Upper Tribunal (Administrative Appeals Chamber)

 

DECISION OF THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

 

The Secretary of State's appeal to the Upper Tribunal is dismissed. The decision of the Sheffield First-tier Tribunal dated 8 October 2010 involved no material error on a point of law, and accordingly stands.

 

 

REASONS FOR DECISION

 

1. The Secretary of State for Work and Pensions appeals to the Upper Tribunal with the permission of the salaried tribunal judge who had constituted the First-tier Tribunal. I directed that there should be an oral hearing in place of the normal exchange of written submissions. The hearing took place at Leeds Combined Court Centre on 23 May 2011. The claimant had replied that he would not be attending. The Secretary of State was represented by Mr Stephen Cooper, solicitor, instructed by DWP/DH Legal Services, with the assistance of Mrs M A Gratrex of the Department’s Decision Making and Appeals Unit, Leeds. The Secretary of State was given time after the hearing to provide details of the amendment to the provisions of regulation 3 of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 on revision with effect from 28 June 2010 and of how the revision provisions had been implemented prior to that amendment. The claimant had no observations to make in reply.

 

2. The facts of this case are simple, but have given rise to a great deal of legal complication. I have concluded that a lot of that complication was unnecessary, although tracing a route through the legislation is far from easy, and that the guidance apparently given to offices administering employment and support allowance (ESA) by the Department was wrong in law. It is certainly the case that the way in which the legislation was said by Mr Cooper and Mrs Gratrex to operate, which I reject below, was very different from the way it had previously been explained to the claimant and to the First-tier Tribunal.

 

3. The claimant was in receipt of income-related ESA, including the work-related activity component (WRAC), awarded in August 2009 after the claimant had passed the work capability assessment but did not qualify for the support component. From April 2009 the weekly rate of WRAC was £25.50 (going up to £25.95 in April 2010) and the weekly rate of the support component was £30.85 (£31.40). That entitlement came to an end when he started full-time employment on 16 March 2010. Unfortunately for him, the employment ended on 24 March 2010 as the person he was covering for returned to work. He made a new claim for ESA with effect from 25 March 2010 and provided medical evidence from that date. On 13 April 2010 he was awarded ESA, but only at the rate not including the WRAC. He was told that he was in effect to be regarded as in a new “assessment phase” and so could not qualify for the WRAC until he had had another work capability assessment. He was also told that if he passed the assessment the WRAC would be awarded from the date of the new claim. On 8 June 2010 the claimant found another job and ceased to be entitled to ESA, before another work capability assessment was carried out.

 

4. The decision was apparently an application of the basic conditions of entitlement to the WRAC for the purposes of income-related ESA in section 4(5) of the Welfare Reform Act 2007 (the 2007 Act):

 

“(5) The conditions of entitlement to the work-related activity component are--

 (a) that the assessment phase has ended;

 (b) that the claimant does not have limited capability for work-related activity, and

 (c) that such other conditions as may be prescribed are satisfied.”

 

The conditions of entitlement to the support component in subsection (4) are the same, except under (b), where the test is that the claimant has limited capability for work-related activity (defined in section 13(7)). Subsection (6) allows regulations to prescribe (a) circumstances in which paragraph (a) of subsection (4) or (5) does not apply and (b) circumstances in which entitlement under those subsections is to be backdated. At the date of the decision in the present case regulations had been made under subsection (6)(a), but not under subsection (6)(b). Section 23(2) provides:

 

“(2) For the purposes of this Part, the assessment phase, in relation to a claimant, is the period—

 (a) beginning, subject to subsection (3), with the first day of the period for which he is entitled to an employment and support allowance, and

 (b) ending with such day as may be prescribed.”

 

5. The general rule under regulation 4(1) of the Employment and Support Allowance Regulations 2008 (the ESA Regulations) is that the assessment phase ends on the last day of a period of 13 weeks beginning on the first day of the assessment phase under section 4(2)(a). Regulation 4(2) provides:

 

“(2) If at the end of the period of 13 weeks referred to in paragraph (1), it has not yet been determined whether the claimant has limited capability for work—

 (a) the claimant having been assessed in accordance with a limited capability for work assessment; or

 (b) as a result of the claimant being treated as having limited capability for work in accordance with regulation 20, 25, 26, 29 or regulation 33(2) (persons to be treated as having limited capability for work),

the assessment phase will end when the limited capability for work determination is made.”

 

Under regulation 2(1) “limited capability for work assessment” means “the assessment of whether a person has limited capability for work as set out in regulation 19(2) and in Schedule 2”. Section 1(4) of the Act provides:

 

“(4) For the purposes of this Part, a person has limited capability for work if—

(a)           his capability for work is limited by his physical or mental condition, and

(b)           the limitation is such that it is not reasonable to require him to work.”

 

Then regulation 19(1) and (2) provides:

 

“(1) For the purposes of Part I of the [2007 Act], whether a claimant’s capability for work is limited by the claimant’s physical or mental condition and, if it is, whether the limitation is such that it is not reasonable to require the claimant to work is to be determined on the basis of a limited capability for work assessment of the claimant in accordance with this Part.

 (2) The limited capability for work assessment is an assessment of the extent to which a claimant who has some specific disease or bodily or mental disablement is capable of performing the activities prescribed in Schedule 2 or is incapable by reason of such disease or bodily or mental disablement of performing those activities.”

 

Schedule 2 sets out the points attached to satisfaction of the now familiar descriptors and regulation 19(3) sets the required score for a finding of limited capability for work at 15. Those provisions were made under the duty, not merely a power, set out in section 8(1) and (2) of the 2007 Act:

 

“(1) For the purposes of this Part, whether a person’s capability for work is limited by his physical or mental condition and, if it is, whether the limitation is such that it is not reasonable to require him to work shall be determined in accordance with regulations.

 (2) Regulations under subsection (1) shall:

(a)           provide for determination on the basis of an assessment of the person concerned;

(b)           define the assessment by reference to the extent to which a person who has some specific disease or bodily or mental disablement is capable or incapable of performing such activities as may be prescribed;

(c)           make provision as to the manner of carrying out the assessment.”

 

6. By way of contrast, the provisions about limited capability for work-related activities are as follows. Section 2(5) of the 1997 Act provides:

 

“(5) For the purposes of this Part, a person has limited capability for work-related activity if—

(c)           his capability for work-related activity is limited by his physical or mental condition, and

(d)           the limitation is such that it is not reasonable to require him to undertake such activity.”

 

Section 9(1) provides that whether a person’s capability for work-related activity is so limited is to be determined in accordance with regulations and subsection (2) imposes substantially the same duty as under section 8(2) except that in paragraph (b) the definition of the assessment is left entirely to the regulations. The provisions made under that duty are regulations 34 to 39 of the ESA Regulations. Regulation 34(1) provides:

 

“(1) For the purposes of Part I of the [1997 Act], where, by reason of a claimant’s physical or mental condition, at least one of the descriptors set out in Schedule 3 applies to the claimant, the claimant’s capability for work-related activity will be limited and the limitation will be such that it is not reasonable to require that claimant to undertake such activity.”

 

The rest of section 34 deals with when a descriptor can be taken to apply and with when the Secretary of State can make a fresh determination. Regulation 35 deems certain claimants to have limited capability for work-related activity. Regulation 36 prescribes the information required to make a determination as (a) any information relating to the Schedule 3 descriptors as may be requested on a questionnaire (unless the Secretary of State already has sufficient information) and (b) such additional information as may be requested. Regulation 37 deems a claimant who fails without good cause to comply with a regulation 36(1)(a) request not to have limited capability for work-related activity. Regulation 38 allows a claimant to be called for an examination by a health care professional and for a similar deeming for non-attendance without good cause. Regulation 39 prescribes some matters to be taken into account in considering good cause.

 

7. The claimant appealed against the decision of 15 April 2010 on the entirely understandable ground that he had been penalised by £26 per week for taking on a temporary contract in an attempt to move his life on from reliance on the social security system.

 

8. In producing the written submission to the First-tier Tribunal, the officer concerned not only consulted the existing general administrative guidance, but also (because of suggestions to the contrary in an annotation in Volume 1 of Bonner et al, Social Security Legislation 2010/11) asked for specific advice from the Department’s Decision Making and Appeals Unit in Leeds (DMA). That advice confirmed the view of the legislation that had been taken when the decision was made. This started from the effect of regulation 145(1) and (2) of the ESA Regulations:

 

“(1) Any period of limited capability for work which is separated from another period by not more than 12 weeks is to be treated as a continuation of the earlier period.

 (2) Where the claimant is a work or training beneficiary in accordance with regulation 148, any period of limited capability for work which is separated from another such period by not more than 104 weeks is to be treated as a continuation of the earlier period.”

 

The claimant here came within regulation 145(2) as a work or training beneficiary, but did not need its extra protection because he also came within regulation 145(1). However, those provisions in themselves bite only on the starting date and duration of the period of limited capability for work, not on whether a new assessment phase was started by the new claim which therefore could not have terminated.

 

9. The issue debated in the DMA advice was whether or not the effect of the complicated provisions of regulation 149 of the ESA Regulations was that, in such circumstances, qualification for the WRAC resumed on the first day of the new period of ESA entitlement, as regulation 150 plainly provided in relation to previous members of the support group and qualification for the support component. The advice was that it was not. The tribunal of 8 October 2010 took the opposite view, leading to the decision that the claimant qualified for the WRAC from and including 25 March 2010. The Secretary of State’s appeal to the Upper Tribunal is on the ground that the tribunal’s view was wrong in law.

 

10. I do not need to set out regulations 148 to 150 of the ESA Regulations in full, because they are in my judgment irrelevant to the resolution of the issue that was before the tribunal. But I should summarise their effect. Regulation 148 defines “work or training beneficiary” so as to cover a person who goes into work after recently ceasing to be entitled to ESA, providing that that was not the result of failing a limited capability for work assessment. Regulation 149 provides a linking rule to treat a work or training beneficiary as having limited capability for work on a new claim within 104 weeks of the end of the previous entitlement. Regulation 150 provides a linking rule for limited capability for work-related activity where a work or training beneficiary was previously a member of the support group (ie determined to have or treated as having limited capability for work-related activity: 2007 Act, section 24(4)). On a claim within the same 104 weeks the claimant is to be treated as having limited capability for work-related activity for the first 13 weeks.

 

11. Those provisions are rendered irrelevant in the circumstances of the present case by regulation 7(1)(b) of the ESA Regulations, made under powers including that in section 4(6)(a) of the 2007 Act:

 

“(1) Subject to paragraph (2), sections 2(2)(a), 2(3)(a), 4(4)(a) and 4(5)(a) of the [2007 Act] do not apply where—

(a)           [terminal illness];

 (b) (i) a period of limited capability for work is to be treated as a continuation of an earlier period of limited capability for work under regulation 145(1) or (2);

(ii) the claimant was entitled to an employment and support allowance in the earlier period of limited capability for work; and

(iii) the assessment phase had ended in the previous period for which the claimant was entitled to an employment and support allowance;

 (c) [income support and lone parents].”

 

Regulation 7(2) provides that paragraph (1)(b) does not apply where a claimant is appealing against a decision embodying a determination of failure of the work capability assessment, so has no effect in the present case. For completeness, it should be noted that regulation 5 deals with cases where the assessment phase was still running in the previous period of limited capability for work.

 

12. Regulation 7(1)(b) applies precisely to the circumstances of the present case. Its effect is that as from 25 March 2010 the claimant qualified for the WRAC if the conditions in section 4(5)(b) and (c) were met, without any need to consider the assessment phase condition in section 4(5)(a). Before the hearing of 23 May 2011 I thought that regulation 7(1)(b) provided the complete answer against the Secretary of State’s case. However, at the hearing Mr Cooper and Mrs Gratrex, having accepted that regulation 7(1)(b) had the effect of removing the condition of entitlement in section 4(5)(a), submitted that the claimant did not as at 25 March 2010 satisfy section 4(5)(b).

 

13. The argument was that the condition of not having limited capability for work-related activity could only be satisfied after the question of whether or not the claimant had such limited capability had been freshly determined in an assessment for that purpose. It was submitted that the plain meaning of sections 8(1) and 9(1) in particular was that the question whether a claimant’s capability for work or for work-related activity was or was not limited was to be determined according to regulations and that sections 8(2) and 9(2) then required the regulations to provide for the determination of that question in either direction to be determined on the basis of an assessment. Accordingly, when considering section 4(4) and 4(5), which it was said logically (being concerned with the amount of entitlement) came after sections 8 and 9 (being concerned with the determination of entitlement), the references to either having or not having limited capability for work-related activity had in the context of the 2007 Act as a whole to be construed as referring to the outcome of a determination following an assessment. It was submitted that that construction was supported by the terms of the regulations set out in paragraphs 5 and 6 above, and by the ESA Regulations as a whole,  in plainly referring to assessments of capability for work and for work-related activity as being of whether or not the claimant met those conditions, as confirmed by regulation 30(1).

 

14. It was further submitted that that result did not work unfairly in general against claimants in a similar situation to that of the claimant. That was because, once a claimant was found on assessment to have limited capability for work and also therefore assessed for limited capability for work-related activity, whichever way the latter assessment went would be backdated to the beginning of the new claim. If it was determined that the claimant was so limited, the support component would be awarded from that date. If it was determined that the claimant was not so limited, the WRAC would be awarded. It was just an unlucky accident that the claimant here had ceased to be entitled to ESA on taking up employment before the assessment was carried out. However, Mr Cooper and Mrs Gratrex were unable at the hearing, or in Mrs Gratrex’s further submission of 24 May 2011, to point to any regulation made in pursuance of the power in section 4(6)(b) of the 2007 Act that allowed such a process of backdating to be applied as at 24 March 2010 or 8 June 2010 (the last day of the claimant’s entitlement to ESA). In the further submission it was said that the general power of revision in regulation 3(1)(a) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 was used. That allows the Secretary of State to revise any decision of his if action leading to revision is commenced within one month of the date of notification of the original decision. With effect from 28 June 2010, regulation 7(2) of the Social Security (Miscellaneous Amendments) (No 3) Regulations 2010 inserted, among other things, a new paragraph (5F) into regulation 3 of the Decisions and Appeals Regulations:

 

“(5F) A decision under section 8 or 10 [of the Social Security Act 1998] awarding an employment and support allowance may be revised if—

 (a) the person’s current period of limited capability for work is treated as a continuation of another such period under regulation 145(1) and (2) of the Employment and Support Allowance Regulations; and

 (b) regulation 7(1)(b) of those Regulations applies.”

 

The scope of regulation 7(1)(b) of the ESA Regulations was also slightly extended by regulation 9(6) of the same Amendment Regulations. I note that the preamble to the Amendment Regulations does not specifically invoke section 4(6)(b) of the 2007 Act nor “all his other enabling powers”, although section 4(6)(a) is mentioned. There might therefore some doubt over the vires of regulation 7(2) (see the decision of the Court of Appeal in Vixiba Ltd v Komori UK Ltd and others [2006] EWCA Civ 536, [2006] 1 WLR 2472). Section 9(1) of the Social Security Act 1998, which is invoked, might, though, supply the necessary power,

 

15. I do not accept the submissions for the Secretary of State. I go back to the plain words of section 4(4)(b) and (5)(b) of the 2007 Act. Looked at in isolation the natural and obvious meaning is that together the two provisions exhaust all possibilities in relation to limited capability for work-related activity. Providing that paragraph (a) on the ending of the assessment phase is satisfied or does not apply, either a claimant is so limited, in which case section 4(4)(b) applies, or is not, in which case section 4(5)(b) applies. Considering the context of the Act and in particular the effect of sections 8 and 9 makes no difference of substance. Accepting that a determination whether or not a claimant has limited capability for work-related activity is for the purposes of the Act (regardless of what the ESA Regulations have in fact done) to be made on the basis of an assessment using particular criteria to be defined does not change the exhaustive effect of section 4(4)(b) and (5)(b). If someone in the circumstances of the claimant here cannot be said to have limited capability for work-related activity because there has not yet been an assessment, so as not to fall within section 4(4)(b), then the person falls within section 4(5)(b). The person does not have limited capability for work-related activity because it has not yet been determined that the person does have such limited capability.

 

16. That is in my view enough to decide the meaning of section 4(5)(b). There is doubt how far the terms of secondary legislation can be relevant to the construction of primary legislation. Where, as here in the case of the ESA Regulations, the secondary legislation was made to come into force at the same date as the primary legislation, there may well be a good case for looking at the overall statutory scheme as part of the context. However, I see nothing in the Regulations to alter the conclusion reached above. Regulations 34 to 39 on capability for work-related activity (see paragraph 6 above) scarcely seem to prescribe any particular form of assessment other than by defining the criteria to be used, whereas regulation 19 is rather more specific in relation to limited capability for work. The use of language and in particular the word “whether” in the ESA Regulations seems throughout appropriately to carry the meaning of “whether or not”, but for the reasons given above that does not affect the construction of section 4(5)(b). Nor do I need to explore the question whether, if the Secretary of State’s submission were correct, regulation 7(1)(b) would have any practical purpose. Mr Cooper and Mrs Gratrex asserted that it had a more general purpose beyond the circumstances of the present case, but I must admit that I struggle to see what it is in relation to its effect on section 4(5)(a).

 

17. I also do not need to decide whether there was prior to 28 June 2010 a proper legal basis for the “backdating” of entitlement to the WRAC or the support component in circumstances like those of the present case once the claimant who had only been entitled to the WRAC in the previous period of entitlement had been determined either to have or not to have limited capability for work-related activity. I have grave doubt whether regulation 3(1)(a) of the Decisions and Appeals Regulations could possibly have worked, because it depends on action being taken by the Secretary of State within a month of the initial decision and that condition would often not be met. The conclusion I have reached means that the beneficial effect of the practice that appears to have been adopted, whether there was a legal basis for it or not, is not withheld from those like the claimant in the present case who happened, often for the best of reasons, to come off ESA before an assessment was carried out. I do not find the terms of the new regulation 3(5F) easy to interpret, but the effect of my decision may be that any difficulties will not in practice have to be addressed.

 

18. The result is that the tribunal of 8 October 2010 came to the only possible legal conclusion on the facts, although, unsurprisingly in view of the way the case was presented to it, not by reference to the correct legal basis. The claimant qualified for the WRAC from 25 March 2010 under section 4(5) of the 2007 Act because paragraph (a) was not applicable, he satisfied paragraph (b) and there were no other conditions prescribed under paragraph (c). The Secretary of State’s appeal against its decision must accordingly be dismissed.

 

19. The Secretary of State will wish, unless it is sought to take this case to a higher court, to consider what to do about the legally wrong official guidance and advice that appears to have been given for some years. I should also mention that the annotation in Bonner et al mentioned above (to regulation 149 of the ESA Regulations) suggesting the result that I have now reached does not refer to regulation 7(1)(b) or 5 (which deals with the case where the assessment phase was still running when one period of limited capability for work ended which then gets linked under regulation 145(1) or (2)) or to section 4(5) of the 2007 Act. Nor is there any exploration of the problem arising here in the annotations to those provisions.

 

 

 

 

(Signed on original):  J Mesher

  Judge of the Upper Tribunal

 

Date: 28 July 2011