Benefit Overpayments [ profit ]

We have been viewing a document recently, this document is from the Audit Sub Committee regarding benefit overpayments. Now before i start i want you to note something;

There have been current local authority members and past members who have jumped on this quick time, they have tried to tell us that we simply do not understand what the document is saying, however i think it is important at this point not to forget a vital point, which ever way you may read this document it still clearly states 2 very disturbing points, in black and white!

You can view the document for yourself HERE

Back to document, we accept that there may be points that we simply do not understand in this document and we would not argue the point however within this document medway council have identified the following;

Ovepayment recovery, in terms of the cost to the council, is not represented solely by the cash collected from claimants or landlords. The Department for Work and Pensions (DWP) also allows categories of overpayment for subsidy purposes at varying degrees from 0% to 100% e.g. overpayments as a result of claimant error are reimbursed at 40% in addition to any claimant recovery. It is therefore theoretically possible to make a ‘profit’ from an overpayment.

I would like to draw your attention to the last part of that statement;

” it is therefore theoretically possible to make a ‘profit’ from an overpayment”

personally i find it disturbing that medway council council even identify that.

Another point raised within this document clearly states;

Why we need a policy
It is essential for Medway Council to demonstrate that it carries out administration and recovery of Housing Benefit overpayments efficiently and effectively.
By doing so the Council:-
• reduces losses to Public Funds;
• provides revenue for the Council;
• helps reduce the loss from overpayments;
• deters fraud and error;
• demonstrates the Council’s commitment to accuracy and provision of a quality
service to its customers as outlined in its Benefits Statement of Intent.

Again we see that medway council have clearly stated;

” provides revenue for the council”

Now we can say that yes this could be ambiguous however it does give rise to questions like;

1. If the council were to overpay benefits on a regular basis would this or could this be seen as a profitable income during these difficult times?

I am so outraged that im almost speechless, medway council can claim an overpayment is the claimants fault, overpay the benefit, receive a 40% subsidy and then keep all overpayment recovered! I think this is a total outrage and must be challenged!!

In times where families are bending over backwards to keep roofs above the heads of their families we find the local authorities can still profit from our loss.
We will be looking more indepth into this situation and meanwhile welcome views of those affiliated with this document.

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3 thoughts on “Benefit Overpayments [ profit ]

  1. CitizenSmith says:

    • “i find it disturbing that medway council council even identify that”
    Why? As it’s true, why shy away from it? Would you prefer that they lied and said they can’t make a profit?

    • “If the council were to overpay benefits on a regular basis would this or could this be seen as a profitable income during these difficult times?”
    Firstly the Department for Work and Pensionners would take a very dim view on thi and since they check council’s performance they’d soon spot this. Secondly, and most convincingly, they wouldn’t actually make a profit overall since some overpayments can’t be recovered, some won’t be recovered (if they can’t find the person, they are bankrupt etc), the costs involved, and that even when an overpayment is recovered is normally done so very slowly – all things considered they don’t actually make a profit.

    • “In times where families are bending over backwards to keep roofs above the heads of their families we find the local authorities can still profit from our loss.”
    Profiting from your loss – what ‘loss’? If you are ovepaid £100 of benefit, you should have to pay that £100.00 back, the fact that a coucil may also be able to get some of it back from elsewhere shouldn’t mean that you have to pay back less otherwise it would be an encouragement for customer’s to not report things and commit frau.

    • Wonderwomen says:

      Thank you for your contribution.

    • Wonderwomen says:

      • “i find it disturbing that medway council council even identify that”
      Why? As it’s true, why shy away from it? Would you prefer that they lied and said they can’t make a profit?

      Response: as you correctly stated medway council HAVE identified overpayments as a form of profit, so why state this in a way which is beneficial, it is clearly relevant otherwise it would not even be approached. It is clear to a number of us who have attended such meetings as it is viewed as a ‘bonus’ i wonder what the normal everyday folk make of medway council viewing overpayments as a form of profit- a dim view i would expect and an upsetting one at that.

      • “If the council were to overpay benefits on a regular basis would this or could this be seen as a profitable income during these difficult times?”
      Firstly the Department for Work and Pensionners would take a very dim view on thi and since they check council’s performance they’d soon spot this. Secondly, and most convincingly, they wouldn’t actually make a profit overall since some overpayments can’t be recovered, some won’t be recovered (if they can’t find the person, they are bankrupt etc), the costs involved, and that even when an overpayment is recovered is normally done so very slowly – all things considered they don’t actually make a profit.

      Response: You mention that some overpayments cost more to recover than the original overpayment amount so where is this in the publics interest? Cost to public purse due to official error? As for the long term recovery plan lets not forget that the subsidy from central government would be enough to ensure that the council are not left out of pocket. With regard to not actually making a profit, can you support that? I can support the argument that a overpayment is and always has been profitable.

      True example ( occurred 2010 )

      Medway council makes official error and overpays claimants landlord by £ 200

      Claimant is informed of the overpayment 6 months later by LA

      LA paid subsidy of around 40% from central government.

      LA then make recovery of overpayment direct from claimants benefit therefor reducing the amount of housing benefit paid to landlord

      Claimant then having to pay the shortfall in rent to landlord.

      Therefore claimant [ through official error ] is at a loss, whilst medway council remain in profit by 40%

      It is important to note that where housing benefit is paid directly to a landlord it is then required of the LA to recover the overpayment from the landlord in order to eliminate any shortfall in rent to the landlord.

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