Third party deductions are payments which are automatically deducted from a claimant's standard Universal Credit allowance. They are used to pay back outstanding debts, such as rent arrears, utility bills or council tax arrears. They are designed to help ensure that people's debts don't continue to mount up and that creditors, including housing associations, get paid back for arrears owed.
The DWP have made the decision to pause these deductions until 10 May to free up time for staff to process new Universal Credit claims. They have given a commitment to maintaining the third party deductions system after this temporary suspension has taken place. The NHF understands that the suspension is for one month only while staff work through the huge number of new claims.
All residents’ third party deductions on Universal Credit payments are currently paused until 10 May, after which some reductions will resume. The DWP have advised that they are explaining the changes to residents who receive Universal Credit through their online journal. They are also informing third parties, including housing providers who collect arrears, via this method.
The third party payments that have been suspended include rent arrears, service charge arrears and council tax arrears. Direct payments for rent will continue and are not affected by this temporary pause.
Housing associations will not receive rent arrears payments from residents who pay through third party deductions for the period up to 10 May. In the longer term, deductions to repay arrears will continue as normal.
In a written answer on 27 April 2020, Employment Minister Mims Davies said:
'Deductions are already capped at 30 per cent to not overburden the claimant. Should we suspend deductions there is a risk that some claimants will be unable to pay their outstanding arrears from third parties, potentially resulting in eviction or a loss of services.'
You can read Mims Davies' written answer in full on UK Parliament’s website.
If you have any further questions about third party deductions please contact Sue Ramsden.