Summary: The Council made a serious error when it calculated a Housing Benefit overpayment and issued a notice requiring Mrs X to repay more than £20,000. It did not carry out appropriate checks. That was fault. The Council apologised and rectified the error one month later. It has agreed to make a payment to Mrs X to recognise her distress and anxiety.

The complaint

1. Mrs X complains about the way the Council handled her claim for Housing Benefit claim and an application for a Discretionary Housing Payment.
2. She says the Council stopped making Housing Benefit payments in February 2018. It then sent notices saying she had been overpaid more than £20,000. The Council said the overpayment occurred because Mrs X had not declared an increase in her income for a period of four years. The Council later accepted it had miscalculated the overpayment and reduced the demand to £1,406.62. It has been recovering this by making a deduction from Mrs X’s ongoing Housing Benefit.
3. Mrs X also complains about the Council’s delay in processing a claim for a Discretionary Housing Payments and making agreed payments direct to her landlord.
4. Mrs X says the Council’s handling of her claims caused her significant anxiety and distress at a time when she was in poor health. It aggravated pre-existing medical conditions. She also believes the error and delay led her landlord to start legal proceedings to recover possession of the property.

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What I have investigated

5. I investigated the Council’s handling of the claims. But I could not investigate decisions about the amount of Housing Benefit awarded or the decision to recover the overpayment because Mrs X could have appealed about these matters to a statutory tribunal.

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The Ombudsman’s role and powers

6. The Local Government Act 1974 sets out our powers but also imposes restrictions on what we can investigate.
7. The law says we cannot normally investigate a complaint when someone can appeal to a tribunal. However, we may decide to investigate if we consider it would be unreasonable to expect the person to appeal. (Local Government Act 1974, section 26(6)(a), as amended)
8. The Social Entitlement Chamber (also known as the Social Security Appeal Tribunal) is a tribunal that considers housing benefit appeals. (The Social Entitlement Chamber of the First Tier Tribunal)
9. We investigate complaints about councils and certain other bodies. Where an individual, organisation or private company is providing services on behalf of a council, we can investigate complaints about the actions of these providers. (Local Government Act 1974, section 25(7), as amended)
10. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

11. I have spoken to Mrs X and considered the Council’s response to my enquiries along with documents from the Benefit Service’s records for Mrs X’s claims.
12. I sent Mrs X and the Council my draft decision and considered their comments.

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What I found

13. Mrs X was a tenant in private rented accommodation in the Council’s area. She lived there with her daughter and worked part-time. She received Housing Benefit but it did not cover the full monthly rent of £900.
14. Mrs X has chronic medical conditions which affect her physical and mental health. These conditions are aggravated by stress and anxiety. Mrs X stopped working in May 2018 because of her poor health.
15. On 23 February the Benefits Service received information which indicated that Mrs X’s earnings were higher than the figure it had used to calculate her Housing Benefit entitlement.
16. Mrs X says the Council then stopped paying Housing Benefit. The Council says it did not suspend or stop Mrs X’s Housing Benefit payments. But a contractor who worked for the Council reviewed the claim and decided she had been overpaid for some years.
17. On 9 March the Benefits Service sent Mrs X several benefit decision notices. They gave a breakdown of her revised Housing Benefit entitlement for the period from October 2013 to March 2018. There was a significant reduction in her weekly entitlement. It also sent several notices telling her she had been overpaid £20,208.18 for the same period. The notices said Mrs X had to repay this amount. The assessment officer did not ask a senior officer to check and approve the overpayment calculation before sending the notices to Mrs X.
18. The notices explained Mrs X could challenge the decision if she thought it was wrong. She could ask for a further explanation, request a reconsideration or appeal against the decision within one month.
19. Mrs X was very shocked and upset to get a demand for such a substantial repayment completely out of the blue. She spoke to an officer in the Benefits Service in March who said he would refer it to a senior officer for a review.
20. On 10 April a team leader in the Benefits Service called Mrs X to explain the original overpayment calculation was wrong. New decision notices were sent to Mrs X on the same day. The net effect of the revision was to reduce the overpayment from £20,208.18 to £1,312.22. The new notices included standard information about the right of appeal to a tribunal. Mrs X did not appeal against the revised overpayment.
21. The Council decided to recover the overpayment by deducting £11.10 per week from future Housing Benefit payments. This left Mrs X with a larger shortfall between the full rent and her Housing Benefit. When Mrs X stopped working due to ill health, she could not afford to make up the shortfall from her other income.
22. Mrs X’s landlord served her with a section 21 notice. The Council’s records say it was served on 11 February 2018 and took effect from 10 April 2018. It gave Mrs X two months’ notice to terminate the tenancy. At this point she owed £900 rent.
23. Mrs X attended a homelessness assessment interview with Officer A, who worked in the Council’s Housing Options service, on 20 April 2018. The Council’s conduct of the housing assessment and its performance of the prevention duties is the subject of a separate investigation by the Ombudsman.
24. Officer A noted on 20 April Mrs X needed to apply for a Discretionary Housing Payment (DHP) to meet the shortfall between the rent and Housing Benefit and try to prevent her landlord from seeking repossession. He asked Mrs X to provide bank statements so he could send them with a referral form to the Local Welfare team which assessed DHPs.
25. Mrs X says she personally delivered her bank statements to the reception desk at the Council’s office in mid-May. On 23 May Officer A told Mrs X he had checked with administrators in his team and the reception staff but found no trace of them. He asked her to submit further copies by 23 May. Mrs X was receiving treatment in hospital at the time. She was also due to leave the UK for a holiday the following week and told Officer A she could not meet this deadline.
26. By the end of May Mrs X submitted a duplicate set of bank statements. On 6 June Officer A completed the DHP referral form and sent it to the relevant team for assessment. He asked it to consider a DHP of £1,500.18. This would cover the outstanding rent arrears of £1,140 owed for the period from 11 February to 10 May 2018. He requested a further sum of £300.18 to cover the shortfall between rent and Housing Benefit for the period 11 May to 10 June 2018 and £60 to reimburse the landlord’s costs in serving the section 21 notice.
27. The Council decided to make direct payments of Housing Benefit to the landlord’s bank account because Mrs X was in rent arrears.
28. On 13 June the Council posted a credit of £1,605.87 to Mrs X’s landlord’s account. This comprised:
• a payment of £347 Housing Benefit due for the period 28 May to 13 June 2018; and
• a DHP of £1,258.87 backdated to 13 November 2017 which ran until 13 June 2018.

A further payment of £786.36 was posted to the landlord’s account on 4 July. This included four weeks Housing Benefit and a DHP of £88.96 for the same period.

29. On 23 July a team leader in the Benefits Service replied to Mrs X’s complaint at Stage One of the Council’s complaints procedure. He said the original overpayment demand created in March 2018 was incorrect. The contractor had made an error with assessing her income. He apologised to Mrs X and said the contractor no longer worked for the Benefits Service.
30. The team leader also reduced the weekly repayment rate from £11.10 to £5.00 per week because Mrs X’s income reduced when she stopped working. He said Mrs X should pay her landlord the £5 weekly shortfall between the full rent and the award of Housing Benefit & DHP.
31. Mrs X’s landlord applied to the County Court for a Possession Order after she received the lump sum DHP and Housing Benefit payments. She considered Officer A had breached the terms of an agreement made to allow Mrs X to stay in the property for a further six months.
32. The landlord’s agent made an application to the County Court in August 2018. The Court granted a Possession Order in early January 2019. Mrs X remained in the property until February 2019 when she moved to temporary accommodation arranged by the Council.

Analysis

33. The Council accepts its contractor made a serious error in calculating the Housing Benefit overpayment in March 2018. That was fault. The Council is responsible for any fault by its contractors.
34. There was further fault because a senior officer did not check and approve the calculation before the overpayment notices were sent to Mrs X. Before issuing demands to repay such a substantial sum, I would expect a senior officer to have checked the calculation carefully. If the contractor failed to ask for this check and authorisation, the Council is responsible for this omission.
35. Mrs X did have a right of appeal to an independent tribunal to challenge the overpayment decision. As it happened, she did not appeal because the Benefits Service identified and corrected the error when she queried the overpayment. But she had to wait one month for confirmation that the original demand was wrong. And it transpired that the actual overpayment was almost £19,000 less than the amount the Council had originally demanded. The team leader did apologise to Mrs X when he replied to her complaint. However, the unexpected demand to repay £20,000 caused Mrs X needless distress and worry. She is particularly vulnerable because of her medical conditions. Receiving an unexpected notification for repayment of such a huge debt caused significant distress.
36. The option of making an application for a DHP was discussed in Mrs X’s first meeting with Officer A on 20 April. Mrs X expressed some reservations then about the affordability of her private rented accommodation. Officer A asked Mrs X for bank statements to send as supporting evidence with the DHP referral form.
37. I do not doubt that Mrs X delivered the original set of bank statements to the Council’s office in mid-May 2018. But I have not been able to establish what happened to them. The request for Mrs X to provide duplicates did cause her some inconvenience and frustration and it delayed the referral for a DHP by a few weeks. However, when the DHP application reached the Local Welfare team it was processed and approved swiftly. Payments were credited to Mrs X’s landlord in June and July 2018 and the DHP was backdated to November 2017.
38. I cannot find that the delay in making the DHP payments caused Mrs X’s landlord to start possession proceedings. I have seen evidence that Mrs X’s landlord instructed her agent to start possession proceedings in the County Court about one month after she received the backdated DHP and Housing Benefit payments from the Council. She had received all the payments due when she instructed her agent to start the Court proceedings.

Agreed action

39. Within one month the Council will pay Mrs X £150 to recognise the needless distress and worry it caused by sending her an inflated Housing Benefit overpayment demand.
40. It will put in place a mechanism for a senior officer to check and approve any substantial overpayment demands before they are issued. The Council will decide on the appropriate threshold figure.

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Final decision

41. I have completed the investigation and found the Council was at fault in the way it handled the overpayment calculation and notification. This caused Mrs X some distress and worry at a difficult time in her life.

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Parts of the complaint that I did not investigate

42. I did not investigate the Council’s decision to recover the reduced overpayment from Mrs X. She could have appealed to the first tier tribunal if she disagreed with this decision. For the same reason, I did not investigate whether the Council correctly calculated Mrs X’s weekly Housing Benefit entitlement.

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Investigator's decision on behalf of the Ombudsman