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PARLIAMENTARY WRITTEN QUESTION
Universal Credit (23 November 2018)

Question Asked

To ask the Secretary of State for Work and Pensions, what estimate her Department has made of the number of claimants of Universal Credit that have had deductions of more than 40 per cent from their Standard Allowance as a result of overpayments made by (a) computer and (b) other administrative error.

Asked by:
Karin Smyth (Labour)

Answer

It is not possible for a deduction of more than 40 per cent of the Standard Allowance to be made as a result of overpayments whether made by a computer or other administrative error.

When an overpayment deduction is being applied, then it has to be within the overall 40 per cent limit for deductions (reducing to 30 per cent from October 2019). The maximum deduction that can be taken for overpayments that have occurred due to computer or administrative error is either 15 per cent (standard rate) or 25 per cent (in receipt of UC with earnings) of the standard allowance. The 40 per cent maximum is only applied to overpayments caused as a consequence of fraud. As last resort deductions are higher up the deduction priority order, they will already have been taken as third party deductions, and as such the total deduction cannot exceed the 40 per cent maximum.

For example:

  1. Last resort deduction for arrears of rent at 10%;
  2. Last resort deduction for arrears of gas at 5%;
  3. Last resort deduction for arrears of electricity at 5%;
  4. Arrears of overpayment caused by error for a claimant with earnings. The maximum deduction rate for this is 25% but as 20% is already being taken for the third party deductions above, only 20% will be taken for the overpayment, so as not to exceed the 40% limit.

More generally, it is possible for the 40% ceiling to be breached but only when there is a Fraud Penalty or Sanction or an Advance repayment which means that some or all of the Last Resort Deductions cannot be applied while remaining within the 40% ceiling. If it is nevertheless in the claimant’s best interests to apply the Last Resort Deductions, then the ceiling can be breached. At this point, anything lower down the priority order (such as overpayments) would not be deducted.

The Deduction Priority Order can be found here (p. 72) - https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/683470/benefit-overpayment-recovery-guide.pdf


Answered by:
Lord Sharma (Conservative)
3 December 2018

Contains Parliamentary information licensed under the Open Parliament Licence v3.0.