Reporting changes – failures and overpayments

 

Simon Osborne looks at the law on reporting changes of circumstance, in the light of recent case law and the ongoing centralisation of offices at Jobcentre Plus.

Claimants have a legal duty to report changes in circumstance which might affect their benefit. Failure to do so can lead to overpayment recovery (and more rarely, to fraud prosecution). The consequences of failing to report a relevant change of circumstance therefore are potentially very serious. Yet at the same time it is becoming increasingly difficult properly to report such changes, at least regarding Jobcentre Plus benefits. This article considers the problems and suggests some solutions.

The basic legal duty to report changes in circumstance is contained at regulation 32 of the Social Security (Claims and Payments) Regulations 1987.

The duty has two main provisions. Firstly, under regulation 32(1A), claimants are required to:

The effect is that claimants are required to report any change of circumstance which the Secretary of State (i.e., the DWP) has told them to. However, there is no specific provision about where or how the change must be reported.

But what about other changes - i.e., those which the Secretary of State has not specifically told the claimant must be disclosed? Those are covered by regulation 32(1B), and this one does specifically relate to changes of circumstance. It also makes specific provision about the office to be disclosed to. Under 32(1B), claimants are required to:

It is worth also noting that this duty involves a reasonableness test, but does not require knowledge that benefit will be affected ('might affect . . . entitlement to benefit').

Benefit overpayments may be recovered on the grounds of misrepresentation of a material fact or failure to disclose a material fact.1 s71 Social Security Administration Act 1992 Two important pieces of case law have been concerned with the latter, and in particular with the duty to disclose under regulation 32(1A).

In Hinchy 2 Secretary of State for Work and Pensions v Hinchy (Bulletin 185, p. 13), the House of Lords reaffirmed that it is the claimant's duty to make disclosure to the office handling the claim, and the claimant was not entitled to assume that because one office (i.e., one not handling the claim) knew about a fact, another office (i.e., the one that was handling the claim) also knew. Consequently, failure by the claimant to report the change to that office constituted failure to disclose and so rendered the overpayment recoverable. In the decision in B 3 B v Secretary of State for Work and Pensions [2005] EWCA Civ 929, 20 July 2005, reported as R(IS) 9/06 (see Bulletin 187, pp. 6-7), the Court of Appeal held that, if a claimant had been clearly and unambiguously informed by the Secretary of State of the need to report a given fact and then failed to do so, that was failure to disclose and there was no test of reasonableness involved. The result is that the long held principle that a claimant could only fail to disclose where disclosure was reasonably to be expected does not apply to the duty under regulation 32(1A).

The overall result of Hinchy and B taken together is that where a claimant has been told clearly and unambiguously that s/he should report a given fact then s/he must do so to the office handling the claim - i.e., under regulation 32(1A). Failure to do so, for whatever reason, will render any resulting overpayment recoverable. However, argument may still be made over whether the claimant really was clearly and unambiguously informed of what to report. See for example CDLA/1823/2004 (Bulletin 189, p. 14), which raises the possibility that whether that is so may depend on what a 'reasonable claimant' would have understood by the instructions, and CDLA/2328/2006 where it is suggested that a claimant's 'mental state' may be relevant to their ability to fulfill her/his duties under both (1A) and (1B). Also, in any case if the relevant DWP office actually knew of the fact concerned, then there can have been no failure to disclose by the claimant - see CIS/1887/2002. Lastly, if regulation 32(1A) does not apply, then recovery for failure to disclose can be founded only by regulation 32(1B). Tribunals must identify which of (1A) or (1B), if any, recovery may be founded under - CDLA/2328/2006. Under (1B), a reasonableness test still does apply, and the question of which office must be disclosed to is also different - i.e., because there it is to an 'appropriate office'. That may lead to a further argument.

Under regulation 32(1B), the duty is to make a disclosure to 'the appropriate office'. That is defined under regulation 2 of the Claims and Payments regulations as, 'an office of the Department for Work and Pensions' in most cases. In theory at least therefore, if it is regulation 32(1B) that is in play, a claimant who has made an otherwise correct disclosure to any DWP office will not have failed to disclose. That argument has not yet been tested; although in CIS/1887/2002 Commissioner Howell noted in passing of a similar provision in a previous version of regulation 32 that, 'taken at face value that definition appears to mean that any disclosure to the Secretary of State can be effectively made . . . at any office of his own department'.

In any case, however, that is really only an argument for a claimant who is already in the position of having to resist recovery of an overpayment. No sensible adviser would tell a claimant wondering where to report a change of circumstance that disclosure to any DWP office is likely to suffice. In addition, there remains the problem of claimants resisting recovery of an overpayment for alleged breach of regulation 32(1A), where the need is to have reported the change to the 'office handling' the claim. That requirement (albeit in connection with an older version of regulation 32) was set out in R(SB) 15/87 and more recently endorsed by the Lords in Hinchy. For both these reasons, identifying which is indeed the office handling the claim remains important.

Formerly, disclosing to the office handling the claim essentially involved reporting to local offices. In many cases, the claimant was only ever given one address of the local office to report changes to, and different sections (e.g., the income support section) were not separately identified.

The DWP has sometimes attempted to argue that in such cases claimants are nevertheless under a duty to report to, for example, the income support section. However, it is an established view of the Commissioners that in these circumstances disclosure to the local office is sufficient. In CSB/ 0677/1986, for example, the Commissioner held that as far as proper disclosure was concerned, 'only one office was involved - and that was the office to which the claimant had been instructed to make disclosure.' In R(SB) 15/87, it was held that 'a claimant cannot be expected to identify the precise person or persons who have the handling of his claim.' In Hinchy, Lord Hoffman confirmed that, 'it is not for the claimant to form views about what may go on behind the scenes in the social security or other benefit offices. His duty is to comply with the instructions in the order book.' More recently still, these principles have been adopted in CIS/1887/2002.

A measure of complication was introduced by the introduction of the concept of the 'one-stop shop' whereby all benefit claims were, outwardly at least, dealt with by a single office with a single contact. ONE offices began this and although these have largely been replaced by Jobcentre Plus, the added complication was that disclosure was apparently required to an office which might be different to the local benefit office. However, in that claimants did not have separate benefit sections (e.g., the IS section) identified to them, the situation was not so different from where claimants were told simply to make disclosure to the local office. In any event, the Commissioner in CIS/4848/2002 held that disclosure to the ONE office counted as an adequate disclosure.

More recently, the situation has become even more complicated with the introduction of further centralisation of offices with Jobcentre Plus.4 See Bulletin 195 (December 2006), p. 2 Under this process, claimants are encouraged (in some cases, wrongfully obliged) to begin their claim by making a telephone call to a regional Contact Centre. Alongside that, in some areas subsequent administration has begun to be centralised in regional 'benefit processing units', with the local Jobcentre Plus office left with the function of carrying out work-focused interviews and other face-to-face contact with claimants.

The next (who would dare say final?) stage is the gradual introduction during 2007 of centralised Benefit Delivery Centres. These will deal with adjudication and claim administration following the making of the claim via the Contact Centre, with any ongoing face-to-face contact continuing at local offices. In effect, over time there will be three offices dealing with claims for the same benefit in many cases, and the main one dealing with administration of the awarded benefit - the Benefit Delivery Centre - will be remote and effectively distinct from the other two.

For much of 2007 at least, the system will be in a state of flux: before all the Benefit Delivery Centres are established, in some areas local Jobcentre Plus offices will retain responsibility for benefit administration, in others that will already have been partially centralised by the use of a regional benefit processing centre. Add to that the use of Contact Centres, the continued existence of centralised units for some benefits administered by DWP agencies other than Jobcentre Plus (e.g., disability living allowance, pension credit), and the use of 'alternative offices' for claims for several benefits, and the claimant wondering where to report a change in circumstance might reasonably be confused.

Following Hinchy and other authorities, the basic duty of the claimant (at least as far as regulation 32(1A) is concerned) remains to disclose to the 'office handling' the claim. The primary task here will be to try to identify that office by checking the instructions issued by the DWP in the communication regarding what changes need to be notified. As provided in Hinchy and earlier decisions, the claimant will be expected to do that much, but not to identify separate sections within that office if that is not done for them. More generally, the questions of whether the claimant was clearly and unambiguously informed of her/his responsibilities, and if the office handling the claim actually knew about the change also remain relevant.

In practical terms, changes of circumstance will usually be relevant to awards rather than initial claims of benefit. Therefore the office handling the claim will normally be the office that deals with adjudication and maintenance of the claim, rather than the office (where different) where the claim is first made. So for example, unless clearly told to do so by the DWP, it is very unlikely to be sufficient to report a change to a Contact Centre or local authority or other alternative office, all of which are essentially offices for the reception and lodging of a claim rather than its 'handling' once established.

Regarding Benefit Delivery Centres, it is these offices that will be responsible for the adjudication and maintenance of claims, and so where they operate it should be the case that the DWP instructs claimants to report changes to them. Certainly, that is the intention: officials have confirmed to CPAG that when operative it is Benefit Delivery Centres that will deal with changes of circumstance. In the transitional period (i.e., where in a given area the Benefit Delivery Centre is not yet operative) officials have also confirmed that in general local offices (or a regional benefit processing centre, where present) will continue to deal with changes of circumstance until the Benefit Delivery Centre is introduced.5 Email correspondence between Jobcentre Plus and CPAG, 17 November 2006 and 5 December 2006.

Again, much will depend on exactly what instructions are issued to the claimant, and, following Hinchy, a claimant who follows those instructions should not have failed to disclose. If a claimant is not clearly and unambiguously informed of her/his responsibilities to report a given change of circumstance, then the claimant's duty to report a change are under regulation 32(1B) rather than 32(1A). As shown above the test is then different: reasonableness must be considered, and as disclosure here is to an 'appropriate' office, arguably that is any DWP office. It remains though that a claimant who has properly followed the instructions s/he is given, including by reporting changes to the office handling the claim, is best positioned both to avoid an overpayment in the first place and then to refute an allegation of failure to disclose.

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