IB ESA reduced because of PPI

Hello all,

I have seen a client who is on IB ESA (WRAG) yet his entitlement has been reduced from £100.15 per week to £23.36 per week because of the following reason:

He received PPI payments from Lloyds into his TSB current on one day and the the following day the exact same amount goes out to pay a PPI Premium with Lloyds and a TSB loan. They were taken out at the same time with the same bank Lloyds TSB for this reason in 2010.

The DWP have made the decision following them viewing his bank statement. The client has very severe anxiety and the client states a ‘manager’ told him the only way to stop the reduction in benefit is to stop it being paid into his account. The client then asked Lloyds, and they have subsequently done this, to stop paying the PPI into his account and pay it directly to the loan account.

The DWP have stated they cannot comment on how the change will affect his benefit until a formal decision is made.

The reduction in benefit doesn’t make a lot of sense to me, I have checked the UC Regs 2013 and their is no mention of PPI unless they are treating it as Reg 66 H I “a payment receive under a insurance policy to insure against - the risk of losing income due to illness, accident or redundancy” but don’t think this would be correct.

Has anyone come across a similar case? Or know any relevant appeal cases?

Any tips would be appreciated.

Andrew.

PPI is indeed paid for a range of reasons, usually including unemployment and sickness. CPAG p.311 talks of ignored insurance payments, although they appear to relate to secured loans.

I think the payments should be disregarded see paragraph 33 of Sch 8 of the ESA Regs

SCHEDULE 8 Regulation 104(2)
SUMS TO BE DISREGARDED IN THE CALCULATION OF INCOME
OTHER THAN EARNINGS

33.—(1) Subject to sub-paragraph (2), any payment received under an insurance
policy, other than an insurance policy referred to in paragraph 31, taken out to insure
against the risk of being unable to maintain repayments under a regulated agreement
as defined for the purposes of the Consumer Credit Act 1974(a) or under a hire-purchaseagreement or a conditional sale agreement as defined for the purposes of Part 3 of the Hire-Purchase Act 1964(b).

(2) A payment referred to in sub-paragraph (1) is to only be disregarded to the
extent that the payment received under that policy does not exceed the amounts,
calculated on a weekly basis which are used to–
(a) maintain the repayments referred to in sub-paragraph (1); and
(b) meet any amount due by way of premiums on that policy.