DWP urged to review ‘harsh treatment' of people who have been overpaid benefits

Daily Record

3 days ago

A charity set up by Martin Lewis is urging the DWP to review the repayment process for claimants and take individual income and outgoings into account.
Reasons your Universal Credit may be cut by DWP
A charity set up by consumer champion Martin Lewis says the approach to collecting benefits overpayments should be urgently reformed. The Money and Mental Health Policy Institute said some people are being subjected to sudden and severe debt collection practices, causing financial hardship and distress for people in vulnerable circumstances.
Benefits overpayments may happen when the Department for Work and Pensions (DWP) pays more in benefits such as Universal Credit than someone is entitled to, perhaps due to changes in someone's circumstances or an error.
The charity said that overpayments can accumulate for months unbeknown to recipients, but the DWP can rapidly take payment within weeks of identifying an issue. It added that the DWP can directly deduct 15 per cent of someone's monthly Universal Credit payment if they have been overpaid benefits.
For a single adult aged 25 and over, 15 per cent of a monthly Universal Credit payment can amount to £60-a-month - causing a significant income shock for people who have a low income - the charity argued.
It contrasted the situation with commercial lenders, who would go through the courts, a process which could take months, to forcibly take money from someone's income.
The charity said some people may find the messaging that benefit money is going to be recouped from them alarming, with people receiving messages on their online accounts stating that they have been paid more in Universal Credit than they were entitled to and this will now be taken back.
It said that while people can call the UK Government to try to negotiate an affordable plan, people may not clearly understand this from the messaging.
Meanwhile, consumer creditors such as banks, credit card companies, water companies and energy companies are required by regulation to engage extensively with people who owe money, Money and Mental Health said.
The charity, which carried out research into the issue, reports one person had said: 'Having money deducted from my benefits has made it difficult for me to make ends meet and some days I have been not eating because I can't afford to, which is leaving my mental health in tatters.'
It also highlighted that the DWP is gaining more powers via the Public Authorities (Fraud, Error and Recovery) Bill currently passing through Parliament.
In particular, the DWP should proactively assess how much people can afford to repay, the charity said. It suggested that, for example, the DWP could mirror the approach taken by consumer creditors in assessing someone's income and essential outgoings, and then giving people a 'real chance' to negotiate an affordable repayment plan.
The charity also said that debt management standards guidance on how to protect people in vulnerable circumstances from harm, including people with mental health problems, should be strengthened for all government departments.
Helen Undy, chief executive of the Money and Mental Health Policy Institute, said: 'The Government's harsh treatment of people who've been overpaid benefits is reminiscent of the Carers' Allowance scandal.
'When people are paid more in Universal Credit than they are entitled to, it's often through no fault of their own, and sometimes the first they know of it is when the Government takes sudden and brutal steps to claw those payments back. Many people we work with are already running out of money for food before the end of the month, suddenly taking £60 from what they have left plunges them into further financial hardship and needless distress.
'The Government has pledged to overhaul how it reclaims carers' allowance, now it needs to do the same for how it collects universal credit overpayments. Above all, that means proactively giving people a real chance to negotiate a payment plan that they can actually afford, instead of just taking money out of people's income with barely any warning.
'We'd also like to see better standards applied across all government debt collection. It cannot be right that the state is lagging far behind the standards that consumer creditors have to meet in treating people fairly and with respect if they fall behind on payments.'
A DWP spokesperson said: 'While we would urge people to report a change in circumstances to avoid falling into debt, we understand debts do occur and will always support those struggling with repayments to agree affordable plans.
'Our new Fraud Bill will help us to identify overpayments at the earliest stage so we can help prevent people falling into debt, and to do so in a way that is fair and proportionate.'
Agents within the Department's debt management team refer customers to the Money Advice Network who offer free, impartial and independent debt advice.
The DWP also said it remains committed to the Treasury's Breathing Space policy, which provides those with problem debt the right to legal protections from creditor action for a set period to enable them to receive debt advice and enter an appropriate debt solution.