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Urgent new DWP alert as some have £60 a month taken from their benefits

Urgent new DWP alert as some have £60 a month taken from their benefits

Daily Mirror4 days ago
The Money and Mental Health Policy Institute, which was set up by Martin Lewis, said some people are being subjected to sudden and severe debt collection practices
The Money and Mental Health Policy Institute, a charity established by consumer advocate Martin Lewis, has called for an urgent reform in the method of collecting benefits overpayments. The charity highlighted that some individuals are being subjected to abrupt and harsh debt collection practices, leading to financial strain and distress for those in vulnerable situations.

Overpayment of benefits can occur when the Department for Work and Pensions (DWP) disburses more in benefits, such as universal credit, than a person is entitled to, possibly due to changes in their circumstances or an error. The charity pointed out that these overpayments can accumulate for months without the recipients' knowledge, yet the DWP can swiftly demand repayment within weeks of identifying an issue.

Furthermore, the charity noted that the DWP has the authority to directly deduct 15% from someone's monthly universal credit payment if they have been overpaid benefits. For a single adult aged 25 and above, this could equate to a deduction of £60 a month – a significant income shock for those on a low income, the charity argued.

The charity contrasted this with the approach of commercial lenders, who would typically engage in a lengthy court process to seize funds from an individual's income. The organisation expressed concern that some individuals might find it distressing to receive notifications on their online accounts informing them that they have been overpaid in universal credit and that the excess will be reclaimed.
It highlighted that while it is possible to contact the Government to arrange a manageable repayment plan, the current messaging may not make this option clear to recipients. In contrast, consumer creditors like banks, credit card firms, water and energy providers are legally obliged to thoroughly communicate with debtors, according to Money and Mental Health.
The charity, which investigated the matter, shared a troubling account from one person: "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."

The report also pointed out that the DWP is set to gain more authority through the Public Authorities (Fraud, Error and Recovery) Bill currently making its way through Parliament. The charity emphasised that the DWP ought to proactively determine what individuals can realistically afford to repay.
It proposed that the DWP could adopt practices similar to those of consumer creditors by evaluating a person's income and necessary expenses, thereby offering individuals a genuine opportunity to agree on an affordable repayment schedule.

Moreover, the charity called for enhanced debt management standards guidance to better shield vulnerable individuals, including those with mental health issues, from harm across all government departments.
Helen Undy, the chief executive of the Money and Mental Health Policy Institute, criticised the Government's approach, stating: "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 responded: "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."
The Department's debt management team directs customers to the Money Advice Network for free, impartial, and independent debt advice. The DWP also upholds the Treasury's Breathing Space policy, which offers legal protections from creditor action for a set period to those with problem debt, allowing them to seek debt advice and find a suitable debt solution.
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