Post-loophole bedroom tax solution

We had previously discussed if the Bedroom tax loophole was a short term fix and as predicted the loophole is due to be plugged by 3rd March. The Bedroom tax has since been deemed legal and so it looks like it is hear to stay for the time being.

What is happening now?

We got in touch with a local Authority near where we work with and were informed:

Dear […],

Thank you for your e-mail.

We have identified around 200 cases where the tenant may be exempt from the bedroom tax. Of these 170 are ongoing and 30 are cases where the exemption applied for a certain period but has now ended (e.g. due to a change of circumstances). [………]

My colleague plans to start the special exercise of re-assessing these claims this week. Yes, it will be finished before 03/03/14.

Yours sincerely,

The Local Authority’s are therefore looking to repay people affected / who fall into the exemption and we have seen our client’s getting the amounts credited to their rent accounts. What happens after march though?

Any time appeal

If you would have fallen within the loophole now (pre-March 2014) or from the time the bedroom tax came into force, you can ask the LA to conduct an “any time appeal” on the grounds of an official error – namely the LA have misapplied the regulations (details on our Bedroom Tax page).

If they do not accept the same and you can reasonably prove the length of your occupation / HB application. Your next step would be to appeal to the First Tier Tribunal to have a independent tribunal have a look at the appeal for you.

We therefore urge if you are reading this post march and are in arrears you do this step as soon as possible. (see further help here).

Bedroom Tax exemptions

Barring the loophole there are a number of “permanent” exemptions . So Step 1 ideally before the any time appeal would be to see if you fit in one of the exemptions as well as the above.

The next step would be to see if one of the recent FTT decisions apply. Specialist help is recommended here.

 Can you get compensation if you have been hit by the Bedroom Tax and were in the loophole?

This question came about when looking at people/clients who have had to move house, evicted or otherwise negatively affected by the Bedroom Tax and should have been exempt under the loophole.

The question has been a debated one in my research and I shall go through the viewpoints that I have come across.

My View

In my experience Local Authority’s  generally do not take possession or find clients to be Intentionally homeless if rent arrears were Bedroom tax related and client took all mitigating steps (DHP etc).

So in my opinion it comes down to:

1. But for the actions of the LA (in misapplying the bedroom tax) would the situation be the same?
2. Was it a foreseeable result or reasonably foreseeable?.
3. Was the result to remote to see?

I think where the problem area is “no 2”. Yes it was foreseeable that the Bedroom Tax would cause people to move out to a cheaper area but with DHP it would not be the “substantive cause” (in theory) for possession or eviction .

The question then becomes the people drafting the regulation in question, with their expertise and knowledge should they had picked the loophole up earlier knowing that this was their sole job role? and were they then negligent in not identifying and patching this?

The answer is “maybe” BUT if they had picked it up  they would have patched it before hand anyway. So with respect with the people who were hit – they would have been hit anyway and the loophole would not have existed. They have therefore benefited from the loophole and not lost out – so no “damage” or “loss” have been suffered.

Short of it being declared incompatible with Human Rights as a whole it will be hard to see (in my eyes) how a claim can be brought without proving the legislation (or aspect of it) unlawful. [This a lot harder now with the latest judgement as above].

Ombudsman Claim

Peter Barker summarised this avenue as the following:

If the incorrect award of benefit had adverse consequences for anyone then in theory they could complain to one of three Ombudsmen (after exhausting any internal complaint mechanisms) seeking compensation, but this really is a difficult one.

The complainant has to show that there has been maladministration by the relevant body and that it led to injustice.

The key question is: had the mal not happened, what position would the complainant have been in compared with what actually did happen? Lets look at the possibilities:

1. Parliamentary Ombudsman – mal by DWP. What did DWP do wrong? Accidentally drafted legislation in a way that led to some people being entitled to more benefit than DWP intended – if the mal had not occurred, they would have been correctly subject to the bedroom tax. So I cannot see how that has caused injustice

2. Local Government Ombudsman: mal by Council. On the face of it this is where the strongest complaint grounds lie. What did the Council do wrong? Two possibilities: (a) Failed to spot the drafting error on its own initiative until a Scottish Tribunal judge stumbled across it a couple of months ago. Is that mal? I am not so sure it is. (b) In respect of its own tenants, threatened or took possession action incorrectly based on an inaccurate benefit award. Again, the obscurity of the unintended drafting error makes it difficult to characterise this as mal – councils were doing what everyone accepted was correct at the time so their housing teams were entitled to act on the assumption that an unchallenged HB award was correct

3. Housing Ombudsman – mal by a Housing Association. Similar point to LA housing teams: is it really mal to treat rent arrears as being correct when, at the time, there wasn’t any reason to think otherwise?

I think all the Ombudsmen are likely to view this affair as a windfall bringing an unexpected advantage to some HB claimants and the payment of their correct benefit entitlement is sufficient remedy.

Possible Court Claim?

Anil Singh of Homespun has opined:

Given the illegality of the application of the bedroom tax in pre-1996 cases, you could pursue compensation through the Courts for the distress of reductions in benefit illegally applied.

Anybody can pursue a compensation case and whether they are successful will depend on how the bedroom tax impacted on them specifically and if it caused harm, illegally, then millions will be paid out to affected tenants. There are already legal firms pursuing these cases, hardly dangerous but helpful in getting justice for their clients

 Giles Peaker in reply has stated:

…., I very much doubt you could. I think all this insistence on the possibility of compensation claims is downright dangerous for the people who might try to bring them. There simply is no compensation claim based on a decision being unlawful (Not illegal, that is criminal). Not unless there are other factors. Otherwise, the remedy is simply to have the decision made correctly – in this case, to have the HB back paid.

…. I’m not minimising the effects on people, but equally, you shouldn’t mistake the effects on people for legal liability. When you say anyone can pursue a claim and ‘whether they are successful will depend on how the bedroom tax impacted on them specifically and if it caused harm’ that is just wrong. It isn’t the extent of the impact or harm that makes a successful case.

There are terrible things that happen to people that a council could and should have prevented, but there is no liability for that failure unless, for example, there is a duty of care. Look at the case of X and Y v Hounslow. ( http://nearlylegal.co.uk/blog/2009/04/the-end-of-the-road/ )

You can’t really argue negligence by DWP, because if the DWP hadn’t been ‘negligent’, the people would have been subject to the bedroom tax anyway, as the exception would have been closed in the first place. So any negligence actually benefited them, rather than causing loss.

Just ‘error’ is not enough to found a claim

….. A personal injury claim only arises where there is a duty of care established in law and where there is negligence. There is neither here…

 

Malcolm Gardner added

On the question of compensation, I think this is tricky because of the risk of confusing the whether the bedroom tax is fair and how we feel about that and the law that is really just a game of logic. …….. The intention of Parliament was that working age social tenants would be capped on the number of bedrooms that HB would pay for. The fact that they made a drafting error is serendipitous for some affected tenants as it gave them an eleven month exemption.

There is little chance of getting compensation because the payment of the benefit over the exempt period was enough.

It is rough justice but the fact is that the only complaint that people have is that they may have moved earlier than they needed to, but they would have ultimately incurred both the cost and the inconvenience eventually.

The logic needs to be reversed. If the result of a drafting error was to make tenants NOT exempt when they should have been exempt then you might have an argument of maladministration and compensation.

I think we all agree that it is all very unfair, but this was never an exercise of fairness it was to cut benefit expenditure. It is simply a mess and for some families a tragic mess.

Conclusion

The bottom line is this at the moment:

1. The “loophole” will be plugged;
2. There is no maladministration and compensation available if you were hit by the bedroom tax  but meant to be in the loophole;
3. HOWEVER if you were otherwise exempt but not given this exemption – there may be a case there;
4. You may still be exempt post loophole if it is within scope of the exemptions / FTT decisions;
5. If you notice you were exempt under the “loophole” after it has been “patched” you can still do an any-time appeal.