Underlying Entitlement

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    Very hot, very tired and oh so fed up of legislation!!

    Following A13 I decided to refresh myself on the rules around overpayments and do a quick straw poll around our assessors to see what they were up to regarding underlying entitlement. Needless to say the responce varied drastically.

    I then presented the following question from the ALG training pack

    [quote:2311641243]A claimant has been overpaid benefit for the period 10th April to 28th May 2006 because a 26 year old non-dependant in full time work moved in and a full non-dependant deduction should have been taken.
    However he notifies the LA on the 21st June that the non-dependant stopped work and is claiming JSA from the 8th May.
    a.What date would you apply the lower non-dependant deduction?
    b.Would you reduce the overpayment?[/quote:2311641243]

    The answer they provide is that the change would take effect from 26th June but that underlying entitlement would have to be calculated for the period 15 – 25 May using the lower rate non dep deduction.

    No question about this as we agree – however….

    Still with me here! Presumably this means that the overpayment was notified to the customer around the 28/5. He was therefore within the 1 month deadline to provide information to calculate UE. If he had notified the fact that the non dep was on JSA 2 months later would we still apply UE for the period 15-25 May.
    A13 para 6 seems to suggest that we should not as this would need good cause shown or we would be in breach of Regulation 8 (beneficial change).

    No longer sure what we should be doing here, not that we were ever sure in the first place.


    The Circular is correct in terms of the outcome, but for neither of those reasons!

    In the ALG example, the following decisions have been made:

    – an entitlement decision has been made somewhere around the end of May that the claimant is entitled to (X – £47.70) from 10 April (DECISION 1)
    – an overpayment decision has been made somewhere around the end of May to the effect that the claimant has been overpaid by £47.70 a week over 7 weeks (DECISION 2)
    – a superseding decision has been made (DECISION 3) which supersedes DECISION 1; the advantageous change rule means that this decision takes effect as if the non-dep went onto JSA in June and it runs from 26 June. The claimant is now entitled to (X – £7.40)
    – new information about the overpayment has come to light within a month of the overpayment decision being made: we now know that the last three weeks of the overpayment period should be reduced by underlying entitlement of £40.30 a week (i.e. 47.70 – 7.40). The overpayment decision (DECISION 2) is therefore revised in the claimant’s favour and the new amount is (4 x 47.70) + (3 x 7.40). This creates a new decision – DECISION 4 – which carries new appeal rights.

    The reduction of the overpayment has nothing to do with good cause or changes of circumstance. The decision was wrong at the time when it was made and luckily the Council has found out quickly enough to revise it.


    I agree with Peter. It’s a shame that an otherwise excellently written circular has been tainted by mixing up the D&A provisions.

    There’s another possibility that’s worth considering too – what if underlying entitlement exists becasue of a late notified beneficial change, but there is not, as yet, an overpayment for the same period. The value of the underlying entitlement is the same as the lost benefit. But who cares, right? There’s no overpayment anyway.

    Later on an overpayment does get created for all or part of the same period as the “lost benefit”. The LA should immediately reduce the overpayment by the underlying entitlment that’s been hanging around doing nothing. But what if it forgets and this comes to light much later (very likely if we’re honest). In this case I’d say that the overpayment decision can be revised without time limit because the decision on the ‘gross’ overpayment was an official error.


    I am still trying to get my head around this and Peter Barkers example has clarified what happens if we find out within 1 month of the overpayment decision being made.

    However, if the information regarding the non-deps JSA had been received after 1 month from the revised overpayment decision would we have to consider whether they had good cause for not advising us within the 1 month timescale rules.

    I am confused because UE is not an award of benefit and I therefore cannot see how the 1 month notification timescale applies.

    My head hurts 🙁


    I agree with Mark: failure to take account of information in the Council’s possession from which u/e could have been established, or at least further investigated, would be an official error so the overpayment decision could be revised at any time.

    James (it is James isn’t it?): u/e is not an award of benefit, you are quite right, it is just something that you do while you are calculating an overpayment. U/e itself is not subject to any time limits that affect revision and supersession for the simple reason that u/e itself is not a fully fledged decision – it’s just a component. However, the decision in which the u/e is, or should be, embodied [b:93ce716a60]is[/b:93ce716a60] affected by the one-month time limit.

    People often think that there is something special about underlying entitlement, as if it leads a charmed existence of total immunity from the normal decision-making regime. It doesn’t. Overpayment decisions are all subject to the D&A rules.


    Hi Peter,

    Thanks for that it has cleared the matter up perfectly (for me at least). 😆 8)


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