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UC claim ended because Direct Payments for care take account balance above capital limit

keith
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Client is appointee for their adult child who was receiving UC due to LCFWRA. As well as being the DWP appointee, they also manage his Direct Payments, paid through the local authority, that are used to pay for his care workers and other care related items. These Direct Payments are paid into a separate bank account used solely for the purpose of receiving the Direct Payments and making payments in accordance with his care plan. The client has received a letter from UC that states “You will not get Universal Credit. You have too much capital.” The letter goes on to say that “Capital is money available to you from things like savings, a property that isn’t your main home, a trust fund or stocks and shares.”

I had earlier conversations and email correspondence with a DWP compliance officer who asked the client to provide all her bank statements going back several years. The DWP accepted that Direct Payments couldn’t be counted as income, however they do appear to be considering the unused Direct Payments to be available to the client, from the “second assessment period after the assessment period the payments become capital”. I’ve only been told this indirectly, not from the person who was making that decision, so until we’ve had a MR response which gives a written explanation we’re not really sure how this decision has been arrived at. In this case, the balance of the account is likely to be above £16,000 every month because a large amount is needed to pay the wage bill for the care workers. So, I’m also expecting a further letter to say the claim ended two years ago and there’s been an overpayment.

I need the DWP to explain how they can say Direct Payments aren’t counted as income for UC but any unspent payments (that will either be used to pay for care later or be refunded to the local authority following audit) can be classed as “available” to the client and therefore be counted as their capital.

Has anyone come across this scenario before, either with UC or a legacy benefit? If this is problem with DWP UC policy clashing with DHSC policy, as has been suggested to me as the reason, then this could affect any working age disabled people who claim UC and receive large Direct Payments to make their own care arrangements.

The specific case where this has first come up is actually a personal health budget which we operate on behalf of our CCG – but the principles would apply equally to any direct payment for someone with complex needs and an expensive care plan.

Paul_Treloar_AgeUK
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But surely on the most basic analysis Keith, it’s not her money, it’s money she manages for her adult child. If she did start using it for her own purposes, she’d be in trouble with the local authority. Sounds like UC admin being complete idiots to be honest and simply itching for an excuse to close the claim.

Elliot Kent
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Are we talking here about the disabled adult’s UC award, rather than the parents?

DWP are correct that money which is received as “income” then becomes “capital” if it is not spent. Whether it is strictly correct that in every case money is “income” in the AP it is received and then “capital” in the next AP if, it is unspent I don’t know - but the general proposition holds true. If I am paid wages and then don’t spend them, they become savings.  There are old authorities on this such as R(IS) 3/93.

Direct payments, as income, are disregarded - or rather they are not taken into account at all because they are not included in the unearned income list at reg 66 UC Regs.

For legacy benefits, direct payments were also then specifically disregarded as capital - see para 56, sch 9 ESA Regs - but that provision doesn’t seem to have crossed over into the UC Regs.

However, there is a new disregard at para 17(b), sch 10 UC Regs:

17.—(1) A payment made within the past 12 months by or on behalf of a local authority—
(a)under section 17, 23B, 23C or 24A of the Children Act 1989 F3, section 12 of the Social Work (Scotland) Act 1968 F4 [F5, section 29 or 30 of the Children (Scotland) Act 1995 or section 37, 38, 109, 110, 114 or 115 of the Social Services and Well-being (Wales) Act 2014]; or

(b)under any other enactment in order to meet a person’s welfare needs related to old age or disability, other than living expenses

I don’t know very much about direct payments, but it does seem to me that there is an argument that they fall within that disregard.

keith
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Thanks both. My initial thought was along the lines of what Paul said - if it isn’t even considered as income for UC how can it become capital?

The bank account is only used to receive the Direct Payments and to pay for care and it is the disabled person’s UC claim. The UC itself is paid into his mother’s bank account which is likely to result in a similar issue for her own joint UC claim with her partner because she has another separate bank account to receive her Direct Payments as a carer, which also maintains a high balance. (Initially, her CA was stopped because DWP said these carer Direct Payments were earnings therefore she wasn’t entitled to CA however I was able to resolve that through a telephone conversation with a senior decision maker.) 

Our council’s audits on DP accounts haven’t been done as frequently over the last 18 months because of the pandemic, however they wouldn’t have been done monthly anyway. I looked at 17(1)(b) of Sch. 10 UC regs and I think DPs could fall under that, but it would need monthly audits to identify how much each month has been spent from each month’s payment and how much “carrried over” which would be a significant drain on local authority resources to do for all DP accounts. As well as being unrealistic from a practical perspective. Even if that information could be provided, would UC admin be able to deal with that correspondence in a timely manner to ensure the correct monthy UC award was made? For some reason, presumably because she is appointee, her son’s UC claim was made with the help of a DWP home visiting officer and the claim is entirely off-line with letters through the post so by the time she could get and send her bank statements to the council and then for the council to carry out the audit and request unspent funds it would likely be into the next assessment period before the “excess” funding had left her bank account.

I have been in contact with an NHS policy manager who has talked to DWP policy, and they said DWP policy were referring to “some banking and finance regulations about capital accruing from revenue” and that any DP would be ignored in the assessment period it was paid, ignored for the next full assessment period and then counted as capital in the following assessment period. But, at this point, my client has asked for a written explanation of the decision so we can see which UC regulations they have used. I think there is a gap (lacuna if I was a UT Judge!) in the UC regs where there should be something equivalent to para 56, sch 9 ESA Regs, as Elliot said.

There is clearly going to have to be a policy fix between DWP and DHSC. In the short term, looking for something practical that put less of a strain on the client and the local authority than monthly audits, I was wondering what the DWP would do if the client transferred any funds in the DP account above £6k back to the council the day before the end of her assessment period (therefore capital below £6k on the last day of that assessment period) and then the funds were returned by the local authority on the first day of the following assessment period. Repeat monthly until the UC equivalent of para 56, sch 9 ESA Regs is put in place…? But even then, with a monthly wage bill for the care workers of around £15k a month, in addition to other expenses, that probably isn’t going to work unless pay day for the carers is in the middle of the UC assessment period.

keith
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The MR failed to provide a reason, but the SoS appeal response based the argument entirely on the unspent Direct Payment income being “beneficial capital” if it wasn’t spent within the following assessment period.

My appeal submission concentrated on that point because whether the regs for means tested benefits specifically mention disregarding unspent DP money as capital or not is irrelevant if it’s disregarded as capital because the claimant cannot be the beneficial owner which they cannot since the LA can ask for the return of unspent DP money.

So, the information I first provided to the compliance officer, then her manager, then in the MR, then in the appeal was only accepted when the Judge issued a pre-hearing Directions Notice to say they “agreed entirely” with my submission and could “make a fair decision without a hearing” but offered the DWP an opportunity to respond and agree to the paper hearing. The DWP did manage to respond within 14 days and conceded the points I’d made but then added - “if the money was there for more than a year it could be counted but as the oldest money would be spent before the new money then it wouldn’t be there for more than a year so we won’t count it.”  I can only think an inherent inability to admit being wrong meant they had to add something no matter how pointless. 

So yes Paul, “on the most basic analysis, it’s not her money” and I’m finding it difficult to disagree with you when you say “Sounds like UC admin being complete idiots to be honest and simply itching for an excuse to close the claim.”

Paul_Treloar_AgeUK
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Got there in the end Keith, good work and thanks for letting us know.

[ Edited: 15 Feb 2022 at 08:55 am by Paul_Treloar_AgeUK ]
Elliot Kent
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Fantastic outcome and good work sticking with it.

keith - 14 February 2022 04:37 PM

The DWP did manage to respond within 14 days

Surely the most remarkable part of the whole thing.

NAI
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Elliot Kent - 14 February 2022 05:52 PM

Fantastic outcome and good work sticking with it.

keith - 14 February 2022 04:37 PM

The DWP did manage to respond within 14 days

Surely the most remarkable part of the whole thing.

:-)

keith
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Thanks all for the thanks and yes, I really don’t know how the DWP managed to meet that deadline!