The Department for Work and Pensions has announced plans to scrap a computer system that automatically processes deduction requests from private landlords, which allowed them to claim up to a fifth of a claimant’s universal credit payments to cover outstanding rent. This decision comes in the wake of a judicial ruling that deemed the process unlawful, as it approved deductions without consulting or considering the interests of those affected.

Over the past several years, the system has processed tens of thousands of requests annually, amounting to millions in deductions. Since 2017, approximately 10.3 million requests have culminated in a total of £479 million being deducted from claimants, highlighting the significant impact of this practice on vulnerable individuals.

The system’s automated approach, which bypassed both the claimant and the DWP in its decision-making, was criticized by Judge Mr Justice Fordham. He noted that the reliance on computer decisions raised serious concerns about fairness and whether the interests of claimants were truly being prioritized. The ruling followed a legal challenge by a benefit claimant, Mr Nathan Roberts, who faced deductions for both alleged rent arrears and ongoing rent payments while embroiled in a dispute over property repairs.

In response, the department is undertaking a comprehensive review of the process to develop a fairer mechanism that adequately protects claimants from falling into debt, while still ensuring landlords receive due payments. Secretary Liz Kendall expressed her commitment to resolving the longstanding issues in the benefits system, emphasizing that the reforms would aim to transform punitive practices into a more equitable framework. The initiative is part of broader changes intended to enhance both employment and disability benefits, with the intention of addressing concerns raised by various stakeholders.

The case, which also involved compensation for other benefit claimants due to inadequate protection measures in the transition to universal credit, underscores the department's recognition of the need for systemic change. Although only refunds have been issued to affected claimants so far, the DWP has confirmed that it is actively re-examining the entire system, indicating a decisive shift towards a more balanced and just benefit framework.