R(IS) 16/95

Mr. D. G. Rice	CIS/758/1992
9.8.94
Student - income - whether loan from a foreign government is a “grant”	
The claimant had a partner who was in receipt of financial help from the Norwegian government to study in Britain, paid partly as a grant and partly as a loan. In assessing his claim for income support, the adjudication officer took both elements into account as income. The claimant appealed to a social security appeal tribunal, contending that the loan should not be treated as income. The tribunal allowed the appeal and the adjudication officer appealed to a social security Commissioner
Held that:
1.	a student’s loan does not fall within the definition of “grant” in regulation 61 of the Income Support General Regulations 1987. Decision R(SB) 20/83 which dealt with the identical point under the supplementary benefit scheme not followed (para. 10);
2	the fact that a payment takes the form of a loan does not prevent it being treated as income for income support purposes. Decision R(SB) 7/88, which dealt with the identical point under the supplementary benefit scheme, followed (para. 11);
3	the fact that a loan is discretionary does not prevent it being treated as income for income support purposes (para. 12).
The Commissioner allowed the appeal.

DECISION OF THE SOCIAL SECURITY COMMISSIONER
1. 	My decision is that the decision of the social security appeal tribunal of          1 September 1992 is erroneous in point of law and accordingly I set it aside. I direct that the appeal be reheard by a differently constituted tribunal who will have regard to the matters mentioned below.
2. 	This is an appeal by the adjudication officer, brought with the leave of the tribunal chairman, against the decision of the SSAT of 1 September 1992. In view of the complexity of the case, I directed an oral hearing. At that hearing, the claimant, who was not present, was represented by Miss Janet Peck, Welfare co‑ordinator of the Union of UEA Students, whilst the adjudication officer appeared by Mr. G. Roe of CAS.
3. 	On 14 January 1992 the claimant applied for income support. He stated at Part VII of the claim form that his partner had been awarded income by the Norwegian Government towards her education, payable in two parts as follows:
Kroner
	Autumn	Spring
Educational Grant	6100	6100
Travel Grant	1650	1650
Overseas Grant	34000	‑
Norwegian Loan	28100	28100
	69850		35850
	Total = 105700 kroner

In sterling (on the basis of 11.83 Kroner to £1) the educational grant came to £1,031.27 for the year, the travel grant to £278.96, the overseas grant to £2,874.04 and the Norwegian loan to £4,750.63, totalling in all £8,934.90. The question arose as to how the income receivable by the claimant’s partner was to be treated in computing the claimant’s claim for income support.
4. 	The adjudication officer carried out a calculation and concluded that a sum of £89.92 per week had to be taken into account “as income other than earnings in the calculation of income support from 14 January 1992”. In due course, the claimant appealed to the tribunal, who in the event allowed the appeal. They decided that neither the grants nor the loan were to be taken into account in assessing the claimant’s entitlement to income support. In reaching this conclusion, the tribunal, for the reasons set out below, erred in point of law.
5. 	It is not in dispute that the payments made in respect of the educational grant, the travel grant and the overseas grant amounting in all to £4,184 constituted grants within the definition contained to regulation 61 of the Income Support (General) Regulations 1987, SI 1987 No. 1967, and that in consequence regulation 62 applied. The latter regulation reads as follows:
“62.–(1) 	The amount of student’s grant income to be taken into account shall, subject to paragraph (2), be the whole of his grant income.
 (2) 	There shall be disregarded from the amount of his student’s grant income any payment-
(a)	intended to meet tuition fees or examination fees;
....
(e)	on account of the student maintaining a home at a place other than that at which he resides during his course but only to the extent that his rent or rates is not met by housing benefit;
....
(g)	intended to meet the cost of books and equipment (other than special equipment) or if not so intended an amount equal to £257 towards such costs:
(h)	intended to meet travel expenses incurred as a result of his attendance on the course.”
6. 	Mr. Roe accepted that the sum of £2,874.04 paid by way of the overseas grant was intended to meet tuition fees or examination fees within regulation 62(2)(a). Moreover, he was prepared to allow as a further disregard the cost of books in the sum of £257 within sub‑paragraph (g) and the sum of £278.96 paid in respect of the travel grant as travel expenses within subparagraph (h). Furthermore, he was willing to accept that the claimant’s partner had incurred costs under sub‑paragraph (e) amounting to £384. These items totalled in all £3,794.
7. 	Miss Peck contended that, as the claimant’s partner had in practice paid over £5,000 towards tuition fees, this was the relevant figure and it was enough to absorb the entirety of the grants. I reject that submission. Manifestly, there can only be deducted in respect of tuition fees or examination fees any payment intended for this purpose. The intention has, of course, to be that of the provider of the payments. How the recipient allocated the payments is wholly irrelevant. Accordingly, the amount of the disregards under regulation 62(2) was limited to £3,794 in all. However, that was not the end of the matter. Mr. Roe fairly pointed out that, although the claimant’s partner received by way of grants £4,184, she suffered certain expenses in connection therewith. She had to pay a tax of £57 and conversion costs from kroner into sterling of £17. Mr. Roe raised the question of how these items were to be dealt with. In my judgment, a student’s grant income is to be taken into account as income other than earnings within regulation 40. Under that provision the income is to be taken gross but there is disregarded therefrom “any sum, where applicable, specified in Schedule 9”. Paragraph 1 of that Schedule provides for income tax to be disregarded and paragraph 24 commission on conversion of foreign payments into sterling. Accordingly, the gross figure of £4,184 had to be reduced by tax of £57 and conversion costs of £17, and the balance then became subject to the deductions discussed above pursuant to regulation 62(2). The net figure falling to be taken into account for purposes of assessing the claimant’s entitlement to income support comes to £316.
8. 	However, the real difficulty in this case arose out of the receipt by the claimant’s partner of £4,750.63 by way of loan. Was this sum to be treated as a grant within regulation 62(1) and therefore to be taken into account in accordance with that provision in computing entitlement to income support? As the sum in question was repayable, on no footing could it be considered a grant in the normal sense of that word, which implies a gift. However, a grant as used in regulation 62 has the meaning given to it in the interpretation provision, namely regulation 61. “Grant” is there defined as meaning “any kind of educational grant or award and includes any scholarship, studentship, exhibition, allowance or bursary ...”. Now, although the loan could not be regarded as a grant, might it not be an award? This question was considered in R(SB) 20/83 with reference to supplementary benefit. However, for present purposes, there is no material difference between regulation 11(2)(1) of the Supplementary Benefit (Resources) Regulations 1981, SI 1981, No. 1527, and the definition of “grant” in regulation 61 of the Income Support (General) Regulations 1987. Accordingly, it could be said that observations made by the learned Commissioner in R(SB) 20/83 apply equally to the present case.
9. 	In R(SB) 20/83 the Commissioner cited for the meaning of “award” the Shorter Oxford English Dictionary and said as follows:
“7. 	The Shorter Oxford English Dictionary materially defines the substantive “award” as meaning:
“That which is awarded, or assigned, as payment, penalty etc.”
‑	and the verb “award” as “to decide after deliberation”
‑	and Miss Shuker [who appeared for the adjudication officer] submitted that the £2,229.60 was “a payment awarded” in that verbal sense, being clearly a “payment” and being also one made in exercise of a discretion which, she submitted, involved decision after deliberation.”
At paragraph 10 of his decision the Commissioner summarised his conclusions. He said as follows:
“10. (1) ....
[The claimant] says that a loan is a well recognised form of financial accommodation in its own right and as such something different from an ‘award’ in the relevant context of a ‘grant or award by an education authority’. One does not, he says, ‘award’ a loan, one ‘makes’ it and, he says, one cannot properly stretch the ordinary meaning of ‘award’ so as to embrace a loan.
(2)	I have not found this an easy point to decide, not least because in the academic context ‘award’ is constantly used in context of conferment of outright bounty, as e.g. the award of a prize or scholarship.
(3)	But, at the end of the day, I am persuaded that what the claimant received was no less an ‘award’ by reason of his liability to repay the money he received. What he obtained was a financial accommodation enabling him, on a ‘cash flow’ basis, to meet wants the satisfaction of which required expenditure. And in my judgment he obtained it in the form of a payment made pursuant to the exercise of the education authority’s discretion, decided upon after deliberation, so that it falls within the definition indicated in paragraph 7 above.”
10. 	I regret that I cannot agree with the Commissioner in R(SB) 2/83. I prefer the contention of the claimant in that case. I am satisfied that the word “award”, if given its everyday meaning and particularly so in the context of academic grants and awards, implies on outright gift with no liability to repay. In this connection Miss Peck pointed out to me that, whereas the regulations governing student grants were entitled “The Education (Mandatory Awards) Regulations, United Kingdom student loans were covered by quite separate legislation and were not accommodated within the Mandatory Awards Regulations. This was, she contended, an example of the distinction drawn by those concerned with these matters between the term “award” and the term “loan”. I think that it is a violence to the ordinary use of language to describe something which you have to repay as an award, particularly in an educational context. Accordingly, in my judgment, the loan made to the claimant’s partner in the present case was not a grant within regulation 61 and as a result did not have to be taken into account in the calculation of income support, pursuant to regulation 62(1).
11. 	However, that is not the end of the matter. It remains to be considered whether the loan fell to be taken into account, irrespective of whether it was a student’ s grant or award, merely because it was a loan. Could it not be said that the receipt by the claimant’s partner of the loan from the Norwegian government constituted receipt of income other than earnings within regulation 40? The same issue arose, albeit under the supplementary benefit legislation, in R(SB) 7/88. In my judgment, the position is exactly the same under the income support legislation and at paragraph 9 of that decision I said as follows:
“9. 	Miss Harding argued that loans could not be treated as income. It defied commonsense that a payment which had to be repaid could be regarded as a source of revenue. However, the supplementary benefit legislation has its own rules. What must always be borne in mind is that the supplementary benefit fund is the fund of last resort. As I said in the dissenting decision in R(SB) 23/84, being subsequently upheld by the Court of Appeal:
‘Supplementary benefit is the benefit of last resort. Its purpose is to safeguard everyone from falling below a standard of living accepted by society at large as being the minimum subsistence level and it is paid for out of public funds without any contribution on the part of the beneficiary. Not surprisingly, safeguards have been built into the system, so as to ensure that a claimant does not need to have resort to supplementary benefit if he already has adequate income or capital resources of his own.” (para. 30).
It follows that if a third party is prepared to lend money to a claimant, so that he is able to satisfy a particular need, the supplementary benefit fund is relieved of any obligation to render financial support in respect of that need. Accordingly, a loan constitutes income as much as earnings. As was said in paragraph 9(8) of decision R(SB) 20/83:
,... I am unable to accept the claimant’s contentions as to a loan not being capable of constituting “income” in the relevant context.’
Moreover the same approach was adopted in R v. West Dorset District Council, Ex parte Poupard [1987] 19 HLR 254, on appeal The Times              5 January 1988.”
12. 	In the present case, the claimant’s partner received, during the year under consideration, the loan in two instalments and as far as Miss Peck understood the position, she received a similar loan in the following year. Miss Peck pointed out that payment of the loan was entirely discretionary, but, in my judgment, that does not affect the issue. If a generous person decides to lend an impecunious relative a sum of money on some regular basis, twice a year, four times a year, monthly or weekly or whatever it might be, this would, in my judgment, constitute income in the hands of the recipient for the purposes of income support and it would be wholly immaterial that the indulgent relative could at his entire discretion terminate the arrangement whenever he wished. So long as the arrangement continued the recipient was in receipt of “income”. The present case was, in my view, no different. The claimant’s partner was, during the relevant period, in receipt of income corresponding to the loan and that had to be taken into account pursuant to regulation 40. And this sum had to be added to the balance of the grants after deduction of all disallowances.
13. 	For completeness, I should make reference to regulation 66A. This regulation provides that a loan which is made to a student pursuant to arrangements entered into under section 1 of the Education (Student Loans) Act 1990 or Article 3 of the Education (Student Loans) (Northern Ireland) Order 1990 shall be treated as income. Now, it could be said that, if a loan is in any event, on general principles, to be treated as income, there was no need to introduce regulation 66A into the regulations. Moreover, it could be argued that the mere presence of this particular regulation suggests that without it regular loans were not to be treated as income. However, in my judgment, regulation 66A was added simply for the removal of doubt. It might be asked why its terms were confined to arrangement made under section 1 of the Education (Student Loans) Act 1990 or Article 3 of the Education (Student Loans) (Northern Ireland) Order 1990 and not left open‑ended in their application. But the specific reference to the above provisions served to prevent English students who, of course, comprise the overwhelming majority of students in this country, from arguing that the loans made to them in accordance with the relevant legislation should not be treated as income. The legislation decided to deal expressly with what was likely to become a major issue and put the matter beyond doubt. No reliance was to be placed on implications and inferences drawn from wider considerations.
14. 	It follows from what has been said above that in deciding that neither the grants nor the loan made to the claimant’s partner were to be taken into account in determining entitlement to income support the tribunal erred in point of law and I must set aside their decision.
15. 	Accordingly, I direct that the appeal be reheard by a differently constituted tribunal who will reach their determination in the light of the principles set out above. Mr. Roe pointed out to me that the new tribunal would also have to consider the period to which the loans should be assigned and suggested that in respect of any weeks to which they had no application the claimant might be able to establish entitlement to income support. The new tribunal will have to go into all these matters and determine what, it anything, the claimant is entitled to by way of income support for any period.
16. 	I allow this appeal.

Date: 9 August 1994	(signed) Mr. D. G. Rice
	Commissioner