Purpose of This Policy
To prescribe a comprehensive policy for the methods by which
Tamworth’s staff will deal with Housing Benefit overpayments and
What are Overpayments?
The Housing Benefit regulations describe overpayments as any
amount of benefit paid, by cheque, BACS or credit to an account, to
which there is no entitlement.
Why do They Occur?
Most occur as a direct result of changes in circumstance being
reported late to the Council. They can also occur as a result
of third party information about a claimant e.g. from landlords,
from information gathered by Investigation Officers or even when
officials make mistakes e.g. Council staff, DWP staff, Pension
Service staff or HMRC staff who process Tax Credits.
The benefit regulations dealing with overpayments are complex,
requiring separate decisions on causes, recoverability as well as
methods and persons to recover from. Unless dealt with properly,
overpayment decisions can lead to improper debt creation and
financial hardship for claimants, large volumes of debt being
written off by the Council, under or over claims of Government
subsidy or possible disqualification of subsidy and financial
losses to the Council itself.
1. Awareness Training on Overpayments
It is policy to provide overpayments awareness training to all
Benefits staff. This training includes understanding what types of
changes of circumstance customers have a duty to report to the
Council, as well as the likely impact on their benefit claim. This
will help ensure that customers are made aware of the changes that
need to be reported and that to avoid overpayments occurring, they
need to provide details promptly.
It is also policy to provide publicity information for claimants
and landlords on how to prevent overpayments occurring, their
duties to report changes of circumstance and their rights to
challenge overpayment decisions.
2. Identification of Overpayments
Benefits staff are authorised to identify all overpayments and
attach the reason/cause for their creation in accordance with DWP
guidelines. For example claimant error, fraud, other error,
technical error, DWP error, Local Authority error.
In cases where overpayments occur as the direct result of more
than one cause, the debt is apportioned between the causes, e.g.
based upon when information was provided to the Council.
Where evidence exists that the original cause was wrong or needs
changing, that benefit staff are authorised and empowered through
training to amend an overpayment reason, for example from claimant
error to fraud.
Workflow is prioritised to ensure that changes in circumstance
that result in the removal of entitlement, i.e cancellations of
benefit are normally actioned within 24 hours of receipt.
Where the overpayment arises as the direct result of the mistake
by an official the following will take place:-
> Errors by DWP/HMRC staff are referred to them for
confirmation before causes are added.
> Errors by Council staff will be allocated as
Local Authority error.
3. Decisions on Whether the Overpayment is Recoverable
It is policy that the Benefits staff are authorised and empowered
to make decisions on the recoverability of all overpayments in
accordance with the benefit regulations.
These rules provide that some overpayments will be deemed
recoverable, for example Payments on Account (urgent payments where
HB Regulation 93 requires payment within 14 days of receipt of the
claim) for Private Rented non Local Housing Allowance
All other overpayments are legally recoverable except for
“Official Errors”, being mistakes by any official of the Council,
DWP, Pension Service or HMRC involved with the claim. These
overpayment cases are subject to an additional test under the
regulations. This test requires that where there is a “reasonable
expectation” on behalf of the person receiving the money (or any
notice of its payment direct to a rent account) that they were
being overpaid, that these types of overpayments can also be
recovered by the Council. An important legal precedent in this area
requires that the decision should take into account the information
that the Council supplied to the customer and whether they would
have understood it clearly.
The Benefits team are authorised to make decisions on the
recoverability of official errors, under the reasonable expectation
test, detailed above.
4. Calculating the Amount of the
This policy confirms that Benefits staff must to calculate
all overpayments in accordance with the benefit regulations.
This means: -
starting with the gross amount due - being the weekly amount
overpaid times the number of weeks overpaid.
then reducing the gross amount by: -
any actual award of benefit properly payable for the same period as
the overpayment; or
any underlying entitlement, up to the full amount overpaid, for the
to identify the net amount due.
NB. Only where the customer makes a valid claim will the first
adjustment be appropriate and only in cases where the customer
provides all requested proof of income and capital for the period
of the overpayment, will the second adjustment be made.
The Benefits staff are also permitted to make further
adjustments to overpayments in individual cases where:-
> The diminishing capital calculation rule should
apply - for failure to provide correct details about the value of
capital held; or
> The customer has made payments on to a rent account
above an incorrect (erroneous) liability i.e. because they knew
they would need to pay something, despite having an account which
currently does not display the correct amount actually payable.
5. Making the Decision to Recover the
Despite there being clear subsidy incentives to encourage
recovery of all overpayments, as the decision is a discretionary
one (see section 75 Social Security Administration Act 1992), it is
important that each decision is made on its individual merits.
Benefits staff are permitted to continue making decisions to
recover overpayments as authorised by the legislation.
In cases such as:-
> A claimant who is suffering from severe financial
hardship and recovery may cause the customer to lose their home,
because of rent arrears; or
> A claimant who has died with no funds in their
estate, the Council may decide not to recover any recoverable
amounts and will pass the debt immediately for write-off action,
see later policy details.
6. Persons from Whom Recovery will be
Benefits staff are authorised to recover overpayments from all
‘prescribed persons’ identified within the benefit regulations.
> Claimants themselves where they have received
> The claimant’s partner, if that person is
claiming benefit now, on the understanding that the claimant and
partner were members of the same household both at the date of the
overpayment occurring and when recovery is sought.
> Landlords, in cases where they have received
Housing Benefit payments directly and the decision is made that
they did contribute to the cause of the overpayment.
However the landlord will not be responsible in cases where
he/she has notified the Council of a fraud case which stops Public
Monies being wasted on this claim, if he/she notifies the Council
in writing of the change of circumstance information instead of the
Benefits staff will also be permitted not to pursue the landlord
in cases where they believe the recovery should be sought directly
from the tenant. This will normally be in an instance where the
landlord would have no knowledge of the change that led to the
Additional prescribed persons are: -
> Appointees in cases where benefit monies have
been paid directly to them on behalf of the claimant
> A “blameless tenant” in accordance with the
requirements of section 16 of the Fraud Act 1997 - see details
under Methods of Recovery below
7. Debt Recovery Strategy - Methods and Rate of
Councils should actively pursue recovery of all legally
recoverable overpayments to protect Public monies using all the
proper remedies available to it.
Policy confirms that Benefits staff are authorised to recover
overpayments using all the following methods:-
> Deductions from ongoing benefit. This is the
primary method of recovery and one of the most effective. From
April 2013 these figures are £10.80 per week for non-fraud
overpayments and £18.00 per week for fraud cases. This amount can
be added to by a further 50% of any earned/ unearned income
disregards that apply on the claim. In all cases where benefit is
resumed, any overpayments outstanding will be recovered at source
from ongoing benefit entitlement. Up to date records are kept
at all times to ensure debt balances are accurate.
Retrospective deductions can also be made in addition to
ongoing deductions and arrears
payments of benefit can be offset against any outstanding
Benefits staff are authorised and empowered to set and revise
the level of ongoing recovery in individual cases where
appropriate, and in particular to avoid severe financial
hardship. The current minimum deduction level is £3.50 per
week. Initial recovery action will however be initiated at
the maximum rate levels pending communications from individual
> Issue of a sundry debtor invoice. This method of
recovery will apply to all debts, where the tenant is no longer on
benefit (hence deductions cannot be applied) or when landlords have
been overpaid and there are no blameless tenants (see below) that
can be used for ongoing recovery.
Benefits staff are authorised to recover overpayments using the
Debtors system and continue recovery action to County Court stage,
where the sum involved is greater than the value of court costs
(currently £40 minimum). Debts of less than this amount should not
proceed further, but be passed for write-off action (see
Following the invoice the subsequent process
to be followed is:
i) a reminder will be sent one calendar month from the date
of the invoice.
ii) where appropriate, a visit to the debtor will be carried
out to discuss repayment of the outstanding debt. Failing
which a final reminder notification will be left requesting that
contact be made.
iii) A notice regarding a Direct Earnings Attachment will be
sent to the debtor requesting employment details and subsequently a
notice will be sent to their employer. This procedure
will enable Tamworth Borough Council recovering the debt from
a debtors net earnings without court authority.
iv) Where a Direct Earnings Attachment is not appropriate a
pre summons notification will be sent where County Court action is
> Blameless Tenant recovery. This effective method
of recovery introduced by the Fraud Act 1997 allows the Council to
reduce the amount of housing benefit payable to a tenant who was
not responsible for the original overpayment. However as the
blameless tenant has also asked for his/her benefit to go direct to
the same landlord, deductions are lawfully permitted. To
avoid the landlord taking recovery action for unpaid rent against
the blameless tenant, the rules require that the landlord be
clearly notified that this is treated as a valid discharge of the
blameless tenant’s rent.
Benefits staff are authorised to use this method in all relevant
cases, provided that the appropriate notice is issued to the
> Recovery from Council Tenant rent accounts.
Benefits staff are authorised and empowered to recover overpayments
directly from a rent account, where monies have been paid to a rent
account over and above the rent due at the time, for the period of
the overpayment. Where a rent account is prepaid, Benefits
staff can recoup overpayments to the value of the prepayment,
subject to written authorisation being obtained from the
tenant. This is because overpaid housing benefit cannot be
treated as unpaid rent for the purposes of actions to regain
possession of council houses as part of the recovery process.
> Recovery from the ongoing Housing Benefit payable
by another Authority. Whilst many tenants move inside the Tamworth
area, some move from one local authority area to another. Where
they have previously been overpaid this can mean that recovery of
the debt becomes problematic or impossible. To avoid wasting public
monies it is lawful for the Council to enter into arrangements
(normally reciprocal) with other Councils to recover overpayments
from the current award being paid by that other Authority.
Such recoveries will normally be at the full deduction rate of
£10.80, or £18.00 per week, unless lesser amounts are negotiated
individually with the other Authority. As mentioned earlier this is
one of the most effective recovery options, means safeguarding
public monies, as well as providing an improved subsidy return for
Benefits staff are authorised to enter into arrangements with
other Local Authorities to optimise overpayment recovery.
> Recovery from other Social Security
benefits. Local Authority benefit overpayments will
fall as a low priority for recovery by the DWP. This is
because they will recover their own overpayments and any social
fund loans first, but it is another lawful route for recovery and
should be used as a viable option before any write-off is
> NB. There is currently no corresponding right to
recover from Tax Credits administered by HMRC.
Benefits staff are authorised and empowered to use this method
of recovery and to work closely with the Debt Management Service to
8. Notification of Overpayment
Asking people for money is a difficult task, so when the Council
makes decisions on overpayments it is required by the benefit rules
to fully explain its decision and why the overpayment debt is
repayable. Schedule 9 of the Housing Benefit Regulations 2006 gives
the composite requirements of such decision letters, including
third party letters to landlords who owe monies. Clearly the better
quality the letter the more likely customers will understand why
they owe the Council money, leading to a higher success of
9. Benefits staff are required to provide clear legal
decision letters on all overpayment decisions, which not only
incorporate all Schedule 9 requirements including underlying
entitlement and appeal rights, but are drafted in a clear and
unambiguous manner, which fully explains the reason for the
10. Priority of Recovery
Whilst it is important to recover all overpayment debt, the
Overpayment recovery team should always prioritise recovery of
overpayments caused by deliberate intent to gain or increase
benefit entitlement. In these cases where fraud has been
proven and an Administration Penalty is accepted by the customer,
priority should always be given to recovery of the Administration
Penalty amount. This action is taken and monitored by
the Overpayments/Investigations Support Officer.
The hierarchy of overpayment recovery is that after recovery of
any Administration Penalty and fraud overpayments, the current
oldest debt should then take priority for recovery.