UK Social Security and Child Support Commissioners' Decisions

[1997] UKSSCSC CIS_14141_1996 (02 April 1997)


 


Commissioner's File: CIS 14141/96

Mr Commissioner Mesher

2 April 1997

SOCIAL SECURITY CONTRIBUTIONS AND BENEFITS ACT 1992

SOCIAL SECURITY ADMINISTRATION ACT 1992

APPEAL FROM DECISION OF SOCIAL SECURITY APPEAL TRIBUNAL ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

Claim for: Income Support

Appeal Tribunal: Huddersfield SSAT

[ORAL HEARING]

1. The claimant's appeal is allowed as a matter of law, but without any change

in the practical outcome. The decision of the Huddersfield social security

appeal tribunal dated 23 January 1996 is erroneous in point of law, for the

reason given below, and I set it aside. It is expedient for me to substitute my

decision for that of the appeal tribunal without making any fresh or further

findings of fact (Social Security Administration Act 1992, section 23(7)(a)(i)).

My decision is that the decision under which the claimant was entitled to income

support immediately before 26 April 1995 falls to be reviewed on the ground of

relevant change of circumstances (Social Security Administration Act 1992,

section 25(1)(b)), but that in relation to the period from 26 April 1995 to 1

October 1995 the existing decision is not to be revised on review so as to

include housing costs in respect of interest on the loan taken out on 26 April

1995 in the claimant's applicable amount.

2. This is one of four appeals with essentially identical facts which were heard

together before me. In all of the cases the claimants were owner-occupiers of

their homes free of any mortgage and had been in receipt of income support

without any housing costs for loan interest. After 2 May 1994 they took out

loans to pay for essential repairs and improvements to their homes arranged

through the Anchor Housing Association and asked for the interest on the loans

to be met as housing costs. That was refused by the adjudication officer,

applying paragraph 5A of Schedule 3 to the Income Support (General) Regulations

1987 ("paragraph 5A"), which was inserted with effect from 2 May 1994 and

remained in force until the wholesale replacement of Schedule 3 on 2 October

1995. The refusal was confirmed by the appeal tribunal in all four cases.

3. At the oral hearing, the claimant was represented by Mr Bruce Moore, the

company secretary and solicitor to Anchor Trust, accompanied by Mr Geoffrey

Ferres, welfare rights development officer of Anchor Housing Association, who

had represented the claimants below. The adjudication officer was represented by

Mr Leo Scoon of the Office of the Solicitor to the Department of Social

Security. I am grateful to both representatives for their clear and concise

submissions.

4. The case turns on the proper effect and meaning of paragraph 5A. For ease of

reference I have attached to this decision as appendix A a copy of the

regulations which inserted paragraph 5A, as made by the Secretary of State for

Social Security and laid before Parliament (the Income Support (General)

Amendment Regulations 1994). I have also attached as Appendix B a copy of the

draft regulations as referred to the Social Security Advisory Committee ("SSAC")

by the Secretary of State in October 1993. The draft regulations, together with

SSAC's report on the proposal to make the regulations and the Secretary of

State's statement under section 174(2) of the Social Security Administration Act

1992 were published as Cm 2537.

The adjudication officer's decision

5. The view taken by the adjudication officer when making the adverse decision

was straightforward, and turned on the precise words of sub-paragraphs (1), (3)

and (5) of paragraph 5A. It was briefly as follows. Sub-paragraph (1) applies

where a liability to pay loan interest is first incurred after 2 May 1994 and,

as the claimant was entitled to income support when the liability was incurred,

would prevent the entire loan interest being met as a housing cost.

Sub-paragraph (3) modifies the operation of sub-paragraph (1), but only where

before the incurring of the "new liability" for loan interest there was a

housing cost applicable for loan interest (the "former liability"). In all four

cases, there was no such former liability, so that sub-paragraph (3) had no

application. Sub-paragraph (5) on loans for repairs and improvements only

operates as an exception to sub-paragraph (3), in contrast to sub-paragraphs (6)

to (11). Thus, as sub-paragraph (3) had no application, neither did

sub-paragraph (5). It was accepted by the adjudication officer that the loan

made to the claimant met the conditions of paragraph 8(3) of Schedule 3, with

the modification required for the purpose of paragraph 5A(5) (see the report of

the review visit on page 1P and the appeal tribunal's acceptance on page 54).

The practical result was that if the claimant had had some existing loan

interest being met as a housing cost, regulation 5A(5) would have allowed the

extra cost of the interest on the repairs and improvement loan to be met. But as

she did not have any existing loan interest the cost of the interest on the

repairs and improvement loan could not be met.

The argument for the claimant

6. The argument made on behalf of the claimant to the appeal tribunal to avoid

that result (rejected by the appeal tribunal) was essentially the same as that

made to me by Mr Moore. The argument is for what might be called a super-literal

construction, supported by evidence about the intention of the Secretary of

State when making the amending regulations.

7. The argument picks up on an ambiguity in sub-paragraphs (1) and (3) of

paragraph 5A suggested by the editor of the 1994 edition of Mesher and

Wood,CPAG's Income-related benefits: the legislation at page 234. Briefly, it is

as follows. Sub-paragraph (1) does not expressly say that it applies where the

relevant housing costs are first incurred after 2 May 1994. It applies where the

costs "were incurred" after 2 May 1994. Housing costs are relevant to the

calculation of the claimant's weekly applicable amount under regulation 17(1) of

the Income Support Regulations and generally refer to the amounts which a

claimant is liable to pay week by week. Therefore, sub-paragraph (1) could be

said to apply, for instance, to the liability to pay interest in weeks falling

after 2 May 1994 on a loan taken out well before 2 May 1994 and when the

claimant was not entitled to income support. On that basis, there would be

little or no point in the reference to the relevant period and the definition in

sub-paragraph (2) including linking periods. There would also be a strange

effect on sub-paragraph (3). In every case where there was a liability to meet

loan interest in more than one week, there would be a former liability, in the

first week, and a new liability, in the second week. That, said Mr Moore, would

alleviate the apparent effect of sub-paragraph (1) in applying paragraph 5A to

loans taken out before 2 May 1994. If the claimant had been receiving income

support immediately before 2 May 1994 there would be a former liability, in the

last week before 2 May 1994, and a new liability, in the next week, of exactly

the same amount, so that the amount of the former liability could continue to be

met. In addition, it would allow the interest on the claimants' loans for

repairs and improvements to be met in the second week of liability to make

payment. In relation to that second week there would be a former liability -the

housing cost in the first week - to which the new liability in the second week

was equal, so that the whole of the cost could be met. Mr Moore recognised

though, that if that were right, the exclusion of any housing cost under

regulation 5A could last only for one week and that sub-paragraph (3)(b) would

be deprived of any practical application.

8. The recognition that the interpretation suggested above has bizarre and

absurd results is then used in this way. Mr Moore agrees with the comment on

page 234 of the 1994 edition of Mesher and Wood that such results "could no

doubt be avoided by a purposive interpretation of para. 5A as a whole". But, he

says, if a purposive approach has to be taken to make sense of paragraph 5A, the

true and full purpose should be looked at. He then refers to the Secretary of

State's statement in Cm 2537 as showing the intention that interest on loans for

essential repairs and improvements should be taken completely outside the

operation of paragraph 5A. In addition he refers to two other sources. One is

the initial guidance to adjudication officers from Central Adjudication Services

in Memo AOG Vol 3/67 dated May 1994 (pages 66 to 70 of the papers before me),

where it was said that loans taken out for any of the designated repair and

improvement purposes should not be restricted under paragraph 5A. The second is

the explanatory memorandum sent by the Secretary of State to SSAC with the draft

Income Support (Housing Costs) Regulations 1995, which Mr Moore says gives no

indication of any change in the law from the position under paragraph 5A in

taking loans for repairs and improvements out of the equivalent provision in the

new Schedule 3. Thus, he says, a proper purposive interpretation must be one

which gives effect to that intention and allows the claimants' housing costs to

be met. If that cannot be done, he says that it is wrong to apply any purposive

interpretation and the strict literal interpretation must be applied. That again

allows the claimants to succeed.

The construction of paragraph 5A

9. Mr Moore's argument is very ingenious. As will appear later, I think that it

contains the material on which another argument for the claimants can be made,

but as put forward by Mr Moore, it must be rejected. There are a number of flaws

in the argument. For one thing, I am not convinced that the super-literal

argument would in fact allow the claimants to succeed. In the second week after

liability to pay interest arises I do not think that there would be a former

liability within the meaning of paragraph 5A(3). For although there would have

been a liability to pay the interest in the previous week, there would not have

been a corresponding housing cost applicable to the claimant in that week,

because for that week paragraph 5A would have prevented the housing cost being

met. In my view a housing cost which cannot be met for a week is not applicable

to the claimant for that week. But, more fundamentally, I do not think that the

argument about the purposive construction works. I am afraid that the use of the

phrase "purposive construction" in the commentary in Mesher and Wood may have

been misleading. What is needed to avoid the bizarre and absurd consequences of

a super-literal interpretation of paragraph 5A is not a purposive construction,

but the ordinary application of the principle described by Lord Reid in Pinner v

Everett [1969] 1 WLR 1266, at 1273:

"In determining the meaning of any word or phrase in a statute the first

question to ask always is what is the natural and ordinary meaning of that

word or phrase in its context in the statute? It is only when that meaning

leads to some result which cannot reasonably be supposed to have been the

intention of the legislature that it is proper to look for some other

possible meaning of the word or phrase."

10. Applying that principle, I am satisfied that the ordinary and natural

meaning of paragraph 5A(1), in the context of the paragraph as a whole, is that

it applies when the liability from which the relevant housing costs are derived

was first incurred after 2 May 1994. That was Mr Scoon's submission, which I

accept. I mention here only a couple of points. The first is that that meaning

is consistent with the language of sub-paragraph (1) in its reference to not

meeting costs, in the present and the future, "where those costs were incurred"

after 2 May 1994. The use of the past tense would not be consistent with the

approach on the basis that housing costs are incurred week by week. The second

point is that sub-paragraph (1) should be given a meaning that allows all parts

of sub-paragraphs (2) and (3) to be given a practical and effective application.

The notion of a former liability remaining while a new additional liability is

added and much of the definition of the "relevant period" only make sense if a

housing cost is treated as incurred on the date on which the underlying

liability was first incurred.

11. Having rejected Mr Moore's main submission, I must go on to consider

whether, in the light of the evidence he presented about the intention of the

Secretary of State in framing paragraph 5A, any ambiguity of language should be

construed in accordance with the intention to take loans for essential repairs

and improvements outside the operation of paragraph 5A. I shall have to come

back shortly to the nature of that evidence, but, in the light of my conclusion

above, I find that there is no ambiguity of language in paragraph 5A that admits

of such an alternative construction. That is so either under the principle of

looking at the SSAC's report in order to identify the mischief which paragraph

5A was intended to remedy (Black-Clawson International Ltd v PapierWerke

Walhof-Ascheffenburg AG [1975] AC 591 and R(I) 11/81) or under the principle of

looking at statements made to Parliament by the proposer of a statutory

provision (Pepper v Hart [1993] AC 593) or under any principle allowing

ambiguities to be resolved to avoid absurd results. The adverse consequences for

the claimant in this case do not stem from any ambiguity of language, but from

the way in which sub-paragraph (5) is embedded in the structure of paragraph 5A

as a whole. It is unambiguous in having no independent operation of its own, but

only spelling out in detail the exception made in sub-paragraph (3) where the

conditions of sub-paragraph (3) would otherwise be met. That cannot be overcome

by a process of construction.

Irrationality

12. During the oral hearing, I suggested that the real force of Mr Moore's

submissions might be to the effect that the provisions of paragraph 5A were

Wednesbury unreasonable or irrational to the extent that they prevented the

interest on new loans for essential repairs and improvements being met if the

claimant had not previously had any housing costs for loan interest, but did not

prevent the interest on such new loans being met if the claimant had previously

had housing costs for loan interest. He had drawn a very striking contrast

between the position of two categories of income support claimant. In both cases

the claimants are owner-occupiers, possibly of long-standing, and require the

same substantial repairs to be done to their homes, say for roof repairs to stop

rain coming in. Both have no savings and a low current income, as shown by their

entitlement to income support. But one category had no outstanding mortgage or

loan when coming onto income support, whereas the other had an outstanding

mortgage, the interest on which is currently being met as a housing cost. The

effect of paragraph 5A is that claimants in the first category are unable to

have the interest on the loan for the repairs met as a housing cost, whereas

claimants in the second category are able to have it met. Mr Moore submitted

that it would be bizarre, absurd and unjust to distinguish between equally

deserving claimants in that way. And what made the effect even more perverse was

that the category which came off worse was the one which had formerly been

making the smaller demand on public funds, as no housing costs for loan interest

had had to be met. Mr Scoon pointed out that in most amendments to regulations

there will be groups who benefit (or at least do not lose) and groups who lose

(or at least do not benefit) and that does not make the amendment irrational. He

also suggested that the policy of paragraph 5A was to discourage the creation of

new housing costs and that it might therefore make sense to distinguish between

those claimants who were already relying on the inclusion of housing costs in

their benefit calculation and those who were not.

13. I should at this point refer to the evidence of the Secretary of State's

intentions in the SSAC report referred to in paragraph 4 above. Mr Moore

submitted that the intention was that there should be no restriction at all

under paragraph 5A on meeting the interest on loans for essential repairs and

improvements. However, he had been unable to obtain a full copy of Cm 2537 and

produced only a copy of one page. Mr Scoon has now kindly supplied to me a full

copy of Cm 2537 (as agreed at the oral hearing).

14. The draft regulations submitted to the SSAC are set out in Appendix B to

this decision. It will be seen that what was then sub-paragraph (4) of the

proposed paragraph 5A, as well as spelling out the exception in sub-paragraph

(3), had an independent operation in providing that the additional housing costs

due to increases in interest rates might be met. In the Secretary of State's

note to the SSAC about the proposal and in the Secretary of State's statement

under section 174(2) of the Social Security Administration Act 1992, it was said

that the amendment provided that income support "would not meet the additional

interest on an increase in loan commitments where the cost is incurred while the

borrower or one of their family is entitled to Income Support". It is plain from

the scope of the proposal that the words "additional" and "increase" were there

being used to include both a situation where the borrower has no existing loan

commitments and the situation where there are existing loan commitments. That

usage was followed by the SSAC in its report.

15. The SSAC accepted that the principle behind the proposal was justified, but

recommended that there should be clear safeguards by way of further exceptions

(para 68). One area of concern related to major repairs and improvements. The

SSAC said this in paragraphs 31 to 35:

"31. The amendment would except from the proposed restriction loans taken

out to pay a service charge imposed on a leaseholder by a freeholder to pay

for repairs and improvements to the property. However, interest on major

loans for repairs and improvements for most householders would no longer be

covered by income support, if taken out during the period of benefit

entitlement, unless the claimant was in the excepted disabled or `over 74'

category. Some Home Improvement Agencies, funded by the Department of the

Environment, are concerned about the effect on their pensioner and disabled

customers. Although most of these would probably be covered by the proposed

exceptions from the new restriction, nevertheless there remains concern

about the under 75s, and the problems of paying for repairs and improvements

must apply equally to all those receiving income support long term. ...

33. It seems essential to us to help people maintain the fabric of their

property, especially if a local authority has imposed a repairs notice

where, for example, a roof or a wall has become dangerous. In some cases

such help could prevent people from losing their homes and thereby possibly

incurring a different kind of public expenditure. ...

35. It is important to bear in mind that, in paragraph 8(3) of Schedule 3 to

the Income Support regulations, there is already a list of allowable repairs

and improvements, including such items as damp-proofing and the provision of

electrical lighting and sockets, with the additional discretion to allow any

item considered `reasonable' by the Adjudication Officer. However, the

Department has pointed out that this discretion has been used to allow

payment for interest on loans, for example, for new kitchens and extensions.

This may be reasonable where the loan was taken out before the claimants

became entitled to income support. We do not believe that such payments

would be appropriate where the loan was taken out after the start of the

period of entitlement. A finite list of repairs and improvements should

therefore be added to the proposed regulations excluding such repairs and

improvements from the proposed restriction. We have identified and listed

below those items which we consider essential. The Department should

consider whether this list needs additions in the light of experience."

I note at this point that there was no suggestion of any different consideration

applying according to whether or not the claimant had a previous loan commitment

before the loan for repairs or improvements was taken out.

16. The SSAC's recommendation was as follows (para 36):

"36. We recommend that all income support recipients, not just those in the

`disabled' and 75 and over categories, should continue to be allowed payment

for the interest on additional loans for repairs and improvements necessary

to maintain the fabric of the dwelling occupied as the home and any of the

following measures undertaken with a view to improving its fitness for

occupation:-"

Then followed a list of the first 10 categories allowed under paragraph 8(3) of

Schedule 3, omitting the final "reasonable" category and adding two more

specific categories relating to overcrowding due to an increase in the number of

children in the household and to the provision of separate sleeping

accommodation for children of different sexes aged 10 or over.

17. The Secretary of State's response to that recommendation in the statement

under section 174(2) of the Social Security Administration Act 1992 was, in

relation to the first 10 categories and the second new category listed, "We

accept these parts of this recommendation". In relation to the first new

category recommended, relating to overcrowding from extra children, the response

was:

"The purpose of Income Support help with mortgage interest is to help people

retain their existing reasonable accommodation. We believe that where that

accommodation is inadequate for their needs help is best focused through

Government housing policy which is administered by the Department of the

Environment in the form of home improvement grants and rehousing for

vulnerable groups. This is a more efficient way of addressing such problems

than using the benefits system, particularly when the help in question is

not available to people in work on low incomes. In addition, owner-occupiers

who do not receive Income Support have to plan for family size in relation

to their expected income and we see no reason why Income Support recipients

should be treated differently."

It is also necessary to quote the response to another recommendation, that the

exception applicable to people of 75 or over should be extended to people aged

65 or over:

"The regulations allow those aged 75 or over, and disabled people of any age

to get help with loans that are taken out to make adaptation to an existing

property or acquire alternative accommodation if the need for the new loan

results from their special needs. We believe that this allows us to focus

help on those groups who need it most. It would be wrong for us to allow

Income Support to be used as a source of funding for alternative housing

generally. In addition, our acceptance of the Committee's recommendation

that loans for essential repairs and improvements will be exempt from the

regulations will make it easier for all elderly people to stay in their own

homes."

I remind myself at this point that the Secretary of State's statement under

section 174(2)(a) must "show ... the extent (if any) to which he has, in framing

the regulations [laid before Parliament], given effect to the Committee's

recommendations".

18. The House of Lords in Foster v Chief Adjudication Officer [1993] AC 754 held

that Social Security Commissioners may determine whether or not regulations are

ultra vires where that question arises as part of a determination before them.

Lord Bridge said, at page 765, that:

"if the Commissioners have jurisdiction to question the vires of secondary

legislation, the scope of that jurisdiction must, at least theoretically,

embrace a challenge on the ground of irrationality as well as illegality."

He went on, after referring to Nottinghamshire County Council v Secretary of

State for the Environment [1986] AC 240 and Edinburgh City District Council v

Secretary of State for Scotland 1985 SC 261, to say, at page 766:

"This is not the occasion when it would be appropriate for your Lordships to

consider whether to go beyond the speech of Lord Scarman, unanimously agreed

to by the Appellate Committee, in the Nottinghamshire case, which leaves

room for possible exceptions in extreme cases from any absolute rule that

the courts may not condemn as irrational secondary legislation which has

been subject to Parliamentary scrutiny. But I have no doubt that the Social

Security Commissioners have good pragmatic reasons not to take it upon

themselves to identify any such exceptional case, but to leave that to the

higher courts, who, as Lord Jauncey pointed out, have never yet done so in a

reported case."

19. The Tribunal of Commissioners in CIS/391/1992 said in paragraph 45 of its

decision that that jurisdiction ought to be exercised by Commissioners "only if

a serious issue of irrationality arises and the question whether a regulation is

invalid on that ground must be necessary for the determination of the issue

which arises before them". When such circumstances arose, which was thought

likely to be rarely, there would be a positive duty to rule on vires. I am quite

satisfied that those conditions are met in the present case. Mr Scoon accepted

that at the level of an individual Commissioner the approach of CIS/391/1992 has

to be followed, although reserving for possible consideration by a higher court

the question of the extent of the Commissioners' jurisdiction to rule that

regulations are ultra vires on the ground of irrationality. In CIS/391/1992 the

Tribunal of Commissioners found that the regulation in question was not

irrational. It could not be said that it was wholly outside the intention of

Parliament and that the Secretary of State had taken leave of his senses. I do

not read that finding as detracting from the need, if a regulation were found to

be irrational in that sense, to consider the conditions under which provisions

which have been subject to Parliamentary approval may be impugned. I consider

that the most authoritative statement of those limits is by Lord Scarman in the

Nottinghamshire case. There he referred, at various points in his speech, to the

necessity for a finding of fact that the House of Commons had been misled, to

the Minister having deceived the House, or to there being bad faith or

misconduct by the Minister. At [1986] AC 250 he said that:

"if a statute ... requires the House of Commons to approve a Minister's

decision before he can lawfully enforce it, and if the action proposed

complies with the terms of the statute ..., it is not for the judges to say

that the action has such unreasonable consequences that the guidance on

which the action is based and of which the House of Commons had notice was

perverse and must be set aside. For that is a question of policy for the

Minister and the Commons..."

20. That is the general legal basis on which I approach the present case, which

seems to me consistent with that adopted by the Commissioner in starred decision

CIS/250/1991. There is no doubt that the making of the Income Support (General)

Amendment Regulations 1994 complied with the terms of the Social Security

Contributions and Benefits Act 1992, as section 135(1) gives the Secretary of

State a wide power to prescribe the amounts to be included in the applicable

amount. There was also a proper reference to and consultation of the SSAC, to

comply with sections 172 and 174 of the Social Security Administration Act 1992

(I do not think that any defect in the Secretary of State's statement under

section 172(4) invalidated that process). However, as a serious issue has been

raised about the irrationality of paragraph 5A, the determination of which is

necessary in deciding the claimants' appeals, I must deal with that issue. I

have not had any submissions on the issue on behalf of the Secretary of State.

But since my conclusion is that the amending Regulations introducing paragraph

5A are not irrational and ultra vires, that does not matter.

21. I have found the argument for irrationality a strong one, but, after a great

deal of thought, not quite strong enough. That is because of two main factors.

The first is that I think that I must look initially at the terms of the

regulations laid before Parliament and ask myself whether there is an

irrationality there. When one looks at the process by which the draft

regulations referred to the SSAC were turned into the regulations made by the

Secretary of State and laid before Parliament, it is hard to discern a rational

reason for the manner of implementation of the SSAC's recommendation. But that

is not the precise point. The question I have to ask is whether any Secretary of

State in his senses could deliberately make a regulation which prevented

claimants with no previous housing costs for loan interest from receiving

housing costs for new loans for essential repairs, while allowing such housing

costs for claimants with previous housing costs for loan interest. The second

factor stems from the specific warning from Lord Bridge in Foster and the

general flavour of judicial opinion pointing to the extremity of the

circumstances in which secondary legislation can be found to be irrational. I

take the principle to be that a Social Security Commissioner should only find

secondary legislation irrational, if able to do so at all, when the argument for

irrationality is compelling. I find that the argument in the present cases falls

short of that standard. I accept that the effect of paragraph 5A is unfair and

absurd and even perverse in treating claimants with identical needs for housing

costs differently. However, as a matter of language, the structure of paragraph

5A is perfectly workable and logical. I do not think that the unfairness and

absurdity of its results are sufficiently compelling that I should find that

there is irrationality.

22. As it is possible that these appeals might be taken further, I should deal

with the other questions which would have arisen if I had decided in the

claimants' favour on irrationality. I would have found the conditions laid down

by Lord Scarman in the Nottinghamshire case to be met. On the view which I have

taken about the construction of the new paragraph 5A in the amending regulations

laid before Parliament, I conclude that the Secretary of State's statement under

section 174(2) of the Social Security Administration Act 1992 was erroneous. In

the light of the terms of the SSAC's report, the Secretary of State's statement

was unequivocal in accepting that loans for repairs and improvements, as

specially defined, should be taken out of the operation of paragraph 5A for all

claimants. The use of the words "additional loans" in the relevant SSAC

recommendation does not carry any suggestion of a limitation to situations where

a claimant has an existing loan commitment (see paragraphs 14 and 15 above). Yet

the inescapable construction of the regulations as laid before Parliament meant

that the Secretary of State had not in framing the regulations actually given

effect to the SSAC's recommendation as he stated that he had. There is no

evidence to suggest any bad faith on the part of the Secretary of State or any

intention to deceive or mislead Parliament. The most likely explanation is that

there was a misunderstanding by his legal advisers of the structure of the new

paragraph 5A, and of what needed to be done to the original draft in order to

incorporate the SSAC recommendations which had been accepted. Nonetheless, the

result was that Parliament was misled in a fundamental respect about the effect

of the amending regulation. In those very unusual circumstances, I consider that

the fact that no resolution was passed by Parliament to nullify the amending

regulations would not have prevented me from finding that the regulations were

irrational and ultra vires.

23. If I had found there to be an invalidity in the failure of paragraph 5A(5)

to extend its exception of loans for repairs or improvements (as specially

defined) to claimants who had not previously had any housing costs for loan

interest, I would have found that the invalid part could be severed from the

rest of paragraph 5A under the test of "substantial severability" (Director of

Public Prosecutions v Hutchinson [1990] 2 AC 783, applied by the Privy Council

in Commissioner of Police v Davis [1993] 4 All ER 476).

Conclusion

24. The result in the claimant's case is that there was no error in the legal

basis adopted by the appeal tribunal for not allowing her the appropriate

housing costs following the taking out of the loan on 26 April 1995. However,

the appeal tribunal failed to take into account the position following the

change in the law on the replacement of Schedule 3 with effect from 2 October

1995 (see paragraphs 10 to 12 of the adjudication officer's submission dated 25

July 1996). The period from 2 October 1995 down to the date of the appeal

tribunal hearing was in issue on the appeal. For that reason, the appeal

tribunal of 23 January 1996 erred in law and its decision must be set aside. I

can substitute the correct decision in the light of the further action which has

since been taken by the adjudication officer. That decision is set out in

paragraph 1 above.

25. On 20 February 1996, after the date of issue of the appeal tribunal's

decision, the adjudication officer informed the claimant of a review and

revision of her entitlement to income support to allow housing costs for the

interest on the loan with effect from 2 October 1995, when the law changed under

the new form of Schedule 3 (see page 65 of the papers). There is no question of

that review being ineffective under the conditions of section 29 of the Social

Security Administration Act 1992, because by that point the appeal against the

adjudication officer's decision of 12 September 1995 had been disposed of.

Accordingly the period now in issue before me ends on 1 October 1995. The taking

out of the loan by the claimant on 26 April 1995 should be treated as a relevant

change of circumstances justifying review of the current decision under which

the claimant was entitled to income support prior to 26 April 1995. It does not

matter in the present context that the precise date of that decision has not

been identified. The decision on review must then be that, despite the change of

circumstances, the existing decision is not to be revised for the period from 26

April 1995 to 1 October 1995 to allow the interest on the loan to be met as a

housing cost under paragraph 8 of Schedule 3.

26. I was told at the oral hearing that applications for extra-statutory

payments had been made in the cases of the claimants concerned in the four

appeals before me and had been refused. I request the Secretary of State to

reconsider that matter in the light of what is set out in this decision, and in

particular of my conclusion that Parliament was misled by the Secretary of

State's statement under section 174(2) of the Social Security Administration Act

1992 in Cm 2537.

(Signed)

J Mesher

Commissioner

2 April 1997

© Crown Copyright 1997. See copyright notice on decisions index page