Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No.  CJSA/2841/2012

ADMINISTRATIVE APPEALS CHAMBER

Before Upper Tribunal Judge Rowland

Decision:  The claimant’s appeal is allowed.  The decision of the First-tier Tribunal dated 8 February 2012 is set aside and I substitute the decision that the overpayment of jobseeker’s allowance amounting to £262.02 in respect of the period from 22 January 2010 to 26 February 2010 is not recoverable from the claimant.

REASONS FOR DECISION

1. The claimant was in receipt of income-based jobseeker’s allowance at the rate of £50.95 p.w. when he was assaulted on 22 January 2010 and badly injured.  On 26 February 2010, after discussing his situation with the jobcentre, he claimed income-related employment and support allowance with effect from the date of the assault, disclosing in his claim that he had been in receipt of jobseeker’s allowance.  Jobseeker’s allowance had continued in payment until, apparently, 26 February 2010 but, on 2 March 2010, the award of jobseeker’s allowance was superseded and terminated with effect from 22 January 2010 (i.e., the award ran up to the preceding day), in the light of which the payment from 22 January 2010 onwards was revealed as having been an overpayment.  On 4 March 2010, an award of employment and support allowance was made with effect from 22 January 2010 and regular payments at the rate of £50.95 p.w. commenced from 6 March 2010.  On 16 March 2010, the claimant was informed that a payment of arrears of employment and support allowance amounting to £247.48 (sic) had been calculated for the period from 29 January 2010 to 3 March 2010 but had not been sent to the claimant because there had been a possible overpayment, which was obviously a reference to the overpayment of jobseeker’s allowance.  However, through an administrative error, the necessary adjustment was not made and a payment of £247.46 in respect employment and support allowance said to be due in respect of the period from 23 January 2010 to 5 March 2010 was paid to the claimant on 19 April 2010.

2. On 2 August 2010, a computer generated a decision to the effect that £262.02 jobseeker’s allowance had been overpaid to the claimant in respect of the period from 22 January 2010 to 26 February 2010 and was recoverable from him because he had failed to disclose the material fact that he had received another benefit.  Section 2 of the Social Security Act 1998 permits decisions to be made by computer and the computer appears to have been numerate, correctly calculating the amount of the overpayment for the five weeks and one day in issue at the rate of £50.95 p.w.  However, it is unfortunate that the task of making a decision was assigned to a computer that was unaware of the facts of the case.  The claimant had not failed to disclose any material fact.  Moreover, despite the fact that the claimant had at all material times lived in Kent, the computer cited the Northern Ireland equivalent of section 71(1) of the Social Security Administration Act 1992 (“the 1992 Act”) in support of its decision.  Unsurprisingly, the claimant appealed.

3. Equally unsurprisingly, the Secretary of State’s response to the appeal relied neither on the Northern Ireland legislation nor on section 71(1) of the 1992 Act, which provides that an overpayment is recoverable if due to a misrepresentation or to a failure to disclose a material fact.  Instead, he relied on section 74(2) and (4) of the 1992 Act which provides –

 “(2) Where—

(a)  a prescribed payment which apart from this subsection falls to be made from public funds in the United Kingdom … is not made on or before the date which is the prescribed date in relation to the payment; and

(b)  it is determined that an amount (“the relevant amount”) has been paid by way of income support, an income-based jobseeker’s allowance, state pension credit or an income-related employment and support allowance that would not have been paid if the payment mentioned in paragraph (a) above had been made on the prescribed date,

then—

(i) in the case of a payment from public funds in the United Kingdom, the authority responsible for making it may abate it by the relevant amount; and

(ii)  ….”

 “(4) Where an amount could have been recovered by abatement by virtue of subsection (2) … above but has not been so recovered, the Secretary of State may recover it otherwise than by way of abatement—

(a)  in the case of an amount which could have been recovered by virtue of subsection (2) above, from the person to whom it was paid; and

(b)  ….”

4. The Secretary of State argued that the overpayment of jobseeker’s allowance could have been recovered by deducting it from the payment of employment and support allowance under subsection (2) but, since that had not been done, it could be recovered under subsection (4).  He asserted that employment and support allowance was a prescribed payment by virtue of regulation 7 of the Social Security (Payments on account, Overpayments and Recovery) Regulations 1988 (SI 1988/664) (“the 1988 Regulations”).

5. The claimant protested that the amount of arrears of employment and support allowance he had been paid was only £247.46 and he had not been told by the jobcentre that the effect of having his claim for employment and support allowance backdated would be to make him worse off than he would have been had the claim been made only prospectively.

6. The First-tier Tribunal accepted the Secretary of State’s argument and it rejected the claimant’s on the ground that the right of recovery under section 74(4) was “absolute”.

7. The claimant applied for permission to appeal on the ground that section 74(4) did not apply because £262.02 could not have been recovered by abatement from a sum of only £247.46.  The First-tier Tribunal refused permission to appeal but I granted it because, given that initially employment and support allowance is calculated in the same way as jobseeker’s allowance, I could not understand how the amount of the arrears of employment and support allowance could have been less than the amount of the overpayment of jobseeker’s allowance.  The Secretary of State, by way of a helpful submission written by Mr R J Atkinson, supports the claimant’s appeal on a more radical ground.

8. The Secretary of State now submits that the correct mechanism for withholding from arrears of employment and support allowance an amount equal to the overpayment of jobseeker’s allowance was not section 74(2) of the 1992 Act but regulation 5(1) of the 1988 Regulations, which was made under the predecessor of section 71(6)(b) of the 1992 Act and provides –

 “5.—(1) Subject to paragraphs (1A), (2A) and (6) and regulation 6 (exception from offset of recoverable overpayment), any sum paid in respect of a period covered by a subsequent determination in any of the cases set out in paragraph (2) shall be offset against arrears of entitlement under the subsequent determination and, except to the extent that the sum exceeds the arrears, shall be treated as properly paid on account of them.

Paragraph (2) lists five cases, including –

“Case 2: Award or payment of benefit in lieu

Where a person has been paid a sum by way of benefit under the original award and it is subsequently determined, on review or appeal, that another benefit should be awarded or is payable in lieu of the first.”

9. I agree that regulation 5(1) is applicable and that what should have happened is that the overpayment of jobseeker’s allowance should have been treated as a payment on account of employment and support allowance and only the balance of the arrears of the latter benefit should have been paid to the claimant.

10. I also agree with the Secretary of State that section 74(2) did not apply in this case.  Section 74(2) is concerned with cases where a claimant in receipt of an income-related benefit is entitled to arrears of another benefit (or other payment from public funds) that would have fallen to be taken into account as income and so would have reduced entitlement to the income-related benefit had it been paid at the correct time.  In such a case, the arrears of the other benefit may be withheld to the extent that the amount of income-related benefit would have been reduced.  But that was not the position here.  A claimant cannot be entitled to more than one of the income-related benefits mentioned in section 74(2)(b) in respect of the same period.  Most materially, employment and support allowance cannot be paid in respect of the same period as jobseeker’s allowance because it is a condition of entitlement to employment and support allowance that the claimant is not entitled to jobseeker’s allowance (see section 1(3)(f) of the Welfare Reform Act 2007).  Moreover, the award of jobseeker’s allowance was not superseded in this case because the claimant was entitled to employment and support allowance but because it was accepted that he had limited capability for work, which was a condition of entitlement to employment and support allowance (see section 1((3)(a) of the 2007 Act) but more immediately meant that he was not entitled to jobseeker’s allowance (see section 1(2)(f) of the Jobseeker’s Act 1995).  The combined effect of these provisions is that the award of jobseeker’s allowance had to be superseded before employment and support allowance was awarded, which is what was done.

11. It is no doubt because more than one of the income-related benefits cannot be awarded in respect of the same period that none of them is prescribed under regulation 8 of the 1988 Regulations for the purposes of section 74(2)(a), although contribution-based jobseeker’s allowance and contributory employment and support allowance are (for reasons that need not be set out here).  Section 74(2) therefore never applies where it is decided that one of the income-related benefits mentioned in subparagraph (b) should have been paid instead of another one.  (Regulation 7 of the 1988 Regulations, to which the Secretary of State referred in his submission to the First-tier Tribunal, is not relevant because it prescribes income for the purposes of section 74(1) which is rightly not relied on in the present case and, in any event, regulation 7 arguably does not prescribe income-related employment and support allowance for those purposes anyway.)

12. Because section 74(2) of the 1992 Act did not permit abatement, section 74(4) did not apply so as to make the overpayment recoverable.  Section 74(4) acts as a backstop where there is a failure to apply section 74(2) but there is no equivalent provision allowing recovery where there is an equivalent failure to apply regulation 5(1) of the 1988 Regulations.  Any overpayment in this case was entirely due to an administrative error rather than any error by the claimant so that, as was common ground before the First-tier Tribunal, section 71(1) of the 1992 Act does not permit recovery.  Accordingly, the overpayment in this case was not recoverable under the 1992 Act at all.  The First-tier Tribunal erred in law in holding otherwise.

13. The Secretary of State has not addressed the point the claimant and I raised about the apparent discrepancy between the payments of benefit but, on a closer examination of the documents, I think the answer is that the payment of £247.46, which was said to be a payment of employment and support allowance in respect of the six-week period from 23 January 2010 to 5 March 2010 (docs 2 and 43) was not the only payment in respect of that period.  There is a record of an earlier payment of £58.24 in respect of the same period (doc 1E) and the two payments combined would have been the correct amount.  There was also a record of a separate payment of £7.28 in respect of the single day of 22 January 2010.  Those payments may explain the discrepancies between the letters of 16 April 2010 (doc 42) and 19 April 2010 (doc 43) as to the amount of arrears due and the period in respect of which they were due.  In any event, if the overpayment of jobseeker’s allowance of £262.02 in respect of the period from 22 January 2010 to 26 February 2010 had been treated as paid on account of the employment and support allowance due during the same period and deducted from the total of £312.98 calculated as due as arrears in respect of the period from 22 January 2010 to 5 March 2010, the claimant would have been correctly paid the £50.95 due in respect of the week from 27 February 2010 to 5 March 2010 (plus a penny gained in the rounding of the calculation in respect of the odd day).  I have not asked the claimant whether he actually received the payments of £58.24 and £7.28 mentioned above.  If he did not, they were, or now can be treated as having been, properly withheld under regulation 5(1) of the 1988 Regulations.  The effect of my decision is merely that none of the payments actually made to the claimant is recoverable from him.

Mark Rowland

1 August 2013