Over 70,000 people on benefits in Northern Ireland are having money deducted from their welfare payments to cover unpaid debts, councillors have been told.
A Stormont reply to a question posed by Belfast City Council stated that an eye-popping 73,803 benefit claimants had deductions taken from benefits including Universal Credit during August 2022, with the average deduction of £53.01.
Benefits debt repayments are imposed when an individual is in rent or utility arrears and where there is a risk of eviction, or their energy or utility supply being disconnected if payment is not made.
Belfast Council had made a request to Stormont’s Department for Communities for an immediate suspension of government debt recovery for those in receipt of benefits and universal credit, as was implemented for a period during the worst days of the Covid pandemic. The department has replied the suspension would not be possible without permission from the UK Treasury.
The council motion states it “notes new research carried out by the Joseph Rowntree Foundation documenting the alarming cost of living impact due to benefit deductions and debt recovery.”
It adds: “Many in receipt of means tested benefits and on Universal Credit, including many in work, are in bill payment arrears. They are taking on unaffordable debt, going without household essentials, and are unable to properly heat their homes or feed their families.
“With inflation continuing to rise and the hardship emergency predicted to become more extreme as we face into the winter months, the situation for many is set to worsen in the absence of immediate intervention. Benefit reductions repaying government and utility providers at unaffordable rates are compounding the hardship crisis faced by many of those who are struggling the most.
“Government departments are in some cases claiming back debts at higher rates than private creditors. Many people are unaware that they can receive debt reduction help.”
In a written reply to the Council, Leonora McLaughlin, the Director of Pensions, Disability, Benefit Security and Debt at DfC said: “I can assure you that the Department for Communities understands the financial hardship that many people are experiencing because of the current cost of living crisis. The Department is continuing to consider options to provide both immediate and medium to longer term interventions to help alleviate financial pressures, including supporting individuals who are struggling financially.
“Customers in receipt of certain benefits may have deductions taken from their benefit and paid to a creditor under what is known as the Third Party Deductions Scheme. There are limits to the level of deductions from benefits which can be made under the scheme and I can assure you that third party deductions will only be made when it is considered to be in the best interest of the individual or their family.
She added: “The temporary suspension of debt recovery which was implemented in 2020 as part of the department’s Covid pandemic response, was in line with and supported by the Department for Work and Pensions. I can confirm that DWP are not considering a further pause in recovery activity at this time. To affect a unilateral suspension of recovery in NI would be a complex process relying upon manual action in respect of over 200,000 cases.
“More significantly, suspension in NI would constitute a break in parity with DWP’s approach and would, therefore, require Treasury approval. Pursuing a temporary suspension in NI could also result in financial penalties to the Northern Ireland Executive’s Block Grant at a time of significant existing funding pressures. The financial cost of any divergence from parity, of this nature, would require Executive agreement.
“However, the department has a level of existing discretion to reduce, defer and, in exceptional circumstances, to waive social security debt. As an alternative to suspending all debt recovery, the Department would encourage people who are experiencing difficulty with their repayments to contact Debt Management.
"Debt Management staff are trained to support and work with individuals to help put in place a more affordable and sustainable repayment plan. This contact also provides the opportunity to signpost individuals to organisations delivering independent debt advice and other support services.
"The department is currently finalising a programme of communications aimed at raising public awareness of the support available in respect of debt recovery and officials are working closely with the independent advice sector to ensure that information and support reaches those who need it.”
People Before Profit Councillor Fiona Ferguson said at City Hall: “This response is disappointing. But just to be clear, I don’t think they are saying the department can’t do this in general, I think what they are saying is that with no Executive they are unable to depart from the scheme from DWP because that would incur a financial penalty.
“It reiterates the point that the absence of an Executive at this time is preventing steps being taken by ministers in order to alleviate poverty.”