[2007] UKSSCSC CIS_2448_2006 (14 February 2007)

CIS/2448/2006

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	This is an appeal by the Claimant, brought with the permission of a legally qualified panel member, against a decision of the Liverpool Appeal Tribunal made on 23 March 2006. For the reasons set out below I dismiss the appeal. 

2.	I held an oral hearing of the appeal at which the Claimant was represented by Karen Carfoot, a mental health caseworker with Garston Citizens Advice Bureau, and the Secretary of State was represented by Huw James of the Office of the Solicitor to the Department for Work and Pensions. 

Introduction
3.	The Claimant is a single man aged about 56 who has been in receipt of income support since at least 1992. On 29 March 2005 he received from the local authority a cheque for £24,760.60. The reason for that payment was that on 25 July 2002 it had been held by the House of Lords in R v Manchester City Council, Ex parte Stennett [2002] UKHL 34 that local authorities are not entitled to charge for after-care services provided by them pursuant to the duty contained in s.117 of the Mental Health Act 1983. S.117 imposes on health authorities and local social services authorities a duty to provide after-care services (which include caring residential accommodation) for persons who have been discharged from compulsory detention under the Mental Health Acts. 

4.	The Claimant was such a person, and between 1997 and 2001 (the precise dates are not material) he lived in a nursing home not managed by the local authority. The Claimant’s income support entitlement (less a small sum for personal expenses) was in effect used to pay the charges for that accommodation which, as subsequently in effect held by the House of Lords, should have been paid by the local authority. 

5.	On 9 June 2005 a decision was made that the Claimant was not entitled to income support from 30 March 2005 on the ground that he had capital in excess of £16,000, namely the sum which he had received from the local authority. The Claimant appealed, contending that that sum should have been disregarded under para. 7 of Schedule 10 to the Income Support (General) Regulations 1987 on the ground that it was arrears of income support. 

6.	The Tribunal, by the decision now under appeal to me, dismissed that appeal. 

The Claimant’s contention
7.	By para. 7(1) of Schedule 10 to the 1987 Regulations there is to be disregarded, in determining the amount of a claimant’s capital, “any arrears of, or any concessionary payment made to compensate for arrears due to the non-payment of, ………………(b) an income-related benefit.” 

8.	The contention made on behalf of the Claimant by Ms Carfoot is that, if the inability of the local authority to charge in respect of the Claimant’s residence in the nursing home had been appreciated, the amount of the Claimant’s income support award would have been exactly the same as it in fact was. It would have comprised, as it in fact did, (a) the amount of the Claimant’s personal allowance, (b) a disability premium and (c) a “residential allowance.” The difference is that the Claimant would have received the full amount of the income support award (rather than merely the amount which he was permitted to retain for “personal expenses”) because none of it would have been used to defray the nursing home charges. Ms. Carfoot therefore contends that the sum of £24,760.60 paid to him by the local authority is properly regarded as arrears of income support and should therefore have been disregarded in calculating his capital for income support purposes. It compensated him for income support which should have been but was not paid to him. Ms. Carfoot has produced a decision of an appeal tribunal in another case in which it appears to have been so held. 

Analysis and conclusions
9.	Ms. Carfoot’s written submission to the Tribunal stated: 

“[The Claimant] received Income Support ……which included a residential allowance; this Income Support was then paid to the care home towards his care fees minus personal expenses.” 

10.	At the hearing before the Tribunal the Claimant was represented by Ms. Carfoot. The Record of Proceedings records: “facts agreed by all parties.” 

11.	The Tribunal’s findings of fact included the following:

“[The Claimant] received Income Support ……….that included a Residential Allowance. This was in turn paid to Care Home towards his care fees minus his personal expenses.” 

12.	Reading that finding of the Tribunal against the background of the submissions which had been made to it, the Tribunal in my judgment found that the full amount of the income support was paid to the Claimant, but that it was then used by the Claimant to defray fees which should have been defrayed by the local authority. In my judgment the Tribunal was entitled, on the basis of the very limited material and submissions before it, so to find. If, as found by the Tribunal, the position was that the full amount of income support was paid to the Claimant, and then by him to the nursing home, it cannot in my judgment possibly be argued that the sum subsequently paid by the local authority to the Claimant represented arrears of income support. On that short ground I would dismiss the appeal. 

13.	However, in this appeal to me it is said on behalf of the Claimant that in fact the DWP paid the Claimant’s income support (less the “personal expenses”) direct to the nursing home. The Secretary of State’s written submission in this appeal appears to accept that that was in fact the position (but without adverting to the apparent inconsistency with what had been submitted to the Tribunal on behalf of the Claimant). Although (for the reasons given in para. 12 above) it cannot affect the outcome of this appeal I propose to consider what the position would be on those facts. 

14.	Regrettably, neither of the parties has made any attempt to refer me in any detail to the then applicable statutory provisions relevant to the calculation of the Claimant’s income support, to the charging powers in respect of the Claimant’s accommodation/care which the local authority thought it was entitled to exercise, or to the payment by the DWP of the income support direct to the nursing home/care provider. I have therefore had to attempt to work these out for myself. 

15.	As I have said, it is an important plank of the argument on behalf of the Claimant that the amount of his income support award would have been the same even if it had been appreciated that the local authority was bound to provide his accommodation and care in the nursing home without charge (i.e. to defray the relevant charges itself). In his written submission in this appeal the Secretary of State asserts that, if that had been appreciated, the income support award would have been much lower, but Mr. James did not attempt to take me through the then applicable provisions. My own researches indicate that Ms. Carfoot may well be right on this point, and I will therefore proceed on the basis that she is. 

16.	If, as now contended on behalf of the Claimant, the Claimant’s income support was paid direct to the nursing home, it would appear (as submitted in the Secretary of State’s written submission) that this must have been done under the supposed authority of para. 4 of Schedule 9 to the Social Security (Claims and Payments) Regulations 1987. In its then form this provided (so far as material) as follows:

	“(1)	Where an award of income support ……….. –

		(a)	is made to a person in a residential care home or nursing home 

…………………..the Secretary of State may determine that an amount of the specified benefit shall be paid direct to the person or body to whom the charges in respect of that accommodation are payable, but, ……..only if the adjudicating authority is satisfied that the beneficiary has failed to budget for the charges and that it is in the interests of the family. 

(2)	………..the amount of any payment of income support ……to a third party determined under paragraph (1) shall be – 

(aa)	an amount equal to the amount of any payment the beneficiary is liable to make to the local authority under section 22 of the National Assistance Act 1948;

(ab)	in a case where the beneficiary ………is not liable to make a payment to a local authority under section 22 of the National Assistance Act 1948 an amount equal to the award of income support payable to the claimant ………..”

17.	It might be argued on behalf of the Claimant that, if (as subsequently held by the House of Lords) the local authority was required to provide his accommodation and care free of charge, the Secretary of State had no power to make any direct payment of income support under para. 4 of Schedule 9 because there was no “person or body to whom the charges in respect of that accommodation are payable” within the meaning of para. 4(1)(a). The argument on his behalf might then continue along the lines that, since the bulk of his income support was wrongly paid away to a third party rather than being paid to him, the payment of £24,760.60 by the local authority should be regarded as having been made in satisfaction of a cause of action arising because his income support had been paid to the wrong person. The £24,760.60 should therefore be regarded (so the argument would continue) as arrears of income support. In my judgment, however, such an argument would not be well-founded, for the following reasons. 

18.	Section 21 of the National Assistance Act 1948 provides a power and duty for local authorities to make arrangements for providing residential accommodation for persons who by reason of age, illness, disability or any other circumstances are in need of care or attention which is not otherwise available to them. Section 22 contains a duty to charge for accommodation so provided. That is on a means tested basis, laid down in regulations. By s.26 the local authority may make arrangements with a voluntary or other organisation for that organisation to provide the accommodation, in which case the local authority must pay the provider’s charges. By section 26(3) the occupant shall in such circumstances, in lieu of being liable to make payment for his accommodation under s.22, pay to the local authority the amounts which he would have been liable to pay under s.22 had the accommodation been provided by the local authority.  By s.26(3) the occupant, the accommodation provider and the local authority can agree that occupant will be liable to pay his required contribution direct to the accommodation provider (rather than to the local authority) and the local authority will be liable to pay to the accommodation provider any balance of the accommodation charges. 

19.	If, as now asserted on behalf of the Claimant, the Claimant’s income support (less an amount for personal expenses) was paid by the DWP direct to the nursing home, then it would appear that there must have been an agreement under s.26(3) of the 1948 Act under which the Claimant was liable to pay his required contribution to the charges direct to the home, and the local authority was liable to pay the balance of the charges to the home. The statutory authority for making the payment of the Claimant’s income support direct to the home would appear, as submitted by the Secretary of State, to have been para. 4 of Schedule 9 to the 1987 Regulations. 

20.	The fact that the local authority was not entitled to charge for accommodation (i.e. should have paid the entirety of the charges to the home itself) would not, as I see it, have invalidated the contract between the Claimant and the home under which the Claimant became liable to the home for charges. On that basis it cannot be said that the DWP had no power under para. 4 of Schedule 9 to pay the income support to the home. The Claimant’s income support was therefore properly paid to the home on his behalf. That being so, any possible basis for an argument that the payment by the local authority was in respect of income support which should have been, but was not, paid to the Claimant in my judgment falls away. The sum paid by the local authority was not paid because his income support was wrongfully withheld from him, but in satisfaction of a quasi-contractual cause of action which arose because the Claimant had (by means of his income support) paid for care charges which should have been paid by the local authority.

21.	However, let it be assumed (most favourably to the Claimant) that what had happened was that the DWP paid the income support directly to the local authority in satisfaction of charges which it was considered (wrongly) the local authority was entitled to make for the accommodation which it arranged for the Claimant. The Claimant would on those facts have been entitled to argue that, because the charges purportedly made by the local authority were unlawful, there was no statutory authority under para. 4 of Schedule 9 for the payment of his income support direct to the local authority: there would have been no “person or body to whom charges in respect of accommodation” were payable. If the DWP had, in those circumstances, subsequently paid to the Claimant the income support which he should have received originally, he would in my judgment have been entitled to say that what had been paid to him was “arrears of income support.” 

22.	However, the payment to the Claimant was not of course made by the Secretary of State, but by the local authority. The precise nature of the Claimant’s cause of action against the local authority would have been open to debate. Putting the matter at its best from his point of view, he might have had an action in quasi-contract for the recovery of sums in respect of income support which ought to have been paid to him but which, under a mistake of law, had been paid to the local authority. However, the sum paid by the local authority in satisfaction of that cause of action could not in my judgment properly have been said to be “arrears of income support.” Those words in my judgment refer to a sum paid by the Secretary of State in satisfaction of an award of income support. They are not in my judgment capable of referring to a sum paid in satisfaction of a cause of action in quasi-contract against some third party to whom the income support was wrongfully paid. 

23.	I would add that this result would not appear to leave the Claimant significantly worse off than he would be likely to have been had it been appreciated from the outset that the local authority was not entitled to charge in respect of his accommodation and care. Had that been appreciated, the full amount of the Claimant’s income support award would have been paid to him, and I have been prepared to assume that the initial amount of that award would have been the same as it in fact was. However, on the footing that his personal expenditure would have been no higher than it in fact was, he would have saved out of his income support capital sums which, once they had reached the relevant limit, would have been taken into account in determining the amount of his income support award.  

24.	It was suggested by the Commissioner who gave directions at an earlier stage of this appeal that the Tribunal should perhaps have considered whether the sum paid by the local authority fell to be disregarded under para. 66 of Schedule 10 to the 1987 Regulations. That provides for a disregard of 

“any payment made by a local authority ……..to or on behalf of the claimant or his partner relating to a service which is provided to develop or sustain the capacity of the claimant or his partner to live independently in his accommodation.” 

I agree with the Secretary of State that that provision can have no application to the Claimant, who was not living “independently” in the nursing home. 

	(signed on the original)	Charles Turnbull
		Commissioner
		14 February 2007