Overpayments
|
|
Source: BFI inspection assessment
For an explanation about how to read this radar chart see Executive summary.
8.1 This section covers London Borough of Lambeth’s efforts to reduce the loss to public funds from fraud and error in the benefits system.
8.2 To reduce the loss to public funds, local authorities must effectively administer the processing of HB and CTB to prevent overpayments occurring in the first place. When they do occur, local authorities should have clear overpayments policies and procedures available to staff to allow them to:
· identify them promptly
· classify them correctly
· prevent them from continuing
· decide if they are recoverable, and if so from whom
· pursue recovery by the most speedy, cost effective and efficient methods available in line with legislation.
8.3 To establish the effectiveness of the council’s overpayment recovery process we held workshops and interviews with staff and key managers in the Benefits service and randomly selected and examined 25 overpayment cases from both the clerical and information technology systems.
8.4 Overpayments work is undertaken by 2 separate sections within the council:
· assessment officers identify, calculate, classify and notify details of overpayments
· the Overpayments team manage ongoing benefit recovery and have responsibility for monitoring the recovery of overpayments.
Overpayment policies and procedures
8.5 Local authorities should link their overpayment policies to the strategic vision for housing benefits administration. These policies should be underpinned by performance targets that give:
· a clear view of the desired outcome
· accountability for providing effective and efficient debt recovery.
8.6 The London Borough of Lambeth carried out a self-assessment of its performance in this element of work and concluded that it is not at Standard. We agree with this assessment.
8.7 The Overpayments team have a comprehensive policy and procedures manual aimed at minimising and managing debt. It details all aspects of overpayment recovery, along with all relevant actions.
8.8 The Overpayments team have corporate targets to meet, such as answering incoming calls within a certain amount of rings. However, we found from interviews with external stakeholders that these targets are rarely met.
8.9 We were pleased to see that monthly statistical returns are produced to show current performance. However, these returns are complex and the management information is not easily interpreted. We found that some of the information is also irrelevant. The format of these returns should be simplified to only include information that is useful to the council and the Department.
8.10 The Overpayments team have a computer directory which contains policies and procedures, and other relevant documents. These are revised and updated as working procedures are amended. A second shared directory is accessible by all staff in the Benefits service. This directory contains all of the current Departmental policies for overpayments and we were pleased to see that it was updated regularly.
8.11 We were told that as part of their initial training, all assessment officers receive overpayments training with refresher sessions provided when necessary. Overpayments staff sat in on the last refresher session for assessment officers. However, there is no comprehensive overpayments training for Overpayments staff. We were told that this is because all staff are experienced and unlikely to need extensive training. We are concerned as this does not take any future staff intake into consideration and does not allow flexibility in resourcing.
8.12 By introducing a formal Overpayments training course, the council would be better prepared for any future change of resource within the Overpayments team.
|
We recommend that the London Borough of Lambeth: · simplifies monthly statistical returns · designs and instigates an official overpayments training course. |
Identification of overpayments
8.13 The accurate and timely identification of overpayments is important as it:
· ensures the incorrect payment of benefit does not continue
· improves the prospect of a successful recovery of the overpayment
· reduces the number of complaints and appeals.
8.14 Overpayments are usually identified when assessment officers record a change of circumstances, on the council’s Benefits information technology system, that affects the customer’s previous benefit entitlement.
8.15 The London Borough of Lambeth assessed itself as not at Standard for this element and we agree with this assessment.
8.16 We asked the council to provide us with figures that showed the amount of overpayments that the council has, compared to the annual benefit spend. Figure 8.2 shows that the number of overpayments identified have fallen as a percentage of total benefit expenditure over the last 3 years. The council told us this was the result of:
· concentrating on current work
· a more stable and better trained workforce
· better targeting of cases that required urgent assessment.
|
2001/2002 |
2002/2003 |
2003/2004 |
|
|
Amount £ |
13,261,537.03 |
12,994,810.58 |
10,770,222.78 |
|
Total Benefit Expenditure £ |
128,429,697.25 |
147,012,194.98 |
144,201,660.64 |
|
% of benefit spend |
10.33 |
8.84 |
7.47 |
Source: London Borough of Lambeth
8.17 We
were told by Overpayment staff that assessment officers identify overpayments
while processing claims. We looked at the source of information leading to
the identification of each of the overpayments in our sample of
25 cases. These are shown in Figure 8.3 and will help the council target potential
training and development needs.
8.18 The London Borough of Lambeth stated that it informs customers of the need to report relevant changes of circumstances. However, in Working with landlords we reported that there are communication issues between the council and landlords. This is supported in our findings by the low number of changes reported by landlords.
|
Source |
Number |
% |
|
Customer |
9 |
36 |
|
Landlord |
1 |
4 |
|
Jobcentre Plus |
12 |
48 |
|
Fraud |
1 |
4 |
|
Other |
2 |
8 |
|
Total |
25 |
100 |
Source: BFI analysis
8.19 The number of customer notifications (36%) indicate that attempts by the council to publicise the need to report any changes of circumstances have achieved a reasonable level of success.
8.20 Figure 8.4 shows the results of our sampling and details the reasons why overpayments have been raised.
|
Reason |
Number |
% |
|
Income increase |
5 |
20 |
|
Private pension increase |
1 |
4 |
|
IS/JSA ended |
6 |
24 |
|
Rent decrease |
1 |
4 |
|
Customer deceased |
1 |
4 |
|
Change of address |
10 |
40 |
|
Fraud |
1 |
4 |
|
Total |
25 |
100 |
Source: BFI analysis
8.21 The council does not collect management information on the number of overpayments that were caused or increased due to processing delays. It is good practice for a local authority to set a target and monitor performance for identifying changes of circumstances that could result in an avoidable overpayment. The council needs to collect this data and use it, so that avoidable overpayments can be targeted as soon as they occur.
8.22 We found that processing delays had caused or had increased the amount of benefit overpaid in 22 (88%) of the 25 overpayments sampled. This clearly affects the council’s ability to:
· ensure overpayments do not continue unnecessarily
· prevent unrecoverable local authority error overpayments
· successfully recover overpayments.
8.23 If overpayments are not immediately identified due to delays in processing changes of circumstances, local authority error overpayments will result. This will have a financial implication for the authority. Delays in taking recovery action may also result in an increased number of complaints and appeals.
|
We recommend that the London Borough of Lambeth: · ensures that at least 80% of changes of circumstances that result in a reduction or cessation of benefit are processed before the first payday following the date sufficient information is received · introduces procedures to ensure that such changes that have not been processed after 7 days are given priority and reasons for delay established. |
Calculation of overpayments
8.24 The accurate and timely calculation of overpayments is important to:
· provide a quality service to customers and landlords
· meet regulatory requirements
· give accurate management information on the value of the overpayment debt
· ensure that only the correct overpaid amount is recovered from the debtor
· enable the correct calculation of subsidy claims and avoid subsidy losses.
8.25 The London Borough of Lambeth completed a self-assessment for this element and assessed itself as not at Standard. We agree with this assessment.
8.26 The council is not at Standard for its calculation of overpayments, as it does not:
· consistently apply the use of underlying entitlement provisions
· calculate gross overpayments, on average, within 7 calendar days of the first payday after receipt of written notification of the change
· give consideration to the effect of any uncashed or returned cheques.
8.27 It is good practice to invite customers to provide details of their income and circumstances to allow consideration of any underlying entitlement in overpayment calculations. Discussions with staff, and our sampling, confirmed that the requirement to invite customers to provide such evidence is not always applied. Appropriate overpayments decision notices should include a paragraph in respect of underlying entitlement.
8.28
Figure 8.5 provides a breakdown
of the time taken to process changes of circumstance in our sample of 25 cases.
We would expect to see the council calculating gross overpayments within 7
calendar days of the first
payday following notification of the change.
|
Days |
Number of cases |
% |
|
1 – 7 |
3 |
12 |
|
8 – 14 |
9 |
36 |
|
15 – 21 |
4 |
16 |
|
22 – 28 |
0 |
0 |
|
29+ |
9 |
36 |
|
Total |
25 |
100 |
Source: BFI analysis
8.29 Only
3 (12%) of the changes of circumstances in our sample were processed within
7 days. We are concerned to see that 9 (36%) took over
29 days from the date that the changes of circumstances notification was received
by the authority, with the worst taking 220 days.
8.30 In
our overpayments sample we found that on average it had taken
35 days, following the next payday, to process the changes of circumstances.
The council does not measure performance against the Performance Standard
target of processing overpayments within 7 days of the first payday following
receipt of notification. Without this information, the council will be unable
to benchmark any improvement.
8.31 Our sampling confirmed that assessment officers are inputting the correct date of change. We also confirmed that the Benefits information technology system had correctly identified the date that benefit had been re-calculated from. We were pleased to see that the full period and amount of overpayment was correct in all 25 sample cases that we examined.
8.32 We found that the council does attempt to prevent the issue of recently produced HB cheques that are still held, when encashment will result in a further overpayment. If a sum of over £1,500 is to be paid by the council, then a quality check is conducted on the case to see if any overpayments are outstanding. If they are, then a decision is made to either pay the monies and deduct from ongoing benefit, if hardship will occur, or cancel the benefit.
|
We recommend that the London Borough of Lambeth: · takes steps to ensure that overpayments are calculated within 7 calendar days of the first payday after receipt of written notification of change · identifies overpayment calculations that take longer than 7 calendar days to process, to establish reasons for the delays and take action accordingly · introduces management checks to ensure that staff are correctly applying underlying entitlement provisions · prevents the issue of recently produced HB cheques, still held by the authority, where their encashment will result in a further overpayment. |
Classification of overpayments
8.33 The correct classification of overpayments is important as it:
· affects the level of subsidy attracted on HB and CTB payments
· can affect the level at which the recovery rate is set
· provides an indication of levels of fraud and error
· affects claims under the Security Against Fraud and Error scheme.
8.34 The London Borough of Lambeth completed a self-assessment of its performance in this element of work and found that it was not at Standard. We agree with this finding.
8.35 As previously discussed, assessment officers classify overpayments and record the reasons for the overpayment on the Benefits information technology system. They told us that they had received overpayments training as part of their ongoing training and felt that it was adequate to enable them to effectively undertake overpayments work.
8.36 To determine how accurate the classification of HB overpayments is, we analysed our sample of 25 cases. Figure 8.6 shows our findings in relation to the classification of overpayments.
|
Number |
% |
|
|
Classification correct |
17 |
68 |
|
Classification incorrect |
8 |
32 |
|
Total |
25 |
100 |
Source: BFI analysis
8.37 The level of incorrect classifications, 8 (32%), is high. The sample size is too small to extrapolate across the whole caseload, but it clearly indicates that errors are being made in classifying overpayments.
8.38 Figure 8.7 shows the failures relating to the 8 (32%) cases incorrectly classified in our sample and the impact this has on the subsidy claim.
|
Case number |
Incorrect classification |
Correct classification |
Overpayment amount (£) |
Incorrect subsidy amount claimed (£) |
|
1 |
Local Authority error |
Customer error |
42.40 |
0.00 |
|
2 |
Customer error |
Local Authority error |
1,109.12 |
443.65 |
|
3 |
Local Authority error |
Split Customer & Local Authority error |
42.40 |
0.00 |
|
4 |
Technical error |
Local Authority error |
13.28 |
0.00 |
|
5 |
Customer error |
Local Authority error |
780.48 |
312.19 |
|
6 |
Departmental error |
Local Authority error |
8.97 |
8.52 |
|
7 |
Customer error |
Local Authority error |
336.24 |
134.50 |
|
8 |
Customer error |
Local Authority error |
277.50 |
111.00 |
|
Total |
- |
- |
2,610.39 |
1,009.86 |
Source: BFI analysis
8.39 Figure 8.7 shows the analysis of incorrectly classified overpayments. The council had classified 4 of the overpayments as customer error when only one was due to this reason. One of the cases had been incorrectly classified as Departmental error, when this was due to local authority error.
8.40 Although the incorrect overpayment amount is small, compared to the total overpayment amount of our sample (£18,649.87), if this is prevalent across the overpayment caseload for the council it becomes quite significant.
8.41 By failing to classify overpayments correctly, the London Borough of Lambeth has:
· incorrectly advised customers of the amount of the recoverable overpayment
· incorrectly received subsidy payments.
8.42 As no management checks are being carried out on classification of overpayments, the council is failing to identify these errors. As a result, the amount of local authority error it is declaring is understated. Figure 8.8 shows the classification of overpayments from the statistics held by the Overpayments team. However, as the council is continuing to incorrectly classify overpayments, we would question its accuracy.
Category |
2001/2002 (£) |
2002/2003 (£) |
2003/2004 (£) |
Customer error/other |
6,257,625.32 |
7,742,298.10 |
5,980,558.83 |
|
Departmental error |
8,178.30 |
22,266.50 |
39,549.99 |
|
Local authority error |
6,943,502.96 |
4,627,525.75 |
3,910,634.22 |
|
Fraud |
415,833.10 |
729,055.50 |
957,826.73 |
|
Total |
13,625,139.68 |
13,121,145.85 |
10,888,569.77 |
Source: London Borough of Lambeth
8.43 The council needs to urgently review overpayment classification to ensure accurate subsidy returns. No management checks are undertaken on the recording of overpayment classifications and therefore senior officers and Members have no assurance that overpayment classifications or the subsidy claims are accurate.
|
We recommend that the London Borough of Lambeth: · urgently introduces management checks to provide assurance that overpayments are classified correctly, using training where necessary · collects and uses details of classification categories, so that it has more meaningful management information to gain insight into the levels of fraud and error and the underlying causes · introduces a more stringent checking regime covering all aspects of overpayments. |
Decisions on recoverability
8.44 Regulations 98 and 99 of the Housing Benefit (General) Regulations 1987 and regulations 83 and 84 of the Council Tax Benefit (General) Regulations 1992, are crucial because they:
· govern the classification and recovery of overpayments
· affect customers and the finances of the authority
· affect subsidy claims under the Security Against Fraud and Error scheme.
8.45 The London Borough of Lambeth carried out a self-assessment of its performance in this element of work and concluded that it is not at Standard. We agree with this assessment, as the council does not record the reasons for decisions and exercises of discretion.
8.46 Once an overpayment has been identified, 2 decisions must be made before recovery methods are put in place. Initially the council has a statutory responsibility to decide whether an overpayment is recoverable in law. The council must then exercise discretion in deciding whether or not to actually pursue the recovery, or to write off the debt as unrecoverable.
8.47 In cases where benefit remains in payment, assessment officers make the decisions on recoverability and from whom an overpayment should be recovered. We were told that in these cases overpayments would be recovered from ongoing benefit at a statutory amount.
8.48 Overpayments staff told us that the council always considers the recoverability of local authority error overpayments in accordance with Housing Benefit Regulations and that any debt to be written off would be referred to the Finance and Contracts Manager or Director of Finance for authorisation and write-off. We were pleased to find that documented procedures are in place to cover this.
8.49 The
council’s overpayments procedures cover recoverable and
non-recoverable overpayments. Guidance clearly states that overpayments caused
by official error can be recovered in certain specified cases.
8.50 Our
sampling confirmed that the overpayment was recoverable in
23 (92%) of the 25 cases we examined. We also found that due consideration
was given to whom the overpayments should be recovered from. In 6 (24%) cases
in our sample, overpayments were recovered from landlords.
8.51 Overpayments staff told us that in practice each overpayment is considered individually, before a decision is made on whether to recover or not. The decision is then detailed on the notification issued to the customer.
8.52 We found from our sampling that recovery decisions are recorded on the decision notice. When it is issued to the customer, a copy is held on the Benefits information technology system.
8.53 However, we also found the reasons for deciding that overpayments are recoverable are not documented on either the older case files or on the Benefits information technology system.
|
We recommend that the London Borough of Lambeth: · ensures that staff are aware that they should record reasons for decisions on whether or not to recover overpayments in every case, through training where necessary · introduces a check of decisions on recoverability into its management checking regime. |
Decision notices
8.54 Regulation 77(1) of the Housing Benefit (General) Regulations 1987 prescribes that local authorities shall notify in writing any person affected by a decision made by it under these Regulations. Decision noticesmust contain a statement of the matters as set out in regulation 77(1) and Schedule 6 to the Housing Benefit (General) Regulations. Regulation 67 and Schedule 6 to the Council Tax Benefit (General) Regulations 1992 has provisions for CTB decision notices.
8.55 Letters to customers and other affected persons need to inform them clearly about decisions made and explain the decision clearly enough for them to decide whether they might have grounds for appeal.
8.56 The London Borough of Lambeth completed a self-assessment for this element, finding itself at Standard. Our analysis found that it was not at Standard, although it had some strengths, including:
· retaining copies of decision notices on the benefits information technology system
· generating decision notices automatically when the overpayment is processed
· routinely issuing decision notices for all overpayments
· issuing notification notices to both customer and landlord in direct payment cases
· dating all decision notices to show the actual date the decision notice was sent.
8.57 Our sample confirmed that where notifications were sent out, all the decision notices were sent on the same day as the decision on the overpayment’s recoverability was made.
8.58 However, we found that in one (4%) of the 25 cases sampled, a decision notice was not issued to the customer after a decision on the overpayment had been made.
8.59 We found that the decision notices have a number of good points, including informing the debtors of how and over what period the overpayment was calculated and why it was recoverable.
8.60 However, we also found that the council’s overpayment decision notices do not fully comply with Schedule 6 of the Housing Benefit (General) Regulations as they do not notify customers that a written explanation of reasons may be requested.
|
We recommend that the London Borough of Lambeth: · amends its decision notices to inform customers that they may request a written explanation · ensures that decision notices are sent to all customers after a decision on the overpayment has been made. |
Recovery of overpayment debt
8.61 The efficient and effective recovery of overpayments is important as it:
· deters fraud and error
· reduces losses to public funds
· is a visible demonstration of the local authority’s commitment to accuracy and propriety
· is a source of revenue for the local authority.
8.62 Sums calculated using the methods below should not be included in overpayment management information when assessing how much the local authority has recovered:
· no payment in the first place, merely methods of calculating overpayments
· deciding not to recover a valid debt
· technical overpayments
· overpayments reviewed and reduced (HB regulation 104)
· write-offs
· debts transferred to a third party
· crediting uncashed cheques.
8.63 The London Borough of Lambeth completed a self assessment for this element and concluded that it was not at Standard. We agree with this assessment, but found some good practices, including the council’s commitment to:
· recover from the rent account only when in credit
· negotiate and agree recovery rates with debtors when appropriate
· recover CTB debt through Council Tax bills.
8.64 When a change of circumstances is processed, the Benefits information technology system automatically identifies and calculates overpaid benefit. Where possible, assessment officers then instigate recovery by deduction from ongoing benefit.
8.65 Regulation 102(3) of the Housing Benefit (General) Regulations 1987 allows the council to recover overpayments from any Housing Benefit to which that person is entitled. Annually updated Departmental rates allow recovery at a higher rate of £10.40 per week in ongoing benefit cases where the customer has been found guilty of an offence, admitted an offence after caution or agreed to pay an administrative penalty. In other cases, the standard rate of recovery of £8.40 per week is recommended.
8.66 If this amount is not affordable, the Overpayments team negotiates an acceptable recovery rate based upon the individual circumstances of the debtor and takes into account any potential hardship, health or welfare issues. In our sample we were pleased to find examples of recovery at various rates, which is good practice.
8.67 The standard rate of recovery figure is revised by the Department each year and is applied to all cases calculated after this by the council. However, we found from our sampling that older cases are not automatically updated each time the figure is revised. This means that the council is not recovering all the monies it is owed as quickly as it can. We recommend that the council looks at ways of automatically updating recovery rates on the Benefits information technology system for all overpayment cases each year.
8.68 The Overpayments team told us that the recovery rate notified in the decision notice was used throughout the entire recovery of the overpayment. However, customers are able to negotiate a reduced rate of recovery on the grounds of hardship.
8.69 The Best Value performance indicator 079b requires the council to report the percentage of recoverable overpayments of HB which have been recovered in the year. We found that the council does not keep a record of this figure and we had to ask specifically for this information to be calculated. By not having this information, the council is unable to accurately reflect its recovery rate.
8.70 Figure 8.9 shows the information relating to this Best Value performance indicator. The very low percentage is a result of large amounts of debt still being carried by the council and discussed in more detail in Management of debt.
|
Amount (£) |
|
|
Overpayments identified in 2003/04 |
10,897,334.79 |
|
Overpayments not recovered from 2002/03 |
24,230,063.87 |
|
Total |
35,127,398.66 |
|
Recovered in 2003/04 |
9,394,186.41 |
|
2003/04 recovery as a % of total |
27% |
Source: The London Borough of Lambeth
8.71 There are many recovery methods available to local authorities and all methods should be considered and used effectively, depending upon the circumstances of each individual case. We were told that the council has looked at the use of debt collection agencies in the past and had not considered it to be cost effective. However, the council is considering outsourcing to debt collection agencies in the near future.
8.72 Our sampling, coupled with interviews, confirmed that not all recovery methods are used by the council. Most importantly, it fails to recover overpayments from landlords by use of the Blameless Tenant recovery method. This issue needs to be addressed as it is the council’s right to use this process. We were advised that there are plans to bring this in soon and landlords will be informed when this is due to happen.
8.73 Figure 8.10 shows the recovery methods employed in the council and the amounts recovered by type.
|
Recovery method |
Used Yes/No |
Total amount recovered (£) |
||
|
2001/2002 |
2002/2003 |
2003/2004 |
||
|
From ongoing Housing Benefit |
Y |
- |
1,814,031 |
1,994,905 |
|
By cash or cheque received after invoice |
Y |
1,681,692 |
1,332,709 |
2,039,708 |
|
From ongoing social security benefit |
N |
N/A |
N/A |
N/A |
|
From payments to landlords |
N |
- |
- |
- |
|
Legal proceedings |
Y |
- |
- |
- |
|
Recovery method |
Used Yes/No |
Total amount recovered (£) |
||
|
2001/2002 |
2002/2003 |
2003/2004 |
||
|
Legal proceedings in full |
N |
N/A |
N/A |
N/A |
|
Recovery by Housing department after transfer to rent account |
Y |
- |
- |
- |
|
Debt collection agency |
N |
- |
- |
- |
Source: The London Borough of Lambeth
8.74 We were disappointed to find that not all of the information could be obtained by the council to populate Figure 8.10. This shows that relevant overpayment data is not being collected or monitored to provide detailed analysis on different types of recovery. This is highlighted by the confusing monthly statistical returns that are collated.
8.75 We were told that the total amount recovered from ongoing Housing Benefit includes the very few cases where recovery from payments to landlords had been made. It also includes income from the Housing department after transfer to the rent account. This does not provide a detailed breakdown of how overpayments are recovered. We were told that a request has been submitted for this to be changed on the Benefits information technology system, although it may take some time.
8.76 We were pleased to see that the Overpayments team has started to keep clerical figures of recovery by Housing department after transfer to the rent account.
8.77 Disappointingly, no figures have been kept for recovery following legal proceedings. Gathering this data would provide the council with information to gauge the most effective method of recovery.
8.78 Figure 8.11 shows the recovery status of our 25 sample cases.
|
Status |
Sample |
|
|
Number |
% |
|
|
Fully recovered |
9 |
36.53 |
|
Partially recovered |
7 |
27.88 |
|
Recovery ongoing |
6 |
23.39 |
|
No ongoing recovery action |
3 |
12.18 |
|
Total |
25 |
100 |
Source: BFI analysis
8.79 We were pleased to find that in 9 (37%) of the cases, the overpayment had been fully recovered and that there was recovery action on 13 (51%) others.
8.80 A high number of cases with no ongoing recovery would indicate poor control of the recovery process, so we were pleased to see that only 3 cases of the sample had no recovery action taken on them.
8.81 We asked the council to identify the 10 Registered Social Landlords with the largest amount of debt owed to the council in 2003/2004 and these can be seen in Figure 8.12 along with the amounts recovered from them by the council.
|
Landlord |
Amount recovered £ |
Amount still outstanding £ |
Recovery % |
|
Metropolitan Housing Trust |
146,214.63 |
126,229.48 |
53.67 |
|
Hyde Southbank Homes Ltd |
41,253.35 |
103,832.14 |
28.43 |
|
Family Housing Association |
108,864.79 |
88,294.41 |
55.22 |
|
SLFHA Ltd |
77,513.65 |
82,014.35 |
48.59 |
|
London & Quadrant Housing Trust |
84,861.70 |
73,297.37 |
53.66 |
|
Presentation Housing Association |
63,273.22 |
42,695.88 |
59.71 |
|
Guinness Trust Estate |
16,740.85 |
42,298.29 |
28.36 |
|
Centrepoint |
76,277.70 |
38,872.72 |
66.24 |
|
St Martins Community Partnership |
48,001.52 |
36,114.65 |
57.07 |
|
Peabody Trust Estate |
33,536.88 |
29,665.97 |
53.06 |
|
Total |
696,538.29 |
663,315.26 |
51.22 |
Source: The London Borough of Lambeth
8.82 We established the total amount of debt still owed by these landlords was £663,315.26. With the combined total of the top 3 being £318,356.03, this equates to 48% of the overall figure.
8.83 We were concerned to find that the level of recovery from these landlords averages only 50.4%. This slow rate of recovery is increasing the amounts owed to the council by landlords.
8.84 The council has produced a service level agreement with Lambeth Housing Association Group members to reduce levels of debt that these Registered Social Landlords owe. The details include:
· writing-off overpayments created prior to 31 March 1998, not already in recovery
· writing-off
overpayments created between 01 April 1998 and
31 March 2003, if under £100 and not in recovery. Debts over this amount
will be repaid at a percentage of the total debt each year
· introducing Blameless Tenant Recovery.
8.85 It is clear that landlords who owe the council substantial amounts of overpaid benefit might find it difficult to pass the fit and proper person test. These landlords should be left in no doubt that by not repaying this debt they may find themselves excluded from receiving further direct payments of HB.
8.86 The Assessment teams have responsibility for classifying fraud overpayments. These overpayments are then referred to the Benefit Investigation team to deal with as appropriate. After necessary action has been taken, the cases are referred back to the Overpayments team to deal with. However, we were told by both teams that fraud cases were not prioritised. It is important that these overpayments are prioritised to ensure that the council is seen to be proactive in tackling fraud and that monies obtained fraudulently are recouped.
8.87 The council has no written policy specifically dealing with the recovery of fraud overpayments. However, we were told that fraud overpayments were recovered in accordance with the current Departmental guidance.
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We recommend that the London Borough of Lambeth: · ensures all overpayment cases, where relevant, have the appropriate standard rate deduction applied through the relevant information technology update · routinely and regularly analyses the reports produced on the status of all HB overpayments · establishes all overpayments classified as fraud and takes immediate action to instigate recovery as a priority · introduces Blameless Tenant Recovery where possible for all landlords and communicates its intentions to them · considers using debt collection agencies · introduces and regularly reports on the amount of benefits debt recovered by the different methods used. |
Management of debt
8.88 Local authorities should attempt to recover all overpayments as quickly as possible to manage debt effectively. Managers should:
· ensure that recovery action is taken wherever possible
· monitor the amount of outstanding debt
· seek to keep the amount of outstanding debt as low as possible
· review working practices for continued efficiency.
8.89 The London Borough of Lambeth carried out a self-assessment of its performance in this element of work and concluded that it is not at standard. We agree with this assessment, but found the following positive aspects:
· a strategy is in place for the continuous improvement in the level and age of debt
· some monitoring is undertaken on the level and age of outstanding debt
· the level of outstanding debt is reported to Members
· write-off only takes place with the appropriate authorisation.
8.90 The council has a large amount of outstanding HB debt which can be seen in Figure 8.13. These figures include both rent allowance and rent rebate cases and show a decrease in the overall levels of outstanding debt.
2001/02 |
2002/03 |
2003/04 |
|
Total (£) |
5,393,832.47 |
4,836,097.29 |
4,031,232.34 |
Source: The London Borough of Lambeth
8.91 The London Borough of Lambeth has 3 systems containing debt. Two systems are redundant and hold debts prior to when the new Benefits information technology system was introduced in 2003. The balance of outstanding sundry debt can be seen in Figure 8.14. This includes unknown HB debt.
|
2001/02 |
2002/03 |
2003/04 |
|
|
Balance (£) |
28,534,337.72 |
24,230,063.87 |
18,890,490.02 |
Source: The London Borough of Lambeth
8.92 The council could not give an itemised breakdown of sundry debt, but were able to identify the balance. This is reducing each year which we were told is mainly due to increased levels of write-off. This indicates the positive level of impact on sundry debt that the Overpayments team has achieved.
8.93 The first BFI Inspection report recommended that the council should have its write-off policy agreed by Members and incorporated into a policy document. We were pleased to see that this had been achieved and that write-offs were now being undertaken to clear the council’s outstanding debts. The amounts of debt being written off can be seen in Figure 8.15. The debt written off has increased considerably from £0.5 million in 2001/02 to over £6 million in the following 2 years.
8.94 We were told that debt would only be written off if all avenues to pursue recovery had been exhausted. The council also told us it is committed to reducing its outstanding debt. However the amounts written off have increased dramatically and the council must satisfy itself this debt is being written off appropriately rather than to just improve the outstanding debt position.
2001/02 |
2002/03 |
2003/04 |
|
|
Write-off (£) |
501,359.84 |
6,090,176.80 |
6,474,504.02 |
Source: The London Borough of Lambeth
8.95 To write off an overpayment, the Overpayments team use a locally produced form which is submitted to the appropriate authorising officer via the Team leader. The authorisation levels for writing off overpayments in the Benefit service are:
· Finance and Contract Manager - £1 - £100
· Finance Director - over £100.
8.96 The levels of write-off authorisation cause problems. The levels to be written off are invariably large, meaning that time is taken to submit these to the senior managers, which delays the decision making. There is a draft document to change the levels of write-off authorisation levels to:
· Overpayments manager - £1 - £100
· Finance and Contract Manager - £101 - £5,000
· Finance Director - over £5,000.
8.97 This will ensure that time is more productively spent on current work and increase the speed of write-offs.
8.98 Examination of records confirmed that write-off activity only takes place within the delegated limits of authority, including appropriate authorisation from senior officers.
8.99 A sample of 7 write-offs were looked at and 4 of these cases were written off without any checks being done. The lack of documentary evidence means that validity of assurance cannot be given regarding the action taken on these cases.
8.100 Within the sample:
· in one of the cases the council was informed of the customer’s death by a letter from the customers son. No Remote Access Terminal check was done to confirm the validity of this claim and the debt of £357.14 was written-off
· on another case, the sum of £4,686.77 was overpaid by the council as it had failed to make non-dependant deductions. The customer would have been liable in this case, yet we found the sum had still been written off.
8.101 In both of these cases, a check could have enabled recovery by the council. Due to the high levels of write-off involved, the sums that could be recovered are large. The council should give Remote Access Terminal access to Overpayments staff, so that they can check cases before writing them off. This will enable the council to recover some of its debt.
8.102 We were told that it is labour intensive to look at all write-offs and the Overpayments team do not have the resources necessary to implement this. The council should urgently review staffing levels to ensure sufficient resources are in place to carry out this task.
8.103 We found that when a debt is written off it is not always reviewed for possible recovery when a debtor makes a subsequent claim. The Overpayments team informed us that this is being addressed, as the information technology system is being programmed to crosscheck claims regularly. This facility was to be made available shortly after the on-site phase of the Inspection.
8.104 By ensuring that adequate resources are in place to carry out write-offs effectively and by creating a facility to enable the recovery of written-off benefit from subsequent claims, the council will be in a much better position to recover outstanding debt.
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We recommend that the London Borough of Lambeth: · reviews the levels of write-off authorisation · ensures that debt is written off only in appropriate cases · engages extra resources to look solely at write-offs · improves processes to ensure the resurrection of a written-off debt when a further claim to benefit is made. |