Housing Benefit overpayment strategy

1) Introduction

An Overpayment of Housing Benefit (HB) is an amount which has been paid or allowed to which there is no entitlement under the Housing Benefit regulations. Overpayments are generally created through a formal review of benefit entitlement.

In fulfilling our strategy on HB Overpayments, we aim to provide a quality service, achieve a high level of debt collection whilst at the same time maintaining a high level of customer care. Customers are to be treated with courtesy, understanding and fairness. It is essential that we administer and recover overpayments effectively and efficiently, as this will:

• Maximise collection and reduce loss to public funds
• Demonstrate the Council’s commitment to accuracy and adherence to regulations
• Help provide a quality and value for money service to its customers
• Deter fraud and error

2) Recovery policy

The Housing Benefit Regulations 2006 do not specifically state the extent to which Local Authorities ( LA ’s) should pursue the recovery of overpayments. Guidance states that this is up to LA ’s, but that serious attempts should be made to recover overpaid benefit.

Just because an overpayment is recoverable, does not necessarily mean that it must be recovered. The law states that all overpayments are recoverable (except certain official errors), but it does not state that they must be recovered. A recoverable overpayment may be recovered at the LA’s discretion. If an LA has a blanket policy of recovering all recoverable overpayments this policy would be open to legal challenge; would not be in the interest of claimants; and would prevent the use of discretion. Although general guidance can be provided each case should be considered on its own merits having regard to the claimant’s circumstances.

It is in the interests of both the Council and the claimant to act quickly when recovering an overpayment – it will be much more difficult attempting recovery from a claimant who has moved and left no forwarding address; and from the claimants point of view they can make better provision for repayment if they are informed as soon as possible after it has arisen.

The main principles which must be adhered to if we are to achieve our aims are:

• process ‘changes in circumstances’ quickly
• identify overpayments promptly
• calculate, classify and record overpayments accurately and correctly to ensure that the correct subsidy is claimed
• determine whether overpayments are recoverable
• pursue recovery by the most speedy, cost effective and efficient methods available
• ensure that effective financial control is kept over the whole of the overpayment process
• notify affected parties promptly of their overpayment
• pursue recovery by the most appropriate method, and
• set targets and monitor performance

3) Reasons for overpayments being created

• Claimant/Other Error – where the claimant fails to inform the Council of a change in circumstances or provides inaccurate details on their claim
• Fraud – where the claimant knowingly and deliberately claims with the intention of receiving more benefit than they are entitled to
• Local Authority Error – where the Council fails to act on a notified change of circumstances.
• Department for Work & Pensions (DWP) Error – where DWP benefits have been awarded incorrectly
• Official Error – overpayments caused by official error are recoverable only if it is considered that the claimant could reasonably have been expected to know that an overpayment had been made when the payment or notification of the payment, was received

Overpayments may be the result of more than one cause e.g. the claimant may delay in notifying a change in circumstances and we may then fail to act on it. In such cases, the overpayment should be separately identified and determined.

A recoverable overpayment may be recovered at the Council’s discretion if it is reasonable to do so. There is, however, no legal obligation to attempt recovery of all recoverable overpayments, although we are penalised by the subsidy arrangements if recovery is not made.

4) Strategy for minimising overpayments

Overpayments should be kept to a minimum by acting promptly on notifications of changes in circumstances. This is to be achieved by prioritising workloads. Staff with this responsibility will identify notifications and claims that are likely to result in an overpayment and allocate them for prompt reassessment.

Encourage claimants to notify us of changes in circumstances immediately by publicity on documents e.g. benefit notifications (giving examples), our website and displayed in our local offices and other buildings defined by our publicity strategy.

Staff within the Council’s Contact Centre, Customer Service Centres and Revenues and Benefits Service suspend HB payment where a detrimental change in circumstances has been received.

Notifications of IS/JSA/PC cessation via the electronic transfer from the Benefits Agency and Pension Service (ETD) will be identified for immediate processing.

Residency checks will be carried out before payment is made.

The HB application form has been specifically designed so claimants supply the correct information and evidence, and includes a clear declaration that failure to provide the correct information may lead to prosecution.

Off-setting any new or underlying entitlement

An information booklet, designed specifically for private sector landlords, advises them of their duty to notify changes in their tenant’s circumstances, and that it is a criminal offence for them to knowingly fail to do so.

The landlord notification letters and the information booklet clearly advise that recovery of overpayments can be sought from them if direct payments have been made.

Weekly audits and random sampling of cases and of individual daily workloads are carried out to ensure correct assessment of entitlement.

All cheque and BACS payments in excess of £600 will be carefully scrutinised before the payment is made.

5) Classification

The Council receives subsidy from the Government in respect of certain types of overpayment and therefore, it is important that all overpayments are correctly classified. Having established that an overpayment has occurred, the assessment staff must determine:

• The cause of the overpayment
• The period and amount of the overpayment
• Whether or not the overpayment is recoverable
• Whether or not recovery should be sought
• From whom recovery should be sought

6) Notification

Once the Overpayment has been generated a notification letter detailing the required prescribed details is issued as soon as possible. If deductions from ongoing benefit are to be made then the letter will give details of the amount of deduction and when deductions will be made. There is a 28 day appeal period, if the claimant appeals no deductions can be made.

7) From whom do we recover?

Recoverable overpayments should be sought from the person to whom benefit has been paid. This is generally the claimant, but in cases of direct payment, recovery can be sought from the landlord where it can be shown that they did not inform us of changes they were aware of or should have been aware of e.g. tenant leaving a property.

If the overpayment is a result of a misrepresentation or failure to disclose a material fact by the claimant, it may be recovered from them, even if payments have been made direct to their landlord.

If the overpayment has been made to a claimant who has a partner, it may be recovered from the partners housing benefit providing that the claimant and partner were members of the same household, both at the time the overpayment occurred and at the date it is recovered.

If an overpayment has been made to a deceased person, recovery can be made from their estate

8) Methods of recovery

Recoverable overpayments can be sought by any reasonable lawful method. The main methods of recovery are:

• Deduction from an ongoing entitlement of benefit
• By issuing an invoice for payment
• Direct deductions from the HB payable to a landlord in respect of their other tenants (known a ‘blameless tenant’ recovery), in these cases the other tenants are protected by legislation
• Referral to a debt collection agency
• Civil action in the County Court followed by appropriate enforcement action
• Deduction from DWP Benefits
• Deduction from arrears of HB/CTB that become payable while there is an outstanding overpayment
• Transferring a Rent Rebate overpayment to the tenant's Rent Account (the HB overpayment must be kept separate from any rent arrears) – this method isn’t currently used as it would place the claimant in rent arrears
• Application to another LA to ask them to deduct the overpayment from the claimant's ongoing HB/CTB entitlement in their area – this method isn’t currently used
• Claim from the estate of a deceased person who had an overpayment

9) Recovery of overpayments

a) Deduction from ongoing entitlement or other benefits

Benefit Officers are responsible for the classification and determination of whether to recover an overpayment. It is also their responsibility to set the weekly recovery rate and to notify both claimants and landlords that an overpayment has occurred and of our proposals to recover it.

If housing benefit is still in payment, recovery is made by deduction from ongoing entitlement.

Recovery rates are currently set in line with the latest DWP guidance. For 2009/10 the maximum weekly deduction is £9.75 and £12.80 for fraud cases, except where there is a disregard for earnings in which case up to half the disregarded amount may be added to the weekly recoverable amount.

The DWP recovery rate is reviewed annually and cases subject to ongoing recovery are adjusted accordingly, usually in April each year. Claimants are advised in writing of the adjusted rate.

If the claimant’s ongoing entitlement is less than the current DWP recovery guidance rate, recovery will be limited to the amount of their weekly benefit.

Claimants with capital in excess of £3,000 should be asked to repay the overpayment in full. If the claimant does not agree, the weekly recovery rate should be set at the rate of their full weekly benefit entitlement. The claimant will be advised that they must pay the subsequent shortfall in order to prevent rent arrears accruing.

For RBH tenants (the Council's ALMO ), the reduced amount of benefit is posted to their rent account. The recovery is credited to their overpayment within the computer system. No recovery is made on a non-rent week, as no rent debit is raised.

These arrangements remain in place until either full recovery is made or the claimant ceases to be entitled to housing benefit. If there is a dispute about the overpayment, the weekly recoveries should be suspended until the claim is reviewed and the dispute is resolved.

b) Apply for DWP deductions

It may be possible to recover regular payments against the debt from other benefits that the claimant may be receiving. Accessing the DWP system allows us to see if there are other benefits being paid and if so we will send off a written request to attempt recovery. Once agreed we will receive regular payments from the DWP until the debt is cleared or there is a change in circumstances. Details of relevant DWP ‘Benefits Offices’ by caseload post code are available on our Intranet.

c) Recovery from other local authorities

Working with other Council’s allows us to trace debtors who have moved to another area and we can ask our colleagues in the relevant authority to recover from any ongoing Housing Benefit which may be allocated. However, this method of recovery is not effective because the other authority is not obliged to comply.

d) Recovery by invoice

Invoice: All overpayments which cannot be recovered from ongoing Housing Benefit will generate a notification letter to the person responsible for payment, informing them of the reason for the overpayment and the amount of overpayment payable. The debtor has 28 days in which to appeal against the decision following which an invoice is issued.

After the appeal period of 28 days the invoice is produced automatically by the benefits computer system. Any invoice with a value of less than £5 is not produced for reasons of economy and is later written off providing no additional overpayment is incurred or benefit reinstated.

Reminder: A reminder is issued after 14 days of the invoice if full payment or a payment arrangement has not been made. The reminder requests that payment or a payment arrangement is made within 7 days.

Final notice: After a further 14 days a final notice is issued; this letter confirms the debt is still outstanding and should we not receive payment within 7 days then the debt will be passed to our Debt Collection Agency to recover the monies owed or legal proceedings will be commenced.

Telephone contact: Where possible the ‘Overpayments’ staff should contact the debtor to request payment of the invoice. Regular verbal contact is seen as a highly effective means of assisting recovery and telephone calls can be made at any time to pursue payment of the debt or to make a payment arrangement. The aim is always to recover the maximum amount with due consideration given to personal circumstances. Call details are entered by notebook on the computer system.

Payment arrangement : At any point in the recovery process the debtor may contact us to offer payment on a regular basis to clear the debt. We must try to secure as high a recovery rate as possible, allowing no more than 12 months (3-6 months for landlords) depending on the size of the debt. The weekly payments agreed should not be less than £10 per week. Where the debtor states that they can only pay a lower amount then they must be asked to complete an ‘Income and Expenditure’ form, providing us with enough detail to measure their ability to pay. If the debtor has capital of over £3,000, they will not be granted any arrangement.

Checks are made on the details provided and a notification of the decision is sent to the claimant confirming or refusing the arrangement. Where a reduced rate is agreed the claimant is informed that this will not be fixed for the full term of the arrangement and regular reviews will be undertaken to assess whether the debtor can potentially increase their payments. All recovery rates are reviewed at least on an annual basis.

Payment arrangement reminder: The receipt of payments made by the debtor will be monitored by the computer system and every fortnight a report of any defaulted arrangements is checked. Debtors will either be phoned or sent a letter requesting that they bring payments up to date or contact the Overpayments Team. If they don’t do this, then the arrangement is terminated.

‘Blameless tenant’: If a landlord is responsible for paying the overpayment and they have not responded to a final notice we are able to apply recovery via ‘Blameless Tenant’; by which we may recover the overpayment from any ongoing benefit paid to their tenant, who are protected by law. In these cases we must write to both the landlord and tenant informing them of the deductions being made.

‘Benefit checks’: Prior to referral to a debt collector we must make checks to see if the debtor has resumed receipt of benefits. If they have then we can apply recovery from ongoing benefit, if not, then we continue with the next stage of the process. These checks can be undertaken at any point in the recovery process.

Debt Collection Agency, legal proceedings or write-off: Where all our attempts to recover in part or full have failed we can pass the debt to a Collection Agency, pursue it through the County Court or propose write-off. The decision on whether to write-off is primarily based on the value of the debt and/or the debtor’s circumstances (please see the write-off policy for guidance on when to propose the debt for write-off). Where we choose either referral to a debt collection agency or legal proceedings, then we notify the debtor in writing of our decision.

Debt collection agencies: The majority of debts which we have failed to collect via invoicing are referred to reputable debt collection agencies (we currently use ‘Phoenix Collections’ and ‘Rossendales’); with whom we have ‘service level agreements’. They employ professional staff to attempt recovery by letter, telephone and doorstep collection. Their agents will attempt recovery in full but are also authorised to make and manage payment arrangements within guidelines set by us.

Whilst the debt is with the agency they are in control of the collection process but should we at any time find we have the opportunity to recover the debt via internal processes, e.g. debtor resuming benefit etc; we can bring the debt back in-house. Our staff have internet-based access to all accounts and we can monitor progress and recall debts as appropriate.

The agency will keep us informed, via regular reports, on progress of collection and any issues arising. It will normally attempt recovery over 3 months; but if no response is made by the debtor within that time the account should be returned to the Council.

Some debts will still remain uncollected and will therefore be returned to us, with a summary of actions taken and any useful recovery information received. At this point we review each debt individually in order to decide whether to pursue it through the County Court or in certain circumstances propose the debt for write-off. This decision process will involve reviewing the case and assessing the probability of not only gaining a court order but also in recovering the debt in full or securing some form of payment arrangement.

Legal proceedings: This application, with supporting documentation will be taken to the Court for consideration. It is possible to apply for Court Orders electronically via an internet-based process; the quality of the information supplied is paramount in ensuring that judgement is received.

Issuing a County Court Order to the debtor does not, in itself, often result in payment. Should the debtor not offer payment on receipt of the judgement then we are free to take further enforcement action by attachment of earnings, County Court bailiffs, charging orders, garnishee orders or bankruptcy.

Write-offs: Whilst we make every effort to recover all overpayments (subject to the minimal value) it will be necessary, for various reasons, to write-off some of this debt every year. The level of write-offs is carefully monitored to ensure that it can be clearly demonstrated that we have diligently applied our process to attempt recovery.

Where a debt is proposed for write-off, it is important that we again review the case to determine whether there has been any change in circumstances which will allow us to recover the debt.

As each case is reviewed we will decide whether to propose the debt for immediate write-off or hold for six months; allowing us a reasonable amount of time in which to check for the opportunity to secure payment via one of our standard recovery processes.

(Please see the write-off policy for guidance on when to propose the debt for write-off, appropriate values and those persons authorised to write-off the debt).

Administrative penalties: An administrative penalty is imposed on a benefit claimant who has fraudulently claimed Housing Benefit and/or Council Tax Benefit and has agreed to pay it rather than undergoing prosecution for fraud.

The administrative penalty is 30% of the fraudulent overpayment, and collection and recovery commences after the overpayment has been recovered; in line with the following process:

• Once an administrative penalty has been imposed on a claimant, an account is set-up on the debtors system (Civica), and an invoice is issued to the debtor.
• The claimant’s overpayment must be paid first before payments can be set against the administrative penalty.
• Intermittently the Overpayment Officer checks overpayment accounts with administrative penalty included. If the overpayment has been cleared, then subsequent payments are automatically posted against the penalty. The Overpayment Officer may make a new payment arrangement at this point if appropriate.
• Recovery action is taken in respect of the penalty only when it remains unpaid and the overpayment is also outstanding (after being subject to recovery action) or the overpayment has been paid in full with no penalty payment despite a final request being made.
• The matter will then be referred back to the Council’s Fraud Section for prosecution by the Council’s Legal Service.

  
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