3. Mr A complains that DWP did not process the Income Support (IS) applications he made after it stopped his IS in June 2016. He says this prolonged the financial hardship he experienced and caused significant distress. Mr A tells us he relied on credit cards to survive which caused him financial loss as he built up debt and interest.
4. Mr A wants the DWP to pay him the credit card interest charges he accrued while his IS was stopped.
Administrative background
5. Income Support is a means-tested benefit for individuals who are on a low income. They need to have no more than £16,000 in capital and cannot be in full-time paid work. Capital includes savings, investments, property, and lump-sum payments. For every £250 the claimant has over £6,000, their entitlement is reduced by £1 (income tariff), and for capital over £16,000 there is nil entitlement. Sometimes claimants may be treated as having capital that they do not actually possess (notional capital). This can arise when a claimant intentionally deprives themselves of capital to secure benefit entitlement.
6. Notional capital is considered as diminishing each week, which means the overall amount reduces as times goes on. As such, an individual can become eligible for IS again, even if at one point their notional capital exceeded the IS threshold.
Background
7. In 2016, Mr A was claiming IS. On 5 May 2016, he told the DWP that he had a monetary interest in his deceased mother’s property that was soon to be sold. But he did not have access to any funds until his mother’s estate was distributed.
8. On 3 June, Mr A received a cheque for £26,751.17 which he deposited into his bank account. This amount is more than the IS threshold. He told his local council about this on 22 June. They contacted the DWP to tell it about the funds, and that Mr A only had £3,000 left. At the time he was receiving £133.30 a week in IS.
9. The DWP began investigating possible deprivation of capital and stopped Mr A’s IS claim with effect from 29 June. It asked him to provide bank statements and receipts from when he received the funds. Mr A responded and provided a breakdown of how he spent the money.
10. On 20 July, DWP considered the information Mr A provided but decided that only £5,245.40 of what he spent was allowable. The remaining £17,506.01 was treated as diminishing notional capital to stay under the IS threshold. Mr A appealed this decision. At the time, the DWP completed a notional capital calculation which showed that Mr A would have been eligible for IS again sometime in August.
11. On 5 September, Mr A made a new claim for IS and asked for it to be backdated to 3 June. On 21 September, DWP disallowed the claim on the basis that Mr A was above the income threshold.
12. Mr A made another claim for IS on 3 November via telephone. DWP staff took details of the claim but did not pass it to the correct department.
13. Mr A sent the DWP several letters in January 2017 asked why his IS claim from November 2016 had not been dealt with. The DWP did not respond.
14. Mr A’s MP contacted the DWP for a response to his letters from January. The DWP replied on 24 April 2017. Its complaint team said that due to an error in Mr A’s IS claim going to the correct department, it was not progressed. Staff said that as it was already shown he had capital of more than £16,000, it would have failed anyway. They did not give any weight to the notional capital calculation from 8 September 2016.
15. Mr A made another claim for IS on 25 May 2017, requesting backdating to 8 November 2016. On 23 June 2017, the DWP approved the claim and he received payment for the period of 25 May to 26 June. The DWP did not take any action on his request for backdating.
16. On 30 August, Mr A’s appeal resulted in extra allowances. The DWP recalculated his capital figures and on 7 November Mr A was backdated IS arrears of £6,212.77 for the period 29 June 2016 to 24 May 2017.
20. Mr A complains that the DWP did not process the IS applications he made in the period it stopped his IS. Mr A was not in receipt of IS between 29 June 2016 and 22 June 2017. He received the arrears he was due for this period on 7 November 2017. They totalled £6,212.77 so Mr A was worse off by that amount for that same period. This undoubtedly would have been a difficult time financially for Mr A.
21. It is important to note that we are not looking at the DWP’s actions in it stopping Mr A’s IS claim on 29 June 2016. We are only considering its actions regarding subsequent IS claims he made.
22. In line with the DWP guide, when it received a claim for IS, it should have processed that claim by sending it to a decision maker. They would then review the claim and decide whether it would be allowed or not. The decision would be issued in writing with appeal rights if the individual disagreed.
23. Mr A applied for IS on 5 September 2016, after his existing claim was stopped. On 21 September, the DWP disallowed the claim on the basis that he was above the income threshold. As such, contrary to Mr A’s belief, the DWP did process the claim. Similarly, the DWP awarded Mr A IS after his claim for it on 25 May 2017, so we do not consider that the DWP acted incorrectly in that respect.
24. However, Mr A made a separate claim for IS on 3 November 2016, in between the two claims outlined above. The DWP did not process it initially until 24 April, or around five months after Mr A made it. When the DWP did process it, this was done incorrectly as a decision maker did not consider it. The DWP did not act in in line with its guidance and it acknowledged this in response to Mr A’s complaint. Our Principles state that organisations should follow their own policy and procedural guidelines. This did not happen and falls so far short of what should have happened, that it amounted to a failing.
25. We have looked at the impact of this failing on Mr A. According to the DWP’s own calculations, Mr A would have been eligible for IS again sometime in August 2016. Meaning if it had dealt with his claim in November appropriately, he would have started receiving IS not long after.
26. The DWP was unable to provide any guidance on how long it should have taken to deal with Mr A’s claim. But we can see that it took DWP 16 days to make a decision on his IS claim from 5 September. It then took the DWP 29 days to deal with Mr A’s IS claim dated 25 May 2017.
27. Based on those timeframes, it does not seem unreasonable to assume that the DWP would have dealt with Mr A’s IS claim of 3 November 2016 by the beginning of December. He would have been receipt of IS going forward, but Mr A did not receive IS again until 23 June 2017 - around seven months later.
28. Therefore, our consideration of the financial impact that the DWP’s errors had on Mr A is limited to the period from December 2016 until 22 June 2017.
29. Mr A says he accrued credit card debt of £3,800 between June 2016 and June 2017, and that the DWP should pay him the interest charges he amassed. He says that when his IS arrears were paid to him in November 2017, he was only able to repay money he borrowed from his family and his bank overdraft.
30. We have reviewed Mr A’s credit card and bank statements for the relevant period. We can see that in that period, Mr A spent £3,413 on his credit card, which attracted interest of £536.50.
31. In summary, Mr A was not receiving the IS he was entitled to. Without access to those funds, he had no option but to rely on other sources. His bank account was significantly overdrawn so he had to rely on his credit card.
32. Had he correctly been in receipt of IS, he would not have had to use his credit card and therefore, he would not have attracted the interest charges.
33. To support this assertion, it is important to note that in the whole period Mr A was not receiving IS, he spent £3,413 on his credit card. He would have received £3,871.50 in IS for that same period. As it seems he spent on his card approximately what he would have received in IS, thus demonstrating that Mr A was living within his usual financial means.
1. We found that the Department for Work & Pensions (DWP) failed to appropriately deal with Mr A’s claim for Income Support (IS) in November 2016. This meant Mr A was not in receipt of IS for a period of around seven months when he should have been. This led to Mr A relying on his credit card. This attracted interest charges, which would not have happened if he was correctly receiving his Income Support. The DWP has not taken adequate action to put this right, so we uphold Mr A’s complaint.
2. We recommend that the DWP reimburse Mr A for the interest charges he accumulated between December 2016 and 22 June 2017.
34. In considering our recommendations, we have referred to our ‘Principles for Remedy’. These state that where poor service or maladministration has led to injustice or hardship, the organisation responsible should take steps to put things right.
35. Our Principles say that public organisations should put things right and, if possible return the person affected to the position they would have been in had the poor service not occurred. If that is not possible, they should compensate them appropriately.
36. Within four weeks of the date of our final report, we recommend that DWP pay Mr A £536.50 in recognition of the interest charges he accrued. It should also apologise to him for the difficult financial position its actions contributed to him being in.