (Full Service UC) guidance that deals with the issue of Universal Credit deductions" - "Deductions causing financial hardship".
If a claimant is struggling financially, they can ask for the amount of deduction to be reconsidered on the basis of financial hardship.
Financial hardship decisions are only available when deductions amount to more than 10% of the Universal Credit Standard Allowance and are being made for any of the following:
- Benefit debt
- A Social Fund loan
- Rent arrears

The decision whether to reduce the deduction rate for a rent arrears TPD can be by the "Debt Management" department (where recovery of a benefit debt or social fund loan is involved); or by the UC decision maker if there is no benefit debt or social fund loan deduction as well as one for rent arrears.
In either case the UC department should apply a new reduced overall maximum deduction rate in line with any decision to reduce the individual debt.

Deductions cannot be reduced in respect of any other types of deduction as the others all have set rates (except fines).

Click here to see the original FOI.


QUESTION
How does the Third Party Deductions "system" automatically transfer deductions from a legacy benefit to UC - is this a legal obligation on DWP or purely good practice?
And if there is a delay which causes a claimant's payments not to be made eg rent arrears, court fines, Council Tax arrears etc - which could have serious knock on effects, can a claimant claim compensation for this?

ANSWER
Third party deductions (such as utility deductions) from “legacy benefits” (such as old style JSA and ESA) are made under the provisions contained in Schedule 9 to the Social Security (Claims and Payments) Regulations 1987. When an award to a legacy benefit is terminated the payments under this provision cease.
However, there are provisions to transfer consent that may have been provided in relation to some legacy benefit deductions, so that it can be used for Universal Credit deductions without needing to gain a claimant’s permission to reuse the data. Please note that not all deductions require consent.
Regulation 18(3) in the Universal Credit (Transitional Provisions) Regulations 2014 specifically provides for continuing deductions in respect of fuel costs or water charges, without the need for further written consent. This is because DWP asks for a claimant’s consent to make deductions for fuel costs and water charges where, the total of these deductions exceeds a set threshold, and without Regulation 18 we would need to ask for that consent again to continue making those deductions where a claimant moves from a legacy to a new style benefit.
Delays to third party deductions payment under legacy should not occur, as we terminate that payment when the legacy claim terminates, then a new payment under Universal Credit’s rules when awarded will takeover. This is all done seamlessly and would look to a claimant like a continuation.
There is a link to gov.uk which gives advice on maladministration. Please see below:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/422425/financial-redress-maladministration-apr-15.pdf

Click here to see the original FOI.


"Where the Secretary of State decides that it is in the claimant’s best interests to order repayment of the arrears he can do so at an amount equal to between 10% and 20% of the claimant’s standard allowance. Where a rent arrears deduction is made, we do so in the claimant’s best interest to avoid the severe hardship caused by eviction when all other options for recovering arrears have failed.
In practice, we take a total amount from Universal Credit equal to up to 40% of the claimant’sstandard allowance for all the deductions that are required, so would take the minimum 10% and up to a further 10% to repay rent arrears depending on other deductions that sit between the minimum and maximum deductions on the priority order. The 40% maximum deduction is the safeguard we have put in place to protect claimants from excessive deductions.
We will consider a claim for hardship to reduce the amount the claimant repays for rent arrears.
The repayment rate will not be reduced to less than the minimum 10% rate under this process. I attach the information note from 19/12/2014 that was sent to staff setting out the guidance for dealing with such requests. "


QUESTION
At a recent briefing DWP (UC) stated that Post Office Card Accounts would not be able to be used under the Digital or "full" service - that if someone claimed UC under the Digital system they could only use a Post Office Card Account for an advance UC payment while setting up a bank/building society/Credit Union account.
However, having a look at the current Digital Claim online it does allow Post Office Card Accounts to be entered.
Could you confirm if this will be changed so as not to allow Post Office Card Accounts or will they in fact still be available to claimants under the Digital ("Full") Service?

ANSWER
We currently hold no information on POCA being removed as an option on digital services as we will accept POCA accounts for claimants to initially make a UC claim, however these accounts remain the exception to be used only where other banking facilities are not available to the claimant. We would then support the claimant where appropriate, via Personal Budgeting Support, to try to move them on to better banking facilities in the future. Research shows very few claimants should be unable to access traditional bank accounts or basic bank account facilities, particularly with current on-going work to improve basic bank accounts and make them more widely available. DWP is working closely with financial institutions to develop a range of banking products which would be available for all claimants, irrespective of their financial history or circumstances. The Department sees the use of a transactional bank account as a key enabler to preparing people for the world of work and enabling them to budget effectively.


QUESTION
The guidance states: "Split Payments should be considered when:
- the claimant notifies DWP of financial mismanagement and/or financial abuse
- the claimant notifies DWP that there are domestic violence issues · the claimant cannot or will not budget for their own or their family’s basic day to day needs "
Can I assume from this that the DWP will not need to / ask to interview both members of a couple but will act on the information from the abused claimant? Secondly could you confirm if/what evidence would be required to accept that there is financial mismanagement and/or financial abuse and/or domestic abuse?

ANSWER
If a request for Split Payments is made, the claimant making the request is interviewed and a decision to award Split Payments made based on that discussion. There is no intention to interview / discuss the matter with the other member of the claimant household and there is no evidence required to support the request. However a notification is sent to both claimants informing them of the decision to change their payment arrangements. This letter does not provide specific details of the request or the basis for the decision but does give details of the intention to split the payments and the rights of appeal
Find out more about split payments here on our website.

Click here to see the original FOI.


QUESTION
In response to a request on "various questions about managed payments" (R2740, response dated 23rd July 2014):
"5. Where a managed payment has been in place and then the DWP find out that the UC award was incorrect and has been overpaid due to claimant fraud or error, will the overpayment always be recoverable from the claimant or could the landlord ever find that they have to pay back some of the managed payment?"
You responded:
"Universal Credit overpayments are recoverable from landlords who are being paid some or all of the claimant’s UC, in 3 specific circumstances:
The landlord has caused the overpayment by misrepresenting or failing to report a change.
The landlord has been paid more than the rental liability.
The claimant has moved out of the landlord’s property and we have continued to pay the landlord the housing element. "
In respect of the first bullet point, how "broad" is the definition of a failure to report a change? Particularly, does it include facts of which a landlord might not be aware? Could you give any examples?

ANSWER
Special rules apply where claimants or landlords report changes of circumstance late or after the end of the assessment period in which the change occurred.
If the change would increase the claimant’s award it takes effect from the start of the assessment period in which the change was reported.
If the change would decrease the claimant’s award it takes effect from the start of the assessment period in which the change occurred. Overpayments would then be recovered in line with the general policy on recovery of overpayments of Universal Credit.


QUESTION
1. Where there is a managed payment in place due to rent arrears - will this always continue until the arrears are cleared?
2. Does the landlord have a responsibility to notify the DWP when the arrears are clear?
3. Will the landlord be notified if managed payment in place due to rent arrears comes to an end - perhaps due to the UC claim ending, or where the DWP decide to stop the managed payment?
4. Where there is a managed payment in place to a ‘non standard claimant’ (ie vulnerable) - will the landlord be notified if this comes to an end - eg on review when the DWP decide that the claimant can now manage paying the rent themselves, or if the UC claim ends?
5. Where a managed payment has been in place and then the DWP find out that the UC award was incorrect and has been overpaid due to claimant fraud or error, will the overpayment always be recoverable from the claimant or could the landlord ever find that they have to pay back some of the managed payment?
6. If the claimant dies and the death is reported 'late' will the landlord have to pay back any managed payment that has been overpaid?
7. If a claimant is on managed payments and requests that they change back to direct payments, under what circumstances would the DWP agree? And would the landlord then be notified?

ANSWER
1. An Alternative Payment Arrangement (APA) is a discretionary decision which is reviewed at appropriate intervals. The decision to return to the norm of standard payment will be based on assessment of capability, following the delivery of any necessary support, ensuring they have any debt under proper control via a repayment plan, including where appropriate deductions from current UC.
2. Only in cases where there is a Third Party Deduction in place to recover arrears.
3. Yes, the landlord would be notified in the managed payment of rent ceases.
4. As above.
5. Universal Credit overpayments are recoverable from landlords who are being paid some or all of the claimant’s UC, in 3 specific circumstances:
The landlord has caused the overpayment by misrepresenting or failing to report a change
The landlord has been paid more than the rental liability
The claimant has moved out of the landlord’s property and we have continued to pay the landlord the housing element
6. Overpayments are recoverable from landlords in the circumstances set out above.
7. It is a discretionary decision to introduce and/ or remove an APA. In cases where a landlord has requested rent payments and there are still rent arrears are outstanding, it is unlikely we would revert to direct payment as a result of a request from the claimant. In any event, the landlord would be notified if the APA ends.

Click here to see the original FOI.