Upper Tribunal (Administrative Appeals Chamber)

Salford City Council [2009] UKUT 150 (AAC) (04 August 2009)
Housing and council tax benefits
liability, commerciality and contrivance

IN THE UPPER TRIBUNAL Appeal Nos. CH/577/2009

ADMINISTRATIVE APPEALS CHAMBER CH/578/2009

CH/579/2009

CH/580/2009

CH/581/2009

CH/582/2009

CH/583/2009

1. These are appeals by Salford City Council ("the Council") against decisions made by an appeal tribunal sitting at Manchester on 29 September 2008. My decisions are set out at the end of this decision.

Introduction

2. The Tribunal's decisions were to allow appeals by each of seven claimants against decisions of the Council, made in May 2008, that (1) the claimants were not entitled to housing benefit on the ground that their tenancies had been created to take advantage of the housing benefit scheme, within the meaning of reg. 9(1)(l) of the Housing Benefit Regulations 2006; alternatively (2) that housing benefit was to be determined on the footing that the claimants' accommodation was not "exempt accommodation" within the meaning of para. 4(10) of Schedule 3 to the Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006. The Tribunal's decision was therefore that each of the claimants was entitled to housing benefit, to be calculated on the footing that their accommodation was "exempt accommodation."
3. I held an oral hearing of this appeal, at which Mr Nicholas Clarke of counsel appeared on behalf of the Council, and Mr Danny Key of Support Solutions appeared on behalf of six of the claimants – i.e. all the claimants other than Miss E. Miss E had not been represented before the Tribunal and was not represented before me.
4. An appeal to the Upper Tribunal being only on a point of law, I did not receive any additional evidence. However, at the hearing both Mr Clarke and Mr Key invited me, in the event that my decision was to set aside the Tribunal's decision as wrong in law, to substitute my own decision on the evidence before me, in so far as I felt able to do so. Although I have concluded that (save in relation to Miss E's appeal) the Tribunal's decision was not wrong in law, I have though it right to indicate, in relation to the issue whether support was required and provided, what findings I would have made if I had considered that the Tribunal had not made sufficient findings. For that and other reasons which will become apparent I have considered it necessary to go into the facts in considerable detail.
5. Page references in this decision are, save where otherwise stated, to the file in Mr F's case, CH/577/2009.

The facts: Mr F's appeal and generally

6. I set out first the facts relevant to the appeals generally and to Mr F's claim in particular. (Mr F's appeal was used as the lead case for the purposes of the hearing before me, but the documents relating to the appeals relating to the other claimants are also before me). I should make clear that in setting out the facts I am not purporting to make any findings of fact. I am simply setting out what appears in the documents, but am doing so considerably more fully than did the Tribunal, in order to enable the parties' submissions, and my subsequent reasoning, to be properly understood.
7. Greenhey Property Company Limited ("Greenhey") is a private limited liability company incorporated in 1999 whose directors at the material times were Christopher Doherty and Patricia Doherty. Its registered office is at no. 70 St J Road, Salford. There is no information in the papers as to the ownership of Greenhey, but I believe it to be common ground that it is owned by Mr and/or Mrs Doherty.
8. Greenhey and/or Mr Doherty have for many years owned nos. 56, 58, 60, 62, 64, 66 and 72 St J Road, no1 D Street and no. 382 GC Street ("the Properties") which are terraced houses adapted for letting of the rooms as bedsitting rooms. As at 2003 they also owned, and were developing for the same purpose, nos. 52 and 54 St J Road. As at April 2003 the total number of rooms let was 59, with 2 paid managers and 6 frontline staff (p.178).
9. According to a note made by the Council, from documents in its possession (pp.38-42), in May 2002 Mr Doherty informed the Council that a new company, to be called "Project SJR", was to be formed, and that it would be a non profit making company. It was further stated that all the properties would be leased to Project SJR, and that Project SJR would become the landlord of the occupants of the rooms. It was stated that this would be a temporary arrangement to satisfy the requirements of the transitional housing benefit scheme (which was due to expire on 31 March 2003). (Under the transitional housing benefit scheme service charges in respect of costs incurred by a landlord in providing certain items of housing support were eligible for housing benefit).
10. On 27 May 2002 Greenhey purported to execute a lease of some or all of the Properties to Project SJR for a term expiring on 31 March 2003, at a peppercorn rent. The Council's note does not record which properties this lease purported to comprise.
11. Housing benefit payments were in fact always made to Greenhey, at the request of Mr Doherty. No housing benefit payments were made to Project SJR.
12. From the commencement of the Supporting People scheme in April 2003 supporting people contracts were awarded to Project SJR in respect of support provided by it to the occupants of the rooms. In respect of the year 2003-4 this contract covered a total of 59 rooms, the total contract sum being about £171,000. It is apparent from figures relating to the supporting people award, and from other information in the papers, that the accommodation is regarded by the occupants as essentially short term accommodation, the occupants' intention being generally to find long term self-contained accommodation (i.e. usually a flat let by a local authority or housing association). For example, 39 occupants left during the quarter October 2004 to January 2005. Of those, 14 were "planned" departures and 25 were unplanned. Of the latter, 9 were evicted and 4 "abandoned" the accommodation.
13. There is in the papers a "Business Plan for Project SJR/Greenhey Property Company" for 2005-6, and an "Annual Report" for Project SJR for 2004/5.The latter states that Project SJR was formed as a result of Greenhey/Mr Doherty having been approached by the Supporting People team to apply for Supporting People funding, and funding having been granted. In a letter from Support Solutions to the Council dated 29 April 2008 (p.73) it is stated as follows:

"Project SJR was set up as a not-for-profit company upon the request of Mr Coogan for the payment of Supporting People monies. Mr Coogan said that the company did not have to be registered with Companies House but it had to have a bank account. Project SJR was set up and used as a trading name but it was never registered."

(That may not be consistent with the information, recorded by the Council in its note, that Project SJR was to be set up in order to satisfy the requirements of the transitional housing benefit scheme, but nothing turns on this).

14. The Annual Report for 2004/5 further states as follows:

"Project SJR then evolved into a Supported Housing Scheme to temporarily house vulnerable, single homeless people from within our community. As the Project developed under the .....Supporting People programme it expanded to accommodate 59 units. Many of these units are located on St J Road, and the remaining units are in satellite houses within Salford. The support provided by Project SJR is accommodation based which means it can only be provided for people who reside on the Project.

Project SJR recognises that homeless people, and people who have endured an unsettled way of life for various reasons, have encountered discrimination, and depression. Many have mental health issues, alcohol or substance misuse and also, in their own words feel "socially excluded". We recognise that homelessness for some people is to endure sleepless nights in friends' houses, rough sleeping and walking endlessly through the streets of Manchester and Salford, with no permanent address of their own.

The philosophy of Project SJR is to enhance and enrich the lives of individuals by creating a non-discriminatory, non-judgemental, safe, supportive and friendly environment. The Project's main aim is to empower the residents and promote independence, whilst embracing the community spirit of the Project."

15. A summary in that report of "current residents' needs", which included such matters as alcohol, mental health, re-offending, drugs and "elderly and infirm", stated that the need of 23% was for "housing only." (p.217)
16. As noted above, no company by the name of Project SJR was in fact ever incorporated.
17. It is noted towards the end of the 2004/5 Report that at some time in 2005 the Council notified Mr Doherty/Greenhey that Supporting People funding was to be discontinued. The actual date of discontinuance does not appear from the papers, but it appears from the submission by Support Solutions at p.136 that it terminated in 2006. According to that submission:

"Once the Supporting People contract ended and was not renewed by [the Council] support has continued to be provided by Project SJR. Support was provided during the 2 year break between 2006 and 2008 however the service was forced to streamline its provision making efficiency savings and some redundancies due to a reduction in funding although this did not impact on the quantity and attention given to the vulnerable people accommodated and supported."

18. On 16 May 2007 Mr F made a claim for housing benefit in respect of the occupation of a room at no. 56. He stated that he was single and long-term sick or disabled, and in receipt of income support. His tenancy began on 14 May 2007, and was at a rent of £207.55 per week, of which £61.02 was in respect of personal care and support, and £2.60 per week in respect of breakfast. The landlord was stated to be Project SJR, although the rent was requested to be paid to a bank account in the name of Greenhey, and the claim form was signed by Mr Doherty, purportedly as landlord. The form was filled in on behalf of the Claimant by Mr Joe Woodward of Project SJR. It is likely that there was a written licence or tenancy agreement with Mr F, presumably with Project SJR shown as landlord, but there is no copy of that in the papers.
19. The rent in respect of that room had previously been referred by the Council to a rent officer, (presumably pursuant to a claim by a previous tenant), the referred rent being £146.53 per week, namely the rent of £207.55 less the sum for support, which was on any view not eligible for housing benefit. On 8 September 2006 the rent officer had determined a claim related rent of £125 per week and a local reference rent of £120 per week.
20. On 17 May 2007 an award of housing benefit was made in the sum of £117.40 per week, i.e. the local reference rent less the £2.60 charge for breakfast. Although Salford was one of the areas selected for a pilot project for introduction of the local housing allowance, the local housing allowance rate of £60 for a shared room was not taken as determining the maximum rent eligible for housing benefit because the rent officer had also determined that a substantial amount of the rent was in respect of board and attendance (the support being considered as "attendance") (pp. 38; 42), with the result, so it was considered, that the local housing allowance rate did not apply.
21. On 31 October 2007 the rent was referred to the rent officer again, 52 weeks having elapsed since the previous determination. On 14 November 2007 the rent officer determined a claim related rent of £125 a week and a local reference rent of £110 per week. On that date the award of housing benefit was therefore superseded and reduced by £10 per week, with effect from 29 October 2007.
22. The effect of the revised housing benefit award was therefore that, of the rent (less support charge) of £146.53 per week, some £36.53 per week was not covered by housing benefit, (although £2.60 of that was in respect of breakfast).
23. It appears that at some time in 2007 Support Solutions was engaged by Mr Doherty/Greenhey to advise what could be done in the light of the termination of Supporting People funding. The total Supporting People contract sum of about £171,000 per annum in respect of the 59 rooms suggests that down to 2006 the entire support charge of about £60 per week in respect of each room had been funded by Supporting People grant.
24. On 11 December 2007 GCS Support Services Ltd ("GCS") was incorporated as a company limited by guarantee and not having a share capital. The subscribers were Mr Doherty and Mr Woodward, and they are also its directors. Support Solutions stated to the Council that GCS is a not-for-profit company. Its first two objects are:

"(a) to carry on business as a general commercial company.

(b) to carry on any other trade or business whatsoever which can, in the opinion of the Company, be advantageously carried on by the Company in connection with or ancillary to any of the general business of the Company or is calculated directly to benefit the Company or enhance the value of or render profitable any of the Company's property or rights or is required by any customers of or persons dealing with the Company."

25. However, at the end of all the listed objects it is stated that "in carrying out the aforesaid objects the Company shall have regard to promoting the physical, mental and spiritual well being of the community."
26. Clauses 4 and 7 of the Memorandum read as follows:

"4. The income and property of the Company shall be applied solely towards the promotion of its objects as set forth in this Memorandum of Association and no portion thereof shall be paid or transferred, directly or indirectly, by way of dividend, bonus or otherwise howsoever by way of profit, to Members of the Company, provided that nothing herein shall prevent any payment in good faith by the Company:

(a) of reasonable and proper remuneration to any Member, officer or servant of the Company for any services rendered to the Company.

(b) of any interest on money lent by any Member of the Company or any Director at a reasonable and proper rate;

(c) of reasonable and proper rent for premises demised or let by any Member of the Company of Director; and

(d) To any Director of out-of-pocket expenses.

7. If upon the winding up or dissolution of the Company there remains, after the satisfaction of all its debts and liabilities, any property whatsoever, the same shall not be paid or distributed among the members of the Company, but shall be given or transferred to some other institution (charitable or otherwise) having objects similar to the objects of the Company and which shall prohibit the distribution of its or their income to its or their members. Such institutions to be determined by the members of the Company at or before the time of dissolution."

27. On 17 March 2008 Greenhey executed a lease of no. 56 St J Road ("no 56") to GCS for a term of 5 years from that date, at an initial rent (subject to review after a year, if so elected by either of the parties) of £27,040 per annum. (At the time of the grant of that lease the freehold of no. 56 was registered in the name of Mr Doherty, not Greenhey. Mr Doherty's solicitors had in December 2002 stated to Mr Doherty that they were holding the title deeds of no. 56 "in the name of Greenhey". Mr Doherty instructed his solicitors at the beginning of March 2008 that the freehold of no. 56 should be transferred to Greenhey, and had believed at the time of the grant of the lease to GCS on 17 March 2008 that that had been done, but the transfer did not in fact take place until 3 April 2008: see pp.529-531; pp.115 to 119 of the file relating to 946/08/02939. The entry on the Proprietorship Register states that the price paid by Greenhey for the transfer of the freehold was £240,000).
28. On 17 March 2008 Mr F and GCS signed a licence agreement whereby GCS granted to Mr F a licence to occupy Room 1 at no. 56, together with right to use a kitchen, bath/shower room and secure car parking, for a licence charge of £196.95 per week. The Licence was stated to begin on 17 March 2008 and to end on 30 March 2008. "If, at the end of this time, you have met all the conditions of this Licence, it may be extended for a further period ...." Opposite a heading "Support Services" appeared the following:

"This Licence is granted to facilitate the provision of support for the Licensee ("the Support Services"). The Project will provide the Housing Support Services, and details of these are set out in the Residents' Handbook. The Support Services form an integral part of the Project's aims and objectives, and if the Licensee ceases to accept the Support Services, this will be regarded as a breach of this Licence, and the Project may take steps to end this Licence."

29. By Clause 3(a)(vi) and (vii) of the Licence the licensor was entitled to terminate the Licence in the event of the Licensee (in the Licensor's reasonable opinion) no longer requiring or refusing to accept the support services.
30. By an Agreement also made between GCS and Mr F, and signed on 28 February 2008, GCS agreed to provide Mr F with a housing support officer "who will be responsible for providing you with support to address your needs as defined in your referral." [Pages 2 onwards of Agreement missing from the copy in the papers.]
31. On 20 March 2008 Mr F made a fresh claim for housing benefit in respect of his occupation of Room 1 at no. 56. This stated (incorrectly of course) that he had moved into the room on 17 March 2008 (but also stated that he had moved out of his "last address", which was stated to be the same room, on the same date!) The landlord was stated to be GCS, and of the rent of £196.98 per week £28.40 was stated to be in respect of personal support, £3.00 per week for heating and lighting and £4.51 per week for meals and catering. The form was stated to have been "filled in" by a support worker on behalf of Mr F, on the ground that this was "part of support package."
32. Also provided in support of this claim, and claims by other licensees of the 8 rooms in no. 56, was a "rent schedule 2008/9", prepared by Support Solutions, and detailed supporting financial information (pp.29 to 34). The rent breakdown showed a total "core rent" of £107.45 per room per week, composed of a "core rent" of £65, to which were added sums for property related housing management, central admin costs, planned and cyclical repairs and maintenance, council tax, sinking fund, voids etc. There was then a total of £53.52 per week for "service charges", broken down into a large number of items, relating to provision of white goods and furniture, "responsive repairs and renewals", maintenance contracts, cleaning materials and services etc. The total of the sums for core rent and service charge amounted to £160.98, which was said in the breakdown to be the "total eligible rent for HB". The ineligible charges were put at £7.17, and the support charges at £28.50, making a "total contractual rent" of £196.65 per week. Those figures differ very slightly from those stated in Mr F's licence agreement and housing benefit claim, but nothing can turn on that.
33. Support Solutions further stated, in correspondence with the Council in April 2008 (pp.71-6), as follows:

(1) The licensees do not pay to GCS the support charges included in the rent. GCS therefore in effect provides this support without charge. GCS is able to do this because it is subsidised by Greenhey, which pays money to GCS to ensure that they have the revenue to pay support staff. Greenhey also subsidises GCS "via time committed as unpaid". (It appears that this is Mr Woodward's time – see (2) below).

(2) Mr Woodward is employed by Greenhey as operations manager and his role is to oversee the effective management of the organisation. Mr Woodward donates his own time to GCS to assess the needs of clients and support the staff. The time donated is variable and is provided unpaid.

(3) GCS accepts clients from referral agencies who have identified the client's support needs.

(4) The staff employed by GCS consisted of Mr Woodward, Mr Murray (support worker), Jessica Woodward (support worker), Mihret Weldgebriel (support worker and interpreter of Amharic, Tigrinya and Arabic).

(5) It was the intention to lease the other properties in Salford to GCS and "phase Project SJR out of the project"

(6) The support equates to approximately 3 hours per tenant per week and is provided by paid support staff.

34. The documentation annexed to the written submission to the Tribunal on behalf of Mr F (prepared by Support Solutions) included the following, relevant to the question whether GCS provided support to its tenants:

(a) A GCS standard form document giving instructions to agencies referring potential occupants to GCS (p.242). It includes the following:

"Once you are confident that your client meets GCS Support Services' eligibility criteria it is important the client knows that you are making the referral and that they are aware that GCS SUPPORT SERVICES is supported accommodation. If the client is successful and is offered accommodation they will be asked to sign a support agreement so they must understand that they are expected to engage with staff throughout their residence with the Project.

Access to GCS Support Services accommodation is by written referral, self referrals will not be accepted ...."

(b) At p.246 is a document headed "eligibility criteria". This sets out a list of criteria, and it appears on the face of it that satisfaction of any of them is enough. Some of the categories are people who would obviously be capable of benefiting from support, such as "people with alcohol problems"; "people with mental health issues on current medication". However, the list also includes, for example, "single people" and "people with a Salford connection". However, the earlier document at (a) above states (p.244) that

"Allocation for vacancies will be prioritised as follows:

Single homeless in priority need referred from Salford homeless department.

Single homeless referred from Salford

Single homeless with a Salford connection referred via Salford agency

Single homeless, with a Salford connection referred from other agencies.

Single homeless, other."

(c) GCS standard form instructions to staff (p.268) includes the following:

"The referral document provides a support needs assessment and the referring agency will have discussed the client's basic needs. GCS is a short term supported housing provider therefore care should be taken when assessing the clients' support needs to ensure that the service offered is suitable for the client and that the client's support needs are not too high.

Things to consider:

How has the client identified the need?

Is the client willing to engage with support to meet the needs?

Have the needs previously been identified by other supporting providers?

Will the current accommodation meet the identified need?"

(d) The following documents were completed in respect of Mr F:

A GCS "interview sheet" completed by Mr Murray on 28 February 2008. Mr F states that he had slept rough before moving to Project SJR: "following relationship breakdown went off the rails with alcohol and drugs then moved back to Salford stayed at mum's then English Churches ....vacated for arrears." He answers "no" to the question "Do you feel you need support services, re substance/alcohol misuse issues?" (p.460) He states that he "will need assistance dealing with housing providers." He states his move-on plans are "independent living".

A risk assessment form (p.478) completed by Miss Woodward in respect of Mr F on 6 March 2008.

A GCS "initial service user needs assessment" completed by Miss Woodward on 6 March 2008. This identified, from a list of 16 types of need, Mr F as requiring "benefit advice", "alcohol or substance misuse" and "resettlement into the local community."

A GCS "support plan" completed on 6 March 2008 by Miss Woodward. It states the identified needs as "alcohol misuse", "resettlement back into the local community" and "personal hygiene", and sets out "goal/targets" and action to be taken in respect of each need.

GCS "support plan monitoring sheets" completed by Miss Woodward (Mr F's support worker) in respect of the period 6 March 2008 to 28 July 2008. These are completed twice a week, and show in brief what was discussed/done at each support session. The first entry, on 28 February 2008, reads:

"Met with Peter today ...... to interview him for support provided by GCS. Informed him about the support and what it entails also when the support sessions will take place and who will be his support worker. Informally chatted about any needs of support he may have though a formal support plan will be drawn up with Peter on 6 March ...."

A GCS "service user needs assessment review" dated 28 July 2008. On this Mr F says his needs have been met because he has found a flat.

A Salford City Council "supported accommodation questionnaire" completed by Mr F on 23 May 2008. In it he states that he did not receive support at his previous address, that the support which he currently receives is twice a week from Ms Woodward of GCS, and that the help he receives is "housing advice" and "help with alcohol."

35. The Council's submission to the Tribunal stated that "the Council was aware of a decision made on another property [apparently made in January 2008] where the landlord is GCS and was concerned that the landlord had changed in respect of no. 56 following this decision. The decision in respect of the other property was that GCS was a not for profit company that provided care, support and supervision to the tenants and so the claimant could be said to occupy "exempt accommodation". This meant that instead of the local reference rent being used to work out the housing benefit entitlement claim related rent would be used instead, and if the claimant were to fall into a vulnerable group then there was the possibility that housing benefit would be based on the maximum eligible rent."
36. On 28 May 2008 the Council made the decision under appeal to the Tribunal, in the terms which I have summarised in paragraph 2 above.

The facts: the other claimants

37. Of the 6 claimants other than Mr F, all except one (Mrs D (tribunal ref. 946/08/03021) became tenants of a room in no. 56 before March 2008, when GCS came on the scene, and so, like Mr F, initially entered into tenancy agreements with Project SJR/Greenhey. Mrs D became a tenant of GCS on 2 May 2008. The sequence of events in relation to the claimants other than Mrs D was very similar to that in relation to Mr F. They entered into new tenancy agreements with GCS in March 2008, and decisions were made refusing the new claims for housing benefit on the same ground as in relation to Mr F.
38. Appeals were lodged on behalf of all the claimants by GCS. Written submissions were lodged in the appeals by Support Solutions on behalf of each of the claimants other than Miss E (tribunal reference 946/08/02939). The reason for Miss E not being represented by that stage appears to have been that she had by then left no. 56. Mr Key did not represent her before the Tribunal (p.528). However, the Tribunal allowed her appeal along with those of the other claimants, and the Council's appeal to the Upper Tribunal therefore relates to her as well.
39. Mr Key's written submissions to the Tribunal on behalf of each claimant were in more or less standard form, with the few paragraphs which related to the needs of and support provided to the claimant altered so as to relate to that particular claimant. The annexed documents which related to the support provided to the particular claimant (see para. 34(d) above) were therefore also specific each case.
40. A notable difference in relation to the annexed documents is that in relation to the claimants other than Mr F, Mrs W. K and Mrs D there is a copy of a "referral document" completed by the referring agency. (See e.g. pages 421 onwards of Mrs M. K's file). It is unclear why no Project SJR referral document is in evidence in respect of Mr F and Mrs. W. K. The referral document is a standard form document provided by Project SJR to the agency. It gives some information at the beginning as to the nature of Project SJR, including the following:

"Project SJR is an equal opportunities, non-judgmental supported tenancy service, which provides accommodation and support to individuals who meet the eligibility criteria and require a support service. The aim of Project SJR is to provide short-term supported accommodation for the service user while promoting equality, empowerment and stability to their lives."

The referral document contains a Section headed "Support needs", which states: "Project SJR are a supported housing provider to help us assess your application please indicate which of the following issues the client may require support with. There then follows a list of some 20 matters.

41. 4 of the claimants (Mrs. M.K, Mr E, Mrs.W. K and Mrs D) were faced with the prospect of homelessness because they were refugees who had been given leave to remain and had been given 28 days' notice to leave their NASS accommodation. Two claimants (Mr F and Mr P) had alcohol abuse and/or mental health problems. Mr P was referred by an entity known as "Counted in" (p.418 of his file), having been "sleeping rough" for at least the previous 3 weeks, probably 10 months (pp.428 and 470 of his file).
42. 2 of the claimants (Mr F and Mrs M.K) were in receipt of income support, and 4 (Mrs. W.K, Mr E, Mrs D and Mr P) were in receipt of JSA. Mr P switched from JSA to income support in about the middle of June 2008 (p.452 of his file), apparently owing to illness.

The legislation

43A. (1) In the case of accommodation falling within the definition of "exempt accommodation" in para. 4(10) of Schedule 3 to the Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006, the rent eligible for housing benefit is not automatically restricted to the local housing allowance rate/local reference rent/claim related rent (as appropriate) set by the rent officer. In such cases the generally more favourable regime which was applicable down to 1996 applies.

(2) The rules governing that more favourable regime are now set out in reg. 12 ("rent") and 13 ("restrictions on unreasonable payments") of the Housing Benefit Regulations 2006, as set out for this purpose in para. 5 of Schedule 3 to the Consequential Provisions Regulations.

(3) Essentially:

(i) if it appears to the local authority that the accommodation is larger than is reasonably required, or that the rent is unreasonably high, the authority must restrict the level of eligible rent by such amount as it considers appropriate taking into account, amongst other factors, the rent levels of suitable alternative accommodation in the area. It is not necessary to find a vacant property that a person can move to immediately, merely that a local market exists at the level of rent to which rent is restricted. (See reg. 13(3); para. 42 of Circular A22/2008)

(ii) However, reg. 13(4) provides that where a claimant is in one of the specified vulnerable groups no deduction shall be made under reg. 13(3) unless (a) suitable cheaper alternative accommodation is available and (b) the authority, taking into account the relevant factors, considers that it is reasonable to expect the claimant to move.

(iii) The "vulnerable groups" include persons aged 60 or over, and (most importantly for present purposes) persons incapable of work for social security benefit purposes.

(4) The definition of "exempt accommodation", which is the key to determining whether the potentially more favourable regime applies, includes accommodation which is

"provided by a non-metropolitan county council …… a housing association, a registered charity or voluntary association where that body or a person acting on its behalf also provides the claimant with care, support or supervision."

B. By reg. 9 of the Housing Benefit Regulations 2006:

"(1) A person who is liable to make payments in respect of a dwelling shall be treated as if he were not so liable where –

…………………………………………………………………….

(l) ……… the appropriate authority is satisfied that the liability was created to take advantage of the housing benefit scheme established under Part 7 of the Act."

The submissions to the Tribunal

43. In the light of the submissions made on behalf of the Council to me in this appeal, it is important that I pay close attention to the extent of the submissions made on behalf of the Council to the Tribunal. The Council was represented before the Tribunal by Ms Bev Connor, an employee of the Council.
44. The Council's written submission to the Tribunal relied primarily on the following points in support of the contention that Mr F's tenancy had been created in order to take advantage of the housing benefit scheme

(1) The decision which had been made in respect of another GCS property in January 2008 had indicated to GCS that they had been accepted as a not for profit organisation and that the tenants in their properties could therefore get higher housing benefit than would otherwise have been the case

(2) The grant of the lease of no 56 by Greenhey to GCS at a rent of £27,040 per annum

(3) Project SJR was not a not for profit company but GCS "is declared to be such"

(4) "It appears that the lease of no. 56 has been taken over by GCS from Project SJR for the purpose of increasing entitlement to housing benefit."

(5) The landlord decided to change the agreements of tenants from a landlord where only the local reference rent was payable to a landlord where more than the local reference rent would be paid because of the status of the landlord and the fact that the landlord provided support

(6) Breakfast is provided (for the tenants of no. 56) at no. 70, not no. 56, and there is no indication that any adaptations have been made to the properties for any disabilities the tenants might have.

(7) The accommodation would appear to be accommodation which could be occupied by any person in need of such accommodation

(8) It would be expected that (a) this type of property would have a varied clientele, where not all would be in need of support and (b) that identified support needs would differ, and the support time would be allocated in accordance with those needs, rather than at a flat rate of 3 hours per week.

(9) The needs of the tenants are judged by the landlord. There is no independent assessment of need. In the case of Mr F he had been referred to no. 56 by his brother, who had also lived there.

(10) There are parallels with R v. Manchester CC ex p Baragrove (1991) 23 HLR 337 in that GCS aimed at having only tenants where an increased level of housing benefit could be achieved by the inability of the Council to restrict those rents.

45. The Council's written submission relied on the following points in support of the contention that, if housing benefit was payable at all, it should be calculated on the basis that Mr F's accommodation was not "exempt accommodation"

(1) "GCS has provided its Memorandum and Articles of Association that show ...not for profit status. The decision maker would accept that the accommodation is provided by an organisation that is not for profit but would submit that the care, support or supervision is not provided other than on a minimal basis

(2) There is no indication why the change in landlord should result in the change in support needs.

(3) Mr F receives income support. This indicates that he is available for work and gives no indication that he has need of sustained support from his landlord

(4) There is no independent assessment that the tenant needs support. That is the landlord's decision.

(5) Mr F says that he does not pay the support charges which he is contractually obliged to pay.

(6) The support provided to Mr F is minimal – housing advice and help with alcohol.

46. In its submission the Council further contended that if the accommodation is not exempt the amount of housing benefit was to be determined on the basis of the local housing allowance (i.e. then £60 per week for a "shared" room). That submission was clearly on the footing that no or minimal support was provided, so that the rent officer's finding (see para. 20 above) that a substantial amount of the rent was in respect of "board and attendance" (with the result that the local housing allowance would apply) would have to be disregarded.
47. In the written submission to the Tribunal on behalf of the Claimants, prepared by Support Solutions, as amplified in oral submissions by Mr Key at the hearing before the Tribunal, the following points were made in relation to the issue of taking advantage of the housing benefit scheme.

(1) The purpose of the introduction of GCS to provide accommodation and an element of support was to use the regulations to ensure that the rents charged were not artificially reduced in line with rent officer determinations. The rent officer determination is designed for general needs housing "as it does not recognise the provision of support thus does not allow for significant management and maintenance costs that are incurred due to the provision of support". Project SJR could not have been used for this purpose as it did not exist as a legal entity, and so could not have been a "voluntary organisation". As regards the additional costs of providing this accommodation (as compared with general needs accommodation) it was asserted that the cost of providing accommodation and support services was increasing:

"[the properties] are registered licensed houses in multiple accommodation. The accommodation therefore has a licence fee to pay to the [Council] and must comply with relevant legislation including the number of bathrooms, room size requirements, fire safety regulations, food storage and cooking facilities in each bedroom. This indicates a significant cost outlay coupled with the additional management and maintenance costs experienced due to the vulnerability of the client group."

(2) It would have been taking unfair advantage of the housing benefit scheme if the rent had been artificially inflated, but "the level of eligible rent calculated for [no. 56] can be justified by either historical expenditure, current management provision and/or reasonable allowances."

(3) The Council had the power to restrict the rent eligible for housing benefit if it considered it unreasonably high in comparison with that for suitable alternative accommodation. "The [Council] failed to examine that approach as it is submitted that there are providers of suitable alternative accommodation that levy higher rental charges than GCS for the provision of similar tenancies."

(4) Reliance was placed on the decision of Mr Commissioner Jacobs in CH/39/2007, which it was submitted was indistinguishable from that in the present case.

(5) The decision of the Divisional Court in the Baragrove Properties case is distinguishable in that (i) a different housing benefit regime was involved (ii) that case did not relate to supported housing and (iii) the landlord there had targeted a specific client group, which is not the case here in that (a) GCS has simply continued to provide accommodation and support for the persons having the same needs as those who were catered for by Project SJR from 2002 and (b) the accommodation is accessed by individuals who are referred by referral agencies "that require providers such as GCS to accommodate and resettle the individuals that they place. It is therefore the referring agency that determines whether the individual tenant requires support rather than the employees of [GCS]."

(6) There are over 175 accredited landlords in Salford where no support is provided. Why would referrers (including the Council's homeless department) complete the referral and needs assessment documents if the accommodation provided by GCS was general needs accommodation and the individuals did not require support?

(7) The fact that the rents charged by GCS are not artificially inflated can be demonstrated by the facts that (i) the Council would be able to restrict the rent if it was deemed unreasonably high by reference to suitable alternative accommodation and (ii) there is evidence of entitlement award notifications for claimants of other landlords providing a similar service to the client group which GSC accommodates.

(8) Although 3 hours' support is the amount initially provided, "following the provision of the support plan the support provided obviously changes based on the development of the specific individual. Once outcomes and objectives have been realised and support is no longer required then the tenant is supported to attempt to secure temporary accommodation ...."

(9) Although the support provided is low level support, it is very important to the individuals. The support plans funded by the local authority (via Supporting People) in respect of people renting from other landlords are almost identical to the GCS ones.

(10) The status of the landlord now fits into the market that it operates with other charitable organisations and housing associations and will enjoy the ability to receive higher levels of housing benefit to ensure the cost of providing accommodation to the specific client group is recouped. In effect, GCS was created to operate in a market where other organisations such as housing associations operate.

(11) Support was provided when SJR were involved, and there was therefore nothing in the Council's contention that a need for support was manufactured when GCS became the landlord. The accommodation did not become "exempt accommodation" until GCS became the landlord because Project SJR was not a legal entity. [In his Skeleton Argument for the purpose of the hearing before me Mr Key explained as follows:

"1. Prior to the removal of Supporting People funding SJR provided high/medium support for all occupants, removal of Supporting People funding resulted in SJR relocating existing service users.

2. The management of SJR continued to provide very low level support for the remaining occupants due to commitment to vulnerable individuals.

3. As the referral agencies were aware of the high/medium level of support that was provided by SJR prior to removal of Supporting People funding a new entity would be established with a totally new name not to confuse matters for referral agencies identified on pages 215-8 of the papers hence the creation of GCS.

4. The cost of medium/high level of support was £61.50 per week. The cost of low/medium level of support is £28.50 for obvious economical reasons"].

(12) Assistance with applying for housing is a classic "support" function.

(13) It was Mr Woodwards' evidence at the hearing that those claimants working with Refugee Action still keep a care worker who visits sometimes, but not regularly because of lack of resources.

48. In oral submissions to the Tribunal Ms Connor made the following points, in addition to those made in the Council's written submission.

(1) She accepted that GCS had been "registered as a voluntary association".

(2) The Council was not satisfied as to the reasons why GCS had become the landlord. The tenants were living independently and were not in need of support. They in fact paid nothing towards support or meals. There appeared to be no difference between the tenants in no. 56 and the tenants living in what was still "SJR accommodation" in other terraced houses in St J Road, who "are living in bed and breakfast accommodation and in our view are able to live independently." [To that Mr Key responded that Project SJR would only be phased out for the people who required support]. There were currently 84 properties where SJR were the landlord.

(3) No external funding was received by GCS, so it was dependent on receiving housing benefit.

(4) There were an inadequate number of support workers to provide support in no. 56 and to the Project SJR properties.

(5) In Mr F's interview with GCS he talked about applying for permanent housing. That suggests he was already able to live independently. The occupants generally are looking for other, permanent housing more or less immediately.

(6) The Tribunal should look at whether the support provided to the occupants was reasonably required.

(7) The Council withdrew Supporting People funding from Project SJR because "it was decided following review that there was no need for that support" (p.540). [However, no evidence was put before the Tribunal by the Council that that was the reason for the withdrawal of Supporting People funding].

(8) 4 of the 6 claimants came from NASS accommodation, although Ms Connor accepted that the other 2 have other issues such as alcohol related issues. The problem is that they need general needs accommodation, not supported accommodation. There is no follow up by the referring agencies to check the level of support being provided.

(9) The Council could not see what the difference was between the service provided by SJR and that provided by GCS.

The Tribunal's decision

49. The Tribunal summarised the main facts, and the representatives' arguments, and then set out its conclusions as follows:

"22. The tribunal considered the general principles to be applied in approaching the conflicting arguments and deciding between them. The meaning of "to take advantage of" in Regulation 9(1)(l) is "to abuse" and not to benefit from or avail oneself of the scheme. The tribunal considered the facts of these appeals and the decision in Baragrove and Commissioner Jacobs' decision in CH/39/2007. The tribunal reached the conclusion that the company was entitled to enter into [the lease from Greenhey] and that whilst its actions would result in Housing Benefit being payable at a higher rate than would otherwise be the case, this was done for legitimate commercial reasons. The tribunal was not satisfied that the Council had discharged the burden of establishing, on the balance of probabilities, that the tenancies fell foul of Regulation 9(1)(l).

23. The Tribunal was also satisfied that the accommodation in question was provided by a voluntary organisation and that that body (or a person acting on its behalf) also provided the appellants with care, support or supervision and that, accordingly, the accommodation provided is exempt accommodation as defined in the Consequential Provisions Regulations.

24. The Tribunal noted the decision of Commissioner Turnbull in CH/1289/2007 which is authority for the proposition that the level of care, support or supervision provided by the landlord must be more than minimal. The Tribunal considered the support provided to the appellants in this case and decided that it was more than minimal. The Tribunal did not accept the submission put forward by the Council's representative that the support should be reasonably required but accepted that one of the factors to be taken into account (as mentioned by the same Commissioner in CH/779/2007) is the extent to which there is in practice any real likelihood that the claimant would need the available support. Based on the support plans which form part of the schedule of evidence, the Tribunal was satisfied that the appellants would benefit from the available support and thus could be said to need it."

The Council's submissions in this appeal.

50. I take the Council's contentions in this appeal from Mr Clarke's Skeleton Argument, as amplified at the hearing. His submission was that the Reg. 9(1)(l) question and the "exempt accommodation" question are so "inextricably linked" that the same points were relevant to each. His submissions were in summary as follows:

(1) It is now settled law that "taking advantage of the housing benefit scheme" means "something akin to abuse of the scheme or taking improper advantage of the scheme" (CH/39/2007) and that the test in Reg. 9(1)(l) should be read as meaning "created to take advantage unfairly or improperly" (CH/136/2007).

(2) In considering whether GCS was a "voluntary organisation" within the meaning of the "exempt accommodation" definition, the Tribunal should have considered not only GCS's constitution but also whether it was making payments to members, directors etc of what were "disguised profits".

(3) The Tribunal's findings that GCS was created to operate in a market where other organisations such as housing associations operate and that GCS entered into the lease for "legitimate commercial reasons" were "erroneous on the evidence" because they ignored the fact that Project SJR was also a "not for profit organisation" and had the same ability as GCS to operate in the same market as housing associations. The Tribunal should have concluded that GCS was created in order to claim higher housing benefit and should have analysed the financial implications of the rent payable by GCS to Greenhey to see whether there was a profit to be made from the structuring of the business.

(4) The fact that SJR never claimed the benefit of the exempt accommodation provisions is enormously significant. The only difference between the structure with SJR and that with GCS was that GCS pays £27,040 per annum to Greenhey, whereas SJR paid a peppercorn. The Tribunal should have addressed the following questions: "Why is there that difference? Are the payments made under the housing benefit provisions £27,040 more than the payments made to SJR under the Supporting People funding? Has there been any change in the support that the claimants require that costs significantly more? Why did the support for the claimant provided by SJR cost £61.05 per week but by GCS it costs £28.50? Is the change for tax reasons? Or is it to provide a profit to Greenhey?"

(5) The only conclusion which could properly have been drawn was that the payment of rent to Greenhey "can only be a profit to Greenhey. There is no evidence that the rent … is a proper and reasonable rent. No comparative evidence was produced to the [Tribunal]. To rent an 8 bedroom property like this one costs £2,250 per month?"

(6) It is accepted that in the weekly meetings GCS provides more than minimal support to each claimant. However, the situation is "legally contrived" because "GCS is creating a situation where their tenants can only have accommodation if they accept that they require support and that support will be provided whether they want it or not." It is submitted that the Tribunal should have looked at "the support that the claimant actually requires over and above that which is freely available from elsewhere" and that Mr F's answers in his interview at p.454 show that "the support provided is entirely unnecessary for [Mr F] if his own evidence is to be accepted" and that "the needs of the claimant are being effectively manufactured." GCS is effectively diagnosing the tenants' problems and the Council has no way of obtaining any independent assessment. It is "inevitable that GCS would conclude that their tenant requires support and then obtain some evidence to support that conclusion." Rather than asking the question: "Do GCS provide support that is more than minimal?" the Tribunal should have asked: "Does the claimant require support that is more than minimal and do GCS provide that support?"

(7) The Tribunal erred in thinking that the "exempt accommodation" is no. 56, rather than each claimant's accommodation. The Tribunal should have considered each claimant's position individually.

Analysis and conclusions

(1) Regulation 9(1)(l)

(a) The scope of reg. 9(1)(l) in the context of "exempt accommodation".

52. The submissions made on behalf of the Council require me to begin with some preliminary comments in relation to the application of this provision in the context of the provisions relating to "exempt accommodation".

51. The parties are agreed, in my judgment rightly, that decided authority indicates that the words "the liability was created to take advantage of the housing benefit scheme" mean that there must be something in the nature of an abuse of the scheme. The scheme must have been taken advantage of in some way unfairly or improperly. See, in particular, CH/39/2007 at para. 19; CH/136/2007 at para. 47 (both of which were in fact concerned with the application of reg. 9(1)(l) in the context of "exempt accommodation"). It is not sufficient merely that a landlord has deliberately arranged matters so that the more favourable housing benefit regime will apply.
52. The more favourable regime applies where the landlord is a certain type of body and where support is provided by or on behalf of that body to the tenant. It is clear from the enacting history of the legislation (and in particular para. 58 of the Report of the Social Security Advisory Committee in June 1995 - Cm 2902) that this more favourable regime was "designed to ensure that housing benefit would continue to meet rents at levels that reflected the higher costs of providing this type of accommodation but is also balanced against the requirement to restrict rent levels by comparison with suitable alternatives." (para. 8 of HB/CTB Circular A22/2008).
53. Before one gets to reg. 9(1)(l), there are controls against abuse of the more favourable regime which are built into it. First, there is the requirement that the landlord must be one of the specified types of body. These are essentially non-profit making bodies, such as local authorities, housing associations, charities etc. In the case of a "voluntary association", that is defined as "a body, other than a public or local authority, the activities of which are carried on otherwise for profit." I would agree with the view expressed in para. 16 of Circular A22/2008 that in determining whether "activities are carried on otherwise than for profit" it is relevant to look not simply at the constitution of the body, but at its actual activities.
54. The requirement that the landlord be one of the specified types of body obviously in itself provides a very important protection against abuse of the more favourable regime. But it may not be sufficient to cover all cases of possible abuse. For example, it might not cover a case where, although the landlord's activities overall were not intended to produce a profit, it was attempting to take advantage of the more favourable regime in order to obtain very high rents on particular properties, as a means of subsidising other loss-making activities. Or the landlord might be letting property which was unnecessarily large or otherwise too expensive for the tenants' needs.
55. The latter sort of abuse is catered for to some extent by the protection in regulation 13(3) (as set out in Schedule 3 to the Consequential Provisions Regulations): see para. 43 above.
56. Where either the favourable regime does not apply at all because the landlord is found not to be one of the specified types of body, or the eligible rent can be reduced by means of the protection in reg. 13, the effect is less drastic than if reg. 9(1)(l) were applied. The rent eligible for housing benefit will be reduced, rather than the claim failing altogether. In para. 24 of CH/39/2007 Mr Commissioner Jacobs said:

"It is relevant to consider whether the type of arrangement that has been made is one that calls for complete exclusion or is more appropriately controlled, if at all, by control over the amount of payment."

However, if the liability was created to take advantage of the scheme, reg. 9(1)(l) applies, and no question whether some other available method of control would be more appropriate can arise. The claimant/landlord's argument would have to be that, given the availability of other controls, there cannot have been an intention to take advantage of the scheme.

57. In any event, as Mr Commissioner Jacobs went on to point out in para. 25 of that decision, the Baragrove is decision is authority for the proposition that the built in protection does not exclude the possibility of falling back on reg. 9(1)(l) in cases where the built in protection is not sufficient to protect against abuse
58. In what types of situation might there be room for the application of reg. 9(1)(l)? It was of course applied by the appeal tribunal whose decision was under consideration in CH/136/2007. As I have noted above, the more favourable regime was retained in the case of "exempt accommodation" because it was considered that the cost of providing supported housing might legitimately be higher than in the case of general needs housing. Para. 58 of the Social Security Advisory Committee's Report indicates that what the Committee (and the housing associations etc who had made representations to it) primarily had in mind were the costs of actually providing the support, in so far as they constituted service charges eligible for housing benefit under the legislation then applicable. Such costs can no longer have any relevance, because costs of employing support workers are no longer eligible service charges. However, it is frequently suggested on behalf of landlords providing supported accommodation that the costs of providing supported accommodation may be higher for a number of other reasons. The property may need to be larger (e.g. to accommodate a support worker overnight) or in a more expensive area (e.g. so that it is near friends or family); the tenants may cause more damage; more intensive housing management may be required.
59. This might suggest that it would be an abuse within reg. 9(1)(l) for a landlord to claim the benefit of the favourable regime in circumstances where the housing was no more expensive to provide and manage than general needs housing, or where the amount by which the rent is higher was wholly disproportionate to any increase in the costs which there may have been. I doubt, however, whether it would be practicable to apply such a test, owing to the difficulty in determining whether the fact that the supported housing was being provided had increased the costs, and if so by how much. In the present case, for example, GCS asserted that more intensive management is required, and higher maintenance costs are incurred. The Council did not seek to rebut that assertion, and there would have been extreme difficulty in doing so.
60. It seems to me that a more practicable method of seeking to demonstrate abuse may to be demonstrate that the rent is significantly higher than reasonably necessary to cover costs. The rationale underlying the more favourable regime is that costs are likely to be higher in relation to supported accommodation, and the types of body which can qualify as landlord are essentially non-profit making bodies. In para. 41 of CH/39/2007 Mr Commissioner Jacobs said:

"There is no objection to the making of a profit from the housing benefit scheme. If there were, there would be no market for tenants who required public financial support for their housing costs."

61. However, I think that that statement must be treated with extreme caution in the context (which appears to have been the context in that case) of purportedly "exempt accommodation". As I have said, the strong theme underlying the more favourable regime is that the accommodation will be provided on a not for profit basis. If, for example, the landlord has sought to justify its rent by reference to an actual or notional cost of borrowing the purchase price or value of the property over an unreasonably short term, or at an unreasonably high rate of interest, that might constitute an intention to make a profit and so qualify as an abuse.
62. In the Baragrove case what was under consideration was not an especially favourable regime for accommodation where care, support or supervision is provided, but the housing benefit regime at that time generally applicable (which is essentially the same as the regime now applicable in respect of exempt accommodation). The local authority considered (i) that the landlords had "targeted" people in the "vulnerable groups", with a view to claiming the benefit of the more favourable provisions in the then equivalent of reg. 13(4) as now set out in the Consequential Provisions Regulations; and (ii) that the rents charged were between two and five times as high as the market rent. The Divisional Court held that the local authority had not erred in principle in deciding that reg. 9(1)(l) applied where it had found (in the summary by Stuart Smith LJ at p.344):

"first of all, that the landlords …… were deliberately targeting exempt groups, and secondly, that they were doing so for the purpose of charging very high rents which they could not otherwise command."

63. There was no policy evident in the housing benefit regime then applicable that it was justifiable to charge substantially higher rents in respect of people in the vulnerable groups. The legislation provided merely that people in the vulnerable groups should not have their housing benefit restricted, on the ground that the property was considered unreasonably large or the rent unreasonably high, unless the local authority could actually point to cheaper alternative accommodation to which it was reasonable for the tenant to move. Stuart-Smith LJ (at p.345) described what is now reg. 13(4) as "a practical loophole" and (p.347) "a perceived loophole or weakness in the scheme." To "target" people in the vulnerable groups with a view to obtaining, via an award of housing benefit, substantially higher rent than would otherwise be obtainable was therefore considered an abuse. In my judgment Mr Key is right in submitting that that decision is not directly applicable in the present context, where the rationale behind the more favourable regime for exempt accommodation is that the rents may justifiably be higher than those generally obtainable. (It could not, as I understand it, be suggested that GSC has in the present case "targeted" people in the vulnerable groups, because at least half of these claimants were not in those groups).
64. It seems to me, therefore, that in general the mere fact of letting only to tenants who have a genuine need for support, and to whom the landlord will provide support, with a view to obtaining a higher rent eligible for housing benefit, is not an abuse. There will be an abuse if the rent is unfairly or improperly high, having regard in particular to the cost of providing the accommodation.

(b) Consideration of the Council's submissions: (i) Intention to make a profit

65. It seems to me that Mr Clarke's submissions under Reg. 9(1)(l) (which I have summarised above) really in substance boil down to two main points. The first is that the Tribunal did not consider whether there was an abuse of the housing benefit scheme by reason of GCS being substituted as landlord so that a profit could be made out of the rent eligible for housing benefit, and in particular by enabling £27,040 per annum to be paid to Greenhey as rent under the head lease.
66. However, I agree with Mr Key's submission (paragraph 1.9 of his Skeleton Argument dated 16 June 2009) that this contention that, taken together, Greenhey and GCS were or may have been making a profit out of the scheme, was not a point which was raised by the Council before the Tribunal. On an analysis of the Council's submissions (both written and oral) to the Tribunal, in my judgment two points were in substance taken under Reg. 9(1)(l). First, that GCS had been created as a not-for-profit organisation so that a higher rent would be eligible for housing benefit. Secondly, that the occupants of no. 56 had no genuine need for support. But, as I have said, the Tribunal were not in my judgment invited to examine the level of rent charged by GCS, or the level of the rent payable by GCS to Greenhey, in order to see whether a profit was in effect being made out of housing benefit. As I have noted above (para. 32), detailed information was before the Tribunal (which had been supplied by GCS to the Council when the latter requested further information) as to the breakdown of the rent, in particular by reference to the cost of the various elements of which it was said to be made up. The Council did not in its submissions to the Tribunal seek to make any points on those figures, nor did the submissions seek to attach any significance to the amount of £27,040 per annum was being paid by GCS to Greenhey. It is true that the Council's written submission did in para. 6 of Section 7 mention the fact that rent of that amount was being paid to Greenhey, but the submission did not seek to argue that the amount of the rent under the head lease was a means of syphoning off profit to Greenhey. For example, no point was made that £27,040 per annum was more than a reasonable rent for no. 56, given the terms of the 5 year lease. None of the questions raised by Mr Clarke in para. 23 of his Skeleton Argument were raised before the Tribunal. I should perhaps say here that I have taken the Record of Proceedings as an accurate record of the points of substance made to the Tribunal. It has not been suggested that it omitted anything of substance. It extends to 17 pages and appears to contain a very full record of the argument.
67. In my judgment the Tribunal cannot therefore be criticised, in the manner which Mr Clarke sought to criticise it, for not having attempted to examine whether a profit was being made out of the higher amount of rent eligible for housing benefit. When the Tribunal found, in paragraph 22 of the Statement of Reasons, that "whilst [GCS's] actions would result in Housing Benefit being payable at a higher rate than would otherwise have been the case, this was done for legitimate commercial reasons", it was in my judgment accepting GCS's assertion (which it had referred to in para. 16 of the Statement of Reasons) that the rent was no more than would have been charged by other not-for-profit bodies, such as housing associations. As I have said, that was a proposition which the Council did not seek, by an examination of the breakdown of the rent, to contest. In my judgment, notwithstanding its inquisitorial duty the Tribunal was in the circumstances entitled to accept it without attempting to consider the issues which Mr Clarke has now raised. Mr Clarke comments in his Skeleton Argument that GCS did not supply comparables to demonstrate that the rent of £27,040 under the head lease was a reasonable one. In my judgment it had no need to do so in the absence of a much more concrete challenge by the Council to the legitimacy of the figures.

(c) Consideration of the Council's submissions: (ii) need for support "manufactured"

68. The second main point which the Council makes in this appeal in respect of reg. 9(1)(l) is that the claimants did not have a genuine need for the support which they were given by GCS – i.e. that a need was "manufactured" in order to bring the lettings within the regulation. I have some difficulty with squaring Mr Clarke's concession, in para. 30 of his Skeleton Argument, that more than minimal support was in fact provided, with his submission that the Tribunal should have found that support was not required. It seems to me that if support is not reasonably required, it cannot be provided. One cannot, it seems to me, be said to "provide support" to a person, within the meaning of the "exempt accommodation" definition, if that person does not need support. However, it would be wrong simply to reject this ground of appeal on that ground. There is no doubt that the Council did in its submissions to the Tribunal contend that there was no real need for the support, or at any rate no sufficient evidence of such a need, and I would say that the submission was therefore in substance that there was no sufficient evidence that more than minimal support was provided. If substantiated, that might have been a ground on which the Tribunal could have found that the whole set-up was designed to abuse the housing benefit scheme, and that therefore no part of the rent was eligible for housing benefit.
69. However, the Tribunal rejected that contention. It found (paras. 23 and 24 of the Statement of Reasons) that (a) the claimants would benefit from the available support and (b) that more than minimal support was in fact provided to them. In my judgment the Tribunal was fully entitled, on the evidence before it, so to find.
70. The Tribunal referred in outline, in paragraphs 18, 19 and 24 of the Statement of Reasons, to some of the evidence which was before it, such as the initial referrals, and the support plans. I have referred to that evidence in somewhat more detail in my above summary of the facts. In my judgment there was ample evidence on which the Tribunal was entitled to find that each of the claimants (other than Miss E – see below) would benefit from the support offered to them, and that more than minimal support was provided.
71. The Tribunal stated in paragraph 24 of the Statement of Reasons that it did not accept the Council's submission (recorded as having been made by Ms Connor at one point during the hearing) that support should be reasonably required. What it appears to have meant by that was merely that, provided that the support would benefit the claimant to a significant extent, and therefore is needed, there is no additional test of whether it is in all the circumstances reasonable to provide support. I agree with that. Such a test might bring in questions of the relative needs of various claimants or groups of claimant, and of the resources available to satisfy particular types of need. I do not think that the words "provides ……support" in the definition of "exempt accommodation" require consideration to be given to such matters, and nor are they in my judgment relevant when considering whether unfair advantage has been taken of the housing benefit scheme. What matters is simply whether support is provided to more than a minimal extent, and it is in my view implicit that support is not "provided" unless there is in fact some need for it.
72. To be fair to Ms Connor, I do not think that she intended her submission to go so far. Her submission at the hearing was that there was no real need at all for the support offered and purportedly given. As I have said, in my judgment the Tribunal was fully entitled on the evidence to find that there was a need in the case of each of the claimants.
73. I have considered whether the Tribunal sufficiently explained its reasoning. It did not deal specifically with many of the points which Ms Connor made in support of her submission, and (beyond saying in para. 19 that "two of the appellants are alcoholics and a further four are asylum seekers with outreach workers") it did not explain what it found each claimant's need to be. However, on the whole I have concluded that in paras. 18, 19 and 24 it adequately explained why it reached the decision it did. It referred to the documentation which was available in the files relating to the support actually provided, and the support required.
74. Further, if I had concluded that the Tribunal's findings of fact were insufficient on this point, I would, in relation to this particular point, have accepted the invitation of both parties to make my own findings, which would have been that a significant degree of support was needed by and was given to each of the claimants by GCS. My findings and reasoning in relation to claimants other than Miss E would have been as follows. (I deal with Miss E separately below).
75. All of the claimants were in need of accommodation which was more suitable to live in on a permanent basis than the bedsit accommodation which was offered by GCS, which was intended generally as temporary accommodation. All of the claimants, save possibly Mr P, were helped with that. Mr P's need for more permanent accommodation seems to have been overtaken by serious health problems. The other claimants were also assisted with other matters, and in particular the refugees were helped with problems arising from their lack of English and their unfamiliarity with the culture. I consider in outline the position of each claimant in turn.
76. Mr F had been with Project SJR since May 2007. He had alcohol problems which are likely to have impeded his motivation and ability to find more permanent accommodation. The notes of the support sessions with him make it clear that he was prompted and assisted to apply for his own accommodation, and also given some counselling in connection with his alcohol problems. He is stated to have found accommodation by the end of July 2008.
77. Mr P had been referred to Project SJR as long ago as February 2006. He was referred by an organisation by the name of "Counted In.", and was at that time homeless and sleeping rough. His needs were stated by the referrer to include managing his accommodation, rebuilding family relationships, health issues, resettlement into the community and living on a limited budget. He stated that he felt able to manage his alcohol misuse issues. In his interview on 6 March 2008 he stated that he had drunk heavily over the previous 2 days, owing to stress relating to the impending interview. The support sessions focussed latterly mainly on his health (having been diagnosed with possible bladder cancer in June 2008).In the last recorded support session in the papers, on 27 August 2008, he stated that he had not wanted to look for accommodation for the last few weeks because he needed to focus on his health, and would not be able to cope with that while living independently.
78. Mrs M.K. was referred to Project SJR in August 2007 by Sunrise Project, having been awarded refugee status and therefore been given notice to leave NASS accommodation. The following were stated by the referring agency to be needed: "emotional support", "benefit advice", "religious and cultural"; "rebuilding family relationships", "health issues", "resettlement into the community", "numeracy/literacy." In a box for other information the following was stated:

"[Mrs M.K] has been living in NASS accommodation and has recently been awarded refugee status. She therefore has to leave her NASS accommodation by 8 August 2007. [She] does not have anybody else she can stay with so if it is possible to accommodate her on this date it would prevent her from becoming street homeless."

79. In one of the initial support sessions with GCS the support worker wrote: "I explained the support on offer fully to her and she thought that this would be of great help to her." Her English was said to be good, having regard to the fact that she had been in the UK for only 12 months. The notes of support sessions indicate that she was helped in relation to the driving theory test, and in relation to finding accommodation.
80. Mrs D was referred to GCS in May 2008 by Leigh Asylum Seeker and Refugee Support, having been given notice to leave NASS accommodation. She was stated by the referring agency to have no family or friends here, her only link being with her Eritrean Church in Manchester. She was said by the referrer to need help with most of the items on the GCS standard form, including how to budget for utility bills, how to access benefits, and how to deal with a very different culture, and resettlement. The notes of support sessions indicate that she was helped with budgeting for furniture, locating her church and finding accommodation.
81. Mrs W.K was referred to Project SJR in November 2007, having been given notice to leave NASS accommodation. There is no document from the referring agency assessing her needs. The initial assessment by GCS in March 2008 indicated that she needed help managing her own accommodation, with resettlement into the community, finding social activities/training/education and basic literacy. By August 2008 she was expecting a baby in January 2009, which meant that she would no longer be able to manage with 1 bedroom. She was going to English lessons. The notes of support sessions indicate that sometimes she was seen by the support worker with an interpreter. She was helped with communications with her doctor, security and applying for accommodation, and applying for benefits. I note that in August 2008 she missed a support session and is recorded as saying: "she does not speak English and we don't speak Eritrean and therefore there is no need for support." The support worker adds: "it speaks for itself really."
82. Mr E was referred to Project SJR by the "Sunrise Project – Refugee Action" in January 2008, having received refugee status and been given notice to leave NASS accommodation. He was stated by the referrer to need benefit advice, help with resettlement into the community, living on a limited budget, locating training activities and higher education. In the notes of support sessions he is stated to have expressed an interest in March 2008 in support for re-housing and education. On 19 March he was warned, having missed sessions, that the support was a requirement of his tenancy agreement. A note on 17 April 2008 records that he had been to see his case worker at Refugee Action regarding housing references for space. The notes of support sessions indicate that he was helped with finding accommodation and completing IT training.
83. There are some points which do puzzle me about the evidence as to need for support, but I have concluded that (i) the fact that the Tribunal did not deal with them did not render their reasoning deficient and (ii) that had I set aside the Tribunal's decision for inadequacy of reasons, these points would not have prevented me making the findings that support was needed and provided.
84. I am unclear why, if (as asserted by Mr Key) support continued to be provided at a "low" level by Project SJR after Supporting People funding was withdrawn, (a) the tenancy agreements of those of the claimants who were later taken on by GCS showed a sum of £61 per week odd as payable in respect of support; there appears to have been no intention that that sum should be paid; and (b) assessments of need for support were purportedly conducted by GCS in February/March 2008, at around the time when it became the landlord. As to (b), for example, in a support session with Mr F on 28 February 2008 it was stated:

"Met with [Mr F] today …..to interview him for support provided by GCS, informed him about the support and what it entails also when support sessions will take place and who will be his support worker.

Again, on p.466 of Mr P's file, at a support session on 6 March 2008, it was stated: "I explained to him how the support package worked and that we would need him to commit himself to this." These items of evidence which I have referred to under (b) read as if no support was previously being provided by Project SJR.

85. However, whether Project SJR was in fact providing support or not, for the reasons given above I am satisfied that these claimants had a genuine need for support and that GCS did provide support to them. It is clear that by no means everyone who could benefit from support, and who could therefore be said to have some need for it, gets it. It seems to me that the questions whether Project SJR was or was not providing support down to March 2008, and why a much larger support charge was shown in the tenancy agreements with Project SJR entered into after the withdrawal of Supporting People funding, are at the end of the day neither here nor there.
86. As regards the points made by Ms. Connor at the Tribunal hearing, I would comment as follows, using the same numbering as in para. 49 above:

(2) Whether or not support was provided to the tenants of no. 56 prior to the introduction of GCS, and whether or not support is provided in relation to the other "Project SJR" properties, in my judgment the Tribunal was entitled to find that these claimants had a genuine need for support, and that GCS provided some significant support. The fact that the support charge was not intended actually to be paid does not seem to me to detract from that. It could of course be some evidence that the stated intention to provide support was a sham, but the Tribunal was in my judgment entitled to find (and I would if necessary have found) that that was not the case.

(4) The Tribunal did not comment on the submission that there were an inadequate number of support workers. The notes show that there were at least weekly, and in some cases twice weekly, sessions at no. 56 and that some significant support was provided by the support workers. I do not think that the Tribunal needed to deal specifically with this submission.

(5) The fact that someone is able to live independently in the sense of survive, and so credibly apply for other permanent accommodation, does not mean that they cannot benefit from support in their existing accommodation. I do not think that the Tribunal needed to deal specifically with this.

(7) Even if it is the case that Supporting People withdrew funding from Project SJR on the ground that it did not consider that there was a sufficient need for the support (and I do not think that there was sufficient evidence of that before the Tribunal to require it to take that point into account – it was merely an assertion by Ms Connor), that would not necessarily indicate that these claimants had no support needs and therefore that support could not properly be provided to them.

As to the Council's point that there was no independent verification that the claimants had support needs, there is no absolute requirement that there be any such verification. It is purely an evidential point. In the case of those claimants in respect of whom there are referral forms from other agencies, there is at least the evidence on those forms, although such evidence may need to be treated with some caution where (as here) it is made clear that the accommodation will only be available if support needs are present.

(2) Exempt accommodation

87. Mr. Clarke's submissions were in substance the same as those made in respect of reg. 9(1)(l). He submitted that the two points were inextricably linked and should not be argued separately. His contention that the Tribunal should have considered whether "disguised profits" were being made incorporated a submission that the Tribunal failed properly to consider whether GCS was a "voluntary organisation", because it looked only at GCS's constitution. However, in my judgment Mr Key is correct in submitting that it was conceded on behalf of the Council before the Tribunal that GCS is a "voluntary organisation". I refer, in particular, to (a) the statement in Section 7.11 of the Council's written submission to the Tribunal that "Project SJR was not a not for profit company but [GCS] is declared to be such" (b) the statement in Section 7.26 of that submission that "the decision maker would accept that the accommodation is provided by an organisation that is not for profit" and (b) Ms Connor's recorded statement at the Tribunal hearing (p.529) that "we accept that it has been registered as a voluntary organisation." No express submission was made that GCS was not a "voluntary organisation" because it was in fact carrying on business for profit.
88. However, the Tribunal did in my judgment err in law in finding that Miss E needed and was provided with support. There was no evidence before the Tribunal relating to her specific position, because no submission was made on her behalf to the Tribunal. The Tribunal should in my judgment have allowed her appeal only on the reg. 9(1)(l) question, leaving on foot the Council's alternative decision that her accommodation was not "exempt accommodation".

Implications for other claims

89. The Tribunal's decision in respect of these claims is not of course binding in relation to any other claimant or claim, and nor is anything which I am about to say.
90. However, in view of the fact that other claims for housing benefit in respect of property let by GCS have been and, no doubt, will continue to be made, it may be helpful if I give some outline consideration to whether an argument that, because it was seeking to make an unjustified profit, either (i) GCS was not a "voluntary organisation" or (ii) reg. 9(1)(l) applied, might have had any prospect of success.
91. I am inclined to agree with Mr Clarke's submission that there are questions which, they having now been raised by the Council, would at least need to be answered. As noted above, the rent payable by the claimants was broken down into a basic core rent of £65 per week, to which items in respect of a large number of costs were added. Mr. Key told me at the hearing that the sum of £65 per week was chosen because it was the local housing allowance (LHA ) rate. I am unclear why there is such a difference between that amount and the local reference rent of £110 per week. Mr Key further explained that the rent of £27,040 per annum payable under the headlease was arrived at by taking the LHA rate of £65 for a "shared" room and multiplying it by 8 (there being 8 lettable rooms in no. 56) and then multiplying by 52 to get an annual amount.
92. What is of possible concern in relation to that exercise is that the LHA of £65 is the amount which would be awarded by way of housing benefit if there were no question of support being provided. A landlord would then have to pay out of that the costs of insuring, repairing, management and all the other costs associated with letting the rooms. However, the 5 year lease from Greenhey to GCS imposes full repairing and insurance obligations on GCS, and Greenhey of course incurs no management costs. It receives its £27,040 per annum net of all costs. That may suggest that it may not have been appropriate to use £65 per week as the basis for calculating a reasonable rent to be paid by GCS. It is also notable that £27,040 is more than 11% of the capital value (£240,000) which was put on no. 56. I believe that that would be, and would have been in early 2008, a very high net rent.
93. There may, in addition, be points which could be taken on the costs which were added to the core rent of £65 in determining the rent charged.
94. It may be that Greenhey was in effect using some of the rent which it received under the headlease to pay back to GCS to enable it to pay the costs of paying the support workers. If so, that might have amounted to including in the rent payable by each tenant a double charge for the support costs – once by inclusion in the "core rent" of £65 per week and once by way of the support charge.
95. However, those claimants in receipt of JSA would not fall within the vulnerable groups in reg. 13(4). That may permit the Council to reduce their rents under reg. 13(3). In the case of such claimants, that might be a ground on which it would be right to find that there can have been no intention to take advantage of the scheme. Can there be an intention to "take advantage of" the scheme where it is known that the control mechanism is available to the local authority, without the restriction in reg. 13(4)? (Cf. para. 58 above).
96. These are not matters on which, had I set aside the Tribunal's decision, I would have felt able to make my own findings. There was insufficient evidence or argument about them before the Tribunal, or me.

Disposal

97. It follows that my decision in respect of the appeals in the cases of all the claimants other than that of Miss E is to dismiss the Council's appeals. In the case of Miss E I allow the Council's appeal to the extent of setting aside the Tribunal's decision and substituting a decision that Miss E's claim (i) does not fall to be disallowed under regulation 9(1)(l) but (ii) falls to be determined on the footing that her accommodation was not exempt accommodation.
98. My decision says nothing about whether the Council is able to reduce the eligible rent of the claimants other than Miss E under reg. 13(3).

Charles Turnbull

Judge of the Upper Tribunal

4 August 2009