Secretary of State for Work and Pensions v Adams

This appeal is brought by permission of the Social Security Commissioner, Mr P.L.Howell, who on 18 June 2002 gave the decision now under challenge. He held that the Secretary of State was not entitled to withhold the invalid care allowance for which Mr Adams was eligible for the period from 10 May 2000, when the invalidity benefit which extinguished it ceased to be payable to him, to 26 March 2001, the day before the Department learnt from Mr Adams of the cessation of his incapacity benefit and as from which it consequently restored his invalid care allowance.

Mr Adams, now in his early fifties, has for a number of years been caring for his severely disabled partner, with the result that from 20 June 1995 he became entitled to an invalid care allowance, initially at £35.25 a week. By then, however, he was in receipt of incapacity benefit in an amount which was greater than the invalid care allowance. By virtue of Regulation 4 of the Social Security (Overlapping Benefits) Regulations 1979, such benefits have to be adjusted, period by period, by deducting the contributory benefit (here the incapacity benefit) from the non-contributory one (here the invalid care allowance). The arithmetical consequence was that the invalid care allowance ceased to be payable for as long as the incapacity benefit was being paid.

The notification sent to Mr Adams by the Department’s invalid care allowance section on 9 February 1996, written in attractively clear English, included the following:

“The adjudication officer has decided you cannot be paid ICA at the moment even though you are entitled to it.”

“This is because you are getting [incapacity] benefit which is the same as, or more than ICA.”

“If the incapacity benefit stops you should tell us straightaway. The adjudication officer may look at your claim again because you are not getting benefit. As long as you satisfy all the other conditions you may be entitled to ICA.”

“Adjudication officer’s decision

Mr Adams’ incapacity benefit was terminated by the Secretary of State with effect from 12 May 2000. The Department, however, failed to observe that this revived his entitlement to invalid care allowance from the same date. Mr Adams for his part was more concerned to have his incapacity benefit restored. The Department refused, and on 22 March 2001 Mr Adams’ appeal against the refusal was turned down. A few days later he returned a routine inquiry form to the invalid care allowance section of the Department, who learned from it that his entitlement to incapacity benefit had terminated almost a year before. They responded promptly by restoring Mr Adams’ invalid care allowance from the date when they received this information from him, 27 March 2001; but they took the view, which was upheld by an appeal tribunal in Cardiff on 5 September 2001, that there was no power to backdate the restoration to the time when Mr Adams’ incapacity benefit had come to an end. It was this decision which the Commissioner overset and which the Secretary of State now seeks to restore.

Meanwhile, commendably, the Department has paid Mr Adams the amount in dispute ex gratia. In consequence we are concerned solely with the issue of principle and can consider it in the light of the present legislation without reference back.

Section 8 of the Social Security Act 1998, shoulder-noted “Decisions by Secretary of State”, provides:

Subject to the provisions of this Chapter, it shall be for the Secretary of State

to decide any claim for a relevant benefit;

…. to make any decision that falls to be made under or by virtue of a relevant enactment

…. (a) any decision of the Secretary of State under section 8 above or this section, whether as originally made or as revised under section 9 above …

Subject to subsection (6) and section 27 below, a decision under this section shall take effect as from the date on which it is made or, where applicable, the date on which the application was made.

Regulations may provide that, in prescribed cases or circumstances, a decision under this section shall take effect as from such other date as may be prescribed.

By regulation 17 of the Social Security (Claims and Payments) Regulations 1987:

Subject to the provisions of this regulation … a claim for benefit shall be treated as made for an indefinite period and any award of benefit on that claim shall be made for an indefinite period.

In the Overlapping Benefit Regulations, regulation 4 provides:

… an adjustment shall be made in accordance with pargraph (5) where … –

two or more personal benefits (whether of the same of a different description) are, or but for this regulation would be, payable … for any period …

one of the benefits is a contributory benefit and one is a non-contributory benefit, the non-contributory benefit shall be adjusted by deducting from it the amount of the contributory benefit and only the balance, if any, shall be payable….

It is common ground that both the suspension and the restoration of Mr Adams’ invalid care allowance involved a decision, not merely (as was argued at one point below) an administrative step. It is central to the argument of Mr Richard Drabble QC for Mr Adams that it was a decision that could lawfully go only one way. This Mr Ward, for the Secretary of State, accepts; but he does not accept Mr Drabble’s corollary that Mr Adams was entitled by operation of law to incapacity benefit from 12 May 2000.

Mr Ward argues that just as a decision is the only mechanism provided by law for the award or discontinuance of benefit, so a decision is the only recognised mechanism for restoring it. The modes of restoration are themselves dictated by the 1998 Act: revision (s.9), supersession (s.10) and appeal (ss. 12-14). The decision taken here was a decision, pursuant to s.10, that payment of incapacity benefit was to supersede non-payment, and by virtue of regulation 7 of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 such a decision could not be backdated further than it was.

Mr Drabble does not take issue with any of these propositions except the first. He contends that a decision relating to payment under an extant award is distinct from a decision on its duration, its revision or its supersession. This is because none of the three latter powers is relevant where the entitlement to invalid care allowance has been established all along and the only question is whether “for any period” (to quote regulation 4 of the Ovelapping Benefits Regulations) something inhibits payment of it. While therefore he accepts that a decision is required to restore a now unblocked non-contributory benefit (to argue otherwise would be to strip such questions of the right of appeal), he contends that the decision is made under s.8 and so is not inhibited by the fetter on retroactivity which affects supersession decisions. The decision itself, he submits, could perfectly well have been phrased: “The amount of your ICA is adjusted to nil for as long as you are receiving incapacity benefit.” If it had been, the decision would have been a formality and would have operated from the date of cessation of incapacity benefit.

There is another aspect of the case which deserves attention. What triggered the restoration of Mr Adams’ invalid care allowance was the Department’s becoming aware, from his answer to an inquiry form, that his incapacity benefit had come to an end the previous year. But the Department had known of this ever since it stopped the benefit in May 2000, although it had clearly not acted on it. In Hinchy v Secretary of State for Work and Pensions EWCA [2003] Civ. 138, a case – unlike the present – turning on the statutory obligation to notify the Department of material facts, Aldous LJ held that there was “no failure to disclose if the fact is known to a relevant official”, and that maladministration could not alter this. Carnwath LJ agreed, but went further by holding that “the Secretary of State cannot disclaim knowledge of his own decisions”. Sir Denis Henry agreed with both judgments.

The single question we have to answer is whether the decision to resume payment of Mr Adams’ invalid care allowance was a supersession decision under s.10 or a decision under s.8 either on a claim for a benefit or under or by virtue of a relevant enactment.

Everything in the phraseology of the initial decision letter cited in paragraph 3 above indicates that, if a time were to come when Mr Adams’ incapacity benefit ceased, the invalid care allowance to which he was entitled would become payable. This in my judgment accurately reflects the law. An “award” of invalid care allowance signifies an extant decision that the claimant is entitled to it. Unless there is some legal inhibition on payment of it, payment follows as of right. Here there was such an inhibition until 12 May 2000. Thereafter there was none.

What then was the nature of the decision, when it was finally made in March 2001, to restore payment of the allowance? It is not impossible to regard it as a decision to pay which superseded the decision not to pay. But it is more in conformity with the legislative scheme to regard it simply as a decision on a claim for a relevant benefit, or as a decision falling to be made under the enactments which had so far created an entitlement but had inhibited payment. The decision to restore payments after May 2000 was predetermined by the decision notified in February 1996.

What then of the requirement in the 1996 letter that Mr Adams should notify the Department’s invalid care allowance section if his incapacity benefit ceased? As good advice it cannot be faulted: in any large organisation it is understandable that from time to time its left hand does not know what its right hand is doing. It helps everybody if claimants ensure that changes in their entitlement to be paid are not missed. But, as Mr Ward accepts, nothing in this branch of social security law (in contrast to other branches, such as overpayment) entitles the Secretary of State to place on the claimant the onus of telling him what he himself has done or to proceed as if he had not stopped a claimant’s incapacity benefit when he, of all people, ought to know that he has. Moreover, it is accepted that (again in contrast to other areas of social security law) there are no circumstances in which incapacity benefit can cease to be payable except at the Department’s instance.

There are two other reasons why it seems to me right to allocate the decision to resume payments of Mr Adams’ invalid care allowance to s.8 rather than s.10. Regulation 4 of the Overlapping Payments Regulations is an accounting provision designed to ensure that parallel entitlements do not result in excessive payment. It does not deal with entitlement, and its operation involves no judgment or fact-finding of any description. Secondly, the result of allocating a decision to resume payment of Mr Adams’ invalid care allowance to s.10 is to penalise him, by denying him the possibility of backdating the decision, for the Department’s failure to readjust the payments according to law upon its decision to terminate his incapacity benefit, and places upon him an onus which cannot be found in the legislation. To do this would tend to defeat the objectives which Parliament and the rule-maker can be seen to have had in mind when assembling the present scheme.

The Commissioner’s impressively reasoned decision is focused on regulation 4 of the Overlapping Benefits Regulations. He took the view that the Secretary of State’s power to make an adjustment continued only for as long as the two benefits were payable simultaneously. The view I have come to is not inconsistent with this, but it derives from statutory construction rather than from the public law approach taken by the Commissioner, and by doing so recognises – as the Commissioner pointed out was wise – the need for a decision at each stage.

Mr Adams was entitled to resumption of payment of his invalid care allowance with effect from 12 May 2000 because the decision to resume payment was made under s.8. Mr Commissioner Howell accordingly came to the right decision and Secretary of State’s appeal against it fails. It follows that the payment already made ex gratia is to be regarded as made as of right.

Lord Justice Clarke: I agree.

Dame Elizabeth Butler-Sloss P.: I agree.