DM v Secretary of State for Work and Pensions

The First-tier Tribunal must (by way of an oral hearing) undertake a complete reconsideration of the issues that are raised by the appeal and, subject to the First-tier Tribunal’s discretion under Section 12(8)(a) of the Social Security Act 1998, any other issues that merit consideration.

The First-tier Tribunal hearing the remitted appeals shall not involve the members of the panel who heard the appeals on 19 September 2024.

In reconsidering the issues raised by the appeals the First-tier Tribunal must not take account of circumstances which were not obtaining at the date of the original decision of the Secretary of State under appeal. Later evidence is admissible provided it relates to the time of the decision: R(DLA) 2 & 3/01.

If the claimant has any further evidence to put before the First-tier Tribunal this should be sent to the regional office of Her Majesty’s Courts and Tribunals Service within one month of the date on which this decision is issued. Any such further evidence must relate to the circumstances as they were at the date of the decision of the Secretary of State under appeal (see Direction 3 above).

The First-tier Tribunal hearing the remitted appeals is not bound in any way by the decision of the previous First-tier Tribunal. Depending on the findings of fact it makes the new panel may reach the same or a different outcome from the previous panel.

The Appellant (to whom I shall refer as the “claimant”) and her partner made a joint claim for Universal Credit on 22 October 2021. On 22 November 2022 the claimant’s partner attended a work search review at which he informed his work coach that the claimant would be starting a university nursing course on 26 September 2022. Further information was requested about the course, and was duly provided on 1 and 6 October 2022 and 14 November 2022. The information included information on the claimant’s student finance showing tuition fees for the academic year as well as an Adult Learning Grant from the NHS of £3,997.50.

The claimant was entitled to apply for a maintenance loan as part of her student finance application but chose not to do so because such a loan would be interest-bearing and would offend against the claimant’s religious beliefs. The claimant notified the Secretary of State of her decision not to apply for a maintenance loan.

The Secretary of State took no action following the claimant’s disclosures, and continued to pay the claimant amounts in respect of Universal Credit.

On 6 January 2023 a decision maker for the Secretary of State decided that the income figure used for calculating the claimant’s Universal Credit payments should have included notional income in an amount equal to the maintenance loan to which the claimant was entitled (albeit that she did not receive such a loan because of her decision not to apply for one), and recalculated your entitlement accordingly. The decision maker decided that the claimant had, as a consequence, received a substantial overpayment of Universal Credit for the assessment period 12 September 2022 to 11 May 2023, and that overpayment was recoverable from the claimant (the decisions described in this paragraph being the “Initial SoS Decisions”).

The Initial SoS Decisions were the subject of two reconsiderations, the second reconsideration taking place on 17 April 2024, when the reconsideration decision maker treated the Adult Learning Grant received by the claimant as notional income and recalculated the claimant’s entitlement and the overpayments that she had received up to that date, again deciding that such overpayment was recoverable from the claimant (the “SoS Decisions”).

The claimant appealed the SoS Decisions to the First-tier Tribunal. On 19 September 2024 a judge of the First-tier Tribunal (Social Entitlement Chamber) decided to dismiss the claimant’s appeals and to confirm the SoS Decisions (the “FtT Decisions”).

Both the SoS Decisions and the FtT Decisions proceeded from the understanding that an overpayment arose because the Secretary of State had not taken into account the amount of the loan to which the claimant was entitled, and regulation 68(5) of the Universal Credit Regulations 2013 required him to do so.

The claimant’s applications for permission to appeal came before me on 1 October 2025. I granted permission to appeal. In my decision notice (which was addressed to the claimant) I explained my reasons for granting permission as follows:

“15.

Your representative, Mr Power of Kirklees Law Centre, made detailed submissions on this appeal which identify some important issues of law, namely:

a.

whether the First-tier Tribunal erred in law by failing to make a finding as to whether (given your religious beliefs) it would have been “reasonable” for you to apply for a student loan before deciding that “notional student income” in an amount equal to the available loan should have been taken into account when calculating your Universal Credit entitlement (per Regulation 68(5) of the Universal Credit Regulations 2013 and per IB v Gresham BC and SSWP [2023] UKUT 193 (AAC) (IB);

b.

if, by reason of your religious beliefs, it would not have been reasonable for you to apply for a student loan, whether attributing you with “notional student income” referable to the amount of the loan to which you would have been entitled involve unlawful discrimination contrary to the Equality Act 2010;

c.

whether the Tribunal erred in deciding that it had no power to prevent the Secretary of State from recovering the overpayment from you; and

d.

whether the Tribunal erred in failing to address the decision of the High Court in R (K) v SSWP [2023] EWHC 233 (Admin) or to consider whether the Secretary of State was estopped from seeking to recover the overpayment from you in circumstances where her error had caused the overpayment and where recovery breached your legitimate expectation that you were entitled to the amounts paid.

16.

I am persuaded that these grounds are arguable with a realistic (as opposed to fanciful) prospect of success. If the Tribunal did err in one or more of the ways Mr Power says it did, such error or errors may well have been material in the sense that had such error or errors not been made the outcome of your appeal might have been different. This justifies a grant of permission to appeal to the Upper Tribunal. Grant of permission extends to each of the grounds argued by Mr Power in his letter dated 8 April 2025.”

I made Case Management Directions for the parties to make submissions and indicate whether they requested an oral hearing of the appeal.

Mr Power made an application for these appeals to be heard at a hearing together with the appeal in UA-2025-000671-USTA, on the basis that there was some overlap in the issues in the appeals.

Mr O’Regan, on behalf of the Secretary of State, indicated support for the appeal on the basis that the First-tier Tribunal had erred in failing to explain with adequate clarity why it considered it to be reasonable for the claimant to have acquired a student maintenance loan and failing to explain how its finding that it was reasonable was consistent with IB v Gresham BC and SSWP, but resisted the appeal on the other grounds argued by the claimant. The Secretary of State did not request an oral hearing of the appeals and invited the Upper Tribunal to allow both appeals and remit the matters to the First-tier Tribunal for reconsideration by a fresh panel.

On 20 January 2026 I dismissed the application for these appeals to be heard together with UA-2025-000671-USTA because I considered that the overriding objective would best be served in these appeals by determining them without further delay, given that the Secretary of State supports the appeals to the extent that he does. I decided that the interests of justice did not require the holding of an oral hearing of these appeals.

At the permission stage I was required to decide whether the claimant’s grounds of appeal were “arguable” with a realistic prospect of success. At the substantive stage the test is whether (on the balance of probabilities) that the Tribunal did indeed err in law in a way that was material.

The Secretary of State accepts that the First-tier Tribunal erred materially in law and that it is appropriate to set the FtT Decisions aside. I consider that concession to have been correctly made. The most appropriate method of disposal is to remit the case for rehearing before the First-tier Tribunal. Since the First-tier Tribunal will consider all matters afresh, to the extent that the FtT Decisions involve any other errors of law, such errors will be subsumed by the rehearing. It is, therefore, unnecessary for me to determine the additional matters on which the parties are not ad idem.