Payment of ESA IB when partner gets ESA CB

Hi looking for some help.  i have a client who is in receipt of ESA contribution based topped with with income based.

He claims for his wife who is also in receipt of ESA contribution based.  His wife also has an occputaional pension.  As a result her ESA has been reduced accordingly.  However, they have taken wife’s occupational pension into account again in full for income based which husband claims.  They have therefore reduced beenfit twice.  Wrote to ESA asking for calculation to be looked as as occ pension has been deducted twice.  Received response stating basically this is how it is calculated. 

lodging a reconsideration - anyone had any issues with this?

Had they not taken it into account against the CESA claim the additional CESA would have reflected as income against the IRESA claim anyway so it’s much of a muchness. No doubt they’re getting their maximum appropriate amount ( is that what they call it for ESA?).

I think it’s very unfair because it effectively deducts twice the 50% of the surplus income over £85.  But I think it’s right.  I could be wrong mind (I ran a scenario through QBC and it only deducts the above amount once). 

Eg, Mrs has a pension of £145 plus £100.15 CESA (ie 71.70 + 28.45 WRAC).  Let’s assume she pays no tax on the pension.  Mr and Mrs both get DLA MRC so double SDP applies to their ESA applicable amount.  Mr is in the support group and claims IRESA in order to top up his wife’s CESA. 

Applicable amount of: 112.55 (couple personal allowance) + 34.80 (SG) + 119 (SDP x2) + 21.75 (EDP) = 288.10

Wife’s CESA of £100.15 above is reduced by 50% of the amount of her pension that exceeds £85.  In other words £60 (ie 145 - 85) x 50% = £30.  So she receives £70.15 p/w CESA (ie 100.15 - 30).

Husband IRESA is worked out as follows: 288.10 (applicable amount above) - £145 (wife’s pension) - £100.15 (wife’s CESA and this is your gripe that it’s 100.15 rather than 70.15; QBC deducts the 70.15).  It’s unfair because if the wife gave up her CESA then they’d be better off (and there might be a deprivation issue in that event).

Still my reading of the WRA 2007 (para 6 of Sch 1 which treats wife’s income as the claimant’s and Section 4 which works out the amount of his IRESA) is that the DWP are correct.  Reg 104(1) ESA treats her income as £100.15 not £70.15. 

Even if she swapped the claim so that she became the IRESA claimant (not a good idea anyway given resultant loss of SG and EDP) I don’t think it would make a difference.  Her IRESA would then be determined by section 6 rather than section 4 WRA but the result would be the same.  Section 6 works out IRESA as the difference between applicable amount and claimant’s income rather than claimant’s personal rate. 

Proviso here: I could be wrong.  I’ve not spent much time looking at this and QBC produces a different result. 

A separate point: had there been tax deducted from her pension, QBC would deduct the 50% from the gross pension (ie, £145 in above example) rather than the pension net of tax.  That was correct in IB (though it took caselaw to confirm it) but I think it might be different for ESA as Reg 104, via its reference to Schedule 8, disregards tax on income other than earnings (eg, on pension income).  Again, could be wrong.

Obviously, the problem will only last a year if wife is in the WRAG as her CESA will be time-limited anyway so that it drops out of the calcs.

Edit: Actually, is that unfair?  Were the DWP not to count the full 100.15 as income for IRESA then it would, effectively, negate the deduction in her CESA, that is, it would give her back in her husband’ IRESA what she lost from her CESA due to her pension.

For ESA(IR) they should count the occupational pension in full but, as Dan says, any effect that occupational pension has on the ESA(C) should make no difference, as far as I can see as they should only take the actual, reduced, amount ESA(C) into account.

I don’t read reg 104 as meaning that the amount of ESA(C) which the partner might have received [if they didn’t have the pension] forms part of the couples “gross income”.

See this case (about CTB/IB but the wording of the relevant regs is the same) ...

http://www.rightsnet.org.uk/briefcase/summary/Whether-gross-income-should-be-calculated-on-basis-of-amount-of-incapacity-

...  it was held that that only the reduced amount of IB should have been taken into account as income (not a “notional” unreduced amount).

( Although the focus in that case was on showing the LA wrong in arguing that the occupational pension reduction was “a deduction by way of recovery” the question could not have arisen if the un-reduced amount really did form part of the gross income for CTB reg 30(1) : the same applies to ESA Reg 104(1) )

Thanks for pointing out that caselaw Jon.

I wasn’t suggesting that the occ pension shouldn’t be counted in full (in fact I’d included it in full in my example calcs).

I’m still not sure that R(H)2/09 will be good authority for ESA but it’s certainly something I’ll quote if necessary.  Problem with it in my view is that the decision was uncontested by the parties.  I accept your point that whilst the judgment appears only to decide the interpretation of “any deduction by way of recovery” it’s implicit that “gross income” was considered to represent, effectively, the IB net of the reduction.  It was accepted that holding otherwise would produce consequences that could not have been intended.  However, that didn’t address the issue that regulations like Reg 104 ESA are, by their very nature, potentially unfair in that their starting point is to treat all income as “gross income” regardless of the reality, unless the Reg provides otherwise. So, whilst Reg 104, via Sch 8, disregards any tax paid on income when calculating that income, there is no equivalent provision disregarding the amount of ESA reduced by the pension, eg the £30 in my earlier example.

If I were the claimant’s rep here I’d be submitting that Reg 104 should not be treated as setting up an exhaustive list of income disregards.  Income if given it’s ordinary meaning arguably means money you have coming in.  I suspect if R(H)2/09 had been contested then that, ultimately, would have been the deputy Commissioner’s reason for allowing the appeal. 

The position in ESA is not helped by the fact that the net amount of CESA, ie after any reduction for a pension has been applied, is specifically referred to as the “personal rate” - see section 6(8) WRA, whereas IRESA is, as we know, calculated by subtracting the claimant’s “income” rather than his/her “personal rate” from their applicable amount.  That could suggest that the intention was for the gross CESA to count as income, otherwise why not provide that it’s the applicable amount minus the personal rate that determines the amount of IRESA.  Still, I accept that “income” as it appears in sections 4 and 6 could still be construed as meaning the personal rate where the circumstances dictated.

Thanks again Jon for providing R(H)2/09.  I’d either totally forgotten about it or never read it.

Looked at this again.

Whilst Reg 104 ESA Regs refers to the gross amount of income, that is only “for the purpose of Reg 91”.  Reg 91 (and related Reg 94) refer to “payment” of income other than earnings, eg CESA.  That would suggest that it’s the net amount of CESA that applies as that is what, as a matter of ordinary language, you are paid.  However, R(IB)3/05, affirming R(U) 8/83, suggests that terms such as “payment” and “payable” are references, unless there’s specific provision to the contrary, to the gross amount of payment.  That case is admittedly about pension payment however the DWP may argue that it’s principle applies equally to gross amounts of CESA, given there’s no specific income disregard authorised by Reg 104 of the amount of CESA that’s abated, ie the £30 in the earlier example.  You’d obviously counter that relying on R(H)2/09 as Jon pointed out.

But if the DWP were right and gross CESA, ie £100.15 p/w in the earlier example, is the amount of CESA which, alongside the amount of the pension itself, is fed into section 4 WRA as “income” then it would create the following anomaly that I think cannot have been intended by Parliament (which suggests DWP cannot be right).

If in the present case, Mrs was to claim IRESA for herself and Mr, thereby topping up her own CESA (ie instead of letting Mr claim IRESA for both of them), then her CESA would not be treated as “income” at all for the purpose of section 6 WRA.  That’s because section 6 uses “income” to calculate the amounts of CESA and IRESA.  In other words, CESA and IRESA are the product of section 6’s calculations not part of the calculations themselves.  If that were not the case and CESA did represent “income” then section 6(2) would never apply.  The result in the earlier example is that, if Mrs decided to claim IRESA herself then only £70.15 would be allocated to CESA under section 6(5)(a) and the rest to IRESA.  The effect would be to reduce CESA by £30 not IRESA as well.

The anomaly would be that the same CESA counts as £100.15 under section 4 WRA but only as £70.15 under section 6. 

Ironically, Regs 91 & 94 above also determine the weekly amount of the pension, 50% of whose excess over £85 is used to work out the abatement of CESA.  Reg 91(10) provides that income other than earnings, ie including a pension payment, is calculated using Chapter 6, under which Reg 104 falls.  However, Reg 104 now clearly provides that it’s the amount of the pension net of any income tax rather than gross pension that is relevant.  One of the express purposes of Reg 94 is to calculate the amount of the weekly pension from which the £85 threshold may be deducted. And Reg 94 is also subject to Reg 104. Consequently, it seems clear that the weekly pension for these purposes is now the amount net of tax.  That is not a reversal of the principle of R(IB)3/05 given that that case held that the amount was gross unless there was express provision to the contrary (which Reg 104 now appears to represent), but it’s still a welcome reversal, for ESA, of the outcome of R(IB)3/05.

It’s ironic because the principle of R(IB)3/05 that terms such as “payment made” and “payable” refer to the gross amount of payment could still be used by the DWP, as stated above, to argue that an IRESA claimant’s partner’s CESA should be counted gross under section 4, when its application to the same facts in ESA as in R(IB)3/05 produces a reversal of outcome.

Thanks for all your posts on this thread, it pointed me to the right regulations regarding gross/net pension income for CB ESA purposes.

I have just returned from a Tribunal that took the view that the DWP should take into account pension income net of income tax paid when calculating CB ESA entitlement.

I note that the current CPAG handbook at p623 refers to gross pension payments which is where my confusion initially arose!  Now I know :)