UK Social Security and Child Support Commissioners' Decisions

THE SOCIAL SECURITY COMMISSIONERS

Commissioner's Case No. : CIS/1657/2004

APPEAL FROM A DECISION OF AN APPEAL TRIBUNAL ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

MR DEPUTY COMMISSIONER POYNTER

1. This is an appeal by the claimant, with the leave of Mr Commissioner Rowland, against the decision of Bargoed Appeal Tribunal given on 17 December 2003. The tribunal's decision to dismiss the appeal before it had the effect of confirming four decisions given on behalf of the Secretary of State on 10 December 2002. Those decisions (as subsequently revised) were as follows:

(a) that the claimant was not entitled to income support, for various specified periods between 11 October 2000 and 16 September 2002; and

(b) that she had been overpaid—and was liable to repay—£4,912.25 as income support for those periods; and

(c) that the claimant was entitled to income support at a reduced rate for other specified periods between 5 May 2001 and 7 June 2002; and

(d) that she had been overpaid—and was liable to repay—£566.38 as income support for those periods.

2. My decision is to allow the appeal. The tribunal's decision is erroneous in law. I set it aside and, under section 14(8)(b) of the Social Security Act 1998, I refer the case to a tribunal ("the new tribunal") for determination in accordance with the directions that I give at paragraphs 30-39 below.

The facts

3. There is little dispute about the facts which are as follows:

(e) The appellant has been claiming income support since 1993. At the beginning of her claim, she established entitlement to that benefit on the basis that she was the lone parent of two sons.

(f) Subsequently the appellant claimed incapacity benefit. The papers are silent as to the illness or disability that formed the basis of that claim and equivocal as to the date on which it was made, but it is not in dispute that the Secretary of State accepted her as being incapable of work. The appellant had not paid sufficient national insurance contributions to be entitled to incapacity benefit but the acceptance of her incapacity for work provided her with an additional basis for her entitlement to income support and had the practical consequence that, after a year, income support was paid at a higher rate because of the inclusion in her applicable amount of the disability premium (see paragraphs 11(a) and 12 of Schedule 2 to the Income Support (General) Regulations 1987 ("the Income Support Regulations")).

(g) In August 1998, the appellant's younger son reached the age of 16 and was therefore no longer a "child" for income support purposes. This in turn meant that the appellant ceased to be a "lone parent". However, income support continued to be paid to her on the basis that she was incapable of work.

(h) On 21 September 2000, the appellant began work. The tribunal found the nature of the work to be as follows:

"She worked on a self-employed basis for B. S. Limited, a company which produces and sells Christmas crackers. The company recruits people on low incomes, provides them with the wherewithal to make crackers and pays on a "piece work" basis. The system is attractive to benefit claimants because they can do the work in their own homes and at their own pace. The rate paid for the job is so poor that the work is unlikely to attract anyone who does not have an income from another source."

(i) The tribunal also found as a fact that the appellant was working 25 hours per week on average. That had been disputed by the Secretary of State on the basis that the appellant had said in a formal written statement that she "was working on average about 60 hours a week". In the appeal to the Commissioner, the appellant maintains that in many weeks she worked for fewer than 16 hours.

(j) There is no suggestion in the papers that the appellant's work for B. S. Limited was undertaken on the advice of a doctor. Further, the appellant neither obtained the approval of the Department before she started work nor notified it of that change of circumstances after it had occurred. In particular, on 26 March 2001, she completed and signed an A2 review form on which she did not declare either the work that she was doing or the wages that she received for that work.

(k) Evidence of the amounts paid to the appellant was obtained from B. S. Limited and appears in the papers. The first payment was made on 17 October 2000 and the final payment on 16 September 2002. It appears that the appellant did no further work for B. S. Limited after the latter date.

(l) The appellant was subsequently prosecuted for criminal offences arising out of the work she did and her failure to report that work. She pleaded guilty to those charges at Blackpool Magistrates Court on 2 June 2003 and was sentenced to a community punishment.

The Secretary of State's decisions and the appeals against them

4. Once the Department had discovered the true position, a number of decisions were made on behalf of the Secretary of State. The first appears to have been made by an incapacity benefit decision maker on a date that was on or before 22 October 2002. The papers before the tribunal did not contain a copy of that decision. The Secretary of State's representative tells me that efforts have been made to obtain a copy but that the local office has been unable to supply one. I comment on the practical implications of that inability for the hearing before the new tribunal at paragraph 30 below. There is, however, partial evidence of the terms of the decision in a note from a civil servant dated 22 October 2002 who says that it had been decided that the appellant was to be treated as capable of work "for various periods between 11.2.01 – 17.8.02". Those periods are not specified further.
5. There is no suggestion that there has been any appeal against the incapacity decision and it seems unlikely in any event that any appeal would have had significant prospects of success. The appellant does not deny that she worked for B. S. Limited and the circumstances set out at paragraph 3(e) above are likely to have proved fatal to any suggestion that what she did was "exempt work" within either of the versions of regulation 17 of the Social Security (Incapacity for Work) (General) Regulations 1995 ("the Incapacity for Work Regulations") which were in force at different times during the overpayment period. Irrespective of the merits, any such appeal would now be out of time unless there had been some defect in the notification of the original decision. In those circumstances, the incapacity benefit decision maker's decision is final, subject only to the possibility of its being revised by the Secretary of State. That decision is also conclusive for the purposes of the subsequent decisions concerning the appellant's entitlement to income support—see regulation 10 of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 ("the Decisions and Appeals Regulations").
6. On 10 December 2002, an income support decision maker made two decisions. The first was that the appellant was not entitled to that benefit for a number of specified periods between 11 October 2000 (presumably the start of the benefit week which included 17 October 2000—see paragraph 3(g) above) and 16 September 2002 (the date of the final payment). As a result, it was decided that there had been an overpayment of income support to the appellant, which was recoverable from her because she had failed to disclose the material fact that she had been working.
7. The second decision made on 10 December 2002 concerned periods between 11 October 2000 and 16 September 2002 which were not covered by the first decision and during which, therefore, the appellant remained entitled to income support. The first decision had decided that, among other periods, the appellant had not been so entitled from 30 January 2001 to 4 May 2001. As this period exceeded 56 days, the decision maker decided that the appellant's previous period of incapacity had come to an end and that she was therefore no longer entitled to the disability premium because she had not been incapable of work for a continuous period of at least 364 days (see paragraph 12(1)(b)(ii) of Schedule 2 to the Income Support Regulations). The consequences of this were that:

(a) for any week commencing on or after 5 May 2001 in which the appellant was entitled to income support at all, she was so entitled at reduced rate; and

(b) for those weeks there had been a further overpayment of income support, which was recoverable from the appellant.

8. The appellant appealed against those decisions on 30 January 2003.
9. On 12 April 2003, a different decision maker revised both the decisions dated 10 December 2003 so as to increase the sums that were said to have been overpaid to the appellant. The revision was justified on the basis that the original decision maker had overlooked the fact that deductions had been made from some of the payments received by the appellant in order to recover a social fund loan and had made incorrect calculations in respect of some part-weeks. In addition, it was decided that those parts of the overpayments that related to periods after 26 March 2001 (when the appellant completed the A2 Review Form—see paragraph 3(e) above) were caused by the misrepresentations contained in that form and not by her failure to disclose that she was working.
10. As a result of those revised decisions, the amount of the first overpayment was increased to £4,912.25 and the second to £566.38. This meant that the revised decisions were less advantageous to the appellant than the original decisions that she had appealed against. That appeal, therefore, did not lapse but continued as an appeal against the decisions as revised (see section 9(6) of the Social Security Act 1998 and regulation 30 of the Decisions and Appeals Regulations).

The tribunal's decision and the appeal to the Commissioner

11. The tribunal's decision to disallow the appeal was reached following an oral hearing at which the appellant, her representative from the local Citizen's Advice Bureau and a presenting officer were present. The tribunal decided a number of issues, which are clearly and helpfully set out in its statement of reasons, but only one of those issues has been pursued on appeal, namely the number of hours which the appellant worked. The solicitors who are now representing the appellant criticise the tribunal for taking an average figure instead of considering each week separately and making a decision as to how many hours are likely to have been worked on a balance of probabilities by reference to the payment made to the appellant in the following week.
12. However with respect to the appellant's solicitors—and to the tribunal which also regarded the number of hours worked as a relevant consideration—that issue is a red herring. The income support decision maker decided that the appellant was not entitled to income support for certain periods not because she was working more than 16 hours a week during those periods and was therefore in remunerative work, or because her earnings in those weeks exceeded her applicable amount, but because the fact that she was working at all—or, at any rate, that the work which she did was more than de minimis—meant that she fell to be treated as capable of work under regulation 16(1) of the Incapacity for Work Regulations.
13. That regulation treats claimants as capable of work throughout any week (commencing on Sunday) during which they actually do any work. As the appellant had been receiving income support on the basis that she was incapable of work, a decision that she was not incapable was, subject to what I say at paragraphs 15-29 below, fatal to her entitlement to that benefit. That was so no matter how many or how few hours she worked and no matter how much or how little money she earned.
14. Of course, the number of hours worked by the appellant was relevant at one point to the question of whether she had worked at all in any given week and should therefore have been treated as capable of work in relation to that week. However, as explained at paragraph 5 above, the decision of the incapacity decision maker was conclusive on that question. In the absence of any appeal against it, it was not open to the tribunal, and it is not open to the Commissioner, to reconsider it.

The prescribed categories

15. Under section 124(1)(e) of Social Security Contributions and Benefits Act 1992, it is a condition of entitlement to income support that a claimant "falls within a prescribed category of person". Those categories are set out in Schedule 1B to the Income Support Regulations. The general policy of the social security system is that anyone whose circumstances would permit them to work if employment were available should be required to make themselves available for, and actively seek, work as a condition of receiving income-related benefits. Schedule 1B is a list of categories of people whose circumstances are such that it is felt reasonable to exempt them from that requirement. People in those categories may receive income support, which in turn means they do not have to look for work. Other people who are of working age but are not in work must sign on at a Jobcentre, look for work and claim jobseeker's allowance if they wish to receive an income-related benefit.
16. As there are 24 prescribed categories at present, the fact that a claimant no longer falls within one category will not usually be a ground for superseding a decision awarding income support unless, on a balance of probabilities, he or she does not fall within any other prescribed category. There will be occasions when the Secretary of State has to make further enquiries before he can be satisfied that that is the case (see, for example, CIS/3781/2002 in which Mr Commissioner Rowland directed the Secretary of State to conduct a personal capability assessment of a claimant who had previously qualified for income support as a carer but also claimed to be incapable of work). The only circumstance in which a claimant's ceasing to fall within one of the prescribed categories will, of itself, justify supersession is where that change necessarily entails a change in the rate at which benefit is paid (for example, when a person who is in receipt of the disability premium ceases to be incapable of work).
17. The prescribed categories cover a diverse range of personal circumstances and it will often be possible to say at a glance that many of them do not apply. In this appeal, the facts do not raise any possibility that the appellant might have been (to pick a few categories by way of example) a disabled student, a refugee, a person required to attend court, or a member of a couple looking after children while the other member is temporarily abroad. The same could probably be said of most of the other categories.
18. The facts did, however, require investigation of:

(c) whether the appellant remained a lone parent;

(d) whether the appellant was a "person appealing against a decision which embodies a determination that they are not incapable of work" within paragraph 24 of Schedule 1B; and

(e) whether the appellant was a "disabled worker" within paragraph 8 of the Schedule

19. As far as the first of those questions is concerned, the appellant had previously received income support as a lone parent. For the reason which I give at paragraph 3(c) above, she no longer fell within that category, but the Secretary of State should have determined that issue for himself and told the tribunal that he had done so.
20. As to the second, an appeal against the incapacity decision would only have been relevant if it had been made before 10 December 2002 when the income support decisions were made (see the decision of Mr Commissioner Turnbull in CIS/1614/2004). The Secretary of State tells me that the appellant's local office has "no knowledge as to whether or not the appellant has [an] appeal under regulation 16 of the Social Security (Incapacity for Work) (General) Regulations 1995" and it may be the case that no such appeal was made. The appellant's representatives will now have been alerted to the issue by this decision and will be free to raise it before the new tribunal if there is anything in it. If the issue is to be raised, it might assist if the Appeals Service were first asked to check the GAPS computer system for any trace of an earlier appeal by the appellant. However, the failure to find such an appeal would not be conclusive because of the possibility that an appeal was made but never submitted to the Appeals Service.
21. As to the third issue, paragraph 8 of Schedule 1B prescribes the following category:

"Disabled workers

8. A person to whom regulation 6(4)(a) (persons not treated as engaged in remunerative work) applies."

Regulation 6(4)(a) provides as follows:

"(4) The following persons shall not be treated as engaged in remunerative work—

(a) a person who is mentally or physically disabled and by reason of that disability—

(i) his earnings are reduced to 75 per cent, or less of what a person without that disability and working the same number of hours would reasonably be expected to earn in that employment or in comparable employment in the area; or

(ii) his number of hours of work are 75 per cent. or less of what a person without that disability would reasonably be expected to undertake in that employment or in comparable employment in the area;"

22. The circumstances prescribed by paragraph 8 and regulation 6(4)(a) are such that decision makers and appeal tribunals will usually need to give express consideration to it in cases where a claimant has been in receipt of income support on the basis that he or she is incapable of work and that benefit is then stopped on revision or supersession because the claimant is engaged in work which is not "exempt work". This is because there is no definition of what amounts to a mental or physical disability for the purposes of regulation 6(4)(a). Whether or not the appellant is "mentally or physically disabled" is a question of fact. There is no requirement that the disability should be severe or that it should be evidenced by receipt of a disability benefit. By its very nature, regulation 6(4)(a) only applies to those whose disabilities do not prevent them from working. In fact, it is possible for a claimant to be working at up to 75% of the capacity of an able-bodied person and still fall within paragraph 8. It follows that the evidential threshold required to raise the possible application of paragraph 8 is relatively low. The fact that a claimant has been incapable of work for a significant period and is now working will usually be sufficient to require further investigation.
23. As I explain at paragraphs 26 to 27 below, that may mean that the decision maker will need to make further enquiries of the claimant or others in order to establish whether the regulation 6(4)(a) criteria are satisfied before a revising or superseding decision is made to end the claimant's entitlement to income support.
24. The Secretary of State's representative does not support this appeal. He submits that in the absence of any evidence of a disability that affects the claimant's earning ability, and given that neither the appellant nor her representative raised the matter before the tribunal, the tribunal did not err in law in failing to consider it.
25. I do not agree. I accept, of course, that section 12(8)(a) of the Social Security Act 1998 gave the tribunal a judicial discretion not to consider issues which are not raised by the parties but that is not the case here. On a proper view of the law, the only basis for the Secretary of State's decision was that the appellant did not fall into any of the prescribed categories: for the reasons given above, a decision that the appellant was treated as incapable of work could not, of itself, justify a decision to supersede previous awards so as to end entitlement altogether. Once that is appreciated, the possibility that the claimant might fall into one or more of the other prescribed categories is one that is inherent in the decision itself. If the evidence suggests (as it does in this appeal—see paragraph 22 above) that another prescribed category may be relevant, then the tribunal, in the exercise of its inquisitorial jurisdiction, must consider that possibility irrespective of whether it is also raised by either of the parties. If authority is needed for that proposition it can be found in R(IS) 11/99 (paragraphs 31-32), and CIS/1997/2002 (at paragraph 10).
26. Moreover, it is not only the tribunal that has an inquisitorial role to play in this process. The decision maker is also obliged to act inquisitorially. In the recent decision of the House of Lords in Kerr v Department for Social Development [2004] UKHL 23, Baroness Hale stated:

'61. Ever since the decision of the Divisional Court in R v Medical Appeal Tribunal (North Midland Region), Ex p Hubble [1958] 2 QB 228, it has been accepted that the process of benefits adjudication is inquisitorial rather than adversarial. Diplock J as he then was said this of an industrial injury benefit claim at p 240:

"A claim by an insured person to benefit under the Act is not truly analogous to a lis inter partes. A claim to benefit is a claim to receive money out of the insurance funds . . . Any such claim requires investigation to determine whether any, and if so, what amount of benefit is payable out of the fund. In such an investigation, the minister or the insurance officer is not a party adverse to the claimant. If analogy be sought in the other branches of the law, it is to be found in an inquest rather than in an action."

62. What emerges from all this is a co-operative process of investigation in which both the claimant and the department play their part. The department is the one which knows what questions it needs to ask and what information it needs to have in order to determine whether the conditions of entitlement have been met. The claimant is the one who generally speaking can and must supply that information. But where the information is available to the department rather than the claimant, then the department must take the necessary steps to enable it to be traced.

27. Most claimants whose income support is stopped because they have been engaged in non-exempt work will not be aware of the possibility that they may nevertheless have an entitlement as a disabled worker unless the Department "which knows what questions it needs to ask and what information it needs to have in order to determine whether the conditions of entitlement have been met" asks them for the information needed to decide the issues raised by regulation 6(4)(a). In such circumstances, the principles enunciated by Baroness Hale in Kerr impose an obligation on the decision maker to consider the possible alternative bases of entitlement and to ask "the questions it needs to ask" before reaching a final decision on such a claimant's entitlement. If they do not do so, then the most probable outcome will be that the tribunal will adjourn and ask the necessary questions itself. However, in the last resort there is the possibility that a failure to ask the right questions will result in the issue being determined against the Department in the same way as the issue in Kerr was.
28. I therefore reject the Secretary of State's submission that the tribunal was entitled not to consider the possible application of paragraph 8 of Schedule 1B simply because neither the appellant nor her representative raised the issue. It was for the Secretary of State to have satisfied himself that the appellant did not fall into another prescribed category before making the decisions that he made on 10 December 2002, but he did not do so. He should also have raised the possibility that the appellant fell within paragraph 8 in his written submission to the tribunal. He did not do that either. He cannot rely on those omissions to support a submission that the issue was not one that was raised by the appeal.
29. For those reasons, the tribunal erred in law by failing to consider the possible application of paragraph 8 of Schedule 1 and I must set its decision aside. I therefore turn to consider the directions that I should give to the new tribunal. Three issues in particular require further discussion. The first concerns the missing incapacity decision, the second the proper interpretation of regulation 6(4)(a), and the third the calculation of the appellant's earnings should she be found to have been a "disabled worker" within that paragraph.

The missing incapacity decision

30. I am not sure that the parties to the appeal have fully appreciated the implications of the fact that no copy of the original decision by the incapacity decision maker (i.e. that the appellant was to be treated as capable of work) has been produced and that that decision appears to have been mislaid or destroyed.
31. This is an overpayment appeal. It is therefore for the Secretary of State to show that the decision under which the allegedly overpaid benefit was originally paid:

"has been reversed or varied on an appeal or has been revised under section 9 or superseded under section 10 of the Social Security Act 1998"

(see section 71(5A) of the Social Security Administration Act 1992 ("the Administration Act")). The requirements of that section have recently been considered by Mr Commissioner Bano in CIS/3228/2003 and Mr Commissioner Williams in CIS/170/2003 and the new tribunal will want to have regard to what is said there about the general principles to be applied.

32. However, a particular difficulty arises for the Secretary of State on the facts of this appeal. The ground on which it is said that the award of income support should be superseded is a previous, conclusive, decision of a different decision maker that the appellant was capable of work. Although it is a matter for the new tribunal to decide, it is difficult to see how the Secretary of State will be able to discharge the burden imposed by section 71(5A) of the Administration Act without producing the incapacity decision, or at the very least, much more detailed evidence of its terms than has been made available so far.
33. In particular, the Secretary of State seeks to support a decision that, because of the appellant's fluctuating pattern of work, she was not entitled to income support in certain weeks but was entitled in others. No explanation has been given as to why any individual week has been allocated to one of those categories as opposed to the other. The allocation is certainly not self-evident from the schedule of payments which the appellant received from B. S. Limited and is in any event a complex matter because:

(a) the "week" during which the claimant is treated as capable of work is not the same as the "week" which is used for the purposes of income support. The former period is fixed and runs from Sunday to Saturday. The latter is a "benefit week" which is determined in accordance with paragraph 4 of Schedule 7 to the Social Security (Claims and Payments) Regulations 1987. In the particular circumstances of this appeal, the two "weeks" should be the same (because before she started work, the appellant would have been entitled to incapacity benefit if she had paid sufficient contributions). But it is not clear that the rule has been correctly applied. In particular, 11 October 2000 (which is said to be the first day of the first period of non-entitlement) was a Wednesday, not a Sunday. I cannot immediately see how that can be correct.

(b) if, for some reason, the appellant's income support benefit week did not run from Sunday to Saturday, there is the additional problem for the Secretary of State that under regulation 4ZA(4) of the Income Support Regulations, if the appellant was incapable of work for even one day in a benefit week she is treated as falling within that prescribed category for the whole of the week.

34. I strongly suspect that the reason for the uncertainty as to the basis on which the appellant has been held to be entitled to income support for some weeks but not other is that the income support decision maker has simply taken the periods from the incapacity decision (which, as I have said, were conclusive) and assessed entitlement to income support accordingly.
35. But, if that is so, then it is necessary to know the precise terms of the incapacity decision in order to show that the decision awarding income support has been correctly superseded. Not only are the terms of that decision not known with any precision at present: the only evidence that is available strongly suggests that the income support award may not have been properly superseded. All that is known of the incapacity decision is that the appellant was to be treated as capable of work for various periods between 11.2.01 – 17.8.02 (see paragraph 4 above). It is very hard to see how a decision by the incapacity decision maker that the appellant is to be treated as capable of work from, at the earliest, 11 February 2001 can form the basis of a subsequent decision to supersede her income support for periods beginning on 11 October 2000.
36. The Secretary of State may therefore wish to redouble his efforts to find the incapacity decision before the new tribunal re-hears this appeal.

Was the appellant a "disabled worker"?

37. The question will only arise if the tribunal decides first that the Secretary of State has established a valid supersession for the purposes of section 71(5A) of the Administration Act and that there was at least one week during which the appellant was treated as capable of work. In those circumstances, the following principles apply:

(c) Regulation 6(4)(a) only applies to the appellant in respect of weeks during which she was actually in employment. Mr Commissioner Rice so decided in CIS/15/1997. That appeal concerned the predecessor to the current regulation 6(4)(a) but the wording is the same. Mr Rice's decision was recently followed by Mr Commissioner Henty in CIS/1997/2002. The commentary to paragraph 8 of Schedule 1B in Social Security Legislation 2004 (Bonner et al. Vol. II, pp. 505-506) which suggests that regulation 6(4)(a) may apply in some circumstances in which the claimant's earnings, or hours worked, are nil, appears to have been written without reference to those decisions. The regulation requires a comparison between what a claimant actually earns (or the number of hours she actually works) and what a person without a disability would be expected to earn (or the hours that person might be expected to work) "in that employment or in comparable employment in the area". The basis for that comparison only exists if the claimant is in employment.

(d) There is no definition of what might amount to a mental or physical disability for the purposes of regulation 6(4)(a), so whether or not the appellant is "mentally or physically disabled" is a question of fact for the new tribunal to decide, having regard to what I say at paragraph 22 above.

(e) If the new tribunal decides that the appellant is "mentally or physically disabled", then it will also need to make findings on

(i) What was the nature of that disability?

(ii) How many hours did the appellant work?

(iii) How many hours would a person without that disability reasonably be expected to work in that employment or in comparable employment in the area?

(iv) How much did the appellant earn?

(v) How much would a person without that disability and working the same number of hours reasonably be expected to earn in that employment or in comparable employment in the area?

(f) If the appellant does come within regulation 6(4)(a), then she is treated as not being in remunerative work even if she in fact works for more than 16 hours a week.

38. Income support is a weekly benefit and therefore the appellant's solicitors are correct to say that this issue—and the appellant's deemed capacity for work—are to be considered on a week-by-week basis. However, if the evidence does not permit facts to be found in relation to particular weeks, the tribunal is entitled to reach a decision based on what is more likely than not to be the case given the totality of the evidence available. In practice such an approach will necessarily involve taking some sort of average. If the appellant's solicitors remain of the view that her case would be served by a detailed week-by-week analysis of the payments that she actually received from B. S. Limited, then they should provide the tribunal with such an analysis (which, in practice, will involve the preparation of an appropriate schedule).

Earnings

39. Even if the tribunal finds that the appellant was a disabled worker, there may still be an overpayment arising from the fact that the appellant had earnings that were not taken into account. The appellant will be entitled to the benefit of any disregards that may be applicable to those earnings under Schedule 8 to the Income Support Regulations (as it was worded during the period in which the earnings were received).

Conclusion

40. For these reasons, my decision is as stated in paragraph 2 above.

(Signed on the original)

Richard Poynter
Deputy Commissioner
15 February 2005