Summary: Miss X complained the Council was wrong to pursue an overpayment of a discretionary housing payment. This caused her distress time and trouble. We find fault as the Council did not properly consider whether it should recover the overpayment. The Council offered to write off the overpayment. The Council has agreed to further remedies we recommended.

The complaint

1. The complainant whom I shall call Miss X, complains the Council is wrong to seek recovery of a discretionary housing payment (DHP) which arose nearly 7 years ago. She says the Council’s notification about this was not clear and it should not use enforcement agents in any case as she is vulnerable and is paying by weekly deductions from her housing benefit. She says she had to make a complaint to find out the reasons for the overpayment and the issue is causing her distress

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The Ombudsman’s role and powers

2. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. If we are satisfied with an organisation’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

4. I have discussed the complaint with the complainant and considered the complaint and the copy correspondence provided by the complainant. I have made enquiries of the Council and considered the comments and documents the Council provided. Miss X and the organisation had an opportunity to comment on my draft decision. I considered their comments before making a final decision.

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What I found

Discretionary Housing Payments

5. The Government guidance manual regarding DHPs states that:

DHPs provide financial support towards housing costs and are paid by an LA [local authority] when they are satisfied that a claimant needs further financial assistance with housing costs and is in receipt of either:

• Housing Benefit (HB) or
• Universal Credit (UC) with housing costs towards rental liability.

(Department for Work and Pensions DHP Guidance Manual (updated 31/5/22)).

DHP Overpayments

6. The regulations which apply to DHP’s state that a DHP award can only be recovered if a local authority decides that payment has been made as a result of either:
• a misrepresentation or failure to disclose a material fact by the claimant (either fraudulently or otherwise)
• an error made when the application was determined
7. In these circumstances the DHP can be recovered as it is classed as being overpaid.

(Discretionary Financial Assistance Regulations 2001.

What happened

8. Miss X is disabled and was receiving housing benefit. In 2014/15 she claimed a DHP from the Council. She said she could not pay her rent because her housing benefit was restricted. This was due to the underoccupancy rules on housing benefit (“bedroom tax”) when a person lives in a social rented sector property which has more bedrooms than is necessary for the household. She also had a non dependent deduction from her housing benefit because she had another adult living in the household.
9. At the time of Miss X’s claim she was threatened with eviction because of her rent arrears. The Council agreed to pay a DHP to make up the shortfall in her rent. It paid this directly to Miss X’s landlord for the period from March 2014 onwards. Miss X told the Council on her DHP form that she had claimed a personal independence payment (PIP) from the Department for Work and Pensions (DWP) to help with extra living costs due to disability. But she was waiting for a decision.
10. In June 2015 Miss X received PIP which was backdated to April 2014. In August 2015 Miss X advised the Council that her employment support allowance benefit had changed. The Council checked Miss X’s entitlement with the DWP and found that Miss X had received PIP backdated to April 2014.
11. The Council revised Miss X’s housing benefit in September 2015. Her housing benefit increased from April 2014 because her PIP entitlement meant there would be no non dependent deduction. The Council paid £982 to Miss X’s landlord.
12. As the Council had already paid the DHP in respect of the same period as the arrears of housing benefit, there was a duplication of payments. The Council adjusted the DHP creating an overpayment of £982. The Council sent Miss X a notification letter regarding the adjusted DHP overpayment. The Council said it would send an invoice to Miss X’s landlord.
13. Miss X’s landlord contacted the Council to query the invoice. In December 2015 the Council noted that although Miss X,

“did not receive the PIP award until this June, as it increases her entitlement and is a relevant benefit we are obliged to include it on the claim from [April 2014] . As DHP was propping up her award, once the PIP was included and HB award went up and the requirement for DHP went down. This created the OP [overpayment] which is highly unlikely to be recovered. However, there is no reason for it to be a LL [landlord] overpayment and a request will be put through to ask for it to be changed.”

14. The Council changed recovery from the landlord to Miss X, but it did not advise her that it would seek repayment from her.
15. The Council took no action to recover the overpayment of the DHP until 2021 when it carried out a review of its outstanding overpayment debt. The Council accepts the delay was unfortunate, but it was committed to recovering outstanding money owed to the Council.
16. The Council wrote to Miss X and said she owed the Council £982 for an overpayment of DHP. It sent an income and expenditure form to arrange a repayment plan.
17. Miss X agreed to make repayments, and did make some payments but she defaulted on the arrangement. In October 2015 she questioned the overpayment, saying she had no knowledge of it. She asked the Council to explain the overpayment and why the Council was asking her to repay it after seven years.
18. The Council replied that Miss X’s income increased as she received PIP and this meant her housing benefit increased. As a result she was not entitled to DHP. The Council said it had sent two letters to Miss X. It said it had originally set the recovery from her landlord but this was transferred to Miss X because according to housing benefit regulations the Council could not recover from the landlord because they would not reasonably be aware that an overpayment had occurred or that benefit was being overpaid. The Council acknowledged the length of time taken to recover the overpayment was considerable but it had duty to recover it.
19. Miss X complained further that PIP was meant for her disability, not for extra living expenses. Therefore, in her view it did not mean that she did not need the DHP.
20. The Council replied that it had not made it clear in its earlier response how the overpayment occurred. It explained it did not take the PIP into consideration as extra income. Miss X’s benefit increased because the inclusion of PIP meant non dependant deductions no longer applied. Therefore, the Council had paid above Miss X’s rental costs her landlord due to housing benefit and DHP payments. The Council apologised but it said that the overpayment remained recoverable.

Analysis

21. I consider the Council did not properly determine whether it should recover the overpayment from Miss X. When changing recovery from the landlord to Miss X, the Council incorrectly considered housing benefit regulations regarding recovery when it was not a housing benefit overpayment. This was fault. The Council also appeared to note it may be difficult to recover from Miss X, but did not state why, or consider why it should recover from Miss X. The Council did not apparently consider DHP regulations which state the Council must consider whether there was a misrepresentation or failure by the claimant to disclose a material fact, or an error made when the application was determined. This was fault.
22. The Council agreed when I made my enquiries to reconsider whether it should recover the overpayment from Miss X. The Council has now reconsidered and decided it should not recover the DHP overpayment from Miss X.
23. The Council confirms it did not advise Miss X that it had decided to change who it would seek recovery from. This was fault.
24. The Council considers the matter was not complex. I disagree. The award of PIP meant Miss X’s housing benefit increased. This duplicated part of the periods and amounts paid by DHP. The notification letters were not clear. The Council did not fully explain the reason for the overpayment in its stage one response. This was fault. Miss X was put to additional time and trouble.
25. The Council agrees there was delay in pursuing recovery. While I do not consider this caused injustice to Miss X in this case, in other cases delay in pursuing recovery can cause hardship and difficulty in providing supporting evidence if a claimant wishes to dispute the overpayment or its recovery. I made a recommendation in respect of this.
26. The Council passed the DHP overpayment account to recovery agent after Miss X missed several payments. The Council is aware that Miss X is vulnerable and states that its agent is highly trained in dealing with vulnerable debtors. It says the agent would act as a debt collector and not as an enforcement agent. It would not carry out any visits or apply any fees. I have not found fault here.

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Agreed action

27. I welcome the Council’s review of its recovery decision, and its decision to write off the DHP overpayment. But I also recommended that the Council should, within one month of my decision:
• Apologise to Miss X for its failure to properly consider the recovery of the overpayment, and its poor communication.
• Write to Miss X and confirm it has written off the outstanding overpayment and refund any DHP overpayment that it has already recovered.
• Pay Miss X £150 for its delay in resolving the matter and the additional time and trouble this caused Miss X as a result.
• Remind officers that they should consider whether the Council should seek recovery of a DHP overpayment taking into account the DHP regulations regarding recovery.
28. The Council should also, within two months of my decision, review its outstanding DHP overpayments and set out an action plan to reduce the delays in seeking recovery. It should also consider whether these overpayments should be recovered taking into account the guidance regarding DHP recovery and the faults I have identified in this statement.

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Final decision

29. The Council has agreed the remedies we proposed, so I have completed my investigation and closed the complaint.

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Investigator's decision on behalf of the Ombudsman