Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No.  CE/4181/2013

ADMINISTRATIVE APPEALS CHAMBER

 

Before Upper Tribunal Judge Rowland

 

Decision:  The claimant’s appeal is allowed.  The decision of the First-tier Tribunal dated 5 July 2013 is set aside and, subject to there being any further issue as to the claimant’s financial position, there is substituted a decision that the claimant is entitled to employment and support allowance from 26 August 2011 at a rate equal to the amount of her applicable amount, which includes not only the support component but also the enhanced disability premium.

 

REASONS FOR DECISION

 

1. This is an appeal, brought by the claimant with my permission, against a decision of the First-tier Tribunal dated 5 July 2013 whereby it dismissed her appeal against a decision of the Secretary of State of uncertain date to the effect that she was not entitled to income-related employment and support allowance before 30 April 2012.

 

2. The facts are not in dispute, although there are some, including several dates, that are not entirely clear from the documents before me. 

 

3. The claimant claimed employment and support allowance on 16 September 2009.  Although she was not working at that time, she was still employed and was receiving half-pay from her employers which included statutory sick pay. Her claim was made because her statutory sick pay was expiring either on that day or on the following day and so she asked that her claim be effective from when her statutory sick pay expired.  A “contact history” shows that she was content to claim only contributory employment and support allowance and not also the income-related allowance and that her half-pay would continue until mid-October.  An award of the contributory allowance was duly made from, it is stated, 18 September 2009.  I am not sure when the award was made but, in any event, the ending of the claimant’s half-pay did not lead her immediately to seek the income-related allowance.  Whether or not she would have been entitled to any additional employment and support allowance had her financial position been considered when her half-pay came to an end in 2009 is not entirely clear but it seems unlikely because the claimant was living in the same rented accommodation then as she was when she provided evidence as to her means in 2012.

 

4. It appears that the claimant’s award of the contributory allowance was superseded and terminated with effect from 26 August 2011 because, following a medical examination, she was found not to have limited capability for work.  She appealed and a new award of the contributory allowance was made, pending determination of the appeal.  The appeal was allowed by the First-tier Tribunal on 22 March 2012 to the extent that not only was the claimant found to have limited capability for work but she was also found to have limited capability for work-related activity.

 

5. Nonetheless, on 9 April 2012, the day after the Welfare Reform Act 2012 received royal assent, the claimant was notified that her award of contributory employment and support allowance would end on 30 April 2012.  She was given, or had already been given, a form ESA 3 which informed her about the income-related allowance and included a form that she could complete if she wished to seek entitlement to it.  30 April 2012 was the day before section 51 of the 2012 Act would come into effect and insert section 1A into the Welfare Reform Act 2007 with the result that entitlement to the contributory allowance would be limited to a period of 365 days unless the claimant not only had limited capability or work but also had limited capability for work-related activity.  I suspect that the claimant was originally informed long before the First-tier Tribunal made its decision that there was a Bill before Parliament that would have the effect of terminating the award of the contributory allowance and that she was then automatically sent the further notice shortly after the First-tier Tribunal had given its decision by a person or computer that was not aware of that decision.  In any event, the claimant was understandably confused.

 

6. The claimant completed the form ESA 3 on 9 April 2012.  In answer to the question “What date do you want us to reassess your Employment and Support Allowance claim from?”, she answered that she wished it to be reassessed from 30 April 2012 because that was when she had been told her benefit would change.  In Part 22 of the form she wrote –

 

“On the 23^rd March 2012, I won the right to this benefit at the higher rate in the county court [where the First-tier Tribunal had sat] but I was told that as of 30^th April 2012 this benefit was changing and because I was awarded the higher rate I would have to claim ESA 3 because I live alone.”

 

7. The form was received by the Department on 12 April 2012.  On or about  30 April 2012, the claimant’s award of the contributory allowance was terminated with effect from, it appears, that date.  (Although that was the day before the relevant provision of the 2012 Act came into force, it may have been the correct date because it was the beginning of the relevant benefit week and anyway nothing turns on the discrepancy if there is one.)  This decision was presumably made because the relevant person or computer was still unaware of the terms of the First-tier Tribunal’s decision.  Probably on the same date but possibly subsequently, the claimant was awarded the income-related allowance, also with effect from 30 April 2012. 

 

8. Eventually, the decision of the First-tier Tribunal was “actioned” on 12 July 2012, but only to the extent of including the work-related activity component in the calculation of the claimant’s contributory allowance from 26 August 2011 and paying the necessary arrears.  After representations were made by the claimant’s representative from Trafford Citizens’ Advice Bureau, the Secretary of State realised that the claimant had in fact been found to have limited capability for work-related activity and so the support component was included in the calculation of her entitlement to the contributory allowance instead of the work-related activity component and further arrears attributable to the contributory allowance were paid on 19 July 2012 in respect of the period since 26 August 2011.  However, although it appears to have been recognised that the effect of finding the claimant to have limited capability for work was that the claimant’s applicable amount for the purposes of calculating the amount attributable to the income-related allowance would include the enhanced disability premium, arrears attributable to the income-related allowance in respect of that premium were paid only from 30 April 2012. 

 

9. In a letter from the citizens’ advice bureau dated 26 July 2012, the claimant appealed against the decision of 19 July 2012 to award arrears of the income-related allowance only from 30 April 2012.  She did so on the ground that employment and support allowance was “one benefit, with two routes to qualification”.  That appeal seems to have generated further correspondence because a further letter of appeal dated 1 November 2012 purported to be an appeal against a decision dated 18 October 2012.  The front of the Secretary of State’s response to the appeal also identified a decision of 18 October 2012 as the subject of the appeal but there is no other evidence within the submission and the accompanying documents of any such decision and if there was a decision on 18 October 2012 it seems likely that it was an unappealable refusal to revise the decision of 19 July 2012 – or the decision of 12 July 2012 as revised on 19 July 2012 – the remedy for a refusal to revise being an appeal against the earlier decision that has not been revised.  On 18 April 2013, the Secretary of State refused (possibly for the second time) to revise the decision of 19 July 2012.  In a sketchy submission to the First-tier Tribunal, the appeal was resisted on the ground that the claimant had claimed the income-related allowance only from 30 April 2012.  The claimant’s representative expanded on the grounds of appeal in a written submission in which it was argued that the claimant did not make a claim on form ESA 3 because she was already entitled to employment and support allowance by virtue of the award made while the appeal was pending, which award had been made without a claim being necessary.

 

10. The First-tier Tribunal dismissed the appeal in a short decision, stating simply –

 

“The tribunal found no merit in the argument that any claim for ESA is a claim for both ESA (contribution-based) and ESA (income-related) and that the requirement to make separate claims is an administrative convenience that has no basis in law.”

 

Although it was no doubt hampered by the inadequate submission of the Secretary of State, I observe that the First-tier Tribunal made no attempt to identify any legal basis for a requirement to make separate claims.  The claimant now appeals with my permission.  Her appeal is opposed by the Secretary of State but there is a considerable degree of common ground between the parties that implies agreement that the First-tier Tribunal’s reasoning, such as it was, was wrong.

 

11. In particular, it now appears to be common ground, and I agree, that employment and support allowance is indeed a single benefit.  That, as the claimant submits, is clear from the terms of section 6 of the Welfare Reform Act 2007 and, in particular, subsections (5) to (7) of that section, which needs to be read against the background of sections 1, 2 and 4.  Section 1 provides that a person may be entitled to employment and support allowance either through satisfying contribution conditions or through satisfying conditions relating to his or her financial position and provides that a “contributory allowance” means an allowance based on contributions and an “income-related allowance” is an allowance based on the claimant’s financial position.  Section 2(1) provides that the amount of a person’s contributory allowance is a prescribed personal allowance plus either the work-related activity component or the support component, less any deductions in respect of pension payments.  Section 4(1) provides, in effect, that the amount of an income-related allowance is the claimant’s prescribed “applicable amount” less any income.  However, it appears that sections 2 and 4 apply only if the claimant is entitled to only, respectively, either the contributory allowance or the income-related allowance, because section 6 applies if the claimant is entitled under section 1 to both allowances.  It provides –

E+W+SThis sectionnoteType=Explanatory Notes has no associated

“6.–(1) This section applies where a claimant is entitled to both a contributory allowance and an income-related allowance.

  (2) If the claimant has no income, the amount payable by way of an employment and support allowance shall be the greater of—

(a) his personal rate, and

(b) the applicable amount.

  (3) If the claimant has an income, the amount payable by way of an employment and support allowance shall be the greater of—

(a) his personal rate, and

(b) the amount by which the applicable amount exceeds his income.

  (4) Where the amount payable to the claimant by way of an employment and support allowance does not exceed his personal rate, the allowance shall be treated as attributable to the claimant's entitlement to a contributory allowance.

  (5) Where the amount payable to the claimant by way of an employment and support allowance exceeds his personal rate, the allowance shall be taken to consist of two elements, namely—

(a) an amount equal to his personal rate, and

(b) an amount equal to the excess.

  (6) The element mentioned in subsection (5)(a) shall be treated as attributable to the claimant's entitlement to a contributory allowance.

  (7) The element mentioned in subsection (5)(b) shall be treated as attributable to the claimant's entitlement to an income-related allowance.

  (8) In this section—

“applicable amount” means the amount which, in the claimant's case, is the applicable amount for the purposes of section 4(1);

“personal rate” means the amount calculated in accordance with section 2(1).”

 

12. Thus, if a claimant is entitled to both a contributory allowance and an income-related allowance, there is still only one amount of employment and support allowance payable, which is either attributable to the contributory allowance or to both allowances, depending on the amount.  It follows, as appears also to be common ground, that, contrary to what the First-tier Tribunal held, it is not necessary to make separate claims for each of the contributory allowance and the income-related allowance.  It is generally a condition of entitlement to employment and support allowance that a claim is made for it (see section 1(1) and (4)(ac) of the Social Security Administration Act 1992), but there is nothing in the legislation requiring separate claims for the contributory allowance and the income-related allowance.

 

13. As a matter of practice, a claimant is given an opportunity on a standard claim form to indicate whether he or she wishes to “claim” both allowances or only one of them.  That has obvious administrative advantages for the Department and it also has advantages for claimants – provided that they do not wrongly believe that they are not entitled to one or other of the allowances – because it avoids delay while contribution records are investigated or, probably more importantly, makes it unnecessary for a claimant to provide details of his or her financial position.  Nonetheless, despite the language usually used, an indication that one or other of the allowances is not “claimed” amounts to a waiver of the need for the Secretary of State to consider entitlement to that element of employment and support allowance, rather than amounting to a true failure to claim it.  The legislation does not actually contemplate there being a claim for only one element of the allowance.

 

14. Consistently with that analysis, the Secretary of State argues that, if a person already has an award of the contributory allowance and wishes the total amount of employment and support allowance to be increased through an award of the income-related allowance, he or she needs to make an application for supersession under section 10 of the Social Security Act 1998, rather than making a new claim.  Given the terms of section 17 of that Act, making decisions under the Act final subject to further determinations under the Act, the Secretary of State’s submission is plainly right in a case where neither a revision under section 9 nor an appeal under section 12 is possible. 

 

15. However, regard must be had to those other ways of altering a decision.  For instance, because a claim is not necessary in respect of each element of employment and support allowance, if a person says on a claim form that he or she wishes to “claim” only one element and a decision is made in respect of that element, it seems to me that it must be open to the claimant, if he or she thinks that it was a mistake not to ask for both elements to be considered, to raise the question of entitlement to the other element by way of an application for a revision under section 9 “on any ground” (see regulation 3(1) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 (SI 1999/991)) or subsequently if there is an appeal.  There are also other bases upon which an application for a revision may be made.  I accept that there was no relevant application for supersession made by the claimant that can assist her on the facts of this case, but the question arises as to whether there was a relevant revision or appeal.  This requires a legal analysis of the decision-making in this case.

 

16. It is common ground that the 2011 award of the contributory allowance while the claimant’s appeal was pending was made without a claim, as is permitted by regulation 3(j) of the Social Security (Claims and Payments) Regulations 1987 (SI 1987/1968) as amended.  The award could be made because a person may be deemed to have limited capability for work while an appeal is pending if the requisite medical evidence is provided and, indeed, it appears to be the usual practice that such an award is made from the date of the termination of the previous award if the medical evidence covers the whole of that period, notwithstanding the words “has claimed” in regulation 30(3) of the Employment and Support Allowance Regulations 2008 (SI 2008/794).  Whether that was done in the present case is not revealed in the documents before me. 

 

17. In any event, I do not consider that the Secretary of State was at fault in 2011 in awarding only the contributory allowance without considering possible entitlement to income-related allowance when the claimant had not made a claim and had never suggested that she might be entitled to additional benefit through entitlement to the income-related allowance.  She could have raised the issue on an application for revision of the new award but did not do so and it seems fairly clear, for reasons explained below, that she would not in fact have been entitled to any additional benefit at that time.  It was that award that was superseded with effect from 30 April 2012 and, in effect, replaced on that supersession by an award of the income-related allowance.  Thus, as the Secretary of State accepts, the form ESA 3 in this case was not a claim but an application for supersession or, perhaps more accurately, a device for obtaining information enabling the Secretary of State to decide what award, if any, to make on his own proposed supersession.  Terminating an award of the contributory allowance upon a cessation of entitlement due to the passage of time is effected by a supersession (see MC v Secretary of State for Work and Pensions (ESA) [2014] UKUT 125; to be reported at [2014] AACR 35).  An application for supersession would usually be effective from the date on which it was received (see section 10(5) of the 1998 Act), whereas the claimant and the Secretary of State both understood at the time that she would not be entitled to the income-related allowance until she ceased to be entitled to the contributory allowance. 

 

18. The parties’ understanding that the claimant would not be entitled to an element of employment and support allowance to be attributed to the income-related allowance while she was entitled to an element to be attributed to the contributory allowance would have been correct if, as was unknown to the relevant decision-maker, the claimant had not already won her first appeal.  The effect of regulation 67 of, and paragraphs 1(1), 12 and 13 of Schedule 4 to, the 2008 Regulations is that for many claimants the amount of contributory allowance to which they might be entitled – the “personal rate” for the purposes of section 6 of the 2007 Act – is exactly the same as the “applicable amount” for the purposes of calculating their entitlement to the income-related allowance.  This is the case if they are single and are also not entitled to include in their “applicable amount” any “premiums” (see paragraphs 2 to 11 of Schedule 4 to the 2008 Regulations) or any “housing costs” (see Schedule 6).  Moreover, if such a person has no income to be taken into account, the amount of the income-related allowance to which he or she would be entitled under section 4 of the 2007 Act is exactly the same as the amount of contributory allowance payable under section 2.  If a claimant in that position seeks both allowances, the effect of section 6(2) and (4) is that only the amount of one of the allowances is paid and it is treated as attributable only to the contributory allowance.

 

19. The present claimant would have been in precisely that position when she completed her form ESA 3, had she not just won her appeal.  She was single, she lived in rented accommodation and so had no material housing costs and she also had no material income, being entitled only to disability living allowance which is disregarded and having too little capital to create a deemed income.  She was not entitled to any premiums, being entitled to only the mobility component and the lowest rate of the care component of disability living allowance.  In any event, when the decision was made to award the income-related allowance in the light of the information provided on form ESA 3, in apparent ignorance of the First-tier Tribunal’s decision of 22 March 2012, the award was presumably effective from the date that the contributory allowance ceased and at exactly the same rate. 

 

20. However, the effect of her having won the appeal on 22 March 2012 and having been held to have limited capability for work-related activity was that the claimant had become entitled to the support component in both the calculation of the contributory allowance (see section 2(1)(b) and (2) of the 2007 Act) and the calculation of the applicable amount for the purposes of the income-related allowance (see section 4(2)(b) and (4)).  Entitlement to the support component led in turn to the claimant’s entitlement to the contributory allowance being indefinite and, more significantly for the purposes of the present case, to her entitlement to have an enhanced disability premium included in her applicable amount (see paragraph 7(1)(a) of Schedule 4 to the 2008 Regulations).

 

21. The finding made by the First-tier Tribunal on 22 March 2012 that the claimant had limited capability for work-related activity was effective from 26 August 2011.  The decision of 19 July 2012 was to the effect that arrears equal to the amount of the support component due since 26 August 2011 (attributable to the contributory allowance by virtue of section 6(6) of the 2007 Act) were paid but the further arrears due as a result of including the enhanced disability premium in the claimant’s applicable amount (attributable to the income-related allowance by virtue of section 6(7)) were paid only in respect of the period from 30 April 2012.

 

22. Whether that was the right decision depends on the powers being exercised on 19 July 2012, upon which the Secretary of State’s submissions to both the First-tier Tribunal and the Upper Tribunal have been completely silent despite the fact that it was that decision that triggered the appeal to the First-tier Tribunal in this case.  Indeed, I do not have before me any copy of the decision of the First-tier Tribunal dated 22 March 2012 or of either of the decisions of 12 July 2012 and 19 July 2012.  However, I do not consider that that matters because, whatever precisely happened, I have no doubt that the dispute between the parties was properly before the First-tier Tribunal on 5 July 2013 and is now properly before me and can be resolved.

 

23. Normally, giving effect to a decision of the First-tier Tribunal allowing an appeal does not give rise to an appealable decision because the Secretary of State should be merely implementing a decision given by the tribunal.  If it transpires that a further decision needs to be made because there is a dispute as to how the decision should be implemented, it should be referred back to the tribunal.  However, a tribunal may leave an issue to be determined afresh by the Secretary of State (see R(IS) 2/08), in which case an appeal will lie against the Secretary of State’s decision.  In either event, the dispute may be brought before the First-tier Tribunal.  More importantly, the task of the First-tier Tribunal in either event is to consider what decision should be substituted for the decision made by the Secretary of State that was held to be wrong in the first appeal. 

 

24. It is likely that, in the present case, the First-tier Tribunal said nothing in its decision of 22 March 2012 about the amount of benefit to be paid in the light of the decision; it found that the claimant had limited capability for work-related activity and probably left the amount of the resulting award to be determined by the Secretary of State.  If it did not do so explicitly, that approach may be implicit.  In any event, I will proceed on the basis that the First-tier Tribunal did leave the question of the amount of the award to be paid in the light of its decision to be made by the Secretary of State as an appealable decision.  The initial decision of 12 July 2012 appears to have been revised on 19 July 2012, so technically the appeal may have been against the decision of 12 July 2012, as revised on 19 July 2012.

 

25. In any event, it is not in dispute that the inevitable result of the First-tier Tribunal’s decision was that the supersession effective from 26 August 2011 should lead to a higher award of employment and support allowance rather than a termination of the award.  The only issue that fell to be determined should have been the amount of that increased award from that date.  Because, for the reasons already given, the amount of employment and support allowance may include an amount attributable to the income-related allowance without a specific claim for that allowance having been made, I am satisfied that the Secretary of State was clearly wrong to calculate the amount of the award by reference to section 2 of the 2007 Act rather than section 6 in respect of the period from 26 August 2011 to 29 April 2012.  The First-tier Tribunal sitting on 5 July 2013 erred in law in not recognising that that was so.

 

26. The claimant, through her representative, has argued the case slightly differently.  She argues that the decision of 19 July 2012 involved a revision of the award made while the earlier appeal was pending.  As she points out, there is an express power to revise such an award under section 9, by virtue of regulation 3(5E) of the 1999 Regulations which provides –

 

“(5E) A decision under section 8 or 10 awarding an employment and support allowance may be revised if –

(a) the decision of the Secretary of State awarding an employment and support allowance was made on the basis that the claimant had made and was pursuing an appeal against a decision of the Secretary of State that the claimant did not have limited capability for work (“the original decision”); and

(b) the appeal to the First-tier Tribunal in relation to the original decision was successful.”

 

27. In my judgement, regulation 3(5E) would also have permitted the revision of the decision awarding an award of income-related allowance from 30 April 2012, since that decision was “made on the basis that the claimant had made and was pursuing an appeal”, even if the Secretary of State was ignorant of, or mistaken as to, the fact that the appeal had been determined so that the claimant was not still “pursuing” it.  Alternatively, that decision and the related decision terminating the award of the contributory allowance could have been revised under regulation 3(5)(a) on the ground that they “arose from an official error” since the decision of the First-tier Tribunal should have been communicated to the decision-maker.  (Had the termination of the award of the contributory allowance occurred before the First-tier Tribunal issued its decision dated 22 March 2012, the termination could have been revised under regulation 3(5I).) 

 

28. A revision under regulation 3(5E) may well be an alternative or additional way of approaching this case.  In the absence of regulation 3(5E), I might have been inclined to take the view that an award made while an appeal is pending simply lapses if the appeal is allowed in respect of the same period.  However, revising that award, gives a clear decision disposing of it, although I would still rely at least in part on the decisions of 12 and 19 July 2012 having been the completion of the earlier appeal because there is no evidence as to the precise date from which the award made pending the appeal was effective.  There might have been a gap. 

 

29. In any event, benefit awarded since 26 August 2011 was to be treated as having been paid on account of any award in the appeal or a revision (see regulation 5 of the Social Security (Payments on account, Overpayments and Recovery) Regulations 1988 (SI 1988/664)).  More importantly, any decision made by way of completing the decision made on the first appeal or by way of a revision under regulation 3(5E) in consequence of that appeal is effective from the same date as the decision under appeal or the decision being revised.  In the absence of any requirement to make a separate claim in order to be entitled to an amount attributable to the income-related allowance as well as an amount attributable to the contributory component, the decision made on the appeal or on revision should have taken into account the claimant’s entitlement to both elements from that effective date.  I therefore allow the claimant’s appeal and make the decision she seeks.

 

30. I do not consider that this approach is unfair to the Secretary of State, notwithstanding that the claimant had not raised the possibility of entitlement to the income-related allowance until after the First-tier Tribunal had given its decision on 22 March 2012, because entitlement to the income-related allowance was not capable of giving rise to any additional entitlement until it was decided that the claimant had limited capability for work-related activity.  I have no doubt that it is generally to the advantage of the Secretary of State not to have to consider entitlement to the income-related allowance if a claimant does not wish him to do so until it becomes a live issue of practical importance. 

 

31. However, this approach does mean that it became necessary after the First-tier Tribunal gave its decision on 22 March 2012 for the Secretary of State to enquire into the claimant’s means as from 26 August 2011.  By the time he considered what decision to give in the light of the First-tier Tribunal’s decision, he had information on the claimant’s means from 9 April 2012 but he did not consider it necessary to obtain confirmation that there had not been a material change since 26 August 2011, particularly as regards the claimant’s income and capital.  I have no reason to suppose that there was any difference and I think it unlikely.  I therefore make this decision without having made any enquiry.  However, the Secretary of State may make his own enquiries if he so wishes.   If they reveal anything of significance as to the claimant’s financial position and he considers that his powers of supersession are not adequate, he may apply for this decision to be set aside on the basis that my failure to make any enquiry has turned out to be a material procedural irregularity.  This seems likely to be a simpler approach than remitting the case to the First-tier Tribunal, which would be the alternative.

 

Mark Rowland

21 October 2014