UK Social Security and Child Support Commissioners' Decisions

[2004] UKSSCSC CIS_3451_2003 (30 January 2004)

PLH Commissioner's Files: CIS 3378/03 & 3451/03
 


SOCIAL SECURITY ACTS 1992- 1998

APPEAL FROM DECISION OF APPEAL TRIBUNAL

ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

Claim for: Income Support (Overpayment)

Appeal Tribunal: Wrexham

Tribunal Case Ref: U/03/190/2001/01055 & 915/2001/00001

Tribunal date: 14 April 2003

Reasons issued: 23 June 2003

1. Following the earlier directions these two linked cases are now before me as:

(1) an application in case CIS 3378/03 by the claimant for leave to appeal against the decision of the appeal tribunal consisting of a chairman sitting alone at Wrexham on 14 April 2003, confirming that a sum of £88.44 income support had been overpaid to the claimant for the period 11 December 2000 to 25 February 2001 and was recoverable from him under section 71 Social Security Administration Act 1992; and

(2) an appeal with my leave in case CIS 3451/03 by him against the separate decision of the same chairman on the same date, holding that the tribunal had no jurisdiction to deal with an appeal by the claimant against a further decision by the Secretary of State that a total of £1,968.28 income support paid to him over the period 25 September 1995 to 10 December 2000 inclusive was recoverable from him under section 74 of that Act following a payment of arrears of "prescribed income" he received from the Gwynedd County Council on or about 5 December 2000.

2. For the reasons given below I am satisfied that the tribunal chairman was wrong in point of law to decline jurisdiction in the appeal over the larger amount under section 74, but the only conclusions he could properly have reached on the facts found and evidence before him were that the claimant was legally liable to repay the Secretary of State both the two amounts of income support sought to be recovered from him. Accordingly (1) while formally allowing the appeal in case CIS 3451/03 on the jurisdiction issue I exercise the power in section 14(8)(a) Social Security Act 1998 to substitute the decision I am satisfied was the only one the tribunal could and should have given, namely that the sum of £1,968.28 was legally recoverable from the claimant by the Secretary of State under that section; and (2) in case CIS 3378/03 I dismiss the claimant's application for leave to appeal, as the decision that the further sum of £88.44 was also recoverable from him under section 71 was legally correct. I emphasize that these decisions are concerned only with the question whether a legal liability to repay these amounts is imposed on the claimant under the Act. The extent to which the Secretary of State thinks it right to enforce such legal liabilities and the rate of any actual recovery are separate matters for his discretion and not for me or the tribunal to decide.
3. The claimant is a gentleman now aged 73, a pensioner and a former employee of the Gwynedd County Council. The basic problem that has led to the decisions he finds it so hard to swallow, or even understand, in this case stems from the failure of successive Governments of all political colours to ensure that the normal State retirement pension for which people pay contributions throughout their working lives is maintained above the subsistence level for means-tested benefits when they come to retire. That means that people who like this claimant have paid their contributions as members of both occupational and State retirement pension schemes find themselves in retirement having also to cope with the means-tested benefit system whose purposes and rules are different. An increasing amount of the State's retirement provision now consists only of a means-tested top-up to bring a person up to a basic subsistence level, payable only if and to the extent that he or she remains below that level after private savings and most other resources are also brought into the reckoning.
4. The claimant's sense of grievance in this case is based on his perception that a small amount of occupational pension at the rate of £8.05 a week (due to him from the Gwynedd County Council from when he attained retirement age in 1995, but through some oversight not actually paid to him until December 2000) had been unfairly "docked" not only from the weekly money he was getting for his State retirement pension as of right, but also and additionally from the income support top-up he was receiving to bring him up to the "applicable amount" or standard subsistence level. His case throughout has been that he has thus been penalised twice, and this amounts to unfair double counting. In the words of his own most recent submission at page 84 of file CIS 3378/03

"The claimant asserts that it is wrong, morally and legally, to deduct the same amount of occupational pension twice from his weekly monies as is the consequence of the tribunal's decision."

That is, and always has been, the real nub of his complaint in both appeals.

5. The short answer is that there are indeed two subtractions, but they are in different calculations and for different purposes. They do not produce the injustice the claimant alleges, unless one counts it an injustice to have to pay back means-tested public assistance when more turns out to have been paid than needed to meet the prescribed subsistence level.
6. What actually happened, and the reason why this claimant turned out to have been paid too much, is apparent from the evidence before the tribunal and the material facts which have never really been in dispute. When the claimant reached retirement age in September 1995 he began to draw his State retirement pension, the calculation of which included the normal flat-rate basic element, plus graduated and additional elements from past earnings-related contributions. Since his employment with the Gwynedd County Council had been "contracted-out" of the main State earnings-related scheme, the bulk of his earnings-related pension for that period of his employment should have been paid to him under his employer's occupational scheme as a guaranteed minimum pension or "GMP", and only a small balance of the additional element remained payable under the State scheme itself. As had been previously notified to him, his GMP entitlement came to £8.05 a week, and this amount ought to have come into payment from Gwynedd as soon as he reached pensionable age and started drawing his State pension.
7. In fact there was an administrative oversight so that the pension department at Gwynedd never started paying the claimant his £8.05 GMP in 1995 when he attained 65, and the mistake went undetected for another five years after that. Meanwhile however it was not included in the weekly payments he got for his State retirement pension, which was entirely correct since it was the Council, not the state, that should have been paying it to him. The way his State retirement pension was (entirely correctly) calculated is shown in the Departmental memorandum at page 17 of file CIS 3451/03. At the rates current when those figures were prepared, he was entitled to get from the State scheme his basic pension of £67.50 a week, plus £4.74 a week graduated pension, plus £1.03 a week for the balance of his additional earnings-related pension still payable from the State scheme on top of the £8.05 a week GMP for which Gwynedd, and not the State scheme, were responsible. Thus his total weekly entitlement to National Insurance retirement pension from the State scheme came to £73.27 and that was what he was actually paid.
8. £73.27 a week is accepted as not enough for a person in the claimant's position to live on and provide for himself and his wife nowadays, even taking into account her own separate National Insurance pension of another £40 or so. Consequently, as many pensioners without significant savings or private resources now find they have to, he applied for means-tested public assistance, and this was awarded to him continuously from September 1995 onwards to supplement his State retirement pension and bring him and his wife up to the prescribed subsistence level of income each week. Although described for cosmetic reasons as a "minimum income guarantee" and paid with the State retirement pension, the "top-up" element payable to pensioners for this purpose is actually income support, and is subject to the normal means-testing rules for that benefit. In particular almost all actual income and resources of any kind that the claimant and his wife happen to have must be declared and are taken into account, and benefit is only payable to the extent that these still leave them short of the prescribed income support level for basic subsistence, known as the "applicable amount".
9. In the present case, the claimant declared entirely truthfully the income he was actually getting in September 1995. This did not of course include anything in pension payments from Gwynedd to supplement his own State retirement pension, for the simple reason that he was not getting them. Consequently the calculation of what he and his wife needed to bring their actual income up to subsistence level was made by the department on the basis that all they had was their actual pension under the State scheme, without any occupational pension. Taking into account their age and the fact that the claimant's wife suffers from a disability, the amount that was worked out to be needed to bring their actual income up to the "applicable amount" was some £26.41 a week from September 1995 onwards. Income support was calculated and paid to the claimant on that basis (subject to minor fluctuations in the rates and amounts which do not matter for the present purpose) continuously from then and for the next five years.
10. There can be no doubt that over the whole of this period if the claimant had in fact been receiving the £8.05 a week he should have been getting as GMP from Gwynedd, the amount of the means-tested "top-up" needed to take him and his wife up from their actual income to the weekly "applicable amount" would have been correspondingly less. In each of the weeks while the situation continued, more income support was thus being paid to him than would have been the case if his actual weekly income had included another £8.05 from Gwynedd, since the gap to be bridged to reach the "applicable amount" would have been that much smaller.
11. This state of affairs continued as I say for another five years. Eventually a routine departmental check of the claimant's records indicated that something might have gone wrong: he was shown as entitled to a GMP of £8.05 a week from Gwynedd, yet his income support was being calculated and paid without that being taken into account as part of his income. The claimant was visited and gave an entirely truthful statement which he signed on 19 October 2000, confirming that whatever the records said about his being entitled to an occupational pension, he was definitely not receiving one: and nor had he been paid any other sums on account of it by Gwynedd County Council. His signed statement (page 7 of file CIS 3451/03) concluded by saying:

"I will let the Benefits Agency know if following enquiries, I do become entitled to a pension."

12. The claimant then did institute enquiries with the Council about whether they should have been paying him a pension, and in due course the mistake came to light and was corrected. On or about 5 December 2000 the Council paid the claimant a total of £1,970.41, being the arrears of pension they should have been paying him at the rate of £8.05 a week for the past five years from September 1995; and from then on they began actually paying him his £8.05 a week by monthly instalments of £34.88, starting with the December 2000 payment which I think was made just before Christmas of that year.
13. However the claimant did not actually get around to informing the Benefits Agency of these developments until his next periodic income support review which was in February 2001. There is no suggestion of his being anything other than entirely honest in his dealings with the Department and I accept that he always intended to honour the assurance he had given them the previous October about letting them know if he did start to get an occupational pension. Perhaps understandably however, he took the view that the next review in February would be time enough for that.
14. Whatever the reason, the undisputed facts were that (a) he did not actually inform the department until February 2001 that he was now at last getting his £8.05 a week from Gwynedd, and had been since the previous December; and (b) because the department had remained unaware that his actual income now did include the extra £8.05 from Gwynedd, they went on calculating and paying him his income support from December 2000 until the end of February 2001 as if it still did not.
15. The consequences of these events under the means-testing system are in my judgment beyond arguable doubt on the facts found and evidence before the tribunal. In particular, they meant that over the period 25 September 1995 to 10 December 2000 the claimant had actually been getting more weekly income support to bring his income up to the prescribed subsistence level than would have been needed if his actual income each week had included the £8.05 he was due from Gwynedd: to a total of not less than £1,969.28 extra income support over that period. Further there can be no doubt that from 11 December 2000 to 25 February 2001 inclusive he went on getting income support at a higher rate than he should have done, to a total of another £88.44, because his actual income in each of those weeks did include the £8.05 from Gwynedd and he had not yet told the department about it.
16. As regards the claimant's complaint that as he sees it this calculation of overpaid income support involves a "double deduction from his weekly monies", I can only repeat that the means-testing calculation for income support is different from the way a GMP is allowed for in the State retirement pension itself. For income support what matters is the total actual income that a person is getting from all sources, with the State only making up the difference to basic subsistence if there is still a shortfall. Thus as soon as the £8.05 from Gwynedd actually comes to be paid, the net difference to be made up by income support between actual income and applicable amount becomes less. The £8.05 which Gwynedd (and not the State scheme) was supposed to be paying from 1995 does indeed reappear in the calculations as actual income once it starts to be received, but this time in a different calculation and for a different purpose. A more accurate description than a "double deduction" would be to say that the claimant has received an interest-free loan from the rest of us via the income support system, to keep his and his wife's weekly income up to the minimum level for their needs until the mistake about his Council pension was finally put right. It may be unpleasant to be asked to pay back the difference now that his money from Gwynedd has at last come in, but it is not illegal or immoral.
17. Consequently, in my judgment, his fundamental point that he has suffered some legal or moral injustice in the way his entitlement to income support over the years from September 1995 was initially calculated and has now been recalculated is wrong. The legislation was correctly applied by the Secretary of State in the two decisions to which he objects: the sums of £1,969.28 and £88.44 have been paid in excess of entitlement, and now that the mistake has come to light and been put right he is legally liable to pay them back as the legislation provides.
18. The claimant makes various further procedural and other points in his written submissions about the way the department and the tribunal have dealt with his case, all of which I have considered. However I am afraid that none of them makes any difference to the fundamental point that his entitlement under the legislation has been calculated correctly, and no reasonable tribunal on this evidence could have done other than confirm the Secretary of State's decisions that he was legally liable to repay the two amounts of overpaid income support in question. The basis of the liability is different for the two amounts and I will deal with the legal position on each briefly.
19. The liability to repay the £1,969.28 for the period from 25 September 1995 to 10 December 2000 is under section 74 Social Security Administration Act 1992. This provides that where a payment by way of prescribed income is made after the date which is the prescribed date in relation to the payment, and it is determined that an amount which has been paid by way of income support would not have been paid if the payment had been made on the prescribed date, the Secretary of State shall be entitled to recover that amount from the person to whom it was paid.
20. There is no doubt that the claimant's occupational pension is "prescribed income" for the purposes of that section, under regulation 7(1) Social Security (Payments on Account, Overpayments and Recovery) Regulations 1988 SI No. 664: such payments count as "income other than earnings" by virtue of regulation 36(2)(d) Income Support (General) Regulations 1987 SI No. 1967. The "prescribed date" is the day or period in respect of which the income in question was paid or to which it was attributable. Hence in simple language, where as in this case arrears of occupational pension income are received late, and less income support would have been paid in one or more past weeks if the pension had been paid on time, the Secretary of State is legally entitled to be paid back the difference when the delayed pension payments eventually come in. This obligation to repay under section 74 does not in any way depend on it being anyone's fault that this situation has arisen: it is simply a mechanism for recovering the extra public money paid out because the pension income was delayed. In the present case there can be no doubt that on the facts as set out above the Secretary of State was justified in issuing the determination that a total of £1,969.28 income support paid to the claimant over the years fell within section 74(1), and was recoverable from the claimant once he received his arrears of occupational pension in December 2000.
21. It is now conceded on behalf of the Secretary of State that the tribunal chairman was wrong in law to hold he had no jurisdiction to deal with those issues. In my judgment that concesssion was right, and the correct boundary of the tribunal's appeal jurisdiction in section 74(1) cases is that defined in the helpful submission by Mrs J Douglas dated 20 October 2003 at pages 126 to 127 of file CIS 3451/03. Thus a determination made by the Secretary of State under section 74(1) that a particular amount of income support has been paid to the claimant but would not have been so paid had he received his prescribed income payments at the prescribed date, and in consequence is legally recoverable from him under the terms of section 74(1), is an appealable decision within the jurisdiction of the tribunal under section 12 Social Security Act 1998. The appeal does not however extend to any subsequent question of whether or how to enforce any liability so established, which is an administrative or discretionary matter for the Secretary of State.
22. In my judgment the right of appeal against a section 74(1) determination must be taken to arise under section 12(1)(a) and 12(2) of the 1998 Act, since as the tribunal chairman correctly pointed out it is not among the specific types of decision listed in Schedule 3 to that Act so as to bring it within the rights of appeal under section 12(1)(b). However there can be no doubt that such a determination falls within section 8(1)(c) of the 1998 Act as a decision to be made by the Secretary of State under that section. In my judgment it is sufficiently related to the award of income support on which the excess payment has been made to bring it within the scope of the primary appeal right under section 12(1)(a) as "a decision of the Secretary of State under section 8 ... made ... on an award of, a relevant benefit", and this is reinforced by the express reference in section 12(4) to section 74 showing the apparent intent that a claimant has an automatic right of appeal against a determination under that section. If there would otherwise be any doubt about the existence of the right, section 3 of the Human Rights Act 1998 in my judgment requires section 12(1) to be construed so as to include it by giving a broad meaning to "on an award" and thus provide the right of appeal to an independent and impartial tribunal required by Article 6 of the Human Rights Convention. That effectively reproduces the position under the legislation before the 1998 Act came into force, whereby such determinations were made by an adjudication officer with the right of appeal to a tribunal: cf. case CIS 155/01.
23. The liability to repay the £88.44 income support overpaid to the claimant for the period 11 December 2000 to 25 February 2001 is under section 71 of the 1992 Act. On this there is in my judgment no ground in law or otherwise for holding the tribunal's decision incorrect. Under section 71 it is necessary for the Secretary of State to show that the excess benefit has been paid by reason of some misrepresentation or failure to disclose material information on the part of the person from whom it is sought to recover. It is a purely factual and objective question whether the overpayment was attributable to such a misrepresentation or failure to disclose: if it was, there is legal liability to repay even though the person has acted entirely innocently. As already noted there can be no ground for doubting that it was the claimant's delay in notifying the Benefits Agency that he had finally started getting his occupational pension payments that caused him to go on getting income support from 15 Deember 2000 at £8.05 a week more than was really due to him. Again there is no question of the claimant being penalised: it is simply correcting the accidental overpayment he got because of his delay.
24. For those reasons, I allow the appeal in case CIS 3451/03 on the jurisdiction point but substitute the only decision open to the tribunal on the facts and evidence in that case, which is to confirm that the sum of £1,969.28 is recoverable from the claimant; and in case CIS 3378/03 I dismiss his application for leave to appeal as there is no ground for disputing the decision that the further sum of £88.44 was recoverable from him as well.

(Signed)

P L Howell

Commissioner

30 January 2004