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Charity warns of debt 'snowball effect' as Redbridge Council reclaims millions in housing benefit overpayment

PUBLISHED: 17:00 21 March 2019 | UPDATED: 15:47 25 March 2019

Council housing. Photo: Ben Birchall

Council housing. Photo: Ben Birchall

PA Archive/PA Images

Redbridge Council reclaimed more than £3million in overpaid housing benefit from claimants, which charities say could push them dangerously into debt.

But the council said overpayment reclamation is vital amid central government cuts and insists it has put in place measures to support vulnerable residents and collect the money in a “fair and efficient” way.

Turn2Us, which helps people in financial hardship, warned that recovering funds paid in error could have a “snowball effect”, putting people at risk of serious poverty and impacting their mental health.

Department for Work and Pensions (DwP) data shows the amount of money recovered by the local authority which was accidentally paid to people who are not entitled to benefits or who got paid more benefit than they should. Cases of fraud are excluded.

The latest figures show that, in the nine months to September, housing benefit claimants had to pay back £3.1m to Redbridge Council from overpayments.

Matthew Geer, campaigns manager at Turn2Us, said: “A benefit overpayment can happen for many reasons. It’s often something as simple as a DWP error or a small unreported change in circumstances.

“However, we are seeing that overpayments can have a real snowball effect on some claimants which often results in people falling into more severe debt and being harassed by bailiffs.

“The impact this can have on someone’s well-being is often overlooked and we speak to people every week struggling with their mental health as a result.”

Housing charity Shelter says the rates at which “housing benefit overpayments are clawed back can be incredibly high”, which can push people into debt and homelessness.

In Redbridge, the bulk of the money reclaimed, £2.5m, was to housing associations or private tenants. A further £615,000 was repaid from rent reductions for council tenants.

Additonally, Redbridge Council wrote off £673,000 of housing benefit overpayments.

In September 2018, the council still had £11m of housing benefit overpayments outstanding.

Mr Geer added: “We encourage local authorities to take a holistic and sensitive approach to recovering accidental overpayments.

“It is vital that a benefit overpayment doesn’t become a trigger for falling into serious poverty.”

Across Great Britain, overpayments during the period totalled £588m, a 15pc drop compared with two years earlier.

During that nine month period, local authorities recovered £506m of housing benefit overpayments, while £74m was written off.

A total of £2.1bn remained outstanding across the country in September.

A Redbridge Council spokeswoman said: “Central government has slashed the council’s funding by nearly 60pc – this, including additional service pressures, have required savings of £166m to be made, so we have a duty to recover overpaid housing benefits to help us pay for vital services our residents need.

“We appreciate in these times of austerity we need to provide as much support as possible but it’s also really important claimants inform us of changes in circumstances as soon as they occur.

“We offer affordable instalment plans, money management support and specialist debt advice.

“We also conduct checks to maximise benefit income and provide hardship payments for rent and council tax to ensure we recoup money in a fair and efficient way to support some of our most vulnerable residents.”

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