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How to Proactively Tackle Housing Benefit Overpayments

HBOP small£24 billion was spent on Housing Benefits throughout the UK between 2014 and 2015 representing the second biggest benefit expenditure after the state pension. As with any area of benefit it is open to fraud and error with the cost of Housing Benefit Overpayments (HBOP) coming in at £1.28bn last year equating to just over 5% of the total expenditure.

Although this is an improvement on the previous year’s figure of £1.45bn, Local Authorities remain under pressure to balance budgets following a series of central government cuts and grant withdrawals. It’s now more important than ever to ensure that these overpayments can be effectively recovered and within reasonable timescales to help reduce exposure to debt and keep essential services running which come under threat.

Understanding the extent of the problem

This needn’t be a complex job, with the right reporting tools in place to query Council data, an authority should be able to identify who still has not paid back their debt in this area, how old that debt is, the amount owed and whether any other debts are owed to the Council. This provides a more focussed and corporate approach for recovery of these debts.

Locating debtors who have moved on

Where problems may arise such as debtors moving on without providing any forwarding address to contact them, there are debt reporting solutions available which can be integrated with leading credit reference agencies to provide data matching and analysis tools to identify where that debtor now resides. This means that collection teams no longer need to park those accounts where they can’t locate debtors and can keep the momentum going to help hit targets and maximise income collection.

Achieving higher hit rates on collections

Identifying the magnitude of the overpayment issue and ensuring you have all the data to begin the collections process is of course only half the battle, you then need to expedite collections. The earlier that you identify and chase a housing benefit overpayment, the better the chances of recovering the debt within a reasonable time period. Increasingly Councils are looking to new technologies and channels to notify the recipient of the overpayment and request the debt is settled. SMS text technology is playing more of a part in this following research to suggest that 98% of people read their text messages, compared to just 22% who read emails (Frost & Sullivan). This channel is generally accepted as having not only a higher hit rate for getting the message across but can be achieved at lower costs comparative to direct mail or phone calls.

The use of text messages is starting to open the dialogue between the Council and the customer and clever solutions are now in place integrating mobile text technology with workflow solutions so that structured texts can be sent giving customers the option to take a number of actions. These include the ability to query the debt, request further information on the debt or pay the debt with a secure payment portal or direct debit mandate. All of this is managed by integrating the data containing lists of HBOP debtors with the relevant workflow solution to be applied, based on parameters set for specific account types.

Identifying Housing Benefit Overpayments trends

The latest reporting tools can also help identify trends through their ability to sort data using a number of parameters. For example by age band, does there appear to be a trend amongst specific age-groups which fail to inform Councils in a timely manner of changes in circumstance? If so it may be worth investing in targeted campaigns to remind claimants within that age group to notify Councils as soon as their circumstances change to avoid future financial difficulties as a result of benefit overpayments.

Why did the overpayment occur in the first place?

To truly get to grips with the problem of housing benefit overpayments, it’s a good idea to get a handle on the reasons the overpayment occurred in the first place. For example you may find a high proportion of some forms completed by claimants for the first time contain incorrect information, which may signal a need for either a more simplistic or self-explanatory form. Alternatively, some Councils have been known to help claimants complete the form which can be more costly to administer up front but results in less errors, longer term. This approach also helps ensure claimants give genuine and accurate responses, if they are faced with having to confirm information directly to a benefits administrator.

In summary the more information you can gather about the extent of your HBOP problem, total amount of debt owed and reasons why it occurred in the first place the more chance you have of reducing the debt and reducing future occurrences of overpayments.

If you want some independent help and advice on tools to help tackle your HBOP debt please contact info@destin.co.uk or call 01772 842092.

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