[2006] UKSSCSC CPC_4177_2005 (13 December 2006)

DECISION OF SOCIAL SECURITY COMMISSIONER

1.	My decision is that the decision of the appeal tribunal given at Manchester on 19 October 2005 is erroneous upon a point of law.  I set it aside.  I make the decision I consider appropriate.  It is that the appeal to the tribunal is disallowed.  The decision of the Secretary of State issued on 24 April 2005 is confirmed.

2.	This appeal came before me for an oral hearing at Bury Magistrate’s Court on 28 November 2006.  The claimant did not appear and was not represented.  His representatives from Salford City Council had indicated in a fax dated 23 November 2006 
that there would be no appearance for reasons set out therein, namely:

“Representation was sought from the Public Law Project, who were to apply for legal aid on behalf of the appellant.  However, following the Commissioner’s decision to decline the adjournment request, the timescales were too tight to achieve this.”

The Secretary of State was represented by Mr James, Solicitor.  In terms of regulation 24(4) of the Social Security Commissioners (Procedure) Regulations 1999, I determined to proceed with the appeal.

3.	The claimant appealed to a tribunal against the decision of the Secretary of State of 27 April 2005 which was:

“From 6 October 2003 you are not entitled to receive a guarantee credit or savings credit component of state pension credit.”  

4.	The claimant’s letter of appeal is to be found at page 2 and related to the decision in respect of the savings credit element only along with 52 weeks of arrears from the date of his application.  It is apparent from paragraph 4.1 of the summary of facts submitted to the tribunal by the Secretary of State that the claimant had made a claim for pension credit in respect of himself and his wife.  His wife, who is over the age of 65, was entitled to a severe disablement allowance.  The amount of that allowance was excluded from the calculation of qualifying income for the purposes of the savings credit.  This is because it is excluded by regulation 9 of the State Pension Credit Regulations 2002.  That regulation provides:

“9.	For the purposes of section 3 (Savings Credit), all income is to be treated as qualifying income except the following which is not to be treated as qualifying income –
….
(d)	Severe Disablement Allowance;
…”

5.	The effect of that provision in the instant case was that the claimant’s qualifying income did not exceed the savings credit threshold.  

6.	The Secretary of State submitted to the tribunal:

“I submit that [the claimant] is not entitled to receive a Savings Credit of State Pension Credit from 6.10.2003.  This is because the qualifying income of £110.73 does not exceed the Savings Credit threshold of £127.25.”

7.	On the basis that the claimant’s wife’s Severe Disablement Allowance was not qualifying income, that submission was and is not challenged.  The challenge and the basis upon which the appeal was made to the tribunal, is set out in the letter of appeal to the tribunal, where it is said:

“This situation is unlawful as it unfairly discriminates against women who continue to receive Severe Disablement Allowance after the age of 65.  Statistically many more women than men aged over 65 are in receipt of Severe Disablement Allowance and therefore its exclusion from being included as qualifying income for the purposes of Savings Credit is indirectly discriminatory and not in accordance with the principle of equal treatment as established in European Community law.  I would argue that the provisions of para 9(d) of the State Pension Credit Regulations 2002 are in conflict with Council Directive 79/7/EEC in this respect.”

8.	The claimant’s appeal to the tribunal was unsuccessful.  The basis upon which it was refused is set out in the tribunal’s statement of reasons where they said:

“Through his representative [the claimant] indicated that the decision was wrong because the provisions of regulation 9 above are in conflict with Council Directive 79/7/EEC (the Directive) which governs the equal treatment of men and women in matters of social security.  It was argued that the regulation unfairly discriminates against women who continue to receive SDA after the age of 65.  To support this argument statistics were obtained from the Department for Work and Pensions which illustrated that there were four times more women than men in receipt of SDA over the age of 65.

The tribunal did not accept the argument put forward for the following reason

The draftsmen of the State Pension Credit Act and the regulations when framing them will have been fully aware of

1.	The provisions of the Directive
2.	The fact that women are expected to live longer than men and also are more likely to have more years in poor health

They will have considered these issues and satisfied themselves that the legislation was not discriminatory and therefore did not offend against the Directive.

As a result of this the appeal failed and the decision of the decision maker confirmed.”

9.	The claimant’s grounds of appeal to the Commissioner are in the following terms:

“I believe that the appeal tribunal erred in law for the following reasons:

a)	there is no evidence to support its decision

The appeal was disallowed because the tribunal found that the draftsmen of the State Pension Credit Act and regulations when framing them would have satisfied themselves of the provisions of Council Directive 79/7/EEC, and would have drafted the legislation accordingly in a non-discriminatory fashion.  However, this explanation is not supported by any evidence whatsoever and is based entirely upon assumption.  If the decision in this case was a correct interpretation of the law, it would in effect make the provisions of Council Directive 79/7/EEC meaningless as it could equally be argued that all social security law drafted after it became binding on the UK (on 22/12/84), were drafted in a non-discriminatory way and in accordance with its provisions.

b)	The decision is perverse and not supported by the facts

The facts of the case do not support the decision reached in this case as it has been based on the pure assumption of what was in the minds of the draftsmen at the time the State Pension Credit Act was created.  No further evidence was relied upon in reaching this decision and I would therefore contend that had the tribunal acted reasonably and interpreted the law correctly, it could not have made the decision it did.

c)	There has been a breach of the rules of natural justice.

The tribunal in their full decision have stated that:

‘The draftsmen of the State Pension Credit Act and the regulations when framing them will have been fully aware of
1)	The provisions of the Directive
2)	The fact that women are expected to live longer than men and also are more likely to have more years in poor health’.

When the tribunal Chairman issued her decision she explained that it was based solely on the first point of the above.  There was no mention verbally that the decision had been reached due to the second point that has not been stated.  Furthermore there is nothing in the Record of Proceedings to suggest that the tribunal Chairman had considered this point during the course of the hearing and it was not raised at the hearing by any of the parties present.  As this line of reasoning was not addressed during the course of the hearing there was no opportunity for either myself or indeed the DWP Presenting Officer to rebut or question this assertion.  I consider this to be unfair and to breach the rules of natural justice.  Incidentally the second point that has been stated is again based upon assumption, with no evidence to support it.”

10.	The claimant’s appeal is not supported, as can be seen from the Secretary of State’s submission at pages 32 – 36.  The claimant responded to that submission with a further submission at pages 41 – 42.  

11.	As can be seen from paragraph 8, the tribunal had determined in the appeal before them that the relevant act and regulations were not discriminative and did not breach the Directive.  However, the Secretary of State in his written submission to the Commissioner submits that the State Pension Credit does not fall within the scope of EEC Directive 79/7.  In making that submission, he says:

“2.1	The claimant complains that severe disablement allowance (SDA) is listed in regulation 9 of the State Pension Credit Regulations 2002, which provides ‘for the purposes of section 3 (savings credit), all income is to be treated as qualifying income except the following which is not to be treated as qualifying income – (d) severe disablement allowance’.  The Secretary of State submits that SPC does not fall within the material scope of EC Directive 79/7.  In R v Secretary of State for Social Security ex parte Smithson [1992] ECR I-467 the European Court of Justice explained ‘in order to fall within the scope of the Directive the benefit must be directly and effectively linked to the protection against one of the risks specified in Article 3(1).’  It was held there and in C-63/91 Jackson and Cresswell v Chief Adjudication Officer [1992] ECR I-4737 (printed as Appendix to R(IS) 10/91) that neither housing benefit nor income support were within the scope of Article 3, because the benefits as whole were designed to provide protection against the risk of poverty, rather than any of the risks listed in Article 3(1)(a).

2.2	The Secretary of State submits that SPC provides protection against the same kind of risks as income support for persons over a specified age, rather than providing protection against the risks of old age, which is a relevant risk for the purposes of Article 3(1)(a).  Therefore, the question of indirect discrimination does not arise.  However, in view of the fact that the tribunal dealt with the claimant’s contention that there was unlawful indirect sex discrimination, the Secretary of State also makes the following submissions.”

12.	The claimant in his written submission does not accept what is said by the Secretary of State and submits:

“I would submit that State Pension Credit does fall within the scope of EC Directive 79/7: Article 3(1)(a) protects against the risk of old age and State Pension Credit clearly has all the characteristics of an old-age benefit and is distinct from Income Support in a number of respects.

Income Support provides a minimum level of income for all independently of any consideration relating to the existence of any of the risks listed in Article 3(1)(a) of the Directive.  State Pension Credit provides not only a minimum level of income for those over 60 years of age but it provides a benefit beyond this level for those aged 65 or over through the Savings Credit element of the benefit.  Part 3 of the explanatory notes to the State Pension Credit Act (2002) state, inter alia, that “Pension Credit comprises two elements: a guarantee credit, to ensure a minimum level of income to those aged 60 or over; a savings credit which will, from age 65, provide an additional income for pensioners who have low or modest incomes in addition to the basic state pension.”

The Savings Credit is therefore additional income for those aged 65+ and is not just targeted at those who fall below a certain income threshold.  State Pension Credit cannot therefore be categorised as purely a benefit to provide protection against the risk of poverty.

In Hockenjos (2001) the Court of Appeal found that income based Jobseekers Allowance fell within the scope of Article 3(1)(a).  The court found that although that benefit incorporated many of the features of Income Support – as Guarantee Pension Credit does – this was irrelevant in determining a direct and effective link with the risks covered by Article 3(1)(a).

I would further submit that State Pension Credit would fall within the scope of Article 3(1)(b) as the explanatory notes to the State Pension Credit Act clearly state that savings credit will from age 65 ‘ … provide an additional income ..  to the basic state pension’.  The intention of the Act therefore is to supplement the basic state pension.  The basic state pension is clearly within the scope of Article 3(1)(a) and in addition to being a statutory scheme in its own right, State Pension Credit could fall within the scope of Article 3(1)(b).

13.	If the Secretary of State is correct in his submission, then the Directive does not apply and, if that is the case, then the argument advanced to the tribunal is wholly misconceived.  The effect of that would be that the tribunal’s decision would have erred further and more fundamentally in law in respect that it had determined the appeal on an issue which never properly arose.  

14.	In the event, I am not persuaded to accept the Secretary of State’s submission that the savings credit is related to poverty rather than the risks identified in Article 3(1)(a) of the directive, namely: sickness, invalidity, old age, accidents at work, occupational diseases and unemployment.  

15.	Mr James explained to me that the basic contributory pension does not meet the level for income support.  The guaranteed credit is designed to procure a minimum level of income for those over 60.  The savings credit is intended to give benefit to those who save.  Thus, for the purposes of the scheme, the calculation of qualifying income would include income from occupational pension schemes.  However, severe disablement allowance, for example, does not constitute savings and is excluded as qualifying income.  I accept what he says in that regard.  In these circumstances, it seems to me that the Directive is engaged.  Savings credit is designed to avoid what is colloquially called “the poverty trap”.  That is to say, for the purpose of personal financial advantage, there is no point in saving, as saving would not make a claimant any better off.  Thus, the inference that I draw is that savings credit is designed to protect against risks in old age rather than poverty.   Different considerations would apply to the guaranteed credit.

16.	Having reached that conclusion, which results in the Directive being engaged, I am satisfied that there is substance in the appeal.  The views of the Parliamentary draftsmen of the State Pension Credit Regulations 2002 about the effect of the Act and regulations are not the basis upon which a decision as to whether there is conflict with the Directive is to be made.  In these circumstances, it appears to me that, as the tribunal decided the appeal before them on these grounds, their decision is erroneous in law and must be set aside.  

17.	However, in respect of the merits of the propositions put by the claimant in the grounds of appeal, I have reached the conclusion that the appeal is misconceived.  Whether the claimant for savings credit is a man or a woman, what is or is not qualifying income is exactly the same.  Thus, for any claimant, severe disablement allowance would be excluded.  As I indicated above, the income to be included in the calculation of qualifying income was designed to encourage saving.  What was excluded from the definition were social security benefits and other income which did not have the nature of savings or other income derived from savings, namely working tax credit, incapacity benefit, contribution based jobseeker’s allowance, severe disablement allowance, maternity allowance and maintenance payments.  I consider that to examine each of the categories of excluded income to determine whether men or women are likely as a class to obtain, on a statistical basis related to age expectancy, more or less advantage than the other, is not the way to approach the question as to whether the regulations offend against Article 4 of the Directive.  What is at issue is whether a claimant is treated differently from the opposite sex when making a claim for savings credit.

18.	Having taken the view I have, I consider the appropriate course is for me to make the decision I consider appropriate, which is set out in paragraph 1.

19.	The appeal succeeds but that success is of no benefit to the claimant.

					(signed)
					D J MAY QC
					Commissioner
					Date:  13 December 2006