Tenant Deposits and Statutory Periodic Tenancies

Tenancy Deposits

Dear Sir,
I wonder if you could help?
I had tenants in the entertainment industry who, due to Covid, lost their income. One of them built up a month's rent arrears and we agreed to a 3 month rent reduction for the whole flat to see if the employment situation would improve. Unfortunately, it did not and so one of the tenants served unilateral notice to end the tenancy (they were already in the statutory period part of the tenancy, the AST having run out about a year ago).
The other tenant wanted to stay on, but just couldn't find a suitable flat mate. He left 1 month after the 1st one's notice expired, while building up another month of rent arrears.

My question is this:

What am I allowed to do re: making deductions for the rent arrears from the deposit: can I only use half of it (the half pertaining to the arrears tenant) or can I use the whole of it?

If I only use half, I lose rather a lot of money; if I use all of it I still lose but less so.

Whereas it doesn't seem fair that the good one's deposit money has to pay for the mistakes of the other one, but neither does it seem fair for me to refund a deposit to one of them while incurring a rather substantial loss with the other, especially as it was a joint AST and joint deposit!

Can anyone help?

Many thanks,

Mookie