Appendix D – Overpayment recovery
Introduction
Ashford's recovery rates for both Rent Rebate and Rent Allowance overpayments are poor. Recovery of these overpayments is undertaken by two distinct sections within Ashford, which are separate and distinct from ABS.
Rent Rebate recovery
Ashford Weald recovers Rent Rebate overpayments. An overpayment is raised on the HBIS system by benefits staff and is then transferred to Ashford Weald’s rent system as a separate sub-account to the rent account.
If an overpaid tenant also has rent arrears, or garage arrears, or has costs from court cases relating to those debts, any payment they make will automatically go towards paying off those arrears, rather than the overpayment. Any subsequent payments made will continue to pay off these other debts until they are cleared. Payments will only go to pay off Rent Rebate overpayments when housing or garage related payments have been cleared.
This confusing position means that overpayment recovery work on Rent Rebate overpayments often results in payment to the wrong debt. The contracts manager told us that the overpayment recovery BVPI (BVPI79b) is based on an estimate, because recovery of Rent Rebate overpayments cannot be accurately quantified. Ashford told us that there was no separate provision for Rent Rebate bad debt, but that this was included in the rent arrears provision.
This practice also suggests Rent Rebate overpayments are a low priority for Ashford, which was confirmed by the Housing Services manager. The system has no way of prioritising fraudulent overpayment recovery. The BFI Good Practice Guide states that inadequate recovery procedures mean ‘losing the deterrent effect that rigorous recovery of overpayments has on those who accidentally or deliberately provide inaccurate information, or who fail to disclose a change of circumstances’.
Rent Allowance recovery
If HB remains in payment after an overpayment has been raised, deductions are made from ongoing benefit. If HB is no longer in payment then Rent Allowance overpayments are recovered by Financial Services. An overpayment is raised on the HBIS system and transferred to Finance’s debtor system, which is part of Ashford’s financial management system, Cedar E-Financial. Before debts were recovered using the Radius debtors system.
One person in Financial Services is responsible for the recovery of all sundry debts including Rent Allowance overpayments. Financial Services has experienced staff shortages over the last two years and gaps caused by staff absences have not been filled. This has meant that existing resources have been stretched. This is one of the reasons for the poor performance in this area. Other key reasons are detailed below.
Recovery options
LAs have various options for recovering HB overpayments, as described below. We have indicated which methods Ashford uses:
| Recovery method | Used by Ashford? |
|---|---|
| Deductions from arrears of HB owed to the claimant | Yes |
| Deductions from HB awarded to a claimant (the best form of recovery is through ongoing benefit) | Yes |
| Deductions from other social security benefits | Yes |
| Deductions from future payments to the claimant’s partner | No |
| Deductions from future payments made direct to the landlord in respect of other tenants | No |
| LAs can make arrangements between themselves, so that overpaid HB owed to one is recovered from HB paid by another | No |
| LAs can register a determined and notified overpayment as a debt in the county court | No |
| Rent Rebate overpayments can be transferred to the tenant’s rent account if the account is in credit. If this method is used, there must be clear procedures to ensure that the overpayment is not treated as rent arrears. | Yes |
| Use of debtor tracing and debt collection agencies | Yes |
When judgement has been obtained, an LA can also seek enforcement of the debt through the courts if payment is still outstanding.
It is clear that Ashford is not pursuing all available avenues to overpayment recovery.
Debt management
Financial Services does not have a recovery policy document to state the aims of the LA and show how these are reflected at a service level. Ashford has an anti-poverty policy, but this should be associated with a service-specific policy document.
Financial Services has no procedures document. Such a document might set out how debts are to be recovered, what distinguishes one type of debt from another, the processes involved, how different stages of recovery are to be dealt with, and the different enforcement options available.
The BFI Good Practice Guide states that an overpayment recovery policy should distinguish between overpayments caused by error and those caused by fraud, and which provides guidance to benefit processing and overpayment recovery officers on:
- how to identify an overpayment;
- how to classify it;
- whether it is recoverable;
- who to recover from; and
- recovery rates and methods to be used.
We were pleased to note that a procedural document has been produced for benefit staff who will undertake Rent Allowance overpayment recovery under a proposed restructure which is due to take place in September 2001. However, neither the current nor proposed systems for HB overpayments prioritises the recovery of overpayments caused by fraud.
Financial Services has no write-off policy or procedures document. This could be used to highlight financial regulations, financial principles of write-offs, different reasons for writing off, when and how to write-off, aspects of computer system security and interface. A policy document could be used to spell out the responsibilities of service centre managers in relation to bad debt provision, budgeting and write-offs.
We were pleased to note that Ashford does appear to follow financial regulations when proposing and writing off bad debt, but the need for written policy and procedure documents has been highlighted by the long-term absence of the individual responsible for recovery.
Debt management further depends on useful case-level and management information from the debtors system. We asked for information about overpayments in a questionnaire before our inspection. These are some examples of the information Ashford was unable to provide:
- total Rent Rebate debt outstanding at 1 April 1998, 1999 and 2000;
- total Rent Allowance and Rent Rebate debt identified in financial years 1998/99, 1999/2000 and 2000/01;
- write-offs for 1998/99, 1999/2000 and 2000/01 – a figure given for Rent Allowance write-offs in 2000/01 of £304 was later presented as £38,077;
- the number of cases where recovery was completed in the three years above;
- the value of any technical overpayments for Rent Allowance or Rent Rebate; and
- combined monthly or quarterly figures for BVPI79b.
Some of this information was provided by the Service Accountant responsible for debtors during our inspection. But the fact that this information was not provided earlier raises doubts over the communication between the Benefits and Financial services, or the ability of the latter to interrogate systems it is responsible for managing.
Performance management
In a proper performance framework we would have expected to see documented standards, measures and targets for individual and team performance. We would expect to see monitoring arrangements in place, and regular management checks. As a minimum these checks would scrutinise the quality of decision-making, speed of processing and whether or not policy and procedures were being followed.
None of the fundamentals of performance management are in place for the recovery of overpayments at Ashford.
Conclusions
Rates of recovery for both Rent Rebate and Rent Allowance at Ashford are poor. The confusing manner by which Rent Rebate overpayments are recovered meant that Ashford can only estimate how much of what it receives is intended to repay an overpayment. The way Rent Rebate overpayments are recovered ensures that they are kept as a low priority, and Ashford has no plans in place to change this situation.
We found debt management by Financial Services to be lacking. Rent Allowance overpayments are recovered without the existence of policy or procedural documentation on recovery, bad debt provision or write-offs. However, a procedural document has been produced for future recovery of Rent Allowance overpayments by benefits staff when the new system goes live.
Information from the debtors system is not being interrogated to help drive performance. There are no monitoring arrangements in place and no management checks are undertaken. Financial Services staff appear to be over-stretched and this has been compounded by long-term staff absences.