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Deductions from UC for ineligible service charges in Specified Accommodation

 

Lostdog
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Hi all,

I am hoping some supported housing landlords (or any other gurus!) might be able to help with this. 

The transition from legacy benefits to UC is becoming an issue for us as a supported accommodation provider and also for our vulnerable residents.  We are a provider of specified accommodation, so HB-eligible charges are claimed via the HB system (i.e. no housing element within the UC claims).  The problem here is arrangements for TPDs from UC to pay for ineligible charges. 

We have discovered TPDs from UC cannot pay for weekly ineligible charges.  UC TPDs can only be taken for rent arrears (not weekly charges), and only once arrears reach 8 weeks.  This is a significant problem, especially for residents living in high-turnover, high-support hostels.

We have instead applied for APAs, with very limited success.  We quote specified supported accommodation (a tier 1 reason) as grounds for the APA request.  We have had only one success so far, and the deduction amount is less than the weekly ineligible deductions requested.

Issues with the UC APA system:
•      DWP have advised they are unable to send the landlord notification of APA being put in place for any APA requests (this despite us using the secure cjsm email system).  Nor will landlord be advised of the APA start date or APA value.
•      The first landlord will know of the APA being confirmed is by seeing the payment itself on the 4-weekly payment schedule.  Which of course is likely to be at least 6 weeks after the initial claim, probably longer.
•      We are told confirmation of APA being put in place is advised via the claimant work journal, but this does not give a value of APA until the first months’ APA deduction is actually taken.
•      It is not clear whether we will be advised where an APA request has been unsuccessful.  I can see it being an issue that, due to the time it takes to process UC claims, APA requests around the start of the UC claim will be unsuccessful due to UC not yet in payment.  How will we know?
•      In high turnover services such as hostels, it is very unlikely APAs (or TPDs) will be put into place before the resident moves out (if they are put in place at all)
 
The above makes management of ineligible service charges/arrears very difficult when compared to the previous TPD system under legacy benefits.  Under the legacy benefit TPD system:
•      A letter was sent to landlord at point of DWP processing the request.  It stated the amount and start date of weekly deduction. 
•      This made clear at an early stage which periods and shortfalls needed to be ‘topped up’ by the claimant.
•      99% of the time the deduction confirmed matched the deduction requested – this was usually the full weekly ineligible service charge, which might be up to £40 per week in fully catered support services.
•      Although the legacy TPD system is imperfect and subject to delay, it gives the option of direct payment for the full ineligible charge, avoiding the need for cash handling, and allowing focus on support.
 
The lack of flexibility in the UC system is likely to cause lack of clarity and significant arrears for residents living in supported accommodation who are liable for ineligible services. As more claimants/residents move across from legacy benefits to UC this will only increase.

Are there any other supported housing providers out there who are dealing with this?  Any successes?

Does the landlord portal provide a better mechanism for APA requests or information flow on amounts and dates? (we are not yet on this but hoping to be in the spring)

All advice welcome!

Thanks

     
CHC
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We are a supported housing/hostel provider and have experienced the same difficulties as you with ineligible service charges. Its currently not possible to set up deductions for these from someone’s UC award in the same way as with legacy benefits.  The only way to get deductions has been as you stated once the client has accrued 2 months rent arrears, obviously once these have been paid off the deductions stop again.

It is putting our clients at risk of eviction and we are losing income as a result.

Our policy team met with DWP policy officials about this issue at the end of November, they confirmed what we already know that there is no provision for deductions for ineligible service charges and that it would require a legislative change to introduce it.

     
Martin Williams
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I am not so sure that is right- paragraph 7 of Schedule 6 of the Universal Credit etc. (Claims and Payments) Regulations 2013 (SI No. 380) seems to me to provide that they can do deductions where the claimant is in debt for any service charge (eligible or not).

Rent and service charges included in rent

7.—(1) This paragraph applies where all of the following conditions are met.

(2) The first condition is that in any assessment period the claimant—

(a)has an award of universal credit which includes an amount under Schedule 4 (housing costs element for renters) to the Universal Credit Regulations; or

(b)occupies exempt accommodation and has an award of housing benefit under section 130 (housing benefit) of the Contributions and Benefits Act F35.

(3) The second condition is that the claimant is in debt for any—

(a)rent payments;

(b)service charges which are paid with or as part of the claimant’s rent.

(4) The third condition is that the claimant occupies the accommodation to which the debt relates.

(5) Where this paragraph applies, but subject to sub-paragraphs (6) and (7), the Secretary of State may, in such cases and circumstances as the Secretary of State may determine, deduct in relation to that assessment period an amount from the claimant’s award [F36which is no less than 10% and no more than 20%] of the standard allowance and pay that amount to the person to whom the debt is owed.

(6) Before the Secretary of State may commence (or re-commence) making deductions in respect of such a debt, the claimant’s earned income (or in the case of joint claimants their combined earned income) in relation to the previous assessment period must not exceed the work allowance.

(7) The Secretary of State must stop making such deductions if, in relation to the three assessment periods immediately preceding the date on which the next deduction could otherwise be made, the claimant’s earned income (or in the case of joint claimants their combined earned income) equals or exceeds the work allowance.

(8) In this paragraph—

“exempt accommodation” has the meaning given by paragraph 1 of Schedule 1 (interpretation) to the Universal Credit Regulations;

“rent payments” includes any elements included in the claimant’s rent which would not fall to be treated as rent under the Housing Benefit Regulations 2006 F37 or as rent payments under the Universal Credit Regulations;

“service charges” includes any items in a charge for services in respect of the accommodation occupied by the claimant which would not fall to be treated as service charges under the Universal Credit Regulations.

You can see the definition of service charges at the end…..

     
CHC
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I agree that ineligible service charges can be included as rent charges. Should have put that in my reply.

     
Martin Williams
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CHC - 18 December 2018 01:47 PM

I agree that ineligible service charges can be included as rent charges. Should have put that in my reply.

So are we saying then that the law does exist to allow the deductions to be made and the DWP don’t understand this?

     
Lostdog
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Martin Williams - 18 December 2018 02:54 PM
CHC - 18 December 2018 01:47 PM

I agree that ineligible service charges can be included as rent charges. Should have put that in my reply.

So are we saying then that the law does exist to allow the deductions to be made and the DWP don’t understand this?


Yes I am little confused as to what is possible, and, perhaps as importantly, what is practical. 

Even if TPDs from UC are possible for ongoing weekly ineligible charges, I think there is much potential for restriction and uncertainty around the level of deduction.  Factors affecting this include the mandatory banding (10-20% of personal allowance), the impact of changes to earned income and (as I read it) the need for a live HB claim being in payment before TPDs can be considered.  The last factor will be problematic in LA areas with slow HB processing, or where claims are suspended.  This uncertainty, and lack of notification of deduction rates, will make it almost impossible to manage arrears from one week to the next.

I think APAs are possible for ineligibles provided DWP are convinced the claimant’s circumstances warrant it (hence my reference to quoting tier 1 specified accommodation), and that this would not be subject to as many restrictions as the TPDs.  My hope would be that quoting tier 1 specified accommodation would be automatically accepted by DWP as adequate to warrant the APA being set up as priority.  Does anyone agree (or disagree) with me on this?

CHC – have you attempted the APA option or queried it with DWP?  Given your policy team met with DWP policy officials and they confirmed no provision for deductions for ineligible service charges, is this something you are likely to revisit with DWP following Martin’s post?

Thanks for your help.

 

     
TP45
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FOI response from 2013 confirms there is no equivalent provision for ‘hostel payments’ to be paid direct to the landlord under universal credit, as they are under legacy benefits.

https://www.whatdotheyknow.com/request/187692/response/461965/attach/2/wdtk 5655 final.pdf?cookie_passthrough=1

The APA route is not an effective replacement for the legacy ‘hostel payments’ system.  These are at DWP’s discretion, require evidence to support and may be time limited whilst circumstances persist.  There are then the known delays in receiving payment and unexpected changes to amount and frequency.  Coupled with the argument that direct deductions may not provide financial independence, we are not pursuing APA’s in the majority of cases.

     
Lostdog
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Thanks TP45 for your response.

We have a few APA requests in and waiting to hear back from DWP.  All our accommodation is regarded as specified (exempt) supported accommodation.  I had hoped quoting specified accommodation (a tier 1 reason) on all APA requests might be adequate to process the APA without the need for further evidence.  But from what you say this is not the case.  Alongside this I did wonder whether we should be assisting claimants to request weekly or fortnightly payments as standard to help them budget and pay their service charges.

I would be interested to know if you have sought a different payment methods for those residents/schemes where TPDs from legacy benefits were previously a key method of payment.  Not all have bank accounts so standing orders and direct debits can be tricky (and would incur bank charges if inadequate funds).  Paying by cash has obvious risks and transaction costs, and can impact on engagement with support.

We are due to sign up to the landlord portal over the coming weeks - awaiting information on this.  I was hoping this might assist with APA requests.

I would be interested to know whether anyone else has had any luck with APAs for ineligible charges in supported accommodation where HB is being claimed for the housing costs.

Many thanks

     
TP45
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Returning to this issue as receipts from DWP 3rd party deductions are dwindling as the UC rollout bites.  Under schedule 9 of the SS (C&P) regs 3rd party deductions could be made when:

Para 5(1)(a) - he or his partner has arrears of rent which equal or exceed four times the full weekly rent payable, or
Para 5(1A) - where the rent includes charges for services included under paragraph 4A(1)(d) and the arrears for these services exceed £100.00

Under schedule 6 of the UC, PIP, JSA & EA (C&P) Regs, 3rd party deductions can be made when:

Para 7(3) - the claimant is in debt for any—
(a) rent payments;
(b) service charges which are paid with or as part of the claimant’s rent.

Paragraph D2120 of ADM Chapter D2 states that operational guidance should be referred to for further criteria about the amount of debt when deciding if deductions are appropriate.  Daphne submitted an FOI request for this operational guidance, but the response wasn’t particularly enlightening: 

https://www.whatdotheyknow.com/request/operational_guidance_for_making

Has anybody come across the amount of debt referred to in operational guidance?  Online information suggests this is only 2 months rent arrears, with no separate provision for service charge arrears.

     
Lostdog
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We haven’t seen the amount of debt quoted in any operational guidance.  But we continue to have significant issues with residents living in specified accommodation accruing significant debt.

I can see two potential avenues to resolve this:

1.  Persuade UC to change (or remove) the trigger point for TPDs to kick in for claimants living in specified accommodation. 
Point 5 of FOI request VTR 5655 confirms that DWP are able to review and amend the ‘2 month arrears’ trigger point within the guidance with no requirement to amend the legislation:
“We have tried to simplify the regulations relating to third party deductions in Universal Credit. Therefore some rules that are in the legacy benefits’ legislation are only covered in guidance for Universal Credit. The “triggers” for the various deduction items is one of the rules that we decided it was better to include in guidance, so that we can easily change them if we find they are not set at the right level.  Currently in Universal Credit, the trigger for a rent arrears deduction is that arrears have accrued of an amount equal to 2 months’ rent. We have set it at that rate because that is when landlords can automatically commence eviction proceedings. If we identify that this trigger is not protecting claimants from being made homeless, which is what it is set up to do, then we will review the policy and amend the trigger if necessary.”

Given the above, it would seem to be sensible for the triggers to be pulled in (or no trigger required) for residents living in specified accommodation. This could be done without the need for a change in regulations.


2. Persuade UC to use Regulation 58 of the ‘Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Claims and Payments) Regulations 2013’ (see below).  This allows for some or all of a claimant’s Universal Credit award to be paid direct to a third party, such as a landlord/hostel provider, if it is in the best interests of the claimant and their family to do so. This would be in the form of an alternative payment arrangement, rather than a third party deduction:
“Payment to another person on the claimant’s behalf
The Secretary of State may direct that universal credit be paid wholly or in part to another person on the claimant’s behalf if this appears to the Secretary of State necessary to protect the interests of–
(a) the claimant;
(b) their partner;
(c) a child or qualifying young person for whom the claimant or their partner or both are responsible”

I think it could be argued that it is in the best interests of the claimant if they are living in specified accommodation.

I understand APA can’t usually be paid where there is no housing element within the UC claim (as will be the case in specified accommodation).  But wouldn’t the above over-ride this?

Anyone agree?  Any tips how best to approach this?