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Cite as: [2015] UKUT 423 (AAC)
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NS v Secretary of State for Work and Pensions (IS) (Remunerative work : Calculation of hours of work) [2015] UKUT 423 (AAC) (31 July 2015)
IN THE UPPER TRIBUNAL Case No CIS/3076/2011
ADMINISTRATIVE APPEALS CHAMBER
Before UPPER TRIBUNAL JUDGE WARD
Attendances:
For the Appellant: Mr Jim Strang, welfare benefits consultant
For the Respondent: Mr Stephen Cooper, solicitor
Decision: To the limited extent hereafter appearing, the appeal is allowed. The decision of the First-tier Tribunal sitting at Birkenhead on 22 July 2011 under reference 062/10/01794 involved the making of an error of law and is set aside. Acting under section 12(2)(b) of the Tribunals, Courts and Enforcement Act 2007 I remake the decision in the following terms:
The claimant’s appeal against the entitlement decision taken by the Secretary of State on 13 April 2010 refusing the claimant income support on the basis that between 16 August 2004 and 5 August 2009 she was in remunerative work is dismissed. The decision was in the outcome correct.
The claimant’s appeal against the decision of 26 April 2010 that there was a recoverable overpayment of £31,759.15 is allowed as to the calculation of the amount of the overpayment only. The Secretary of State must recalculate the amount of the overpayment on the basis that the number of hours worked, and (where stated there) the gross pay earned by the claimant is as found by the Upper Tribunal in the Appendix to this decision. Where the gross pay is not stated there it is to be calculated using the hours stated there and the following hourly rates:
In the period from week 24 of tax year 2006/7
to the end of that tax year £5.42
In the tax year 2007/8 £5.95
In the tax year 2008/9 £6.00
In the tax year 2009/10 £6.25
He must apply regulation 13 of the Social Security (Payments on Account, Overpayments and Recovery) Regulations 1988 in accordance with the Reasons below. The Secretary of State must notify the claimant’s representative of the revised calculation no later than 6 weeks after the date of the letter sending him this Decision. The claimant may, within 4 weeks of the date on which that calculation is sent to her representative, apply in writing to the Upper Tribunal for any dispute as to the calculation of the amount to be resolved.
REASONS FOR DECISION
Introduction
1. This initially rather technical-seeming case raises questions of some importance with the spread of zero hours contracts and other less conventional working arrangements. They arise in the contexts of determining what is “remunerative work” for income support purposes and of calculating the amount of a recoverable overpayment. Although the reasons for my decision contain a fair amount of arithmetic, it does not require more than school mathematics and it is regrettable that the parties and the First-tier Tribunal did not engage more with that aspect of the evidence.
Relevant History
2. The claimant had been in receipt of income support from 28 May 1998 pursuant to a decision dated 11 June 1998. The award was initially made on the basis that she was a single parent, but from 27 July 2004 she claimed on the basis of incapacity for work (advantageous to her income support because of the premium a claim on such a basis attracted) and then, having failed the Personal Capability Assessment on 5 April 2005, once again as a single parent. She had previously worked part-time while on income support, stopping in March 2003 because of childcare problems.
3. It is not in dispute that between 16 August 2004 and 5 August 2009 she worked for a taxi company. There was evidence from the taxi company. In respect of the period between week 20 of tax year 2004/5 and week 23 of tax year 2006/7, it gave details of the claimant’s gross pay. From this one could at best only infer the number of hours worked in any given week and, as no hourly rate of pay was given before the tax year 2008/09, even that was not an entirely straightforward exercise. Gross pay varied between £0.00 in some weeks to a peak of £321.00 in one week. The most common entry initially however was the weekly sum of £85.60. From week 24 of tax year 2006/7, following an apparent change of practice in the taxi company’s record keeping, the evidence disclosed the weekly hours worked. These varied between 0 hours in a few weeks and a peak of 54.25 hours in one week. Pay rates were shown for 2008/09 as £6 per hour and for 2009/10 as £6.25 per hour. There was also a form completed on behalf of the company in January 2010 where the question “What were or are this person’s contracted hours a week or month?” was answered by “18” and “What was or is this person’s hourly rate of pay?” by “£6.25”. There was also evidence demonstrating the content of Forms P60 for relevant tax years.
4. On 13 April 2010 the decision maker superseded the decision of 11 June 1998 on the ground of relevant change of circumstances, namely that the claimant had since then started employment. On 26 April 2010 the decision maker determined that there had been an overpayment, recoverable on the ground of failure to disclose.
5. The amount of the overpayment was calculated at £31,759.15. This was on the basis that the claimant’s entire entitlement to income support during the relevant period was extinguished by virtue of the work she had been doing.
6. The claimant’s case was:
(a) that a Ms W, an adviser at the JobCentre, had been aware from the outset that the claimant would be doing the job and that it lasted for 16 hours a week, as she had authorised a payment, initially described as a “Back to Work Bonus” (but which the evidence subsequently suggested was made out of the “Adviser Discretionary Fund”);
(b) that Ms W had advised the claimant that she could work up to 16 hours a week without it affecting her benefits; and
(c) that if the claimant had been correctly advised, she could have claimed working tax credit which should, accordingly, be offset against the income support overpaid.
7. The claimant was prosecuted and pleaded guilty on the basis that she had been advised as set out at (b) above but had failed to notify a change of circumstances when she worked in excess of 16 hours per week. The claimant received a 6 month community order. The overpayment was calculated for sentencing purposes only at £13,841.46. Neither representative was able to explain how this figure had been arrived at. Although the ignorance is on both sides, Mr Strang seeks to take a point based on the lack of explanation for the above figure. There is nothing in it. The purposes for which the figure was calculated are not those with which I am concerned and I do not rely on it.
First-tier Tribunal in error of law
8. The First-tier Tribunal took the claimant’s appeal as being against both the entitlement and the overpayment decisions. In its statement of reasons (para 21):
”The Tribunal accepted the accuracy of the documentation supplied by [the taxi company] as to period of employment and the working of 18 hours per week contracted. The documentation provided by [the taxi company] shows that the appellant was working over 16 hours.”
9. However, if by that the tribunal meant in each and every week in the relevant period, it patently did not. If alternatively the tribunal was going through an averaging process, it needed to say what it was doing and so I gave permission to appeal. As will be seen, the reference to “over 16 hours” was also inexact.
10. It was common ground that the tribunal had erred in law. What was less forthcoming were positive suggestions as to how the admittedly difficult legislation could sensibly be applied. Further, there were quite significant gaps in the fact finding by the First-tier Tribunal and attempts to fill in the gaps by seeking further particulars through Mr Strang met with only limited success. Consequently I directed an oral hearing, which the claimant was required to attend. It was significantly delayed by the claimant’s ill-health and by administrative difficulties, but was eventually held at Liverpool on 7 August 2014. I received little assistance there either with interpreting the financial evidence or with the legislation. Insofar as this decision includes significant aspects which were not raised by or with the parties but which occurred to me afterwards, the parties have had the opportunity to comment on them.
Remunerative work – General
11. What the First-tier Tribunal needed to do in the first instance was to determine whether the claimant was in remunerative work for the relevant period. A person who is in remunerative work is precluded from receiving income support by section 124 (1)(c) of the Social Security Contributions and Benefits Act 1992 (“the 1992 Act”). “Remunerative work” for this purpose is defined in regulation 5 of the Income Support (General) Regulations 1987/1967 (“the 1987 Regulations”) as will be seen below.
Remunerative Work- Findings as to Earnings
12. The evidence indicates that the claimant’s hourly wage in the period from when she started the job through to week 23 of 2006/07 was £5.35 and I so find. This is because:
a. that figure produces an explanation for the figure (£85.60) most commonly occurring in the employer’s evidence which is congruent with the 16 hours (being two 8 hour night shifts) which the claimant says was the basic amount of her work when she was taken on;
b. other exact multiples of £5.35 also appear in that evidence for other whole numbers of hours worked. See e.g. 2004/05 week 34 (26 hours), 35 (15), 37 (19), 38 (31) and so on;
c. in other cases periods of time involving recognised fractions of an hour can also be derived using this figure (e.g. 2004/05 week 31 (7.25), weeks 28 and 32 (14.50);
d. those figures which fall outside the above categories (and there are relatively few in 2004/05 and none in 2005/06 and 2006/07) are attributable either to other fractions of an hour being worked and/or small amounts of rounding in the sum : see e.g. weeks 24-26, where £67.50 equates to 12.62 hours, but 12.66 hours would (sensibly enough) be 12 hours 40 minutes;
e. it is consistent with those wage figures which were given by the employer in respect of 2008/9 and 2009/10, assuming small increases from time to time, and with the hours given in the employer’s evidence in respect of the period from week 24 of 2006/7 and 2007/8 and the income figures disclosed by the P60s, which were also in evidence and which I analyse at [13] and [14] below.
It is however nothing to do with the national minimum wage, which at all times the rates paid exceeded. The claimant’s evidence to me that she was paid less than the national minimum wage and only after some time given a rise which took her to it (and the written submission on her behalf) were incorrect in that respect and I reject them as less likely to be accurate than the schedule provided by the employer’s accountant, an objective third party with access to relevant records. I also consider that the evidence provided by the employer in January 2010 may have reflected the position at the end of the claimant’s period of employment as regards both hours and pay rate but does not directly address the position at the start of the period in 2004.
13. For the tax year 2006/7 after week 23 I find that the claimant was paid £5.42 an hour. In weeks 1 to 23 she earned £2266.81 (p17). In 2006/7 as a whole she earned £5035.53 (p21). Therefore in weeks 24 to 52 she earned £5035.53 - £2266.81 = £2768.72. During that period she worked a total of 510.75 hours, giving an average hourly rate of £5.42.
14. For the tax year 2007/8, dividing total hours worked (1215.25) into her gross pay of £7227.50 (p20) gives an average figure of £5.95.
15. I appreciate that in reality it is likely that pay in the periods referred to in [13] and [14] would for a while have been at a lower figure than the average, before increasing to a higher figure in consequence of a pay award, but without knowing the actual rates, or the date of any increase, it does not appear possible to calculate more accurately than by way of averaging.
Remunerative work – findings as to hours worked
16. In relation to the initial period by applying the hourly rate I have arrived at to the gross pay figures provided by the employer, and in relation to the subsequent period by relying on the working hours figures provided by the employer, I therefore find as fact that the hours worked by the claimant were as set out in the Appendix to these Reasons. In doing so I have not overlooked the possibility that occasional hours may have been worked at premium rates around Christmas and New Year, but beyond saying that that happened very infrequently the claimant was unable to provide any details and there is no basis on which I can rationally apply other than the general position.
17. It can thus be seen that in the first three weeks of working (2004/05, weeks 20-22), when she was paid £99, the claimant worked 18.5 hours a week. These weeks do not coincide with any of the periods when the possibility of premium rates was mentioned in evidence, nor is the increase from £85.60 to £99 explicable by any mark-up commonly used for premium rates (time-and-a-quarter, time-and-a-half etc).
Remunerative work – applying the legislation
18. The question then is how to approach whether the claimant was in remunerative work. Reg 5 of the 1987 Regulations, in the version in force since 14 April 2008 – such amendments as were made prior to that appear immaterial for present purposes – so far as material provides as follows:
“5.— Persons treated as engaged in remunerative work
(1) Subject to the following provisions of this regulation, for the purposes of section 20(3)(c) of the Act (conditions of entitlement to income support) [now SSCBA, s124(1)(c)], remunerative work is work in which a person is engaged, or, where his hours of work fluctuate, he is engaged on average, for not less than 16 hours a week being work for which payment is made or which is done in expectation of payment.
…
(2) Subject to paragraph (3B), the number of hours for which a person is engaged in work shall be determined—
(a) where no recognisable cycle has been established in respect of a person's work, by reference to the number of hours or, where those hours are likely to fluctuate, the average of the hours, which he is expected to work in a week;
(b) where the number of hours for which he is engaged fluctuate, by reference to the average of hours worked over—
(i) if there is a recognisable cycle of work, the period of one complete cycle (including, where the cycle involves periods in which the person does no work, those periods but disregarding any other absences);
(ii) in any other case, the period of five weeks immediately before the date of claim or the date on which a superseding decision is made under section 10 (decisions superseding earlier decisions) of the Social Security Act 1998, or such other length of time as may, in the particular case, enable the person's average hours of work to be determined more accurately.
(3) A person shall be treated as engaged in remunerative work during any period for which he is absent from work referred to in paragraph (1) if the absence is either without good cause or by reason of a recognised, customary or other holiday.
(3A) A person shall not be treated as engaged in remunerative work on any day on which the person is on maternity leave, paternity leave or adoption leave or is absent from work because he is ill.
(3B) [not material]
…
(5) Subject to paragraph (5A), a person who was, or was treated as being, engaged in remunerative work and in respect of that work earnings to which regulation 35(1)(b) and (d) (earnings of employed earners) applies are paid shall be treated as being engaged in remunerative work for the period for which those earnings are taken into account in accordance with Part V.
(5A) [not material]
…
(7) For the purposes of paragraphs (1) and (2), in determining the number of hours for which a person is engaged in work, that number shall include any time allowed to that person by his employer for a meal or for refreshment, but only where that person is, or expects to be, paid earnings in respect of that time.”
19. Although not put to me in quite these terms, looking subsequently at the DWP’s Decision Maker’s Guide at para DMG 20323 makes clear to me the DWP’s view that the period over which averaging is to take place MUST end with the date on which the superseding decision was made. Looking again at reg 5(2)(b)(ii), that is quite right. If “the period of five weeks” leading up to the decision yields an insufficiently accurate answer, it is not “such other period” which one is entitled to substitute (i.e. one not ending at the date of decision -or, in this case, supersession) but some other length of time (i.e. the same period, but of different duration).
20. On the facts of this case a period of 5 weeks leading up to the date of supersession provides a nonsensical answer because the claimant had by then stopped working altogether. In general terms, her hours tended to increase in the later part of the period – the average weekly hours per tax year (or part) were:
2004/5 (part year) 17.99
2005/6 17.46
2006/7 17.95
2007/8 23.37
2008/9 24.78
2009/10 (part year) 26.08
21. The most accurate (and also the most advantageous to the claimant) approach is therefore to carry out the calculation over the whole period leading up to the date of supersession.
22. In applying reg 5 over that period, there are however a number of special situations which need to be considered. First, by reg 5(3A) one cannot treat as engaged in remunerative work a person who is absent from work because she was ill (there is no suggestion that any of the other categories in paragraph (3A) apply.) Although I acknowledge that the claimant has received treatment for mental health problems, no evidence has been provided which would allow me to conclude that she was absent from work through illness on any given day. It is intrinsically unlikely that in weeks where 0 hours were worked in the same week in several years, this was because of illness on each occasion: see for instance week 31 in the tax years 2005/6, 2007/8 and 2008/9 and week 35 in the tax years 2005/6, 2006/7 and 2007/8.
23. There is then the question of holidays to consider: the evidence is that the claimant was not given any paid holiday. Though under the Working Time Regulations 1998 (as amended) it appears she would have been entitled to some, this does not affect the calculation, as the question is not whether she was entitled to it but whether she was “absent …by reason of a recognised, customary or other holiday” (emphasis added) which she was not.
24. In my view therefore, the averaging process falls to be carried out simply including the weeks where there was nil or a small amount of work in the general calculation and paras (3) and (3A) of reg 5 neither require the claimant to be treated, or not treated, as having been in remunerative work in those weeks.
25. If one applies reg 5 over that period, one arrives at an average of 20.88 hours, from which it follows that the claimant is required by law to be treated as having been engaged in remunerative work throughout the period and that she was disentitled to income support for the whole period.
The claimant’s duty to disclose
26. Reg 32(1A) of the Social Security (Claims and Payments) Regulations 1987 requires a claimant to furnish in such manner as the Secretary of State may determine such information as the Secretary of State may require in connection with specified matters. This includes requirements set out in instruction leaflets provided to claimants.
27. The non-contemporaneous leaflet INF4(IS) 04/06 that was in evidence (p50) contains an explicit instruction that “If you get Income Support, tell the Income Support section at your office about the change. If you are sick, tell the Incapacity Benefit section as well” (emphasis added). Double notification was required. The versions actually issued to the claimant were older: one had been issued on 11 June 1998 and one on 9 September 2005. Given the date when she started work, it was the former which was relevant. The Secretary of State has not been able to produce that version from the archive but has been able to evidence the wording in the October 1999 version and also the wording which was in use in the similarly structured INF4 that was in use in April 1991 when sickness benefit rather than incapacity benefit was involved. A person in the position of the claimant at that time might have found herself rendered ineligible for income support either as a result of being in “remunerative work” under s124(1)(c) of the 1992 Act or as a result of ceasing to be a “person incapable of work” for the purposes of sch 1B of the 1987 Regulations, which might take her outside the further condition imposed by s124(1)(e) of the 1992 Act of “fall[ing] within a prescribed category of person”. That may appear a complicated position, but is why instructions in the terms quoted were required. I accept that the situation was potentially a confusing one and therefore the instructions needed to spell it out, but they did. From all of that, I am satisfied that the version issued to the claimant on 11 June 1998 did contain words substantially to the effect of those quoted above in this paragraph and imposed upon her a duty to notify both the income support and incapacity benefit sections.
28. What had to be the subject of this dual notification was set out in INF(IS)4/06, INF4(IS)04/05 and the 1991 leaflet that were in evidence. They consistently contain the instruction, under the heading “Changes we need to know about”
“Tell us if you…
- do any work at all
- earn more money or less money”
and they then go on to make provision for notification, in writing, as to income and deductions and I find that the version in use in 1998 would have contained materially identical provisions.
Was there sufficient disclosure for income support purposes, via Ms W, a jobcentre officer?
29. As noted at [2], the claimant’s income support claim had switched on 27 July 2014 to being on the basis of incapacity for work. On 13 August 2004, the claimant was recorded as having been awarded incapacity benefit/credits (p12). That was the Friday before the week in which she started work and when she saw Ms W. Ms W’s function in 2004 was as “a personal advisor dealing with incapacity benefit” (emphasis added) (p79), based at the Jobcentre Plus office at Brunswick House, Price Street, Birkenhead. There is no evidence that she was acting or purporting to act on behalf of the income support section. Her own description of her role and what she said in her statement at p 80 about the need for the claimant to notify others about starting work are consistent with this, as is the fact that in view of the course the claimant’s income support claim took, she had every reason to have been seeing the claimant in such a capacity at that time. Further, the claimant said her discussion with Ms W was about “permitted work”, a term of art relating to incapacity benefit (see [36] below.)
30. Mr Strang in a submission dated in error 24 July 2014 (should be 24 September) says that the claimant’s income support was dealt with at Hordan House, which is the adjacent building to Brunswick House but that there is no public access to it and so the only place where a claimant could inform in person was at Brunswick House. The instructions say “you can telephone or write or call into the office” so “calling in” was a valid thing to do, at least for starting work, even if the instructions required written notification of earnings details. If what Mr Strang says is right (and the Secretary of State has not suggested otherwise) that does make it more likely that an alternative, indirect means would have been necessary to enable a claimant “calling in” to Brunswick House to convey the message to someone in Hordan House. It does not of itself mean that Ms W was such a means.
31. Mr Strang further submits that had Ms W been called at the FtT hearing, it “would have confirmed her exact function and her duties to inform the relevant departments”. Her function was stated in her written evidence in any event as was her approach to the claimant’s duty to inform others of changes but I accept that had she been called, it would in principle have been open to Mr Strang, subject to the tribunal judge’s discretion, to cross-examine on such matters. It transpires that Mr Strang had indeed applied for Ms W to be called, by a letter dated 2 June 2011, and this was not granted. However, at that time, his stated reasons for wanting her to be called were not so that she could be cross-examined about the extent to which, as a result of the geographical and operational arrangements of the Department’s buildings on Price Street, she was required to act as an intermediary for the income support section. Rather, the application was based on a wish to cross-examine her about the “Back to Work Bonus” (to which I return below) and “how long she had been in the position she held at the relevant time” (which, apart from the negative and rather general implication as to Ms W’s experience, is not directly relevant). The record of proceedings does not disclose any renewed application by Mr Strang for Ms W to be called on any other grounds. Nor does it indicate any submission that Ms W was, for the reasons now stated, acting as the agent for the income support section. The tribunal had a discretion whether to pursue the attendance of Ms W and it explained at para 23 of the statement of reasons, by reference to the reasons for calling her advanced by Mr Strang, why it did not consider it necessary to do so.
32. I do not consider that it is open to Mr Strang now to base a claim that the tribunal erred by failing to call a witness for a purpose other than the one for which he had indicated he wanted her to be called and when he was not in terms making an argument based on agency. In the absence of Ms W having been called and cross-examined, I do not consider that the evidence supports a finding that Ms W was acting on behalf of the income support section. I do not consider that it is appropriate to attempt to call Ms W now, many years later, as the argument on this point is entirely contrary to the remainder of the evidence and even if, contrary to my view, she was acting on behalf of the income support section, there was in any event no accurate disclosure to her meeting the requirements of INF4 (see below). (See also in relation to Ms W’s evidence para [37] below.)
Relevance of the Back to Work Bonus (or similar)
33. This issue only arises if I am wrong as to the capacity in which Ms W was acting. Mr Strang relied at the First-tier Tribunal on the suggestion that the claimant had been paid the “Back to Work Bonus” on starting work, something which he said was only available to a person working 16 hours or more and which accordingly proved that the DWP knew the claimant was working at least 16 hours. The tribunal found that ”there is no such specific item as a “Back to Work” payment” and that what the claimant was paid was a payment out of the Advisor Discretionary Fund. The tribunal was wrong in concluding that there was no such thing as a Back to Work Bonus – there was at that time (see SI 1996/2570) - but the form it took (storing up earnings taken into account by the Department and offset from benefit and paying them out when a person went off benefit altogether) does not indicate that this was a material error as it was not linked to a requirement to be working for 16 hours a week or more. Further, the tribunal’s conclusion that assistance given to the claimant was, rather, from the Advisor Discretionary Fund is supported by evidence (notably p65). Evidence was provided to me as to the basis of operation of the Fund which is, as its name suggests, discretionary. There is nothing in the material I have seen which supports a case that by making such a payment the Department in general terms, never mind specifically the income support section, must have had knowledge that a job for 16 hours a week or more was involved.
Did Ms W modify the written instructions relating to the duty to report changes?
34. It is, in principle, possible for an officer of the Department to modify the duty to disclose by oral representation (see R(A)2/06). As a preliminary, either I would have to be wrong as to the capacity in which Ms W was actually acting, or she would have had to have ostensible authority to make such a representation, which the evidence does not disclose.
35. The best available evidence to me, so long after the event, about what was actually said is provided by the transcript of the claimant’s interview under caution, carried out in March 2010.
“The lady said that I could work up to 16 hours a week but I didn’t have to declare it because it wouldn’t affect me benefits…so long as I was working but up to 16 hours that was okay…And it was called permitted work and she gave me …like, I think it was a credit note you know to go and get…clothes and things to start back at work with…Definitely she said permitted work because that’s …what I could do because with the depression it was like an encouragement you know to get back into hopefully being able to go back into proper work.”
36. “Permitted work” is non-statutory terminology that was used in relation to incapacity benefit: see e.g. CPAG Welfare Benefits and Tax Credits Handbook 2004-5 at p754. The terminology, which the claimant clearly remembered, once again suggests that Ms W was acting as an officer concerned with incapacity benefit. Further, though what the claimant is recorded as having said is (unsurprisingly) not a complete or entirely accurate statement of the “permitted work” rules as they applied, as regards the critical element of the number of hours, “up to 16 hours”, while ambiguous, is at least capable of being equated with the fundamental statutory position of “less than 16 hours a week” (Social Security (Incapacity for Work) (General) Regulations 1995/311 reg 17(2)(b)).
37. It may be that the claimant misinterpreted this as “16 or less”. It may be that, whether out of genuine confusion – perhaps lined to the change in the basis on which she was claiming income support -or because subconsciously it was the message she wanted to hear, that she took Ms W’s words as applying not only to her status as a person adjudged to be incapable of work but also for income support purposes. It may be – and the inexactitude of her description of the benefit rules in her witness statement provides a degree of support for this -that Ms W expressed herself inexactly. Ultimately though it does not matter. Even taking matters at their highest in the claimant’s favour, supposing Ms W, with sufficient ostensible authority, did make a representation that for all benefit purposes with which the claimant was concerned there was no duty to disclose if one worked up to and including 16 hours, the evidence shows that even when the claimant started she worked 18.5 hours in each of the first three weeks, and neither then, nor on any of the many other occasions when she worked more than 16 hours, was there disclosure to any part of the DWP of the true extent of hours worked. Had there been any such disclosure at the proper time, enquiries would have been made which would have prevented the overpayment from occurring. As the claimant’s case fails, even as to the maximum that could be elicited from Ms W in cross-examination, that is a further reason not to attempt to call her now.
Conclusion on recoverability
38. There was no notification to the income support section of the matters required to be notified by the relevant instructions to claimants. If, which I should not be taken as accepting, Ms W modified that duty by oral representation, the claimant did not comply with that duty as alleged to have been modified. There is, accordingly, a recoverable overpayment.
Calculation of overpayment
39. Even on the basis that there was a recoverable overpayment, there still remains the question of the calculation of the amount. It is necessary to consider the impact of the Social Security (Payments on Account, Overpayments and Recovery) Regulations 1988/664, reg 13 of which provides for certain sums to be deducted in calculating recoverable amounts in the following terms (as they stood at 26 April 2010, the date of the decision under appeal):
“13. Sums to be deducted in calculating recoverable amounts
(1) Subject to paragraph (2), in calculating the amounts recoverable under section 53(1) of the Act or regulation 11, where there has been an overpayment of benefit, the adjudicating authority shall deduct–
(a) any amount which has been offset under Part III;
(b) any additional amount of income support, or state pension credit, or income-based jobseeker's allowance or income-related employment and support allowance which was not payable under the original, or any other, determination, but which should have been determined to be payable–
(i) on the basis of the claim as presented to the adjudicating authority, or
(ii) on the basis of the claim as it would have appeared had the misrepresentation or non-disclosure been remedied before the determination;
but no other deduction shall be made in respect of any other entitlement to benefit which may be, or might have been, determined to exist.
(2) Paragraph (1) shall apply to tax credit only where both—
(a) the overpayment of benefit referred to in that paragraph, and
(b) the amount referred to in sub-paragraph (a) of that paragraph,
are tax credit, and with the modification that sub-paragraph (b) of that paragraph is omitted.”
40. It will be noted that, contrary to the contention on behalf of the claimant, the deductions do not extend to tax credit a person might have obtained in these circumstances: see reg 13(2). Such an argument can only be made by way of representations to the Secretary of State as to whether, in the exercise of his discretion, he should decide to waive recovery of an overpayment adjudged to be recoverable – that is not a matter over which the Upper Tribunal has any jurisdiction.
41. The Secretary of State in written submissions suggests (emphasis in original) that “Regulation 13(1)(b) only permits the deduction of amounts that are not actually payable under an existing award and cannot actually be made payable under an award now.” He suggests, however, that an approach similar to that which I suggest in [44] and [45] below could be adopted by way of a “closed supersession”.
42. I do not think the concept of a closed supersession is relevant here. That is concerned with the following situation, described in CSIS/754/2002 (and subsequently approved in CIS/2595/2003 and CIS/1305/2012):
“If, during the currency of an award, an overpayment arises because a claimant ceases to satisfy the conditions of entitlement, but later, and still within the currency of the award, he satisfies the conditions of entitlement, the disentitlement on revision or supersession is not indefinite because he has not made a new claim at the relevant time, but is instead limited to the period where the conditions of entitlement are not satisfied, unless some other ground for disentitlement arises.”
In the present case, the claimant has failed to satisfy the conditions of entitlement throughout, as the result of the operation of reg 5 of the 1987 Regulations. Because reg 5(2)(b)(ii) ties us to the period immediately before the superseding decision was made, there is no room for periods ending at other times to be taken into account as a way of satisfying conditions of entitlement for some of the time.
43. As to the application of reg 13, I consider that the Secretary of State’s (emphasised) additions of “actually” to the statutory wording serve to obscure. The purpose of this provision, whose convoluted wording has been the subject of judicial comment on numerous occasions, is to provide a floor of a person’s proper entitlement to a subsistence benefit, calculated on the basis of the true facts. Whatever income support might be payable as the result of applying a 5 week rolling average as suggested below was not (correctly) payable under the original decision awarding benefit and was not payable under the supersession decision of 13 April 2010: in my judgment it was not “payable under the original, or any other, determination” for the purposes of reg 13. Nor is it necessary to consider what could “actually be made payable under an award now”, for we are concerned with hypotheses: amounts which “should have been determined to be payable-…on the basis of the claim as it would have appeared had the misrepresentation or non-disclosure been remedied before the determination” (emphasis added).
44. Reg 13(1)(b)(ii) directs one to entitlement on the basis that any misrepresentation or failure to disclose had been remedied before an award was made: in other words, that the claimant had accurately told the income support section, week by week, the hours that she had worked. Had she done so, there would have been either a fresh claim or a potential superseding decision each time. That then causes, by reference to such notional claim or supersession, reg 5(2)(b)(ii) to have to be applied a second time. When doing so, it seems to me that the standard 5 week period should apply. A person who had been working less than 16 hours weekly would not have been disentitled to income support on the grounds of being engaged in remunerative work. Income support is, in principle, a weekly benefit. Statute requires a 5 week period to be looked at as a starting point and I do not see that for the purposes of this notional exercise, to choose any different period would result in the claimant’s hours being “determined more accurately”.
45. It follows that in my view the correct approach when calculating the amount of the overpayment is to look at the matter weekly, on the basis of a 5 week average. This will thus give rise to a rolling average. That is not unfair. There are periods in 2004/05 and in early 2008/9 when the general trend, reflected in such 5 week averages, would be that the claimant was not working for 16 hours or more weekly. For such periods it is fair that the overpayment should be calculated on the basis that she was not disentitled by virtue of having been in remunerative employment (the other conditions of entitlement and any amount payable may be another matter and I express no view upon them.)
CG Ward
Judge of the Upper Tribunal
31 July 2015