CIS/4201/2003

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	This is an appeal by the Claimant, brought with my leave, against a decision of the Margate Appeal Tribunal made on 23 May 2003. For the reasons set out below I dismiss the appeal. 

2.	The Claimant is a single mother now aged 33 with 2 dependant children. In September 2000 she began a full-time BA/BSc Education/Childhood and Society degree programme of study at the University of Surrey, Roehampton (p.35).

3.	She was awarded a dependants’ grant for the academic year 2000 to 2001 of £3620 (p.7). (The letter from Student Loans Company Ltd (“SLC”) dated 16 April 2002 at p7 states the amount as £3260, but it can be seen by adding up the 3 instalments that that was a misprint for £3620). According to the letter at p.7 the amount of the grant was assessed by the LEA in August 2000. The first instalment of £1206 was paid on 25 September 2000. The second instalment of £1206 was paid on 31 January 2001. (The date 31 January 2002 in the letter at p.7 is clearly another typographical error).  

4.	The spring term ended on 6 April 2001. At or about that time the Claimant decided not to continue her course owing to escalating domestic violence at home (p.2). On 30 January 2001 a cheque was sent to the Claimant for the third instalment of the grant, in the sum of £1208 (p.7). By May 2001 the Claimant had decided to retreat to a women’s refuge in Canterbury (p.2). On 14 May 2001 the Claimant visited the DSS local office in Canterbury to inquire about claiming income support. The Claimant says (p.2) that she was informed that as she had her student’s grant and loan to live on she was not entitled to full income support. An award of income support was made which treated her as entitled to the full amount of the grant by way of income. 

5.	In May 2001 the LEA, which had plainly been informed of the Claimant’s decision from some source, informed SLC that the grant had (as a result of her leaving) been re-assessed and that she was only entitled to a grant of £2168.00. This meant (according to SLC’s letter at p.7) that there had been an overpayment of dependant’s grant totalling £1452. According to the Claimant (p.2) SLC was, owing to the Claimant’s change of address, unable to contact the Claimant about the overpayment until March 2002, when they obtained the Claimant’s address from her father. As I understand it from the Claimant’s Appeal Form (p.2) it was in March 2002 that the Claimant  was first informed by SLC of the overpayment and that it was repayable. The letter from SLC to the Claimant dated 16 April 2002 stated that the overpayment “must be paid back”, but that letter refers to “our recent correspondence informing you that you have received an overpayment of your dependants grant.” In that letter the date of withdrawal from the course is stated as 1 April 2001, whereas the letter from the University at p.35 puts the date as 6 April 2001.

6.	In December 2001 the Claimant’s award of income support had been terminated when she obtained employment .The Claimant made a further claim in March 2002 but later withdrew it. 

7.	On 26 April 2002 the Claimant, having been faced with the claim for repayment of the part of the dependant’s grant, requested a revision of the income support award so as to award, as from 6 April 2001, the amount of income support to which she would have been entitled if she had not had the dependants’ grant. (According to a later calculation by her representative (p.30) she would on this basis have been entitled to additional income support of £7.70 per week; that is of course considerably less than the averaged weekly amount of the dependants’ grant). However, by a decision made on 14 May 2002 that application was refused (p.8) on the ground that the grant had not actually been repaid. It appears (see para. 5 of the Secretary of State’s submission to the Tribunal) that it was considered that the request was one for supersession on the ground of a change of circumstances, and that there would be no change of circumstances unless and until the grant was actually repaid.

8.	On 19 May 2002 the Claimant appealed. 

9.	The decision of 14 May 2002 was reconsidered on 23 May 2002 but not revised.

10.	The Claimant did make a repayment of £30 on 20 June 2002, and two further small repayments totalling an additional £90, but as I understand it the bulk of the overpayment has not been repaid. 

11.	The Tribunal, by the decision now under appeal to me, dismissed the Claimant’s appeal. Its Decision Notice reads as follows:

“Student grant is treated differently to most other sources of income. As a result even if grant had been repaid, never received or spent, the amount of the grant would be taken as notional income for purposes of income support calculation. For there to be a change of circumstances it has to be an alteration in something that could affect benefit – thus in this case there was no change of circumstances and BA has made the correct decision.” 

12.	However, the Statement of Reasons arguably put the matter on a somewhat different footing. The crux of the reasoning is in para. 7 of the findings: “It was hard to escape the conclusion that having had and encashed the final instalment of the grant despite no longer being at the university that this counted as income for income support calculation purposes.” 

13.	I propose to proceed by considering on what basis income support ought to have been awarded in May 2001. If I conclude that a higher amount of income support ought to have been awarded, I will then need to go on to consider additional questions as regards the identification of the decision under appeal and the Tribunal’s powers.

14.	Chapter VIII of the Income Support (General) Regulations 1987 contains specific rules as to the calculation of the income of students for income support purposes. By Reg. 62(3)(a) “grant income” is generally to be apportioned equally over the period of study. The definition of “grant income” in Reg. 61 would appear to be capable of including the instalment of grant paid on 30 April 2001, notwithstanding that the Claimant had by then left the course. 

15.	Reg. 29(2B) contains a specific provision to cover the situation where “grant income …..has been paid to a person who ceases to be a full-time student before the end of the period in respect of which that income is payable and, as a consequence, the whole or part of the income falls to be repaid by that person.” Both parties submit that that provision can have no application in this case, because the Claimant had already left the course by the time when the final instalment of grant was paid. Those submissions appear to me to be correct. 

16.	In those circumstances, it is submitted that the significance of the Claimant’s obligation to repay part of the grant must be determined by whether, on general principles, the obligation to repay prevented that part of the grant from being the Claimant’s “income”. In the submissions this question is said to turn primarily on whether the facts of the present case are distinguishable from those in the decision of the Court of Appeal in Chief Adjudication Officer v. Leeves R(IS) 5/99. 

17.	It was held in that case that the grant did not cease to be the student’s income for income support purposes from the date when he abandoned the course, but only from the date (about a month later) when the local education authority requested repayment of the portion of the grant paid in respect of the period after the date of abandonment. 

18.	Potter L.J. said:

“I consider that, on the position as it stood prior to 24 May, the adjudication officer was correct in deciding that the grant fell to be treated as income of the claimant. Such potential obligation to repay as existed following abandonment did not give rise to an immediate liability. The power of the Hampshire County Council under regulation 15 of the 1993 regulations could not be exercised before consultation with the educational authority and, in any event was framed in discretionary terms. While in this case there was no substantial reason to doubt that the discretion to call for repayment would be exercised, it was not clear how long it would be before the claimant was called on to repay, nor was it certain precisely what sum or over what period he would be required to pay. The wording of the undertaking appears to have been framed to reflect that position (“such sum as may be determined by the County Treasurer to have been paid”) and did not in my view itself create a certain an immediate (i.e. crystallised) obligation of payment of the kind which Mr. Forsdick concedes he must demonstrate.

On the other hand, it seems to me that, following demand made by the Hampshire County Council in its letter of 24 May, at which point the claimant became under an obligation of immediate repayment in respect of his grant, that part of the claimant’s grant required to be taken into account over the weeks which followed under regulation 29 thereby lost its character of “income” on any ordinary understanding of the word.”

19.	It is apparent that the decision in Leeves turned heavily on the terms of the regulations under which the grant was paid, and in particular on the precise circumstances in which the repayment obligation arose. It is therefore necessary for me to examine the provisions of the regulations which applied in this case. It is agreed, as I understand it, that the relevant regulations were the Education (Student Support) Regulations 2000 (“the 2000 Regulations”). They are of some complexity. Reg. 15 provides for grants for dependants. A student is only eligible for such a grant if he is an “eligible student”. 

20.	As I understand it the combined effect of Reg. 25(2) and the definition of “quarter” in Reg. 2(1) is that (if the Claimant had not left) the grant would have been payable in 3 equal instalments in respect of the periods (a) 1 September 2000 to 31 December 2000 (b) 1 January to 31 March 2001 and (c) 1 April to 30 June 2001. 

21.	The following provisions appear to be of significance in relation to the Claimant’s decision to leave. By Reg. 8(3):

“Where an eligible student has withdrawn from a course in circumstances where the Secretary of State has not transferred or will not transfer his eligibility to another course under regulation 7, or has abandoned of been expelled from his course, the Secretary of State shall determine that he is no longer eligible for support, and on such determination he shall then cease to be an eligible student.”

By Reg. 25(5) no grant shall be payable in respect of a quarter beginning after an eligible student has withdrawn from, abandoned or been expelled from his course.

By Reg. 25(6) no grant shall be payable in respect of a quarter during any part of which an eligible student is absent from his course, unless in the opinion of the Secretary of State it would be appropriate in all the circumstances to pay all or part of the grant.

Reg. 25(9) provides (so far as material to this case) that where after the Secretary of State has made any payment of a grant he makes a determination of the amount of grant for which the student is eligible, either for the first time or by way of revision of a provisional or other determination of that amount, “(c) if the amount of the decrease is greater than the amount of grant remaining to be paid that amount shall be reduced to nil, and the balance subtracted from any other grant for which the student is eligible in respect of the academic year; (d) any remaining overpayment shall be recovered in accordance with regulation 26”. 

Reg. 26(3) provides as follows: 

“Any overpayment of grant for dependants …shall be recovered in such one or more of the following ways as the Secretary of State considers appropriate in all the circumstances: 

(a) by subtracting the overpayment from any grant for dependants for which the student is eligible in respect of the academic year in question or for which he is eligible in respect of any other academic year; 

(b) where a student upon completion of his course immediately commences another course disregarding any intervening vacation by subtracting the overpayment from any payment of such grant for which he is eligible in respect of any academic year in connection with the second course; and 

(c) by taking such other action for the recovery of a payment without statutory authority as is available to him.” 

22.	The Secretary of State submits that, as in Leeves, no obligation of immediate repayment crystallised until the Claimant was requested, in March or April 2002, to repay the overpaid amount, and therefore that the Tribunal was correct to treat the overpaid amount as having been part of the Claimant’s income at the date of the award in May 2001 and thereafter. The Claimant, on the other hand, submits that the decision in Leeves is distinguishable because by the time when the third instalment of grant was paid on 30 April 2001 the Claimant had already left the course. It is submitted on behalf of the Claimant that either (i) the Claimant was never entitled to the instalment which was paid on 30 April 2001, so that it did not become her income, or alternatively (ii) there was an immediate obligation to repay the amount paid on 30 April 2001 and therefore that instalment at any rate should not ever have been included as part of the Claimant’s income. 

23.	As regards the first of the Claimant’s submissions, the third instalment of grant which was paid on 30 April 2001 was, it seems, payable in respect of the “quarter” 1 April to 30 June 2001. It therefore appears that the Claimant left the course shortly after the beginning of the period in respect of which that third instalment was payable. Reg. 25(5) of the 2000 Regulations would therefore not appear to have been applicable. The applicable provisions would appear to be Reg. 8(3), under which a student ceases to be an eligible student when the Secretary of State so determines, Reg. 25(6), stating that no grant was payable in respect of that quarter unless the Secretary of State considered that it was appropriate to pay all or part of it, and also Reg. 25(9), referring to a revised determination of the amount of grant for which a student is eligible. The Secretary of State appears to have delegated or transferred to the local education authority the power to determine the amount of grant payable. The original determination was that the Claimant was entitled to a grant of £3620, payable by 3 instalments. It appears from SLC’s letter dated 16 April 2002 (p.7) that the revised amount of the grant was determined at some date in May 2001. It therefore appears to me that it was not until May 2001 that the revised amount of the grant to which the Claimant was entitled was determined. I would therefore reject the Claimant’s first submission, which is based on the proposition that the Claimant was not entitled to the third instalment of grant at the time when it was paid. In my view she probably remained entitled to it pursuant to the original determination until the LEA determined otherwise. 

24.	As to the submission that there was an immediate and binding obligation to repay the grant as soon as it was received, for the reasons given in para. 23 above it seems to me that the earliest date when such an obligation can be said to have arisen was the date (unknown on the papers) when the LEA informed SLC of the amount of the overpayment. However, did such an obligation arise even then? The Claimant was not of course aware of the communication between the LEA and SLC. 

25.	In my judgment the Secretary of State is correct in submitting that there was no obligation to repay an ascertained or ascertainable sum until the request for repayment was made by SLC in March or April 2002. In my judgment, the effect of Regulations 25(9) and 26(3) of the 2000 Regulations was that no sum was repayable by the Claimant unless and until (a) the Secretary of State had determined the revised amount of the grant payable to the Claimant in the light of her having left the course, and therefore the amount of the overpayment (see Reg. 25(9)) and (b) the Secretary of State had determined under Reg. 26(3) that the “appropriate” method of recovering the overpayment was for it to be repaid by the Claimant. 

26.	The function of determining, under Reg. 26(3), by what means an overpayment should be recovered appears to have been delegated by the Secretary of State to SLC, and no decision that the Claimant should be required to repay the overpayment appears to have been made until SLC’s request to the Claimant for repayment in March 2002.

27.	I accept that Reg. 26(3) appears to state the obligation to recover the overpayment in mandatory terms: “an overpayment of grant for dependants ………shall be recovered”. However, it is only to be recovered in “such one or more of the following ways as the Secretary of State considers appropriate in all the circumstances”, and if the Secretary of State had considered it appropriate to recover it in either of the methods specified in (a) or (b), the Claimant would not, in my view, have been under an immediate obligation to repay the overpayment.

28.	I would also accept that Reg. 26(3)(c) proceeds on the footing that there is an underlying legal obligation on the student to repay any overpayment on the ground that it is money paid without statutory authority. However, I do not think that it is an obligation immediately to repay, in the sense meant by Potter L.J. in Leeves, until the Secretary of State has determined whether the student should be required actually to repay the overpaid amount, as opposed to having it dealt with under Reg. 26(3)(a) or (b). 

29.	It could further be argued on behalf of the Claimant that in this case there was never any realistic possibility of either of methods (a) or (b) in Reg. 26(3) being applicable, or of the Claimant not being required to repay the overpayment. However, looking at the position as at May 2001, it was perfectly possible (so far as the Benefits Agency was concerned) that the Claimant might start another course, and that the Secretary of State might, under Reg. 26(3)(a), direct that the overpayment should be subtracted from the amount of the dependant’s grant to which the Claimant became entitled in connection with that course. 

30.	I appreciate that it may be said that the result which I have reached operates rather harshly on the Claimant in that she is under a liability to repay the grant but has not had that liability taken into account in determining her income support entitlement. However, I would make 3 points in relation to that. First, although the Claimant says that she was told by the Benefits Agency to keep the grant cheque, it was open to her to clarify her grant position with the SLC by taking the simple step of contacting them and asking them what her position was. Had she done that, and had repayment been sought (as seems likely), income support could then have been awarded accordingly. Secondly, if the figures on p.30, calculated by her representative, are correct, the additional amount of income support to which the Claimant would have been entitled would have been only £7.70 per week. As I understand it the grant should in any event have ceased to be taken into account as the Claimant’s income for income support purposes by the middle of June 2001 (p.35). I do not know whether or not the Claimant’s income support was in fact increased at that time, but whether or not it was, it would appear (although I make clear that I am not in any way basing my decision on this) that even if the Claimant had succeeded in this appeal she could at most have obtained additional income support of £7.70 per week from (at the earliest) about 6 April 2001 to 15 June 2001. Finally, I have some doubts as to whether the amount of the overpayment was correctly calculated by SLC. It would appear to me that, since the Claimant left the course on 1 April 2001 at the earliest (and probably not until 6 April 2001), the overpaid amount should not have been greater than the amount of the third instalment. SLC may, however, be able to explain the apparent discrepancy here. It may be that they have apportioned the total figure of the grant equally over the weeks comprised in the academic year, but if so I am not sure that that approach is reconcilable with Regulation 25(2) of the 2000 Regulations. That is not of course a question which I have any jurisdiction to determine. 
	
31.	Thus the decision of the Tribunal was in my judgment in substance correct, and I therefore dismiss the appeal. 

	(Signed)	Charles Turnbull
		Commissioner

		20 April 2004