Repaying overpayment of ESA after receiving arrears of ESA
My client has been awarded arrears of IR ESA totalling £22,000 (from 2017-date). This came about after 2 years of haggling with the DWP and 2 Tribunals all stemming from a deprivation of capital issue.
My client however has an overpayment of IR ESA dating from 2015-2017 totalling £17,000 which she accepts she legally has to repay and has never disputed this overpayment. The DWP has not taken any steps to recover this overpayment whilst her ESA appeal has been ongoing.
I am aware that arrears of benefits are ignored as capital for 52 weeks after receipt. There does not seem to be an issue of official error so assume we can’t extend this period.
Ideally she would like to repay the whole overpayment now, rather than in instalments, leaving £5,000 capital, thus bringing her under the capital limits for ESA in a year’s time. She is fully aware of the deprivation rules, because of her current situation, but feels that she can’t continue to deal with the DWP any more than she has to so would rather get the overpayment dealt with and then she can forget about it.
Unfortunately my client has mental health issues, she’s getting ER DL and Mob PIP, and the whole ESA saga has severely affected her mental health. However she has been so traumatised by the last couple of years that she’s terrified to repay the debt to the DWP and then find herself back in the deprivation of capital loop again.
Just wondered if anyone had any thoughts on how repaying the money now would be viewed in a year’s time. (I appreciate that legislation could change in the intervening year but we will just have to take a gamble on that not happening!). I am planning on contacting the DWP to discuss this, I’ve got contact details of someone having raised 2 complaints about her case, so will see what they say but expect they will just come up with the usual line that it will be down to the individual decision maker at the time!
My reaction would be that the previous overpayment is due for immediate repayment. Any agreement to pay by instalments is a concession in recognition of the claimants inability to make immediate repayment. In this situation making full repayment shouldn’t be deprivation of capital.
Others may have a different take.
It’s been a while since I’ve dealt with a similar case but in my experience the overpayment would be recovered from the arrears before a payment is issued anyway.
I would agree that they will reduce the arrears due by any outstanding overpayment, this then negates any issue re deprivation of capital. It could possibly be one of the few sensible things that the DWP will do…...
As above, you would expect DWP to offset the overpayment against the underpayment so that the issue doesn’t arise.
But if it does, DMG 52833 relies on R (SB) 12/91 as authority that where a person uses capital to repay a debt immediately due including an overpayment to the department, then there cannot have been a deprivation as the claimant has no choice. Whilst the caselaw has, I think, moved on a bit from that - I would have thought it vanishingly unlikely that the DWP would try to argue that claimants have a free choice as to whether to repay benefit overpayments and that it was unreasonable for your client to do so here.
As a point of interest, the UC Regs specifically provide that spending capital to reduce debt can never be a deprivation of capital even if the claimant has a free choice about it - although that doesn’t help you in this case.
I’ve had a number of clients bring their savings under £16,000 by repaying an overpayment to the DWP. Deprivation of capital has never been raised by the DWP in any of these cases. These have mainly been ESA, but some IS back in the day.
Thanks for the responses.
Since the original post I’ve had a couple of further conversations with the DWP. It appears the Decision Maker has stated that the arrears capital will be ignored indefinitely whilst my client remains on IR ESA. Secondly, since raising this issue with the DWP (which they had also picked up on) they have decided to recall the £22K payment and will now recover the overpayment before paying the outstanding arrears thereby bringing her under the £6K limit. A good example of the DWP doing the sensible thing for once!
Now my client is just panicking that she will have to wait months to receive the outstanding sum so she can repay some debts incurred whilst waiting for her case to be dealt with, we shall wait and see!
This would be a straightforward Section 74 of the SS Admin Act empowers DWP to offset any overpayments against arrears owed to the claimant.
Around these parts they always check with Debt Management before paying any arrears.