Housing benefit: a recipe for trouble

Mr Smith complained that a council had failed to determine his claim for housing benefit and council tax benefit for more than three years. Over that period, he accumulated rent and council tax arrears. He received letters and a visit from bailiffs threatening to have him committed to prison and to seize his property. The council took possession action against him and obtained an outright possession order because of his rent arrears.

Smith (not his real name) said he suffered from mental ill-health, which had been worsened by the anxiety and uncertainty about his claim.

Take one fraud investigation …
The council's housing and council tax benefits administration had been contracted out to a private company. When Smith first made the claim, the company said the firm for which he said he worked was known to it as an organisation that provided false employment details to support fraudulent benefit claims. Smith's claim was referred to the company's fraud section.

The fraud section took no action for six months. Its action after that was intermittent.

The ombudsman said the fraud section should have pursued its investigation as speedily as possible and the three-year delay indicated "staggering incompetence" in the company's benefit fraud section.

… put in some legal action …
The council started legal action against Smith because it believed he had no outstanding benefit claim and his rent arrears were growing rapidly. But that belief was based on inaccurate information from the council's computer system.

The ombudsman said the council's failure to maintain accurate records was maladministration.

… blend with bad advice …
At one point, the council learned that Smith was receiving income support. It did not advise him that his earlier benefit claim would only cover the period up to the date he started receiving income support and that he would need to submit a new application.

The council was aware that entitlement to benefit expired when a claimant's circumstances changed. The council was also aware that recipients of income support automatically received housing and council tax benefits if they applied to the council.

The ombudsman said the council's failure to advise Smith on these matters was also maladministration.

If the council had checked, it would have found the fraud section had taken very little action for two years. It missed a chance to resolve the complaint

… and add a solicitor
Smith's solicitor complained to the council about the failure to determine the benefit claim. But the council failed to appreciate the significance of the delay.

If the council had checked, it would have realised that the fraud section had taken very little action for two years. Instead, the council stated it could do nothing while the fraud section was investigating. The council therefore missed an opportunity to resolve Smith's complaint more speedily. That too was maladministration.

The ombudsman's investigation
Even after the ombudsman informed the council he was investigating Smith's complaint, the council took court action against Smith and obtained an outright possession order. The council acknowledged to the ombudsman at that stage that it had not determined the housing benefit claim. The council also sent bailiffs to Smith's property during the investigation, despite being aware that there was an outstanding council tax benefit claim.

The ombudsman commented: "All these actions contravene the council's own procedures and indicate that various council departments have failed to communicate effectively with each other.

"It seems to me that the council's failures here raise important questions about its ability to act as a responsible steward for public funds, as well as contributing to the financial uncertainty and distress of individuals who might not be guilty of any benefit fraud at all."

As a result, the ombudsman brought its report to the attention of the government's benefit fraud inspectorate.

It was not possible to conclude what injustice the council's maladministration caused Smith because the fraud investigation was still ongoing.

The ombudsman noted that if the council concluded that the benefit claim was fraudulent, the delay would not have caused Smith a significant injustice. In any event, Smith would have the right to appeal. But if the council decided Smith's claim was not fraudulent, the council's actions would have caused a significant injustice.