The rules are in SS Claims and Payments Regulations, mostly in Schedule 9. They are very complex, but summarised very clearly on pages 994-7 of the CPAG handbook.
Unfortunately, the only challenge I can identify to your client's deductions is the fine. Regulation 6 of Fines (Deductions from Income Support) Regulations 1992 (No. 2182) says that these deductions should be limited to 5% of the personal allowance for a claimant aged 25 or over (ie £3.05).
Also the water deduction is high because it is made up of £3.05 for arrears and a figure for future consumption. If your cient is on a metered supply this will be an estimate. If you can persuade the water company that this estimate is too high they may be prepared to reduce it.
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