UC deductions - advances, SF loans etc

HI

In my experience it depends on what the debt is for. I have had success with recovery of things like overpayment of tax credits by calling debt management, who seem to agree to reduce down recovery (or defer recovery in some cases) where there is hardship.  There are some things they say they cant reduce such as the new claim advances . I haven’t really had to try very hard so its certainly worth a try.

They seem to be keen on offering a 3 month suspension of advance payments.

Using the CPAG article above, it appears that there is a vast gap between what the Regs say and actual DWP practice.

I’ve drafted a challenge to 40% deductions for advances, as follows - can anyone see any holes in it?:

UC statements [for the claimant] show that 40% of the standard allowance is being deducted every month.

I would like to request that repayments be deferred for three months to allow a breathing-space for [claimant] and also for the following to be considered.

I wish to request Mandatory Reconsideration of the decision to deduct 40%.

The grounds for this MR request are that:

• The Regulations governing repayments of this sort are The Social Security (Overpayments and Recovery) Regulations 2013 (2013 No 384)
• At Regulation 11(2) (a) a 40% deduction rate is prescribed – but this is clearly only applicable to hardship payments, those who have been found guilty of an offence, those who have made an admission after caution,  or who have agreed to pay an administrative penalty
• The correct Regulations applicable in cases of UC advance payments are 11 (2)(b) and 2(c) where a 25% deduction applies where there is earned income and 15% in all other cases
• The applicable deduction rate in [claimant’s] case is 15%

I am aware that this is not what is stated in DWP guidance on advance payments: guidance cannot override the law and so my request refers to the law.

What I have been told when I have asked is that where the claimant asks for an advance, the recovery rate is explicitly agreed with them. So If my advance is going to be £1200 per month, I can elect to have it recovered at £100 per month for 12 months, £200 per month for 6 months or somewhere in between.

I do not think that the DWP believe that repayment of advance is treated as recovery of an overpayment subject to the Regulations you describe. As I understand it, advance recovery is dealt with by the case manager and overpayment recovery is dealt with by debt management so they are not even the same department - although this seems to vary depending on who you talk to. They appear on different sections of the payment recover on the journal.

I do not really know what they think the legal position is and it isn’t something I have given much thought to.

DWP seem extremely reluctant to depart from this agreed rate under any circumstances - however they will agree to a payment holiday on request as per S2uABZ.

I lodged an MR back in May regarding repayment rates for the advance payment based upon CPAG’s arguments, and ,having heard nothing back, chased the case up.

DWP’s reply is that they received the MR in May, decided it was a policy matter and that there was no decision to be made - case closed, and they didn’t bother telling either the claimant or me.

I’ve asked CPAG for its view on DWP’s ‘policy matter’ approach..

Just jumping in on the advance payments recovery rate issue.

We have argued that an advance payment is a ‘payment on account’ and therefore recovery is governed by SS(OP)Reg. 11 which sets the max rate at 15%.

UC(C&P)Regs Sch 6 sets the maximum cumulative rate of recovery at 40%. But there is nothing in Sch 6 that amends SS(OP)Reg 11. So, for example, if the claimant only has an advance to be recovered that does not allow DWP to recover at 40% only 15% - 40% is the maximum rate of the cumulative recoveries - the maximum rate for different types of recovery being set by other provisions.

We never had a case where the issue of recovery rate proceeded to tribunal so have never tested the above argument.

Attached is our argument - haven’t looked at it for ages so may be affected by any subsequent amendments to Regs? And you may not agree with our analysis!

Thanks Peter - the argument provided by CPAG concurs and I think DWP is taking 40% on a ‘because we can’ basis, and is now hiding behind the claim that it is only a policy matter.

Andrew Dutton - 25 September 2019 01:39 PM

Thanks Peter - the argument provided by CPAG concurs and I think DWP is taking 40% on a ‘because we can’ basis, and is now hiding behind the claim that it is only a policy matter.

Indeed. But of course they can only make payments, including advance payments (loans) if there is a statutory basis for making the payment. They can’t just give away public money (however much they would like too)! I once tried to argue that hardship payments of tax credits (to reduce the rate of recovery of a TC overpayment) was not a payment of TC (allowed under TC legislation) Comm. Jacobs did not agree!

DWP believe they have the power under reg 10 of the SS(POAOB) Regs to recover however they like from UC payments. This is all before getting to the overpayment stage, and does not use the powers in s71ZG of the SSAA. See also Elliot’s post above.

I can see that Reg 10 permits advances to be offset against future payments of benefits but it is otherwise silent - would this permit collection of advances at DWP’s discretion?

Going back to the Overpayments and Recovery Regs, I wonder if these remain relevant as this is a matter of recovery as opposed to overpayment- under ‘purpose of the instrument’ the explanatory notes state that it is (of course) for recovering overpayments but also ‘the rules for recovery of certain court costs,
payments on account, hardship payments, administrative penalties and civil penalties.’

Reg 3 O&R refers to recovery of payments on account under 71ZG SSAA 1992, that in its turn refers to its own section 5(1)(r) (payments on account).

If payments on account were already addressed elsewhere, would there be any need for this?

I would have thought 71ZG wasn’t bypassed and that the limits on recovery from UC under Reg 11 O&R Regulations apply.

I’d be grateful for views. Even more grateful to go to the pub.

I think Charles has identified the issue at the heart of this.  There is a difference between recovering a payment on account on the one hand, and “bringing it into account” on the other.

To the extent that the claimant’s entitlement equals or exceeds the payment on account, that payment is being “brought into account” under Reg 10 of the SSPOAB Regs as it gradually clawed back over the coming months.

Section 71ZG I think is intended for cases where the POA exceeds entitlement for the period in respect of which it was made - an overpayment on account, if you like.  I know that s71ZG is not expressed in terms that restrict its application in that way, but clearly its position in a sequence of provisions dealing with overpayments conveys a policy intention that it be used for overpayment on account.

HB Anorak - 25 September 2019 03:33 PM

I think Charles has identified the issue at the heart of this.  There is a difference between recovering a payment on account on the one hand, and “bringing it into account” on the other.

To the extent that the claimant’s entitlement equals or exceeds the payment on account, that payment is being “brought into account” under Reg 10 of the SSPOAB Regs as it gradually clawed back over the coming months.

Section 71ZG I think is intended for cases where the POA exceeds entitlement for the period in respect of which it was made - an overpayment on account, if you like.  I know that s71ZG is not expressed in terms that restrict its application in that way, but clearly its position in a sequence of provisions dealing with overpayments conveys a policy intention that it be used for overpayment on account.

Precisely.
Just to add, the provisions in reg 10 of the SS(POAOB) Regs are made directly under s5(1)(r) (see also the introductory text of the SI, which only mentions s5(1)(r) and not s71ZG). This is because a “payment on account” by its very definition involves bringing it into account against the actual payments of the benefit on account of which it was made.
The most common case where s71ZG would be necessary would be when a payment on account is made, and it turns out the claimant was not actually entitled at all to the relevant benefit, in which case DWP can recover from other benefits, take court action etc.

Exit one argument!

If DWP writes its own ticket, is there any remedy other than asking for them to think again on a case by case basis where the recovery rate is causing hardship?

I don’t think there’s anything else to be done. Full service guidance says that although the normal recovery period of 12 months can be delayed by 3 months, full recovery must be made within 15 months. I doubt you will get anywhere if you want more than that. See page 4 here.

We are having huge difficulty getting through to Debt Management on the phone, going through the recorded message and choosing the option to speak to someone, just cuts off with a dial tone.
Anyone else struggling with this?
It has a massively negative impact on clients e.g. those who are having the standard deduction for overpayments set at £47 per month, when a phone call to Debt Management setting out their hardship almost always results in a reduction to £10 a month or less.

bristol_1 - 15 October 2019 12:56 PM

We are having huge difficulty getting through to Debt Management on the phone, going through the recorded message and choosing the option to speak to someone, just cuts off with a dial tone.
Anyone else struggling with this?

I have been simply unable to get through for past couple of weeks, whereas previously it was much easier.
I resort to entering messages on clients journals regarding deferment, reductions of recovery rates, etc- never as good as speaking to Debt Manag.

One of the problems is that UC agents are telling me that they can defer/reduce only one “item”, so for example if client has few advances, they tell me they can defer only one. Whilst when speaking with Debt Manag, that was never an issue.
Making it up as they go along…?

In the past 4 weeks almost none of the calls from my colleagues and I to Debt Management have even got through to the on hold music, calls are just cut off with a dial tone.

We’ll be raising this at a DWP liaison meeting on 22/11.

Perhaps the argument about 15% deductions ain’t dead after all:

CPAG is looking for cases where a claimant was awarded a payment on account at the start of their claim, which is now being recovered at more than 15% of their standard allowance.

The DWP have said that they do not believe that reg 11(2) of the Social Security (Overpayments and Recovery) Regulations 2013, which sets the maximum rate of deduction at 15%, applies to payments on account of benefit.

CPAG is looking for a suitable case to challenge this, as they are aware that a number of claimants are affected by high deductions. Please submit a referral form or email .(JavaScript must be enabled to view this email address)