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[2005] UKSSCSC CG_4941_2003 (11 January 2005)

PLH Commissioner's File: CG 4941/03

SOCIAL SECURITY ACTS 1992-1998

APPEAL FROM DECISION OF APPEAL TRIBUNAL

ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

Claim for: Invalid Care Allowance (overpayment)

Appeal Tribunal: Luton

Tribunal Case Ref:

Tribunal date: 7 August 2003

Reasons issued: 15 September 2003

[ORAL HEARING]

1. The decision of the Luton appeal tribunal consisting of the chairman Mr K Wilding sitting alone on 7 August 2003 was in my judgment erroneous in point of law in that it purported to determine an amount of benefit had been overpaid to the claimant and was recoverable from her for the period 1 January 2001 to 8 April 2001, when her entitlement to the benefit for that period under a valid and still subsisting award was not the subject of the appeal to the tribunal and was not disputed by the Secretary of State. As I am therefore obliged to do under section 14(8) Social Security Act 1998, I set the decision aside. I give instead the decision I am satisfied the tribunal ought to have given on the appeal and the material it did have before it: namely that the Secretary of State's decision of 4 February 2003, that a total of £1,469.65 invalid care allowance for the period from 29 October 2001 to 30 June 2002 inclusive was recoverable from the claimant because it had been overpaid in consequence of her failure to disclose the material fact that she had been working, was correct and is confirmed. The manner and extent of any actual recovery of this overpaid amount is not a matter for me but for the discretion of the Secretary of State and no doubt any genuine considerations of hardship the claimant is able to put forward will be considered properly and sympathetically.
2. I held an oral hearing of this appeal which had been directed at the claimant's request. She appeared and was represented by Mr Nicholas Welch, a friend who has throughout been acting as her adviser. The Secretary of State appeared by Leo Scoon of the solicitor's office, Department for Work and Pensions.
3. Although this was the claimant's appeal it is I think fair to say that neither side had been happy about the tribunal chairman's decision. It had the effect that none of the benefit actually reclaimed by the Secretary of State was recoverable from her, but she was nevertheless liable to repay a different (albeit lower) amount for another period the Secretary of State had not claimed: see the departmental letter to Mr Welch dated 28 October 2003 at page 154 showing the result was that the claimant would have to repay £565.60 instead of £1,469.65. That letter also said the Secretary of State was content to leave matters there and not pursue his own appeal against the decision (in which I strongly suspect the tribunal chairman thought he had done the claimant a good turn). Mr Welch however sought to bring this appeal on behalf of the claimant in the hope of eliminating the recoverable overpayment altogether. The appeal has since been pursued by him on her behalf despite the specific warning in the legal officer's direction of 4 May 2004 of the possible consequences of the tribunal chairman's decision having to be set aside, with the suggestion that advice should be taken about withdrawing: pages 181-182; and despite the written submission by Mr G P Cahill on behalf of the Secretary of State dated 27 July 2004 at pages 254-260, very clearly stating that although the appeal was supported in the sense that the tribunal decision was agreed to be defective, the effect of setting it aside would not be to the claimant's advantage since on a full reconsideration the true amount of overpaid benefit recoverable from the claimant should, on the Secretary of State's analysis, be as much as £1,670.30.
4. In view of that I again drew the attention of the claimant and Mr Welch at the outset of the hearing to the possible consequences if the appeal were to go ahead; and they nevertheless indicated that it should do so, and confirmed they understood that if the tribunal decision was to be set aside as they contended it should be, that would mean the original decision of the Secretary of State holding the larger amount recoverable for the later period would fall to be reopened and reconsidered. In those circumstances, I proceeded with the appeal. As the claimant and Mr Welch both also confirmed they understood, I am concerned in the appeal only with determining her correct legal liability, if any, under the regulations in respect of any benefit that turns out to have been overpaid. Whether or how any legal liability that is found to exist should be enforced is a separate matter for the Secretary of State to consider only after the liability itself is finally determined as a matter of law.
5. The claimant is a lady now aged 52, who has had to devote a very substantial part of her life to caring for her daughter, who has been disabled since infancy and is now aged 25. Few people who have not been in this situation themselves will be able to imagine the toll it takes on a day to day basis, but at least some practical help is provided by the state in the form of the invalid care allowance (now renamed carer's allowance) payable under section 70 Social Security Contributions and Benefits Act 1992 to those regularly and substantially engaged in caring for a seriously disabled person and thereby prevented from engaging in full-time paid work elsewhere for themselves. It is thus a condition of receiving the allowance that the claimant is not "gainfully employed"; but to allow people to undertake relatively small amounts of work which do not prejudice the care given to the disabled person, there is an exception by which a person only counts as "gainfully employed" if his or her weekly earnings exceed a certain prescribed limit.
6. The legislation achieves this by stipulating in in section 70(1) of the 1992 Act that a person is entitled to an invalid care allowance for any day on which he is engaged in caring for a severely disabled person if (a) he is regularly and substantially so engaged, and (b) he is not gainfully employed; but then by regulation 8 of the Social Security (Invalid Care Allowance) Regulations 1976 SI No. 409 (made in exercise of the powers given to the Secretary of State under section 70(8) to prescribe when a person is or is not to be treated as gainfully employed), a person is not to be treated as gainfully employed on any day in a week unless his earnings in the immediately preceding week have exceeded a weekly cash limit, and (apart from temporary respite periods when the disabled person is in hospital) is to be treated as gainfully employed on every day in a week if his earnings in the immediately preceding week have exceeded that limit. The applicable limits so far as relevant to this case were £50 a week down to 5 April 2001, £72 a week for the year to 5 April 2002, and £75 a week from 6 April 2002 onwards.
7. The order books and literature issued to claimants contain clear statements drawing their attention to the existence of these limits and to the need to notify the department if they begin doing any work at all, whatever the level of earnings, in case the entitlement to benefit is affected. In the present case there is no room for dispute that the claimant, who had been awarded invalid care allowance on a continuing basis from 1 September 1990, did go out to work on a regular basis over an extended period from at any rate July 2000 until August 2002, for which she received earnings of varying weekly or monthly amounts; that her actual receipts in several of the months or weeks from July 2001 onwards were over the current prescribed limits; that she failed to notify the department until after August 2002 how much she was earning, week by week or month by month; and that she nevertheless continued to draw her full invalid care allowance by cashing the payment orders in her order book each week.
8. For the purposes of this appeal there is (quite rightly, on the facts just outlined) no dispute that if she has overdrawn invalid care allowance in excess of her true entitlement for certain weeks it is recoverable from her under section 71 Social Security Administration Act 1992 because of her failure to disclose the relevant facts to the department at the time. The only argument is whether there has in fact been any overpayment, which depends on whether the weekly limits were exceeded when one comes to apply the regulations about how to measure earnings for people whose actual hours of work and receipts fluctuate, as this claimant's did.
9. The time and pay sheets produced by her employer, a mill shop selling goods to the public, were in evidence before the tribunal at pages 25-34. They show that for just under a year from 16 July 2000 the claimant worked a regular six-hour shift each Sunday, with an extra half or full day shift on other days as required from time to time, and was paid weekly in cash. In December 2000 and some individual weeks thereafter the net pay she received went over the £50 limit in force down to April 2001, but there was no consistent pattern to these increases. From 1 July 2001 her remuneration changed to being paid monthly through the bank and her earnings started to increase more significantly, being over the weekly equivalent of £72 or £75 in August 2001 and throughout the period from October 2001 to June 2002, after which they fell back again.
10. In the decision of 4 February 2003 under appeal to the tribunal, the Secretary of State had calculated that the claimant's weekly earnings when averaged on a fair basis over the 50-week period she had been paid weekly down to the end of June 2001 had been below £50, so her continuing entitlement to invalid care allowance was left unaffected by the individual weeks in excess. However when it came to the period from 1 July 2001 his calculations showed that the earnings she received over the period from October 2001 to the start of June 2002 averaged out as consistently well above the weekly limit, and he accordingly determined that the invalid care allowance she had continued to draw for the relevant benefit weeks from 29 October 2001 to 30 June 2002 inclusive had been overpaid in excess of entitlement and was recoverable from her.
11. The amount of benefit for this period was £1,469.65, made up as shown in the calculation on page 37: there is no dispute as to the method of calculation, or that this money was actually received by the claimant. Her appeal to the tribunal was based on the contention that a fairer way of assessing whether her earnings had been over the weekly limit would be to average them over calendar or tax years instead of the periods used in the Secretary of State's calculation, and that if so the weekly average for the period of entitlement in dispute from 29 October 2001 onwards could be brought below the £72 or £75 limits then from time to time in force. That argument was accepted by the tribunal chairman, but as he also pointed out in his statement of reasons issued to the parties on 15 September 2003 at pages 147-148, while taking a calendar year average of the claimant's total net earnings did bring the weekly amount down below the limit of £72 or £75 for the disputed period from 29 October 2001 onwards, the corollary was that applying the same average to each of the weeks in the year 2001 for consistency sent the claimant over the limit for those weeks in the period 1 January to 8 April 2001 when the substantially lower limit of only £50 had been applicable.
12. Consequently (there being no possible argument against this as a matter of arithmetic, whether or not there was any express concession made about it as recorded in paragraph 4 of his statement of reasons) the chairman considered it right, while allowing the appeal against the Secretary of State's determination of an overpayment as regards the period 29 October 2001 to 30 June 2002, to substitute his own decision that there had been an entirely different overpayment of invalid care allowance for the period 1 January to 8 April 2001 which was recoverable from the claimant instead. He remitted the case to the Secretary of State to calculate the amount to be repaid by the claimant on that basis, which was subsequently worked out as £565.60 and notified to her in the departmental letter of 28 October 2003 at page 154 referred to above.
13. On the claimant's appeal to me against that decision it was contended on her behalf that the tribunal chairman had been wrong to purport to interfere with her past entitlement to invalid care allowance for 1 January to 8 April 2001 when this was outside the period in dispute. The appeal was only against the decision on entitlement, and any consequent overpayment, for the specified period from 29 October 2001 to 30 June 2002 and there had been neither any suggestion to the claimant that some other period of entitlement might be put in issue nor any valid basis for doing so as part of the appeal. Those arguments were accepted by Mr Scoon on behalf of the Secretary of State, at least to the extent that there appeared to have been no sufficient warning to the claimant and her representative that in allowing her appeal as regards the period that was in dispute, the tribunal would consider making a fresh decision against her in respect of a different period that had not been in dispute, and they should have been given a fuller explanation and more of an opportunity to address what the tribunal had in mind.
14. In my judgment the Secretary of State was right to concede on this point and the tribunal chairman's decision purporting to make a different amount of benefit recoverable from the claimant for a period outside that of the decision under appeal must be set aside as erroneous in point of law. For my own part I doubt very much whether it was within the proper scope of the appeal to the tribunal at all to purport to make a decision that there was a recoverable overpayment of benefit for a period as regards which there was a subsisting valid award of entitlement by the Secretary of State that had not been altered by him or challenged by anyone in any way. I am by no means certain that the lengthy decision of a tribunal of Commissioners in case CIB 4751/02 which was cited to me can be taken as empowering a tribunal to put itself in the shoes of the Secretary of State to that extent in this kind of context, and assume a power to revise previous decisions for which there appears to be no statutory authority under sections 8, 9 or 10 Social Security Act 1998. But however that may be, I must accept Mr Scoon's concession that the basis on which the tribunal was contemplating taking the course adopted in this case was insufficiently spelt out, and insufficient opportunity was given for the claimant and her representative to respond or obtain advice about it before too late. I therefore hold the tribunal's decision of 7 August 2003 in error and I set it aside.
15. As already indicated, that means that the decision actually under appeal to the tribunal as regards the period 29 October 2001 to 30 June 2002 has to be reconsidered, and the merits of the rival arguments gone into on how the claimant's weekly earnings for the purposes of the invalid care allowance limit should be calculated. Having had the benefit of full written and oral submissions from both sides, I am satisfied that this is a task I should attempt to carry out for myself without the case having to be remitted for a further tribunal rehearing. To do so involves having to consider some rather intricate provisions of the Social Security (Computation of Earnings) Regulations 1996 SI No. 2745; these are made under section 3(2) of the 1992 Act by which "earnings" for the purposes of parts II to V of that Act are to be calculated in such manner or on such basis as may be prescribed. Section 70 of the Act which provides for invalid care allowance is is in part III, so that these are the regulations that apply in determining what is meant by "earnings" in the invalid care allowance provisions: it will be recalled that under regulation 8 of the ICA regulations whether a person counts as gainfully employed on any day in a week depends on whether his "earnings" in the immediately preceding week exceeded the prescribed weekly limit. For obvious practical reasons there is thus an element of "delayed action": you wait and see whether the "earnings" for a given week have gone over the limit, and if they have, the next week's entitlement is affected.
16. The Computation of Earnings regulations provide so far as material as follows:

by regulation 2(1), a "week" is a period of 7 days; a "benefit week" is a period of 7 days corresponding to the week in respect of which the relevant social security benefit is due to be paid (for invalid care allowance which is a weekly benefit, this means in practice a period of 7 days beginning on a Monday); "earnings" means the amounts so prescribed under regulations 9 and 12 for employed and self-employed earners respectively;

by regulation 3 for the purposes of parts II to V of the Contributions and Benefits Act and of any regulations made thereunder, "the earnings of a claimant shall be calculated by determining in accordance with these regulations the weekly amount of his earnings";

by regulations 6-8:

"Calculation of earnings of employed earners

6. - (1) Earnings derived from employment as an employed earner shall be calculated or estimated over a period determined in accordance with the following paragraphs and at a weekly amount determined in accordance with regulation 8…

(2) … the period over which a payment is to be taken into account –

(a) in a case where it is payable in respect of a period, shall be a period equal to a benefit week or such number of benefit weeks as comprise the period commencing on the date on which earnings are treated as paid under regulation 7 … and ending on the day before the date on which the earnings of the same kind … and from the same source would, or would if the employment was continuing, next be treated as paid under that regulation …

and that period shall begin on the date on which the payment is treated as paid under regulation 7 …

Date on which earnings are treated as paid

7. Earnings to which regulation 6 … applies shall be treated as paid –

… on the first day of the benefit week in which the payment is due to be paid.

Calculation of weekly amount of earnings

8. - (1) For the purposes of regulation 6 … subject to paragraphs (2) to (4), where the period in respect of which a payment is made –

(a) does not exceed a week, the weekly amount shall be the amount of that payment;

(b) exceeds a week, the weekly amount shall be determined –

(i) in a case where that period is a month, by multiplying the amount of that payment by 12 and dividing the product by 52; ...

(3) Where the amount of the claimant's net earnings fluctuates and has changed more than once, or a claimant's regular pattern of work is such that he does not work every week, the application of the foregoing paragraphs may be modified so that the weekly amount of his earnings is determined by reference to his average weekly earnings -

(b) ... over a period of five weeks or such other period as may, in the particular case, enable the claimant's average weekly earnings to be determined more accurately."

17. Thus in simple terms, for a person both working and paid on a regular weekly basis, say on Fridays, the earnings for each benefit week starting on Monday will be the amount of the payment he or she receives on the Friday of the same week, and the normal rule is that if those earnings are over the weekly limit in force on the last day of that week, he or she will be "gainfully employed" for ICA purposes throughout the next benefit week starting on the following Monday. For a person paid on a regular monthly basis on the last working day of each calendar month, as this claimant was from 1 July 2001 onwards, the monthly earnings are treated as paid on the Monday of the benefit week that contains the actual monthly pay day, and that payment is treated as giving the claimant "earnings" for each of the (four or five) benefit weeks starting with that one and ending with the one before the week that will contain the next regular monthly pay day; the weekly amount of the earnings in each of those weeks being taken as the most recent monthly payment multiplied by 12 and divided by 52. For persons such as the claimant having fluctuating earnings (but, as is agreed, no recognisable "cycle" of work and non-work to bring into play the separate provision in regulation 8(3)(a) for such cases) the weekly or monthly payments received may instead be averaged under regulation 8(3)(b), so as to substitute a different weekly figure for the "earnings" attributable to the claimant, though still over the period of benefit weeks which each actual payment of earnings is treated as having to cover for the purposes of regulations 6 and 7.
18. As the very helpful and detailed written submission of Mr Cahill on behalf of the Secretary of State points out, regulation 8(3)(b) gives the Secretary of State a discretion to be applied rationally on a case by case basis, but is limited in its purpose to the use of a five-week or other period in place of the actual weekly, monthly or other calculation under regulation 8(1) to "enable the claimant's average weekly earnings to be determined more accurately"; and this is less clear that it might be since strictly the accuracy of an average is simply a matter of doing the arithmetic correctly, irrespective of the periods you happen to select for the calculation. Regulation 8(3) must I think be taken as intended less literally (or mathematically), to mean that the Secretary of State is to have the power of substituting an alternative averaging calculation to produce a standardised weekly figure for the week or month, etc., identified in regulation 8(1) as the one in respect of which a given payment is actually made where he is satisfied this would more accurately reflect the true rate of the claimant's weekly earnings current at the period for which a week by week figure for those earnings has to be identified, in order to determine some question of entitlement: such as the one here, of whether or at what point the claimant had crossed the line of having weekly earnings over the limit to make her count as "gainfully employed" for invalid care allowance purposes in each day of the following benefit week.
19. It has to be borne in mind that the overriding purpose of the exercise, in the context of a weekly benefit such as invalid care allowance which is there to provide assistance with current weekly living expenses for people without sufficient weekly earnings of their own, is the relatively short term one of producing a working week by week figure so as to know as quickly as possible whether benefit is payable or not. Mr Cahill is I think right in saying that the application of regulation 8(3) in this context may often have to be more a matter of judgment than of science, and there may be no necessarily 'right' answer: it has to be a matter of dealing reasonably with the evidence of actual earnings for the current payment periods as disclosed (or as it should be disclosed) by the claimant to the Secretary of State week by week or month by month. It cannot in my judgment be said that the existence of the discretionary power in regulation 8(3)(b) requires the Secretary of State in a case such as this to "wait and see" over a very extended period, and then juggle and aggregate a whole succession of payments that were each in fact made in respect of specific weekly and monthly periods either side of a significant change in the rate of working and earning, so as to treat them as in effect equivalent to one lumped-together payment for work spread evenly throughout. There are no grounds on which it could be described as "more accurate" to ignore a step-change in the rate of working and earning such as shown here in the late summer of 2001, and pretend that the claimant's work and earnings had carried on at one uniform rate all year.
20. The starting point, and the basic rule under regulation 8(1), is that whenever a weekly or monthly earnings payment takes the claimant over the weekly limit the entitlement for the relevant succeeding benefit week or weeks is lost. When the actual payments are seen to be fluctuating it is however an entirely proper use of the power in regulation 8(3) to "wait and see" over a period of five weeks or more, until one can be satisfied whether an apparently wide variance over a short period represents a "blip" to be ironed out in the average because there is no real change in the underlying weekly rate, or represents the start of some more substantial change in the pattern and level of working and earning. In the present case, the officer making the original calculation on behalf of the Secretary of State (a long time after the event, and with the benefit of hindsight in view of the claimant's failure to disclose her actual earnings at the time she received them) in fact operated the averaging provision to the advantage of the claimant by taking the whole of her weekly earnings for the 50 weeks to 30 June 2001 as one lump sum payment evenly spread, so as not to reopen her entitlement for any part of that period. As shown in Mr Cahill's analysis a stricter application of regulation 8(1)(a) on a week by week basis would have put her over the limit and removed her entitlement in at any rate half a dozen individual weeks during that time because of the various extra weekly shifts she worked and earnings over the prescribed limit she obtained.
21. The averaging provision was again applied in her favour after she was switched to being paid monthly and the pattern of her work and earnings started to increase, when the monthly earnings for August 2001 (which were over the prescribed limit) were averaged with those for July and September so as to prevent her losing any entitlement. After that, the earnings she received in each of the months October 2001 to the end of May 2002 were all well over the limit, on either an individual monthly or an average basis over that identified period of eight months' increased working and earning activity; and for that reason she was held disentitled to invalid care allowance for the relevant benefit weeks to which those earnings had to be attributed under regulations 6 and 7, namely the period from 29 October 2001 to 30 June 2002 inclusive. After the latter date the pattern of her working and earning was again seen to have fallen away below the limit, and was accepted as not prejudicing her invalid care allowance entitlement.
22. I can see nothing wrong in that way of applying the averaging provisions in regulation 8(3), and in my judgment the decision of the tribunal chairman ought to have been to confirm it as regards the period of entitlement in dispute from 29 October 2001 to 30 June 2002, both dates inclusive, with the result that there was no entitlement to invalid care allowance for that period and the benefit she had already obtained was recoverable. I do not think there was any justification for imposing an annual averaging of all the disparate payments the claimant received over the whole calendar year 2001 so as to treat her as if she had been working and earning at a uniform weekly rate of some £60 throughout the whole of that year, when plainly she had not, and the evidence in her time and pay sheets showed an identifiable and sustained pattern of significantly increased working and earning at well over that rate throughout the eight-month period from the autumn of 2001 to the end of May 2002.
23. As regards the benefit weeks before 29 October 2001 I do not think it right to attempt to reopen any question of entitlement for individual weeks, even though as Mr Cahill shows in his submission the 50-week averaging used so as to spread her actual weekly earnings evenly over the the entire period was perhaps generous to her, and she might well have lost her entitlement for several individual weeks and been liable to pay back an additional £240 or so if regulation 8(1)(a) had been applied unmodified. However I am not satisfied it was actually wrong or unreasonable for the Secretary of State's officer to exercise the discretion in regulation 8(3) as he did in respect of those weeks, or that it could be right in any event for me to revisit that or substitute some different decision as regards a benefit period for which the claimant's entitlement to invalid care allowance was not disputed in the appeal to the tribunal.
24. I reject a further argument advanced on behalf of the claimant by Mr Welch that because some of the additional earnings she obtained from her periods of more intensive work at the mill shop were for different types of work (for example working on the shop floor rather than as a cashier) the earnings she received should be treated as "earnings not of the same kind" from the same source and so aggregated over a period of a year or more under regulation 6(3), which deals with payments for overlapping periods. I was not clear to what extent it could be said there was in fact any possibility of "overlap" in the actual earnings payments she received, which all appear to have been for the actual hours worked in a given week or month; but in any event the fact that weekly or monthly earnings calculated by reference to the hours worked may include hours when different tasks were required to be performed for the same employer does not mean that the earnings are "not of the same kind" in this context. What is meant by that expression is illustrated by the list of different types of earnings in regulation 9(1), so as to make the expression extend beyond basic pay to such things as bonus or commission, payments in lieu of notice, holiday pay, and so forth, which by their nature may well be calculated and paid by reference to different periods from the basic rate. I also record for the sake of completeness that there being no suggestion that this could be a "recognisable cycle of work" case so as to bring it within regulation 8(3)(a), I agree with Mr Scoon's submission that this could not provide any valid alternative ground for the calendar year averaging sought by the claimant for the year 2001.
25. The appeal is thus allowed, the decision of the tribunal set aside, and my decision substituted confirming the Secretary of State's original decision of 4 February 2003 that the £1,469.65 invalid care allowance received by the claimant for the period 29 October 2001 to 30 June 2002 inclusive was overpaid and is recoverable from her.

(Signed)

P L Howell

Commissioner

11 January 2005