UK Social Security and Child Support Commissioners' Decisions

 


CIB 1602 2006

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. I allow the appeal. For the reasons below, the decision of the tribunal is wrong in law. It is set aside. I replace the decision with the decision that the tribunal should have taken. This is:

Appeal allowed. The appellant satisfies the contribution conditions for his claim for incapacity benefit made with effect from 16 04 2004.

The appeal is referred to the Secretary of State to consider whether the appellant is entitled to incapacity benefit from that date.

2. The claimant and appellant ("D") is appealing with my permission against the decision of the Colchester tribunal on 20 04 2005 under reference U 42 132 2005 00198.
3. I held an oral hearing of this appeal on 13 03 2007 in London. D was present with his father. They were represented by Vicky Lord of the Free Representation Unit acting with Keith Gordon. The Secretary of State was represented by Sarah Wise of the Office of the Solicitor to the Department for Work and Pensions, accompanied by Jennie Bull. I am grateful to each of them for their detailed skeleton arguments and thorough submissions to the hearing.
4. I indicated at the hearing that I would be setting the decision of the tribunal aside and would then consider the decision on its merits. As discussed at the hearing, I directed the Secretary of State to produce, so far as available, further information about D's appeal and to make a submission more generally about procedures for handling claims of this kind. The secretary of state's representative has responded fully to that direction. I have also received submissions from Ms Lord and Mr Gordon in response.

REASONS FOR THE DECISION

The facts

5. D suffered serious injuries from a road traffic accident some years ago. Among other permanent injuries were partial paralysis, dyspraxia, personality changes and epilepsy. Despite this, D looked for work. He received JSA (jobseeker's allowance) from 06 2001 to 15 04 2003. His award was stopped on 26 7 2002 when he went abroad. It was restarted on 15 8 2002 and paid until 15 04 2003. He again found work, and had a job in early 2004. He was then formally prevented from continuing to work with children after a brief period by the Secretary of State for Education because of his disabilities. He reclaimed JSA. He was told that he should be claiming incapacity benefit. He did so on 19 04 2004. It was refused. He appealed.

Handling D's appeal

6. The original decision under appeal was identified in the submission by the Secretary of State as being:

"[D] is not entitled to receive payment of incapacity benefit on his claim from 16 04 2004 because the contributions conditions are not satisfied"

That is a decision purely about contribution conditions. That decision was reconsidered and affirmed in correspondence between D and his father and the Jobcentre, and later between their Member of Parliament and an official replying on behalf of the Minister of State. The correspondence also concerned complaints made by D about official administration of his case. It has been explained to D that a Commissioner cannot consider those complaints, and I therefore do not discuss that aspect of his correspondence.

7. The key letter of 26 04 2004 from the Jobcentre to D explaining the initial decision to refuse benefit is not in the papers. What we do know is that D challenged the decision on 9 05 2004 on the ground that:

"I believe therefore that my NI contributions were paid throughout this time sufficiently to qualify me for incapacity benefit."

So D immediately challenged the accuracy of his contribution record. It is clear from context that in that letter he was challenging credited earnings for JSA as well as actual contributions paid. Correspondence between the Jobcentre and D followed. Later, D's Member of Parliament and a Minister at the Department for Work and Pensions were both drawn into the dispute. That correspondence looked closely at the contributions D had paid and the credited earnings to which he was entitled. The usual question in dispute in appeals, namely whether D was capable of work, appears to have been conceded in D's favour throughout.

8. The same approach was adopted in the formal submission to the tribunal by the secretary of state's representative. It stated:

"4.2 Details of [D's] NI contribution record were received, which showed that [D] had not paid or been credited with sufficient contributions in the two relevant tax years to satisfy the second contribution condition. Accordingly, on 26 04 2004 the decision maker gave the decision [above]…

4.3 [D] queried the decision on 12 05 2004 and his contribution record was checked again. It was confirmed that [D] had received jobseeker's allowance (and had been credited with NI contributions) between June 2001 and April 2003. However, his claim had ended on 26 07 2002 because he had gone abroad and could not be treated as actively seeking employment. [D] had then reclaimed jobseeker's allowance from 15 08 2002. Therefore, his contribution record for the 2002-03 tax year was incomplete. [D] was advised of the result of these investigations on 13 07 2004."

The tribunal decision

9. The tribunal's formal decision was to dismiss D's appeal. But its reasoning does not support that decision. What it actually did was to reject the appeal without considering its legal merits. It is not clear whether this was because it considered that there was no power to appeal against the decision of the Secretary of State or because it considered that there was no decision to appeal.
10. In its reasons, the tribunal set out some comments on the issue of NI contributions and their application to the appeal. It then stated:

"The adequacy or otherwise of National Insurance contributions is entirely a matter for the Secretary of State, as a matter of law, nevertheless, it is all too obvious to everyone how the problem occurred..."

This appears to suggest that the tribunal considered the decision unappealable. It then commented on complaints about administration made by D and concluded:

"I explained to [D] that that cannot be a matter justiciable before the tribunal. … I have to conclude that there is nothing which the tribunal can do, given the admitted deficiency in contributions and given the Secretary of State having stated that there is such a deficiency which is the reason for his not qualifying for Incapacity Benefit."

The tribunal observed in its decision:

"The detailed rules and facts relating to the origin of this problem are more than adequately set out in the submissions of the Department for Work and Pensions which I accept together with a very helpful letter written to D on 17 12 2004 from Jobcentre plus following the intervention of D's Member of Parliament".

In referring to the "origin of the problem" but also declining to investigate that origin, the tribunal appears to consider that there is nothing for it to investigate in that aspect of the appeal. But it does not say why.

11. The tribunal plainly failed to address the substance of D's appeal but appears to be uncertain why it declined to do so. The parties, in their oral and written submissions came up with several different approaches to the issue D had appealed to the tribunal. But all of them start from the acceptance that the tribunal's decision was wrong in law. I agree. The decision leaves it unclear why the tribunal refused to consider D's appeal to it. But in addition the parties, as I detail below, could not agree what, if anything, was the decision under appeal to the tribunal. Nor could they agree on the proper way forward at this stage of the appeal once the decision of the tribunal was set aside. I must therefore look at the procedural provisions in detail before turning to the specific substance of D's appeal.

Decisions about contribution records

12. It is clear what D wanted to dispute. He wanted to know why his contribution record was deficient and prevented him claiming incapacity benefit.
13. Decisions described as being decisions refusing "credits" are regularly seen by tribunals and Commissioners. But there is a recurring difficulty such as that in this case about pinning down the decision about the contribution record. Commissioner Rowland considered this in his interim decision CIB 3327 2004. In a detailed examination of the processes behind an appeal with some similarities to this, he identified serious flaws in the departmental processes dealing with these common problems. Among those flaws was a failure to recognise the need for a decision about the addition of credited earnings to the contribution record of a claimant claiming a contributory benefit. He summarised his views as follows:

"Above all, a system needs to be put in place to ensure that challenges to refusals of credits result in formal decisions that comply with regulation 28 of the 1999 Regulations and inform the contributor of his or her right of appeal. That is so whether credit decisions are to be made during the relevant contribution year or after it has ended."

Having made those criticisms, the Commissioner took the view in that case that there was no appealable decision before the tribunal or him. He therefore had no jurisdiction to do other than refer the matter back to the Secretary of State.

14. That decision was made a year ago. It was an interim decision. I understand that as a result of later proceedings in the appeal the matter has now ceased to be an active appeal and that therefore the Commissioner will not be issuing a final decision. I have also seen no official response to that decision beyond the specific case. I therefore consider that I should adopt and repeat some of that analysis as it applies to this case in order to make clear why I entirely agree with him that the existing situation does not accord with the law. I depart from the approach of Commissioner Rowland in taking the view that in this case there is an appealable decision. But his criticisms of the lack of system are clearly part of the explanation for the confusion on the part of the secretary of state's representatives and the tribunal in this case.
15. In practical terms, the starting point for identifying the systems failures revealed by this appeal is with the official guidance with which it may be assumed officials were working. This is to be found in the relevant parts of the Decision Maker's Guide ("DMG") published by the Department for Work and Pensions.

The DMG guidance

16. The guidance relevant to this appeal is in two volumes that are not cross-referenced to each other. The guidance in one of the volumes is now seriously out of date. The paragraphs apparently most relevant to this appeal are those dealing both generally with the contribution conditions for incapacity benefit and similar contributory benefits and with the second contribution condition. The opening paragraph of this part of the DMG states:

"56008 With the exception of IB youth provision for persons incapacitated in youth (see DMG 56019 et seq), there are two contribution conditions for IBST for people under pension age1. The DM decides whether the contribution conditions are satisfied. This involves deciding the commencement of a PIW2.

1 s 30A(1) & Sch 3, Part 1, para 2; 2 Secretary of State v. Scully [1992] 4 ALL ER 1"

After setting out details of the first and second contribution conditions, the DMG continues:

"56014 The DM determines1

1. earnings factors

2. whether contributions or credits are of a relevant class

3. what are the relevant years.

1 SS A Act 92, s 17(1); Secretary of State v. Scully [1992] 4 ALL ER 1

56015 If an issue arises in respect of NI Contributions, HMRC is responsible for deciding

whether1

1. a person is or was liable to pay contributions of any particular class, and if so,

the amount he is or was liable to pay2 or

2. a person is or was entitled to pay contributions of any particular class, and if

so, the amount he is or was entitled to pay3 or

3. contributions of a particular class have been paid in respect of any period4 or

4. whether contributions have been paid at the right time.

1 SS CS (D&A) Regs, reg 11A,

2 SSC (ToF) Act 99, s 8(1)(c); 3 s 8(1)(d); 4 s 8(1)(e)."

Those paragraphs are in volume 3, chapter 56. They contain errors of law.

17. In volume 1, chapter 1, there is more accurate guidance:

Reference to HM Revenue and Customs [HMRC]

01055 Entitlement to SS contributory benefits depends on the contribution conditions being satisfied. In practice the NI contribution record is usually obtained and any decision is based on the assumption that the record is factually correct. However, where there is a dispute about the record, the matter must be referred by the Secretary of State to HMRC for a formal decision1. See DMG Chapters 03, 04 and 06 for guidance on how decisions and appeals are handled after a reference to HMRC.

1 SS CS (D&A) Regs, reg 11A and 38A

01056 The Secretary of State will remain responsible for deciding whether the contribution conditions are satisfied in relation to benefits including

1. the earnings factor derived from them

2. which are the relevant income tax years

3. the years in which the contributions must have been paid or credited

4. the commencement of a PIW

5. the start of the relevant benefit year.

Home Responsibilities Protection and credits

01057 The Secretary of State will also remain responsible for deciding HRP and credits questions1. In practice all HRP and some credits decisions (for example, jury service, starting credits) will be taken on his behalf by HMRC2.

1 SS Act 98, Sch 3 paras 16 & 17; 2 SSC (ToF) Act 99, s 17

18. Chapter 3 of Volume 1 gives more detailed guidance:

Issues for decision by HM Revenue and Customs

Introduction

03230 Since 5.7.99 HMRC (formerly the Board of the Inland Revenue) has been

responsible for making decisions on NI contributions issues previously determined by the Secretary of State1. A list of these, together with exceptions is at Annex C to this Volume.

1 SS C (ToF) Act 99, s 8(1)

03231 Entitlement to SS contributory benefits depends on the contribution conditions being satisfied. In practice the NI contribution record is usually obtained and any decision is based on the assumption that the record is factually correct. However, where there is a dispute about the record, the matter must be referred by the Secretary of State to HMRC for a formal decision.

When to refer to HM Revenue and Customs

03232 Where the DM considers that before deciding an application for revision of a decision made on an assumption of facts a formal decision by HMRC is required, the issue must be referred to HMRC1.

1 SS CS (D&A) Regs, reg 11A(1)&(2)

Example

A claim for JSA (Cont) is disallowed because the NI record shows no contributions for the two tax years before the benefit year in which the date of claim fell. All other conditions of entitlement are satisfied. The claimant applies for the decision to be revised on the ground that she was employed for several years immediately before claiming benefit, and her wage slips show NI deductions. The DM refers the question of whether contributions should be treated as paid to HMRC. HMRC decides that contributions should be treated as paid for the period of employment. The DM revises the disallowance and awards JSA.

03233 While a decision of HMRC is awaited, the DM can1

1. determine any other matter on the application

2. decide the application on the basis of a preliminary opinion of HMRC on the issue referred to them

3. defer making a decision on the application.

1 SS CS (D&A) Regs, reg 11A (3)

03234 Where the reference was made following an appeal, it is not possible to make a further decision until HMRC's decision is received. The appeal should not be lodged with the TS.

19. It can be seen that this guidance is internally inconsistent. Compare 01055 and 01056 with 56014. And it also guides administrators to make assumptions about contribution issues rather than decide them. See 01055 and 03231. And it does not tell the administrators to make it clear that their decisions depend on assumptions about a claimant's NI record rather than decisions about it. In my view the instruction to officials to make undisclosed assumptions about contribution issues combined with the failure to make it clear that there has been no decision on a contribution question have contributed to the systems failure to which Commissioner Rowland draws attention. In particular, there is a recurring failure to make a clear appealable decision on a question of credited earnings and a system in place that enables administrators to avoid the need to make the required decisions. This may explain why, even in this case where there was a decision, it has been assumed that there was no decision.

The law: contribution conditions

20. I must now examine why a decision about contribution conditions was necessary. D's claim is for incapacity benefit. It is a contributory benefit. It can be claimed only by those who meet both the required contribution conditions for the benefit set out in Schedule 3 paragraph 2 to the Social Security Contributions and Benefits Act 1992 ("the 1992 Act").
21. There are two conditions. The first is that the claimant must have actually paid a set number of contributions in one of the three previous contributions years to the year in which the claim is made. It is common ground that D had paid the necessary contributions to meet this condition.
22. The second contribution is defined in paragraph 2 sub-paragraphs (3) to (6) of Schedule 3. It is that:

"(a) the claimant must in respect of the last two complete years before the beginning of the relevant benefit year have either paid or been credited with contributions of a relevant class or been credited with (in the case of 1987-88 or any subsequent year) with earnings; and

(b) the earnings factor derived as mentioned in sub-paragraph (5) below must be not less in each of those years than the year's lower earnings limit multiplied by 50."

The relevant part of sub-paragraph (5) provides:

"The earnings factor referred to in paragraph (b) of sub-paragraph (3) above is that which is derived –

(a) if the year in question is 1987-88 or any subsequent year –

(i) from earnings upon which primary Class 1 contributions have been paid or treated as paid or from earnings credited…"

23. It is common ground that D claimed incapacity benefit in the year 2004-05, and that therefore he had to meet the second contribution condition in the two years 2002-03 and 2003-04. It is also common ground that D met the second contribution condition for the year 2003-04 by credited earnings. The disputed year is 2002-03. It is common ground that D did not pay any Class 1 (employed earner's) contributions in that year and did not claim any incapacity benefit in that year. The question is therefore whether D met the second contribution condition in 2002-03 by reference to credited earnings for periods when he was unemployed.

The law: credited earnings

24. Provision is made to allow credited earnings under section 22(5) of the

1992 Act. This provides, as relevant to this appeal:

"Regulations may provide for crediting-

(a) for 1987-88 or any subsequent year, earnings …

for the purpose of bringing a person's earnings factor for that tax year to a figure which will enable him to satisfy contribution conditions of entitlement to … any prescribed description of benefit …"

This applies to D's claim for incapacity benefit. It makes clear that credited earnings can only apply when the individual has not paid enough actual contributions for the year. This, equally clearly, can only be decided after the end of the tax year, which occurs in April each calendar year. (For employed earners this will be in practice after the time limit in the following May or June when all employers are required to make a return of total contributions collected for their employees during the year ending in April. See Schedule 4, paragraph 22 to the Social Security (Contributions) Regulations 2001 (SI 2001 No 1004)).

25. The regulations allowing credited earnings for periods of unemployment are regulations 3 (general provisions relating to the crediting of contributions and earnings) and 8A (credits for unemployment) of the Social Security (Credits) Regulations 1975 ("the Credits Regulations") (SI 1975 No 556). These are complicated and much amended regulations. Little attention has been paid for years past to the structure of the Credits Regulations and the way that they are empowered by, and link to, section 22(5) of the 1992 Act and its predecessors back to section 13 of the Social Security Act 1975. The Regulations follow the usual pattern of stating the commencement provisions in regulation 1 and definitions in regulation 2. Regulation 3 then lays down general provisions relating to the crediting of contributions and earnings. Regulations 4 to 9D follow with provisions for specific forms of credit or credited earnings in specific situations. It is abundantly clear from this that, reflecting the authority granted in section 22(5), regulation 3 is to be applied in each case along with the specific regulation. That has not happened here. As Commissioner Rowland commented in CIB 3327 2004, regulation 3 is rarely mentioned in connection with the award of credited earnings. It is not the subject, so far as I can see, of any comment in the DMG. Nor has it been mentioned in this appeal.
26. The Credits Regulations have been amended many times since first being written. The most important of the amendments – only partially executed – take account of the abolition of contribution credits on 6 04 1987. From that date (the start of the tax year 1987-88) the previous system of awarding weekly credits was abolished. It was replaced by a system of crediting earnings and earnings factors to a claimant only when necessary at the end of a tax year. Commissioner Rowland explores these concepts in CIB 3327 2004, and I do not repeat that. The difficulties in cases such as this are because the fundamental change in the nature of contribution "credits" does not appear yet to have been absorbed into the relevant administrative processes for identifying and awarding credited earnings. That failure is in part hidden because of a failure fully to amend the Credits Regulations themselves to reflect the changes made in 1987.
27. The key parts of regulation 8A of the Credits Regulations as applied to D's claim are in paragraphs (2) and (3). These provide:

"(2) Subject to paragraph (5) this regulation applies to a week which, in relation to [D], is –

(a) a week for the whole of which he was paid a jobseeker's allowance, or

(b) a week for the whole of which he satisfied or was treated as having satisfied the conditions set out in paragraphs (a), (c) and (e) to (h) of section 192) of the jobseekers Act 1995 (conditions for entitlement to a jobseeker's allowance) and in respect of which he has satisfied the further condition specified in paragraph (3) …

(3) the further condition referred to in paragraph (2)(b) is that [D] –

(a) furnished to the Secretary of State notice in writing of the grounds on which he claimed to be entitled to be credited with earnings -

(i) on the first day of the period for which he claims to be entitled in which the week in question fell; or

(ii) within such further time as may be reasonable in all the circumstances; and

(b) has provided any evidence required by the Secretary of State that the conditions referred to in paragraph (2)(b) are satisfied.

28. It is common ground that the provisions of paragraph (5) do not apply here. There is disagreement about the application of the provisions in section 1 of the Jobseekers Act 1995, and I must look at that. Before I do so, I must consider the procedural requirement of regulation 8A(3) together with regulation 3.

Claiming credited earnings under regulation 8A

29. On a literal reading of regulation 8A(3)(i), an individual who was not claimed JSA but who considers that he or she meets the specific tests in that Act identified in regulation 8A must give notice in writing:

"on the first day of the period for which he claims to be entitled in which the week in question fell".

30. Regulation 3 of the Credits Regulations, following the authority of section 22 of the 1992 Act, provides that entitlement to credited earnings can arise only after the end of the tax year for which they are claimed. What then is the "first day of the period" for the purposes of regulation 8A(3)(a)(i)? Parliament cannot be regarded as granting entitlements beyond the limits set out in section 22(5) and reflected in the general condition in regulation 3. So the period cannot start until it is known that a claimant is entitled to claim credited earnings. That cannot be until, at the very least, the end of the tax year for which the claim is made. In practice, as we have seen, it will be some weeks later before HMRC, and in many cases also the claimant, has a clear picture of the claimant's contribution record. It is only then that HMRC is in a position to calculate the earnings factors for the year derived from contributions paid and then the earnings factor, if any, for credited earnings to which the claimant is entitled for periods where HMRC is responsible in practice for the decisions. It is only then that it can be seen whether there is entitlement to a further earnings factor in respect of further credited earnings under regulation 8A. And a claimant cannot claim to be entitled to credited earnings under this regulation until it can be established that such an entitlement exists to be claimed.
31. The incompatibility between regulation 3 and regulation 8A is more extreme than that. Unemployment credits, to give them their common but inaccurate title, are available under regulation 8A(2)(b) only if a claimant was both available for work and actively seeking work during the week in question. Let us assume that D met these requirements when claiming credited earnings. If D was actively seeking work then he might have found it. How therefore can he say on the first day of the period in which he was actively seeking work (but not receiving JSA) that he was not going to find any work during the period, so that he was entitled to claim credited earnings? If he did say that, then Jobcentre officials could respond by stating that in that case he was not entitled to claim because he was not genuinely actively seeking work. The interpretation of "the period" to mean the period when a claimant first started actively seeking work creates, in my view, an absurd contradiction under which no claimant could ever qualify under regulation 8A(2)(b). It has a distinct flavour of "Catch 22". If you are actively seeking work in the period just starting, then you must assume that you will probably find it and you therefore cannot say that you are entitled to credited earnings. You therefore cannot claim them. If you are not actively seeking, then you do not qualify for credited earnings in any event. You therefore cannot claim them.
32. With these problems in mind, I asked the Secretary of State after the oral hearing to give me details of how these provisions are operated. A copy of the booklet Jobseeker's Allowance and getting back to work was produced. The only passage relating to this issue is on page 22 where it states:

"National insurance (NI) contributions

Unless you are told otherwise, National Insurance contributions

will be credited to you while you continue to satisfy the JSA entitlement conditions."

My attention was also drawn to paragraph 02002 of the Decision Makers Guide. This reads:

"National insurance credits

02002 The Department is responsible for making decisions on NI credits. Because the method of claiming or applying for them is not the same as it is for benefits, information about them is contained in the relevant operational guides."

This is to be read with the extracts from the Decision Makers Guide set out above. Instructions to officers in Jobcentres Plus about holidays were also produced, along with relevant forms. These help understand how the jobseeking conditions were applied to D. They do not help on this point. The secretary of state's representative candidly added to this that "unfortunately there is little else". There is no standard form, and there is no specific approach required or requested, for those who are not claiming JSA but are claiming unemployment credits.

33. My conclusion is that the requirement that a claimant claims credited earnings under regulation 8A at the start of the period of non-payment of JSA simply does not work. But it does not need to. There is a fallback rule available in regulation 8A(3)(a)(ii) in every case. So I need take the analysis no further. Reading the Credit Regulations as a whole in the context of the Act, in a case such as this the Secretary of State can do no more than require that a claimant makes a claim in writing, setting out the grounds for it, within a reasonable time of becoming entitled. That is a question of fact. It will take into account the guidance given to a claimant (all of which is set out above, unless something is added orally).
34. Noting the guidance and correspondence put in evidence to the tribunal in this appeal, I have little difficulty in finding on the facts that D's correspondence with the Jobcentre and with the Member of Parliament and the Minister did raise the matter adequately in writing and within a reasonable time.

The law: deciding a disputed credits question

35. Once D had claimed, the next issue is to identify how the decision was or should have been taken about the claim.
36. The records of contributions and credited earnings are kept by NICO (the National Insurance Contributions Office of HMRC, which is part of and under the responsibility of HMRC (Her Majesty's Revenue and Customs). Full responsibility for maintaining the NI contribution record system, including taking the necessary decisions, was transferred by the Social Security (Transfer of Functions) Act 1999 from the Department of Social Security to the Inland Revenue. See section 8 of that Act. It now rests with HMRC by reason of the Commissioners for Revenue and Customs Act 2005, sections 5 and 7 and Schedule 1. Any question about the employment status of an individual, the duty or entitlement to pay contributions, the contributions actually paid, and the earnings factors from those contributions are matters for decision by HMRC. All "in year" decisions about a claimant's contribution record are therefore taken by officials at NICO as part of HMRC. NICO keeps the records of all contributions paid as and when they are assigned to an individual contributor's record. And it is NICO that keeps the full record for future reference both for HMRC and for the Secretary of State for Work and Pensions.
37. As part of those records, it keeps a note of any payment of JSA to an individual and accordingly logs the availability of credited earnings in respect of that payment. That is then available to deal with actual or potential entitlement to credited earnings under regulation 8A(2)(a) of the Credits Regulations.
38. However, we have seen that a decision about credited earnings under regulation 8A is not an "in year" decision. It is a decision that can only be taken after the end of a contribution year. Decision under both regulation 8A(2)(a) and regulation 8A(2)(b) are decisions that can only be made after the year.
39. The procedures noted in the previous paragraph deal with the regulation 8A(2)(a) decisions by providing NICO and therefore the Secretary of State with the necessary information. There does not appear to be any equivalent procedure for dealing with regulation 8A(2)(b) issues, including the making of decisions about that provision. The necessity for, and nature of, any decision under regulation 8A(2)(b) is another matter in dispute between the parties.
40. The 1999 Transfer of Functions Act transferring responsibility for contribution records from the Secretary of State took effect at the same time as other changes under the Social Security Act 1998. Before the 1998 Act, a decision about contributions, credited earnings or earnings factors was made by the Secretary of State.
41. The formal transfers of powers under the 1999 Act took place under section 8 of that Act. That does not apply to decisions about credited earnings under regulation 8A. The relevant decisions therefore remain with the Secretary of State as decisions to be made under section 8(1)(c) of the Social Security Act 1998. This is confirmed by the express power granted to appeal against such a decision by section 12(1)(c) of that Act read with Schedule 3 to the Act. Schedule 3, paragraph 17, provides that the following is an appealable decision under section 12:

"A decision whether a person is entitled to be credited with earnings or contributions in accordance with regulations made under section 22(5) of the Contributions and Benefits Act."

Those regulations are, as we have seen, the Credits Regulations. A decision on a regulation 8A matter is therefore a decision to be made under section 8(1)(c) of the Social Security Act 1998 by the Secretary of State. And an appeal lies to an appeal tribunal under section 12(1)(b) of that Act.

42. In some cases, there may first have to be a decision using the power that has been transferred to HMRC. If, for example, D claimed that he had made actual contributions that HMRC had not put on his record, then NICO would need to make a formal decision about the point. We have seen that the instructions to DWP officials are to assume that anything said by NICO is accurate. Once that assumption has been challenged, only NICO can deal with the point. That may require formal reference of the disputed point to HMRC by the Secretary of State. The procedure for doing this is provided in regulations 11A and 38A of the Social Security (Decisions and Appeals) Regulations 1999 ("the Decisions Regulations").
43. There is no need for such a reference in this case. It is now common ground that there are no questions in issue in the appeal about actual contributions. The previous issue about Class 3 contributions paid by D is no longer a live issue. The Secretary of State accepted that the first condition was met, and the failure to meet the second condition was clearly, at the time the incapacity benefit decision was taken, a decision purely about entitlement to credited earnings. We can therefore rely on section 12(8)(a) to accept the actual contribution record as produced by HMRC and as not disputed by D.
44. The decision required for D under regulation 8A(2)(b) is therefore a matter for the Secretary of State to decide and for the tribunal, on appeal, to consider in full. It is for this reason that this tribunal was entirely wrong in its approach.

The decision in this case

45. We are now in a position to see what this tribunal should have decided. The two parties have completely different views about this. For D, Mr Gordon argued strongly at and after the oral hearing that I should take the decision that the tribunal should have taken on the appeal, and that I should find that D was entitled to sufficient credited earnings to meet the contribution condition in full in 2002-2003. His argument for this was based on the view that what I had to decide was not the contribution condition but the outcome decision. The question to be answered was: Was D entitled to the benefit he claimed? Whether or not he met the contribution conditions was merely a building block on the way to that outcome decision. I have jurisdiction to decide all the "building block" decisions, so could decide this.
46. The view of the Secretary of State evolved as the appeal proceeded. The initial view was that the decision on credited earnings had been taken at the same time as the decision to end the award of JSA in 2002. That was later rightly abandoned. The submission made after the hearing was put on an assumed factual basis that "it is unlikely that a decision in respect of credits was also given" when the JSA decision was made. The secretary of state's representative then submitted that I should take the same course of action as taken by Commissioner Rowland in CIB 3327 2004. The appeal should be referred back to the Secretary of State so that the Secretary of State could take the decision on credited earnings. D would then, if he wished, have the right to appeal that decision. In that way he could make the appeal he thought he had made when appealing the refusal of his incapacity benefit in 2004. A Commissioner could not go further than that. That is the only action a Commissioner could take as there was, in effect, no decision under appeal on the credited earnings issue.
47. Mr Gordon's final submission, in reply to that (and, of course, again after the hearing) rested on the "building block" argument.
48. The initial view for the Secretary of State that the decision on credited earnings was made at the same time as the decision ending JSA is plainly wrong. That cannot be so because there was no question of any entitlement to credited earnings at that time. So thee could not be a claim under regulation 8A(2)(b) at that time.
49. The other positions for which the parties argued were the untaken specific decision and the building block approach. In general terms, I agree with the views of Commissioner Rowland in CIB 3327 2004 and the final submission for the Secretary of State on this. The series of assumptions and failures identified by Commissioner Rowland and in this decision mean that the likely position in an appeal like this is that the Secretary of State has not yet dealt properly with the question of credited earnings. Again in similar general terms, I do not accept the superficially attractive solution offered by Mr Gordon. I do not do so specifically because of the designation of a credited earnings decision as an appealable decision in paragraph 17 of Schedule 3 to the 1998 Act. D, and any similarly placed claimant, is entitled to a specific appealable decision on any entitlement to credited earnings if a claim has been made. The Secretary of State should, where the position is challenged, stop using an assumption about the contribution record and make a decision about it.
50. However, the basis of the decision actually under appeal here is different from that in CIB 3327 2004. I have found that there was a claim under regulation 8A for the contribution year 2002-03 and that that claim was considered in detail by the Secretary of State. Any ambiguity about D's claim for credited earnings was in my view removed by the correspondence between the Member of Parliament and the Minister. And those issues were all before the tribunal. The letter to which the tribunal referred expressly deals with the issue of credited earnings. This was a decision and not an assumption. The correspondence expressly states that the record had been checked and a view taken about D's holiday (when the earnings gap occurred). Further, the reason why the decision to maintain the refusal to credit additional earnings to D is also clear, and was also before the tribunal. It is because D was out of the United Kingdom at the relevant period.
51. When the tribunal considered D's appeal, there was an appealable decision about credited earnings taken as part of the refusal of incapacity credit. In that factual sense, I accept Mr Gordon's "building block" argument as an appropriate approach to this appeal. This is not because of the usual system of decision making (or, more accurately, the system of not making decisions) but because of the persistence of D and his father in challenging the assumptions made by the Jobcentre. It led to the usual assumptions being replaced by a specific decision that there were no further credited earnings due.

The gap in credited earnings

52. The contribution record in the papers shows that D was credited with earnings equal to an earnings factor sufficient to be equivalent to the contributions payable for 48 weeks as a result of the JSA paid to him in that year. It is common ground that those are the only earnings and credited earnings for the year so far determined as being available to D and that are relevant to the claim for incapacity benefit.
53. The gap in the record is not stated in the official contribution record. But it has been noted on the benefit record. JSA was stopped on 26 07 2002 and restarted on 15 08 2002. The letter to the Member of Parliament confirms this. JSA was not paid from 27 07 2002. It was paid from 15 08 2002. That is consistent with the computer records produced. JSA was therefore stopped for a period starting on Saturday 27 July 2002 and ending on Wednesday 14 August 2002. The actual period of absence was 19 days. For JSA purposes it appears to have been assumed to be two benefit weeks and part of two further benefit weeks, and so to have been four weeks, notwithstanding that it was actually less than three full weeks. On the information in the papers, I do not see why. I have no information about which day of the week was the relevant day on which D's benefit week started or ended. And the records have now been destroyed. I can only assume that the benefit week (as defined by JSA Regulations, regulation 1(3)) ended on a Monday or Tuesday. If it did not, D was only absent for three relevant weeks, not four. Were the matter entirely at large, it is arguable that I could therefore conclude that on the balance of probabilities D missed three weeks not four. But I do not need to take a view on that.

Entitlement to credited earnings in respect of the gap in JSA

54. In argument before me, Mr Gordon argued robustly for D that proper application of the various provisions in the Jobseeker's Allowance Regulations 1996 (the JSA Regulations) provided D with enough additional credited earnings for periods to allow him to qualify for at least two of the four weeks. This was all that was necessary to make D's entitlement to credited earnings up to the level of an earnings factor that is the equivalent of 50 weeks so as to meet the contribution condition for 2002-03. In doing so, he challenged the assumption that D was disqualified for JSA at all, as it was certainly arguable in his view that D remained both available for work and actively seeking work to the extent he was required to do during the whole of the period. I cannot now consider whether D should have been given JSA for the missing weeks. That decision was clearly taken some time ago. It was not appealed, and it is final. But I am required by regulation 8A(2) to consider the same arguments with regard to credited earnings.
55. The approach taken in submissions for the Secretary of State is that D was outside Britain at the time, so could not meet the requirements either for JSA or credited earnings. That was the basis on which the decision was defended before the tribunal. As we have seen, the tribunal made no decision on the matter.
56. The substantive requirements of regulation 8A(2)(b) for claiming credited earnings for a week when the claimant was not claiming JSA are:

"a week for the whole of which he satisfied or was treated as having satisfied the conditions set out in paragraphs (a), (c), and (e) to (h) of section 1(2) of the Jobseekers Act 1995 (conditions for entitlement to a jobseeker's allowance) …"

This applies part only of section 1(2) of the 1995 Act. Specifically, regulation 8A(2)(b) applies section 1(2)(a) (available for employment), (c) actively seeking employment), (e) not engaged in remunerative work, (f) (capable of work), (g) (not receiving full time education) and (h) (under pensionable age) to entitlement to credited earnings. But it does not apply section 1(2)(b) (entering a jobseeker's agreement), (d) (the contribution-based conditions in section 2 of the Act) and (i) (in Great Britain).

In Great Britain

57. The exact terms of regulation 8A(2)(b) are important precisely because they do not include in the tests to be satisfied the presence of the claimant in Great Britain. This was the ground on which the Secretary of State contended that D could not claim credited earnings. It is plain that in taking this view the Secretary of State has misread the regulation. There is no requirement that a person claiming credited earnings be in Great Britain at the time. So it is therefore irrelevant for that purpose that D was in fact in the United States at the time. The decision of the Secretary of State under appeal is therefore wrong. But D must show that he satisfies the conditions in section 1(2)(a) (available for employment) and (c) (actively seeking employment). The other provisions of section 1(2) are plainly satisfied here on undisputed facts save for the conclusion that D was capable of work at the time.

Actively seeking work

58. Mr Gordon started his submission on this issue by drawing attention to D's evidence that he had told the Jobcentre what he was doing. That was conceded for the Secretary of State by Miss Wise. She accepted that in fairness she could not contest that statement in the light of D's evidence and the indications in the papers as the Jobcentre had kept no other relevant records.
59. Mr Gordon next contended that D was entitled in those circumstances to the advantage of regulation 19(1)(p) of the JSA Regulations for two full weeks. That provides:

"(1) A person shall be treated as actively seeking employment in the following circumstances, subject to paragraph (2)…

(p) in any week in respect of which he has given notice to an employment officer, in writing if so required by the employment officer, that –

(i) he does not intend to be actively seeking employment, but

(ii) he does intend to reside at a place other than his usual place of

residence for at least one day…"

Paragraph (2) puts a general limit of two weeks on any period of claim allowed under this subparagraph.

60. For the Secretary of State it was contended that this did not apply because D was out of Great Britain during the whole period from which those two weeks could be drawn. These submissions, and the literature I was shown about the operation of what is termed the "holiday" rule, work on the basis that to meet all the rules a claimant must remain in Britain. We have already seen that presence in Britain this is irrelevant to a claim for credited earnings. To that extent the decision and the literature are wrong. So I need take that objection no further. I accept Mr Gordon's argument on this point.
61. D is also entitled to the advantage of regulation 19(1)(j) of those Regulations. Paragraph (1)(j) provides:

"if the award is terminated other than on the last day of a week, for the period beginning with the beginning of the week in which the award is terminated and ending on the day on which the award is terminated…"

We have seen that the contribution record assumes that D was absent for the whole or part of four weeks. I am unable precisely to say when those weeks started or finished. But regulation 19(1)(j) makes it clear that D was actively seeking employment up to the day on which he went away. Were it necessary to take the matter further, it would also be necessary then to consider if D was actively seeking employment for the rest of the week as well. That would depend on whether he had met the conditions of section 7 of the 1995 Act and regulation 18 of the JSA Regulations. Had he taken three relevant steps in that week? If I am right that the relevant last day of the week must have been either a Monday or a Tuesday, it may be that D could show that he had taken, or was to be treated as having taken, enough steps in the part of the week for which regulation 19(1)(j) operated to meet the requirements for the full week. That must be an open question if the day was a Monday. But I do not need to take that further as D is to be treated as actively seeking work for two weeks in any event.

Available for work

62. Was D available for work during that period? Yes he was, replies Mr Gordon. The concession made for the Secretary of State about notification to the employment officer of the holiday is relevant here.
63. Mr Gordon was again able to buttress D's position by a detailed examination of the JSA Regulations. D was on holiday. During that time, for the purposes of section 6 of the Jobseekers Act 1995, it was contended that D was willing to take up any employment. His record showed this. He had only stopped work because the Secretary of State for Education had stopped him working. He was able to take up any available work at any time. While he could not now work with children he was able to take on any other work for which he was capable. Mr Gordon also had an answer to the obvious retort that D was not, while in the United States of America, in the position to take up employment immediately. He had caring responsibilities both before and during the time he was in the United States. His children were with him and him alone. So he was entitled to the addition 48 hours' notice under regulation 5(1)(a) of the Jobseeker's Allowance Regulations. Had he been offered a job, he would have been able to arrange with his brother (with whom they were staying) if necessary to look after the children while he travelled back to Britain. Or he could have used the 48 hours' notice to travel back with the children and then make the arrangements.
64. I accept that argument. I do so because it links in with the point made above that D was not required to be in Britain to claim credited earnings. It may be that these circumstances are highly unusual. But the record shows that despite his serious limitations D had found work and had only stopped work because he had been prevented from continuing. He had told the local Jobcentre what he was doing and where he was going. He did not contest that his JSA was stopped. In that context, he was clearly being entirely open with the Jobcentre. I am prepared to accept that he did everything he thought he should have done and also everything that he was advised to do to keep himself available for employment while away. He was not offered a job while away, so the operation of regulation 5(1)(a) did not fall to be tested in fact. As the Secretary of State, in the absence of any records, has no evidence to offer against the evidence offered by D and through Mr Gordon, I accept that evidence.

Conclusion

65. For these reasons, I find that:

(a) It is common ground that during the periods in which D was paid JSA he

was entitled to credited earnings giving an earnings factor equivalent to

minimum contributions for 48 weeks of the 2002-03 contribution year;

(b) It is arguable that D should have received credited earnings equivalent to 49 weeks in any event, but I do not need to decide that and it is in any event not sufficient by itself to deal with the deficiency in D's contribution record for 2002-03;

(c) D did make a claim for credited earnings at a reasonable time in respect of the gap of 19 days between the periods for which he was paid JSA in 2002-03;

(d) D did not need to be in Great Britain throughout the period of a claim for credited earnings while no JSA was being paid, and the decision rejecting his entitlement because he was abroad was wrong in law;

(e) D was available for employment throughout the period when he was not paid JSA

in 2002-2003 as he did not need to be available for employment immediately;

(f) D was entitled to the benefit of regulation 19(1)(p) during a maximum of two weeks of that period so as to be treated as actively seeking employment for two of the four benefit weeks in that period;

(g) D may also have been entitled to the benefit of being treated as actively seeking work by reason of regulation 19(1)(j) but I do not need to decide that;

(h) D therefore met all relevant conditions in regulation 8A(2)(b) of the Credits

Regulations so entitling him to an earnings factor based on credited earnings for the equivalent of two further weeks of contribution in 2002-03, so bringing the total weeks of credited contributions to at least 50 weeks.

66. On that basis, D meets the secondary contribution condition for 2002-03. It is common ground that he meets the other contribution conditions. I therefore conclude that the decision that the tribunal should have made is that D had met all the necessary contribution conditions to make a claim for incapacity benefit from and including 16 04 2004.
67. In my view, it is not now open to dispute that D was otherwise than incapable of work at that time. His disablements are clear, serious and permanent. That is why he was prevented for continuing the work he had. That is why he was advised by the Jobcentre to make this claim for incapacity benefit. He was also receiving disability living allowance at the time. But I am not in a position to decide that and must refer that aspect of the decision on D's claim to the Secretary of State as it has not been decided.
68. As a concluding note, I again record thanks to Mr Gordon and Miss Lord for chasing D's unusual situation through the tortuous windings of the JSA and Credits Regulations. The result is not one I had anticipated when hearing this case. But that happens when extremely complex sets of rules interact. And I am pleased to be able to confirm that D does meet the contribution conditions for his claim in April 2004. To that I must add regret that it has taken so long to reach that result.

David Williams

Commissioner

4 10 2007

[Signed on the original on the date stated]