It appears that there is still a problem with the Universal Credit computer system: in certain situations, it is missing off the Bedroom Tax deduction, which is causing claimants to be overpaid.
Despite reports that this glitch had been fixed it seems that some UC claimants are still being affected - it could be those whose UC claim started before Jan 2021.
Who does this affect?
Where a social housing UC claimant has three bedrooms and would normally only be eligible for one, but they have been granted a second bedroom on medical grounds, (where a couple or children are unable to share, or a non-household carer stays on a regular basis) then they should only have a 14% reduction ie in respect of one spare room, instead of a 25% reduction.
However, it appears that the UC computer system cannot allocate the claimant an extra bedroom in these circumstances and so the Case Manager sets the UC computer system to exclude them from the Bedroom Tax altogether ie the system fails to deduct the 14% it should. No Bedroom Tax deduction is made even though there is one spare bedroom.
The result is that the claimant receives more UC than they are entitled to.
One concern has always been whether or not the DWP would decide to recover this overpayment. We have heard of one case where they have done just that.
Implications
There are numerous implications for both the tenant and the landlord:
• The situation is confusing for the claimant – whilst we understand that they are informed of the overpayment, it is unclear whether this is explained in any detail.
• The tenant, who would struggle to pay their rent if the correct deduction was put in place, may be refused a DHP because, from the Local Authoritiy's perspective, there is no Bedroom Tax reduction.
• The claimant – unless they put this overpaid UC to one side – will sort out their budget based on the income they have; this will then need to be reviewed at the point the deduction (and potential overpayment recovery) start.
• If the overpayment is recoverable from the claimant, then the DWP usually recover this from the claimant's on-going UC entitlement. So, at the point that the Bedroom Tax deduction starts being made, the claimant's UC award is further reduced due to the recovery of the overpayment. The drop in income at that time for a couple (both aged 25+, neither working) whose rent is £140 a week would be £174.41 a month (£84.93 - Bedroom Tax reduction, plus £89.45 - deduction for overpayment).
Can the overpayment be recovered from the landlord if an APA Managed Payment was in place?
No. The Social Security (Overpayments and Recovery) Regulations 2013 outline when a UC overpayment can be recovered from a landlord.
This is where:
• The landlord has caused the overpayment by misrepresenting or failing to report a change.
• The landlord has been paid more than the rental liability.
• The claimant has moved out of the landlord’s property and DWP have continued to pay the landlord the housing element.
Where a landlord receives an invoice for an overpayment and it relates to overpaid UC because of this computer glitch they should challenge the overpayment quoting the above Regulations. Click here for more information.
What can be done?
Here are some ideas – but no clear solutions unfortunately.
Can the claimant afford to put the overpaid UC to one side?
If a claimant is aware that they are being overpaid – they should be advised to put the amount to one side (if possible) – as they will be asked to repay the overpaid amount.
Whether it is repaid in one lump sum by the claimant or taken off UC as deductions, making provision for that in advance would clearly make things easier for the claimant when that happens.
If the DWP notify them of an overpayment - request that the overpayment is not recovered
All UC overpayments are recoverable – including where the overpayment was caused by DWP error.
However, the DWP can use their discretion not to recover overpayments, although this will only be in exceptional circumstances. DWP guidance states,
This is considered only where there is reasonable evidence available that the recovery of the overpayment is detrimental to the health and/or welfare of the debtor or their family, or that recovery would not be in the public interest. Waivers are only granted in very exceptional circumstances and there would need to be very specific and compelling grounds to do so. A request for waiver should normally be made in writing.
So, whilst there is nothing to lose by asking for the overpayment not to be recovered, claimants need to be aware that in most cases, the request is likely to be refused.
They might have a stronger case for any period before they became aware that they were being overpaid – as they could not have been expected to budget for the recovery of the overpayment.
They would need to provide full details of the financial hardship recovery of the overpayment would cause.
After considering the request, if the DWP decide to recover the overpayment, there is no right of appeal.
Make a complaint
Claimants could make a complaint to the DWP, and should not wait until the overpayment notification to do so.
A complaint could raise the issue and may be taken into account if the claimants requests that the DWP use their discretion not to recover the overpayment - ie it may help the claimant’s case if as soon as they became aware that they were being overpaid they had done everything they could to stop the overpayment.
The claimant could ask for compensation too (for the amount of the overpayment and possibly the stress caused). However the financial redress policy is limited and would not normally provide compensation above a claimant’s statutory benefit entitlement.
Continue to put pressure on the DWP to sort out the problem
The claimant can put notes on their journal highlighting the problem and asking what is being done to sort it out.
Advisers can use the CPAG Early Warning System that tracks UC problems – you (as an adviser) can log anonymous cases.
Contacting their MP about the situation might help to put pressure on the DWP to sort the problem out.