Overpayment Recovery

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    As an Authority that has had to cut resources due to budget cuts with regard to staff resources working on benefit overpayments, we have identified a large number where all recovery actions have been taken and for a number of reasons we are unable to take further action apart from considering write off.

    We are thinking to use the payment offer approach where a customer is asked to pay a percentage of the overpayment in one lump sum and as a result we will write off the balance or commit to take no further recovery action, we are looking at a minimum percentage payment, for example for debts up to £500 the minimum payment would be 80%.

    Has anyone used this option or a similar scheme?


    Hi Linda

    this is not something that we have considered seriously – it has come up periodically when a customer has made the offer instead of it being suggested by the LA. In these cases though they had to be referred to a senior service manager who would decide whether we would agree or not. I think we have only agreed it once -(possibly twice).

    The most obvious problem that I can see is, if they have not been paying and you are considering write off as the only option, why would they be likely to pay a lump sum, most of the time where all recovery options have been exhausted it is a true case of inability to pay rather than refusal to pay.

    As far as the wont pays go, I wonder if the Councellors would be happy if they paid a lump sum happily enough now that they know the rest of the debt will be written off, surely to them it would feel even more like these people were having a laugh at the authorities expense.

    People talk – what would you do as an authority if it got into the press (in a negative way) or other people who have arrangements in place suddenly say why should I keep paying monthly – when I have been a good client and always kept to my arrangement when someone else gets a percentage written off and they have been a difficult customer.

    I am not trying to be negative as in principal I can see why it would be suggested, but there are a lot of drawbacks I think

    nick dearnley

    I think this would be difficult for the reasons Caroline gives. Also, the law says you *may* recover any recoverable overpayment, so the discretion to not recover is already available, and has to be applied to the individual case on merit. When I did recovery work in the past I always bore in mind that on a properly calculated overpayment we had already been reimbursed 40% by the subsidy system, so anything over 60% recovery was ‘profit’. Again, you wouldn’t want that little nugget getting widely known.

    Granted you should have a recovery policy for internal use, but I think to try to impose a set of criteria as to whether or not you would recover on an individual case might lead you open to JR for having fettered the discretion provided in the law.

    It’s a good idea to look at how you use the resources available, of course, but I think it would be more practical, and more palatable to your Members, to look at writing off the ‘can’t pays’ on a regualr basis and concentrating recovery work on the ‘won’t pays’. You can always reinstate the debt if it’s very large and circumstances change, because that would be using the discretion to recover. Unless of course you’ve written to them and told them there will it has been written off.

    John Smith

    On a related topic (I can’t start a new one) the new Social Security (Overpayments and Recovery) Regulations 2013 now give the option of recovery by attacment to earnings. On the face of it, it seems that an LA simply has to issue an appropriate notice to the liable party and his / her employer, and the employer will have to start making deductions (without any involvement of the courts). This almost sounds too good to be true – as even Council Tax have to get a liability order before they take this route? Any thoughts welcomed.


    “As an Authority that has had to cut resources due to budget cuts with regard to staff resources working on benefit overpayments”

    I wonder about this. Overpayment recovery can bring in large amounts of funding. Also, these will remain with the LA when the case is transferred over to UC.

    John…only if you consider the current systems and restrictions. The UC overpayment rules (and other rules) are much tougher and then some; no more “mr nice guy” LOL. We are moving away from the current position as the UC pilots start.

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