UK Social Security and Child Support Commissioners' Decisions

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[2005] UKSSCSC CIB_1599_2005 (17 October 2005)

DECISION OF THE SOCIAL SECURITY COMMISSIONER

The claimant's appeal to the Commissioner is allowed. The decision of the Cwmbran appeal tribunal dated 28 February 2005 is erroneous in point of law, for the reasons given below, and I set it aside. It is expedient for me to substitute the decision that the appeal tribunal should have given on its findings of fact (Social Security Act 1998, section 14(8)(a)(i)). My substituted decision is that, although a ground of superseding the decision of 22 March 2000 (relevant change of circumstances) has been proved by the Secretary of State, no superseding decision can be given in respect of the claimant's entitlement to credits on the basis of incapacity for work in the period from 2 April 2003 to 5 November 2003 as no superseding decision could take effect prior to 14 September 2004 (Social Security Act 1998, section 10(5)). Accordingly, the decision of 22 March 2000 remains operative in relation to that period.

The claimant was accepted as incapable of work from 28 February 2000. He had stopped his part-time work as a taxi driver and the certified cause of incapacity was angina pectoris. He claimed incapacity benefit, but had an insufficient contribution record to qualify, so was apparently awarded incapacity credits on 22 March 2000. On 15 May 2002, after receiving the standard letter and leaflet PW(Inf) 02/02 about the change from the therapeutic work rules to rules in terms of permitted work in April 2002 (pages 11 to 14), he gave notice on a form attached to the leaflet that he had started work on 13 May 2002 as a part-time disabled children's bus driver. He gave the average weekly hours worked as 15 and his weekly earnings as £61.50. He then received the letter from the social security office now at pages 9 and 10 saying that his work fell within the permitted work rules and (wrongly) that he could earn no more than £66 per week for an unlimited period with the support of a care worker or similar. That seems to have been wrong because I can see no evidence of any such support and the claimant would seem properly to have fallen into the category for whom work was permitted for 26 weeks in the first instance. The letter went on to say that the claimant had to tell the office about various changes, including changing employer or stopping work. He did stop that work on 19 July 2002, because of ill health, and informed the social security office.

According to the findings of fact of the appeal tribunal (which in my judgment it was entitled to make on the evidence), on 2 April 2003 the claimant took up part-time casual employment with Serv-U Taxis as a taxi driver. From April to the end of August 2003 he did casual driving jobs as and when the need arose. From September 2003 to 24 October 2003 he was engaged on a regular service taking pupils to and from a school in Penarth. He was paid generally in cash at the rate of £5 per day and his earnings did not on average exceed £20 per week. The appeal tribunal preferred the claimant's evidence that he earned less than £20 per week and that he did not work after 24 October 2003 to the documentary evidence from the proprietor of Serv-U Taxis. The claimant did not inform the social security office about this work.

Anonymous information had been received in October 2003 about the claimant's working. Following investigation and various interviews, including statements from the proprietor that the claimant had been employed from 2 April 2003 to 5 November 2003 at £67 per week, a decision was given on 14 September 2004 superseding the decision of 22 March 2000. The decision carefully identified the days on which the claimant would have been treated as incapable of work under regulation 16 of the Social Security (Incapacity for Work) (General) Regulations 1995 (the 1995 Regulations) on the basis that the work was not permitted work under regulation 17 (there are very clear notes at pages 66 and 67). If the claimant's earnings had been £67 per week, the work throughout could only have been permitted if he had given the social security office notice of doing the work within 42 days of beginning it. The decision of 14 September 2004 was that the claimant was not entitled to national insurance credits for the days identified in the period from 2 April 2003 to 5 November 2003. There was no reference in the decision (pages 2 and 3) or in the decision-maker's notes to any legislation, to any ground of supersession or to any of the rules on the effective dates of superseding decisions.

The claimant appealed through his representative, Mr John Colegate. There was particular reference to the letter at page 9 saying that the claimant could earn no more than £66 per week for an unlimited period. The Secretary of State's written submission did rely on the ground of supersession of relevant change of circumstances and asserted in paragraph 6 of section 5 that the claimant had not informed the Department that he commenced work despite being aware, from his previous occasion of permitted work and an earlier period of therapeutic work, of the necessity to do so. But there was no reference to the legislation on the effective date of superseding decisions.

The claimant and Mr Colegate attended the hearing on 28 February 2005. The appeal tribunal said that it disallowed the appeal, although it altered the decision to the extent of ending the period of non-entitlement to credits on 24 October 2003. It found the claimant to be a credible and reliable witness, but decided that, on the basis of its findings of fact, the claimant's work could not fall into permitted category under regulation 17(1)(a)(i) and (1E) because he had not given the required notice. In a case where earnings do not exceed £20 per week notice is required "at any time before the person ceases to undertake the work". The claimant gave no such notice.

Mr Colegate made an application for leave to appeal on the claimant's behalf. Three grounds were put forward, none of which had any legal merit. All I need say about them, very briefly, is that the fact that the claimant did not realise that he needed to give separate notice about the new work from April 2003 did not alter the operation of regulations 16 and 17 of the 1995 Regulations, that those provisions are not ultra vires section 171D of the Social Security Contributions and Benefits Act 1992 and that there was no breach of the principles of natural justice in the decision of the appeal tribunal of 28 February 2005. When granting leave to appeal I said this:

"However, before a superseding decision on the ground of relevant change of circumstances could be made effective from the date of the change in accordance with regulation 7(2)(c)(ii) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 (as it seems that there must have been an incapacity determination in the claimant's case), there would have to be an additional determination that the claimant failed to notify a change of circumstances that he was required to notify and that he knew or could reasonably have been expected to know that the change should have been notified. Neither the decision maker nor the appeal tribunal addressed that issue (to which some of the points raised under ground 1 of the application would have been relevant)."

In the submission dated 7 July 2005, the representative of the Secretary of State supported the appeal, but only to suggest that the Commissioner should substitute a decision to the same effect as the appeal tribunal's. It was said that the decision-maker and the appeal tribunal had dealt with the issue mentioned when I granted leave, but inadequately, through the references to the claimant's not having given the required notice of work. However, in suggesting that the Commissioner could find that the claimant could reasonably have been expected to know that the change of circumstances should have been notified, no further analysis of regulation 7(2)(c)(ii) of the Decisions and Appeals Regulations was offered. In reply, Mr Colegate submitted that there should be a remittal to a new appeal tribunal that could consider at the same time other appeals pending against associated income support decisions.

The Secretary of State has had the opportunity to put forward a view on the effect of regulation 7(2)(c)(ii) of the Decisions and Appeals Regulations, but, while not disputing that that provision was applicable in the circumstances, has not put forward any further view. I therefore propose to set out my conclusions without delaying to invite further submissions.

Regulation 7(2)(c)(ii) and (iii) provides (omitting the references to disability benefit decisions):

"(2) Where a decision under section 10 is made on the ground that there has been, or it is anticipated that there will be, a relevant change of circumstances since the decision was made, the decision under section 10 shall take effect--

...

(ii) in the case of ... an incapacity benefit decision where there has been an incapacity determination (whether before or after the determination), where the Secretary of State is satisfied that in relation to ... the incapacity determination, the claimant or payee failed to notify an appropriate office of a change in circumstances which regulations under the [Social Security Administration Act 1992] required him to notify, and the claimant or payee, as the case may be, knew or could reasonably have been expected to know that the change of circumstances should have been notified,

(aa) from the date on which the claimant or payee, as the case may be, ought to have notified the change of circumstances, or

(bb) if more than one change has taken place between the date from which the decision to be superseded took effect and the date of the superseding decision, from the date on which the first change ought to have been notified, or

(iii) in any other case, except in the case of a decision which supersedes ... an incapacity benefit decision where there has been an incapacity benefit determination (whether before or after the decision), from the date of change."

A result of those provisions is that, if the superseded decision was an incapacity benefit decision where there has been an incapacity determination and the conditions of regulation 7(2)(c)(ii) are not met, a superseding decision adverse to the claimant on the ground of relevant change of circumstances can only take effect from the date on which the superseding decision is made (Social Security Act 1998, section 10(5)).

I do not need to set out the relevant definitions in regulation 7A of the Decisions and Appeals Regulations. In the present case, the decision of 22 March 2000 to award credits or the basis of incapacity for work is expressly within the definition of incapacity benefit decision. I consider that there must have later been an incapacity determination, ie a determination whether a person is incapable of work by applying the personal capability assessment (PCA) or the provisions of regulation 10 or 27 of the 1995 Regulations. The claimant would not have been allowed to continue to receive credits for such a long time without either having the PCA applied or being found exempt or in exceptional circumstances. The Secretary of State has not suggested otherwise. Then, the change of circumstances of the claimant doing work that would on its face fall within regulation 16 of the 1995 Regulations would have been a change "in relation to the incapacity determination" because, if regulation 16 bites, the effect is to treat the person as capable of work notwithstanding that he would otherwise be incapable of work following the application of the PCA or treated as incapable under regulation 10 or 27. Thus, to this point, the case falls within regulation 7(2)(c)(ii) of the Decisions and Appeals Regulations, as the removal of entitlement to credits would not be to the claimant's advantage.

The difficult question, however, is whether regulations under the Administration Act required the claimant to notify the change of circumstances. The provision normally considered is regulation 32(1) to (1B) of the Social Security (Claims and Payments) Regulations 1987, as in force from 6 January 2004:

"(1) Except in the case of jobseeker's allowance, every beneficiary and every person by whom, or on whose behalf, sums payable by way of benefit are receivable shall furnish in such manner and at such times as the Secretary of State may determine such information or evidence as the Secretary of State may require for determining whether a decision on the award of benefit should be revised under section 9 of the Social Security Act 1998 or superseded under section 10 of that Act.

(1A) Every beneficiary and every person by whom, or on whose behalf, sums by way of benefit are receivable shall furnish in such manner and at such times as the Secretary of State may determine such information or evidence as the Secretary of State may require in connection with payment of the benefit claimed or awarded.

(1B) Except in the case of jobseeker's allowance, every beneficiary and every person by whom, or on whose behalf, sums payable by way of benefit are receivable shall notify the Secretary of State of any change of circumstances which he might reasonably be expected to know might affect--

(a) the continuance of entitlement to benefit; or

(b) the payment of benefit,

as soon as reasonably practicable after the change occurs by giving notice of the change to the appropriate office--

(i) in writing or by telephone (unless the Secretary of State determines in any particular case that notice must be in writing or may be given otherwise than in writing or by telephone); or

(ii) in writing if in any class of case he requires written notice (unless he determines in any particular case to accept notice otherwise than in writing)."

Regulation 32(1B) in particular would seem to be relevant in cases like the present, but it only applies to beneficiaries and to people to whom sums by way of benefit are payable and in relation to changes affecting the continuance of entitlement to or the payment of benefit. "Beneficiary" was defined in Schedule 20 to the Social Security Act 1975, under which the Claims and Payments Regulations were originally made, and in section 122(1) of the Social Security Contributions and Benefits Act 1992 as "in relation to any benefit, the person entitled to that benefit". "Benefit" is defined in regulation 2(2)(b) of the Claims and Payments Regulations as including any benefit under what used to be the Social Security Act 1975, plus other benefits such as child benefit, income support, state pension credit, jobseeker's allowance etc. Although that is an inclusive not an exhaustive definition, the meaning cannot extend beyond the benefits mentioned. That is because the power to make the Claims and Payments Regulations and to amend them lies in section 5(1) of the Administration Act and its predecessors (see in particular section 5(1)(j)). Section 5(2) limits the application of section 5 to benefits as defined in section 122 of the Contributions and Benefits Act, jobseeker's allowance, state pension credit, housing benefit, social fund payments under section 138(1)(a) or (b), child benefit and Christmas bonus. None of the extensions in subsections (4) to (5) apply to credits. The upshot is that the requirements as to notifying changes of circumstances in regulation 32 of the Claims and Payments Regulations do not apply in relation to decision merely awarding or allowing credits or finding the conditions for entitlement to credits satisfied.

I know of no regulations making any similar provision to regulation 32 in relation to credits decisions nor of any statutory power under which such regulations could be made. That is not just a technicality, but seems to reflect the essential nature of the awarding of credits, which has become obscured in the incapacity for work context. It is a general condition of the award of credited contributions or earnings under regulation 3 of the Social Security (Credits) Regulations 1975 that such an award is necessary to bring a person's earnings factor up to the level to allow the contribution year to qualify. That is something that cannot be identified until after the end of the contribution year in question. Thus, in regulation 8B on credits for incapacity for work, a person has a considerable period after the end of the contribution year in question in which to give notice of the grounds on which he claims to be entitled to credits (paragraph (4). It is thus quite understandable that the rules on notification of information should be different from those in benefit cases.

Regulation 17 of the 1995 Regulations could perhaps be said to impose a requirement to give notice of matters that would constitute a relevant change of circumstances in relation to decisions to award credits on the basis of incapacity to work. Although the requirement is not in terms to notify a change of circumstances, it could be argued to come within the condition in regulation 7(2)(c)(ii) of the Decisions and Appeals Regulations. But regulations 16 and 17 of the 1995 Regulations were not made under the Administration Act. The 1995 Regulations were in the main made under the Contributions and Benefits Act. They were partly made under section 61A of the Administration Act, but that only authorised regulations to provide for incapacity determinations made for one purpose to be conclusive for other purposes and always to be made by adjudication officers. Section 61A did not authorise the making of regulations 16 and 17 and nor did section 5(1) or any other provision of the Administration Act.

Accordingly, in my judgment an essential condition of the application of regulation 7(2)(c)(ii) cannot be met in the case of a supersession on the ground of relevant change of circumstances of a decision awarding credits on the basis of incapacity for work. There cannot be a requirement to notify the change imposed by regulations made under the Administration Act. Therefore, accepting on the facts found by the appeal tribunal here that the decision of 22 March 2000 did fall to be superseded on the ground of relevant change of circumstances, the superseding decision could not take effect before 14 September 2004 and could not operate so as to remove any entitlement to credits in the period from 2 April 2003 to 24 October 2003.

If I were wrong in the above, there is a further obstacle to a superseding decision operating so as to remove entitlement to credits in the period in question. That stems from the peculiar terms of the provisions in regulation 17 of the 1995 Regulations about when the required notice has to be given. Some of the difficulties involved in the rule giving 42 days from the beginning of work have been explored in Commissioners' decisions CIB/3925/2003 and CIB/1985/2004, to be reported as R(IB) 4/05. However, I must consider the case on the basis of the finding by the appeal tribunal that the claimant earned less than £20 per week. In such circumstances, the required notice need only be given "at any time before the person ceases to undertake the work". Two questions immediately arise. First, on the assumption that the undertaking of work is (contrary to my conclusion above) a change of circumstances required to be notified under the right sort of regulations for regulation 7(2)(c)(ii) of the Decisions and Appeals Regulations, can a claimant be reasonably be expected to know when starting to undertake the work that the change ought to be notified when notification at any point while the work is still being undertaken will do for the 1995 Regulations? The very notification renders the undertaking of the work immaterial to the claimant's incapacity throughout the period of work. Second, if regulation 7(2)(c)(ii) applies, the superseding decision takes effect from the date on which the claimant ought to have notified the change of circumstances. In the present case, would that have been 2 April 2003 or 24 October 2003? Without exploring all of the answers to those questions, there would be at least a real doubt whether any superseding decision could be operative in the period in question.

For the reasons given above, I set aside the appeal tribunal's decision as erroneous in point of law. It is then plainly expedient for me to substitute the decision that the appeal tribunal should have given if it had applied the principles of law that I have set out above. That decision,

favourable to the claimant, is set out in paragraph 1 above. I prefer to say nothing about where my decision leaves any other pending appeals, about which I know little.

(Signed) J Mesher

Commissioner

Date: 17 October 2005