[2008] UKSSCSC CPC_3992_2007 (20 May 2008)

CPC/3992/2007

DECISION OF THE SOCIAL SECURITY COMMISSIONER

The decision of the Social Security Commissioner in summary

1.	This appeal by the Secretary of State succeeds.  I have to set aside the decision of the Boston appeal tribunal dated 16 May 2007, which had allowed the claimant’s appeal against the Secretary of State’s refusal to allow housing costs on his claim for state pension credit.  My full decision is as set out at paragraph 15 below.

The factual background to the appeal to the tribunal

2.	For the purposes of the present appeal to the Social Security Commissioner, the key facts of this case are fairly straightforward.   As the Secretary of State is the appellant before the Commissioner, and the individual concerned was the appellant before the tribunal, I will call that individual “the claimant” to avoid confusion.  The claimant (who is now aged 67) and his wife had been living with his son at his son’s home near London.  This arrangement could not continue for various reasons. The claimant and his wife decided to relocate to a cheaper part of the country and bought a property in Lincolnshire in 2005.  They took out a mortgage of just over £105,000 on 7 July 2005 to assist with the purchase.  

3.	Over six months later, in February 2006, the claimant completed a claim form for state pension credit.  One of the Department’s officers visited the claimant and helped him complete the claim form, including a claim for housing costs.  The claimant was unaware of the possibility of entitlement to state pension credit being backdated, but the visiting officer explained that backdating for up to 12 months was available.  The claimant applied for his claim to be backdated for a full year.  The visiting officer did not explain that backdating might have an adverse impact on the claim for assistance with housing costs.  A Department decision maker awarded the claimant state pension credit with effect from 14 February 2005 (i.e. a year before the date of claim).  However, the award included no assistance with housing costs.  On 8 November 2006 a decision maker decided that the mortgage had been taken out during a “relevant period”, namely a period of entitlement to state pension credit, and therefore no assistance with the mortgage interest payments was possible.

The appeal tribunal’s decision

4.	The claimant appealed to a tribunal.  In his appeal letter he made the point that he had been misinformed by the visiting officer, as he had not been advised that backdating might mean the loss of benefit.  The Boston tribunal first heard the appeal on 4 April 2007.  The case was adjourned as the Pensions Service had not provided a copy of the claimant’s original application form.  The appeal was adjourned in order for a copy to be located.  The tribunal reconvened on 16 May 2007.  The Pensions Service was still unable to locate and provide a copy of the original claim.

5.	The tribunal allowed the claimant’s appeal, principally on the basis that by the date the claim was made the mortgage was already in existence.  The tribunal chairman issued a Statement of Reasons for the decision to similar effect.  She concluded that “The fact that arrears have been paid to a date that precedes the start of the mortgage is in the tribunal’s view irrelevant to his entitlement to housing costs”.

The error of law in the appeal tribunal’s decision

6.	Unfortunately for the claimant this proposition is incorrect.  The facts in the Commissioner’s appeal dealt with by Mr Commissioner Jacobs in CPC/3226/2005 are to all intents and purposes on all fours with the present appeal.  There, as here, the mortgage had been taken out before the claim for state pension credit, but the mortgage date fell within a period of backdated entitlement.

7.	The legal position is governed by paragraph 5(2) and (4) of Schedule II to the State Pension Credit Regulations 2002 (SI 2002/1792).  Paragraph 5(2) of Schedule II provides that housing costs are not met “where the loan was incurred during the relevant period”.  Paragraph 5(4) then defines a “relevant period” as follows:

“(4) The “relevant period” for the purposes of this paragraph is any period during which the person to whom the loan was made - 
(a) is entitled to income support, income-based jobseeker's allowance or state pension credit; or
(b) has a partner and the partner is entitled to income support, income-based jobseeker's allowance or to state pension credit;
together with any linked period, that is to say a period falling between two periods separated by not more than 26 weeks in which one of heads (a) or (b) above is satisfied.”

8.	The question is then how this provision applies in a case where a person makes a claim for state pension credit after having taken out a mortgage but their award of benefit is backdated.  In CPC/3226/2005 Mr Commissioner Jacobs ruled that that language and structure of paragraph 5, along with the linking rule, led to only one conclusion.  Housing costs could not be met where the loan was incurred during a period in which a claimant was retrospectively entitled to state pension credit.  

9.	The Commissioner explained the position as follows at paragraph 11 of his decision:

“The provisions of Schedule II have to be interpreted and applied in the context of the provisions for claiming a state pension credit and adjudicating in respect of claims. Like many benefits, a claim for state pension credit may be made in respect of a past period. The conditions of entitlement have to be applied to the circumstances obtaining at the time covered by the award. Any of the claimant’s relevant circumstances may have changed during the period for which the claim is made. The decision on the claim must reflect the circumstances as obtaining at different times. That may be advantageous or disadvantageous to the claimant. Either way, the conditions of entitlement have to be applied to the circumstances obtaining at particular times within the period of the claim. They cannot be interpreted or applied differently on the random chance that they occurred or changed before the date when the claim was made. The provisions governing housing costs that may not be met are no different in this respect from any of the conditions of entitlement. The language in which they are drafted is no different, neither is their interpretation, nor is their application.”

The parties’ submissions on the appeal to the Commissioner

10.	In reaching my decision I therefore accept the submission of the Secretary of State’s representative dated 7 November 2007 as to the relevant law, as discussed above.  I also note and agree with the further helpful observations of the Secretary of State’s representative received on 11 March 2008 in response to the observations of Mr Commissioner Turnbull.  The Commissioner had asked whether the claimant could have opted to limit the backdating of his award.  As the Secretary of State’s representative explains, this would have been possible, but the claim could have been amended only up to the point at which it was decided.  The Commissioner also asked whether the tribunal could have limited the period of backdating.  For the reasons given, I agree that this course of action was not open to the tribunal, not least because of the effect of section 12(8)(b) of the 1998 Act.

11.	In reaching this decision I have also considered the claimant’s submissions carefully.  I can understand why the claimant has a very real sense of injustice as to the outcome of this matter.  The procedure itself has been less than satisfactory – the Pensions Service has apparently been unable to locate his original claim form and the JobCentre managed to lose his first appeal letter.  But the claimant’s central argument is that he applied for backdating of his award on the advice of the Department’s visiting officer, and was given no indication that it might adversely affect his claim in respect of housing costs.  In his letter of appeal to the tribunal the claimant put the matter as follows: 

“At no time did your home assessor say that any benefits could be lost, as to when credit was paid from.  I have been very misinformed in this respect.  People should have an understanding of rules set by yourselves, but not given to us, or even printed.  I now know the ruling but disagree, my house loan was taken long before pension credit was claimed for.  Had I been made aware, I could have done something about it.  At the point of a home visit, all people should be told of the facts.  In my case nothing was mentioned that I would lose the right to further benefits”.

I should add that the tribunal at first instance had no hesitation in accepting the claimant’s account of events as he was a “very credible truthful witness”.

12.	It is well-established law that the Department cannot be prevented (or “estopped”) from applying the letter of the law even in situations where its own staff have previously given contradictory advice (see e.g. Davies v Social Security Commissioner (R(SB) 4/91) and Commissioner’s decision R(CS) 2/97).

The outcome of the appeal to the Commissioner

13.	In the present case the tribunal failed to apply the principle established by Mr Commissioner Jacobs in CPC/3226/2005.  It therefore erred in law.  As such, I have no option but to set aside the decision of the Boston appeal tribunal dated 16 May 2007 (Social Security Act 1998, section 14(8)).

14.	There are various exceptions to the application of the “relevant period” rule which may apply but there is no evidence that any of them apply in the circumstances of the present case.  The claimant and his partner have disability issues, and indeed he is registered disabled, but there is no evidence that they are receiving any of the disability benefits which would fall within paragraph 5(10), as the term “disabled person” is narrowly defined by paragraph 1(2) of the Schedule.

15.	Having set aside the tribunal’s decision, I have to consider how to deal with the appeal.  There is no real justification for sending the matter back for rehearing when the underlying facts and relevant law are clear.  I therefore substitute my own decision, giving the decision that the tribunal should have given and without making fresh or further findings of fact (Social Security Act 1998, section 14(8)(a)(i)).  My full decision is therefore as follows:

I set aside the decision of the Boston appeal tribunal, held on 16 May 2007 under reference 030/07/00077, because it is erroneous in point of law.

I give the decision that the appeal tribunal should have given, without making fresh or further findings of fact.

My decision is that the claimant’s appeal against the decision of the Secretary of State dated 8 November 2006 is dismissed.  The award of state pension credit does not include an amount by way of housing costs in respect of the claimant’s mortgage.  This is because the loan was incurred during a period when, retrospectively, he was entitled to the state pension credit.

Other remedies available to the claimant in this case

The Department’s extra-statutory compensation scheme

16.	The Secretary of State’s representative’s further submission helpfully points out that the Department operates an extra-statutory compensation scheme for making payments where people have lost entitlement to benefit due to departmental error (paragraph 7 of the submission at doc 68, received 11 March 2008).  That refers also to the official document entitled the Department’s Guide to Financial Redress for Maladministration, which is available on the DWP website.  The Commissioner’s jurisdiction and powers do not extend to applications under the extra-statutory scheme, but that is clearly an option that the claimant may now wish to pursue, given that the formal appeals process has ended in the way it has.

17.	In this context I note the helpful observation by the Secretary of State’s representative, confirming the claimant’s argument, as to the contents of the Pension Credit claim form notes.  The point is that none of the information in Part 10 of those notes (headed “When you want to claim from”) highlights the potential loss of housing costs which may be caused by applying for backdated entitlement.  I accept that there is obviously a difficult balance to be struck between providing sufficient information so as to avoid misleading the reader but not providing so much that the average reader is left completely lost.  That said, there appears to be an arguable case here that the claimant was let down both by the oral advice and the written guidance.

The Parliamentary Commissioner for Administration (“the Ombudsman”)  

18.	In the event that an application under the extra-statutory scheme does not produce a satisfactory outcome – and, of course, there is no appeal to a tribunal or the Commissioner about such matters – then the claimant may wish to consider lodging a complaint with the Parliamentary Commissioner for Administration (“the Ombudsman”).  Such a complaint has to be made in the first instance by contacting the constituency Member of Parliament, as only MPs may refer complaints to the Ombudsman.  There is a 12-month time limit on lodging such complaints.

The wider policy issue: the mischief at which the relevant period rule is directed

19.	There is a wider issue involved in this appeal.  The state pension credit scheme was established by the State Pension Credit Act 2002.  Much of the detail of the scheme is to be found in the 2002 Regulations.  In many, but not all respects, these Regulations mirror the equivalent provisions for income support.  Paragraph 5(4) is certainly modelled very closely on paragraph 4(4) of Schedule 3 to the Income Support (General) Regulations 1987 (SI 1987/1967).

20.	The Schedule to the Income Support (General) Regulations 1987 was introduced in its present form in amending regulations in October 1995 (although it has been much amended since).  Those rules limited in various ways the extent to which the income support scheme provided assistance with claimants’ housing costs.  The 1995 changes incorporated a number of earlier changes which had restricted access to assistance with housing costs. One such change was the introduction of what was then paragraph 5A(2) of Schedule 3 in the income support scheme (but is now paragraph 4(4) of Schedule 3, and so the direct ascendant of the state pension scheme provision).  This amendment was made in May 1994 and did not include all the safeguards proposed in the report of the independent Social Security Advisory Committee (SSAC) on the relevant regulations (SSAC Report, Cm 2537).

21.	The purpose of the May 1994 amendment was to tackle what the Government of the day perceived as the phenomenon of claimants “upmarketing” (i.e. moving to better and more expensive accommodation) at the expense of the benefits system (see Wikeley, Ogus and Barendt’s The Law of Social Security, 5th edition, 2002, at p. 312).  If this was the “mischief” at which the rule was directed, it is difficult to see how it can apply in the circumstances of the present case.  This is especially so where the claimant’s benefit entitlement has been backdated at the express suggestion of a departmental visiting officer.  This suggests that policy makers may need to revisit the interaction of the “relevant period” exclusion for housing costs with the rules governing the backdating of benefit entitlement.

22.	The ultimate irony in this case, which will be no consolation to the claimant, is that the Department has recently brought forward proposals to amend further the rules governing backdating of benefit entitlement.  These proposals are currently subject to a public consultation exercise by SSAC.  The proposed changes include a planned reduction in the maximum period of backdating for state pension credit claims from 12 months to 3 months (draft Social Security (Miscellaneous Amendments) (No. …) Regulations 2008).  If this proposed change had been in force at the time that the claimant in this case applied for state pension credit, then the problem in the present appeal would never have arisen.  In that scenario he would have claimed state pension credit in February 2006.  It would have been backdated three months to November 2005 and he would have received assistance with his housing costs as his July 2005 mortgage would not have been taken out in the “relevant period”.  However, even assuming the current proposal comes into force, it will not be retrospective in its effects.

The task of the tribunal and the Commissioner

23.	The task of the tribunal and the Commissioner is not to decide wider matters of policy relating to the benefits system.  It is to apply the relevant law as it is in force at the relevant time to the circumstances of the particular case.  In this case the tribunal erred in law.  The tribunal’s decision is accordingly set aside.  My full decision is set out at paragraph 15 above.

	(signed on the original)	N J Wikeley
		Deputy Commissioner
		
		20 May 2008