ESA arrears: why claimants may lose out | CPAG

ESA arrears: why claimants may lose out

Date: 
01 April 2018
Issue: 
Issue 263 (April 2018)

Simon Osborne describes how it is that around 70,000 people have been underpaid employment and support allowance (ESA) and how the government is refusing to pay some of them full arrears.

The issue

An estimated 70,000 people have been under-paid income-related ESA since 2011. This is because of a DWP error when transferring claimants of the old incapacity benefits – income support, severe disablement allowance and incapacity benefit (IB) – to ESA. This programme began in 2011 and was initially due to have been complete by 2014, but in fact is now due only to be finished in April 2018. The arrears arose because the DWP wrongly failed to consider entitlement to income-related ESA in a number of these transfer cases. The typical example is where a claimantwas on IB and was transferred to contributory ESA only, but – for example, because of entitlement to a disability premium – s/he was in fact also entitled to income-related ESA.

The government response

For many years, the common experience was thatclaimants who askedfor arrears to be back-dated to the date their benefit was converted to ESA (the date of the ‘conversion decision’) were indeed paid full arrears. But that was a matter of resolving individual cases. The National Audit Office says that the DWP identified such cases as early as 2013, and in ‘early 2014’ staff ‘identified the error as a major cause of ESA underpayments’.1 On 14 December 2017, the government announcedthat‘we realise howimportantitis to get this matter fixed’. A dedicated team is to identify claimants who lost out. There ‘is therefore no need for individuals to independently contact the department on this matter’, says the government, and the DWP aims to make a decision and ‘repay the appropriate arrears’within 12 weeks. This exercise is expected to be completed during 2018/19.2 But what are the ‘appropriate arrears’?

Why claimants may lose out

The governmentis not paying arrears for the period before 21 October 2014. So some claimants will still lose out. Whether this really amounts to getting ‘this matter fixed’ is a moot point, but many will feel a keen sense of injustice.

Contrary to common experience before 2014, the government now says that the error in not paying income-related ESA was identified only by virtue of a decision from the Upper Tribunal – LH v SSWP (ESA) [2014] UKUT 480 (AAC); [2015] AACR 14 – dated 21 October 2014. It identifies LH as a test case (or ‘relevant determination’) for the purposes of the so-called ‘anti-test case’ rule at section 27 of the Social Security Act 1998. Under that rule, where decisions are known to be wrong as a result of a test case, decisions are only changed from the date of the test case. Hence, the government claims that ‘payments of arrears which pre-date the tribunal ruling [ie, the decision in LH] are barred’.3

Use of supersession

Formally speaking, the Secretary of State is changing erroneous conversion decisions from 2011 to 2014 by conducting a supersession. This is for error of law in the light of an Upper Tribunal decision (ie, following a ‘relevant determination’), with the date of changed decision limited to the date of the relevant determination – ie, 21 October 2014.4 Use of supersession is in deliberate contrast to carrying out a revision for official error, which can be done at any time and would simply replace the conversion decision from that date of the conversion decision itself, leading to payment of full arrears.5

This approach disadvantages many ill and disabled people. It is estimated that most claimants may be owed around £2,500 each, but that around 20,000 may be owed around £11,500 and a small number could be owed as much as £20,000. The amount of the arrears arising after 21 October 2014 (ie, that the government will pay) is estimated at £340 million. Underpayments from before that date (ie, which the governmentwill notpay) are estimated at between £100 million and £150 million.6

Treatment of arrears

That may not be the end of the disadvantage. Because the government identifies the arrears as resulting from error of law in the light of an Upper Tribunal decision (ie, as a result of a test case) rather than simply as from ‘official error’, the arrears would seem to fall to be ignored as capital for mean-tested benefits only for 52 weeks.7

Challenging the limitation on arrears

The Secretary of State’s approach has been supportedby a decision of Judge Gamble in the Upper Tribunal in SKv SSWP, CSE/33/2017 (18 January 2018). Key findings of that decision include that it was LH (and nothing else) that established that ESA was a unitary benefit (ie, that both the income-related and contributory forms were claimed at the same time) and that as a consequence the anti-test case rule applies to the ESA arrears issue. Currently, both decision makers and the First-tier Tribunal are likely to regard themselves as bound by SK.

However, at the time of writing further challenges were likely.

1. SK was the possible subject of a further appeal to the Court of Session in Scotland.

2. Separately, a judicial review of a decision limiting arrears to 21 October 2014 was launched by CPAG on 29 March.

Any such challenge is likely to involve the following arguments.

  • LH did not establish for the first time that ESA is a unitary benefit and it is not a ‘relevant determination’. Thus section 27 of the Social Security Act does not apply: the regulations providing for conversion to ESA always envisaged that both income-related and contributory ESA could be awarded. Departmental guidance as early as 2011 expressly envisaged that both income-re-lated ESA and contributory ESA should be considered;8 authority on section 27 holds that where a court refers to something which is already as ‘plain as a pikestaff’ or ‘speaks for itself’ then the court pointing that out is not a ‘relevant determination’.9
  • The failure to consider and award income-related ESA was therefore merely an ‘official error’ by the DWP, and not an ‘error of law’ which was first identified in LH. Therefore, the relevant conversion decision should have been revised for official error with the result of full arrears being payable.
  • SK was wrongly decided. It was already well known before LH that ESA was a unitary benefit. The judge in SK did not have reference to departmental guidance that income-related ESA should be considered on conversion; neither did the judge have reference to sufficient authority on section 27, or indeed to PG v SSWP [2014] UKUT 282 (AAC) (17 June 2014), a decision which also noted that ESA was a unitary benefit but which was in fact decided before LH.

At the time this article was written, the outcome of these further challenges was not known. But, for the time being at least, their existence does provide at least some hope for any claimant who wants arrears going back before 21 October 2014.

What should claimants do?

In a number of cases, claimants have already challenged the decision only paying them arrears going back to 21 October 2014. Some are already at First-tier Tribunal stage.

In such cases, the DWP is submitting that the appeal should be struck out for having no reasonable prospects of success.10 At the time of writing, it was understood that the Tribunals Service is stockpiling cases with a view to forming a general approach as to what to do.

It might be argued that, given the very arguable flaws in SK, and the likelihood of further authority from the Court of Session (ie, in the appeal against SK itself) and the Upper Tribunal (ie, in the CPAG judicial review case), striking out is not appropriate.

In any case where an appeal is already lodged, clearly it should at least be argued that the case is stayed pending the outcome of the challenges referred to above. Any tribunal that actually hears a case is very likely to consider itself bound by SK and so refuse the appeal.

However, CPAG believes that for the time being it is advisable simply to await the outcome of the further challenges, rather than challenge the decision about arrears (ie, on mandatory reconsideration or appeal) now. This is because, firstly, there may be a difficulty with rightof appeal. In any appeal aboutarrears before 21 October 2014, the DWP is very likely to have refused to revise the conversion decision – ie, refused to revise a decision which is more than 13 months old. (As shown above, it will instead have superseded the decision.) Well established caselaw says that where there has been a refusal to revise a decision which is more than 13 months old, there cannot then be a right of appeal against that decision, and the only challenge is by judicial review.11 This problem has notyetbeen raisedor considered in the ESA arrears context, but there may well be complications for anyone who wants her/his challenge heard by a tribunal.

Secondly, if it is established that the correct process for changing a conversion decision is by revision for official error, such a revision can be requested and carried out at any time – ie, without a time limit. So claimants who await the outcome of further challenges could avoid the potential problem with right of appeal described above, and still be able to get full arrears if the further challenges are successful. Also, this could assist anyone whose appeal is struck out. Clearly, however, this will require claimants (or at least their advisers) to remain vigilant for developments.

 


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  • 1. Investigation into Errors in Employment and Support Allowance, report and press release, National Audit Office, 21 March 2018
  • 2. Employment and Support Allowance, Written statement HCWS356, Hansard, 14 December 2017.
  • 3. See note 2
  • 4. The relevant rule is at reg 7(6) Social Security (Decisions and Appeals) Regulations 1999, No.991 (‘the D&A regulations’). Confirmation that supersession rather than revision is the official approach is in Memo DMG 2/18.
  • 5. The relevant rule is at reg 3(5)(a) D&A regulations.
  • 6. Investigation into Errors in Employment and Support Allowance, report and press release, National Audit Office, 21 March 2018
  • 7. Arrears caused by official error can be ignored for longer in some cases. See, for example, Sch 9 para 11 Employment and Support Allowance Regulations 2008, No.794.
  • 8. Paras 45413 to 45414 of the Decision Maker’s Guide, Vol 8, Amendment 7, February 2011; see also, for example, paras 45580-45583 to Vol 8, Amendment 14, February 2014
  • 9. BD v SSWP [2013] UKUT 216 (AAC) (3 May 2013), reported as R(P) 2/09
  • 10. See Memo DMG 2/18
  • 11. R(IS) 15/04; Beltekian v Westminster City Council [2004] EWCA Civ 1784, reported as R(H) 8/95