Local councillor allowance and IR ESA

I wonder if anyone can give a view.

The client is a long term ESA claimant (pre 2013).  Got ESA with LCW (12 month for contrib) then moved over to ESA IR.  I dont know exactly how long he has been claiming for.

He worked as a local authority councillor and received an allowance while claiming IR ESA.

ESA 2008 regs - reg 76 basically says that the amount of the allowance that is the value of permitted work is ignored, the rest is taken into account - ‘the excess is to be deducted from the amount of a contributory allowance to which that claimant is entitled.’

Does this mean that this rule only applies if you are in receipt of Contributory ESA?  If there is anyway to argue that it applies to IR ESA claims please let me know as this could save the claimant £14k overpayment.

The reg for reference:

Deductions for councillor’s allowance
76.—(1) Where the net amount of councillor’s allowance to which a claimant is entitled in respect of any week exceeds [F116 x National Minimum Wage, subject to paragraph (3)], an amount equal to the excess is to be deducted from the amount of a contributory allowance to which that [F2claimant] is entitled in respect of that week, and only the balance remaining (if any) is to be payable.

(2) In paragraph (1) “net amount”, in relation to any councillor’s allowance to which a claimant is entitled, means the aggregate amount of the councillor’s allowance or allowances, or remuneration to which that claimant is entitled for the week in question, reduced by the amount of any payment in respect of expenses wholly, exclusively and necessarily incurred by that claimant, in that week, in the performance of the duties of a councillor.

[F3(3) Where the amount determined by the calculation in paragraph (1) would, but for this paragraph, include an amount of–

(i)less than 50p, that amount shall be rounded up to the nearest 50p; or
(ii)less than £1 but more than 50p, that amount shall be rounded up to the nearest £1.]

cESA and irESA are calculated essentially separately. Earnings are usually irrelevant for cESA, but councillors are an exception, and reg 76 deals with the position of those allowances for cESA only. As your case involves irESA only, it is irrelevant.

For irESA, councillors are office holders and therefore dealt with as employed earners. There is exceptionally detailed guidance on the treatment of their allowances at DMG 49081-49107.

I’ve had a few of these cases. The following is from a letter I sent to a senior council officer some time ago.

“A helpful starting point would be either a statement from the local authority of general principle as to precisely what councillors’ expenses are actually an imbursement for, or failing that, an individualised statement for each particular councillor.

This would be helpful because the way that the Department for Work and Pensions treats those payments is by no means straightforward.  First, however one arrives at it, councillors are treated by law as in “gainful employment” and from their remuneration there shall be excluded “any payment in respect of expenses wholly, exclusively and necessarily incurred in the performance of the employment”.

The approach to this assessment by decision makers and appeal tribunals is set out in the judgement of the Upper Tribunal of The Administrative Appeals chamber in SS v Secretary of State for Work and Pensions (JSA) [2013] UKUT 0233 (AAC) where Judge Wikely asserts the following proposition of law:

“The basic allowance and the special responsibility allowance are in
principle both capable of being “earnings” within the meaning of Reg.
98(1) of the Jobseekers Allowance Regulations 1996.

However, by Regulation 98(2)(d) “earnings” shall not include “any
payment in respect of expenses wholly, exclusively and necessarily
incurred in the performance of the duties of the employment.” If either
(i) the legislation relevant to council allowances had showed that a
basic allowance could only be paid in respect of the expenses likely to
be incurred in the course of duties as a councillor or (ii) the evidence
had showed that the basic allowance was in fact calculated by
reference only to expenses likely to be incurred, the Claimant could
have said that the whole of the basic allowance should be
disregarded, without inquiry as to the amount of expenses which he
actually incurred in performance of his duties.

However, (i) the legislation relating to the basic allowance (which is helpfully
summarised in para. 6 of CIS/77/1993 (see pages 151-2 of the case
papers)) shows that such an allowance is not by law restricted to the
amount of likely expenses and (ii) the evidence in this case shows that
the basic allowance is in fact given partly in order to compensate for a
councillor’s time, and not solely to compensate him for his expenses:
see especially pages 112 and 113 of the case papers, and also para.
7 of CIS/77/1993. The position is therefore that, in calculating the
Claimant’s earnings, there should be deducted from the basic
allowance expenses wholly, exclusively and necessarily incurred in
the performance of the Claimant’s duties which were not in fact
separately reimbursed by the Council”. *

*Note, that where a special responsibilities allowance is payable, if the expenses incurred wholly, exclusively and necessarily in the performance of her duties exceed the basic allowance “the excess can be deducted from the special responsibilities allowance”.”

Many thanks both and for such quick reply. 

Feels like a bit of an unfair knife edge.

Nevip – you are suggesting a rigorous examination of the actual expenses?  The client is quite chaotic and I think he said he had hardly any expenses in reality (most work was done via zoom).  But I can give a go..