Summary: There was fault by the Council. It made mistakes when it administered overpayments of housing benefit, it did not explain the process properly to Mr B, and gave him wrong information. This caused him uncertainty and distress, but did not disadvantage him financially. In fact, Mr B has benefited from the Council’s mistakes. The Council has apologised to Mr B. This is a suitable remedy for Mr B’s complaint.

The complaint

1. Mr B complains about how the Council has handled his housing benefit (HB) and rent accounts since 2007. In particular he says:
• The Council decided that it would not recover an overpayment of HB in 2007, but did not refund the rent payments he had made to make up the deductions from his benefit.
• The Council did not properly action its decision not to recover the overpayment until 2010/11.
• In 2013, his rent account was in credit, and he asked for a refund. However, the Council wrongly charged him for repairs. It realised this was wrong and agreed not to recover the charges.
• In 2023, his rent account was in credit and he again asked for a refund. But the Council wrongly charged him for the repairs again and tried to recover this and an overpayment from his rent account. It only rectified this after he had contacted the Council several times.
2. Mr B has a number of mental and physical health conditions. He has been distressed by the Council’s actions and says he has been significantly impacted by these.

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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 significant injustice, or that could cause injustice to others in the future we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
4. 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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What I have and have not investigated

5. We cannot investigate late complaints unless we decide there are good reasons. Late complaints are when someone takes more than 12 months to complain to us about something a council has done. (Local Government Act 1974, sections 26B and 34D, as amended)
6. Mr B’s complaints date back many years. However, I have exercised discretion to investigate these. This is because Mr B has explained to me that his serious mental illness has made it very difficult for him to deal with the Council or to make complaints. In addition, some of the more recent complaints relate to events from many years ago, and by investigating these now, I aim to resolve the difficulties with Mr B’s rent and housing benefit accounts.

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How I considered this complaint

7. I considered the information provided by Mr B and discussed the issues with him. I considered the information provided by the Council including its file documents. I also considered the law and guidance set out below. Both parties had the opportunity to comment on a draft of this statement. I have considered any comments received.

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What I found

Housing benefit overpayments

8. If a council pays too much housing benefit to someone, it will usually ask them to repay it. The law says the council can recover overpayment 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.
9. Even where an overpayment is recoverable, a council can decide not to recover the debt.

What happened

How the Council handles overpayments of HB and a tenant’s rent account

10. The Council keeps an account for a tenant’s overpayment of HB separate to their rent account. When the Council decided not to recover an overpayment of HB, the Council manually adjusts the two accounts. This involves crediting the amount to be written off to the rent account and then transferring this to the HB overpayment account.
11. However, the Council will not always transfer the credit from the rent account to the HB overpayment account in one go. This is because if the tenant is already in rent arrears, the manual adjustment will increase the rent arrears. The Council cannot evict a person for arrears caused by an overpayment of HB, and so where there are already rent arrears, the Council will transfer the credit from the rent account to the HB overpayment account at a later date, or in smaller instalments.
12. The tenant will then need to set up repayment arrangements to reduce the arrears on both accounts. The Council says that this should be made clear to the tenant.

Mr B’s rent account and his overpayment account

13. In 2007, the Council found that it had paid Mr B too much HB of £1,400 and it asked him to repay it. Mr B’s MP contacted the Council and it decided that although the overpayment was recoverable, it would exercise its discretion not to demand repayment. It wrote off the overpayment. This meant that it credited £1400 to Mr B’s rent account.
14. The Council should have then transferred the credit to the HB overpayment account to write it off. However, Mr B was already in rent arrears of nearly £1,000 because from July 2007, he was not entitled to HB. The Council had already started possession action due to the rent arrears and so it did not transfer the credit from the rent account. This meant that Mr B’s rent account was now in credit by £400.
15. By 2008, Mr B had been making regular payments and had received some HB and this meant he had built up some credit on his rent account. This allowed the Council to transfer an amount to his HB overpayment account. This left around £740 to be transferred from the rent account at a later date when it would not increase rent arrears.
16. In 2009, Mr B was not paying enough towards his rent and so the rent arrears increased. Mr B’s rent account still had the amount of £740 that would at some stage have to be transferred to the overpayment account. But again, the Council did not do this at that stage as it would increase Mr B’s rent arrears.
17. The Council wrote to Mr B in 2009 confirming that it had spoken to him about his rent account and the HB overpayment account. It does not have details of the conversation. It has no records that it clearly explained to Mr B that it had credited his rent account in 2007 and was slowly transferring this to pay off the overpayment of HB.
18. In 2010, the Council sent Mr B an invoice for the £740 still payable to the HB overpayment account. When Mr B queried this, the Council wrongly told him that it had not written off the HB overpayment in 2007 as agreed. The Council then wrongly created a second manual adjustment which credited a further £1400 to Mr B’s rent account. This took Mr B’s rent account out of arrears, but he was not entitled to this credit. Mr B continued to pay his rent regularly. The Council transferred some of the rent credit, in instalments, to the overpayment account.
19. In 2014, Mr B became entitled to full HB and this continued to 2017 when Mr B moved to a new council property. The rent account on Mr B’s old address showed a nil balance. However, Mr B still owed £234 that remained of the original credit, and he had also benefited from the Council wrongly crediting £1400 to his rent account in 2010.
20. Over the years, Mr B also had repairs charges added to his rent account. The Council has provided details of four separate chargeable repairs and the invoices it sent to Mr B. The Council wrote off two of these charges in 2012.
21. The third charge was raised in 2013 and Mr B cleared this by a payment to his account in 2015.
22. The fourth charge was raised in 2013. Mr B cleared part of this debt in 2014 and the rest in 2015.
23. By 2023, Mr B’s rent account was in credit and he asked the Council to refund this. Mr B’s tenancy agreement allows the Council to offset any rent credit against money owed to its Housing Service. The Council found that Mr B owed one overpayment and an amount for a care alert system. The Council paid these two debts. It then refunded Mr B the remaining £1,164. However, the rent credit actually included the wrongly credited adjustment of £1,400 and Mr B was not entitled to this.
24. Mr B complained to the Council in October 2023. He said that he had been paying the overpayment back weekly until his MP resolved this in 2007, but the Council did not pay this back when it agreed not to pursue the overpayment. Mr B said even after this he continued to pay his rent and at times he was not in work he would make payments on top of the housing benefit. He said that when he asked for a refund the Council told him that he could not have this because of the overpayment despite that he thought this had been sorted out some years earlier. Mr B also explained that he has serious psychiatric conditions and that his dealings with the Council had made this significantly worse.
25. The Council responded to Mr B’s complaint. It said it was sorry to hear about his ill health. The Council explained that it had made mistakes both in 2007 and in 2010 so that when it agreed not to recover the overpayment, it did not administer this correctly on his accounts. It apologised to Mr B for this and said it had refunded the money to him. Mr B was not satisfied with the Council’s response because it did not recognise the impact on him of the Council's failings. The Council considered this and offered to pay Mr B £350 in recognition of the impact on him.

Analysis

26. As part of my investigation, the Council has discovered that it should not have refunded money to Mr B in 2023. His rent account was only in credit because the Council had wrongly added another credit in 2010. The Council says that overall, Mr B has benefited financially from this and from it not being clear about its processes.
27. I have reviewed Mr B’s rent accounts and a statement of his overpaid housing benefit. I have looked to see whether mistakes by the Council caused Mr B to have rent arrears or meant that he had to pay money that was not due.
28. The Council was entitled to recover the overpayment of HB from Mr B in 2007. Mr B started to make payments towards the debt. The Council used its discretion to write off the overpayment in 2007. This means that it did not have to refund the payments Mr B had made before it decided to write this off.
29. Government guidance is clear that overpayments are not rent arrears and councils should not take possession action for rent arrears caused by housing benefit overpayments. The Council did not put Mr B at risk of eviction due to the overpayment.
30. The Council did not explain the process to Mr B clearly, and was not clear itself about how this works so that it gave him wrong information and wrongly refunded money to him.
31. The Council’s confusing communications have caused Mr B distress, especially as the lack of clarity continued over a number of years. This impact of this on Mr B is greater as he was already living with a very difficult psychiatric condition and, from the correspondence, was clearly trying to get back to work and overcome these difficulties. However, I am satisfied that Mr B has not been financially disadvantaged nor put at risk of eviction. For this reason, the Council’s apology to Mr B is a reasonable way to remedy the impact on him.

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Final decision

32. I have completed my investigation. There was fault causing injustice to Mr B, but the Council’s apology has remedied this.

Investigator’s decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman