CH 4817 2002

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1	I dismiss the appeal. For the reasons below, the decision of the tribunal is not wrong in law. 

2	The claimant and appellant is appealing with my permission against the decision of the Hounslow appeal tribunal on 15 August 2002 under reference U 45 164 2002 00446.

3	The appeal is about a decision by the London Borough of Hounslow Council (the Council). The claimant was overpaid housing benefit and council tax benefit for the period from 29 December 1997 to 13 December 1998.  The Council’s original claim was that the claimant had received an overpayment of £2773.25 housing benefit and excess  £357.03 council tax benefit for the period from 22 June 1998 to 13 December 1998, and that this was recoverable. At a later stage a further decision was made that there were further overpayments of  £2668.75 housing benefit and excess £255.06 council tax benefit from 29 December 1997 to 21 June 1998, and that these were also recoverable. 

4	When the claim came before the tribunal, the Council withdrew the claim for repayment of the sums overpaid before 22 June 1998. This was because the underlying benefit that the claimant could have claimed for the period at least equalled the sums paid, so no net sum was due. However the Council refused to reduce the sum due from 22 June 1998 to take account of underlying entitlement. In reply, the claimant’s representative conceded that there was an overpayment, and that it was recoverable subject to an offset.

5	The tribunal upheld the decision of the Council. It did so because it took the view that it was bound, in interpreting and applying regulation 104 of the Housing Benefit (General) Regulations 1987 and the council tax benefit equivalent,  to follow the decision of Potts J  in the Administrative Court in the case of R v Wyre BC ex parte Lord ( Crown Office list, unreported, 24 October 1997). The tribunal resisted an argument that Lord was wrongly decided.

6	The tribunal was correct in law, as it stood at the date of the tribunal hearing, in considering itself bound by Lord. But the grounds of appeal to the tribunal, renewed before me, pointed out that that decision had been subject to strong criticism. In R(IS) 15/99 Commissioner Rowland set out (at paragraph 19) the basis on which a Commissioner considers a decision made by the High Court exercising its supervisory jurisdiction in social security cases. They are to be regarded as made in a jurisdiction coordinate with that of Commissioners. I respectfully endorse the view he took there that “I am not bound to follow a decision of a single judge but should do so unless convinced it is wrong.”   

7	For that reason, given that a leading reference work on housing benefit criticised Lord in strong terms, I gave permission to appeal and invited submissions as to whether I should follow Lord. I have now received those submissions. Neither party asked for an oral hearing. 

The offset rules

8	I do not need to consider how the overpayments arose in this case or the basis for deciding that they were recoverable. I need consider only whether entitlement to recover is prevented or reduced by the Housing Benefit (General) Regulations 1987 (and the equivalent Council Tax Benefit (General) Regulations 1992) and whether those rules provide for any  offset against the recoverable overpayments of housing benefit and excess council tax benefit for underlying benefit. “Underlying benefit” is the benefit to which a claimant was or might have been entitled during a period had he or she claimed at the correct time and given the correct information. 

9	In this case as in many others the claimant claimed housing benefit and council tax benefit together with income support.  Her income support entitlement was stopped retrospectively in December 1998 with effect from June 1998. As a result the Council took the decision to stop her housing benefit and council tax benefit. The benefit overpaid to her during that six months was, as noted above, about £3,000. Had the claimant made a timely claim for housing benefit and council tax benefit on the basis of the full facts, or reported her changed circumstances, she would have been entitled to benefit of about £2,400 for that period. This was the underlying benefit, leaving only about £600 as a true loss to the Council. Similar sums applied to the previous six months.

Regulation 104 of the Housing Benefit (General) Regulations 1987 

10	The rules about offsetting underlying benefit are in regulation 104 of the Housing Benefit (General) Regulations 1987 and regulation 90 of the Council Tax Benefit (General) Regulations 1992.  The relevant part of Regulation 104 used to provide:

	In calculating the amount of a recoverable overpayment, the appropriate authority –
	
	(a)	if it determines that a lesser amount was properly payable in respect of the whole or part of the repayment period shall deduct that amount …	 

Regulation 90 was in similar terms, save that it referred to recoverable excess benefit.

11	As from 2 October 2000, SI 2000 No 2331 (The Housing Benefit and Council Tax Benefit (General) (Amendment No 4) Regulations 2000) replaced the wording of regulation 104 with the following provisions (again, so far as relevant here):

	(1) 	… in calculating the amount of a recoverable overpayment the appropriate authority shall deduct any amount of housing benefit which should have been determined to be payable in respect of the whole or part of the overpayment period –
	
(a) on the basis of the claim as presented to the authority;

	(b) on the basis of the claim as it would have appeared had any misrepresentation or non-disclosure been remedied before the determination; or

	(c) on the basis of the claim as it would have appeared if any change of circumstances had been notified at the time that change occurred.

	(2)	For the purposes of paragraph (1)(c), where the change of circumstances is the cessation of entitlement to income support or income-based jobseeker’s allowance the deduction shall be made as if that change of circumstances had not ended the benefit period.	
		
There were equivalent amendments to regulation 90 for excess council tax benefit.

12	In this case the decision about recovery of overpayment for the period from June 1998 to December 1998 was made in January 1999. The decision about recovery of overpayment for the earlier period was made in November 2000. The Council applied the later version of regulation 104 to the earlier period of overpayment and the earlier version of regulation 104 to the later period of overpayment. Its view was that the change required an offset against the amount due for the later period but not for the earlier period.

The Lord decision

13	There were three points at issue in Lord. Only one is relevant here. It arose out of the earlier form of regulation 104, the later form being made some years after Lord. The point  was put to the court in the following terms: “whether a Housing Review Board, in determining whether a recoverable overpayment is due under regulation 104, is under a statutory duty at all times to determine a lesser amount of benefit which would otherwise have been properly payable to the claimant in the absence of a claim for such benefit”.  Potts J noted that the meaning of “properly payable” lay at the heart of that case.

14	In Lord , Wyre Borough Council was seeking to recover overpayment of housing benefit from a claimant who had been prosecuted and convicted of making fraudulent claims for benefit while not disclosing that his wife was working. (Council tax benefit is not mentioned in the case).  On behalf of Mr Lord it was argued that the sum overpaid (about £5,000) should be reduced by about £1,500 because of an underlying entitlement to housing benefit. On behalf of Wyre Borough Council, it was argued that the regulations, read as a whole, produced the result that Mr Lord, if he wanted to have the offset, had to have made a valid claim for it so that his claim could be properly determined. He had not done so.

15	Potts J accepted the full argument from Wyre Borough Council in the following terms:

		“The applicant, in my judgment, would only be entitled to set off … the sum … to which, it is submitted, he was entitled, after a determination by the appropriate authority that that sum was properly payable to him in respect of the overpayment period. In my opinion, the meaning of the word “determine” is to be found in regulation 76. Regulation 76(2)(a) provides that an authority shall be under no duty to determine a claim where the claim has not been made in accordance with regulation 72(1). In any event, however, and in my judgment crucially, the expression “properly payable” in regulation 104 can only mean benefit payable in respect of a validly constituted claim; that is to say benefit to which the applicant is entitled. On a true construction of the regulations this requires not only that the applicant is eligible for benefit, but also that that applicant has submitted a valid claim for determination in accordance with the Regulations.

The applicant has done this (sic – not?). He therefore cannot bring himself within the provision of regulation 104.” 

The claimant’s arguments

16	It was argued for the claimant both before the tribunal and in submissions to me that this decision misinterpreted regulation 104. Inevitably that argument failed before the tribunal, but should it fail before me also?  The argument that I should not follow Lord is based in part on the comments on regulation 104 and that decision in the 13th edition of CPAG’s Housing Benefit and Council Tax Benefit Legislation (2000 – 2001 revisions by Stagg and Poynter). There is an extensive note on the case (at pp 433-4). The commentators first note the case and then comment that it has “very harsh consequences”. They note that the period covered in Lord was some 90 weeks, and so under standard housing benefit legislation there must have been at least one intervening renewal claim and award during the period covered by the judgment. I pause on that point, because, with respect to Potts J, that must be right and the point applies in this case also.  There is nothing in the papers in this case showing when the periods of award of housing benefit and council tax benefit started, ended and were renewed. Nor is it clear whether those periods for housing benefit coincided with the periods of award of council tax benefit (although the likelihood is that they did not).  The only claim details relate to income support, and they are irrelevant. However, on the facts of this case, no point has been taken on it and I cannot see that it would make any difference to the practical outcome, so I do no more than note that it might be relevant in other cases. To that extent I would endorse the comments by Stagg and Poynter. 

17	The commentators then make an extended criticism of  Potts J’s interpretation of regulation 104 on the grounds that the reasoning is “flawed and wrong”.  The argument is based on provisions in the Housing Benefit (General) Regulations 1987 to which Potts J’s attention does not appear to have been drawn. In particular, the point is made that an overpayment can only arise in a case of failure to disclose after there has been a review of the circumstances carried out under regulation 79(1).  That is required by regulation 98, to which the court was referred. The argument is that in carrying out the regulation 79 review the authority must consider if there is any underlying entitlement. Its decision under regulation 79 should take that into account. But if that is so, then there is nothing to which regulation 104(a) could apply. 

18	The argument was supported by two other arguments. First, the language of regulation 104 (“properly payable”) is looser language than the requirement of regulation 98 (overpayment is any amount to which there was no entitlement). Second, the retrospective use of regulation 67(1) (the regulation used to end a housing benefit period when income support is ended) tends to offend against the “down to the date” principle. (The latter issue ceased to be relevant when Schedule 7 to the Child Support, Pensions and Social Security Act 2000 came into effect in July 2001). 

19	The claimant’s representative buttressed these arguments by reference to the amendments made by SI 2000 No 2331. My attention was drawn to the explanatory note to that statutory instrument. This states that the reason for the amendment to regulation 104 was that the new regulation “specifies more precisely the deductions to be made in calculating a recoverable overpayment”. My attention was also drawn to Departmental Circular HB/CTB A42/2000 explaining SI 2000 No 2331 to local authorities. I am not sure that I can derive much assistance from this somewhat opaque  wording of the explanatory note or from a departmental circular which is a statement of intention rather than of law.   

20	In reply, the council contented itself in supporting the tribunal decision on the basis that it was following Lord. 

21	I do not find the arguments for the claimant to the effect that Lord was wrong are persuasive.  But in doing so, I found my decision that the conclusion in Lord was correct in part on a different basis to that given by Potts J.  Both before Potts J and in the commentary on his decision argument have been based on the structure of the Housing Benefit (General) Regulations 1987 (and Council Tax Benefit (General) Regulations 1992) before the changes in October 2000.  Inevitably, in such a complex scheme, the focus can be shifted. In my opinion the focus should also be on a point on which neither those arguing before Potts J nor the commentators focussed. That point is that regulation 104 is about “the amount of a recoverable overpayment”, that is, the amount that an authority is legally entitled to recover. That is not the same thing as the amount that the authority actually decides to recover.  

22	The “harshness” of the recovery process under the form of rules operating before October 2000, as it has been termed, lies not in regulation 104 and the surrounding regulations but in the use made of those regulation by councils in making recovery decisions. Regulation 100, not so far noted in the arguments, is central to the legal structure about recovery:

	The authority which paid the recoverable overpayment may recover it.

The use of “may” is in contrast to the “shall” in most of the surrounding regulations. Further, as noted by Stagg and Poynter in their commentary on regulation 100, the power granted in the Social Security Administration Act 1992, section 75(2), to require authorities to recover overpayment, was not exercised. And under the present appeals rules no appeal lies to an appeal tribunal against a decision whether or not to recover an overpayment in full: Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001, regulation 16 and Schedule.  In other words - but now subject undoubtedly to judicial review - the question of the severity of the overpayment decision is for the local authority.

23	On that point, I find one paragraph of HB/CTB A42/2000 instructive as to the factual basis behind the changes in 2000:

2. 	Previously, the legislation relating to the calculation and recovery of housing benefit and council tax benefit had been less prescriptive than for other social security benefits to allow local authorities the discretion to decide the most appropriate method of recovery. However, various anomalies have arisen as a result of legal judgments, and this together with local authorities’ individual interpretations of the regulations, has resulted in a variety of custom and practice. This has led to inconsistent treatment of claimants.” 

No point seems to have been taken or made before Potts J on the issue of recovery rather than recoverability. This may be because the focus was on a decision of a housing benefit review board, and not on the decision of the council. Or it may be because the case concerned a claimant convicted of fraud. In any event, his Lordship was not asked to decide   that point.  

24	Viewed in particular since the commencement of the Human Rights Act 1998 (on the same day, it may be noted, as the changes were made to regulation 104), a reason for amending regulation 104 may have been a political decision to cut down the discretion given to local authorities so that they acted more consistently both as between authorities and as between claimants, and so that part at least of their decision making became susceptible to appeal rather than judicial review, as in Lord. Those are, in my view, the results of that change. That suggests that there was a real change in content in regulation 104 and not, as it was argued for the claimant, that there was merely tidying up of previously loose language.  

25	Those considerations persuade me both that there is no essential unfairness or harshness in regulation 104 as interpreted by Potts J and that no strong argument against his decision can be founded on the terms of the new form of regulation 104. On the contrary, my own reading of that amendment and when it was made tends to confirm that Potts J made, if I may respectfully say so, the proper interpretation of regulation 104 in its then regulatory context. My approach, as stated above, has been to see whether there was good reason not to follow that interpretation. I see no such good reason, and I therefore follow it. The answer to the points about fairness lies in the use made by authorities of their discretion under regulation 100. Any change to the effect of regulation 104 was for Parliament. And Parliament has changed it at the time it considered it appropriate. 

26	While I have no jurisdiction over the use made by the Council of regulation 100 in this case and no point was taken before me on it or its appealability, I cannot fail to draw attention to the failure of the council, at least as evidenced in the papers before me, to take any account in enforcing its earlier decisions about recovery – as against recoverability - of the factors that it was obliged to take account in its later decisions about recoverability following the change in regulation 104. There is a stark and it might be felt disproportionate contrast in the practical result of the two sets of decisions and the Council does not seem at any stage to have considered this. 

								David Williams
									Commissioner

									25 February 2003
[Signed on the original on the date shown]