[2004] UKSSCSC CJSA_679_2004 (02 June 2004)

	DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	The claimant's appeal to the Commissioner is allowed. The decision of the Exeter appeal tribunal dated 5 December 2003 is erroneous in point of law, for the reason given below, and I set it aside. It is expedient for me to substitute the decision which the appeal tribunal should have made on its findings of fact (Social Security Act 1998, section 14(8)(a)(i)). My decision is that the claimant's appeal against the Secretary of State's decision dated 23 June 2003 is allowed and that with effect from 17 June 2003 the claimant's entitlement to income-based jobseeker's allowance is to be calculated with the inclusion of half of her full housing costs in accordance with paragraphs 7(3) and (6) and 6(1)(b) of Schedule 2 to the Jobseeker's Allowance Regulations 1996.

2.	The appeal tribunal was concerned with the claim for income-based jobseeker's allowance (JSA) from 20 May 2003. On 23 June 2003 the decision was made on behalf of the Secretary of State awarding income-based JSA from and including 20 May 2003 at the weekly rate of £54.65, which included no housing costs. The claimant had previously been in receipt of income-based JSA for the period from 22 April 2003 to 9 May 2003. The issue in dispute was qualification for housing costs. The claimant had remortgaged her house with a new lender in June 1999, so that the mortgage interest fell into the category of "new housing costs", for which no housing costs are normally met until a claimant has been entitled to JSA for a continuous period of 39 weeks. However, she relied on the fact that she had had a mortgage protection policy, but a claim had most recently been refused in March 2001 because she had had treatment or advice for the disability on which the insurance claim was based in the 12 months before the policy was taken out (see the letter at page 18). The claimant had cancelled the mortgage protection policy in 2002 as it was unlikely to provide her with any practical protection.

3.	The relevant provision is paragraph 7(3) of Schedule 2 to the Jobseeker's Allowance Regulations 1996:

	"(3) This sub-paragraph applies to a claimant who at the time the claim is made has been refused payments under a policy of insurance on the grounds that--
	 (a)	the claim under the policy is the outcome of a pre-existing medical condition which, under the terms of the policy, does not give rise to any payment by the insurer; or
	 (b)	he was infected by the Human Immunodeficiency Virus,
	and the policy was taken out to insure against the risk of being able to maintain repayments on a loan which is secured by a mortgage or a charge over land, or (in Scotland) by a heritable security."

By paragraph 7(6), where paragraph 7(3) applies any new housing costs are to be met as though they are existing housing costs under paragraph 6. The qualifying periods under paragraph 6 are much shorter.

4.	The view taken in the decision under appeal was that paragraph 7(3) did not apply because the mortgage protection policy had been cancelled before the date of the JSA claim. The appeal tribunal of 5 December 2003 took the same view. It rejected the argument put on behalf of the claimant by Matthew Brown of Exeter Citizens Advice Bureau that it was enough that the claimant had had a policy in the past and had been refused payment under it. The statement of reasons continued:

	"In the Tribunal's view, the use of the words `at the time the claim is made' within the sub-paragraph implies a current claim under a current policy. It contemplates a refusal under a policy at the time of the claim, otherwise the use of the words `at the time of the claim' are redundant. It is difficult to see how a situation might arise such as suggested by Mr Brown, where a mortgage protection policy could ever be taken out after a claim for Jobseeker's allowance had already been made."

5.	The claimant now appeals with the leave of a district chairman. In the written submission dated 6 April 2004, the representative of the Secretary of State supported the appeal. It was submitted of paragraph 7(3) of Schedule 2 to the JSA Regulations that:

	"no such implication [as suggested by the appeal tribunal] is present, and there is equally no implication that act of refusal on the policy should be simultaneous with the claim for benefit."

Mr Brown had no further comments to make in reply.

6.	I agree that the appeal tribunal adopted a wrong interpretation of paragraph 7(3). The plain words of paragraph 7(3) point to a past refusal of a claim under a policy which met the condition about its purpose. The policy must obviously still be in force at the date of the claim under it, but I cannot see that there is any condition that the policy should remain in force after the claim under it has been refused. There must be some limits on what refusals are relevant under paragraph 7(3). It cannot be the case that a claimant gets within the provision just because at some time long in the past a claim under a mortgage protection policy in relation to any mortgage or property was refused as a result of a pre-existing medical condition. But I do not need to define the limits in this decision. In the present case, the mortgage protection policy was taken out in connection with the mortgage current at the date of the JSA claim (as is shown by the link between the insurer and the new mortgage provider) and the refused claim related to the current mortgage. The insurance claim was the outcome of a pre-existing medical condition which, because of the policy terms about treatment or advice within the 12 months before taking out the policy, did not give rise to any payment. Those factors bring the circumstances plainly within the scope of paragraph 7(3).

7.	Although the policy behind the rule in paragraph 7(3) is not a matter for me, the conclusion in my previous paragraph is consistent with what I understand to have been the thinking behind the changes in the provisions on housing costs in the income support scheme in October 1995. Although the JSA Regulations were drafted after that date they adopted the income support scheme, with its division between housing costs arising on an agreement made before 2 October 1995 (existing housing costs) and those arising on an agreement made after 1 October 1995 (new housing costs). The main difference between the rules applied to those two categories is in the length of time a claimant has to be entitled to benefit in order to have full housing costs met. The intention was that mortgage protection insurance would meet mortgage payments in the gap. It is consistent with that policy that a claimant who had taken out a mortgage protection policy, which in the event failed to meet mortgage payments because of its rules about pre-existing medical conditions, should not be caught by the rules on new housing costs.

8.	For the reason given above, I set aside the appeal tribunal's decision of 5 December 2003 as erroneous in point of law. It is clearly expedient for me to substitute a decision on the appeal against the decision of 23 June 2003, as submitted in the Secretary of State's submission of 6 April 2004. No further findings of fact are necessary.

9.	The substitution of a decision is not quite as simple as suggested in the submission of 6 April 2004. It was said there that the decision should simply be that the claimant's housing costs should assessed as though they were existing housing costs. That is the inevitable result of the application of what I have held to be the correct legal rule to the circumstances. But it does not inevitably lead to the decision of 23 June 2003 having been wrong in its calculation of the amount of the claimant's entitlement to income-based JSA from 20 May 2003 down to 23 June 2003. That is because under paragraph 6(1) of Schedule 2 to the JSA Regulations on existing housing costs a claimant is not entitled to have any housing costs met until she has been entitled to JSA for a continuous period of eight weeks (when half of the full amount can be met). The full amount is to be met after 26 weeks of continuous entitlement.

10.	That might suggest that, as I, like the appeal tribunal, am prohibited from taking into account circumstances not obtaining on 23 June 2003 (Social Security Act 1998, section 12(8)(b)), the claimant's appeal against the decision of 23 June 2003 cannot be allowed. 23 June 2003 is within eight weeks beginning on 20 May 2003. However, the claimant is helped by the linking rule in paragraph 13 of Schedule 2. She can count as part of the period of continuous entitlement, not just the period from 22 April 2003 to 9 May 2003, but also the intervening period of non-receipt from 10 May 2003 to 19 May 2003 (paragraph 13(1)(a)(ii) and (4)). The period of eight weeks starts on 22 April 2003 and ends on 16 June 2003. Accordingly, the claimant became entitled to half of full housing costs from and including 17 June 2003. Effect can be given to that entitlement in a decision on appeal against the decision made on 23 June 2003. I cannot formally decide that the claimant would become entitled to have full housing costs met after the expiry of 26 weeks starting with 22 April 2003, but that result would necessarily follow unless there had been some change of circumstances I do not know about.

11.	Accordingly, I allow the claimant's appeal against the decision of 23 June 2003. My substituted decision is set out in paragraph 1 above.

12.	The issue of the amount of the mortgage loan which qualifies under paragraph 14(1)(b) of Schedule 2 to the JSA Regulations has not been raised in this appeal and I do not deal with it in my decision. If Mr Brown, on the claimant's behalf, wishes to raise any challenge to the exclusion of the £1,038 charged by the previous mortgage lender for changing to another lender, possibly relying on Commissioner's decision CIS/5110/1999, he must do so separately. I am not to be taken as having said anything about whether CIS/5110/1999 was rightly or wrongly decided in relation to the income support equivalent of paragraph 14(1)(b).

	(Signed)    J Mesher    
	Commissioner

	Date:      2 June 2004