CIS/492/2008

DECISION OF THE SOCIAL SECURITY COMMISSIONER
  
1.	This is an appeal by the Claimant, brought with my permission, against a decision of an appeal tribunal sitting at Bournemouth on 20 September 2007. For the reasons set out below I dismiss the appeal. 

2.	The Claimant was in receipt of income support in 2005, apparently on the ground of incapacity for work. According to the submission of the Secretary of State to the Tribunal the Claimant “was claiming income support up to and including 16 February 2006. His incapacity benefit claim closed on 1 March 2006.” 

3.	On 9 May 2006 the Claimant was took out a loan of £135,000 in order to purchase the 60% beneficial interest in the house in which he lived which had been left to his brothers under his mother’s Will. The loan was secured by way of mortgage on that property. 

4.	On 11 May 2006 the Claimant reclaimed income support. He satisfied the conditions of entitlement save that, unless interest on the mortgage could be added to his “applicable amount”, his income was in excess of his applicable amount. 

5.	At the time of reclaiming income support the Claimant completed a form MI12, relating to the mortgage. That contains a part to be completed by the lender. According to a later decision made on 10 May 2007 (p.30), on 16 October 2006 a decision was made to disallow income support from 11 May 2006. 

6.	On about 30 November 2006 the MI12 Form was returned by the lender to the Jobcentre stating: “invalid account please provide one and send it back.” On 17 January 2007 the Claimant signed a further MI 12 Form, which was completed by the lender and returned to the Jobcentre on 18 January 2007. 

7.	On 29 January 2007 there was a request on behalf of the Secretary of State for a decision to be made by a decision maker. This stated that the loan had been taken out on 9 May 2006 “whilst on benefit.” No further decision seems to have been made until 10 May 2007 (p.30), when the decision was to refuse income support from 11 May 2006 on the ground that the loan was made during a “relevant period” (see below for the significance of this expression). 

8.	On 18 May 2007 the Claimant was notified of that decision (p.35), although the letter stated that “we cannot help with the interest payments on your home loan. This is because you took out your loan in a relevant period – i.e. whilst you were in receipt of incapacity benefit which is not allowable by law.” That explanation seems to have been wrong, in that (i) the issue was whether the loan was taken out whilst the Claimant was entitled to income support (not incapacity benefit), or during a gap in such entitlement of not more than 26 weeks and (ii) the Claimant was not (according to the Secretary of State) entitled to incapacity benefit at the time when the loan was taken out. 

9.	On 21 May 2007 the Claimant made a statement saying: “I was not in receipt of incapacity benefit on 13 January 2006. I was awarded incapacity benefit from 2 March 2006. I returned the payments of incapacity benefit from 2 March 2006 to 27 April 2006 (prints attached). My mortgage was sanctioned on 13 January 2006. I was not in receipt of any benefits on 13 January 2006, my benefits were suspended.” 

10.	On 10 June 2007 the Claimant appealed against the decision of 10 May 2007, stating: “I have sent you evidence that I was not on incapacity benefit when the mortgage was sanctioned (took out).” 

11.	On 27 June 2007 the decision of 10 May 2007 was reconsidered, but not revised. That reconsideration decision stated that “[the Claimant] was in receipt of Income Support up to and including 16 February 2006. His income exceeded Income Support requirements from that date.” On 23 June 2007 the Claimant was notified of that decision. 

12.	The Tribunal, by the decision now under appeal to me, dismissed the appeal. I granted leave to appeal because it seemed to me that there might be a possible argument as to the effect of paragraph 4 of Schedule 3 to the Income Support (General) Regulations 1987, which provides (so far as material) as follows:

 “(2)	Subject to the following provisions of this paragraph, loans which, apart from this paragraph qualify under paragraph 15 shall not so qualify where the loan was incurred during the relevant period ……………………
		
(4)	The “relevant period” for the purposes of this paragraph is any period during which the person to whom the loan is made – 

		(a)	is entitled to income support, or

(b)	is living as a member of a family one of whom is entitled to income support, 

together with any linked period, that is to say a period falling between two such periods of entitlement to income support separated by not more than 26 weeks.” 

13.	Para. 4(2) refers to the time when the loan was “incurred”. That is not the date when the loan was “sanctioned”, but the date when the advance was made, which according to the Claimant’s evidence was on 9 May 2006. The Claimant reclaimed income support from 11 May 2006. The loan was therefore incurred just before the date of the Claimant’s fresh claim. However, under the definition of “relevant period” in para. 4(4), the loan still did not qualify for mortgage interest if it was incurred during a gap between two periods of entitlement to income support, unless that gap was of more than 26 weeks. 

14.	Was the loan incurred during a period “falling between two such periods of entitlement”? It is possible to argue that it was not, in that the Secretary of State’s decision was that the Claimant was not entitled to income support on his fresh claim because (on the footing that mortgage interest could not be added to his applicable amount), his income was too high. However, I agree with the Secretary of State that it is impossible to apply this provision sensibly unless, for the purposes of any claim, one treats a period covered by that claim during which the claimant would be entitled to income support if mortgage interest were allowable as a “period of entitlement”. Unless one does that one ends up with a completely circular position: if one says that the second period is not a period of “entitlement” because (mortgage interest not being allowable) there is no entitlement, the conclusion would then be that mortgage interest is allowable, with the result that there is then a gap of not more than 26 weeks between two periods of “entitlement”, and so on ad infinitum. The only way to break that circle is to apply the provision on the footing  that mortgage interest is allowable in respect of any period covered by the claim, and ask what the result is on that footing. In other words, it is necessary to read para. 4(4) as if it began: “The “relevant period” for the purposes of this paragraph is any period during which the person to whom the loan was made (a) is or would but for paragraph (2) above be entitled to income support” 

15.	The Secretary of State accepts, in his representative’s submission in this appeal dated 10 April 2008, that paragraph 4(3) of Schedule 3 would not have prevented mortgage interest being included in the Claimant’s housing costs for income support purposes in respect of any fresh claim to income support made by the Claimant more than 26 weeks after 16 February 2006. I think that that must be right. It is not right to treat as a period of “entitlement” a period in respect of which a previous claim has been made but disallowed. The submission states that “the claimant made a further claim for income support in December 2007 and housing costs were initially disallowed. I understand that this decision will be reconsidered on the basis that the relevant period rule does not apply so that housing costs can be awarded, subject to the other conditions in Schedule 3”. 

16.	The Claimant has attached to his submission in reply a letter to him from the Jobcentre dated 17 May 2008 which states: 

“Please complete sections 1-6 of the enclosed MI 12 Form and forward it to your lender for completion of sections 7 to 9 so that we can consider mortgage interest. As you are aware we can consider your mortgage interest from 27 December 2007 since you have won your appeal.” 

17.	I do not know what “appeal” is being referred to in that letter. I assume that the letter may have been written as a result of discussions between the Secretary of State’s representative in the appeal before me and the Jobcentre. I assume that the letter states that mortgage interest can be considered from 27 December 2007 because that is the date of the fresh claim. The requirement in para. 8(1)(a) of Schedule 3 for 39 weeks’ continuous entitlement may also need to be considered here. 

18.	I have considered whether it was necessary for the Claimant to make a fresh claim to income support in order to take advantage of the fact that, if a loan is taken out during a gap in entitlement to income support, it is only excluded from being a loan qualifying for income support housing costs if the gap was of 26 weeks or less. When making the decision of 10 May 2007 the decision maker was entitled and bound to take into account changes in circumstances down to that date. Was it necessary for the Claimant to make a fresh claim to income support, after the 26 weeks had elapsed from the end of his previous income support entitlement, or should the decision maker on 10 May 2007 have treated the loan as a qualifying loan as from 26 August 2006 (which I calculate to have been the date when the 26 weeks elapsed)? At first sight it seems odd if the mere making of a fresh claim can make a difference, but I have concluded that it does. 

19.	My conclusion (see para. 14 above) that it is necessary to assume, in determining for the purposes of any claim whether a period covered by that claim is a “period of entitlement”, that mortgage interest is allowable, means in my judgment that unless and until the Claimant makes a fresh claim after the 26 week period has elapsed, the loan will have been granted during a gap of nor more than 26 weeks between periods of “entitlement”. 

20.	I refuse the Claimant’s request for an oral hearing of this appeal as I consider that I have been able properly to determine it without an oral hearing. 

	(signed on the original)	Charles Turnbull
		Commissioner
		20 August 2008