R(IS) 20/98

Mr. M. J. Goodman	CIS/7273/1995
30.1.97
Housing costs - mortgage taken out two years after repayment of earlier loan - whether claimant entitled to include in her applicable amount the interest on her new mortgage
In 1989 the claimant, a widow, was awarded income support. She owned her home on which a mortgage loan of £7,000 was secured, in respect of which the appropriate sum was included in her applicable amount when her entitlement to income support was calculated. The loan was repaid in 1992. She transferred that home to one of her sons and on 1 September 1994 bought another home with the aid of a mortgage loan of £30,000. In November 1994 she applied for her housing costs in respect of the new loan to be paid as part of her income support. From 6 February 1995, the claimant was awarded attendance allowance and had the severe disability premium included in her applicable amount. She reached the age of 75 in May 1995. The social security appeal tribunal upheld the adjudication officer’s decision that the claimant’s housing costs could not be included in her income support, because of the application of paragraph 5A of Schedule 3 to the Income Support (General) Regulations 1987. The claimant appealed to the Commissioner.
Held, allowing the appeal, that:
1.	having regard to sub-paragraph 3(a) of paragraph 5A of the 1987 Regulations, the claimant was entitled to housing costs in respect of her new mortgage, but only to the extent to which it did not exceed the original £7,000 mortgage; and this was so despite the time gap between the discharge of the former loan and the taking out of the new one, as both events occurred during the same income support period;
2.	the claimant was not a “disabled person” within paragraph 5A(8) of the 1987 Regulations on the relevant date, 1 September 1994, when the new mortgage was taken out (so as to entitle her to income support housing costs on the entire £30,000) as at that date she did not have included in the applicable amount of her income support any of the premiums listed in that paragraph and it was irrelevant that the awards made from February 1995 were based on the premise that the claimant, by then, had been disabled for six months or that the claimant might have claimed attendance allowance earlier.
[Note: The Commissioner’s view was that the principles of his decision were applicable to the provisions of the new Schedule 3, substituted by SI 1995 No 1613 with effect from 2 October 1995, for the Schedule 3 considered in this decision.]

DECISION OF THE SOCIAL SECURITY COMMISSIONER
1.	I allow the claimant’s appeal against the decision of the social security appeal tribunal dated 24 July 1993 as that decision is erroneous in law and I set it aside. My decision is as follows:
(a)	The award of income support to the claimant was properly reviewed because there had been a relevant change, of circumstances since that award was made namely that the claimant had on 1 September 1994 borrowed £30,000 from a Building Society, secured by a mortgage on her new home 
3 R Road, the loan being to acquire an interest in that home; 
b)	On revision consequent on that review the claimant’s income support applicable amount for housing costs should not be nil (as decided by the adjudication officer and the tribunal) but should be limited to the appropriate housing costs in relation to £7,000 (the amount of an earlier loan on mortgage of the claimant’s previous house, repaid in March 1992). The said applicable amount is not to include the amount by which the “new liability” on the mortgage of £30,000 exceeds the “former liability” (the mortgage of £7,000); Income Support (General) Regulations 1987, SI 1987 No. 1967, Schedule 3, paragraph 5A (added by SI 1994 No. 1004, as from 2 May 1994).
2.	This is an appeal to the Commissioner by the claimant, a widow born on 28 May 1920. The appeal is against the unanimous decision of a social security appeal tribunal dated 24 July 1995 which dismissed the claimant’s appeal from the following decision of an adjudication officer issued on 24 November 1994:
“I have reviewed the decision of 6 September 1994 because there has been a relevant change of circumstances since that decision was made, namely that [the claimant], has taken put a mortgage to purchase her home. I am unable to revise the payment of income support because of the provisions of paragraph 5A of schedule 3 to the Income Support (General) Regulations (1987). [The claimant] is not entitled to housing costs.”
3.	The appeal was the subject of an oral hearing before me on 23 January 1991 at which the claimant was not present but was represented by Mr. R. Body, her solicitor. The adjudication officer was represented by Ms. K. Phelan of the Office of the Solicitor to the Departments of Health & Social Security. I am indebted to Mr. Body and Ms. Phelan for their assistance to me at the hearing.
4.	This appeal concerns the somewhat complex provisions of paragraph 5A of Schedule 3 to the Income Support (General) Regulations 1987, SI 1987 No. 1967 as added by SI 1994 No. 1004 from 2 May 1994. The relevant parts of paragraph 5A read as follows:
“Other housing costs which are not met
5A(1)	Subject to the following provisions of this paragraph the housing costs referred to in paragraph 1(a), (aa) and (b) [which include the interest on the mortgages involved in this appeal] shall not be met during the relevant period where those costs were incurred‑
(a)	after 2nd May 1994 and
(b)	 during the same relevant period.
(2)	The “relevant period’ is any period during which the person who incurred the costs is either‑
(a)	entitled to income support; or
(b)	...
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; and for the purposes of this paragraph two or more periods of entitlement and any intervening linked periods form a single relevant period.
(3)	Where in the relevant period, before the housing costs referred to in sub‑paragraph (1) were incurred (“the new liability”), housing costs of a kind referred to in paragraph 1(a), (aa) or (b) (e.g. the mortgage interest costs in this case) were applicable in the case of a claimant ... (“the former liability”) then, in sub-paragraph (1), the housing costs which are not to be met are such costs, except those costs mentioned in sub-paragraphs (4) and (5)‑
(a)	except in a case to which head (b) applies, (not applicable in this case] as are equal to an amount (if any) by which the new liability exceeds the former liability; and
(b)	[not relevant in this case]
(6)	Notwithstanding sub‑paragraph (1), the housing costs shall be met in accordance with the provisions of this Schedule in the case of a claimant who satisfies the conditions specified in sub‑paragraph ... (8) ... below, but‑
(a)	Subject to any additional limitations imposed by the sub‑paragraph; and
	(b)	...
(7)	...
(8)	... the conditions specified in this sub‑paragraph are that the loan was taken out, ... either- 
(a)	...; or
(b)	to acquire alternative accommodation more suited to the special needs of a disabled person than the accommodation which was occupied before the acquisition by the claimant:
and in this sub‑paragraph a disabled person is a person in respect of whom a disability premium, disabled child premium, higher pensioner premium or pensioner premium for persons aged 75 or over is included in his applicable amount or would be so included but for his failure to satisfy other conditions of entitlement to income support.”
5.	The facts of the case were set out by the tribunal in their findings of fact as follows:
“1.	[The claimant] is a widow born 28 May 1920; she suffers from bouts of confusion and panic attacks.
2.	In 1992 [the claimant] claimed income support and it was paid on the basis of her personal applicable amount plus a pensioner premium and has continued in payment without a break to date.
3.	In 1994 on 1 September [1994] [the claimant] moved from 335 OSRH to 3 R Road ... so as to live near her son who could look after her. The move was made with the aid of a £30,000 mortgage [taken out with a Building Society]. [The claimant’s] former home has been transferred to her other son ... who assisted financially with the purchase of the new home.
4.	On 9 November 1994 [the claimant] applied for her housing costs to be paid as part of her income support.
5.	From 6 February 1995 [the claimant] was awarded attendance allowance and severe disability premium; she now also receives higher pensioner premium.
	6.	[The claimant] reached the age of 75 on 28 May 1998.”
It appears from the adjudication officer’s statement of facts to the tribunal that in fact the claimant had been in receipt of income support from 5 December 1989.
6.	To the factual circumstances as thus found, paragraph 5A of Schedule 3 to the 1987 Regulations clearly applies. The new mortgage of £30,000 was taken out on 1 September 1994 i.e. after 2 May 1994. The claimant was entitled to income support and had been continuously so entitled since 5 December 1989. Housing costs in relation to the earlier mortgage of £7,000 (repaid March 1992) had been met by the appropriate applicable amount of income support. There was therefore, within one continuous, period of entitlement to income support, a “former liability” within sub‑paragraph (3) of paragraph 5A, and a “new liability” in the form of the £30,000 mortgage taken out on 1 September 1994.
7.	In my judgment it follows that the tribunal erred in law in holding that the claimant was not entitled to any housing costs at all in relation to the £30,000 mortgage. They in my judgment overlooked the provision of sub‑paragraph (3)(a)	of paragraph 5A, that the only housing costs which are disallowed for income support purposes are these “equal to an amount (if any) by which the new liability exceeds the former liability” i.e. in the present case the difference between the housing costs attributable to the former liability on the £7,000 mortgage and the housing costs applicable, in excess of that amount, to the £30,000 mortgage. I would pause here to say that the actual arithmetic of this comparison may cause difficulties. If there are such difficulties and they cannot be resolved at local level they can be referred back to me or to another, Commissioner for direction or supplemental decision.
8.	However, the principle is in my view quite clear that it was wrong to deny the claimant housing costs altogether and that she is entitled to housing costs measured by the applicable amount referable to the original £7,000 mortgage. I should record that Ms. Phelan, on behalf of the adjudication officer, contended that this was not so and that this provision was meant to apply only where there had been a contemporaneous paying off of an old mortgage and taking out of a new one, whereas here a gap of some two years occurred between those two events. Mr. Body did not feel able to contend otherwise. However, it appears to me quite clear that the provision of sub‑paragraph 3(b) of paragraph 5A does apply, because there is no time limit expressed in paragraph 5A, between the former liability and the new liability, save that they must both occur during one and the same income support period, which they do in this case. I have therefore given my decision in paragraph 1(b) above accordingly.
9.	I now turn to the main ground of appeal which had been put forward on behalf of the claimant by her solicitor. That ground is put shortly (but amplified considerably and ably by Mr. Body at the hearing) in a letter from her solicitor, dated 31 August 1995 as follows:
“The point of law on which our client appeals the tribunal’s decision is the definition of “a disabled person” as defined by the Income Support (General) Regulations 1987, Schedule 3, paragraph 5A(8). It is our submission that [the claimant] was a disabled person at the time that the loan was applied for [the loan was actually taken out on 1 September 1994, which would appear to be the relevant date]. [The claimant] was granted attendance allowance and severe disability premium. For such an award to be made, the regulations [in fact section 65(1)(b) of the Social Security Contributions and Benefits Act 1992] state that the disability must be apparent for at least 6 months prior to the award.” (words in square brackets inserted by me)
10.	That contention involves a close examination of the definition of “disabled person” in sub‑paragraph (8) of para. 5A of Schedule 3 to the 1987 Regulations. It is common ground between the parties that if the claimant were able to show at the relevant time that she was “a disabled person”, then she would be entitled to income support housing costs in relation to the whole of the £30,000 mortgage, since that mortgage was to acquire an interest in her new home which was “alternative accommodation more suited to the special needs of a disabled person than the accommodation which was occupied before the acquisition by the claimant” (para. 5A(8)(b)).
11.	“The definition in para. 5A(8) of disabled person (see also para. 4 above) is as follows:
“... in this sub‑paragraph a disabled person is a person in respect of whom a disability premium, disabled child premium, higher pensioner premium or pensioner premium for persons aged 75 or over in included in his applicable amount or would be so included but for his failure to satisfy other conditions of entitlement to income support.” (my emphasis)
12.	The difficulty in this case is at the time of taking out the mortgage i.e. 
1 September 1994 the claimant did not have included in her applicable amount any of the premiums listed in that definition. She had a pensioner premium (the basic one) but that is not mentioned in the definition. However, I was informed at the hearing (amplifying the findings made by the tribunal), that she was made an award of lower rate attendance allowance and severe disability premium from 6 February 1993 and the higher pensioner premium from 7 February 1995.
13.	Mr. Body’s contention was that those awards could, so to speak, be “back‑dated” and be regarded as being notionally in existence at the date the mortgage was taken out i.e. 1 September 1994. He relied on the words in sub‑paragraph 8 of paragraph 5A “... or would be so included but for his failure to satisfy other conditions of entitlement to income support”. It may be that the phrase includes a failure to claim timeously, though I express no final opinion on that point. But in any event the difficulty is that in this particular case the only relevant premiums that the claimant had or has i.e. higher pensioner premium and pensioner premium for persons aged 75 or over cannot by their nature be backdated. As to the latter the claimant did not attain the age of 75 until 28 May 1995 and of course there could be no question of backdating that premium because of its relation to the age of 75. As to “higher pensioner premium”, under the terms of paragraphs 10 and 12 of Schedule 2 to the Income Support (General) Regulations 1987, the claimant’s only “title” to those premiums would be that she was “in receipt of ... attendance allowance” (para. 12(1)(a)(i) of Schedule 2).
14.	The difficulty then arises from the fact that there can be no backdating of attendance allowance because of the provision of section 65(4) of the Social Security Contributions and Benefits Act 1992 that a person shall not be entitled to an attendance allowance for any period preceding the date on which he makes or is treated as making a claim for it. The reference in section 65(4) to “treated as making a claim for it” will not assist the claimant here because that only applies in certain very restricted circumstances e.g. postal delays, which are not relevant in this case. Therefore, here there can be no backdating of the award of attendance allowance before it was actually made on 6 February 1995 (which was presumably the date of claim). Therefore there could be no backdating of the disablement or the higher pensioner premiums either. Mr. Body sought to counter that by saying that the claimant had been in fact in a poor state of health for a considerable period and thus could satisfy the requirement of section 65(1)(a) of the 1992 Act of at least six months prior satisfaction of the conditions of entitlement. He asserted that, had she claimed attendance allowance on or before the taking out of the mortgage on 1 September 1994, she would on the medical evidence then have been entitled to the allowance.
15.	Mr. Body continued by contending that the claimant therefore came within the saving words in paragraph 5A(8) “... or would be so included but for [her] failure to satisfy other conditions of entitlement to income support”. I hold that that cannot be so. Her failure to claim attendance allowance earlier cannot be described as a failure to satisfy another condition of entitlement to income support. Although attendance allowance is the “passport” in a case like this to the higher pensioner premium, an award of the allowance cannot be regarded as a general “condition” of entitlement to income support. Indeed to allow otherwise would in fact mean that the whole of the restricted definition in paragraph 5A(8) of “disabled person” would be ‘destroyed’ by a side wind because a	disabled person of 65 or over would be able to say that, had they claimed attendance allowance earlier, they would have obtained it and therefore would have been entitled to the higher pensioner premium. In my view it is not possible to nullify the effect of the definition in that way. In so saying, I do not wish in any way to sound unsympathetic to people like the claimant who have in fact been ill for a number of years and who may well have been entitled to attendance allowance if they had claimed it earlier. But section 65(4) of the 1992 Act (repeating section 35(4) of the Social Security Act 1975) is in imperative terms, in its prohibition of awards of attendance allowance prior to the date of claim.
16.	I should mention one further matter which was referred to in a direction by me for the oral hearing, dated 22 October 1996. In paragraph 2(b) of that direction, I asked:
“What date(s) is or are relevant in considering the application of para. 5A(8) of Schedule 3 [to the Income Support (General) Regulations 1987]? Should the tribunal have applied para. 5(8) to the facts as they were at the date of tribunal’s hearing [i.e. on 24 July 1995, after the date that the claimant had the qualifying higher pensioner premium]?”
17.	Ms. Phelan contended that the only relevant date was the date of the taking out of the mortgage and that if there was no applicable amount for the mortgage costs at that date that was the end of the matter and an applicable amount could not be added at a later date when circumstances had changed. Mr. Body left the point open and did not wish to make a positive submission one way or the other about it.
18.	It is of course true that the sequence of events as have happened here has caused hardship for the claimant, a point on which both Ms. Phelan and Mr. Body concurred. However, when I examine paragraph 5A it is apparent to me that all the matters thereunder have to be determined once and for all at the date of the taking out of the relevant mortgage i.e. here 1 September 1994 and cannot change by e.g. by later review, if there has been some relevant change in circumstances. Moreover sub‑paragraph	(8) of paragraph 5A is prefaced by the words “that the loan was taken out”. It is clear to me that the definition of “disabled person” is to be applied at the date the loan was taken out and not from any later date e.g. a date when a claimant does obtain a qualifying premium or a date of a later tribunal hearing. Consequently the appeal cannot succeed on this ground either.
19.	Lastly, I should mention that paragraph 5A, together with the whole of Schedule 3 to the Income Support (General) Regulations 1987, was revoked (and replaced by a new Schedule 3) by SI 1995 No. 1613 as from 2 October 1995 i.e. after the periods in issue is this case. However, the equivalent provisions of the new Schedule 3 i.e. paragraph 1(3) (definition of disabled person) and paragraph 4 (housing costs not met) are in essence the same as those in paragraph 5A of the original Schedule 3 which I have considered in this case. In my judgment the principles of this decision are equally applicable to the new Schedule 3 despite the fact that the definition of disablement in paragraph 1(3)(a) and (b) in the new Schedule 3 is in rather different wording from that in the original Schedule 3.

Date: 30 January 1997	(signed) Mr. M. J. Goodman
Commissioner