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Forum Home  →  Discussion  →  Work capability issues and ESA  →  Thread

Credits Only ESA

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benefit_advisor
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I have a client who is part of a couple. They received IRESA with the Support Group Component until May 2013 when her husband took up full time employment. The ESA claim remained open as a credits only claim.

He wants to end his employment because it is costing to much to take work, and he has spoken to the DWP who advised that they need to complete an ESA3, report the change and then award would be re-instated. Whilst this sounds right, I have never come across it before so was looking for some confirmation that this would be the case, and pointers to where this would be in guidance/regs?

Also, if this is the correct situation, would the award automatically be re-instated at the previous rate? Again, I believe that it would be I cant find anything to back this up.

Is anybody able to help??

Tom H
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I’m assuming she no longer qualified for IRESA either because husband was working more than 24 hours p/w or his wages were above their applicable amount.  In which case ESA stops in May.  If he leaves work now she should make a new claim (normally ESA1 not ESA3).  The period of limited capability for work (pLCW) which the new claim starts does not link with the old pLCW because there’s more than 12 weeks between them (note the continued receipt of LCW credits did not prevent the old pLCW ending).  Consequently, she’ll have to serve 3 waiting days and an assessment phase.  The new DM is not bound to start paying the support component from wk14 of this new claim (section 17(2) SSA 98) just because she was in the SG in the past. But the fact they’re asking for an ESA3 suggests they’ll probably re-start the support component.  They might even start paying it from day 1 which, in my view, would be incorrect (Reg 7 ESA allows the old component to start being paid from day 1 but only where the pLCWs link or where any of its other conditions, which don’t appear to apply here, are satisfied).

[ Edited: 20 Sep 2013 at 02:26 pm by Tom H ]
benefit_advisor
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Hi,

Thanks for that. The DWP advise that the claim is still open but, as you mentioned, because of her husbands employment, no payments have been made. She is still considered to have LCWRA which is why im assuming that the DWP are suggesting an ESA3 rather than making a new claim via ESA1.

Tom H
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It there’s been no payment of ESA the claim isn’t open.  But I’d not cause a fuss.

benefit_advisor
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So it seems that the DWP are not giving us the full story then.

Thanks for your reply Tom. Appreciate it.,

Helen Rogers
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I disagree with Tom H’s comments.  The claim has been running as a credits only claim, so entitlement is there, just not entitled to payments (because of husband’s hours/wages.)  So ESA 3 is required because this is a change of circumstances.

This is a very different situation to if the claimant had started work, for example.  In which case entitlement would have stopped and ESA 1 would be needed as it would be a new claim.

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Tom H - 20 September 2013 12:19 PM

I’m assuming she no longer qualified for IRESA either because husband was working more than 24 hours p/w or his wages were above their applicable amount.  In which case ESA stops in May.  If he leaves work now she should make a new claim (normally ESA1 not ESA3).  The period of limited capability for work (pLCW) which the new claim starts does not link with the old pLCW because there’s more than 12 weeks between them (note the continued receipt of LCW credits did not prevent the old pLCW ending).  Consequently, she’ll have to serve 3 waiting days and an assessment phase.  The new DM is not bound to start paying the support component from wk14 of this new claim (section 17(2) SSA 98) just because she was in the SG in the past. But the fact they’re asking for an ESA3 suggests they’ll probably re-start the support component.  They might even start paying it from day 1 which, in my view, would be incorrect (Reg 7 ESA allows the old component to start being paid from day 1 but only where the pLCWs link or where any of its other conditions, which don’t appear to apply here, are satisfied).

tom chances are you are right on this but why does the period on credits only not link? I would have thought credits only would mean you still have a “live claim”.

Tom H
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Section 1 WRA 2007 sets out the conditions for entitlement to ESA.  They are:

That you satisfy:

(a) the contribution conditions,

or

(b) the income conditions

AND

(c) all of the basic conditions which includes having limited capability for work.

If you fail the WCA you no longer satisfy (c) so your entitlement ends, regardless of the fact you still satisfy (a) and/or (b).  Equally, if you no longer satisfy (a) or (b) above then your entitlement ends, regardless of the fact that you still satisfy (c).  In the present case, partner starts remunerative work so client doesn’t satisfy (b).  Nor, from the info provided, does she satisfy (a).  So her ESA stops regardless of the fact she still satisfies (c).

Under the law she is not entitled to credits after her ESA stops.  She is not even necessarily entitled to credits whilst entitled to ESA.  That’s because you are only awarded credits if you need them (Reg 3 Credits Regs 1975) and you don’t know if you need them until the end of the tax year.  Eg, her health could improve and she could get a job in the present tax year and pay enough national insurance contributions based on earnings to make an award of credits unnecessary.  In that situation she would not even be awarded LCW credits for the period April – May when she was definitely in receipt of ESA. 

For the above reasons, the law requires her to apply in writing to the Secretary of State for the credits setting out the grounds on which she qualifies for credits – Reg 8B(4) Credits Regs.  There is a time limit for applying which can be extended if it’s reasonable.  It is implicit in Reg 3 above however that the earliest she can apply is the end of the tax year.

However, hardly anyone in her position ever formally applies for credits.  I have been doing benefits for 10 years and I have never done an application for credits for any client.  Instead, the DWP and HMRC between them share info to allow the DWP to award credits at the end of the tax year.  In the present case, her LCW credits will, at that time be awarded under reg 8B(2)(a)(iv) Credits Regs.  Each day between 6/4/13 (start of tax year) and the date in May 2013 when her ESA entitlement ended would be a “day of limited capability for work under 8B(2)(a)(iv).  Each day after her entitlement ended until 5/4/14 would also be a “day of limited capability for work” because she never stopped having LCW.

In order to qualify for ESA in the first place there would have been a determination that she either had or was treated as having LCW.  Such a determination is conclusive for any later decisions, eg the credits decision that needs to be made at the end of the tax year - see Reg 10 Decisions and Appeals Regs.  Being “conclusive” also means that the LCW determination survives the ending of her entitlement to ESA in May (ie, she doesn’t have to start submitting sick notes to prove that she remains LCW).  The only thing it wouldn’t survive is a further LCW determination (people on credits, as we know, still have to attend medicals and have their LCW re-assessed).

But an award of credits under Reg 8B(2)(a) above is a completely separate award to an award of ESA in the same way as Income Support is a totally separate award.  Under the Social Security Act 1998 credits are awarded by a DM under section 8(1)(c) and benefits are awarded under 8(1)(a).  With respect, an award of credits cannot keep an award of ESA “open”.

An award of ESA can link with another award of ESA for various purposes if the periods of limited capability for work (pLCW) associated with each award are no more than 12 weeks apart. A pLCW is defined in Reg 2 of the ESA Regs as follows:

“a period throughout which a person has, or is treated as having, limited capability for work, and does not include a period which is outside the prescribed time for claiming as specified in regulation 19 of the Social Security (Claims and Payments) Regulations 1987” (my emphasis)

It is implicit in this definition that a pLCW can be associated only with a claim for and, therefore, an award of, ESA.  Whilst you need LCW to qualify for credits, an award of LCW credits on its own, ie without an accompanying award of ESA, cannot put you in a pLCW.  Similarly, a period of “days of limited capability for work” (eg, where you are subsequently not even awarded credits) cannot form a pLCW unless there is an award of ESA in respect of those days.

Consequently, an ESA award can never link with an award of “LCW credits-only” because only the former is in a pLCW and you need two pLCWs to link.

I understand that this is CPAG’s position also - see posts 6 & 15 of this thread:
This thread: http://www.rightsnet.org.uk/forums/viewthread/2869/

[ Edited: 23 Sep 2013 at 10:38 pm by Tom H ]
Helen Rogers
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Tom, I still think you’re coming at this all wrong.

There is no linking to be done.  The client (as I understand it) never stopped having LCW, so ESA was never closed.  It was kept open as credits only.  I don’t think we need to get bogged down with the technicalities of the HMRC computer system.  This case shows why it’s important that people keep their claims for ESA open as “credits only” when they stop being entitled to payments of income-based ESA - so that after a change of circumstances they can reclaim income-based ESA without having to go through the assessment phase again.

A “credits only” claim for ESA means that the DWP accept that you have LCW, but you don’t meet the means test for income based ESA and you don’t meet the criteria for payment of contribution based ESA (eg you haven’t paid enough NI conts.)

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Helen Rogers - 24 September 2013 07:59 AM

Tom, I still think you’re coming at this all wrong.

There is no linking to be done.  The client (as I understand it) never stopped having LCW, so ESA was never closed.  It was kept open as credits only.  I don’t think we need to get bogged down with the technicalities of the HMRC computer system.  This case shows why it’s important that people keep their claims for ESA open as “credits only” when they stop being entitled to payments of income-based ESA - so that after a change of circumstances they can reclaim income-based ESA without having to go through the assessment phase again.

A “credits only” claim for ESA means that the DWP accept that you have LCW, but you don’t meet the means test for income based ESA and you don’t meet the criteria for payment of contribution based ESA (eg you haven’t paid enough NI conts.)

on the face of it I agree withy you and your explanation has always been my understanding of it and it also seems to be the way the dwp (in my experience) are working with it.

That being said tom has clearly put a lot of thought into his way of thinking and until I sat in a dark room for a long time thinking about what he has posted I cant really say that he isn’t correct.

stevenmcavoy
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I know its basic as well but I ran a situation though the QBC where I had a couple with one working and one on ESA that had exhausted (QBC has an option for this for anyone who doesn’t use it).  the QBC was still showing the wrag component in the hb calc…is the QBC wrong then or am I wrong in thinking the wrag component in hb wouldn’t apply if the client didn’t have the conts based claim.

Tom H
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Helen the problem with your view is that it’s not supported by any reference to law and unless we have law we have nothing. 

The problem is we use “credits” when what we really mean is “a day of having LCW” (I did it myself in post 1 where I said that her credits didn’t prevent her old pLCW ending).  But I’ve tried to show in my last post that THERE IS NO CREDITS AWARD.  There are days of limited capability for work which continue after ESA entitlement ends.  And those days of LCW are not without value.  They can support a later award of credits (at end of tax year) or they can help you re-qualify under the deterioration route (section 1B WRA 07) or they can help you get a WRAC in your HB applicable amount.  But the definition of pLCW in Reg 2 ESA Regs does not allow those “days of LCW” to form a separate pLCW or prevent the old pLCW ending.  Helen, what you call “technicalities” is actually the law.  The fact the DWP might get it wrong (and Commissioners have been extremely critical of the DWP’s handling of credits) does not change the law.

In this case my advice would be to go along with the DWP’s advice however because it’ll probably result in the client getting the SC from day one of the new claim.  That doesn’t change the fact that the law says something different.

[ Edited: 24 Sep 2013 at 05:21 pm by Tom H ]
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Tom H - 24 September 2013 09:08 AM

Helen the problem with your view is that it’s not supported by an reference to law and unless we have law we have nothing. 

The problem is we use “credits” when what we really mean is “a day of having LCW” (I did it myself in post 1 where I said that her credits didn’t prevent her old pLCW ending).  But I’ve tried to show in my last post that THERE IS NO CREDITS AWARD.  There are days of limited capability for work which continue after ESA entitlement ends.  And those days of LCW are not without value.  They can support a later award of credits (at end of tax year) or they can help you re-qualify under the deterioration route (section 1B WRA 07) or they can help you get a WRAC in your HB applicable amount.  But the definition of pLCW in Reg 2 ESA Regs does not allow those “days of LCW” to form a separate pLCW or prevent the old pLCW ending.  Helen, what you call “technicalities” is actually the law.  The fact the DWP might get it wrong (and Commissioners have been extremely critical of the DWP’s handling of credits) does not change the law.

In this case my advice would be to go along with the DWP’s advice however because it’ll probably result in the client getting the SC from day one of the new claim.  That doesn’t change the fact that the law says something different.

sorry tom I am getting confused. can I give you an example and see if I am following your argument correctly?

say I have a client with MS and her partner works ft.  she is currently in the wrag group and has had her 365 days.  I discuss her case and at that time the support group doesn’t apply.  payment of ESA stops but she still has LCW so gets wrag component in hb applicable amount?

client returns a year later as her condition has progressed, she now meets support group criteria, what are you saying would happen in that case?

to my mind the client could be reassed, go into the support group and her money would restart but whats your take on this situation?

Tom H
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Steven, she continues to get the WRAC in her HB applicable amount not because the time-limited ESA claim is, somehow, “kept open”, but because the law, that thing that dare not speak its name, says so. 

In this case para 21 of Sch 3 to the HB Regs.  She qualifies because she meets sub paras (a), (b)(i) and (c)(i) of that para, ie, she made a claim for ESA in the past, it was determined that she had LCW and the assessment phase had ended at the point her ESA was time limited.  Some HB advisers/specialists might disagree with the last of these provisions and feel it’s sub para (c)(iii) rather than (c)(i) that allows the continued award of the WRAC in the applicable amount in these circs.  But it doesn’t really matter.  What matters is that the law is making specific provision for the continuation of the WRAC in the applicable amount.

Section 1B WRA 2007 provides the following:

“1B.—(1) Where a person’s entitlement to a contributory allowance has ceased as a result of section 1A (1) or (4) (ie, due to time-limiting) but–

(a) the person has not at any subsequent time ceased to have (or to be treated as having) limited capability for work,

(b) the person satisfies the basic conditions, and

(c) the person has (or is treated as having) limited capability for work-related activity (ie the support component), the claimant is entitled to an employment and support allowance by virtue of this section.

(2) An employment and support allowance entitlement to which is based on this section is to be regarded as a contributory allowance…”

Steven, in your example, when your client returns a year later and qualifies for the support component then she has to make a new claim for ESA, rather than it being a change of circs.  You can only supersede an award if there is an award to supersede and in the present circs there is no award to supersede (section 1B clearly states that the ESA ceases upon time-limiting).

Again, the law has made specific provision for this new claim/award to be contributory (see section 1B(2) above). 

Section1B(1)(a) is what I have been going on about.  Reg 10 D&A Regs (mentioned in my last post) will ensure she continues to have LCW after her ESA is time limited.  She does not have to submit sick notes for example.  The only thing that would stop her continuing to have LCW between the time-limiting and her return to you one year later would be a failed medical/WCA in between.  In that event, if she didn’t appeal the failed WCA, she would not meet the condition in section 1B(1)(a) above, so her new ESA claim would not be treated as contributory even if she could qualify for the support group.

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Tom H - 24 September 2013 03:20 PM

Steven, she continues to get the WRAC in her HB applicable amount not because the time-limited ESA claim is, somehow, “kept open”, but because the law, that thing that dare not speak its name, says so. 

In this case para 21 of Sch 3 to the HB Regs.  She qualifies because she meets sub paras (a), (b)(i) and (c)(i) of that para, ie, she made a claim for ESA in the past, it was determined that she had LCW and the assessment phase had ended at the point her ESA was time limited.  Some HB advisers/specialists might disagree with the last of these provisions and feel it’s sub para (c)(iii) rather than (c)(i) that allows the continued award of the WRAC in the applicable amount in these circs.  But it doesn’t really matter.  What matters is that the law is making specific provision for the continuation of the WRAC in the applicable amount.

Section 1B WRA 2007 provides the following:

“1B.—(1) Where a person’s entitlement to a contributory allowance has ceased as a result of section 1A (1) or (4) (ie, due to time-limiting) but–

(a) the person has not at any subsequent time ceased to have (or to be treated as having) limited capability for work,

(b) the person satisfies the basic conditions, and

(c) the person has (or is treated as having) limited capability for work-related activity (ie the support component), the claimant is entitled to an employment and support allowance by virtue of this section.

(2) An employment and support allowance entitlement to which is based on this section is to be regarded as a contributory allowance…”

Steven, in your example, when your client returns a year later and qualifies for the support component then she has to make a new claim for ESA, rather than it being a change of circs.  You can only supersede an award if there is an award to supersede and in the present circs there is no award to supersede (section 1B clearly states that the ESA ceases upon time-limiting).

Again, the law has made specific provision for this new claim/award to be contributory (see section 1B(2) above). 

Section1B(1)(a) is what I have been going on about.  Reg 10 D&A Regs (mentioned in my last post) will ensure she continues to have LCW after her ESA is time limited.  She does not have to submit sick notes for example.  The only thing that would stop her continuing to have LCW between the time-limiting and her return to you one year later would be a failed medical/WCA in between.  In that event, if she didn’t appeal the failed WCA, she would not meet the condition in section 1B(1)(a) above, so her new ESA claim would not be treated as contributory even if she could qualify for the support group.

in which case then I cant see why she would requalify if we assume she wont meet the 26 week test?

Tom H
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What 26 week test?