Secretary of State for Work and Pensions v SM

This appeal relates to the Respondent’s decision made on 09 September 2023 on her entitlement to Universal Credit from 5 February 2022. The Secretary of State decided that the Respondent was entitled to payment of the Transitional SDP Element of Universal Credit at the lower rate of £120 per Assessment Period because although she had previously been in receipt of the higher rate of Severe Disability Premium in the context of her award of Employment and Support Allowance, she experienced a significant change of circumstances by the first day of her award of Universal Credit (the “SoS Decision”). The change of circumstances that the Secretary of State identified was the Respondent’s notification that she and her partner looked after each other for 35 hours a week, which entitled her to the carer element of Universal Credit.

The Appellant appealed the SoS Decision to the First-tier Tribunal.

On 26 July 2023 a judge of the First-tier Tribunal heard the appeal at Leeds and allowed the appeal, setting aside the SoS Decision and deciding that the Respondent was entitled to a transitional SDP Element of £405 per Assessment Period from 5 February 2022 (the “FtT Decision”).

The Secretary of State applied to the Upper Tribunal for permission to appeal the FtT Decision, identifying an issue as to the proper interpretation of the phrase "if the higher SDP rate was payable" in paragraph 5(b)(i) of Schedule 2 to the Universal Credit (Transitional Provisions) Regulations 2014 (the "UC Regulations"), as applicable as at the date of the SoS Decision.

The Secretary of State argued that the phrase "if the higher SDP rate was payable" in paragraph 5 of the UC Regulations should be interpreted as "if the Higher SDP rate would have been payable, as at the first day of the UC award, had any change of circumstances been factored in".

This had been argued before the First-tier Tribunal, but the First-tier Tribunal rejected the Secretary of State's argument and gave a literal interpretation to the words "if the higher SDP was payable", finding that paragraph 5(b)(i) did apply, and that the higher SDP rate of £405 was therefore payable in the first assessment period.

The Secretary of State argued that this approach was in error of law.

On 25 March 2024 I granted permission to appeal because I was persuaded that the point of law identified by the Secretary of State was at least arguable with a realistic prospect of success.

Because there was a considerable overlap between the issues in this appeal and the issues in SSWP v (1) RW and (2) DW (appeal number UA-2023-001053-USTA) (“SSWP v RW and DW”), which was also before the Upper Tribunal, I decided that it was appropriate to stay this appeal behind that case. After the Upper Tribunal decided the appeal in SSWP v RW and DW I lifted the stay on these proceedings and directed the parties to indicate their positions on this appeal in the light of the Upper Tribunal’s decision in that case.

Mr Whitaker, on behalf of the Secretary of State, argued that the decision of Judge West in SSWP v RW and DW as to the proper interpretation of paragraph 5(b)(i) of Schedule 2 to the UC Regulations supported the Secretary of State’s position in this appeal and that this appeal should therefore be allowed, the FtT Decision be set aside as being materially in error of law, and the decision should be remade to reflect that, on a proper interpretation of paragraph 5(b)(i) of Schedule 2 to the UC Regulations, the Respondent was not entitled to the higher rate of the SDP Element of Universal Credit.

Mr Lewis, on behalf of the Respondent, maintained the position taken before the First-tier Tribunal.

In SSWP v RW and DW, Judge West explained his reading of paragraph 5(b)(i) of Schedule 2 to the UC Regulations as follows:

“66.

In my judgment, paragraph 5(b)(i) of Schedule 2 to the 2014 Regulations does not stand alone and must be construed as part of the whole of the Schedule in those Regulations. One cannot interpret paragraph 5 other than in the light of paragraphs 2 and 3 which precede it. Thus, whether the higher rate of SDP “was payable” for the purposes of paragraph 5(b)(i) can only be understood by reference to what the claimant was previously entitled to under paragraph 3(b) (neither paragraph 2 nor paragraph 3(a) being in issue in this case)…

[…]

70.

As Mr Williams again put it, in his skeleton argument, the parties appeared to be agreed that the issue in dispute in relation to Schedule 2 boiled down simply to whether it was correct to describe Mr and Mrs W as meeting the conditions of eligibility (as that phrase was used in paragraph 3(b)) for the higher rate of SDP on the day of the commencement of their UC award.

71.

However, given what Mr W had told the Secretary of State on 30 May 2022 about his caring responsibilities for his wife, which reflected the position as at 17 May 2022, the Secretary of State was obliged to approach the decision to award UC on the basis that there had been a relevant change of circumstances with effect from the first day of the assessment period (17 May 2022). It must follow from this that, on the facts disclosed by Mr W as to his caring responsibilities, neither Mrs W nor the couple were entitled to the higher rate on SDP on that day. They were instead entitled to, and were awarded, the carer’s element of UC with effect from that day. Accordingly, it cannot be said that on the first day of the first assessment period that the higher rate of the SDP was payable, a phrase which can only be understood in the light of, and with reference to, paragraph 3 of Schedule 2.

72.

If the higher rate was not therefore payable under paragraph 5(b)(i), one then turns to paragraph 5(b)(ii) which provides that if paragraph (i) does not apply and the LCWRA element is included in the award in respect of either member of the couple, the amount of TSDPE in the first assessment period is £120, not £405 because paragraph 5(b)(i) is not applicable.”

I agree with Judge West’s analysis.

The facts of this case are very much on all fours with those in SSWP v RW and DW: the claimants had a higher Severe Disability Premium (“SDP”) rate payment as part of their legacy benefit. However, in their Universal Credit claim they declared they were caring for each other, leading to an award of Carers Element in their Universal Credit award. The same question was under examination – when calculating the Transitional Severe Disability Premium Element (“TSDPE”) does the Carer Element being in place on the first day of the Universal Credit award mean that the claimant was someone who did not have the higher SDP rate, for the purposes of paragraph 5(b)(i) of the Universal Credit Transitional Provisions 2014?

The First-tier Tribunal said that it didn’t matter about the Carer Element at all: all that mattered was whether there was a higher SDP rate in place. As it explained in §17 of its statement of reasons:

“17.

The Tribunal rejected the Respondent’s argument that paragraph 5(b)(ii) applied because this paragraph is only expressed to apply ‘if paragraph (i) does not apply’. Paragraph (i) did apply. Furthermore, the Tribunal found that it would not be a correct interpretation to seek to introduce elements of condition 2 to then determine entitlement under paragraph 5, because there was nothing of this nature expressed within paragraph 5(b)(i). The only question to answer was whether the higher SDP rate was payable. It had been.”

In light of the decision of the Upper Tribunal in SSWP v RW and DW I am satisfied that the First-tier Tribunal erred in law in its construction of paragraph 5 of Schedule 2 to the UC Regulations. For the reasons explained by Judge West in SSWP v RW and DW, paragraph 5(b)(i) does have to be read in conjunction with earlier paragraphs in the Schedule. As such, the existence of the Carer Element in the UC award means that the higher SDP rate was not payable, and paragraph 5(b)(i) cannot apply to the claimants.

For these reasons I am satisfied that the FtT Decision is materially in error of law. The interests of justice demand that it be set aside and remade as it should have been made.