UC claim ended because Direct Payments for care take account balance above capital limit

Client is appointee for their adult child who was receiving UC due to LCFWRA. As well as being the DWP appointee, they also manage his Direct Payments, paid through the local authority, that are used to pay for his care workers and other care related items. These Direct Payments are paid into a separate bank account used solely for the purpose of receiving the Direct Payments and making payments in accordance with his care plan. The client has received a letter from UC that states “You will not get Universal Credit. You have too much capital.” The letter goes on to say that “Capital is money available to you from things like savings, a property that isn’t your main home, a trust fund or stocks and shares.”

I had earlier conversations and email correspondence with a DWP compliance officer who asked the client to provide all her bank statements going back several years. The DWP accepted that Direct Payments couldn’t be counted as income, however they do appear to be considering the unused Direct Payments to be available to the client, from the “second assessment period after the assessment period the payments become capital”. I’ve only been told this indirectly, not from the person who was making that decision, so until we’ve had a MR response which gives a written explanation we’re not really sure how this decision has been arrived at. In this case, the balance of the account is likely to be above £16,000 every month because a large amount is needed to pay the wage bill for the care workers. So, I’m also expecting a further letter to say the claim ended two years ago and there’s been an overpayment.

I need the DWP to explain how they can say Direct Payments aren’t counted as income for UC but any unspent payments (that will either be used to pay for care later or be refunded to the local authority following audit) can be classed as “available” to the client and therefore be counted as their capital.

Has anyone come across this scenario before, either with UC or a legacy benefit? If this is problem with DWP UC policy clashing with DHSC policy, as has been suggested to me as the reason, then this could affect any working age disabled people who claim UC and receive large Direct Payments to make their own care arrangements.

The specific case where this has first come up is actually a personal health budget which we operate on behalf of our CCG – but the principles would apply equally to any direct payment for someone with complex needs and an expensive care plan.

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