Guidance

LA Welfare Direct lite 4/2021

Updated 20 December 2021

Contact

If you have queries about the:

• technical content of this bulletin then contact details are given at the end of each article
• general content and distribution of this bulletin, contact: lawelfare.correspondence@dwp.gov.uk

Who should read

All Housing Benefit (HB) staff

Action

For information

Clarification: Breathing Space (applicable in England and Wales only)

Universal Credit Third Party Deductions not included in Breathing Space

1. April’s LAWD4/2021 contained an article on Debt Respite Scheme (Breathing Space). Since issuing that bulletin the Department for Work and Pensions (DWP) has received a number of queries from local authorities (LAs) concerning the fact that Universal Credit (UC) Third Party Deductions (TPDs) are not currently included in the protections of Breathing Space.

2. DWP’s lawyers have confirmed that whilst the power to request deductions comes from regulation 2(1) of the Council Tax (Deductions from Income Support) Regulations 1993, they are all still part of the system set out in Schedule 6 and the power to make deductions under that system is Regulation 60. Therefore, the intent behind Regulation 7(13)(d) was to exempt the whole UC system.

3. Therefore, the guidance provided in LAWD4/2021 is correct. To clarify, where deductions are being taken from the claimant’s UC, the LA should not take any action to stop the deductions as UC TPDs are not currently included in the protections of Breathing Space. The Debt Advisor should not notify the LA in these circumstances.

Breathing Space and ongoing deductions from Housing Benefit payments

4. We have also been made aware there is some confusing and contradictory advice circulating, as to whether Breathing Space applies to ongoing HB deductions.

5. Breathing Space is an HM Treasury policy and, furthermore, DWP do not own HB debts. So, it is for LAs to determine how Breathing Space legislation should be applied to LA debts. However, our interpretation is that HB debts that are recovered via ongoing HB payments is collection/enforcement action against the debtor.

6. The Breathing Space guidance was updated by the Insolvency Service on 5 March 2021 and ‘Stopping enforcement action’ is covered under section 3.4. Unfortunately, as it doesn’t specify HB, we appreciate it is open to some interpretation. There is very little information specific to HB/Council Tax in the guidance for creditors because it is for all types of creditor and not just LAs. Therefore, LAs should refer to existing legislation and Insolvency Service guidance and draw their own conclusions.

7. The Insolvency Service can be contacted at breathingspace@insolvency.gov.uk. Please note, this is a small team and they are unlikely to be able to answer queries regarding specific debt types. We understand the Insolvency Service has been advising LAs to refer to their own legal teams.

8. If we receive any further advice regarding this matter from either the Insolvency Service or HM Treasury we will, of course, share this with LAs.

Wider sharing of this information

9. We ask that our HB colleagues share the content of this article with colleagues within their authority as necessary, such as Council Tax and Housing teams.

Reminder: Discretionary Housing Payment final claim form 2020 to 2021

10. This is a reminder to LAs that completed Discretionary Housing Payment 2020 to 2021 final claim forms should be returned at the earliest opportunity, but no later than 30 April 2021.

11. If you have not received your final claim form contact dhp.returns@dwp.gov.uk.

Crown Copyright 2021
Recipients may freely reproduce this bulletin.