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    [1997] UKSSCSC CIS_14141_1996 (02 April 1997)

     

    Commissioner's File: CIS 14141/96

    Mr Commissioner Mesher

    2 April 1997

    SOCIAL SECURITY CONTRIBUTIONS AND BENEFITS ACT 1992

    SOCIAL SECURITY ADMINISTRATION ACT 1992

    APPEAL FROM DECISION OF SOCIAL SECURITY APPEAL TRIBUNAL ON A QUESTION OF LAW

    DECISION OF THE SOCIAL SECURITY COMMISSIONER

    Claim for: Income Support

    Appeal Tribunal: Huddersfield SSAT

    [ORAL HEARING]

    1. The claimant's appeal is allowed as a matter of law, but without any change

    in the practical outcome. The decision of the Huddersfield social security

    appeal tribunal dated 23 January 1996 is erroneous in point of law, for the

    reason given below, and I set it aside. It is expedient for me to substitute my

    decision for that of the appeal tribunal without making any fresh or further

    findings of fact (Social Security Administration Act 1992, section 23(7)(a)(i)).

    My decision is that the decision under which the claimant was entitled to income

    support immediately before 26 April 1995 falls to be reviewed on the ground of

    relevant change of circumstances (Social Security Administration Act 1992,

    section 25(1)(b)), but that in relation to the period from 26 April 1995 to 1

    October 1995 the existing decision is not to be revised on review so as to

    include housing costs in respect of interest on the loan taken out on 26 April

    1995 in the claimant's applicable amount.
    2. This is one of four appeals with essentially identical facts which were heard

    together before me. In all of the cases the claimants were owner-occupiers of

    their homes free of any mortgage and had been in receipt of income support

    without any housing costs for loan interest. After 2 May 1994 they took out

    loans to pay for essential repairs and improvements to their homes arranged

    through the Anchor Housing Association and asked for the interest on the loans

    to be met as housing costs. That was refused by the adjudication officer,

    applying paragraph 5A of Schedule 3 to the Income Support (General) Regulations

    1987 ("paragraph 5A"), which was inserted with effect from 2 May 1994 and

    remained in force until the wholesale replacement of Schedule 3 on 2 October

    1995. The refusal was confirmed by the appeal tribunal in all four cases.
    3. At the oral hearing, the claimant was represented by Mr Bruce Moore, the

    company secretary and solicitor to Anchor Trust, accompanied by Mr Geoffrey

    Ferres, welfare rights development officer of Anchor Housing Association, who

    had represented the claimants below. The adjudication officer was represented by

    Mr Leo Scoon of the Office of the Solicitor to the Department of Social

    Security. I am grateful to both representatives for their clear and concise

    submissions.

    4. The case turns on the proper effect and meaning of paragraph 5A. For ease of

    reference I have attached to this decision as appendix A a copy of the

    regulations which inserted paragraph 5A, as made by the Secretary of State for

    Social Security and laid before Parliament (the Income Support (General)

    Amendment Regulations 1994). I have also attached as Appendix B a copy of the

    draft regulations as referred to the Social Security Advisory Committee ("SSAC")

    by the Secretary of State in October 1993. The draft regulations, together with

    SSAC's report on the proposal to make the regulations and the Secretary of

    State's statement under section 174(2) of the Social Security Administration Act

    1992 were published as Cm 2537.

    The adjudication officer's decision

    5. The view taken by the adjudication officer when making the adverse decision

    was straightforward, and turned on the precise words of sub-paragraphs (1), (3)

    and (5) of paragraph 5A. It was briefly as follows. Sub-paragraph (1) applies

    where a liability to pay loan interest is first incurred after 2 May 1994 and,

    as the claimant was entitled to income support when the liability was incurred,

    would prevent the entire loan interest being met as a housing cost.

    Sub-paragraph (3) modifies the operation of sub-paragraph (1), but only where

    before the incurring of the "new liability" for loan interest there was a

    housing cost applicable for loan interest (the "former liability"). In all four

    cases, there was no such former liability, so that sub-paragraph (3) had no

    application. Sub-paragraph (5) on loans for repairs and improvements only

    operates as an exception to sub-paragraph (3), in contrast to sub-paragraphs (6)

    to (11). Thus, as sub-paragraph (3) had no application, neither did

    sub-paragraph (5). It was accepted by the adjudication officer that the loan

    made to the claimant met the conditions of paragraph 8(3) of Schedule 3, with

    the modification required for the purpose of paragraph 5A(5) (see the report of

    the review visit on page 1P and the appeal tribunal's acceptance on page 54).

    The practical result was that if the claimant had had some existing loan

    interest being met as a housing cost, regulation 5A(5) would have allowed the

    extra cost of the interest on the repairs and improvement loan to be met. But as

    she did not have any existing loan interest the cost of the interest on the

    repairs and improvement loan could not be met.

    The argument for the claimant

    6. The argument made on behalf of the claimant to the appeal tribunal to avoid

    that result (rejected by the appeal tribunal) was essentially the same as that

    made to me by Mr Moore. The argument is for what might be called a super-literal

    construction, supported by evidence about the intention of the Secretary of

    State when making the amending regulations.

    7. The argument picks up on an ambiguity in sub-paragraphs (1) and (3) of

    paragraph 5A suggested by the editor of the 1994 edition of Mesher and

    Wood,CPAG's Income-related benefits: the legislation at page 234. Briefly, it is

    as follows. Sub-paragraph (1) does not expressly say that it applies where the

    relevant housing costs are first incurred after 2 May 1994. It applies where the

    costs "were incurred" after 2 May 1994. Housing costs are relevant to the

    calculation of the claimant's weekly applicable amount under regulation 17(1) of

    the Income Support Regulations and generally refer to the amounts which a

    claimant is liable to pay week by week. Therefore, sub-paragraph (1) could be

    said to apply, for instance, to the liability to pay interest in weeks falling

    after 2 May 1994 on a loan taken out well before 2 May 1994 and when the

    claimant was not entitled to income support. On that basis, there would be

    little or no point in the reference to the relevant period and the definition in

    sub-paragraph (2) including linking periods. There would also be a strange

    effect on sub-paragraph (3). In every case where there was a liability to meet

    loan interest in more than one week, there would be a former liability, in the

    first week, and a new liability, in the second week. That, said Mr Moore, would

    alleviate the apparent effect of sub-paragraph (1) in applying paragraph 5A to

    loans taken out before 2 May 1994. If the claimant had been receiving income

    support immediately before 2 May 1994 there would be a former liability, in the

    last week before 2 May 1994, and a new liability, in the next week, of exactly

    the same amount, so that the amount of the former liability could continue to be

    met. In addition, it would allow the interest on the claimants' loans for

    repairs and improvements to be met in the second week of liability to make

    payment. In relation to that second week there would be a former liability -the

    housing cost in the first week - to which the new liability in the second week

    was equal, so that the whole of the cost could be met. Mr Moore recognised

    though, that if that were right, the exclusion of any housing cost under

    regulation 5A could last only for one week and that sub-paragraph (3)(b) would

    be deprived of any practical application.

    8. The recognition that the interpretation suggested above has bizarre and

    absurd results is then used in this way. Mr Moore agrees with the comment on

    page 234 of the 1994 edition of Mesher and Wood that such results "could no

    doubt be avoided by a purposive interpretation of para. 5A as a whole". But, he

    says, if a purposive approach has to be taken to make sense of paragraph 5A, the

    true and full purpose should be looked at. He then refers to the Secretary of

    State's statement in Cm 2537 as showing the intention that interest on loans for

    essential repairs and improvements should be taken completely outside the

    operation of paragraph 5A. In addition he refers to two other sources. One is

    the initial guidance to adjudication officers from Central Adjudication Services

    in Memo AOG Vol 3/67 dated May 1994 (pages 66 to 70 of the papers before me),

    where it was said that loans taken out for any of the designated repair and

    improvement purposes should not be restricted under paragraph 5A. The second is

    the explanatory memorandum sent by the Secretary of State to SSAC with the draft

    Income Support (Housing Costs) Regulations 1995, which Mr Moore says gives no

    indication of any change in the law from the position under paragraph 5A in

    taking loans for repairs and improvements out of the equivalent provision in the

    new Schedule 3. Thus, he says, a proper purposive interpretation must be one

    which gives effect to that intention and allows the claimants' housing costs to

    be met. If that cannot be done, he says that it is wrong to apply any purposive

    interpretation and the strict literal interpretation must be applied. That again

    allows the claimants to succeed.

    The construction of paragraph 5A

    9. Mr Moore's argument is very ingenious. As will appear later, I think that it

    contains the material on which another argument for the claimants can be made,

    but as put forward by Mr Moore, it must be rejected. There are a number of flaws

    in the argument. For one thing, I am not convinced that the super-literal

    argument would in fact allow the claimants to succeed. In the second week after

    liability to pay interest arises I do not think that there would be a former

    liability within the meaning of paragraph 5A(3). For although there would have

    been a liability to pay the interest in the previous week, there would not have

    been a corresponding housing cost applicable to the claimant in that week,

    because for that week paragraph 5A would have prevented the housing cost being

    met. In my view a housing cost which cannot be met for a week is not applicable

    to the claimant for that week. But, more fundamentally, I do not think that the

    argument about the purposive construction works. I am afraid that the use of the

    phrase "purposive construction" in the commentary in Mesher and Wood may have

    been misleading. What is needed to avoid the bizarre and absurd consequences of

    a super-literal interpretation of paragraph 5A is not a purposive construction,

    but the ordinary application of the principle described by Lord Reid in Pinner v

    Everett [1969] 1 WLR 1266, at 1273:

    "In determining the meaning of any word or phrase in a statute the first

    question to ask always is what is the natural and ordinary meaning of that

    word or phrase in its context in the statute? It is only when that meaning

    leads to some result which cannot reasonably be supposed to have been the

    intention of the legislature that it is proper to look for some other

    possible meaning of the word or phrase."

    10. Applying that principle, I am satisfied that the ordinary and natural

    meaning of paragraph 5A(1), in the context of the paragraph as a whole, is that

    it applies when the liability from which the relevant housing costs are derived

    was first incurred after 2 May 1994. That was Mr Scoon's submission, which I

    accept. I mention here only a couple of points. The first is that that meaning

    is consistent with the language of sub-paragraph (1) in its reference to not

    meeting costs, in the present and the future, "where those costs were incurred"

    after 2 May 1994. The use of the past tense would not be consistent with the

    approach on the basis that housing costs are incurred week by week. The second

    point is that sub-paragraph (1) should be given a meaning that allows all parts

    of sub-paragraphs (2) and (3) to be given a practical and effective application.

    The notion of a former liability remaining while a new additional liability is

    added and much of the definition of the "relevant period" only make sense if a

    housing cost is treated as incurred on the date on which the underlying

    liability was first incurred.

    11. Having rejected Mr Moore's main submission, I must go on to consider

    whether, in the light of the evidence he presented about the intention of the

    Secretary of State in framing paragraph 5A, any ambiguity of language should be

    construed in accordance with the intention to take loans for essential repairs

    and improvements outside the operation of paragraph 5A. I shall have to come

    back shortly to the nature of that evidence, but, in the light of my conclusion

    above, I find that there is no ambiguity of language in paragraph 5A that admits

    of such an alternative construction. That is so either under the principle of

    looking at the SSAC's report in order to identify the mischief which paragraph

    5A was intended to remedy (Black-Clawson International Ltd v PapierWerke

    Walhof-Ascheffenburg AG [1975] AC 591 and R(I) 11/81) or under the principle of

    looking at statements made to Parliament by the proposer of a statutory

    provision (Pepper v Hart [1993] AC 593) or under any principle allowing

    ambiguities to be resolved to avoid absurd results. The adverse consequences for

    the claimant in this case do not stem from any ambiguity of language, but from

    the way in which sub-paragraph (5) is embedded in the structure of paragraph 5A

    as a whole. It is unambiguous in having no independent operation of its own, but

    only spelling out in detail the exception made in sub-paragraph (3) where the

    conditions of sub-paragraph (3) would otherwise be met. That cannot be overcome

    by a process of construction.

    Irrationality

    12. During the oral hearing, I suggested that the real force of Mr Moore's

    submissions might be to the effect that the provisions of paragraph 5A were

    Wednesbury unreasonable or irrational to the extent that they prevented the

    interest on new loans for essential repairs and improvements being met if the

    claimant had not previously had any housing costs for loan interest, but did not

    prevent the interest on such new loans being met if the claimant had previously

    had housing costs for loan interest. He had drawn a very striking contrast

    between the position of two categories of income support claimant. In both cases

    the claimants are owner-occupiers, possibly of long-standing, and require the

    same substantial repairs to be done to their homes, say for roof repairs to stop

    rain coming in. Both have no savings and a low current income, as shown by their

    entitlement to income support. But one category had no outstanding mortgage or

    loan when coming onto income support, whereas the other had an outstanding

    mortgage, the interest on which is currently being met as a housing cost. The

    effect of paragraph 5A is that claimants in the first category are unable to

    have the interest on the loan for the repairs met as a housing cost, whereas

    claimants in the second category are able to have it met. Mr Moore submitted

    that it would be bizarre, absurd and unjust to distinguish between equally

    deserving claimants in that way. And what made the effect even more perverse was

    that the category which came off worse was the one which had formerly been

    making the smaller demand on public funds, as no housing costs for loan interest

    had had to be met. Mr Scoon pointed out that in most amendments to regulations

    there will be groups who benefit (or at least do not lose) and groups who lose

    (or at least do not benefit) and that does not make the amendment irrational. He

    also suggested that the policy of paragraph 5A was to discourage the creation of

    new housing costs and that it might therefore make sense to distinguish between

    those claimants who were already relying on the inclusion of housing costs in

    their benefit calculation and those who were not.

    13. I should at this point refer to the evidence of the Secretary of State's

    intentions in the SSAC report referred to in paragraph 4 above. Mr Moore

    submitted that the intention was that there should be no restriction at all

    under paragraph 5A on meeting the interest on loans for essential repairs and

    improvements. However, he had been unable to obtain a full copy of Cm 2537 and

    produced only a copy of one page. Mr Scoon has now kindly supplied to me a full

    copy of Cm 2537 (as agreed at the oral hearing).

    14. The draft regulations submitted to the SSAC are set out in Appendix B to

    this decision. It will be seen that what was then sub-paragraph (4) of the

    proposed paragraph 5A, as well as spelling out the exception in sub-paragraph

    (3), had an independent operation in providing that the additional housing costs

    due to increases in interest rates might be met. In the Secretary of State's

    note to the SSAC about the proposal and in the Secretary of State's statement

    under section 174(2) of the Social Security Administration Act 1992, it was said

    that the amendment provided that income support "would not meet the additional

    interest on an increase in loan commitments where the cost is incurred while the

    borrower or one of their family is entitled to Income Support". It is plain from

    the scope of the proposal that the words "additional" and "increase" were there

    being used to include both a situation where the borrower has no existing loan

    commitments and the situation where there are existing loan commitments. That

    usage was followed by the SSAC in its report.

    15. The SSAC accepted that the principle behind the proposal was justified, but

    recommended that there should be clear safeguards by way of further exceptions

    (para 68). One area of concern related to major repairs and improvements. The

    SSAC said this in paragraphs 31 to 35:

    "31. The amendment would except from the proposed restriction loans taken

    out to pay a service charge imposed on a leaseholder by a freeholder to pay

    for repairs and improvements to the property. However, interest on major

    loans for repairs and improvements for most householders would no longer be

    covered by income support, if taken out during the period of benefit

    entitlement, unless the claimant was in the excepted disabled or `over 74'

    category. Some Home Improvement Agencies, funded by the Department of the

    Environment, are concerned about the effect on their pensioner and disabled

    customers. Although most of these would probably be covered by the proposed

    exceptions from the new restriction, nevertheless there remains concern

    about the under 75s, and the problems of paying for repairs and improvements

    must apply equally to all those receiving income support long term. ...

    33. It seems essential to us to help people maintain the fabric of their

    property, especially if a local authority has imposed a repairs notice

    where, for example, a roof or a wall has become dangerous. In some cases

    such help could prevent people from losing their homes and thereby possibly

    incurring a different kind of public expenditure. ...

    35. It is important to bear in mind that, in paragraph 8(3) of Schedule 3 to

    the Income Support regulations, there is already a list of allowable repairs

    and improvements, including such items as damp-proofing and the provision of

    electrical lighting and sockets, with the additional discretion to allow any

    item considered `reasonable' by the Adjudication Officer. However, the

    Department has pointed out that this discretion has been used to allow

    payment for interest on loans, for example, for new kitchens and extensions.

    This may be reasonable where the loan was taken out before the claimants

    became entitled to income support. We do not believe that such payments

    would be appropriate where the loan was taken out after the start of the

    period of entitlement. A finite list of repairs and improvements should

    therefore be added to the proposed regulations excluding such repairs and

    improvements from the proposed restriction. We have identified and listed

    below those items which we consider essential. The Department should

    consider whether this list needs additions in the light of experience."

    I note at this point that there was no suggestion of any different consideration

    applying according to whether or not the claimant had a previous loan commitment

    before the loan for repairs or improvements was taken out.

    16. The SSAC's recommendation was as follows (para 36):

    "36. We recommend that all income support recipients, not just those in the

    `disabled' and 75 and over categories, should continue to be allowed payment

    for the interest on additional loans for repairs and improvements necessary

    to maintain the fabric of the dwelling occupied as the home and any of the

    following measures undertaken with a view to improving its fitness for

    occupation:-"

    Then followed a list of the first 10 categories allowed under paragraph 8(3) of

    Schedule 3, omitting the final "reasonable" category and adding two more

    specific categories relating to overcrowding due to an increase in the number of

    children in the household and to the provision of separate sleeping

    accommodation for children of different sexes aged 10 or over.

    17. The Secretary of State's response to that recommendation in the statement

    under section 174(2) of the Social Security Administration Act 1992 was, in

    relation to the first 10 categories and the second new category listed, "We

    accept these parts of this recommendation". In relation to the first new

    category recommended, relating to overcrowding from extra children, the response

    was:

    "The purpose of Income Support help with mortgage interest is to help people

    retain their existing reasonable accommodation. We believe that where that

    accommodation is inadequate for their needs help is best focused through

    Government housing policy which is administered by the Department of the

    Environment in the form of home improvement grants and rehousing for

    vulnerable groups. This is a more efficient way of addressing such problems

    than using the benefits system, particularly when the help in question is

    not available to people in work on low incomes. In addition, owner-occupiers

    who do not receive Income Support have to plan for family size in relation

    to their expected income and we see no reason why Income Support recipients

    should be treated differently."

    It is also necessary to quote the response to another recommendation, that the

    exception applicable to people of 75 or over should be extended to people aged

    65 or over:

    "The regulations allow those aged 75 or over, and disabled people of any age

    to get help with loans that are taken out to make adaptation to an existing

    property or acquire alternative accommodation if the need for the new loan

    results from their special needs. We believe that this allows us to focus

    help on those groups who need it most. It would be wrong for us to allow

    Income Support to be used as a source of funding for alternative housing

    generally. In addition, our acceptance of the Committee's recommendation

    that loans for essential repairs and improvements will be exempt from the

    regulations will make it easier for all elderly people to stay in their own

    homes."

    I remind myself at this point that the Secretary of State's statement under

    section 174(2)(a) must "show ... the extent (if any) to which he has, in framing

    the regulations [laid before Parliament], given effect to the Committee's

    recommendations".

    18. The House of Lords in Foster v Chief Adjudication Officer [1993] AC 754 held

    that Social Security Commissioners may determine whether or not regulations are

    ultra vires where that question arises as part of a determination before them.

    Lord Bridge said, at page 765, that:

    "if the Commissioners have jurisdiction to question the vires of secondary

    legislation, the scope of that jurisdiction must, at least theoretically,

    embrace a challenge on the ground of irrationality as well as illegality."

    He went on, after referring to Nottinghamshire County Council v Secretary of

    State for the Environment [1986] AC 240 and Edinburgh City District Council v

    Secretary of State for Scotland 1985 SC 261, to say, at page 766:

    "This is not the occasion when it would be appropriate for your Lordships to

    consider whether to go beyond the speech of Lord Scarman, unanimously agreed

    to by the Appellate Committee, in the Nottinghamshire case, which leaves

    room for possible exceptions in extreme cases from any absolute rule that

    the courts may not condemn as irrational secondary legislation which has

    been subject to Parliamentary scrutiny. But I have no doubt that the Social

    Security Commissioners have good pragmatic reasons not to take it upon

    themselves to identify any such exceptional case, but to leave that to the

    higher courts, who, as Lord Jauncey pointed out, have never yet done so in a

    reported case."

    19. The Tribunal of Commissioners in CIS/391/1992 said in paragraph 45 of its

    decision that that jurisdiction ought to be exercised by Commissioners "only if

    a serious issue of irrationality arises and the question whether a regulation is

    invalid on that ground must be necessary for the determination of the issue

    which arises before them". When such circumstances arose, which was thought

    likely to be rarely, there would be a positive duty to rule on vires. I am quite

    satisfied that those conditions are met in the present case. Mr Scoon accepted

    that at the level of an individual Commissioner the approach of CIS/391/1992 has

    to be followed, although reserving for possible consideration by a higher court

    the question of the extent of the Commissioners' jurisdiction to rule that

    regulations are ultra vires on the ground of irrationality. In CIS/391/1992 the

    Tribunal of Commissioners found that the regulation in question was not

    irrational. It could not be said that it was wholly outside the intention of

    Parliament and that the Secretary of State had taken leave of his senses. I do

    not read that finding as detracting from the need, if a regulation were found to

    be irrational in that sense, to consider the conditions under which provisions

    which have been subject to Parliamentary approval may be impugned. I consider

    that the most authoritative statement of those limits is by Lord Scarman in the

    Nottinghamshire case. There he referred, at various points in his speech, to the

    necessity for a finding of fact that the House of Commons had been misled, to

    the Minister having deceived the House, or to there being bad faith or

    misconduct by the Minister. At [1986] AC 250 he said that:

    "if a statute ... requires the House of Commons to approve a Minister's

    decision before he can lawfully enforce it, and if the action proposed

    complies with the terms of the statute ..., it is not for the judges to say

    that the action has such unreasonable consequences that the guidance on

    which the action is based and of which the House of Commons had notice was

    perverse and must be set aside. For that is a question of policy for the

    Minister and the Commons..."

    20. That is the general legal basis on which I approach the present case, which

    seems to me consistent with that adopted by the Commissioner in starred decision

    CIS/250/1991. There is no doubt that the making of the Income Support (General)

    Amendment Regulations 1994 complied with the terms of the Social Security

    Contributions and Benefits Act 1992, as section 135(1) gives the Secretary of

    State a wide power to prescribe the amounts to be included in the applicable

    amount. There was also a proper reference to and consultation of the SSAC, to

    comply with sections 172 and 174 of the Social Security Administration Act 1992

    (I do not think that any defect in the Secretary of State's statement under

    section 172(4) invalidated that process). However, as a serious issue has been

    raised about the irrationality of paragraph 5A, the determination of which is

    necessary in deciding the claimants' appeals, I must deal with that issue. I

    have not had any submissions on the issue on behalf of the Secretary of State.

    But since my conclusion is that the amending Regulations introducing paragraph

    5A are not irrational and ultra vires, that does not matter.
    21. I have found the argument for irrationality a strong one, but, after a great

    deal of thought, not quite strong enough. That is because of two main factors.

    The first is that I think that I must look initially at the terms of the

    regulations laid before Parliament and ask myself whether there is an

    irrationality there. When one looks at the process by which the draft

    regulations referred to the SSAC were turned into the regulations made by the

    Secretary of State and laid before Parliament, it is hard to discern a rational

    reason for the manner of implementation of the SSAC's recommendation. But that

    is not the precise point. The question I have to ask is whether any Secretary of

    State in his senses could deliberately make a regulation which prevented

    claimants with no previous housing costs for loan interest from receiving

    housing costs for new loans for essential repairs, while allowing such housing

    costs for claimants with previous housing costs for loan interest. The second

    factor stems from the specific warning from Lord Bridge in Foster and the

    general flavour of judicial opinion pointing to the extremity of the

    circumstances in which secondary legislation can be found to be irrational. I

    take the principle to be that a Social Security Commissioner should only find

    secondary legislation irrational, if able to do so at all, when the argument for

    irrationality is compelling. I find that the argument in the present cases falls

    short of that standard. I accept that the effect of paragraph 5A is unfair and

    absurd and even perverse in treating claimants with identical needs for housing

    costs differently. However, as a matter of language, the structure of paragraph

    5A is perfectly workable and logical. I do not think that the unfairness and

    absurdity of its results are sufficiently compelling that I should find that

    there is irrationality.

    22. As it is possible that these appeals might be taken further, I should deal

    with the other questions which would have arisen if I had decided in the

    claimants' favour on irrationality. I would have found the conditions laid down

    by Lord Scarman in the Nottinghamshire case to be met. On the view which I have

    taken about the construction of the new paragraph 5A in the amending regulations

    laid before Parliament, I conclude that the Secretary of State's statement under

    section 174(2) of the Social Security Administration Act 1992 was erroneous. In

    the light of the terms of the SSAC's report, the Secretary of State's statement

    was unequivocal in accepting that loans for repairs and improvements, as

    specially defined, should be taken out of the operation of paragraph 5A for all

    claimants. The use of the words "additional loans" in the relevant SSAC

    recommendation does not carry any suggestion of a limitation to situations where

    a claimant has an existing loan commitment (see paragraphs 14 and 15 above). Yet

    the inescapable construction of the regulations as laid before Parliament meant

    that the Secretary of State had not in framing the regulations actually given

    effect to the SSAC's recommendation as he stated that he had. There is no

    evidence to suggest any bad faith on the part of the Secretary of State or any

    intention to deceive or mislead Parliament. The most likely explanation is that

    there was a misunderstanding by his legal advisers of the structure of the new

    paragraph 5A, and of what needed to be done to the original draft in order to

    incorporate the SSAC recommendations which had been accepted. Nonetheless, the

    result was that Parliament was misled in a fundamental respect about the effect

    of the amending regulation. In those very unusual circumstances, I consider that

    the fact that no resolution was passed by Parliament to nullify the amending

    regulations would not have prevented me from finding that the regulations were

    irrational and ultra vires.

    23. If I had found there to be an invalidity in the failure of paragraph 5A(5)

    to extend its exception of loans for repairs or improvements (as specially

    defined) to claimants who had not previously had any housing costs for loan

    interest, I would have found that the invalid part could be severed from the

    rest of paragraph 5A under the test of "substantial severability" (Director of

    Public Prosecutions v Hutchinson [1990] 2 AC 783, applied by the Privy Council

    in Commissioner of Police v Davis [1993] 4 All ER 476).

    Conclusion

    24. The result in the claimant's case is that there was no error in the legal

    basis adopted by the appeal tribunal for not allowing her the appropriate

    housing costs following the taking out of the loan on 26 April 1995. However,

    the appeal tribunal failed to take into account the position following the

    change in the law on the replacement of Schedule 3 with effect from 2 October

    1995 (see paragraphs 10 to 12 of the adjudication officer's submission dated 25

    July 1996). The period from 2 October 1995 down to the date of the appeal

    tribunal hearing was in issue on the appeal. For that reason, the appeal

    tribunal of 23 January 1996 erred in law and its decision must be set aside. I

    can substitute the correct decision in the light of the further action which has

    since been taken by the adjudication officer. That decision is set out in

    paragraph 1 above.

    25. On 20 February 1996, after the date of issue of the appeal tribunal's

    decision, the adjudication officer informed the claimant of a review and

    revision of her entitlement to income support to allow housing costs for the

    interest on the loan with effect from 2 October 1995, when the law changed under

    the new form of Schedule 3 (see page 65 of the papers). There is no question of

    that review being ineffective under the conditions of section 29 of the Social

    Security Administration Act 1992, because by that point the appeal against the

    adjudication officer's decision of 12 September 1995 had been disposed of.

    Accordingly the period now in issue before me ends on 1 October 1995. The taking

    out of the loan by the claimant on 26 April 1995 should be treated as a relevant

    change of circumstances justifying review of the current decision under which

    the claimant was entitled to income support prior to 26 April 1995. It does not

    matter in the present context that the precise date of that decision has not

    been identified. The decision on review must then be that, despite the change of

    circumstances, the existing decision is not to be revised for the period from 26

    April 1995 to 1 October 1995 to allow the interest on the loan to be met as a

    housing cost under paragraph 8 of Schedule 3.

    26. I was told at the oral hearing that applications for extra-statutory

    payments had been made in the cases of the claimants concerned in the four

    appeals before me and had been refused. I request the Secretary of State to

    reconsider that matter in the light of what is set out in this decision, and in

    particular of my conclusion that Parliament was misled by the Secretary of

    State's statement under section 174(2) of the Social Security Administration Act

    1992 in Cm 2537.
    (Signed)

    J Mesher

    Commissioner

    2 April 1997

    © Crown Copyright 1997. See copyright notice on decisions index page


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