Upper Tribunal (Administrative Appeals Chamber)

SB v Oxford City Council (HB) (Housing and council tax benefits : other) [2014] UKUT 166 (AAC) (08 April 2014)



IN THE UPPER TRIBUNAL                                                       Case No.  CH/1349/2011

ADMINISTRATIVE APPEALS CHAMBER

 

Before Upper Tribunal Judge Rowland

 

The claimant appeared in person.

 

Neither the local authority nor the Secretary of State appeared or was represented at the hearing, but both had made written submissions.

 

Decision:  The claimant’s appeal is allowed to a limited extent.  The decision of the First-tier Tribunal dated 21 January 2011 is set aside and there is substituted a decision that, in addition to the sums excluded by the local authority, £305 of the claimant’s bursary from the University of Oxford is to be excluded from her “grant income” for the purposes of calculating her entitlement to housing benefit for the period from 17 April 2008 to 15 June 2008.

 

 

REASONS FOR DECISION

 

1.         The sole issue in this appeal is whether Oxford City Council and the First-tier Tribunal were right to regard the whole of a bursary that the claimant, a student, received from the University of Oxford as being part of her grant income for the purpose of calculating her entitlement to housing benefit under the Housing Benefit Regulations 2008 (SI 2006/213) (“the 2006 Regulations”) during the summer term of 2008.

 

2.         The claimant has been very ill for some years, which accounts both for the fact that she was entitled to housing benefit during term time at all while she was a student - regulation 56 of the 2006 Regulations has the effect of excluding most full-time students from entitlement to housing benefit - and also for a large part of the delay there has been at all stages of her case.  The complexity of the arguments advanced by the parties, who have not always maintained consistent positions, has also contributed to the delay but, ultimately, the issue in the case is a short one.

 

The legislation

 

3.         Part 7 of the 2006 Regulations makes special provision for students.  (Relevant provisions are set out here as in force in from 19 May 2008, when an obvious drafting error in the definition of “grant” in regulation 53 was corrected.)  

 

4.         Various terms are defined in regulation 53(1), which provides, among other things, that -

 

"‘access funds’ means-

(a)   grants made under section 68 of the Further and Higher Education Act 1992 for the purpose of providing funds on a discretionary basis to be paid to students;

(b)   grants made under sections 73(a) and (c) and 74(1) of the Education (Scotland) Act 1980; or

(c)   grants made under Article 30 of the Education and Libraries (Northern Ireland) Order 1993 or grants, loans or other payments made under Article 5 of the Further Education (Northern Ireland) Order 1997 in each case being grants, or grants, loans or other payments as the case may be, for the purpose of assisting students in financial difficulties;

(d)   discretionary payments, known as “learner support funds”, which are made available to students in further education by institutions out of funds provided by the Learning and Skills Council for England under sections 5, 6 and 9 of the Learning and Skills Act 2000; or

(e)   Financial Contingency Funds made available by the National Assembly for Wales;

 …

 ‘grant’ (except in the definition of “access funds”) means any kind of educational grant or award and includes any scholarship, studentship, exhibition, allowance or bursary but does not include a payment from access funds or any payment to which paragraph 11 of Schedule 5 or paragraph 54 of Schedule 6 applies;

‘grant income’ means-

    (a)   any income by way of a grant;

    (b)   any contribution whether or not it is paid;

…

‘student loan’ means a loan towards a student’s maintenance pursuant to any regulations made under section 22 of the Teaching and Higher education Act 1998, section 73 of the Education (Scotland) Act 1980 or Article 3 of the Education (Student Support) (Northern Ireland) Order 1998 and shall include, in Scotland, a young student’s bursary paid under regulation 4(1)(c) of the Students’ Allowances (Scotland) Regulations 2007.”

 

5.         Regulation 59(1) to (3) provides for the calculation of students’ grant income in the following terms -

 

“This sectionnoteType=Explanatory Memorandum has no associated

59.-(1)  The amount of a student’s grant income to be taken into account shall, subject to paragraphs (2) and (3), be the whole of his grant income.

  (2) There shall be excluded from a student’s grant income any payment-

    (a)   intended to meet tuition fees or examination fees;

    (b)   in respect of the student’s disability;

    (c)    intended to meet additional expenditure connected with term time residential study away from the student’s educational establishment;

    (d)   on account of the student maintaining a home at a place other than that at which he resides during his course;

    (e)   on account of any other person but only if that person is residing outside of the United Kingdom and there is no applicable amount in respect of him;

    (f)    intended to meet the cost of books and equipment;

    (g)   intended to meet travel expenses incurred as a result of his attendance on the course;

    (h)   intended for the child care costs of a child dependant.

 (3) Where a student does not have a student loan and is not treated as possessing such a loan, there shall be excluded from the student’s grant income-

    (a)   the sum of £290 in respect of travel costs; and

    (b)   the sum of £370 towards the costs of books and equipment,

whether or not any such costs are incurred.

  …”

 

It is unnecessary to set out the rest of that regulation because there is no issue between the parties as to the way in which the grant income is to be apportioned.

 

6.         Regulation 64 provides for the treatment of student loans and makes provision for a person to be treated as entitled to a loan even when one has not been taken out.  However, regulation 64A provides for loans in respect of fees to be disregarded.  So far as is material, regulations 64 and 64A provide -

 

“64. -(1)  A student loan shall be treated as income.

  (2)  …

  (3) A student shall be treated as possessing a student loan in respect of an academic year where-

    (a)   a student loan has been made to him in respect of that year; or

    (b)   he could acquire such a loan in respect of that year by taking reasonable steps to do so.

  (4) Where a student is treated as possessing a student loan under paragraph (3), the amount of the student loan to be taken into account as income shall be, subject to paragraph (5)-

    (a)   in the case of a student to whom a student loan is made in respect of an academic year, a sum equal to-

    (i)     the maximum student loan he is able to acquire in respect of that year by taking reasonable steps to do so; and

    (ii)    any contribution whether or not it has been paid;

    (b)   in the case of a student to whom a student loan is not made in respect of an academic year, the maximum student loan that would be made to the student if-

    (i)     he took all reasonable steps to obtain the maximum student loan he is able to acquire in respect of that year; and

    (ii)    no deduction in that loan was made by virtue of the application of a means test.

  (5) There shall be deducted from the amount of a student’s loan income-

    (a)   the sum of £290 in respect of travel costs; and

    (b)   the sum of £370 towards the cost of books and equipment,

whether or not any such costs are incurred.

 

64A.  A loan for fees, known as a fee loan or a fee contribution loan, made pursuant to regulations made under Article 3 of the Education (Student Support) (Northern Ireland) Order 1998, section 22 of the Teaching and Higher Education Act 1998 or section 73(f) of the Education (Scotland) Act 1980, shall be disregarded as income.”

 

7.         Provision in respect of payments to students from “access funds” is made by regulations 65 and 68, but I need not set those provisions out because, as I shall explain below, it is common ground that none of the payments made to the claimant in this case was made out of such funds.

 

8.         The Teaching and Higher Education Act 1998 empowers the Secretary of State to make regulations as regards grants and loans for students in England.  Such regulations are made, or amended, annually.  Parts 3 and 4 of the Higher Education Act 2004 (“the 2004 Act”) enabled higher education institutions to charge undergraduates much higher fees than before and, at the same time, amended the 1998 Act so as to enable loans in respect of fees to be made directly to institutions.  This was because it was intended that grants in respect of fees made under regulations made under the 1998 Act would in future be replaced by loans made under such regulations.

 

9.         The regulations made under the 1998 Act that are relevant to the present case are the Education (Student Support) Regulations 2007 (SI 2007/176) (“the 2007 Regulations”).  When there are changes to the scheme for student support, students usually remain entitled to the package of support offered to them when their courses began.  The 2007 Regulations therefore make provision both for “current system students”, who started their courses in or after the academic year beginning in 2006, and “old system students”, who started their courses before then.  The claimant in the present case was a “current system student”.  Parts 4 and 6 of the Regulations provided for loans for current system students for, respectively, fees and “living costs”.  Part 5 was headed “Grants for living and other costs” and included provision for, among other things, means-tested maintenance grants and special support grants for current system students.  In particular, regulations 56(1) and (2) and 58(1) and (2) provided -

 

“56.-(1)  A current system student qualifies in accordance with this regulation for a special grant in connection with his attendance on a designated course.

  (2)     A current system student does not qualify for a maintenance grant if he qualifies for a special support grant.”

 

“58.-(1)  A current system student qualifies in accordance with this regulation for a special grant in connection with his attendance on a designated course to defray the costs of books, equipment, travel or childcare incurred for the purpose of attending that course.

  (2)     A current system student qualifies for a special support grant if he -

    (a)   falls within a prescribed category of person for the purposes of section 124(1)(e) of the Social Security Contributions and Benefits Act 1992; or

    (b)   is treated as being liable to make payments in respect of a dwelling prescribed by regulations made under section 130(2) of that Act.”

 

In all other respects, maintenance grants and special support grants were identical, although entitlement to a maintenance grant affected the amount of a loan for living costs that was available, whereas entitlement to a special support grant did not.  The maximum amount of maintenance grants and specials support grants in 2007-2008 was £2,765.  It had been £2,700 in the previous year, the first year of the new system.

 

10.       Apart from grants and loans made under such regulations, students may be entitled to bursaries from the higher education institution they are attending.  Such bursaries may be means-tested although bursaries may be awarded by institutions for other reasons.  To some extent, minimum standards for bursaries for students from poorer backgrounds are regulated by the Office for Fair Access (“OFFA”), the function of which is explained in the explanatory notes to Part 3 of the 2004 Act. 

 

“Part 3 - Student Fees and Fair Access

 

16.       Student fees - Previously, under section 26 of the Teaching and Higher Education Act 1998, the fee which higher education institutions (HEIs) charge for full-time undergraduate students in a given year was determined by the maximum fee remission grant for that year, as prescribed under section 22 of that Act. This Act enables HEIs to set their own fees, up to a basic amount specified in regulations, which is no longer linked to a grant for fees. Institutions that wish to charge fees above this rate will only be able to do so if they have in force a plan under this Part of the Act, approved by the relevant authority. For England, the relevant authority will be the new Director of Fair Access to Higher Education. For Wales, it will be a body to be designated by the National Assembly for Wales. If institutions have such a plan, they may charge up to a higher amount (within the bounds of their plan), also specified in regulations. It is intended that loans will be made available, on an income-contingent basis and with no real rate of interest, to allow students to defer payment of fees.

 

17.       Director of Fair Access to Higher Education - This Part of the Act creates a new office-holder, the Director of Fair Access to Higher Education. His or her office will informally be known as the Office for Fair Access (OFFA). The Director’s role will be approving and monitoring plans made by institutions in England that wish to set fees higher than the basic amount. The matters to be covered by these plans - which will remain in force for up to five years - will be specified in regulations. Should an institution breach its plan, the Director may choose not to renew that plan or, where there is need for more immediate action, may direct the Higher Education Funding Council for England or the Teacher Training Agency to impose financial requirements, including reducing its grant to that institution.”

 

11.       OFFA requires higher education institutions intending to charge more than the basic amount of fees to enter into “access agreements” specifying, among other things, the fees they intend to charge and the financial support that they will provide to students from less affluent backgrounds.  The maximum “higher amount” of fees that could be charged by higher education institutions was £3,000 in 2006-2007 and £3,070 in 2007-2008.  The University of Oxford, in common with a large number of other universities, has always charged that maximum amount.  Because it has charged more than the basic amount of fees, it has entered into access agreements from time to time.

 

The facts and the arguments before the First-tier Tribunal

 

12.       Against that background, I can turn to the primary facts of this case, which are undisputed.  The claimant was in receipt of severe disablement allowance and the lowest rate of the care component of disability living allowance.  For student support purposes, she is to be taken to have started her course in the autumn of 2007.  Because the tuition fees charged by the University were £3,070 for the year, she was entitled to a “fee loan” of £3,070 under Part 4 of the 2007 Regulations, which was paid straight to the University.  Under Part 5, she received a “special support grant” of £2,765 and, under Part 6, she received a loan for “living costs” of £4,510.  In addition, she received from the University an Oxford Opportunity Bursary of £4,095, of which £1,025 was a one-off payment in the first term of her first year “to help you meet the start-up costs of coming to University” and the remaining £3,070 was paid in three termly instalments.  Nothing was said in the notification of the award of the bursary, which was dated 12 November 2007, as to the intention behind the three termly instalments.

 

13.       The claimant first claimed housing benefit in October 2007.  I am not aware of the early adjudication history but the local authority made a decision on 7 May 2008, awarding the claimant housing benefit for the summer term from 17 April 2008 to 15 June 2008 at the rate of £15.91 pw. and it was against that decision that the claimant formally appealed to the First-tier Tribunal on 20 January 2009.  On 20 November 2009, she asked that the appeal also be taken as being against other decisions.  On 8 December 2009, the local authority wrote that “if it was found by the Appeals Tribunal that the bursary had been incorrectly taken into account in the assessment of entitlement, we would correct the error throughout the period of your benefit award”. It presumably had in mind regulation 4(2)(a) and (7) of the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001 (SI 2001/1002).  I have not been asked to consider whether that was an entirely satisfactory approach in relation to decisions made before 7 May 2008.

 

14.       Although it had originally made its decision of 15 June 2008 on a different basis, the local authority’s case before the First-tier Tribunal was that the whole of the fee loan, the whole of the special support grant, the travel element and the books and equipment element of the loan for living costs and the start-up element of the bursary all fell to be disregarded as income, but that the rest of the loan for living costs and the rest of the bursary, totalling £6,755, fell to be taken into account as income, attributed to a period of 43 weeks, and added to her other income .

 

15.       The claimant accepted that the local authority was correct to take into account the balance of the loan for living costs, but she argued that the balance of the bursary should have been excluded from her grant income and she referred to the Decision Maker’s Guide, as published by the Department for Work and Pensions on its website in August 2008, which says -

 

“30330  Where a student is in receipt of the maximum Special Support Grant and the Higher Education Establishment charges the full £3,000 tuition fees, then the Higher Education Establishment must pay the student a bursary to at least make up the difference between the Special Support Grant and the £3,000 fee.  As this bursary is for tuition fees it should be disregarded in full whatever its value.  In addition, a Higher Education Establishment may award other grants and bursaries and these may be disregarded if they fall within the disregards listed at DMG 30326.”

 

(This paragraph remains on the Government website in April 2014, still unamended despite rises in fees and the demise of the minimum bursary for recent students.)

 

16.       That guidance was issued in respect of income support and income-based jobseeker’s allowance and a footnote referred to the provisions in the relevant legislation that are equivalent to regulation 59(2)(a) of the 2006 Regulations.  The local authority argued that the guidance did not apply to housing benefit but the legislation is not materially distinguishable and the claimant quickly referred to the equivalent guidance issued in relation to housing benefit by the Department of Work and Pensions in Housing Benefit and Council Tax Benefit Circular A15/2006 (which was later incorporated into the Housing Benefit Guidance Manual).  There, reference was made to the special support grant to be introduced from 1 September 2006, which local authorities were told should be disregarded, and there was then added -

 

“12      When a student is in receipt of the SSG and the university or HE Institution charges the full £3,000 tuition fees, the university must award the student a bursary to make up the difference between the £2,700 SSG and the fees.

13        Disregard the amount of this bursary.”

 

17.       She also drew attention to the explanatory memorandum to the Education (Supply of Student Support Information to Governing Bodies) Regulations 2006 (SI 2006/141) (which authorise those providing student loans to provide information to higher education institutions for the purpose of calculating entitlement to bursaries), in which it is stated -

 

“7.2  It is our policy intention that, as a minimum, a new student who is:

    (a)   entitled to a full Maintenance Grant or Special Support Grant under the student support scheme from 2006/07; and

    (b)   charged fees of more than £2,700,

be entitled to a bursary of at least the difference between £2,700 and the actual fee charged and that this should be provided for in an HEI’s access agreement. The formal letter of guidance issued to the Director of Fair Access to Higher Education in October 2004 confirms this policy intention. HEIs may of course provide more generous bursaries or bursaries to wider groups of student.”

 

18.       The formal letter of guidance from the Minister - at that time the Secretary of State for Education and Skills - had stated -

 

“6.2     Financial support for students

 

6.2.1   There is one particular priority which I would like you to insist that every institution meets.

 

6.2.2   As you will know, there has been concern that students from the poorest backgrounds might be put off applying to higher education because of the perceived deterrent of higher fees - despite the central safeguard that no fees need to be paid by the student while they are studying.  For this reason, a central plank in our policy is to ensure that this perceived deterrent is minimised.

 

6.2.3   It is our policy that the poorest students on the most expensive courses should receive a total package (state maintenance support plus institutional bursary) of non-repayable support of at least £3,000.  Those students will then be no worse off than they are now, although the balance of support for fees and for maintenance will be different.  By ‘poorest students’, we mean those on the full Higher Education maintenance grant of £2,700, as it will exist in 2006.  This grant is an entitlement and is not related to the fee level of the student’s course.  For any of those students who are on courses which charge more than £2,700, there will be a difference of up to £300 between the fee that the institution charges them, and the state maintenance that they receive.  I would expect every access agreement, as a minimum requirement, to show how the institution will give financial support to students on full state support, to make up the difference.  It is for institutions to make their own proposals on precisely how they will do this.  …” (Emphasis in the original.)

 

19.       This policy was reflected in the first edition of OFFA’s guidance to institutions, Producing Access Agreements, which stated -

 

“40.     There is concern that students with the least financial resources may be put off applying to higher education because of the cost. To minimise the perceived deterrent of tuition fees, it is government policy that the poorest students should receive a total package of support that at least equals the amount of their tuition fees. ‘Poorest students’ in this context are those in receipt of the full Higher Education Maintenance Grant of £2,700 as it will exist in 2006. For students who will be on courses which charge more than £2,700, there will be a difference of up to £300 between the tuition fee and the state support they receive.

 

41.       Regardless of any other bursary and financial support offered, institutions must, as a minimum, provide a commitment in their access agreements that this difference, of up to £300, will be met for those students on full state support. They must also specify how this commitment will be provided to the students.”

 

20.       In the light of the claimant’s submissions, the local authority sought further information as to the purpose of the bursary paid to her by the University.  On 7 December 2009, a financial support manager at the University informed the local authority that “the Oxford Opportunity Bursary for undergraduate students at the University of Oxford is a bursary for living costs whilst studying”.  However, she wrote a further email dated 22 December 2009 to the local authority, saying-

 

“I wrote to you earlier in the month in response to your question about how bursaries are used.  Since then, we have received information from the government regulatory body for bursaries, the Office of Fair Access (Offa), and they have informed me that the DWP disregard as income in calculation of benefits any HE institutional bursary, provided that the bursary holder is in receipt of the income assessed Special Support Grant (as [the claimant] is).  In line with the guidance, I can confirm that [the claimant’s] bursary is for course-related costs.”

 

21.       The local authority did not accept that that was so.  It suggested that a figure for course-related costs of £3,000 to £4,000 seemed high when a loan had been obtained for fees and pointed out that the University’s website did not state that the bursary was for course-related costs.  On the contrary, it argued, both the University’s website and OFFA’s suggested that bursaries were for living costs and, furthermore, the guidance from the Department for Work and Pensions in relation to housing benefit did not actually require the whole of a bursary to be disregarded. 

 

22.       The claimant countered this by referring to guidance published by OFFA on its website on 18 July 2006, stating -

 

“April 2006

Following concern that the value of institutional bursaries might be reduced by corresponding decreases in social security benefits, the DfES has obtained Department for Work and Pensions (DWP) agreement that they will disregard as income in calculation of benefits (eg income support and housing benefit) any HE institutional bursary, provided that certain conditions are met. The conditions are that the bursary holder has to be in receipt of the income assessed Special Support Grant (which has been designed specifically for full-time students eligible for DWP benefits), and that the disregard does not apply to any part of a bursary which is for living costs.  In order to qualify for the disregard the student must have a written statement that their bursary is for course-related costs.

 

OFFA guidance

It is of course for institutions to decide their procedures around bursaries, but we would strongly support the DfES advice to institutions that they should make every effort to describe a bursary in terms which enable the DWP to disregard it as income. We expect that relevant organisations within the sector which cover the delivery of student services and finance, will want to carefully consider the most effective way of ensuring that students in receipt of benefit are best protected in receiving the full value of the support as it is intended.”

 

She argued that the email of 22 December 2009 from the University to the local authority was consistent with that guidance and she asked for sight of the agreement between the Government Departments mentioned in the guidance.  That was not forthcoming.

 

23.       The First-tier Tribunal accepted the local authority’s case, at a hearing on 21 January 2011 that the claimant was too ill to attend.  Its reasoning was that the bursary could not be said to be “intended to meet tuition fees” because the claimant had already received a loan for that purpose and because the letter informing the claimant that she had been awarded a bursary made no mention of it being for the purpose of meeting tuition fees.

 

24.       The claimant now appeals to the Upper Tribunal with permission granted by Upper Tribunal Judge Lloyd-Davies, who subsequently added the Secretary of State for Work and Pensions as a respondent.  The Secretary of State supports the local authority’s case, at least as far as the outcome of this particular case is concerned.  I held an oral hearing in Manchester, near where the claimant now lives, at which neither the local authority nor the Secretary of State, who had both been content that the appeal should be decided on the papers, was represented.

 

The arguments on the appeal to the Upper Tribunal

 

25.       It is common ground that the local authority and the First-tier Tribunal were correct to disregard the fee loan under regulation 64A of the 2006 Regulations and, subject to the standard deductions in respects of travel costs and books and equipment costs under regulation 64(5), were correct to take the loan for living costs into account as income under regulation 64(1) and (3)(a). That is clearly right and, indeed, even if the claimant had not applied for the loan in respect of living expenses - as was the position in the following academic year - it would have fallen to be taken into account under regulation 64(3)(b).

 

26.       It is also common ground that the special support grant was properly disregarded.  The local authority has referred only to guidance issued by the Department for Work and Pensions but the legal position appears to be that that grant fell to be excluded from the claimant’s grant income under regulation 59(2)(f), (g) and (h) of the 2006 Regulations in the light of the statutory purpose of the grant revealed by regulation 58(1) of the 2007 Regulations.   Arguably regulation 59(2)(h) of the 2006 Regulations did not apply in this case, since the claimant did not have any childcare costs (as far as I am aware), but the whole grant nonetheless fell to be disregarded. 

 

27.       The start-up costs element of the bursary appears also to have been excluded from the claimant’s grant income under regulation 59(2)(f) by the local authority on the ground that it was intended for books and equipment.  It might perhaps be arguable that only part of that part of the bursary should have been excluded, since a student is likely to have start-up costs in relation to general living expenses as well as books and equipment.  However, since the exclusion is not unreasonable and the point has not been taken by the local authority, I need not consider this issue further.

 

28.       The only disagreement is therefore as to whether the rest of the bursary can be disregarded.  There is even some common ground in relation to that issue because the claimant accepts that the bursary is a “grant” that would form part of her “grant income” unless it is excluded under regulation 59(2) of the 2006 Regulations and she also accepts that, despite the similarity of terminology, the minimum bursaries set out in access agreements are not payments from “access funds”.  The parties both submit that, because the access agreements require the bursaries to be made, the bursaries are not paid to students on a “discretionary” basis.  I am not entirely convinced by that approach but this does not matter because it is clear from both the Minister’s formal letter of guidance to OFFA and OFFA’s guidance to institutions, Producing Access Agreements, that the bursaries are to be funded out to fee income and not out of grants provided under the legislation mentioned in the definition of “access funds” in regulation 53(1) of the 2006 Regulations.

 

29.       There are two main areas of dispute between the parties.  The first is whether the fact that the claimant had obtained a loan for tuition fees prevented the bursary from being excluded from her grant income under regulation 59(2)(a) of the 2006 Regulations on the ground that it was “intended to meet tuition fees” and the second is whether her bursary can in fact be said to have been intended for any purpose that would allow it to be excluded from her grant income under any provision of regulation 59(2).  

 

30.       As to the first of those points, the local authority simply submits that a bursary cannot be used to meet tuition fees if those have already been met in full through a loan.  This seems also to have been the First-tier Tribunal’s approach.  The claimant relies partly on the guidance issued by the Department for Work and Pensions, which I will consider in more detail below, and partly on the simple point that, where a student is entitled to a special support grant and loans for both living expenses and fees, it is likely to be a significant purpose of a bursary that the student should be enabled to avoid relying on the loans by either not taking them out or repaying them.  That is because a loan for living expenses and the special support grant are sufficient to enable a student to meet day-to-day living expenses - in 2007-2008 they amounted to £7,275 - and a student does not usually require a further bursary for the same expenses, although some students may choose a higher standard of living.  There can, she told me, be practical reasons for taking out a loan and then repaying it, rather than not taking it out at all, because the payment date of a bursary may be uncertain and fees have to be paid by a certain date, quite apart from there being a need to meet other costs straightaway.

 

31.       As to the question whether the bursary paid to her was in fact intended to meet tuition fees, the claimant points out that the amount of the bursary, other than the element in respect of start-up costs, was precisely the same as the amount of the fees, and she reiterates the point that the University has said that the loan was for course-related expenses.  She also states that she in fact used the bursary to pay back her loan, and points out that other costs were already covered by the special support grant and that any student eligible for a full bursary would be entitled to such a grant (or a maintenance grant of the same amount).  For these reasons, she submits that her bursary should have been treated as “intended to meet tuition fees”.

 

32.       The claimant also relies heavily on the guidance issued by the Department for Work and Pensions together with the information as to the policy of the Secretary of State for Education and Skills and his successors, the Secretary of State for Innovation, Universities and Skills and, now, the Secretary of State for Business, Innovations and Skills.

 

33        The local authority’s response to this argument is to question the accuracy of the guidance.  In the light of the local authority’s submission to that effect, Judge Lloyd-Davies asked the Secretary of State to explain the guidance.  The Secretary of State’s representative was unable to find an explanation in legislation but provided a copy of a memorandum from what was then the Department for Innovation, Universities and Skills that he had apparently obtained from OFFA, which showed that students commencing their courses in 2008 and 2009 and being charged the maximum fees were still guaranteed a bursary of at least the difference between a maintenance grant or special support grant and the fees.  He also supported the local authority in submitting that a bursary did not have to be attributed to tuition fees if it was clearly stated to be for other purposes.

 

34.       In reply, the claimant referred again to the policy documents she had drawn to the First-tier Tribunal’s attention.  In the light of those documents, Judge Lloyd-Davies invited observations on the access agreements made by the University of Oxford.

 

35.       The first of those, that for 2006-2007, stated -

 

“5.        The essential living costs of undergraduates living away from home in Oxford for twenty-seven weeks of the year are estimated to be, in 2006-07, in the region of £5,700. The University and Colleges’ bursary scheme, taken together with Government support, will make a significant graduated contribution to the living costs of undergraduates whose family income is lower than £37,425 per annum.

 

6.         For students whose family income is in the lowest bracket, the annual bursary will be set at a minimum of £3,000, which, together with Government support of £2,700, will cover the essential living costs of those students. Hence there will be little or no need for them to take additional maintenance loans from the Student Loan Company. In addition to the annual bursary of £3,000, all students in this category will receive a further £1,000 in their first year at Oxford, paid at the beginning of their course, to help meet their initial costs in moving away from home for the first time.”

 

36.       On 25 September 2006, OFFA reported on its website the increases in maximum fees and student support for 2007-2008 announced in Parliament earlier in the month - the uplift was 2.33% - and added -

“Institutions should be reminded that the minimum bursary requirement must increase to ensure that it meets the difference between the level of full Higher Education Maintenance Grant and the fee charged. For example for institutions charging the full fee of £3070 in 2007-08, the new minimum bursary requirement will be £305.

As set out in our note of 10 August we will assume that every institution intends to apply the inflationary uplift to its fee and bursary schemes. You need to inform us if this is not the case.”

 

37.       In its 2007-2008 access agreement, written in October 2006, the University stated -

 

7.         The essential living costs of undergraduates living away from home in Oxford for twenty-seven weeks of the year are estimated to be, in 2007-08, in the region of £5,700.

 

Paragraph 6 of the 2006-2007 access agreement was replicated, as paragraph 9, in the part of the 2007-2008 access agreement dealing with those students who had begun their courses in 2006-2007, although it was stated in paragraph 8 that the amounts were likely to be increased to allow for inflation.  However, for students entering in 2007-2008, it was stated in paragraph 5 that the fees would be increased to £3,070 and, in paragraph 15, that the Oxford Opportunity Bursary scheme would be simplified, with the bursary for those in the lowest income group being a minimum of £3,070.  In relation to these students, nothing specific was said as to the purpose of the bursary.

 

38.       The local authority submits that its arguments are supported by the access agreements, which it says show that the claimant’s bursary was intended for living costs.  The claimant argues that the relevant part of the access agreement says nothing about the purpose for which bursaries are paid and that the estimate of living costs of £5,700 is not matched precisely by the total amount of any of the support provided, whereas the amount of the bursary was precisely the same as the amount of the tuition fees.  She submits that the system was arranged so that, upon being told that they would receive a bursary, students would cancel their living expenses loans, rather than their fee loans, so that the University would not have to look to students for the fees.

 

39.       Finally, the claimant has argued that the First-tier Tribunal acted unfairly in determining her appeal in her absence.  However, as it was uncertain when, if at all, the claimant would be well enough to attend a hearing and as the case turned on points of law on uncontested facts and the points of law had been fully argued in writing, I am satisfied that it was entitled to do so, since any error could adequately be corrected on appeal.  Those were, in effect, the reasons given by the First-tier Tribunal.  I therefore need not consider this issue further.

 

Discussion

 

40.       It seems to me that much of the problem in this case arises from the failure of the Department for Education and Skills and its successors, together with OFFA, either to agree with the Department for Work and Pensions amendments to the latter’s legislation that would reflect a common policy or to give higher education institutions adequate guidance to enable effect to be given to their policy through the existing legislation.

 

41.       The poorest old system students, i.e., the poorest of those who had started their courses before 2006-07, were entitled to grants that met their tuition fees and those grants were paid direct to the relevant higher education institution.  From 2004, they were also entitled to higher education grants of £1,000 in addition to their loans for living expenses.  The broad policy seems to have been to ensure that, from 2006-2007, the poorest new scheme students would similarly be entitled to grants and bursaries sufficient to meet their tuition fees, although there would be no obligation on the students to use the money for that purpose and the grants were not actually related to the mount of fees.  The tuition fees might be considerably higher than before and perhaps it was for that reason that it was not also suggested that the minimum bursaries should also be enough to recompense for the loss of the higher education grant.  In any event, the policy seems to have been to counter the disincentive of having to pay fees by providing the poorest students with a higher grant income.  Presumably, it was expected that at least some students would use at least part of the grant and bursary in place of part of the loans also available to them.  On the other hand, others might choose to have a slightly higher standard of living while studying, particularly as the amount of a loan for living expenses left little room for variations in individuals’ costs.  The amount payable by way of fees would also vary.

 

42.       No doubt due to the desire to allow students a free hand in this area, no attempt is made in regulation 56 of the 2007 Regulations to define the purpose of the maintenance grant available to most of the least affluent current system students.  However, the “special support grant” for those potentially entitled to housing benefit and other income-related benefits during periods of study is described in regulation 58 of the 2007 Regulations as being “to defray the costs of books, equipment, travel or childcare”.  This seems to be an artificial device intended to ensure that the grant would be disregarded as income for the purposes of the 2006 Regulations and equivalent legislation relating to other benefits.  The description is given despite the justification for the whole grant being disregarded seeming in fact to have been the potential level of fees.  Moreover, not all eligible students have childcare costs (and there are separate childcare grants for those who do have dependent children (see regulations 36(b), 42(b) and 44 of the 2007 Regulations)) and it seems unrealistic to assume that most students use the whole of the grant for the stated purpose.  The purpose of the higher education grant for old system students is described in the same way in regulation 60 of the 2007 Regulations, no doubt for the same reason, but the amount of the grant makes the description less obviously artificial. 

 

43.       I am not entirely sure why a distinction was drawn between a maintenance grant and a special support grant in this way, but the distinction may have some  complicated rationale.  It has not caused difficulties in the present case, but it is not impossible to envisage a claimant of an income-related benefit or the partner of such a person who has been awarded a maintenance grant rather than a special support grant, either due to his or her circumstances at the material time or simply because the scope of regulation 58(2) of the 2007 Regulations may not be entirely clear.  I am also not sure why this device of ascribing a purpose to the special support grant was used, rather than specific provision being made in social security legislation for one or both grants simply to be disregarded without reference to their purpose.

 

44.       In any event, the expectation of both the Department for Education and Skills and its successors and the Department for Work and Pensions seems to have been that higher education institutions awarding the minimum bursaries required by OFFA would use the same sort of device, describing the bursary in such a way that it would fall to be excluded from the student’s grant income under regulation 59(2) of the 2006 Regulations and equivalent provisions in other legislation.  That, in my view, is the explanation for the guidance given by the Department for Work and Pensions both to its own decision-makers and, through Housing Benefit and Council Tax Benefit Circular A15/2006, to local authorities.  However, OFFA’s guidance in respect of minimum bursaries did not say that such a device had to be used and the guidance published on 18 July 2006, which was of more general application, was not much more helpful because it used the term “course-related expenses” rather than a term that actually appears in regulation 59(2) of the 2006 Regulations and equivalent provisions (although the phrase is useful short-hand that I will adopt).  The “agreement” between Government Departments mentioned by OFFA appears to have been no more than an understanding that the policy would be implemented through the existing legislation, but it was not adequately explained how that should be done.  It might have been simpler to amend the 2006 Regulations and equivalent provisions so that there was excluded from a student’s grant income that part of any bursaries received from a higher education institution that was equal to the amount (if any) by which the fees charged to the student exceeded the special support grant.

 

45.       Even if the advice had been clearer, the fundamental problem for higher education institutions was that regulation 59(2)(a), (c), (f), (g) and (h) all refer to the “intended” purpose of the payment and the intention is that of the payer (R(IS) 7/95; R(IS) 16/95).  Higher education institutions, in common with the Secretary of State Education and Skills and his successors, generally do not wish to be prescriptive about the use to which bursaries should be put and so may well not have any particular intended purpose in mind.  However, such institutions cannot properly make the written statement that is envisaged by OFFA (and is quite reasonably required by the Secretary of State for Work and Pensions or local authorities administering benefits under the legislation in its current form) unless they have in fact formed the requisite intention.  OFFA has not made that explicit.  Furthermore, one can expect the Secretary of State for Work and Pensions or a local authority to be sceptical about a suggestion that a substantial bursary is intended for a purpose already apparently covered by a substantial grant unless it is clearly related to the claimant’s specific circumstances or there is other evidence of the need for a bursary for that purpose.

 

46.       Moreover, insofar as the University of Oxford intended its bursaries to be sufficient to enable students to avoid taking out loans for living costs, the purpose is frustrated in relation to those entitled to income-related benefits by regulation 64(3) of the 2006 Regulations and equivalent provisions.  The bursary goes first to remove the support available to the student through the benefits and only the balance is available to enable the student to avoid debt.  This seems inconsistent with the policy of the former Department for Education and Skills, although, from a social security policy perspective one might expect that, if there were amendments, regulation 64(3) and equivalent provisions would be disapplied only to the extent that a claimant had both received a bursary and had either not applied for a loan or had cancelled or repaid a loan.

 

47.       It is for this reason that the claimant has been obliged to argue that the bursary she received was for the payment of fees.  There is no equivalent to regulation 64(3) in relation to fee loans, because they are disregarded as income under regulation 64A.  In principle, therefore, a bursary may be excluded from a student’s grant income if intended to meet tuition fees and if the claimant has not obtained a loan although, in practice, a higher education institution might prefer simply to waive the fee which would achieve the same result.

 

48.       In this case, however, the claimant had obtained a loan which had been used to pay the fees.  On a narrow, literal interpretation of the words “meet tuition fees” in regulation 59(2)(a), her bursary, which was confirmed only on 12 November 2007,  cannot have been for the purpose of enabling her to meet her fees which by then, the University would have known, had already been paid.  That, in effect, is the local authority’s case.  However, I would be inclined to take the view that, in this context, the words should be construed broadly so as to include the repayment of a loan taken out to meet the fees.  There seems no sensible policy justification for drawing a distinction between a bursary intended to enable a student to avoid debt by not borrowing at all and a bursary enabling a student to do so by making a prompt repayment of a loan.  This is particularly so given the practical point that a bursary may not be confirmed until after the date on which payment of fees was due.  It could be said that the legislation is then open to abuse, because there is no guarantee that a bursary intended by a higher education institution to meet tuition fees would be used for that purpose.  It might therefore make more sense if regulation 59(2)(a) provided that a bursary or other grant was to be excluded from grant income to the extent that it was used by the student for the purpose of meeting tuition fees or repaying a loan for tuition fees, irrespective of the payer’s intention, but I do not consider that the lack of such a provision is a strong indication of an intention by the Secretary of State for Work and Pensions to achieve the undesirable result of discouraging higher education institutions from enabling students to pay off debts incurred to pay fees.

 

49.       Were it necessary to do so, I would therefore be minded to accept the claimant’s argument that, in principle, the bursary in her case could have been intended to meet tuition fees, even though she had received a loan for that purpose.  However, it is unnecessary for me to determine this issue.

 

50.       That is because I am not satisfied that the First-tier Tribunal erred in law in finding that the University of Oxford did not in fact intend any part of the bursary to be used to meet tuition fees.  The existing legislation generally requires the higher education institution actually to have formed the requisite intention if a bursary is to be disregarded under regulation 59(2)(a), (c), (f), (g) or (h).  Whereas the intention lying behind a special support grant, being specified in legislation, must always be accepted as being true, a higher education institution’s description of the intention lying behind a bursary can be accepted only if is actually true.  Normally, of course, there will be no reason to doubt what a higher education institution says, but here the University of Oxford gave contradictory descriptions and the second, which was more helpful to the claimant, obviously owed more to guidance obtained from OFFA than to research into the University’s original motives in awarding the bursary. 

 

51.       Although they were not before the First-tier Tribunal, I have looked at the access agreements because they are publicly available documents - all access agreements from the start of OFFA’s existence are published on its website (www.offa.org.uk) - and, if they proved decisive in favour of the claimant, it is arguable that the relevant one should have been produced to the First-tier Tribunal.  However, they do not in fact assist the claimant’s case.

 

52.       The claimant is correct that the part of the 2007-2008 access agreement dealing specifically with students who started their courses that year did not refer to the bursary as being for living costs, but the part dealing with students in the year above did and there was no indication of a change of policy in that regard.  A fair reading of the document as a whole suggests that, insofar as it had any intention at all, the University still intended the bursary to be used for living costs, largely in place of the loan available for such costs.  That, indeed, was clearly the understanding of the financial support manager on 7 December 2009, before she had received guidance from OFFA.

 

53.       I do not consider that the paragraph from the Decision Maker’s Guide relied upon by the claimant is capable of requiring the bursary to be treated as a payment intended to meet tuition fees.  In its context, the sentence “As this bursary is for tuition fees it should be disregarded in full whatever its value” is based on an understandable, but nonetheless unjustified, misunderstanding that, because the sum to be disregarded was linked to the amount of fees, the payment must necessarily have been intended for that purpose.  That is not the law and was not even the policy of the Department for Education and Skills.  The guidance reflected a policy that at least the minimum bursary should be disregarded but it was inaccurate in suggesting that that was because such a bursary was necessarily intended to meet tuition fees and, if the words “whatever its value” implied that the whole of any bursary that included the minimum amount should be disregarded (rather than allowing for the possibility that the difference between the maximum special support allowance and the fees charged might vary), it again was inaccurate in suggesting that the whole of the bursary would necessarily be intended to meet tuition fees.

 

54.       Nor do I consider that the fact that the amount of the bursary was equal to the amount of the fees shows that it was intended to meet those fees.  In the absence of other evidence, that might be the implication.  However, there is nothing whatsoever in the access agreement or any other document to show that it was intended that the amount of the bursary was deliberately related to the amount of the fees.  On the contrary, the access agreements show that the amount of the bursary in 2006-2007 was calculated by deducting the amount of a maintenance grant or special support grant from the estimated living costs of students in Oxford in that year and I am satisfied that it is mere coincidence that the resulting large round figure was the same as the amount of the maximum fees chargeable that year.  As the claimant says, the £5,700 estimate of those costs was not based on any of the elements of student support and in fact it is less than the amount of a loan for living costs added to a maintenance grant or special support grant.  This may be partly explained by the fact that the estimate relates to living costs over only 27 weeks, whereas statutory support is expected, at least notionally for social security purposes, to provide support over the vacations as well, but presumably the estimate was also based on local factors such as accommodation costs.  In any event, the reason that the bursary kept in line with the maximum fees in 2007-2008 seems simply to have been that the University applied, in accordance with OFFA’s guidance of 25 September 2006, the same percentage uplift to its bursary to take account of inflation as the Government applied to the maximum fees.  (In 2008-2009, a £5 discrepancy emerged, perhaps due to the bursary being rounded up to a number easily divisible by three.)

 

55.       I am therefore satisfied that the First-tier Tribunal did not err in law in holding that the bursary was not intended to meet tuition fees.  The decision it reached was one open to it on the evidence and it is arguable that any other conclusion would have been perverse.

 

56.       However, the First-tier Tribunal did not go on to consider whether the bursary, or any part of it, might have been intended to meet other course-related costs such as books and equipment.  It presumably adopted the local authority’s reasoning which was that there was clear evidence that the bursary was for living costs and the University’s change of description was unconvincing.  Moreover, the claimant had already received a considerable amount of assistance, at least notionally, with course-related costs.  However, although OFFA, in its guidance of 18 July 2006, had regarded “living costs” and “course-related costs” as mutually exclusive and it is to be inferred that the local authority also did so, that is not the case.  The term “living costs” may include some course-related costs such as travel costs and the cost of books and equipment.  That is clear from the statutory scheme, since regulation 64(5) of the 2006 Regulations required, at the material time, £660 of a student loan, described in regulation Part 6 of the 2007 Regulations as being “for living costs”, to be deducted when calculating the claimant’s income, because that sum was regarded as being notionally in respect of travel costs and the cost of books and equipment.  Equivalent provision was made in regulation 59(3) for those who do not have loans and regulation 59(2)(f) and (g) clearly enabled there to be further deductions on the same grounds.

 

57        Therefore, the description of the bursary as being for living costs did not mean that a proportion of it could not be for course-related costs.  The local authority and the First-tier Tribunal were entitled to take the view that the whole of the bursary had not been intended to meet such course-related costs as fall within the scope of regulation 59(2) of the 2006 Regulations and, again, it is arguable that it would have been perverse to decide otherwise, but neither seems to have considered whether a proportion of the bursary should be accepted as being for such costs.  No doubt that was because the University had not explicitly identified any part of the bursary as being intended to meet such costs. 

 

58.       However, I do not consider that to be good enough when there was overwhelming evidence before the First-tier Tribunal of a Government policy, accepted by the Secretary of State for Work and Pensions (who funds housing benefit, even though it is administered by local authorities), that at least the amount of the minimum bursary - £305 in 2007-2008 - should be excluded from a claimant’s grant income where the claimant is entitled to the maximum specials support grant and the University’s description of the bursary was not actually inconsistent with that being done under regulation 59(2)(f) or (g).  I consider that the claimant had a legitimate expectation that £305 of her bursary would be excluded from her grant income for housing benefit purposes unless there was a good reason for not doing so.  The First-tier Tribunal did not consider whether there was any good reason for not adopting that policy.  I am satisfied that it should have done so.

 

59.       I am also satisfied that there is no good reason for departing from the policy.  The University has not convincingly stated that it actually intended any greater proportion of the bursary to be for course-related costs but it has also never said anything to suggest that none of the bursary should be regarded as being for such costs and £305 is, in my judgement, a reasonable proportion of the bursary to be excluded on that ground without further evidence.

 

Conclusion

 

60.       For these reasons, I allow the claimant’s appeal to the limited extent of deciding that £305 of her bursary is to be excluded from her grant income for the purposes of determining her entitlement to housing benefit during the relevant period. 

 

61.       If, as she says, the claimant did in fact use the bursary to reduce her debt, as the University anticipated she might, I very much regret not being able to allow her appeal in full.  Insofar as repayments of loans are concerned, the Student Loans Company appears not to keep separate accounts for fee loans and loans for living costs and it seems unsatisfactory that social security legislation should place obstacles in the way of students wishing to use grants or bursaries in order to avoid or repay any type of student debt.  I therefore hope that the Secretary of State will not only correct and up-date his guidance to decision-makers and local authorities but will also consider whether the legislation should be amended in the light of modern arrangements for the support of students in higher education.

 

 

 

Mark Rowland

9 April 2014