Agenda item

*Clerk’s Note – The Chair agreed to amend the order of the agenda so that  the Housing Benefits Subsidy Certification Report was taken as the first substantive item. The minutes reflect the order that each item was discussed, rather than the order on the published agenda.*

The Committee received a report from BDO which provided an update on the main issues arising from certification of the housing benefits subsidy for the financial year ended 31^st March 2018. The report was introduced by Lee Lloyd-Thomas and was included in the agenda pack at pages 47-55. The following points were noted in discussion of the report:

a.    The Committee was advised that the housing benefits subsidy process provided an allowance each year to allow local authorities to recover overpayments resulting from local authority errors and administrative delays, through a DWP subsidy.  However, this allowance was capped to provide subsidy in full for overpayments where the total did not exceed 0.48% of total benefits, provided for subsidy at only 40% where these overpayments did not exceed 0.54% of total benefits, and penalised local authorities by not providing any subsidy for these overpayments which exceeded 0.54% of total benefits.

b.    As a result of clearing a large part of the backlog in 2017/18, the Council had created a higher than usual number and value of overpayments arising from local authority errors and administrative delays, which exceeded the 0.54% threshold. As a result, the Council had not been able to recover any amounts for the £1.445 million local authority error and administrative delay overpayments in 2017/18. 

c.    The Committee was advised, that ideally, the Council should seek to minimise such errors so that these fell below the 0.48% threshold to be able to recover those amounts in full through subsidy from DWP. BDO advised that they welcomed the fact that the Council had taken action and obtained external support to clear many of the backlog cases and claimant changes.

d.    In discussions with management, BDO advised that the current position (to 14 January 2019) suggested that the overpayments total to date of £577,504 was only 0.30% of benefits awarded and should be recoverable in full this year.  However, this was subject to continued good performance for the remainder of the year.

e.    The certification process was set by DWP and required that BDO test an initial 60 benefit cases in full. Where an error was advised in any of these cases, and for all error types found in the prior year, BDO then tested a further 40 cases with similar characteristics to the identified error. Whatever the percentage rate of error was within those 40 cases, this was then extrapolated across the board to determine amount of subsidy claimed. This year, this resulted in 29 separate error types where an additional 40 cases were tested.

f.     Overall, the auditors advised that the direction of travel showed a significant improvement in 2017/18. Over the duration of the year, the Council had more than halved its backlog. BDO suggested that with further work to clear the remainder of the backlog in 2018/19, it was hoped that the Council would receive its full subsidy for 2019/2020.

g.    In response to a question around delays, officers advised that the KPI in relation to new claims was 20 days, current performance was 22 days. There were around 5000 cases currently in the backlog, but officers advised that there were around 3000 new cases per week.

h.    The Committee sought clarification in relation to the use of an external company, called Merritec to help clear the backlog of cases. In response, officers advised that experienced staff were needed to clear the backlog and that employing in-house staff had proven difficult over the years, particularly as it took around nine months to train a Benefits Officer. The current establishment for the team was 38 FTE but the current number of staff was 30. Savings from the vacant posts covered the cost of the contract. The cost of the contract with Merritec was around £250k per year.

i.      In response to concerns about the use of external staff/contractors rather than Council staff, officers set out that this was a much more efficient way of dealing with the backlog and that attempts to employ temporary staff directly was one of the reasons for the number of mistakes which had caused the historical backlog. Officers advised that part of the reason that it was difficult to recruit in-house staff was because the Council paid less than some other boroughs, as well as the uncertainty caused by repeated delays to the roll-out of Universal Credit. Officers advised that the award of the contract was done following a mini-tender process.

j.      The Committee sought assurances about how effectively the Council was using its Discretionary Housing Payments to help those in need. In response, officers advised that the DHP was used on a case-by-case basis and that the full allocation was used each year. Officers cautioned that the DHP funding from the DWP got less and less each year.

**Clerks note – Cllr Hakata arrived at the meeting.**

k.    In response to a question, officers advised that the backlog was primarily due to a lack of staffing resources in that area to deal with the caseload. One potential source of overpayment was identified as a recipient failing to declare a change of circumstances, such as a new job.  A process of data matching between DWP and HMRC was undertaken to identify such cases.

l.      In response to a request for clarification on the total losses that the Council had incurred, BDO advised that they had identified £500k of additional overpayments that were not picked up in the self-report and that this was on top of the £1.4m in cases identified which exceeded the 0.54% threshold. This resulted in around £1.9m of additional costs, which would have to be paid for from the General Fund.

m.  In response to a question around the audit cost, BDO advised that the audit fees were around £38k. The amount of the fee was set by government.

n.    The Committee enquired whether there was a plan in place to reduce the Council’s reliance on Merritec, with a view to them being used to train up in-house staff. In response, officers reiterated that the future caseload would be heavily impacted by the introduction of Universal Credit and it was anticipated that carrying a significant vacancy rate would hopefully prevent redundancies further down the line.

o.    The Committee sought reassurances around what happened to the individual claimant when an overpayment was made. In response, officers advised that the usual process was that standard deduction of £11.10 per week from a claimant’s Housing Benefit. If the person in question was not a benefit claimant then the case would be passed on to another team to chase up repayment. In response to a follow up question, officers advised that they were not aware of any case where a person had been made homeless as a result of failure  to repay an overpayment. The Committee emphasised the need for a link to local voluntary sector organisations who could assist with housing arrears. 

p.    The Committee expressed concern with the lack of a facility for claimants to make appointments to speak to council staff in person to go through the paperwork. It was suggested that this may contribute to delays and the additional costs associated with overpayments.

q.    Officers agreed to circulate benchmarking marking data in relation to the Council’s performance against other local authorities. (Action: Amelia Hadjimichael).

r.     The Committee also requested that a follow up report be brought back to a the Committee at the halfway point in next year’s collection process, which provided an update on efforts to reduce the backlog and further benchmarking with other local authorities on overpayments. (Action: Amelia Hadjimichael).

RESOLVED

     I.        That the Housing Benefits Subsidy Certification report was noted.