PLH                                                                            Commissioner's File:  CJSA 549/03
JOBSEEKERS ACT 1995
SOCIAL SECURITY ACT 1998

APPEAL FROM DECISION OF APPEAL TRIBUNAL
ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

Claim for:  		Jobseekers Allowance
Appeal Tribunal: 		Harlow 
Tribunal Case Ref:  	U/42/133/2002/00191
Tribunal date:		13 June 2002
Reasons issued:		1 November 2002

1.	My decision is that the decision of the tribunal chairman sitting alone at Harlow on 13 June 2002 to deal with this question of the treatment of a repaid student loan for jobseeker’s allowance was technically erroneous in law in that the calculation he approved contained a counting error and thus failed to give effect to the requirements of the Jobseekers Allowance Regulations 1996 SI No.207 as amended; but unfortunately the correct application of the regulations produces very little difference in the practical effect.  I therefore formally allow the appeal, but exercise the power in section 14(8)(a) Social Security Act 1998 to substitute the decision I am satisfied the tribunal was obliged to give on the undisputed facts, which is that in calculating the claimant’s jobseekers allowance entitlement for the period 25 September 2001 to 3 January 2002 inclusive (but not after that) the sum of £41.36 per week has to be treated as included in her income attributable to the student loan payment she received in September 2001, despite the fact that she had ceased to be a student almost immediately after she started, and repaid most or all of the loan within a matter of weeks .

2.	The claimant, a single person now aged 23, had been claiming jobseeker’s allowance from May 2000 until 16 September 2001 when she started a HND course in Building Economics and Design at Anglia Polytechnic University.  She applied for and was granted a student loan and received the first instalment of this, £1,369.50, on or about 21 September 2001.  A week or so into the course she realised she had made a mistake and it was not suitable for her, and abandoned it: her last day of actual attendance was 24 September 2001.  She reclaimed jobseeker’s allowance from the following day and the question in these proceedings is whether and how the student loan payment she received has nevertheless to be reflected in the income calculation for the balance of the period to which it related, some 15 weeks of the autumn term running into the Christmas holiday.

3.	As the tribunal chairman noted, the effect of the regulations is particularly harsh in a case such as this as no allowance is made for any repayment of the loan, the regulations continuing to assume that the loan money is still there to be used for living expenses even when it is not.  The harshness is compounded in this particular case  because, as the tribunal chairman found, the claimant only repaid the loan as soon as she did as a result of advice from officials of the Employment Service (acting on behalf of the Benefits Agency but apparently unfamiliar with student claims) that she had to repay the whole of it in order to claim jobseeker’s allowance, and if she did so the allowance would be awarded for the whole period in question without reduction:  that advice being, when one looks at the actual regulations, completely and obviously wrong.

4.	The true effect of the regulations on this claimant’s case is most helpfully set out and explained in the written submission by Mr J Westerman on behalf of the Secretary of State dated 8 May 2003 at pages 59 to 62.  It depends first on regulation 136 of the jobseekers allowance regulations, which applies while the person concerned is still a student and requires any student loan to be treated as income apportioned in a set way over the period to which it relates, subject to certain deductions for books and so forth. Secondly, on paragraphs (5) and (5ZA)-(5ZB) of regulation 103, (incorrectly referred to in the original Secretary of State’s submission on which the tribunal chairman relied as “regulation 103(4)”) which apply to a person who, like this claimant, has received a student loan but ceases to be a student during the period to which it related.  These latter provisions as in force from 2 July 2001 onwards (replacing the original regulation 103(5) which was even more harsh) require broadly an apportionment of the relevant loan payments, less the annual deduction for books and travel and any amounts already apportioned under regulation 136 to weeks while still a student, to be spread over the balance of the current term or other assessment period treated as covered by the loan from the time the course is abandoned.  

5.	It is easiest to understand this in terms of actual figures, as helpfully set out in the Secretary of State’s written submission at page 61: showing how the balance of the claimant’s September 2001 loan cheque after the deductions for books and travel (£790.50), less the apportioned amounts under regulation 136 for the weeks she still counted as a student (2 weeks at £85.02), has to be treated as her income spread over the remaining period from when she abandoned the course to the end of the loan payment period (21 September 2001 to 3 January 2002: 15 weeks)  That results in a figure of £41.36 which has to be taken into account as weekly “income” of the claimant under regulation 103 for each week of claim until 3 January 2002: it is accepted that the original figure of £41.62 approved by the tribunal contained a small calculation error. 

6.	Unfortunately for the claimant that relatively minor mistake was the only respect in which the original calculation and the tribunal’s decision failed to give effect to the requirements of the regulations.  These are clearly stated and binding on the departmental decisionmakers and tribunals, however much one may dislike their effects as the tribunal chairman obviously did.  In my judgment, he had no option but to hold that as he explained in paragraph 6 of his statement of reasons at page 42,  regulation 103 provides that where a student loan is made and the person ceases to be a student prematurely, the amount of the student loan nevertheless continues to be taken into account as income over the current term or other relevant period during the academic year, and this is something that is not changed if the loan is repaid.  As the chairman said, he reached this conclusion with regret, but in my judgment he was right in law on the point of principle.

7.	I accordingly dispose of the appeal by substituting the decision set out in the first paragraph above, but in doing so I emphasise two points which I think merit the attention of the Secretary of State.  First, the harsh effect of these regulations when a student loan is repaid but the claimant is nevertheless treated as still having the money available, unlike the treatment of a repaid grant under regulation 94(2B); and second, the case for at least some ex gratia recognition of the mistakes made at the local level, if as found by the tribunal the claimant was given misleading advice by officials there and was left without money for living expenses as a result.

(Signed)

P L Howell
Commissioner
25 June 2003