IR ESA - disregarded capital

Cl has been on IRESA in the Support Group for many years. After a Tribunal about three years ago they had a large payment of PIPS and SDP arrears.

A year after they had the payment they rang ESA to tell them that they still had c.£12k capital. They also called Housing Benefit.
ESA seem to have taken the view that this money is arrears owed because of an official error and , despite a second call about ten days later, do not seem to have reduced the IRESA to take account of the tariff income. HB simply said that if the cl was getting IR ESA then they would pay HB.

It is the ‘official error’ part that worries me. The cl’s appeal was unremarkable, they just did not score enough points, and it looks as if PIPS revised the decision prior to the hearing.

Having looked at the relevant definition in Reg 1 of the D&A Regs I am far from sure that arrears from winning an appeal would be ignored for more than a year as they were paid because of an an ‘official error’ by PIPS.

If ESA have done a suitable investigation and satisfied themselves that all is OK then there is nothing we need do . My concern is that the client is due to apply for PC next year and will have to declare their capital to do so, which might lead to ESA realising they have made an error ( if they have in fact done so)  and raising an overpayment, possibly followed by HB.

Any o/p is eminently challengeable, the cl discharged their duty to report a change more that once and has notes of the date , time and who they spoke to. As IR ESA is a   legacy benefit I don’t think that there is any power to recover if the cl has done their bit in in good time but I would be interested to hear any observations about the ‘official error’ status of the arrears.

I don’t think there is anything to add to your analysis. Appeals to the FtT are not limited to errors of law, so success in an appeal does not necessarily infer that the original decision involved official error or error of law.

There may be circumstances where a successful FtT appeal does demonstrate error of law (e.g. if the DWP had misapplied a descriptor) but I don’t see that this would be the general case.

If your client has indeed reported what they need to report, then there could be no recoverable overpayment. It’s not their job to correct the DWP’s decision making.

HB is not affected by any of this because they are passported by the irESA. Any tariff income would apply to the ESA.

I would gently suggest that your client spends £2k or so before they claim PC and then there won’t be any capital related issues.

I think it might actually be possible to argue that the fact these were arrears issued in consequence of a tribunal result then they are paid out on the basis of official error.

Elliot is completely right to say that an appeal to an FTT is by way of complete rehearing and one would think therefore mere fact an FTT has overturned a previous decision does not establish that previous decision was “in error” (in the sense of legally wrong / error of law).

However, a couple of decisions (I only recently came across - thanks to Rachel Ingleby at Cit A) have held that due to the superior nature of FTT as a decision making body that will do to demonstrate the earlier decision was wrong for official error - these were overpayment cases (so the reg. 100 HB definition which uses terms “mistake” but applied to “official error” revision in a UT decision that has not received a NCN in May 2023- DS v SSWP UA-2022-000727-CA, 05/05/2023). Before seeing those I would have agreed entirely with Elliot.

Here you go:

CH/943/2003

GH v Scarborough BC (HB) [2015] UKUT 197 (AAC)

Para 23 of the latter contains the full relevant passage from the former - with which UTJ Markus KC agrees entirely. The key passage in the former is:

33 The importance of giving due weight to a tribunal decision, combined with the fact that the claimant in this case in no way caused or contributed to the Revenue decision being wrong, separate this case from the issues considered by Commissioner Howell QC in CH 5485 2002 or the other cases cited to me. The first tribunal decided that the Revenue decision was wrong. The Tribunal of Commissioners in CIB 4751 2002 put renewed emphasis on the role of the appeal tribunal as a superior decision maker. Any doubts that it did not do its job properly were ended when the appeal period ran out without anyone seeking permission to appeal. At that point the weighty principles of judicial finality must come into play. The claimant cannot be expected to show all over again to the Council that the Revenue was wrong or, for it amounts in substance to the same thing, why it was wrong.

34 Had this case come forward without the first tribunal’s decision in the claimant’s favour, then I would have adopted the approach in CH 5485 2002 and I would have wanted to see why it was that Miss C contended that the Revenue decision was wrong and how she based her arguments. But she has done that. She persuaded the superior decision maker that the Revenue decision needed changing.  If there was an evidential burden on Miss C, then she discharged it in winning that appeal. And in persuading the tribunal as she did, she established that there was something clearly wrong with the Revenue’s decision. It may not have been clear before the appeal, but it is clear in the light of the tribunal decision. As compared with the situation in CH 5485 2002, things have gone a further stage here, and that stage cannot be ignored. 

35 Without the benefit of the statement of facts or reasons for the first tribunal decision I agree with the Revenue view that it is impossible to say whether the tribunal found that the Revenue decision was wrong on a factual basis, or a basis of law, or by exercise of some discretion on which the tribunal could rightly take a different view of the overall situation. So I cannot decide, or direct another tribunal how to decide, whether the Revenue decision was “right” or “wrong” in the secondary sense argued by the official parties to this case. Further, even if there were a statement of reasons, it would be wrong to use it to speculate whether the tribunal thought that the Revenue decision was an “official error” in the regulation 99 sense. That is an impossible approach in this case. Even if it were possible in other cases it is wrong. There was no appeal against the tribunal decision. It must stand, and the Revenue decision must go. To engage in speculation about the first tribunal decision is to go behind that decision in an unacceptable manner. To expect the Council to go behind it in this way offends judicial certainty and imposes a double jeopardy on the claimant. Further, if this approach allowed the Council to ignore the tribunal decision then issues of Article 6 independence and equality of arms arise.

36 The only answer to this problem consistent with the principles set out above is that the Council must accept the first tribunal decision. And it must accept that the first tribunal decision shows that the Revenue decision was an “error” or “mistake”.

So weirdly we end up perhaps with principle that arrears paid out as a result of an FTT decision are paid in order to rectify an official error and thus fall within the sch 9, para 11 of the ESA Regs 2008 disregard as the DWP are forced to accept that the FTT decision shows the decisions it overturned were wrong…..

Certainly that is what one would want to argue if DWP did say they had wrongly disregarded the arrears for too long- ie no you didn’t. Obviously if that fails then left with s.71 SSAA defense as previously discussed.

Thanks Martin for that interesting, if rather surprising, line of caselaw. That is me told.

The bonus question then is whether it matters that “it looks as if PIPS revised the decision prior to the hearing”

Oh dear - I think if DWP did revise prior to hearing then forget everything I said. The logic of the cases seems to be that it is an FTT making the decision etc. Teach me not to read the original post. Facts are sometimes a real downer.