Commissioner's File: CIS 4312/97
Mr Commissioner Howell QC
10 March 1998
DEDDFAU NAWDD CYMDEITHASOL 1992
SOCIAL SECURITY ACTS 1992
APEL YN ERBYN DYFARNIAD TRIBIWNLYS APEL NAWDD CYMDEITHASOL YNGHYLCH CWESTIWN CYFREITHIOL
APPEAL FROM DECISION OF SOCIAL SECURITY APPEAL TRIBUNAL ON A QUESTION OF LAW
DYFARNIAD Y COMISYNYDD NAWDD CYMDEITHASOL
DECISION OF THE SOCIAL SECURITY COMMISSIONER
Cais am/Claim for: Income Support
Tribiwnlys/Appeal Tribunal: Cwmbran SSAT
[GWRANDAWIAD/ ORAL HEARING]
1. My decision is that the decision of the social security appeal tribunal given on 24 June 1997 on this claim for income support was not erroneous in law. The claimant's appeal against it therefore has to be dismissed. This is a conclusion I reach with considerable regret, as the claimant appears to me to be a victim of an unjust anomaly in the income support regulations. If nothing else I hope his appeal will bring the anomaly to the attention of the Secretary of State so that she can consider putting it right for similar cases in the future.
2. I held an oral hearing of this appeal at which Andrew Buchanan-Smith, solicitor, appeared for the claimant and Claire Robinson of Counsel, instructed by the solicitor to the Department of Social Security, appeared for the adjudication officer. I am grateful to both of them for their helpful submissions on the point of law involved.
3. There is no dispute about the facts, and the issue before the tribunal, which was whether the claimant was entitled to income support for the period of four weeks immediately after his employment terminated at the end of October 1996, depends simply on whether the income support regulations have the effect they appear to have. According to the facts recorded by the tribunal the claimant who is a man now aged 35 became terminally ill in September 1996 and had to stop working. For a four week period in October 1996 after he had ceased to be able to go to work his contract of employment with his employer continued, and he was paid statutory sick pay and contractual sick pay under his employer's scheme. These came to a gross amount of £500 for the month, reduced to an actual payment of some £450 after deduction of tax and national insurance contributions. This amount was paid to him on 31 October 1996, in place of the salary he would normally have received then for that month.
4. There is no doubt or dispute that the sick pay, like the salary, was paid in arrears so that what the claimant received on 31 October 1996 was for the past period and not for the future. On the same date his employment was terminated, and as he had no further earnings or resources of his own (apart from a few hundred pounds in savings) he claimed income support. According to his own evidence (see e.g. the letter of 28 November 1996 at page 46) much of the October payment was needed to pay bills and expenses already incurred for that month, and as income support is now itself only paid in arrear (Sch. 7 Social Security (Claims and Payments) Regulations 1987 SI No. 1968) it was necessary for him to make an immediate claim to prevent there being a gap in the money he needed to live on in the succeeding weeks.
5. A person who receives a final payment of wages in arrear on termination of his employment is given help over exactly this problem, by having the final wages payment left out of account to enable him to become immediately entitled to income support: see reg. 36(2) and Sch. 8 para 1, Income Support (General) Regulations 1987 SI No. 1967. There can be no doubt that the purpose of this was to tide people over the hiatus period they would otherwise suffer from the system of payment in arrears. The government statement to the House of Commons on 12 November 1987 at page 65 of the case papers makes this clear:
"I think that the new system will be simpler and more clearly understood ... as part of the package, we will disregard last earnings ... They will be disregarded completely in terms of the calculation for income support. ... Claimants will now be able to use any final earnings to live on while awaiting their first benefit payment. They will no longer be excluded for the period covered by their last earnings. That is, I believe, a far more sensible arrangement ..". (Hansard, 12 Nov 1987 col. 606)
6. Precisely the same considerations appear to me to apply to the present claimant in relation to the month's sick pay he received in place of a final month's earnings. There appears to me no logical distinction between the two at all, and the moral claim of a person in the claimant's position is if anything stronger.
7. However as the regulations stand the claimant's application for income support was rejected for the first 28 days of his claim from 1 November 1996 on the simple but in my view unanswerable ground that the "sensible arrangement" described above for final earnings payments applies only to earnings, and that "earnings" are defined by reg. 36(2) of the income support regulations so as to exclude any remuneration paid by or on behalf of an employer to the claimant in respect of a period throughout which he is absent from work because he is ill. The consequence of this is that the sick pay is so far as the regulations are concerned "income other than earnings", and counts as income of the claimant for the same length of time as the month for which it was actually paid, but measured forwards from the date of payment instead of back. Thus the claimant was treated as having a continuing income for another four weeks after 31 October 1996 by regs. 29(1), 29(2) and 31(1).
8. For "income other than earnings" there is nothing to correspond with Sch. 8 para 1 above to enable final payments of sick pay in arrear to be left out of account; and the only deductions allowed in the calculation are those for income tax, Class 1 national insurance and any pension contributions under Sch. 9 paras 1 and 4A. The claimant is not even allowed the minimum flat rate deduction of £5 that would apply to earnings under Sch 8 para 9.
9. Mr Buchanan-Smith sought to argue before me, as he had before the tribunal, that if the regulations really do have this effect they must be outside the powers of the enabling legislation. The purpose of this, in his submission, was limited to allowing a claimant's income to be calculated or estimated in some rational manner, not to imputing to him a completely fictional income in the relevant weeks when in fact he had none at all. However the tribunal were right in my view to reject this argument. The enabling powers in s. 136 Social Security Contributions and Benefits Act 1992 are in the widest possible terms: as Lord Donaldson observed in CAO v. Foster  QB 31, 45 they allow the Secretary of State "to prescribe that black is white and that nothing is something and vice versa in the context of income and capital". As well as s.136(4) to which the tribunal referred (providing for the income of a week to be calculated by reference to a period which need not include the week concerned at all) the regulations at issue in this case appear to me to fall squarely within s.136(5) which with chilling simplicity lays down that
"(5) Circumstances may be prescribed in which -
(a) a person is treated as possessing capital or income which he does not possess; ..."
10.In my judgment this is conclusive. In the relevant week the claimant had no income but the regulations prescribe that his resources are to be assessed as though he did. This is what s.136 allows them to do. The mere fact that I find the result anomalous does not enable me to construe the regulations contrary to what they plainly say, or to strike down as "irrational" the wording Parliament has been persuaded to approve.
11.For those reasons I have no doubt that this appeal has to be dismissed, though I share the tribunal's unhappiness at the apparent unfairness of the regulations and I hope that in the light of what is said above they can be looked at again so that some good can come out of it for other people in a similar position.
P L Howell
10 March 1998