2011 08 Welfare Benefits

Thursday 1 September 2011

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In Secretary of State for Work and Pensions v JL (DLA) [2011] UKUT 293 (AAC) a panel of three judges of the Upper Tribunal was convened to considered the payability of disability living allowance (“DLA”) for retrospective self-funders’. The claimant suffered from schizo-affective disorder. His daughters had an enduring joint power of attorney over his affairs; and one of them also acted as his appointee for social security purposes. On 1 July 1998 he had been awarded the highest rate of the care component of DLA for an indefinite period. In June 2000 he was admitted into a residential nursing home where the fees were being met by the local authority. At this time the claimant was still married and he and his wife jointly owned the matrimonial home. The value of the property was disregarded as the claimant’s wife was living there. In October 2000 however, the couple divorced and the claimant’s beneficial interest in the matrimonial home changed from being that of a joint tenant with his wife to that of a tenant in common with his former wife. However, the local authority remained unaware of this. The claimant’s former wife continued to live in the matrimonial home for some years until she died in April 2007. The family informed the local authority which undertook a new financial assessment and asked for reimbursement of the care home fees for the period from June 2000 through to 2007. In August 2007, the house was sold to realise some £116,000 for the claimant, and his daughter settled the local authority’s invoice for £90,151.72. Accordingly the claimant was retrospectively self-funding for the period from October 2000 to July 2007 and then became self-funding “in real time” with effect from July 2007. The DLA Unit then made a supersession decision, superseding the original award decision of 1 July 1998 but held that the care component was only payable with effect from July 2007. This conclusion was based on the standard rule that the effective date for a supersession decision was the date the DWP was informed of the change of circumstances. The claimant appealed. An appeal tribunal allowed the claimant’s appeal. The Secretary of State was granted permission to appeal.

The Upper Tribunal said the case-law on retrospective self-funding revealed that there were “formidable technical problems”, in dealing with this type of case because if a decision has been given that DLA is not payable because of residence in a care home funded by a local authority, reinstating payability back to the beginning of the period in question after reimbursement of the local authority on the sale of a house is problematic due to the rules on the effective date for a supersession. Those problems were exposed in the decisions of the Court of Appeal in Northern Ireland in Chief Adjudication Officer v Creighton and Others, Northern Ireland Court of Appeal, December 15, 1999, also reported as Commissioner’s Decision R1/00(AA), but they were disregarded due to a concession on behalf of the Department of Social Development.

The Secretary of State argued that the principle in Creighton was subject to the normal rules governing time limits for revisions and supersessions under the regime established by the Social Security Act 1998 and the decision should be treated as a decision made on the claimant’s request for a supersession. Accordingly this limited the date from which payment of the DLA could be reinstated to June 2007. The Panel of Judges disagreed saying that the case law showed that an acceptable technical means needed to be found to allow claimants in circumstances like those of the present case to be paid DLA for a past period once reimbursement had been made to a local authority. The Panel approved the approach in CA/3800/2006 that in appropriate cases, instead of terminating payment by way of supersession, the decision maker should simply suspend making payments of DLA and that the failure to do so was an official error that could then be corrected by revision. Applying these principles the Panel held that the Secretary of State should have declined to supersede the award decision of 1 July 1998 and instead, merely suspend payment of the care component. Since the Upper Tribunal had no power itself to suspend payment its substituted decision in relation to the whole period was to leave intact the awarding decision of 1 July 1998 with the associated right for the claimant to receive payment under the award (click here for transcript).

In Stewart v Secretary of State for Work and Pensions [2011] EWCA Civ 907 S made a claim for a funeral payment from the Social Fund to help with the cost of her son’s funeral. Her application was refused on the basis that she was not in receipt of a ‘qualifying benefit’ (i.e. a means-tested benefit such as IS, JSA, HB/CTB or WTC) as she was serving a custodial sentence at the time. The Secretary of State accepted before the Court of Appeal that the funeral payment scheme was indirectly discriminatory against prisoners, because it was more difficult for a prisoner than a non-prisoner to qualify for such a benefit however it was contended that the discrimination was justified having regard to the following principles from case-law: -

  • that the judiciary should accord the legislature or the executive a wide margin of appreciation or discretion when considering discrimination in the arena of social policy (including entitlement to state benefits) and that the discretion to be accorded to the legislature or executive is especially wide where the discrimination is indirect rather than direct;
  • that it is legitimate for the Secretary of State to apply "bright line" rules in constructing eligibility rules in the arena of social welfare; and
  • the State can also rely on additional costs and administrative inconvenience as reasons capable of justifying discrimination.

S argued that prisoners who are not in receipt of a qualifying benefit should be able to establish entitlement to a funeral payment by satisfying a separate means test. Dismissing the appeal the Court said that what was being demanded was a significant change from the simple scheme introduced by Parliament in 1987, with significant ramifications in delay and expense. This was not required by the Convention given that the Secretary of State had established a rational justification for the discriminatory treatment of most of the prisoners who sought funeral payments (click here for transcript).

For an example of another human rights challenge to the funeral payment scheme before the Upper Tribunal see RM v Secretary of State for Work and Pensions (IS) [2010] UKUT 220 (AAC) (click here for transcript).

Proposed cuts to contribution-based Employment and Support Allowance – DWP to write to claimants about the proposed change

Employment and Support Allowance helps people with an illness or disability to move into work. It has replaced Incapacity Benefit and Income Support paid because of an illness or disability.

Those claimants assessed as being in the Work-Related Activity Group receive a higher rate of benefit than those on Jobseeker’s Allowance but are required to engage with ‘Pathways to Work’.

Those claimants assessed as being in the Support Group (for those with severe disabilities) – receive a higher rate of benefit entitlement overall and exemption from mandatory involvement with Pathways to Work.

Employment and Support Allowance is paid in two forms:

  • contribution-based where the claimant has paid enough National Insurance contributions, or

  • income-related if the claimant does not have enough money or savings and has not paid enough National Insurance contributions.

There are also special arrangements which allow certain young people to qualify for contributory ESA under the ESA ‘youth’ provision, without having to satisfy the National Insurance contribution conditions which apply to all other claimants.

The Welfare Reform Bill currently going through Parliament is proposing two changes to contribution-based Employment and Support Allowance (ESA):

  • to limit the amount of time that people in the Work Related Activity Group can receive contribution-based ESA to 12 months; (Clause 51) and

  • to remove the special contribution criteria for ESA "youth" (Clause 52).

The time-limiting proposal does not affect claimants in the Support Group or those receiving income-related ESA.

According to the Government's the Impact Assessment: ‘Time limit Contributory Employment and Support Allowance to one year for those in the Work-Related Activity Group’, dated 20 April 2011, (click here) it estimates that, some 400,000 contributory ESA claimants will lose their benefit due to the time-limiting proposal in the period 2012/2013 alone. Of these 60 percent will be able to transfer over to means-tested benefit, but 40 percent will not be eligible for income-based ESA either because of savings, or because of other income in the household e.g. earnings of a partner. The Government estimates that for this group the average net loss of income will be around £50 per week:.

According to the Government’s Impact Assessment entitled ‘Abolition of concessionary Employment and Support Allowance ESA) ‘youth’ National Insurance qualification conditions’, dated 16 February 2011, (click here) the abolition of ESA ‘youth’ provisions will affect approximately 15,000 people of whom 10% will not be able to move over to means-tested benefits, mostly because of a working partner.

The proposal to time limit contributory ESA has proved to be very controversial. Many claimants feel aggrieved at this change because having worked for many years and paid their contributions, they find that the system will not help them when they need it. Welfare rights and disability organisations have criticised the proposal as further undermining the contributory principle and, coming on top of other announced benefit cuts, they argue it will increase poverty and cause financial distress for people with long-term health conditions or disabilities and their families. Macmillan Cancer Support has said that thousands of cancer patients will be affected by time limiting of contributory ESA. See Guardian Article: ‘Welfare bill 'penalises cancer patients' - Group of 30 charities has written to Iain Duncan Smith to warn reforms will plunge thousands of sick people into poverty'' (click here for link).

If the Welfare Reform Bill is passed by Parliament these changes will be introduced in Spring 2012. The DWP (Jobcentre Plus) has decided to write to all those currently receiving contribution-based ESA in the Work Related Activity Group over a four week period starting on 19 September 2011 to “to prepare them for the effect of the changes” and to advise them that their contribution-based benefit may be limited to 12 months. The DWP has given the following advice on “What will happen if a claimant’s contribution-based ESA is stopped?”

  • Claimants may be entitled to income-related ESA. They will not have to make a new claim, but we may have to ask them for more information. We will write to them before their benefit ends to tell them what to do to be considered for this.

  • If this change takes place, claimants who receive income-related ESA and contribution-based ESA will lose the contributory element. The income-related element of their ESA will be adjusted to take this into account and will continue.

For further details see the ‘Advisers and intermediaries’ section on the DWP’s website (click here for link).

Government launches consultation on housing benefit for people in supported housing

In July 2011 the government launched a consultation on housing benefit for people in supported housing: Housing Benefit Reform – Supported Housing - Proposals for change in the way Housing Benefit assists those living in supported housing within the social and Voluntary sector with their rent (Cm 8152). (click here for link)

Under the present system certain types of accommodation are exempt from the rent restrictions rules within the Housing Benefit scheme, where “care, supervision and attention is provided by, or on behalf of, the provider to residents”; para 4(10) of Schedule 3, Transitional and Savings Provisions to the Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006 (SI 2006/217) (click here for link).

In a section headed ‘The need for reform’ the Consultation Paper lists the following reasons why the current Housing Benefit system for people in supported housing “no longer works”:

  • The processing of these benefit claims has become too complicated often resulting in time consuming and intrusive investigation of a person’s care and support needs, as well as the provider’s status and how the care and support is delivered.

  • It is incompatible with other government policies as linking housing with care provision in legislation mirrors that for care homes where residents are ineligible for Housing Benefit. It does not fit with the Government’s wider objective of personal budgets, where individuals are enabled to exercise choice in commissioning their own care.

  • It can be unfair in that it does not provide extra help to those requiring personal care or support whose landlord is not one of the prescribed types, but who have additional housing costs because of their condition. These claimants currently face the same rent restriction rules as other private sector tenants in mainstream housing.

  • It creates unnecessary risk as specialist housing providers are said to be reluctant to invest in this housing sector due to uncertainty around how help with their rents will be determined. There is the potential for schemes to become financially unviable, which would leave vulnerable people without the specialist provision they need.

  • It is costly to many local authorities who often have to meet some of the Housing Benefit costs for expensive properties themselves.

The Consultation Paper states that supported housing provision for people falls into two groups or categories:

People in conventional supported housing:

  • Often provided in more communal types of accommodation, possibly short-term in nature, such as hostels, Foyers, refuges and other purpose-built sheltered housing.

  • Residents include those who are elderly, ex-homeless, fleeing domestic violence, young people, ex-offenders or substance abusers.

  • those in this group commonly need lower levels of personal care and support to help them remain in the community,

People with more specific housing needs:

  • This covers people who often need more intensive levels of personal care or support to help them live independently in the community.

  • This accommodation is often more expensive because it has been built, acquired or adapted to meet an individual’s specific housing needs.

  • those in this group who often have more specific housing needs that can not be met by mainstream or existing supported housing.

Proposals for change

For the first group it is proposed that local housing allowance be paid but with fixed additions. In order to bring simplicity to the scheme the Government would prefer this to be a flat rate amount, perhaps with some regional variation. The three options being to enhance the standard Local Housing Allowance rate by (i) a certain percentage, or (ii) by allowing an extra room or (iii) by basing it on a broad average of actual costs or instead of there just being a single rate, there could be a separate rate for different types of accommodation within this group to reflect their particular costs.

For the second group it is proposed that accommodation that is provided to meet an individual’s specific housing needs would be treated in the same way as mainstream accommodation for Housing Benefit purposes based on the Local Housing Allowance, but customers would be able to apply to a separate (supported housing) fund to meet their additional housing costs. The detail of the exact funding arrangements are yet to be determined but the decision to provide any extra help that an individual may need toward their rent would be made locally.

The Consultation Paper ends with a section entitled: A Wider Reform than these?’ in which its considers whether it would be better to consider the housing costs of those in supported housing in the broader context of how care, support and supervision is commissioned, provided and financed. After referring to the Independent Living Strategy (ILS) published in 2008 and how in recent years changes have been made to allow for Personal Budgets the Paper raised the following question:

“While our proposals assume that help with the higher costs of providing supported housing should remain within Housing Benefit, is there a case for paying standard Housing Benefit and separating out the additional help altogether and administer it locally in the same way as Personal Budgets? Funding could then be allocated and added to the ‘pot’ of money available to the individual to decide where and how it should be spent. This might reduce the number of assessments of the individual’s needs and requirements that have to be made. Or is this a step too far that might in fact jeopardise an individual’s ability to find suitable accommodation and their required care within a total budget” (para 67).

The closing date for responses is 9 October 2011.

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