DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	 For the reasons given below, this appeal is dismissed. 

2.	This is an appeal by the claimant with the leave of a tribunal chairman from the decision of the Blackpool Appeal Tribunal given on 2 May 2003 dismissing her appeal from a decision of the secretary of state issued on 30 August 2002.  That decision revised an earlier decision of an adjudication officer issued on 22 April 1999 which had reviewed the decision of an adjudication officer awarding invalid care allowance from and including 1 May 1991 and deciding for the periods from and including 9 February 1998 that the claimant was not entitled to invalid care allowance because she was gainfully employed and could not be treated as not gainfully employed.  By virtue of the revision of that decision effected on 30 August 2002 the disallowance was only from 1 February 1999.

3.	The appeal letter at pp.1-2 of the file states that it registers an appeal against a decision of 30 August 2002 to remove national insurance credits from 1st February 1999 until 11 April 1999.  It is plain from an examination of the only decision of that date on the file (file, pp.11-12) is that is does no such thing.  It simply varies the earlier decision relating to invalid care allowance.  Indeed, the question of the removal of the claimant’s national insurance credits has already been argued in CG/347/2001, before the revision of the order of 22 April 1999.   The decision of Mr. Commissioner Lloyd Davies in that case (file, pp.17-19) was that there must have been a decision withdrawing national insurance credits which was made prior to 18 October 1999 (although there must have been no copy of it on the file before him), and that in those circumstances any appeal or review of it ought to have been made in accordance with section 18 or section 19 of the Social Security Administration Act 1992 and the tribunal from which an appeal had been brought before him was wholly without jurisdiction.

4.	He further noted that it was also unclear from the papers before him that the decision disallowing national insurance credits was made by the secretary of state, as it should have been, or by an adjudication officer.  In the latter case, it would have been made without jurisdiction and there would be no valid decision disallowing those credits.

5.	There seems to have been no resolution of those problems even now, although the claimant’s representative informed the tribunal that he had been told that the decision had been made by a clerk and that after invalid care allowance had been re-instated for most of the original period it had been agreed that the question of credits was now susceptible to appeal under the 1998 legislation (file, p.21).  This does not seem to have been challenged by the representative of the secretary of state on this appeal.

6.	I am therefore prepared to decide this appeal on the basis that the secretary of state made a decision on 30 August 2002 relating to the claimant’s entitlement to credits  for the period from 1 February to 11 April 1999.  This leaves open the question, raised by Commissioner Lloyd Davies in CG/347/2001 (file, pp.17-19), whether that decision was a review of an earlier decision by the secretary of state withdrawing credits for the period from 9 February 1998 to 11 April 1999.  As he points out, if it was a review of an earlier decision by him, it should have been conducted under sections 18 and 19 of the Social Security Administration Act 1992, under which an appeal would be to the court and not to the appeal tribunal.  However, as he also points out, it was not then clear from the papers, and it is no clearer now, whether the decision disallowing national insurance credits ever was made by the secretary of state rather than by an adjudication officer who had no power to make it, and whose decision would therefore have been a nullity.

7.	In the continuing absence of any evidence that there was an earlier decision by the secretary of state, it appears to me that I should proceed on the basis that there was no such decision and that the first valid decision made was that which I am asked to assume was made on 22 August 2002.  As Commissioner Lloyd Davies points out in paragraph 4 of his decision, that decision would have had to be made under section 8(1)(c) of the Social Security Act 1998.  It would be an original decision and not a revision.  

8.	It further appears to me that this was the first decision at all in relation to the period from 1 February to 11 April 1999 whether or not credits should be awarded, so that the question which I raised in my Direction of  29 January 2004 as to the power of the secretary of state to take away credits once awarded does not arise for decision.

9.	The question therefore is whether the secretary of state ought to have awarded credits for the period in question,  which was a period when the claimant was paid invalid care allowance to which it was subsequently decided she was not entitled.  That depends upon the meaning of the words “an invalid care allowance is paid” in regulation 7A(1) of the Social Security (Credit) Regulations 1975.  This provision was originally inserted by regulation 19 of the Social Security (Invalid Care Allowance) Regulations 1976, when it provided that

“For the purposes of entitlement to any benefit by virtue of a person’s contributions he shall, subject to paragraph (2), be entitled to a Class 1 credit in respect of each week for any part of which an invalid care allowance is paid to him, or in the case of a widow, would have been so payable but for the provisions of the Social Security (Overlapping Benefits) Regulations 1975, as amended by the Social Security (Invalid Care Allowance) Regulations 1976, requiring adjustment of an invalid care allowance against widow’s benefit or benefit by virtue of section 39(4) corresponding to a widowed mother’s allowance or widow’s pension.”

10.	There have since been a number of amendments to this regulation both before and after the period of February to April 1999.  These both redefine precisely what is to be credited and provide for amended and additional cases where credits are to be given although invalid care allowance is not paid.  By August 2002 the regulation read:

“For the purpose of entitlement to any benefit by virtue of a person’s earnings or contributions [1988 amendment] he shall, subject to paragraph (2), be entitled to be credited with earnings equal to the lower earnings limit then in force, [1987 amendment] in respect of each week for any part of which an invalid care allowance is paid to him or would be paid to him but for a restriction under section 7 of the Social Security Fraud Act 2001 (loss of benefit provisions),  [2002 amendment] or in the case of a widow or widower [2000 amendment] would have been so payable but for the provisions of the Social Security (Overlapping Benefits) Regulations 1975, as amended by the Social Security (Invalid Care Allowance) Regulations 1976, requiring adjustment of an invalid care allowance against widow’s benefit, bereavement benefit [2000 amendment] or benefit by virtue of section 39(4) corresponding to  a widowed mother’s allowance or a widow’s pension.”

11.	Further amendments to the regulations, all subsequent to the introduction of  regulation 7A include regulation 7B(1) which provides for certain purposes for a person to be credited with specified earnings “in respect of each week for any part of which a disabled person’s tax credit is paid to him” and regulation 7C(1) which provides for credits in certain cases where “working families’ tax credit is paid for any week”.

12.	Regulation 2 provides that unless the context otherwise requires “credits” and “a credit” shall be construed in accordance with regulation 3.  Regulation 3(1) as originally in force, and in a modified form as in force in August 2002 provided that any contributions credited in accordance with the regulations were for very limited purposes, and where under any of the regulations a person was, apart from that paragraph, entitled to be credited with any contributions or (by 1999) earnings for a year or in respect of any week in a year, he shall be so entitled for the purposes of any benefit only if and to no greater extent than that by which his relevant earnings factor for that year falls short of the level required to make that year a reckonable year.

13.	Given the apparent increase in the claimant’s income, I am unclear whether the credits, even if the claimant were entitled to them, would benefit the claimant in the light of regulation 3(1).  Whether that is so or not, it must follow from regulation 3(1) that there will be many occasions when a claimant’s earnings rise so that the credit is of no benefit in the end.

14.	The factual situation in the present case, was summarised by Commissioner Lloyd Davies at paragraph 2 of CG/347/2001 as follows:

“The claimant, who runs a guest house in partnership, had been in receipt of invalid care allowance for a number of years.  Her self-employed earnings were reviewed by the Department annually.  In April 1999 the Department, having reviewed the claimant’s accounts for the accounting year ending 31 January 1999, decided that her earnings for that year exceeded £50 per week that she was accordingly gainfully employed and hence not entitled to invalid care allowance for the period from 9 February 1998.  Although the claimant had been overpaid benefit for the period from 9 February 1998 until the date of disallowance in April 1999, no overpayment decision was made since it was accepted on behalf of the Department that the claimant could not reasonably be expected to have known what her level of profits were until the accounts for the relevant period had been prepared.”

15.	Subsequently the secretary of state decided that the claimant was indeed entitled to invalid care allowance for the period until 31 January 1999, but not after that date because of the level of earnings revealed by her accounts to 31 January 1999.

16.	In Secretary of State v. Harmon, reported as R(CS) 4/99, Millett LJ, with whom the other members of the Court of Appeal agreed, stated at p.54 of the report

“In my judgment, the primary meaning of the word “paid” is “actually paid”.  But I acknowledge that this primary meaning will readily yield to the context.”

17.	Before the tribunal, the secretary of state contended that although the wording of regulation 7A appeared equivocal yet the intention of the regulation was clarified later by “or in the case of a widow, would have been so payable” which it was said clearly indicated that it was payability which was crucial.  The tribunal recognised that the expression was ambiguous but concluded that the position of the secretary of state was to be preferred and that the award was consequent upon payability.  It found that where there had been an error then it was implausible to suppose that dependent benefits should still flow.

18.	I do not find the example of the secretary of state convincing as the provision regarding the widow is clearly concerned to confer benefits in a case where there has not only been no entitlement but also no payment.  However, there is force in the tribunal’s view that one might not expect dependent benefits to flow if a payment is wrongly made.  Against that, it may be said that over a period of time a claimant may be led to believe that credits are building up and may act on that basis, and that it would not be right, possibly after several years to take away dependent benefits in circumstances in which there is no repayment claim for the recovery of the main benefit.

19.	The secretary of state submits on this appeal that “paid” in the context means “lawfully paid”.  However, there is nothing unlawful in the payments which have been made, so I do not see how that qualification can assist him on this appeal.  Neither would “properly paid” assist him.  There was nothing improper in the payments.

20.	However, this case is to be distinguished from Secretary of State v. Harmon.  In that case income support had been awarded to the mother and the award had never been altered in any way.  The Court of Appeal held that it was not open to the father to contend that it ought never to have been awarded in order to avoid liability for child support.  In the present case, |I have held that the decision of 22 August 2002 must be regarded as the first decision on the credits question.  There is no evidence of any previous decision by the secretary of state, and, as explained by Commissioner Lloyd Davies, had there been a previous decision it would have been under section 17 of the Social Security Administration Act and any appeal would have had to be to the court.

21.	The secretary of state was therefore considering the question for the first time on 30 August 2002 in the light of the decisions of 22 April 1999 and 30 August 2002 that the claimant was not entitled to invalid care allowance from 1 February 1999.  In this context, it seems to me that it would be very strange if the secretary of state was bound to award credits which were dependent on an award of invalid care allowance when he or an adjudication officer had removed the award for the period in question.  Whatever the position when it comes to removal of credits previously awarded, in my judgment, as a result of the review or revision of the award, what the claimant had received was not a payment of invalid care allowance but a payment of money in respect of invalid care allowance for a period during which it had subsequently been decided the claimant was not entitled to that allowance.  

22.	I conclude that however the words “an invalid care allowance is paid” are to be construed in the context, for the purposes of regulation 7A, it is not paid where it has been  decided subsequent to payment that the claimant was not entitled to such an allowance for that period.  Accordingly, the secretary of state was correct not to award credits in respect of that period and the tribunal was correct to dismiss the claimant’s appeal.  I express no view as to the effect on an existing award of credits where the award of invalid care allowance is revised or superseded  

(Signed)	Michael Mark
     Deputy Commissioner

		15 April 2004