Overpayment Coding – LA error or Claimant error?

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    I was wondering what other LAs are doing in respect to the coding of overpayments in light of the contradicting commissioners decisions.

    As I understand it some of the overpayments we have coded to LA error should be claimant error. This would really help us out as we are trying to come in below the lower LA error threshold.

    What would you code the overpayment as in the following scenarios?

    1) DWP advises us that the claimant’s income support has ended. Unfortunately, the claim is not suspended and payments continue. The claimant does not contact us themselves to advise us of the change and ignores our letters requesting information about their current situation. The claim is later suspended and cancelled accordingly.

    I would have said that the overpayment occurred due to an error on our part because we delayed in actioning a change in circumstances. However, I know think that we could code this as claimant error because the claimant has materially contributed to the error by not contacting us.

    2) The claimant advises us that their earned income has increased. The claim is not suspended but we are unable to recalculate their entitlement because we do not have any evidence of the increase. By time the payslips showing the increased earnings are received an overpayment has occurred.

    Again, I would have said that this is LA error, we knew that there had been a change in circumstances but delayed in actioning it. Could this be claimant error because they contributed to the overpayment by delaying in providing their payslips?

    We use SX3/Northgate so in these scenarios we could have input the information received date as the day the DWP told us about the I/S ending and the date the claimant told us about their increased earnings. This would mean that the system could have coded the overpayments to LA error. If we can code these to Claimant error, would you leave the Information received date as it is and recode the OP subsidy manually or use the date that we decided to cancel the claim/date received the pay slips as the Information received date so that the system automatically codes the OPs to claimant error?

    Thank you in advance for your opinion.


    I have found a very old post about this issue where the issue was clarified (???) by Jane Autherson of the DWP Overpayment Unit.

    For subsidy purposes where the Authority could have prevented the overpayment the overpayment is LA Error. Very very simply why should the DWP fund the mistakes of Local Councils?

    The thresholds are designed to reflect an lelement of automatic error within the system. Whether they are too low or not is open to debate.


    Should you wish to code what are under current subsidy rules LA error overpayments as eligible then you would have to challenge the DWP guidance, through the Courts. Peter Barker is of the opinion that the DWP may give up straight away on presentation of papers as their guidance (and consequential instructions to Auditors) has no basis in law. I agree that their definition has no basis in law and I have argued that point for many years, however they run the funding system and make the rules. I would not expect an easy fight and I would certainly expect that they would use far better lawyers to defend (their possibly indefinsable) position than those available to LAs.

    The lack of legal clarity has been confirmed in a number of CDs which allow for a reasonable amount of time to be afforded to LAs in order to process changes in entitlement. These are it is argued relate to the original cause of the overpayemnt and therefore issues of recoverability.

    Now assuming your authority (or someone with a good legal budget / lot to lose) won the argument allowing for a reasonable element of delay for processing (14 days would spring to mind), the cases you quoted resulted in an increase in the level of the overpayment because the LA failed to act FULLSTOP. That element has to be LA error.

    Kevin D

    If an LA is awaiting evidence in order to make a decision on a change of circs, failing to suspend is not [u:4b06a3011f]necessarily[/u:4b06a3011f] an official error. It will depend on the circumstances as a whole. The following CDs confirm this approach:

    [b:4b06a3011f]CSHB/01718/2002 (p42)
    CH/0843/2005 (p9)[/b:4b06a3011f]

    Hope this helps.


    They do however fly in the face of the subsidy instructions. It would be a very brave LA to take on the DWP on this key area of finance. They fund the scheme so they set the rules.

    Kevin D

    Imagine, no, go on, try really hard….. One day the DWP will twig it is the law that counts. 😯


    Thank you for your replies. I raised this because of information passed to me from from Jane Autherson. I am also waiting for a reply from her on this matter myself.


    Sadly they are two different things with similar (but not the same) names.

    “Official Error” is covered by Reg 100 and is used to decide if an overpayment is recoverable.

    “LA Error” is subsidy category that applies to overpayments and is just used to determine the rates of subsidy that applies to an overpayment and to determine if additional subsidy is payable to LAs.

    They are not the same thing, but confusion has been caused by some very badly written passages in both the overpayments guide and the overpayments guide.

    Kevin D

    Hi Jeff,

    Subsidy is not something I deal with, so I’m on a bit of a fishing expedition.

    I’m still wondering if there is anything in the subsidy orders (as opposed to guidance) that means “LA error” for subsidy should be treated any differently to “official error” for HBR 100 (which, obviously, can be LA error).

    Sorry to lob these potential benefit grenades – but the interest is genuine.



    Actually LA Error does not appear in subsidy legislation. Instead “authority error overpayment” is defined in Reg 18(6) of the Income Related Benefits Subsidy to Authorities) order 1998.

    “means an overpayment caused by a mistake made, whether in the form of an act or omission, by an authority where the claimant, a person acting on his behalf or any other person to whom the payment is made did not cause or materially contribute to that mistake but excludes any mistake of law which is shown to have been an error only by virtue of a subsequent decision of a court.”;”


    She has confirmed that the OPs in my scenarios should be counted as claimant error.

    ‘At present your scenarios are correct. Any overpayment would only be classified as LA official error from the Monday following receipt of sufficient information in order to process the change. This of course would only be the case if the LA failed to process that change before the claimant’s next payday.

    We are looking at the policy on LA official errors, when they are caused by a delay in processing a change, so things may change in the future. However this is the guidance at present, so you would be able to justify your Subsidy claim. You would not need to reclassify overpayments’ retrospectively, if guidance changed.


    Mew, that reply from Jane Autherson would all but abolish LA Error in most authorities.

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