Sounds like typical benefit office numpties. Clients are entitled to have savings below �6000 ignored.
He has a reduced income, he could apply for :
1.Working Tax Credits, on the basis that when he was working he worked a set number of hours so may be eligible. Contact HMRC.
2. Council Tax Benefit on the basis of low income, but this may be affected by any Working Tax Credit. Contact local authority.
3. Mortgage Interest Relief (through Income Support). There is a waiting period of 13 weeks but it could contribute to his monthly payments. Contact DWP.
Have you looked at the
EntitledTo website?