DECISION OF THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)

The DECISION of the Upper Tribunal is to allow the appeal by the claimant.

The decision of the Newtown First-tier Tribunal dated 1 October 2009 under file reference 199/08/00189 involves an error on a point of law.  The First-tier Tribunal’s decision is therefore set aside under section 12(2)(a) of the Tribunals, Courts and Enforcement Act 2007.

The Upper Tribunal is in a position to re-make the original decision under appeal.  The decision that the tribunal should have made on the claimant’s appeal against the Secretary of State’s decision dated 19 June 2008 is as follows:

	The claimant’s appeal is allowed and the decision of the Secretary of State’s dated 19 June 2008 is revised.  The claimant’s income does not exceed his applicable amount and he is entitled to income support as from 3 September 2008.  In particular, the residential college he attends in term-time is a “care home” within the meaning of the relevant legislation.  This means that payments made on his behalf in respect of meals fall to be counted as his notional income within regulation 42(4A) of the Income Support (General) Regulations 1987, but are then to be disregarded by virtue of paragraph 66 of Schedule 9 to the 1987 Regulations.

This decision is given under section 12(2)(b)(ii) of the Tribunals, Courts and Enforcement Act 2007.

REASONS FOR DECISION

The Upper Tribunal’s decision in summary

1.		The claimant’s appeal to the Upper Tribunal, which is supported by the Secretary of State’s representative, is allowed. The decision of the Newtown First-tier Tribunal dated 1 October 2009 under file reference 199/08/00189 involves an error on a point of law.  The tribunal’s decision is therefore set aside.  

2.		The Upper Tribunal is in a position to re-make the decision under appeal.  The Upper Tribunal’s decision, as set out above, is that the claimant is entitled to income support from 3 September 2010.  In particular, no amount of notional income falls to be taken into account in calculating his entitlement to benefit as from that date.

The legal issues in this appeal

3.		The main legal issue in this appeal concerns the definition of a “care home” for the purposes of the Income Support (General) Regulations 1987 (SI 1987/1967).  There is a subsidiary and related issue about the scope of the notional income rules and the income disregards under the same regulations. 

The facts of the case

4.	The material facts are not in dispute.  The claimant is a young man, aged 19 at the date of the original decision by the Secretary of State.  He has learning difficulties, giving rise to special educational needs, and his mother acts as his appointee for benefit purposes.  He lives in Wales but in September 2007 started attending a residential college (pursuing a general programme of vocational education with life skills integrated) across the border in England.   He went home for the holidays and some weekends.  The cost of the residential accommodation was in the order of £36,000 a year.  This was met by three funding streams from public authorities in Wales: the Welsh Assembly Government contributed (approximately) 55%, the county council social services department 25% and the area health authority 20%.

5.	The claimant had an award of the lower rate of the disability living allowance mobility component and the middle rate of the care component (although of course payment of the care component was withdrawn after he spent 28 days in the publicly-funded college accommodation).  As he approached the age of 20, he made a claim for incapacity benefit on the special youth criteria and also for income support.

6.	On 19 June 2008 a decision-maker concluded that the claimant was not entitled to income support.  It was decided that part of the local authority’s payments towards his college fees should be treated as the claimant’s notional income in respect of meals (under regulation 42(4)(a)(ii) of the 1987 Regulations). Taken together, the claimant’s incapacity benefit and the notional income attributed to his meals when at college meant that from the date he started college “the claim is EIOR” (excess income over requirements), i.e. his income was above his applicable amount for the purposes of income support entitlement.  In plain English, his income was above the amount the state said he needed to live on, so he was not entitled to income support.

7.	The claimant’s mother appealed on his behalf, assisted by the county council’s welfare rights officer, who argued that the local authority contribution to the funding for his residential placement had been wrongly included in the assessment. 

8.	An initial hearing of the appeal was held on 14 May 2009.  It is clear from the Record of Proceedings that a good part of the discussion there centred on whether or not the decision-maker had been right to apply regulation 42(4)(a)(ii) of the 1987 Regulations.  The claimant’s representative argued that the college was a “care home”, and so regulation 42(4A) applied, with the result that any such notional income then had to be disregarded in full under paragraph 66 of Schedule 9 to the same Regulations.  The district tribunal judge adjourned the appeal for further submissions on whether the college was also a “care home” within the 1987 Regulations.

9.	The income support appeals officer put in a submission arguing that the claimant was attending a residential educational establishment rather than living in a care home.  On the other hand, the claimant’s representative pointed out that the college had been inspected by the Commission for Social Care Inspection (CSCI) and was registered as a care home within the meaning of section 3 of the Care Standards Act 2000.

The First-tier Tribunal decision

10.	A different tribunal judge heard the appeal on 1 October 2009.  She dismissed the claimant’s appeal and confirmed the Secretary of State’s decision to refuse income support.  In the tribunal’s Statement of Reasons, she described the crux of the appeal as whether the college was “an educational establishment or a care home”.  She found that the college had an academic domain name ending in “ac.uk” and was subject to OFSTED reports, as with other educational establishments.  She conceded that it had also been subject to a CSCI inspection.  The tribunal judge’s key conclusion was as follows:  

“It may well be that the college satisfies both criteria, but on balance, following its history, its purpose and aims, the tribunal feels that it is first and foremost an educational establishment.  As such, not only must it take into account income such as Incapacity Benefit, but the notional income, i.e. the payment in respect of meals. [The college] therefore should not be treated as a care home as stated in section 3 of the Care Standards Act 2000.”

11.	A district tribunal judge granted the claimant permission to appeal.

The notional income rule and the disregards

12.	Regulation 42(4)(a)(ii) of the 1987 Regulations, as amended, provides that:

(4)     Any payment of income, other than a payment of income specified in paragraph (4ZA), made—

(a) to a third party in respect of a single claimant or his partner (but not a member of the third party's family) shall be treated—
		…
(ii) in any other case, as possessed by that single claimant or his partner to the extent that it is used for the food, ordinary clothing or footwear, household fuel, rent . . . for which housing benefit is payable, or any housing costs to the extent that they are met under regulations 17(1)(e) or 18(1)(f) (housing costs), of that single claimant or, as the case may be, of his partner, or is used for any council tax or water charges for which that claimant or partner is liable;”.

13.	The Department’s case at the First-tier Tribunal was that a relatively modest part of the fees paid to the college should be attributed to the cost of meals, and taken into account as the claimant’s notional income under this provision.

14.		However, the claimant’s representative argued that regulation 42(4A) applied instead:

“(4A)     Where the claimant resides in a care home, an Abbeyfield Home or an independent hospital, or is temporarily absent from such a home or hospital], any payment made by a person other than the claimant or a member of his family in respect of some or all of the cost of maintaining the claimant or his partner in that home or hospital shall be treated as possessed by the claimant or his partner.”

15.		This meant, so he argued, that although the cost of maintaining the claimant by way of meals was to be treated as his notional income, those amounts were then to be disregarded in full.  This was because, according to regulation 40(2) of, and paragraph 66 of Schedule 9 to, the 1987 Regulations (and omitting extraneous material), the following types of payment are to be disregarded in full:

“Any payment made with respect to a person on account of … the provision of accommodation or welfare services to which Part III of the National Assistance Act 1948 refers ..., which falls to be treated as notional income under paragraph (4A) of regulation 42 above (payments made in respect of a person living in a care home, an Abbeyfield Home or an independent hospital).”

16.		The critical question, therefore, was whether the claimant was residing in a “care home”, so that both regulation 42(4A) and the disregard in Schedule 9 applied, or not, in which case regulation 42(4)(a)(ii) applied but without the benefit of a parallel disregard.

What is a care home?

17.	According to regulation 2(1) of the 1987 Regulations:

“ ‘care home’ in England and Wales has the meaning assigned to it by section 3 of the Care Standards Act 2000, and in Scotland means a care home service within the meaning assigned to it by section 2(3) of the Regulation of Care (Scotland) Act 2001;”

18.	At the time in question section 3 of the Care Standards Act 2000 provided as follows:

“Care homes

3(1) For the purposes of this Act, an establishment is a care home if it provides accommodation, together with nursing or personal care, for any of the following persons.

(2) They are—
(a) persons who are or have been ill;
(b) persons who have or have had a mental disorder;
(c) persons who are disabled or infirm;
(d) persons who are or have been dependent on alcohol or drugs.

(3) But an establishment is not a care home if it is—
(a) a hospital;
(b) an independent clinic; or
(c) a children's home,
or if it is of a description excepted by regulations.”

19.	I say “at the time in question” advisedly, as section 3 was amended by the Health and Social Care Act 2008 (see section 95 and Schedule 5, paragraph 4). Those amendments have the effect of confining subsection (3) to Wales and inserting an equivalent provision for England in the form of a new subsection (4).  However, those amendments were not in force at the material time.  They come into effect on 1 October 2010 (see the Health and Social Care Act 2008 (Commencement No 16, Transitory and Transitional Provisions) Order 2010 (SI 2010/807)).  In the present case, however, nothing would turn on these changes.

Why the First-tier Tribunal erred in law

20.	The First-tier Tribunal concluded that the college was “first and foremost an educational establishment... [and] therefore should not be treated as a care home”.  In doing so it erred in law; the two concepts are not necessarily mutually exclusive.  There is no suggestion in either the Care Standards Act 2000 or in the Income Support (General) Regulations 1987 that a care home ceases to be a care home by virtue of fulfilling some other function, unless there is an express statutory exception in the primary or secondary legislation.

21.	There can be no doubt that the college is a care home within section 3 of the 2000 Act.   This is because it “provides accommodation, together with nursing or personal care” for “persons who are disabled or infirm” within section 3(1) and 3(2)(c).  The college is certainly not excluded by any of the specific exemptions listed in section 3(3)(a)-(c).

22.	Section 3(3) also makes provision for an establishment not to be a care home if it is of “a description excepted by regulations”.  At the material time regulation 3 of the Care Home Regulations 2001 (SI 2001/3965) specified certain types of establishment as being excluded from the definition of care home.  The only possibly relevant exception is in regulation 3(1)(d), which refers to “an institution within the further education sector as defined by section 91(3) of the Further and Higher Education Act 1992”.  However, according to regulation 3(3), that exception itself does not apply if

“(a) the establishment provides accommodation together with nursing or personal care to any person; and
(b) the number of such persons is more than one tenth of the number of students to whom it provides both education and accommodation.”

23.	Whether or not the college falls within the complex definition of a further education institution in section 91(3) of the Further and Higher Education Act 1992, it is plain from the tribunal’s findings and the evidence on file that the college falls within the ‘exception to the exception’ as set out in regulation 3(3).  As the tribunal also noted, the college was the subject of an inspection report by the CSCI (now the Care Quality Commission), demonstrating that it was registered as a care home under section 11 of the 2000 Act.

24.		It is also relevant to note that at least one other statutory provision plainly contemplates that a school or college may also fall within the definition of a “care home under the 2000 Act.  Thus section 87(2) of the Children Act 1989, inserted by the 2000 Act, provides that the duty under section 87(1) to safeguard and promote the child’s welfare “does not apply in relation to a school or college which is a children’s home care home”.

25.	Mr John Tattersall, who now acts for the Secretary of State, supports the claimant’s appeal.  He accepts that although the college operates as an education al establishment that is not an exception which takes it outside the scope of the definition of “care home” in section 3 of the 2000 Act.  I regard that concession as correctly made, given the statutory framework described above.

26.		There appear to be no case law authorities directly bearing on the point.  However, the decision of the Court of Appeal in R (on the application of Moore and others) v Care Standards Tribunal [2005] EWCA Civ 627, [2005] 3 All ER 428, a case in which the owners of certain registered care homes applied for the establishments to be de-registered, has some relevance, if only by analogy.  The care homes in question were occupied by long-term residents with severe learning difficulties who required personal care.  The owners argued that the change in the residents’ status from licensees to assured tenants meant that the properties were no longer care homes; instead, the owners contended that they were providing a domiciliary care service to people in their own homes.  The Care Standards Tribunal and the High Court on judicial review both rejected that argument.

27.	Dismissing the further appeal, Sir William Aldous, giving the leading judgment in the Court of Appeal, concluded thus (at paragraph [21]):

“No doubt [counsel for the owners] is right that the intention of the Legislature was to include within the Act a range of models of care facilities, but I can see no reason why an establishment cannot provide accommodation within the meaning of that word in section 3 of the Act whether or not the accommodation provided is by lease or licence. The crucial consideration is whether the establishment provides the accommodation together with nursing or personal care. That is essentially a question of fact... The establishment of a lessor and lessee relationship can be an indicator of a situation where an establishment does not provide both the accommodation and the care, but cannot be determinative.”

28.	The Court of Appeal’s approach in that case is entirely consistent with the view derived from the analysis of the legislative provisions above, namely that a college can be at one and the same time a care home and an educational establishment.  The terms are not mutually exclusive.

29.	Given the statutory framework discussed above, the First-tier Tribunal in the present case erred in law.  It asked itself the wrong question, namely was the college an educational establishment rather than a care home, and erred by adopting what was effectively a predominant or primary purpose test.  I therefore set aside the tribunal’s decision as involving an error of law (section 12(2)(a) of the Tribunals, Courts and Enforcement Act 2007).

The decision that the First-tier Tribunal should have made

30.	The material facts are not in dispute.  It is appropriate for the Upper Tribunal to re-make the decision under appeal.   The First-tier Tribunal should have decided that the claimant was residing in a “care home”.  This means that the funding provided by the county council to cover his fees, in so far as it included sums for the cost of meals, counted as his notional income within regulation 42(4A) of the 1987 Regulations.  The original decision maker and (by implication) the First-tier Tribunal were in error in deciding that such contributions counted as notional income within   regulation 42(4)(a)(ii).  As the payments were covered by regulation 42(4A), they were fully disregarded by paragraph 66 of Schedule 9.  Had they fallen within regulation 42(4)(a)(ii), there would have been no parallel disregard available. I re-make the decision accordingly.

Other issues relating to notional income

31.	There has been some discussion in the submissions about the issue of the WAG contribution to the funding for the claimant’s fees.  I simply note the concession by Mr Tattersall on behalf of the Secretary of State in the following terms:

“The interpretation of the Secretary of State, as reflected in guidance to the Department’s decision makers, is that the disregard [under paragraph 66 of Schedule 9] applies to a payment made for accommodation or welfare services referred to in Part III of the National Assistance Act 1948 that is treated as possessed by the claimant under regulation 42(4A) of the 1987 regulations.  I therefore submit that the payments made to the claimant by the Local Authority and the Welsh Assembly Government under Part II of the National Assistance Act 1948 fall to be fully disregarded under regulation 40(2) of and paragraph 66 of Schedule 9 to the 1987 Regulations”.

32.	I merely observe that this concession may possibly underestimate the complications caused by the devolution process and how that has impacted on the responsibilities of various public bodies to provide services under the 1948 Act and analogous legislation.  However, those questions have not been fully ventilated in the present appeal and do not fall for resolution here.  I would add that there is, in any event, some further scope for certain payments made to people residing in care homes to be disregarded under paragraph 30A of Schedule 9 to the 1987 Regulations.

33.	The claimant’s representative makes a separate point.  In essence, his argument is that the WAG funding was provided purely to cover the educational element of the claimant’s college placement.  On that basis, he submits, it does not fall for consideration at all as notional income, whether under regulation 42(4)(a)(ii) or under regulation 42(4A).  On the evidence provided I can see the force of the argument that the WAG contribution to the overall package extends only to educational provision.  However, as both representatives are agreed that the WAG funding does not impact on the claimant’s own income support entitlement, I need not resolve the point one way or the other.

Conclusion

34.		For the reasons explained above, the decision of the tribunal involves an error of law.  The Upper Tribunal therefore allows the appeal and sets aside the decision of the First-tier Tribunal (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)).  The Upper Tribunal re-makes the decision in the terms as set out above (section 12(2)(b)(ii) of the 2007 Act).  Its effect is that the claimant was living in a care home and his entitlement to income support should have been calculated on that basis.

Signed on the original			Nicholas Wikeley
on 23 September 2010			Judge of the Upper Tribunal