Recovery of ‘non-recoverable’ o/p from underpayment

Client today with nine months of various changes in circs leading to a number of overpayments and underpayments.  Still have to plough through all the award letters to try and work out whether the o/p’s are correct.  However one letter gives the following reasons for recovering previous overpayment from the most recent underpayment (which arose as LA failed to apply student income correctly)

“You had previously been advised that an overpayment covering all or part of this adjustment had been made non recoverable. However DWP guidance says that if another underpayment is created then this amount can be offset against any such non-recoverable overpayment”

Can’t find anything in CPAG to back this up.  Anyone any idea what this guidance is and if we can challenge it? Surely LA can’t supercede the original decision that o/p non recoverable just because client is lucky enough to have an underpayment?!

Stuff the guidance, what law are they using? Both DWP and LA decision makers have an appalling tendency to think that their guidance - which is just that - is the definitive statement of what they can and can’t do.
There is just this little thing called the law…

I completely agree with Ariadne.  An overpayment that is not recoverable cannot be lawfully recovered.  This sounds like a variation of the DWP’s argument that non-recoverable overpayments of other DWP benefits could be recovered through common law principles.  The Supreme Court emphatically found against the DWP:  recovery of an overpayment can only be sought if it is legally recoverable in the first instance - CPAG (resp) v SoS DWP (appel) [2010] UKSC 54.  In my view, exactly the same principle applies to HB/CTB.

Further, DWP guidance has no legal standing.  For example:

CH/3571/2008 (para 22)
“The Guidance Manual is not law. There is no statutory provision giving its provisions any particular weight.”

CH/1586/2004 (para 17)
“The Court of Appeal decided in the De Falco case ( [1980] 1 All ER 913) that even where a statute requires a local authority to “have regard” to guidance from a Minister or government Department, the local authority is not bound to follow any such guidance. In the case of housing benefit, there is not even that requirement in the statutes or regulations. I agree with the Commissioner in CH/3853/2001 (paragraph 20) that central government Circulars in relation to housing benefit are not binding on local authorities or appeal tribunals (or, for that matter, on Commissioners), who must apply the law as set out in the statute and regulations in the light of decisions by the Commissioners and the relevant courts.”

R(FC) 1/91 (para 39)
“The instructions to the contrary in the extract from the Adjudication Officer’s Guide set out in the second appendix state the law differently. But the guide is inadmissible as an aid to construction: see decision R(SB) 28/84 and the authorities there cited.”

In the event of the Council refusing to make payments of benefit due (i.e. without the unlawful deductions for non-recoverable overpayments), I would undoubtedly make a formal complaint, copying in the LA’s legal department and Chief Exec - through to the LGO if necessary.  Ultimately, I would make it clear that if the Council continues to refuse payment, action will be commenced in the County Court - the Council has already decided there is entitlement so it’s just payment of that which is being pursued (this doesn’t fall within the remit of a Tribunal).  Although in a different context, Waveney DC v Jones [1999] 33 HLR 3 CA may be of assistance.

It sounds to me that this ‘underpayment’ is just a revision of the overpayment decision - they are saying that the non-recoverable overpayment is less than they thought it was. Its not being recovered; just being reduced.

But you’re probably best checking with the LA about this. Ask if the underpayment and overpayment were for the same period.

Not sure yet, waiting for call back from LA.  I think it may be during the same period but for different reasons..

Wouldn’t matter if it was for different reasons.

Say the original overpayment occured by reducing entitlement from £100 per week to £50 per week. So the claimant received £100, but was only entitled to £50. The £50 per week overpayment is not recoverable.

If, for a different reason, the LA has now decided that the claimant was actually entitled to £80 per week during that period (an increase of £30) they would not pay that additional money since they have already paid more than they should have.

The notification letters (I’m guessing academy?) will say that an underpayment of £30 is being used to recover the overpayment, but what is actually happening is that the non-recoverable overpayment is reducing from £50 to £20. There is nothing extra to pay since the claimant has already received £20 more than they should have.

Your own LA send out letters in that format Michael (and yes I dont know where the so called guidance comes from either)

I do agree that where you have determined an overpayment for a period on account of a reduction in entitlement because of an error in calcultating that entitlement, and if there is an error in the second calculation that is again corrected and the result is that you reduce the overpayment for that period , that is merely a revision of your previous decision.  You cannot pay out the amount of the reduction as a housing benefit payment.

That amount has of course already been paid out previously , otherwise there would be no overpayment decision.. 

I think this is a problem of over-reliance on computers, with assessors not fully understanding the decision making process.