People who are in residential care homes under section 117 of the mental health act and were only getting “pocket money” were given the rest of their income support back to them by local authorities. For some people it was a large sum of money. This is being taken into account as “savings” by income support reducing how much income support they are getting now.
It should be ignored I thought - compensation for an official error (income support regs schedule 10.
But DWP are saying it wasn’t their error. Which is true. Any offers on how to challenge these decisions. Seem very unfair to me.

The problem is that such payments are not 'arrears' of income support because IS was paid at the right time,right amount, right person etc to the LA (or whoever),but the customer only got a small amount of their full entitlement. As you say, para 7(2) and (3)of Schedule 10 doesn't apply because it is not a DWP error. The matter would have to be taken up through the LA

See now CIS/2448/2006, just published, which seems to close all routes for disregarding payments of compensation for wrongly levied S117 charges.

Available here:
http://www.osscsc.gov.uk/judgmentfiles/j2140/CIS%202448%202006-00.doc

Must admit I always thought this was the case and advised accordingly so one feels a sort of guilty relief that a loophole wasn't missed.

Richard Atkinson

Many thanks both of you. I knew this was the answer.
I guess all I can advise is to encourage the support workers to help these people spend the money. That couldn't be treated as deprivation of capital I feel.

Spending the money is deprivation (of a sort) , but whether or not it would be viewed as 'deliberate' and with the primary purpose of maintaining or increasing entitlement to IS is the point at issue and is for the DM to determine. I would advise that the clients/ support workers keep receipts for items purchased, bills paid etc as questions are sure to be asked.