R(IS) 13/94

Mr. D. G. Rice	CIS/809/1991 
25.6.93			
Housing costs ‑ claimant buying council house before claiming income support - whether housing costs liable to be restricted
On 28 May 1990 the claimant purchased from the local authority the council house she had been renting. Prior to purchasing the home the claimant had capital in excess of £8,000 and was not entitled to income support. By purchasing her home the claimant reduced her capital below £8,000. On a claim made on 3 October 1990 the adjudication officer awarded income support from 23 May 1990, the first day of the benefit week in which the claimant’s capital reduced below £8,000. The adjudication officer restricted the claimant’s housing costs on the ground that she was in receipt of income support on 28 May 1990 when she purchased her home. The restriction was made under paragraph 10(1) of Schedule 3 to the Income Support (General) Regulations 1987 to the amount of the eligible rent immediately before the date of purchase. The social security appeal tribunal upheld the adjudication officer’s decision. The claimant appealed to a social security Commissioner. In remitting the appeal the Commissioner,
Held that:
1.	this is a new claim for income support and entitlement to income support could not begin until 29 May 1990, the day after the claimant’s capital reduced below £8,000 (para. 4);
2.	as the claimant was not in receipt of income support on 28 May 1990 when she purchased the home her housing costs should not have been restricted under paragraph 10(l) of Schedule 3 to the Income Support (General) Regulations 1987 (para. 5);
3.	the tribunal erred in not considering whether the claimant had deprived herself of a capital asset in purchasing the home, under regulation 51(1) of the Income Support (General) Regulations 1987 (para. 6).

DECISION OF THE social security COMMISSIONER
1.	My decision is that the decision of the social security appeal tribunal given on 5 March 1991 is erroneous in point of law and accordingly I set it aside. I direct that the appeal be reheard by a differently constituted tribunal who will have regard to the matters mentioned below.
2.	This is an appeal by the claimant, brought with the leave of the tribunal chairman, against the decision of the social security appeal tribunal of 5 March 1991. In view of the complexity of the case, I directed an oral hearing. At that hearing the claimant, who was present, was represented by Mr. Martin South, a welfare rights worker from the Tower Hamlet Law Centre, whilst the adjudication officer appeared by Mr. N. Butt of the Solicitor’s Office of the Department of Social Security. I am grateful to them both for their submissions.
3.	The claimant had been in receipt of income support from 28 June 1986 when on 16 September 1990 (or possibly 16 October 1990) the adjudication officer reviewed the original award and disallowed benefit for the period from 28 June 1986 to 16 September 1990, on the ground that throughout that period the claimant had been in possession of capital resources in excess of the statutory limit. On 3 October 1990 the claimant made a new claim and benefit was awarded as from the benefit week commencing 23 May 1990. The claimant had on 28 May 1990 purchased the Council house which she had hitherto rented and for this purpose had applied, by way of deposit, sufficient of the actual capital in her possession to bring it below the statutory limit. As a result, she became, in the adjudication officer’s view, entitled to income support, and such income support included a sum corresponding to the interest payable on her mortgage. However the question arose as to whether or not the sum so included should be restricted, pursuant to paragraph 10(1) of Schedule 3 to the Income Support (General) Regulations 1987 SI 1987 No 1967 “to the amount of the eligible rent immediately before the acquisition”. Such restriction applied if, on the date when she became liable to complete the purchase of the Council house income support was payable in respect of her, but pursuant to paragraph 10(2)(a) did not apply if income support was not so payable.
4.	The tribunal, upholding the decision of the adjudication officer, took the view that the sum to be included by way of mortgage interest was restricted, in that on the completion date (which was accepted to have been 28 May 1990) the claimant was in fact in receipt of income support. For such income support had recommenced on the week beginning 23 May 1990. On any footing this approach was wrong. In fixing the commencement date of the award as being the week beginning 23 May 1990 the tribunal treated it as having resulted from a review and not from a fresh claim. On this basis they applied paragraph 7(1) of Schedule 7 to the Social Security (Claims and Payments) Regulations 1987, SI 1987 No 1968, and as the relevant change activating the review took place in the benefit week commencing 23 May 1990 the award had to commence from that particular date. But clearly the award arose not out of any review, but from a fresh claim made on 3 October 1990. Moreover Mr. Butt did not contend otherwise. The award could to some extent be backdated, but on no footing could it have commenced before the time when the claimant qualified for benefit, and that was when she had, on the purchase of the Council house, divested herself  of sufficient of her capital to bring it below the statutory limit, namely 28 May 1990, or perhaps more accurately the day after. And if she was not entitled to income support on the date of acquisition of the Council house, as was clearly the case, she could rely on paragraph 10(2) of Schedule 3 and shake free from the restriction of mortgage interest to “the eligible rent immediately before the acquisition”. Manifestly, then, the tribunal erred in point of law in applying the wrong principles and I must necessarily set aside their decision.
5.	Included in the papers was a decision of a Commissioner CIS/560/1990 where, in somewhat similar circumstances to the present, it was held that, for the purposes of determining whether income support was payable at the date of acquisition of a Council house, income support was not payable for any period before the actual date of claim, and any backdating had no relevance. If this view was right, then in the present case the only relevant date was 3 October 1990 when the claim was lodged, and not any retrospective date from which any award could properly be made. I regret that I disagree with the approach adopted in CIS/560/1990. If, in any particular instance a claim is properly backdated, then the operative date is, in my view, the date from which the backdated award commenced. However, nothing turns on the point in the present case, in that whether the relevant date was 3 October or 29 May 1990 the acquisition was made at a time when the claimant was not entitled to income support.
6.	The tribunal also erred in another, perhaps more important respect, they failed to consider the possible application of regulation 51(l). Manifestly, in providing the deposit for the acquisition of the Council house the claimant deprived herself  of capital. Of course, she acquired the equity in the property as a quid pro quo, but there was still an initial deprivation of capital resources, and since what she received was a home, this was something which necessarily had to be disregarded when calculating her total capital. The result was that the claimant was able to reduce her capital assets below the statutory limit, but if she did so with the object of claiming income support, then by operation of regulation 51(1) the capital, of which she deprived herself , was to be treated as still possessed by her. Moreover, the intention to secure income support need not have been the primary motive; it was enough if it was a significant object. Now where, as in this case, the claimant was apparently dependent upon income support to pay the mortgage interest, it is difficult to see how the securing of income support was not at least one of the purposes behind her using her capital as a deposit for the acquisition of the Council house. Of course, her primary motive was doubtless to acquire the premises; but it is difficult to see how the desire to obtain income support did not form at least a significant motive for this action. At any rate the tribunal should have considered this aspect of the case. For if they had taken the view that regulation 51(1) applied, then the claimant would have received no income support at all and the question whether or not there should be any restriction on the amount of mortgage interest allowable would simply not have arisen. Accordingly the tribunal’s failure to consider regulation 51(l) constitutes a further ground on which I must set aside their decision.
7.	It follows from what has been said above that I must direct that the appeal be reheard by a differently constituted tribunal. That tribunal will, of course, have to consider whether regulation 51(1) applied as from 29 May 1990, and if they take the view that it did, then there was no entitlement to any income support at all unless and until the claimant brought her capital within the statutory limit in accordance with the diminishing capital rule. I wondered whether I might avoid remitting the matter to a new tribunal by substituting my own decision. For it would seem difficult to envisage how the claimant could satisfy any adjudicating authority that, by applying her capital in providing a deposit for the purchase of her Council house, she did not have in mind, as a significant purpose, the securing of income support. However, on balance, I thought that the claimant should have the opportunity of seeking to persuade a tribunal to the contrary and that the fairer course was for me to remit the matter to a tribunal for determination. If, in the event, the claimant should be successful and the tribunal willing to accept that regulation 51(1) did not apply, then, in my judgment, the claimant would be entitled to have included in her income support mortgage interest without the restriction imposed by paragraph 10(1) of Schedule 3. For at the time of the acquisition of the property, the claimant was not entitled to income support.
8.	For completeness, I should mention that Mr. South questioned whether regulation 51(1) should apply in the present circumstances in view of the terms of paragraph 10(1) of Schedule 3. For the restriction there imposed only applied in the case of recipients of income support and if in practice there never could be any such recipients because they were effectively deprived of benefit by virtue of regulation 51(1), then paragraph 10(1) had no useful purpose. And, if meaning was to be given to paragraph 10, then it should be allowed to override regulation 51(1). There is nothing in that point. Paragraph 10(1) embraces not merely claimants, who have deprived themselves of capital in circumstances giving rise to the application of regulation 51(1), but also claimants who have acquired their Council house in circumstances where they have not brought themselves within regulation 51(1), and have preserved their entitlement to income support. Suppose, for example, a claimant already has less than the statutory capital limit. Any reduction of that sum in payment of a deposit could not be for the purpose of securing income support; she was already, as far as capital was concerned, eligible before she parted with the money. Clearly then paragraph 10(1) has a relevance where regulation 51(1) is not brought into play.
9.	I allow this appeal.

Date: 25 June 1993	(signed) Mr. D. G. Rice
	Commissioner