retrospective application of benefit cap and resulting overpayments

We have received a number of enquiries this week about overpayments due to a failure by DWP to apply the benefit cap. Local council also report similar enquiries alongside applications for DHPs.

We have not previously seen this as an issue.

Are others experiencing similar enquiries / issues - or a sudden increase in them?

Hi I just had one of these.  Client was paid full UC for first month of his claim in October, then in November they applied benefit cap and raised overpayment. From what client says his income was above grace period threshold but this included furlough pay.  Was wondering whether UC are not recognising the period on furlough pay as client not working. But I have not enough info from client about his pay, so could be that he had gap within last 12 months.

We have had this issue, client claimed in April, they then applied the cap in August, as wages went down.

They then noticed should have been capped in April and so raised an overpayment for April. 

In October wages back up and so uncapped, they did not lift the cap until November - client asked for the difference from October, they said no, this has been ‘offered’ to debt management to clear the overpayment from April.

You couldn’t make it up.

Have now received a copy of detailed response in once case from DWP to clients MP.

The DWP confirm the benefit cap was applied due to a system error. “I can confirm that the benefit cap should not have been applied to her UC and we believe the error occurred when a council tax change was applied”.

The same client had another o/p due to a system error that generated a child element (in addition to the one she was   entitled to).

DWP state recovery action for both was ‘cancelled’ in November 20 (a couple of weeks after the decisions), However, they did not inform the client, nor did they revise the decisions or action the MR’s made! They have made a £50 ‘consolatory payment’.

I wonder how many claimants are/ have had overpayments due to ‘system error’ (we have seen others for different reasons) recovered because they have not challenged the decision? I understand clients MP may ask a PQ on this.
[corrected for typo]

Does anyone know if when a client is underpaid and this is ‘offered’ to debt management, against any overpayment - is this a policy or regulation - as in our case, see our post above - they recovered in effect a client’s whole month’s payment and left her with £0.00 - so when getting back to them it woud be useful to have some information on this

Many thanks

As a matter of law, the arrears can be used in full to reduce the overpayment. See para (8) here.

However, there are a number of cases where DWP policy is not to do this. See paragraph 5.50 here. The fourth bullet point in particular may be relevant to your case.

Charles,

Many thanks for this, that is as they say just the ticket

Best wishes

Answer to written PQ (see my posts above). Note DWP do not record within overpayments those that are due to ‘system error’.

The Department for Work and Pensions has provided the following answer to your written parliamentary question (142916):

Question:
To ask the Secretary of State for Work and Pensions, how many universal credit overpayments have been raised in the last 12 months; and how many of those payments were caused by a system error. (142916)

Tabled on: 25 January 2021

Answer:
Will Quince:

The Department is committed to ensuring that the right people are paid the right amount of Universal Credit. The vast majority of benefit expenditure is paid correctly, with front line staff working hard to prevent overpayments from occurring. We are constantly improving our processes and continue to invest in the use of data and analytics to identify fraud and error.

Where overpayments do occur, the Department has a duty to recover any debt quickly and efficiently. However, we recognise that there will be some claimants who may be experiencing financial difficulty, and anyone unable to afford the rate of recovery proposed is encouraged to contact DWP Debt Management to review the proposed rate of recovery.

During 2020 there were 290,057 Universal Credit (UC) overpayments recorded on the Department’s Debt Management system. The system does not capture how many of these overpayments were due to ‘system error’. The Department was called upon to process an additional 2.9 million UC claims from people who needed our immediate help as a result of the pandemic and there are currently 5.9 million UC claimants.

The answer was submitted on 28 Jan 2021 at 16:00.