[2007] UKSSCSC CIS_1068_2006 (14 March 2007)

CIS/1068/2006

DECISION OF THE SOCIAL SECURITY COMMISSIONER
  
1.	This is an appeal by the Secretary of State, brought with my permission, against a decision of the Stoke-on-Trent Appeal Tribunal made on 5 January 2006. For the reasons set out below that decision was in my judgment erroneous in law and I set it aside. In exercise of the power in s.14(8)(a)(ii) of the Social Security Act 1998 I make the findings of fact set out below and substitute for the decision of the Tribunal a decision dismissing the Claimant’s appeal against the decision of the Secretary of State made on 7 October 2005. 

The facts
2.	The Claimant is a man now aged 34 who has been in receipt of income support since 1993 on the ground that he cares for his wife, Nicola, who is severely disabled. In August 2004 the local authority carried out an assessment of the needs of the Claimant’s wife for community care services. That assessment took into account of course the fact that the Claimant’s wife was receiving substantial care and support from the Claimant. It was noted in the assessment that the Claimant’s wife wished to receive “direct payments” “to enable her to remain independent and to have the flexibility that direct payments afford.” The recommendation in the assessment was as follows:

“Nicola in my view, meets the Fair Access to Care Services Criteria and as a result is eligible for direct payments via Staffs County Council Social Services Department. [The Claimant] needs to be acknowledged as a carer to Nicola and in this respect time needs to be allowed on the care plan to enable him to have a break from his role. However, it is important to distinguish that this break should be directly linked to the assessment with regard to Nicola and not to the general running of the home and all of the demands that this brings. Nicola and [the Claimant] are unlikely to accept another person providing support to Nicola which would relieve [the Claimant]. They would wish [the Claimant] to continue as carer. Therefore, this issue needs to be considered in light of the Direct Payments Guidelines.” 

3.	On 21 September 2004 a community care plan was drawn up by the social services department of the local authority. This was signed by Nicola and by the Claimant (p.28). It provided that care was to be provided “via direct payments – husband to provide support”. The result of the care plan was that direct payments to Nicola totalling £73.50 per week were made by the local authority, to enable her to purchase 10½ hours’ care a week. 

4.	On 23 June 2005 information was received by the DWP from the General Matching Service that the Claimant received payments of £73.50 a week from an entity described as Rowan House. On 15 September 2005 an officer employed by the DWP telephoned the Rowan Organisation and received the following information from the person who answered: 

“She states that they [i.e. the Rowan Organisation] do not make the payments – these are local authority payments. They just provide a payroll service for the local authority. The customer completes a form re the hours of care that she needs and they then produce a wage slip for the person that the customer employs – telling her how much she should be paying.” 

5.	The General Matching Service is (see p.40) a system which matches details held by the income support computer system with information held by HM Revenue and Customs. The Revenue appears to have been informed from some source that the Claimant was in receipt of £73.50 per week from “Rowan House”.  

6.	On 8 November 2005 the local authority wrote to the Appeals Service at the Claimant’s request in order to give further information as to the position. Their letter included the following: 

“I can confirm that we as a Department have been providing Direct Payments to Nicola since 19 July 2004 and within the Direct Payments Agreement she has been employing [the Claimant] as her carer ….. [The Council] provides the payments directly to the Service User who in this case was identified as Nicola and where relevant a decision is made regarding who should be the Personal Assistant/Carer and in this particular case [the Claimant] was identified as this person.”

7.	There may, I think, have been some contradiction in the thinking of the local authority leading up to the authorisation of the direct payments. There are references to the rationale for the payments being to enable Nicola to purchase “respite care” (i.e to give the Claimant a break from his caring role) (see the citation in para. 2 above from the community care assessment, and the reference in the community care plan (p.28) to “respite care”). At the same time, however, the local authority was clearly aware that care would not be purchased from a third party, and that the Claimant would provide all the care.  

8.	On 7 October 2005 a decision was made superseding and reducing the Claimant’s income support award with effect from 30 September 2005 on the ground that the Claimant was in receipt of additional income – i.e. the payments of £73.50 per week made to him by Nicola in respect of care. The first £20 per week of that fell to be disregarded under para. 6A of Schedule 8 to the Income Support (General) Regulations 1987 (“the 1987 Regulations”), and the net result was therefore to reduce the Claimant’s income support award by £53.50 per week. 

9.	The Claimant appealed on the ground that under para. 58 of Schedule 9 to the 1987 Regulations there is to be disregarded in calculating income other than earnings “any payment made under the Community Care (Direct Payments) Act 1996 ……”  

The Tribunal’s decision
10.	The submission to the Tribunal on behalf of the Secretary of State was that the payments made to the Claimant by Nicola were not payments made under the 1996 Act, but rather were simply payments made in consideration of the care provided by the Claimant, and therefore fell to be treated as earnings in the ordinary way. The Tribunal rejected that submission and allowed the appeal. Its Decision Notice reads as follows:

“It is accepted that payments under the Community Care (Direct Payments) Act 1996 are not taken into account in the calculation of a customer’s income. The facts in this case are not in dispute. [Nicola] receives Community Care payments from Staffordshire County Council. The payments are made to her. There are no other payments from sources outside the family in respect of Community Care. For some inexplicable reason [Nicola] is provided with a payslip for her husband from the Rowan Organisation for the same amount as the Community Care payment. It is not earnings. It is not a job which [the Claimant] does. He cares for his wife and payments are made so that he can have a break from that care. It is axiomatic that the situation should be taken as a whole and not split up so that it gives a different and incorrect picture. The Council may use Rowan Organisation for its own purposes but that does not affect the position of the money in the hands of [the Claimant and Nicola]. It is not earnings derived from employment as an employed earner.”

11.	The Tribunal’s Statement of Reasons was very brief. The essence of the Tribunal’s reasoning was contained in the paragraphs 5 and 6:

“5.	There has effectively been no change in the Appellant’s circumstances by reason of the change in the method of payment of the Community Care direct payments. The Rowan Organisation appears to have been involved as a third party. There is little information about them in the case papers. 

6.	It is suggested that the Appellant is an employed earner. The situation should be looked at in the round. He is doing exactly what he has done before. He is not employed by his wife. The Respondent has not shown that they have an employer/employee relationship.” 

12.	The reference in the Statement of Reasons to the situation as it previously was is explained by the fact that it was asserted by the Claimant, in his grounds of appeal to the Tribunal, that before moving to the area of Staffordshire County Council the Claimant and Nicola lived in an area administered by a different authority, who made payments directly to the Claimant, which were not included in his income for income support purposes. 

Analysis and conclusions
13.	In my judgment, for the reasons set out below, the Tribunal’s conclusion that the Claimant was not in receipt of “earnings” from Nicola was not one to which it could on the evidence before it permissibly have come. Its decision was for that reason erroneous in law and must be set aside. It is appropriate for me to substitute my own decision for that of the Tribunal, on the basis of the findings of fact set out in this decision. 

14.	There is no doubt that, in determining Nicola’s income for income support purposes, the direct payments received by her from the local authority fell to be disregarded. By regulation 40(1) and (2) of the Income Support (General) Regulations 1987:

(1)	For the purposes of regulation 29 (calculation of income other than earnings) the income of a claimant which does not consist of earnings to be taken into account, shall …..be his gross income ……….

(2)	There shall be disregarded from the calculation of a claimant’s gross income under paragraph (1), any sum, where applicable, specified in Schedule 9.” 

15.	As I have said, Schedule 9 (headed “sums to be disregarded in the calculation of income other than earnings”) provides in para. 58 for the disregard of “any payment made under the Community Care (Direct Payments) Act 1996 ……” (The statutory authority for the making of direct payments is in fact now in s.57 of the Health and Social Care Act 2001, and the reference in para. 58 of Schedule 9 (and indeed in the Tribunal’s decision) to the 1996 Act  must be read as a reference to the 2001 Act). 

16.	In the light of the submissions made in this appeal, two questions in my view fall for decision.

(1)	Did Nicola engage the Claimant to provide care services in exchange for payment?
17.	I find, on the basis of the evidence referred to above, that £73.50 per week was paid to Nicola by the local authority to enable her to purchase care services which were to be provided by the Claimant, and that the Rowan Organisation, with the knowledge of Nicola and the Claimant, prepared wage slips showing the amount which she should pay to the Claimant. The Claimant did provide the services in question. Whether Nicola formally actually made the payments to the Claimant does not appear from the papers, although I suspect that she did not. I do not think that it matters for the purposes of this appeal. I do note, however, that the Claimant said in his grounds of appeal to the Tribunal that they were told by the local authority that “they [i.e. the local authority] would pay it into Nicola’s Direct payments bank account and she would then have to write me a cheque each week.” 

18.	In my judgment the only conclusion which it is possible to reach, on the above findings, is that Nicola did engage the Claimant to provide care services for her in consideration of payment equal to the amount of the direct payments. 

19.	Section 57(1) of the 2001 Act enables the making of regulations requiring or authorising the responsible authority, in the case of a person of a prescribed description, to make, with that person’s consent “such payments to him as they may determine ……in respect of his securing the provision of the service mentioned in [subsection (2)(a) or (b)]”. 

20.	The relevant regulations have at all times material to this case laboured under the title of The Community Care, Services for Carers and Children’s Services (Direct Payments) (England) Regulations 2003 (“the 2003 Regulations”). By reg. 4(1) of the 2003 Regulations, if specified conditions are satisfied, a responsible authority “must make in respect of a prescribed person ……..such payments (direct payments) as are determined in accordance with regulation 5 in respect of his securing the provision of a relevant service.” By regulation 4(2) a “relevant service” includes a community care service within the meaning of section 46 of the National Health Service and Community Care Act 1990. 

21.	By regulation 6(1) “a direct payment shall be subject to the condition that the service in respect of which it is made shall not be secured from” [a specified list of persons, which includes the prescribed person’s spouse] unless [in the case of a spouse] “the responsible authority is satisfied that securing the service from such a person is necessary to meet satisfactorily the prescribed person’s need for that service.” 

22.	By regulation 9(1):

“Where a responsible authority which has made a direct payment is satisfied, in relation to the whole or part of the payment – 

(a)	that it has not been used to secure the provision of the service to which it relates; 

(b)	…………………………………………..

they may require the payment or, as the case may be, the part of the payment to be repaid.” 

23.	I refer to the above provisions simply for the purpose of demonstrating that the purpose of a direct payment is to enable the recipient to secure the provision of care services, and that it is expressly provided that if the responsible authority is satisfied that the payment has not been used to secure the provision of the relevant care service it can be recovered by the authority. 

24.	When one takes into account in addition the fact that the Rowan Organisation, with the knowledge of Nicola and the Claimant, prepared wage slips showing the amount paid to the Claimant, as the person who was to provide the care services which the direct payments  were intended to purchase, the irresistible inference is in my judgment that Nicola must be taken to have engaged the Claimant to provide the care services in consideration of payment equal to the amount of the direct payments. It is not in my judgment possible to conclude that Nicola simply retained the direct payments and did not utilise them to purchase care services provided by the Claimant (i.e. to regard the Claimant as having provided all his care voluntarily and without payment). So to conclude would amount to saying that Nicola did not use the direct payments for the purpose for which they were paid to her, and would fly in the face of the evidence emanating from the Rowan Organisation. (It would further mean that the direct payments would be recoverable by the local authority). 

25.	It matters not whether the Claimant is regarded as an “employed earner” (within regulation 29 of the 1987 Regulations) or as a “self-employed earner” (within regulation 30). In either case the sums paid to the Claimant are in my judgment “earnings” which, subject to the argument considered under (2) below, fall to be taken into account in calculating the amount of his income support entitlement. Even if the Tribunal was technically correct in saying that the Claimant and Nicola did not have an “employer/employee relationship”, the Claimant was in my judgment certainly engaged by Nicola to provide care services for reward. 

(2) The effect of s.136(1) of the Social Security Contributions and Benefits Act 1992
26.	Section 136(1) is as follows:

“Where a person claiming an income-related benefit is a member of a family, the income and capital of any member of that family shall, except in prescribed circumstances, be treated as the income and capital of that person.”

27.	The argument presented on behalf of the Claimant in response to this appeal is that the effect of s.136(1) is that the direct payments received by Nicola were treated as received by the Claimant in the form of direct payments (and were therefore required to be disregarded under para. 58 of Schedule 9), so that there is no scope for treating that income as having then been paid to him a second time, but this time by Nicola in the form of “earnings”. 

28.	If there had been no exemption for direct payments in para. 58 of Schedule 9 it would very arguably have been wrong to treat the Claimant, for income support purposes, as having been in receipt of both (a) the direct payments and (b) the sums paid by Nicola to the Claimant in order to purchase the care services. To do so would have involved an unfair element of double-counting. 

29.	In my judgment, however, the short answer to the Claimant’s contention is to be found in regulation 23(1) of the 1987 Regulations, which provides that “the income and capital of a claimant’s partner which by virtue of section 136(1) …. is to be treated as income and capital of the claimant, shall be calculated in accordance with the following provisions of this Part in like manner as for the claimant ……….”

30.	Regulation 40 (which imports Schedule 9) is in the same Part of the 1987 Regulations as regulation 23. The effect of reg. 23 is therefore that the direct payments were to be disregarded in computing Nicola’s income, and were therefore not to be treated as included in the Claimant’s income under s.136(1). There is therefore in my judgment no obstacle, arising from s.136(1), in including in the Claimant’s income the payments which must be taken to have been made by Nicola to him. 

31.	It cannot be correct to say that s.136(1) necessarily prevents payments made by one spouse to the other (where they are living together) being treated as part of the latter’s income for income support purposes. If, for example, a self-employed man employs his wife in the business, the latter’s salary would in principle be taken into account in determining his income for income support purposes. 

32.	The conclusion which I have reached does not seem to me to conflict with the policy which is likely to underly the exemption for direct payments in para. 58 of Schedule 9. That policy is presumably that direct payments are intended to be spent in purchasing from a third party care services which would otherwise have had to be provided by the local authority, and therefore do not represent a real net increase in the family’s income. But if (as here) the money is not spent in purchasing care from a third party, there is a real increase in the family’s net income. 

33.	I therefore set aside the Tribunal’s decision and substitute the decision set out in paragraph 1 above. 

(signed on the original)	Charles Turnbull
Commissioner
14 March 2007