Summary: Mr X complains the Council incorrectly decided to pursue him for historic council tax and rent arrears. Mr X says he had applied for discretionary payments from the Council to clear the outstanding amounts. The Council has accepted it failed to respond to Mr X’s original request for a discretionary relief payment for the council tax arrears. It has now written off Mr X’s debt and withdrawn his account from the Bailiffs. We also found the Council failed to respond to Mr X’s original request for a discretionary housing payment for the rent arrears. To remedy this, the Council has agreed to apologise to Mr X, make him a payment to recognise the uncertainty and distress caused, including by passing his council tax debt to the Bailiffs, and it has offered to award a discretionary housing payment on part of the rent arrears. The Council also agreed to make several service improvements.

The complaint

1. The complainant, who I shall refer to here as Mr X, complains the Council:
1. incorrectly decided to pursue him for historic council tax arrears from 2018. He said the Council had previously awarded him a discretionary relief payment to cover this (under Section 13A of the Local Government Finance Act 1992);
2. incorrectly decided to pursue him for historic rent arrears totaling £2744.64 (over four properties). Mr X says he was not aware of the rent arrears until a third party, Agency B, wrote to him in December 2021. He said that he does not owe the arrears as he was receiving support towards his rent from Housing Benefit;
3. failed to contact him before referring him to a third party, Agency B, who the Council had contracted to follow up on outstanding rent arrears; and,
4. failed to respond to his request that the Council clear the rent arrears.
2. Mr X says the situation with Agency B and the Bailiffs has caused him a great deal of distress. He says trying to make financial arrangements with Agency B on the outstanding balance has added to his and his daughter’s financial hardship.

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The Ombudsman’s role and powers

3. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
4. The Local Government Act 1974 sets out our powers but also imposes restrictions on what we can investigate.
5. We consider whether there was fault in the way an organisation made its decision. If there was no fault in the decision making, we cannot question the outcome. (Local Government Act 1974, section 34(3), as amended)
6. 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)
7. 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)
8. If we are satisfied with an organisation’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

9. I spoke with Mr X about his complaint. I considered the information Mr X and the Council sent to me.
10. Mr X and the Council had an opportunity to comment on my draft decision. I considered all comments received before making a final decision.

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What I found

What should have happened

Council tax - recovery summary

11. The Council Tax (Administration and Enforcement) Regulations 1992 cover both the way councils collect payments of council tax and the way councils can recover council tax debt. The Tribunals, Courts and Enforcement Act 2007 and associated regulations cover the way bailiffs may recover debts.
12. The council tax bill for the year is due on the 1st April. A council will usually collect payment through monthly instalments. If any instalment is missed the council will send the liable person a reminder. If a payment is still not made or a further payment missed, then the entire outstanding balance will be due (that is the full amount for the rest of the year).
13. To use the various powers available to it to recover unpaid council tax, a council has to apply to the Magistrates Court for a liability order against those it believes are liable. Once a council has obtained a liability order it can take recovery action.
14. A liability order gives a council legal powers to take enforcement action to collect the money owed. This can include taking deductions from benefits, getting an attachment of earnings (by which deductions are taken directly from earnings by an employer and passed to the council) or using bailiffs. The council can decide which recovery method it wishes to use but it can only use one method for one liability order at one time.

Council tax – discretion to write off or make discretionary payment

15. Councils, in exceptional circumstances, may decide to effectively write off some or all of a council tax debt by using their discretionary powers under S13A(1)(c) of the Local Government Finance Act 1992 (as amended).

Housing benefit – overpayments

16. If a council pays too much housing benefit to someone it will usually ask them to repay it. The law says an overpayment is recoverable unless it was caused by an official error and it was not reasonable to expect the person to realise they were receiving too much benefit.
17. If someone disagrees with a decision that they must repay an overpayment they can appeal to the Social Entitlement Chamber of the First Tier Tribunal. The law says people should appeal within one month of the date of the decision they think is wrong. The tribunal can accept a late appeal up to 13 months from the date of the decision.
18. Section 108 of the Welfare Reform Act 2013 clarified that social security debts, including for housing benefit overpayments, are not covered by a Statute of Limitation. 

Discretionary Housing Payments

19. The discretionary housing payments guidance manual issued by the Department for Work and Pensions says councils may award a discretionary housing payment (DHP) where a council considers a claimant needs further financial support. This is towards housing costs. Eligibility depends on the applicant’s entitlement to either housing benefit or the housing cost element of universal credit.
20. The scheme is purely discretionary, a claimant does not have a statutory right to a payment.

Council’s Discretionary Housing Payment Scheme

21. The Council’s Discretionary Council Tax Hardship Scheme (DCTHS) and Discretionary Housing Payment (DHP) Scheme (“the Scheme”, published December 2018) says a DHP may be awarded to help claimants who require “further financial assistance” towards housing costs.
22. To be eligible a person must be in receipt of either:

• housing benefit (HB) or
• universal credit (UC) with housing costs towards rental liability.

23. The Scheme says “further financial assistance” means a need for a payment where:

• there is a shortfall between HB or UC (housing costs) and the contractual rent and
• the person is unable to meet their housing costs from their available resources.

24. The Scheme says this means no DHP will be awarded if there is no shortfall between the HB/UC amount and contractual rent.
25. The Council’s Scheme sets out certain circumstances where a DHP cannot be awarded, such as where the applicant receives sanctions or reductions in benefit. This means the Council cannot award a DHP where any shortfalls and associated rent arrears have been caused by HB or UC overpayment recovery.

What happened

26. In January 2022, Mr X complained to the Council. He said:

• he had received an enforcement notice from the Bailiffs, who the Council had instructed, for non-payment of a council tax debt of £960 from 2018. The enforcement notice said action was being taken following a liability order issued by the court in September 2018. Mr X said he had not received any notice of the debt or that it had been passed to the Bailiffs.
• the Council had previously awarded him a discretionary relief payment to cover the council tax debt. He provided a copy of his application from September 2018 and his further request in November 2018 for support due to the financial hardship he and his daughter were facing at the time.
• he had received four letters from Agency B requesting payment of historic rent arrears on four different properties. These letters requested repayment of £2755.64 in total. Mr X complained the Council had failed to warn him that the rent arrears were being passed to Agency B. He said that he did not owe the rent arrears as his rent was covered in full by housing benefit. Mr X attached a request to the Council from November 2018 where he asked for a discretionary housing payment (DHP) to help with housing costs.

27. In February, the Council sent its stage one complaint response. It said:

• the Council’s Council Tax team would separately respond to his complaint about the enforcement notice.
• it did not uphold Mr X’s complaint about the action of Agency B. It said the some of the arrears were due to a shortfall between the rent charged and housing benefit awarded, which built up over time as Mr X did not pay the shortfall. It said other arrears related to a build-up of housing benefit overpayments being deducted from Mr X’s entitlement where Mr X had not made up the shortfall. The Council provided Mr X with a breakdown of the rent accounts for the relevant time periods, which showed when housing benefit overpayments had been deducted.

28. The Council’s Council Tax team sent Mr X a separate stage one complaint response. It did not uphold Mr X’s complaint. It said:

• On 11 September 2018, the Council wrote to Mr X refusing his request for a discretionary payment. It said this was because Mr X was not receiving housing benefit or universal credit at that time.
• in mid-January 2021, the Council wrote to Mr X to say the balance remained outstanding. It asked Mr X to make the payment in full or contact the Council. However, it passed Mr X’s accounts to enforcement agents in December 2021 as Mr X had not paid the balance or arranged a monthly payment plan to clear the arrears.
• as a gesture of goodwill, it had recalled the debt from the Bailiffs and provided Mr X with details of a repayment plan of £100 per month starting 25 February.

29. A week later, Mr X asked the Council to escalate his complaint. He said he was in financial hardship as he was in receipt of universal credit. Mr X said that he could not afford to repay the arrears of £2755.64. Mr X said again that the Council previously awarded a discretionary relief payment that covered the council tax debt.
30. Two days later, the Council sent Mr X its stage two complaint response. It said it was satisfied Mr X’s complaint about the rent arrears had been sufficiently responded to at stage one. The Council said Mr X had not provided any new evidence that suggested there had been an error in the Council’s decision-making. It encouraged Mr X to contact Agency B to make an affordable repayment plan.
31. Mr X then complained to the Ombudsman.

Analysis – was there fault by the Council causing injustice?

Council handling of historic Council Tax arrears

32. In May 2022, the Council responded to questions we asked as follows:

• in late August 2018, Mr X applied for a discretionary relief payment to help with the council tax arrears. The Council refused this application as Mr X was not in receipt of universal credit or housing benefit at the time.
• in November 2018, Mr X successfully appealed the universal credit decision and was awarded backdated universal credit. Following this appeal, Mr X applied to the Council again for a discretionary relief payment. However, the Council said the Council Tax team failed to forward the application to the relevant team and instead closed Mr X’s request. This is fault.
• following Mr X’s complaints in January and February 2022, an Officer in the Council’s team that handles requests to write-off council tax debts contacted Mr X. The Officer apologised to Mr X and explained the Council had missed his original application from November 2018. The Officer asked Mr X to complete a further application and to provide as much supporting evidence as possible showing his financial circumstances from November 2018 to January 2019.
• the next day, Mr X submitted a fresh application for a discretionary relief payment. Two weeks later, the Council awarded Mr X a discretionary relief payment clearing the historic council tax arrears and removed the associated court costs. The Council told us it recalled Mr X accounts from the Bailiff meaning enforcement action had stopped.

33. Mr X missed out on the Council making a prompt decision on his application several years before his complaint because of the fault identified above. In my view, if the Council had correctly processed his application in November 2018, it is likely the Council would have awarded a discretionary relief payment sooner and this would have avoided the debt being passed to the Bailiffs. The Council acted quickly when it realised it had failed to respond to Mr X’s November application and apologised for this. I find this remedies some of the injustice Mr X experienced. However, due to the significant distressed caused to Mr X when the debt was passed to the Bailiffs, I have recommended the Council apologises in writing to Mr X for this and makes a symbolic payment.

Council handling of historic rent arrears

34. In January 2022, Agency B, acting on behalf of the Council, wrote to Mr X requesting payment of historic rent arrears on four different properties. These letters requested repayment of £2755.64 in total. The rent arrears were made up of:

• £1918.57 for the period between 24 August 2017 and 29 March 2018
• £266.45 for the period between 22 October 2019 and 12 December 2019
• £420.16 for the period between 12 December 2019 and 16 December 2020
• £139.46 for the period between 15 December 2020 and 26 February 2021.

35. Mr X disagrees that he owes the rent arrears as he says he was in receipt of housing benefit that covered his rent in full.
36. Mr X had a right of appeal against the Council’s decisions. Based on the evidence I have seen, the Council decided to recover housing benefit overpayments between 24 August 2017 and 26 February 2021. The Council wrote to Mr X explaining its decisions and provided information on the appeal process if Mr X disagreed with the decisions made. It is my understanding that Mr X did not initiate this process. However, I consider it would have been reasonable for Mr X to exercise his right of appeal if he disagreed with the calculation of his housing benefit or the Council’s decision that he must repay any overpayments during this period. I do not therefore intend to investigate this issue further (part b of the complaint).
37. Mr X complains the Council refused to respond to his request that it clear the rent arrears (part d of the complaint).
38. As explained above, in November 2018, Mr X successfully appealed the universal credit (UC) decision and was awarded backdated universal credit. Based on the evidence I have seen, Mr X then requested the Council award him a discretionary housing payment (DHP) as he and his daughter were facing significant financial hardship. This was a separate letter sent at the same time as his request for a discretionary relief payment for the council tax arrears.
39. The Council’s Benefits Services replied to Mr X on 29 November 2018 asking him to send further information so it could consider an affordable repayment arrangement for him. Mr X sent certain documents on 11 December 2018 and said he had been unable to secure a job meaning he and his daughter were relying on foodbanks. It is not clear how and whether the Council considered Mr X’s additional evidence from 11 December 2018.
40. The Ombudsman’s role is to review how councils have made their decisions. We may criticise a council if, for example, it has not followed an appropriate procedure, not considered relevant information, or not properly explained why it has made a decision. We call this ‘administrative fault’ and, if we find it, we can consider what difference it may have made to the outcome of a situation and ask the council to address this.
41. Based on the evidence I have seen, the Council failed to respond to Mr X’s request the Council consider awarding him a DHP. It decided to treat his request as a way of arranging an affordable repayment plan without making a decision about his DHP request in line with its Scheme. This is fault. This caused Mr X uncertainty about what decision would be made about his DHP request. He went to time and trouble during his recent complaints trying to confirm this with the Council.
42. The Council told me in June 2022 that Mr X “can apply for a DHP to help with a shortfall between his rent liability and his housing benefit award, however a DHP cannot be awarded in respect of a housing benefit overpayment, or any shortfall resulting from the recovery of a housing benefit overpayment. There is no evidence this has been explained to [Mr X].” This is fault. This meant Mr X missed out on the Council making a decision about his DHP request in 2018 as well as receiving information on the associated review rights contained in the Council’s DHP Scheme.
43. I will now consider whether this fault would have likely made a difference to the outcome of Mr X’s situation. In doing so, I have considered Mr X’s statement of his rent accounts for the above time periods against the Council’s housing benefit and housing cost element of UC overpayment decisions. I have considered this alongside the Council’s information from June 2022, its complaint responses and its DHP Policy described above. Based on these, I find:

• The Council’s DHP Scheme is clear that a DHP cannot be awarded where the applicant receives sanctions or reductions in benefit. This means the Council cannot award a DHP where any shortfalls and associated rent arrears have been caused by housing benefit or housing cost element of UC overpayment recovery. It is my understanding that this applies to the following time periods: between 22 October 2019 and 12 December 2019; between 12 December 2019 and 16 December 2020; and between 15 December 2020 and 26 February 2021. During these time periods, the housing benefit awarded by the Council to Mr X was equal to Mr X’s weekly rent. However, the Council deducted housing benefit overpayments each week from Mr X’s entitlement, which led to a shortfall. This is in line with the Council’s response from June 2022 and its DHP Scheme.
• However, for the shortfall of £1918.57 that accrued between 24 August 2017 and 29 March 2018, I am unable to say whether the Council cannot award a DHP. There were weekly overpayments deducted from Mr X's housing benefit entitlement during this time period. I understand this in part related to a decision of the Social Entitlement Chamber from 2015 where the Tribunal decided a significant housing benefit overpayment to Mr X was recoverable by the Council. But, there also seems to have been a significant shortfall between Mr X’s rent and the housing benefit awarded (even before the overpayments were deducted). Mr X’s weekly rent was £143.84 and the housing benefit awarded was £33.84 per week. It is for the Council to consider this point under its DHP Scheme and provide clear reasons as to whether or not to award a DHP for the portion of the debt that relates to the shortfall between the rent and housing benefit awarded.

44. I, therefore, uphold part d of Mr X’s complaint.
45. In my draft decision, I recommended the Council review Mr X’s request from November 2018 for a DHP for the time period between 24 August 2017 and 29 March 2018 and make a decision now on whether to award a payment. I said the Council should give Mr X the chance to send in any supporting evidence regarding his request, including information on his universal credit being backdated. If the Council refuses Mr X’s request, I said it should provide Mr X with details of his right to request a review of its decision under its DHP Scheme.
46. In comments about my draft decision, the Council offered to award Mr X the £1918.57 now without the need for Mr X to submit supporting information. I consider this is a suitable remedy offered by the Council. It is positive the Council has offered this payment now after considering Mr X’s request afresh and my draft decision. I have amended the associated personal remedy below so it is in line with this offer.
47. Mr X complained the Council failed to contact him before referring the arrears to a third party, Agency B, who the Council had contracted to follow up on outstanding rent arrears.
48. I find the Council has suitably responded to Mr X’s complaint in its stage one and stage two complaint responses. It confirmed to Mr X that its records showed the Council had tried to contact Mr X on several occasions about the arrears and the need to make payment. It said the Council had up to six years to make contact about arrears. It explained Agency B was acting on behalf of the Council in following up on rent arrears with former Council tenants. However, it said the referral to Agency B would not lead to further fees or charges. Rather, Agency B was instructed to collect the amount owed from Mr X. It provided Mr X with Agency B’s contact details so he could make an affordable repayment plan. I do not find the Council at fault here.
49. As a final point on the Council’s handling of Mr X’s complaint, I note the Council incorrectly referred Mr X to the Housing Ombudsman at the end of its complaints process. This is fault. This caused Mr X confusion about which ombudsman service he should contact. I have recommended the Council apologise to Mr X to remedy this as well as recommending the Council carry out a related service improvement.

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Agreed action

50. Within four weeks of my final decision, the Council has agreed to:
1. apologise in writing to Mr X for the fault causing injustice identified above;
2. make Mr X a payment of £300 to recognise the avoidable significant distress and uncertainty caused to Mr X by having the council tax debt passed to the Bailiffs and by the Council’s failure to respond to his request for a discretionary housing payment (DHP). I have considered the Ombudsman’s published guidance on remedies when recommending this figure; and,
3. make Mr X a discretionary housing payment of £1918.57 for the period between 24 August 2017 and 29 March 2018. As explained above, the Council offered to make this payment in response to my draft decision.
51. Within four weeks of my final decision, the Council has also agreed to:

• review its DHP Scheme to ensure it is clear to staff how to handle requests for a DHP when the applicant has:
• a shortfall between their weekly rent and the housing benefit/housing element of UC awarded; and
• weekly overpayment deductions to their account that are less than the applicant’s housing benefit/housing element of UC entitlement;
• circulate a reminder to relevant staff that complaints concerning discretionary relief payments and discretionary housing payments should be signposted to the Local Government and Social Care Ombudsman at the end of the complaints process (not the Housing Ombudsman); and,
• share this decision with relevant staff (including those handling requests for DHPs and discretionary relief payments).

52. The Ombudsman will need to see evidence that the Council has completed these actions.

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Final decision

53. I have completed my investigation.
54. I have decided to uphold parts a and d of Mr X’s complaint. This is because I have seen evidence of fault by the Council causing injustice. The above recommendations are suitable ways for the Council to remedy this, which the Council has agreed to.
55. I have decided not to investigate part b of Mr X’s complaint. This is because I consider it reasonable to have expected Mr X to make use of his appeal rights to the Social Entitlement Chamber.
56. I have decided not to uphold part c of Mr X’s complaint. This is because I have not seen evidence of fault by the Council.

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Investigator's decision on behalf of the Ombudsman