DECISION OF THE SOCIAL SECURITY COMMISSIONER

Commissioner’s Case No: CIS/0155/2001

[ORAL HEARING]

1. This appeal by the claimant does not succeed. I confirm the decision of the Sutton tribunal on 6th March 2000 to the effect that there is a recoverable overpayment of income support of £387.30.
 
2. I held an oral hearing of this appeal on 23rd January 2002. The claimant was represented by Mr Sklar of the Citizens Advice Bureau Welfare Benefits Unit. The Secretary of State was represented by Mr Scoon from the office of the Solicitor to the Department for Work and Pensions. I am grateful to them for their assistance. After the hearing I directed the Secretary of State to provide certain information about the steps taken after the adjudication officer made the decisions to which I refer below. I am grateful to the Secretary of State for the information given in response to my direction.

3. The claimant was born on 1st January 1971. She has four children of her own and at some stage her nephew, and later her niece, also came to live with her. She was awarded income support from 24th December 1996 on the basis that she is a lone parent responsible for 6 children in respect of all of whom except her niece she was also in receipt of child benefit. There was some confusion over the age of the niece and the claimant (for whom English is not her first language) spoke through an interpreter to staff at the local office of the Benefits Agency. The income support confusion was sorted out but she was also advised by the staff to claim child benefit in respect of her niece. She gathered the impression that her total benefit would increase as a result. This impression was inaccurate because the law provides that the amount of income support entitlement is reduced by the amount of child benefit being received.
 
4. The claim for child benefit in respect of the niece was made and after many months the benefit was awarded as from 20th January 1998. In November 1998 the claimant received a giro payment which included £387.30 arrears of child benefit for the period 20th January 1998 to 9th November 1998. The local Post Office would not cash the giro as it was for too large an amount, and the claimant was advised to take it to her local office of the Benefits Agency or DSS to have it divided into giros for smaller amounts. On 9th November 1998 she went to the local office with the giro, Home Office documentation and her income support order book. She showed all of these documents to the officer who saw her. The officer retained the giro, issuing a receipt for it. In due course replacement giro orders were issued and cashed. The claimant continued to receive child benefit in respect of her niece throughout the period from 10th November 1998 to 3rd May 1999. Continued payments of income support were made without taking account of the fact that child benefit was now being paid for 6 children and not for 5 children. The claimant continued to believe that she was receiving her correct entitlement of both benefits.

5. In May 1999 the local office was informed of the true position by the Child Benefit Centre. On 12th May 1999 and 15th June 1999 the adjudication officer decided that entitlement to income support should be reduced by the amount of child benefit and that there had been 2 recoverable overpayments. The first was the amount of £387.30 to which I have referred above. This was said to be recoverable under the provisions of section 74 of the Social Security Administration Act 1992 (“the section 74 decision”). The other was the amount of income support paid from 10th November 1998 to 3rd May 1999. This was said to be recoverable under the provisions of section 71 of the Social Security Administration Act 1992 (“the section 71 decision”). 

6. In August 1999 an appropriately authorised officer, acting on behalf of the Secretary of State, decided that it was not appropriate to waive recovery of the overpaid amounts. A different officer confirmed this decision in September 1999 after the matter was raised by the claimant’s MP.

7. On 22nd September 1999 the claimant appealed to the tribunal against the decisions of the adjudication officer. The tribunal considered the appeals on 6th March 2000. Quite rightly, it confirmed the decision that entitlement to income support should be reduced by the amount of child benefit. That matter is no longer disputed. Again quite rightly, the tribunal allowed the appeal against the section 71 decision and decided that any overpayment was not recoverable under the provisions of section 71. That decision is not challenged before me. After a lengthy and impressive legal analysis the tribunal confirmed the section 74 decision. However, it recommended the Secretary of State not to enforce recovery, expressing the view that in public law recovery was unenforceable because there had been a breach of legitimate expectation.
 
8. On 27th November 2000 the District Chairman of the tribunal refused leave to appeal to the Social Security Commissioner against the section 74 decision of the tribunal. However, leave to appeal was granted by Mr Commissioner Bano on 20th February 2001. The Secretary of State (who has taken over the conduct of this matter from the adjudication officer) opposes the appeal and supports the decision of the tribunal. The appeal was regarded as ready for decision in May 2001, but it was not referred to me until 6th December 2001, when I directed an oral hearing because it raises an important issue of potentially far reaching application.

9. So far as is relevant section 74 of the Social Security Administration Act 1992 provides as follows:

74(1) Where— 

(a)	a payment by way of prescribed income is made after the date which is the prescribed date in relation to the payment; and

(b)	it is determined that an amount which has been paid by way of income support would not have been paid if the payment had been made on the prescribed date,

the Secretary of State shall be entitled to recover that amount from the person to whom it was paid.

(2) Where— 

(a)	a prescribed payment which apart from this subsection falls to be made from public funds in the United Kingdom or under the law of any other member State is not made on or before the date which is the prescribed date in relation to the payment; and

(b)	it is determined that an amount ("the relevant amount") has been paid by way of income support that would not have been paid if the payment mentioned in paragraph (a) above had been made on the prescribed date,

then— 

(i) in the case of a payment from public funds in the United Kingdom, the authority responsible for making it may abate it by the relevant amount; and 
(ii) in the case of any other payment, the Secretary of State shall be entitled to receive the relevant amount out of the payment.

(3) … 	

(4) Where an amount could have been recovered by abatement by virtue of subsection (2) or (3) above but has not been so recovered, the Secretary of State may recover it otherwise than by way of abatement— 

(a)	in the case of an amount which could have been recovered by virtue of subsection (2) above, from the person to whom it was paid; and

(b)	in the case of an amount which could have been recovered by virtue of subsection (3) above, from the person to whom the prescribed benefit in question was paid.

10. There is no doubt that payment of child benefit is a prescribed payment and income from it is prescribed income. The prescribed date of payment is the first day of the period to which the payment relates. In this case that was 20th January 1998 but payment was not made until November 1998. The adjudication officer determined that had child benefit been paid correctly from the prescribed date, then an equivalent amount of income support would not have been paid. The correctness of that decision is not now challenged, neither is the arithmetic. That being so, and no abatement having been made from the payment of child benefit arrears, then on the face of it the Act provides no limit to the right of the Secretary of State to recover the overpayment. Section 74(1) provides that the Secretary of State “shall be entitled to recover” and section 74(4)(a) provides that the Secretary of State “may recover” the relevant amount from the claimant. Clearly there is a right of appeal against the decisions of the adjudication officer (which would have been made under section 20 of the 1992 Act), but they will nearly always relate to disputes over the accuracy of the dates and amounts. Unlike the section 71 provisions it is no condition of recoverability under section 74 that the claimant must in some way have caused the overpayment.

11. To avoid confusion I should point out that since 29th November 1999 the functions of the adjudication officer in income support have been taken over by the Secretary of State. However, that has not changed the 2 stage process for which section 74 provides. It just means that now both stages are both carried out by the Secretary of State.

12. The claimant argues that the tribunal (and the Commissioner) can interfere with the way in which the Secretary of State exercises the discretion that is conferred on him once the adjudication officer has made the initial determination. Before the tribunal this argument was based on the facts that on 9th November 1998 the claimant produced all of the information to the local office and that the Agency or Department, in full possession of all of the facts and evidence, deliberately issued further giros for the relevant amounts. This induced in the claimant a belief that she was entitled to these payments, and what administrative lawyers refer to as “a legitimate expectation” that no steps would be taken to recover the amounts again. The tribunal took the view that the doctrine of legitimate expectation could not affect the determination of the adjudication officer. That determination was based on establishing the factual history of the claim(s). I do not see that any contrary argument on this point can begin to get off the ground. The tribunal also found that the doctrine of legitimate expectation could not affect its decision because the tribunal had no power to interfere with the way in which the Secretary of State exercised the section 74 decision to effect recovery.

13. The tribunal also pointed out that although Article 13 of the European Convention on Human Rights obliged the government to provide an effective remedy for any breach of the Convention, that Article had not been incorporated as a “Convention Right” in the Human Rights Act 1998. Accordingly the tribunal could not assume jurisdiction to control the exercise of the discretion. 

14. The tribunal considered the use of the word “would” in section 74(1)(b) and section 74(2)(b). Does that require consideration of what would in fact have happened had payment of child benefit been made properly on the prescribed date? I agree, as did the tribunal, with the Commissioner in CIS/0625/1991 (*93/92) who stated that if that were so:

“ … the provision would become entirely haphazard in its operation depending as it would on determining in the last resort whether a particular clerk in a particular office in the light of whatever knowledge, experience, conscientiousness and efficiency he might be presumed to have, would or would not have taken steps to adjust the amount of income support … the liability to repay [under section 74] would depend entirely on a hypothesis as to what might have happened in circumstances which never happened at all.”

15. This approach was also approved by Mr Commissioner Goodman in CIS/12091/1996. The word “would” is to be read as meaning “would if everything were done properly at the right time and in the right way”. However, I do not think it correct to say, as do both of those Commissioners (on whom Mr Scoon relies), that recovery was intended to be automatic in section 74 cases. If recoverability has been established, then the Secretary of State has a discretion as to whether to enforce recovery. To regard recovery as automatic is to ignore nearly half a century of developments in public and administrative law. The question is whether the tribunal (or the Commissioner) can control the way in which that discretion is exercised. 

16. Before me, Mr Sklar pointed out, quite correctly, that when section 74(1) provides that the Secretary of State “shall be entitled to recover”, this includes the concept “is not obliged to recover”; when section 74(4)(a) provides that the Secretary of State “may recover”, this includes the concept “need not recover”. However, I cannot see that this leads to the conclusion that the tribunal has any control over the way in which the Secretary of State exercises his discretion.

17. Mr Sklar also argued that the return of the giros by the claimant and the actions of the officials in issuing the further giros after 9th November 1998 broke the chain of causation between the original overpayment of income support and the payment of arrears of child benefit. This does not take him very far, because section 74 applies to the new payments in their own right in the same way as it applied to the original payment of arrears.

18. Mr Sklar’s next argument drew on the analysis by Paul Stagg in his book Overpayments and Recovery of Social Security Benefits (Legal Action Group 1996 at page 207). This depends on reading section 74 together with regulation 32 of the Social Security (Claims and Payments) Regulations 1987 so that the prescribed date for the purposes of section 74(2) is the date when the claimant becomes aware of entitlement to the payments which have been delayed. I am bound to say that I do not find this argument in the least attractive. In any event, as Mr Stagg concedes, even if this approach were to prevent recoverability under section 74(2), “there appears to be no reason why the outstanding amount of benefit should not be recoverable under section 74(1).” It also seems to me that in the present case the claimant was aware that she would be entitled to the extra amount of child benefit from the moment she was advised to apply for it. What she was not aware of was the effect that it would have on her income support.

19. Before 29th November 1999 section 22 of the Social Security Administration Act 1992 provided that in relation to income support the claimant had a right of appeal to the social security appeal tribunal “where the adjudication officer has decided a claim or question”. No reference was made to a right of appeal to the tribunal against a decision of the Secretary of State. At the hearing before me Mr Scoon referred to a number of court decisions dealing with the way in which the Secretary of State and similar authorities should exercise any discretion conferred on them by statute. However, it seems to me that, at least in relation to decisions made by the Secretary of State on income support matters prior to 29th November 1999 there simply was no right of appeal to the tribunal. The appropriate legal remedy to challenge the way in which discretion had been exercised was by was of application for judicial review, not a matter over which the tribunal or the Commissioner had or has any jurisdiction. I say nothing in the present appeal about the situation since 29th November 1999, when section 17 and other relevant provisions of the 1992 Act were replaced by the Social Security Act 1998.

20. However, I do agree with the tribunal that the claimant has suffered an injustice in this case. Unfortunately I am not in a position to remedy it and, for the above reasons, this appeal by the claimant does not succeed.

H. Levenson
Commissioner

26th March 2002