Guidance

A7/2022: Housing Benefit debt recovered by the Department for Work and Pensions’ Debt Management

Updated 20 December 2022

Who should read

All Housing Benefit staff

Action

For information

Subject

Housing Benefit debt recovered by the Department for Work and Pensions’ Debt Management

Guidance Manual

The information in this circular does not affect the content of the HB Guidance Manual.

Queries

You can get extra copies of this circular/copies of previous circulars.

For queries about the general or technical content of this circular, contact: lawelfare.lasupport@dwp.gov.uk

If you need to ask about the distribution of this circular, contact: lawelfare.correspondence@dwp.gov.uk

Crown Copyright 2022
Recipients may freely reproduce this circular.

Introduction

1. The Department for Work and Pensions’ (DWPs) Debt Management recover Housing Benefit (HB) debts on behalf of local authorities (LAs) from claimants who are in receipt of certain prescribed benefits when the LAs have been unable to recover from ongoing HB.

2. In 2016 the processes used for referral and management of HB debt were enhanced to create a technical solution to what was a manual process. The project for this was known as the Payment Deduction Programme (PDP) and the use of this name has largely remained within the LA community since that time. However, within Debt Management it is not a name which has been used for several years. Therefore, going forward, the processes used for referral and management of HB debt will formally be known as HB debt recovered by DWPs Debt Management.

3. This circular builds on lessons learnt and questions asked since 2016 and replaces circular HB A6/2016. This circular has also been placed on Glasscubes.

HB debt

4. HB debt can be recovered from Universal Credit (UC) and non-UC benefits as outlined in Annex A.

5. LAs retain ownership of the HB debt and the DWP Debt Manager System (DMS) will manage recovery of the debt and forward any deductions of benefit to LAs.

Exchange of data interfaces

6. Each process covered by the exchange of data between LAs and Debt Management are known as interfaces:

• LA referrals of outstanding HB debt (referrals)
• LA notifications of revised LA debt balances to Debt Management, either an increase or decrease (revisions):
• Capita/Civica (temporary manual process)
• other software providers (automated process)
• the recall of debts by LAs (recalls)
• the return of debts by Debt Management to LAs (cessations)
• the automated issue of the payment schedule and payment of HB debt deductions from Debt Management to LAs (payment schedules)

Referrals

7. Before making a referral LAs must check the Customer Information System (CIS) via Searchlight to ensure a DWP benefit is in payment. For UC claimants, LAs should ensure an award with a start date (and no end date) has been recorded in the award screen to avoid referrals being returned unnecessarily.

8. Each LA will refer relevant HB debt(s) to DMS via the automated HB debt referral interface.

9. If an LA uses a third-party DMS, they may be required to move the HB debt back into their HB processing system to enable the referral to interact with the interface. The LAs IT software supplier will have provided guidance on this.

10. Referral data will be sent to DMS as a batch file once a day or as often as the LA determines. Do note, only one type of each interface file can be sent each day otherwise files will be overridden. In other words, if a referral file is created in the morning, then a second referral file cannot be sent in the afternoon, using the same date, as this will override the morning file. The consequence being DMS only receives one referral file from the LA for that day.

11. DMS will accept up to five HB debt referrals at any one time for UC claimants. DMS will continue to only accept one HB debt referral at a time for non-UC claimants. Debt referrals will be returned immediately if the numbers are exceeded.

12. Debt balances must be classified as either fraud or non-fraud and can consist of a single debt or multiple debts per invoice/unique reference number (created at the same time) but must be of the same classification.

13. Recovery of HB fraud debts will take priority over HB non-fraud debts. Debts will be held in DMS (refer to paragraph 13) and recovered in chronological order according to the date DMS received the debt. However, if an LA recalls a debt and then subsequently re-refers the debt, it will then go to the back of any queue for recovery unless it is a fraud debt.

14. At the point of referral LAs will not receive confirmation the debt has been accepted by DMS. LAs should therefore assume, the debt has been accepted unless they receive a return notification for one of the reasons listed in the return of debts (cessation) section.

15. When an HB debt is referred to Debt Management it is loaded onto the DMS for consideration of recovery from a claimant’s benefit. When recovery is implemented, deductions are taken from a claimant’s benefit. This could be weekly, fortnightly, four weekly or monthly dependent on the benefit type and claimant circumstances.

Revisions

16. Following an HB debt referral, an LA can revise the balance or classification of a debt they want Debt Management to collect via the interface if appropriate.

17. However, a review of the data continues to show there are many incorrect uses of the revision process by some LAs across IT systems. The Local Authority Partnership, Engagement and Delivery (LA-PED) division is working with LAs to resolve these issues and improve understanding of the revision process.

18. Revisions should only be used in a small number of scenarios:

• The claimant has had their entitlement reviewed or has won an appeal; this reduces the amount of the HB debt originally created.
• Further circumstances come to light which means for the period of the overpayment the entitlement was less and therefore the amount of the HB debt needs to be increased.
• The claimant pays a one-off amount to the LA towards their debt:
• If a claimant makes direct contact with a LA to make a payment against an outstanding HB debt held by Debt Management, the claimant should be advised to contact Debt Management. However, in exceptional cases should the LA accept the payment, a revision must be made via the interface as soon as possible to ensure accurate accounting.
• The LA has a credit from the claimants rent account or Council Tax account which they consider can be off set against the HB debt.

19. We are also aware that LA IT systems are automatically producing a revision file to increase debts when there is a second debt for the same claimant, providing it is for the same classification.

20. All the above are acceptable reasons to revise the HB debt and advise Debt Management the HB debt they hold needs to be increased or decreased by the appropriate amount.

Workaround for some IT software supplier sites due to non-genuine revisions

21. A workaround remains in place for some IT software suppliers due to non genuine revisions being generated. LA-PED are working with LAs to resolve the issues causing non-genuine revisions, such as posting DWP payment schedules as ‘cash’ and not as DWP payment.

22. LAs affected by this workaround are required to email the Debt Management Revision team at dwpdm.larevision@dwp.gov.uk to advise them to action a genuine revision.

23. LAs need to include all the information required, such as, claimant identifiers, the amount of revision, an increase or decrease to the HB debt referred. LAs can find an LA revision template on Glasscubes for this purpose.

All LA sites

24. LA-PED is also working with LAs to resolve the following issues:

• accepting regular payments from claimants but the HB debt has been left with Debt Management, resulting in weekly/monthly revisions. This must not happen as it could lead to dual recovery (from both the LA and Debt Management) and place the claimant in financial hardship.
• revising a debt to a zero balance, resulting in the LA unable to recall the debt through their system. The LA should ensure the debt is recalled before any further action is taken within their systems.

Recalls

25. An LA has the option to recall the HB debt at any time, for example, the LA has decided to take their own recovery action. However, LAs should consider:

• UC claimants: if the LA decides to re-refer this debt at a later stage, it could then affect when the debt will go into recovery. This is because recoveries are made in chronological order according to the date the referral was received by DMS. If this becomes the sixth non-fraud debt to be received by DMS it would automatically be returned to the LA
• non-UC claimants: it is also possible any re-referral will be immediately returned as another HB debt could have been received by Debt Management or other recovery activity could have started.

26. LAs are reminded, if the claimant has an insolvency order/debt relief order they need to recall the HB debt from Debt Management (if it has not already been returned by Debt Management), to avoid deductions being taken whilst a moratorium is in place.

27. LAs will receive a notification via the interface of any recalled debts (cessation file) and need to be aware there is a holding period during which any unallocated monies can be transacted. This is to ensure the accurate debt balance is returned to the LA in:

• for UC - up to 5 days
• for non-UC benefits - up to 14 days

28. If an LA recalls a debt and then decides it needs to re-refer the debt, consideration must be taken to check the balance which was returned on the cessation file and, the payment schedule covering the month the debt was returned. This will ensure the correct outstanding HB debt balance is returned. We have seen many examples where a debt is recalled and then re-referred for the full amount within days, when there is a deduction waiting to be processed through the payment schedule which would reduce the amount to be re-referred.

29. If you are unable to recall a debt using the automated file, you can contact the Debt Centre and ask them to action a manual recall to return the debt to your LA.

Cessations

30. HB debts can be returned by Debt Management to LAs via the interface for a number of reasons:

UC claimant

• CIS broadcast is received notifying Debt Management the UC claim has ceased
• HB debts will be returned to the LA at the end of the Assessment period for claimants when an award ceases
• the claimant dies
• Debt Management receives a recall from the LA
• a claimant becomes insolvent
• 100% benefit sanction is imposed for 13 weeks or more
• the sixth debt of the same classification has been received, or if the sixth debt received is fraud and at least one of the five debts held is non-fraud, the last received non-fraud debt will be returned to the LA.

DWP non-UC benefit claimant

• CIS broadcast is received notifying Debt Management the claim has ceased
• the claimant dies
• Debt Management receives a recall from the LA
• a claimant becomes insolvent
• 100% benefit sanction is imposed for 13 weeks or more
• Debt Management will continue to accept only one HB debt at any one time and will return a new referral of a HB debt if there is already LA debt held, or other on-going DWP debt recovery is currently in place which is due to last more than 28 days
• there are three missed instalments and no other prescribed benefit in payment, each case is looked at individually
• Debt Management determines there is insufficient benefit to make a recovery. This is where the benefit award is small and deductions for HB and DWP debts cannot be set as this would contravene the rules which require a minimum amount of benefit to remain in payment
• Debt Management determines the maximum deductions are already in place. This is where third party deductions such as court fines, utility arrears, etc. are already in place and any other deduction for HB or DWP debts would exceed the maximum amount which can be recovered from an individual’s benefit.

31. The cessation file will contain the balance held on DMS at the time of the cessation.

Payment schedules

32. DMS will issue LAs with a schedule of deductions summarising recoveries made on an individual case basis via the automated interface. Debt Management will continue to send monthly payments to LAs via BACS (Bankers Automated Clearing Services).

33. For DWP non-UC benefit deductions Debt Management will set up an instalment plan to take deductions at a set rate and periodicity (according to benefit pay dates).

34. For UC, there is no fixed instalment plan. The amount of deduction is determined each month according to existing deductions priority order – see Annex B. LAs should also be aware that:

• UC is paid monthly in arrears
• UC is income based so the award can fluctuate each month as earnings/income rise and fall
• deductions will be taken from available UC up to a maximum 25% of the award, according to the priority order
• UC will hold up to five HB debts at any time, which will be recovered in order of referral received date and classification. If the 5 debts held are the same classification, then payment credits to the oldest debt. If there is a mixture of fraud and non-fraud classified debts, the oldest fraud debt based on referral received date is recovered first, before the recovery of non-fraud debts
• in partnership cases where both claimants have their own individual HB debts then recovery is apportioned equally if they are both the same classification. If one of the debts is classified as fraud, then this would be prioritised and recovered first
• it is possible the total amount recovered from UC for HB debts within any given assessment period could be spread over more than one HB debt. This is because the amount available exceeded the balance of the first HB debt allowing recovery to commence on the next. LAs must be aware, there may be instances where small value payments could be made because of this scenario

Note: LAs should not raise queries regarding UC claimants relating to when deductions will start and the value of the deductions as this is impossible to predict for the reasons listed above.

35. Where there is sufficient UC available to recover debts in priority order, the amount deducted from UC will be allocated equally between DWP, Tax Credits and the HB debt held by Debt Management.

Example

A £60 monthly deduction would allocate £20 to each of the DWP, HM Revenue & Customs and the LA debts concurrently, to reduce the balance of each by an equal amount if they are all the same classification.

36. Due to data protection policy, Debt Management is only able to discuss debt currently in repayment with the LA owning the debt.

37. By exception, Debt Management may override the deduction rate following an affordability request from the claimant. Claimants contacting the LA with an affordability request must be directed to Debt Management who will consider and action the request.

38. The deductions taken in any one calendar month (from the first to last day) are paid to the LA in the month following the deduction. For example:

• a monthly deduction from a claimant’s UC payment, credited to DMS on 5 June, will be paid to the LA the following month (July)
• fortnightly deductions from a claimant’s Employment Support Allowance/Jobseekers Allowance, credited to DMS on the 5th and 19th of September, will be paid as one payment to the LA in the following month (October).

39. LAs will receive the payments and supporting HB payment schedules by the 3rd Friday of the month after the recovery from the claimant’s benefit (usually between the 15th and 21st of the month, in exceptional circumstance it could be the 4th Friday in a month (22nd).

40. If an LA has a query about their payment schedule and/or amount paid into their bank account, then these queries only should be directed to debt.accountingandfinance@dwp.gov.uk

Transfer of files

41. Transfer Your Files (TYF) is used to transfer HB debt files to and from the LA to DMS. Five specific file types will be used to manage the recovery of HB debt. These are:

• Referrals, revisions and recalls (from the LA to Debt Management)
• Cessations and monthly payment schedules (from Debt Management to the LA).

42. LA IT software suppliers developed solutions which create the HB debt files for referrals, revisions and recalls individually in xml format. The files are then compressed into a single .tar file which LAs will upload to TYF once a day as appropriate. Your LA IT supplier should have provided you with detailed guidance and instructions on the creation, compression and uploading of the compressed .tar files.

43. Note, each file type can only be uploaded once per day, unless they have different dates, otherwise it will overwrite the earlier file that day.

44. The cessations and monthly schedule will be generated by DMS in xml format and placed in appropriate LA Message Queues within TYF. These will also be provided as compressed .tar files. LAs must ensure these are downloaded daily and processed. These files are only available from TYF for a maximum of 30 days.

File format

45. This section will describe the file naming conventions for files which are transmitted between LAs and DMS via TYF.

46. File names for referral, revision and recall files:

Referral

File	Format [Creation Date-Message Type-LAID]	Suffix
Referral	YYYYMMDD-LAREF-AAAAAA	.xml
	YYYYMMDD is the creation date of the file.
	LAREF identifies the file as a referral file.
	AAAAAA is the LA ID

47. Example file name: 20151118-LAREF-005920.xml

• In this example, the Batch ID for this file which would be contained within the header information of the file would be: 20151118-LAREF-005920

Revision

File	Format [Creation Date-Message Type-LAID]	Suffix
Revision	YYYYMMDD-LAREV-AAAAAA	.xml
	YYYYMMDD is the creation date of the file.
	LAREV identifies the file as a revision file.
	AAAAAA is the LA ID

48. Example file name: 20151118-LAREV-005920.xml

• In this example the Batch ID for this file which would be contained within the header information of the file would be: 20151118-LAREV-005920

Recall

File	Format [Creation Date-Message Type-LAID]	Suffix
Recall	YYYYMMDD-LAREC-AAAAAA	.xml
	YYYYMMDD is the creation date of the file.
	LAREC identifies the file as a recall file.
	AAAAAA is the LA ID

49. Example file name: 20151118-LAREC-005920.xml

• In this example the Batch ID for this file which would be contained within the header information of the file would be: 20151118-LAREC-005920 File names for tar file

50. Any referral, revision or recall files produced for a particular day will be zipped into a tar file.

51. If there are no referral, revision or recall files produced by an LA for a particular day then no tar file will be produced.

tar files from LA to TYF

File	Format [Creation Date-Message Type-LAID]	Suffix
A tar file containing any Referral, Revision and Recall files generated that day from an LA.	YYYYMMDD-PDPLA-AAAAAA	.tar
	YYYYMMDD is the creation date of the file.
	PDPLA identifies the file as a tar file containing referral, revision and recall files generated by an LA for a particular day.
	AAAAAA is the LA ID

52. Example file name: 20151118-PDPLA-005920.tar

File failure

53. .Xml files failing DMS validation for non-quality reasons will be returned to the LA for corrective action. If one non-quality referral is identified within the .xml file, the whole file containing multiple claimant referrals will fail. Subsequent errors within the file will not be identified until the file is re-submitted, which could result in the file being returned on multiple occasions. It is therefore within LAs best interest to ensure the quality and accuracy of the data before making a referral.

54. Once a referral has been made, if the file fails validation within DMS, the LA Security and Support Team (LASST) will notify the LA that the .xml file has failed. The LA should then take the following steps:

• retrieve the failed .xml file from their IT system
• amend any incorrect record contained within the .xml file
• upload the corrected .xml file to TYF (for DMS validation)

55. During this period any revision or recall files submitted which contain records relating to the debts within the failed file will also fail validation. This will continue until the original referral file is corrected and validated by DMS.

56. In addition to non-quality issues .xml files will fail if they become corrupted, when this occurs the file will be displayed as successfully uploaded in TYF. However, Debt Management will be unable to open the file as an .xml file. Investigations suggest such faults primarily occur when a user at the LA has attempted to manually alter the .xml file before uploading it onto TYF. Where the .xml file is corrupted Debt Management will not be able to indicate the reason for the corruption. When viewed with a browser, corrupted files fail to display as .xml with only the raw data visible. In all instances LASST will return the failed file to the LA, who will be responsible for raising an incident/support call with their LA IT software supplier. Following corrective action by the LA IT software supplier and/or the LA, these files will be required to be uploaded again to TYF. (Note: no duplicate file will be generated by DWP as the original will not have been processed).

Over recovery

57. If an HB debt becomes over recovered, the following examples show the action which should be taken in each scenario:

Example 1

Where an LA accepts a payment from a claimant and the HB debt has already been recovered in full, it will be the LAs’ responsibility to provide a refund to the claimant providing the LA has not sent a revision causing a credit balance. Debt Management will manage any credit balance and refund to the claimant.

Example 2

Where an LA accepts a payment from the claimant prior to Debt Management having made the final payment to the LA and no other debt is held, Debt Management will manage any credit balance and refund to the claimant.

Example 3

Where an LA accepts a payment from the claimant prior to Debt Management having made final payment to the LA and there are other outstanding debt(s), Debt Management will apply the revision to the HB debt, manage any credit balance and adjustments to other debts.

Example 4

Where an LA receives payments resulting in a credit balance solely because DWP has recovered too much then it will be DWPs responsibility to manage any credit balance and refund to the claimant.

Cases in credit but not through over recovery

58. Evidence and feedback from LAs show the HB Debt Recovered by DWPs’ Debt Management referrals can, at times, develop into a credit situation. In other words, there appears to be an over-recovery on the individual case.

59. Sometimes the DMS makes the right deduction from the claimant but instead of apportioning the repayment between different debt types it sometimes credits only one of the debts. This then potentially makes one debt type appear over recovered when in fact the credit needs to be reallocated from one debt and credited to another, not affecting the customer. These are reported to Debt Agents to address and recall excess payments from LAs where appropriate.

Example

The claimant has an HB debt, a UC debt, and a Tax Credit debt. A deduction of £60 from the current benefit payment is made and should credit 3 x £20 to each of the debt types. But a system fault means the whole £60 is credited to the HB debt. When the agent looks at the exception report, they will correct this by recalling £40 from the LA and posting 2 x £20 credits to the other debt types.

LA query process

60. For queries regarding individual debts, LAs should call the Debt Centre on 0800 916 0647. The busiest times for Debt Management are Mondays and Fridays as these are peak calling times for customers. Debt Management has not put any limit on the number of queries LAs can raise at one time. However, this may change at any given time depending on how busy the network is at the time the call is made. Note: There is no e-mail address to use to resolve HB debt queries, the only contact route is to phone the Debt Centre.

61. Debt Management agents cannot advise on when debt recovery will start, how much it will be and when is it ending for individual UC cases. This is due to the fluctuating nature of UC and is determined by the circumstances of each case at the time of payment.

62. If an LA has a query regarding the HB debt deductions payment schedule and associated total payment or bank details, email debt.accountingandfinance@dwp.gov.uk

63. LA should contact LASST by email at lawelfare.lasupport@dwp.gov.uk or telephone 03000 920103 for any issues regarding:

• technical or TYF connectivity
• non-receipt of files
• uploading or downloading files to and from TYF

Service Level Agreement

64. The SLA for the financial year ending March 2023 should be communicated by the end of 2022.

Annex A

DWP benefits that deductions for HB can be taken from for UC and non-UC benefits:

• Income Support
• Attendance Allowance
• Jobseeker’s Allowance (JSA) and JSA New Style
• Employment & Support Allowance (ESA) and ESA New Style
• Disability Living Allowance (care component only)
• Incapacity Benefit
• Industrial Death Benefit
• Carers Allowance
• Maternity Allowance
• New State Pension
• Retirement Pension
• Severe Disablement Allowance
• Pension Credit
• Bereavement Benefits
• Bereavement Allowances
• Personal Independence Payment

Annex B

Deductions priority order

Note: all % rates are of the claimant/benefit unit’s UC standard Allowance

Reductions: made before the priority order is applied

Fraud penalties (previously referred to as sanctions) [100%for a single person and 50% for each member of a couple – limited exceptions can apply (40% and 20% respectively)].

Conditionality Sanctions [Full work conditionality – 100% for a single person and 50% for each member of a couple].

Note: Only one Fraud penalty or one Conditionality Sanction can be applied at any one time. If a Conditionality Sanction is already in place and a Fraud penalty needs to be applied to the claimant’s UC, the Fraud penalty will take precedence. The Conditionality Sanction will be applied once the Fraud penalty has ceased.

Advances priority order:

• UC Advance (new claim or change of circumstance)
• UC Advance (Benefit Transfer)
• Budgeting Advances
• [All up to a maximum of 25%]

Note: If the final part of a Fraud Penalty or Conditionality Sanction means it is only applied to part of the Assessment Period, for example, 20 days of the Assessment Period, and this is less than 25% of the UC Standard Allowance then other deductions can be applied as appropriate.

Deductions priority order

• Marked items are part of the Third Party Deduction scheme.

Last resort deductions:

• Arrears of owner occupier service charge [5% (fixed rate)]
• Arrears of rent and/private rented service charges relating to a rented property (minimum deduction) [10% (fixed rate)]
• Arrears of fuel – electricity [5% (fixed rate), where both can’t be applied then a decision will be made on which should take precedence]

Note: Last resort deductions can be applied even if it means that more than 25% of the claimant/benefit unit’s UC standard allowance has already been used up, as long as it is in their best interest.

Enforcing social obligation deductions:

• Arrears of Community Charge [5% (fixed rate)] or Council Tax [5% (fixed rate)]
• Fines (minimum deduction) [5% (fixed rate)]
• Arrears of water charges [5% (fixed rate)]
• Old scheme Child Maintenance [5% (fixed rate)]

Flat Rate Maintenance [£5 per week – a fixed amount as specified in legislation (part of 25% cap)

Ensuring recovery of benefit debt deductions:

• Social Fund loans [Up to 25%]

• Recoverable Hardship payments [Up to 25%]

• HB and DWP Administrative Penalties [50% of the overpayment from £350 to £5,000 – post 5/5/12 – before this date other rules apply]

• Tax Credit, HB and DWP Fraud overpayments [Up to 25%]

• HB and DWP Civil Penalties [Up to 25%]

• Tax Credit, HB and DWP normal overpayments [Up to 15% with no earnings and 25% with earnings above the work allowance, if applicable]

Enforcing social obligation deductions:

• Arrears of Integration loans [5% (fixed rate)]

• Arrears of Eligible loans [5% (fixed rate)]

• Arrears of Rent and/or service charges relating to a rented property (up to the maximum deduction) [+10% if it is within 25% of UC SA (making 20%)]

• Fines (up to the maximum deduction) [Up to £108.35 (part of the 30% cap)] (no additional fine deduction will be taken for items with an Assessment Period end after 5 May 2021).

Exceptions to the 25% limit

There are two exceptions to the overall maximum deduction rate. The first is deductions for current consumption of gas, electricity and water, which do not count towards the overall maximum amount. The second is where a Fraud Penalty or Conditionality Sanction is being applied or an Advance needs recovering.

A penalty or sanction takes precedence, and an Advance will be recovered once the penalty or sanction has ceased. This is unless the penalty or sanction results in less than the maximum 25% deduction being taken, in which case other deductions (for example, the Advance) can be taken up to the 25% maximum.

Last resort deductions continue to be taken, even if it means that more than 40 per cent is deducted. This is to protect vulnerable claimants from being made homeless or having their fuel disconnected.