[2023] UKUT 193 (AAC)

deciding whether to accept those terms; and if so

completing the form and returning it to the Student Finance Authority.

It is step (c) that lies at the heart of my disagreement with CH/4429/2006. In contrast with, for example, regulations 42(2) and 49(2) (see paragraph 102 below)—and indeed in contrast with the pre-August 1999 version of regulation 57A of the Former Regulations (see paragraph 52 above)—regulation 64(3) does not assume the making of the application. Rather, deciding to apply is one of the “steps” that is needed to be taken to acquire the student loan. It follows that the decision maker must be satisfied that it would have been a “reasonable” step for the student to have taken before he may be treated as possessing a loan that has not been made to him.

It also follows that the phrase “reasonable steps” cannot be confined to “the mechanics” of obtaining a loan (see paragraph 11 of CH/4429/2006). There is nothing mechanical about the decision to apply for the loan. Even those students whose only concerns are that they do not wish to leave university with a substantial amount of debt or that they might be able to make other arrangements or else receive assistance from their families (see paragraph 4 of CH/4429/2006) will need to undertake some moderately complex calculations in order to ascertain whether they will have sufficient cash flow to see them through the academic year if they do not apply.

Moreover, if “reasonable steps” is interpreted as only applying to the mechanics of making the application, then the phrase becomes otiose. At paragraph 11 of CH/4429/2006, the Commissioner stated:

“… It is the steps needed to obtain the loan – or, putting it another way, the mechanics of doing so – which are required to be considered. If that is right, then the claimant’s argument cannot succeed. No one has sought to suggest that there is anything unreasonable about the steps which would need to be taken to obtain alone in this case. Indeed on the limited information available to me it is extremely difficult to see how the necessary steps could ever become unreasonable save in the most exceptional case.”

I would go further. If one ignores personal circumstances and focusses solely on the mechanics of the application, then is inconceivable that in any case—exceptional or not—the mechanics of applying for a student loan would ever require students to take steps that were unreasonable.

To take an extreme example, no Scheme will involve the taking of evidence under torture or deciding the application through trial by combat. The mechanics of any conceivable Scheme will involve a written application supported by evidence that the student meets the prescribed criteria. They will therefore be self-evidently reasonable.

In my judgment, therefore, the final three sentences of that passage quoted under paragraph 96 above—which are clearly correct if one grants the premise expressed in the first sentence—demonstrate that the premise is incorrect. It is to be inferred that the draftsman intended the words “reasonable steps” to have some practical effect. But if one adopts the interpretation in CH/4429/2006, they have none.

CH/4429/2006, relies in part on an argument from possible alternative legislative wording:

“11.

… It is submitted on behalf of the claimant that because of the strongly held religious beliefs of her partner and herself, it is unreasonable to expect her partner to apply for a student loan or to expect her to request him to do so. However, that is not how the regulation is worded. The regulation could have said something along the lines as “where it is reasonable for him to do so” or “reasonable in all the circumstances”. That would focus attention on the claimant’s partner and involve an examination of his reasons for not applying for a loan. However, what the regulation refers to is the taking of “reasonable steps”. Reasonable qualifies the steps which must be taken to acquire a loan. It is not concerned with other matters, such as the motives and religious beliefs of the claimant and her partner …” (my emphasis).

But it is always easy to suggest that, had a different outcome been intended, different legislative wording would have been used. It may be argued with equal justice that—if it had been intended that a student should be treated as possessing a student loan in any circumstances in which such a loan would have been awarded to him if he had applied for it (which is what is what regulation 64(3) means in practice if CH/4429/2006 is correct)—the regulation would or should have been worded:

“(b)

in the case of a student to whom a student loan is not made in respect of an academic year, the maximum student loan that would have been awarded upon application being made”.

Such an argument would, moreover, be fortified by the fact that—without any consideration of reasonableness—other parts of the housing benefit scheme do treat claimants as possessing income or capital that would become available on application. When that is the case, the relevant regulations say so in terms. For example, 42(2) (Notional income) is worded as follows:

“(2)

Except in the case of—

(a)-(h) …

any income which would become available to the claimant upon application being made, but which has not been acquired by him shall be treated as possessed by the claimant but only from the date on which it could be expected to be acquired were an application made.”

Regulation 49(2) (Notional capital) is similarly worded, the only significant difference being that the word “capital” appears instead of the word “income”.

To follow the argument through, the draftsman could have used regulations 42(2) and 49(2) as a basis for the drafting of regulation 69(3)(b). Instead he provided that a student who is eligible for a student loan, but has not in fact acquired one, should have that loan treated as income for the purpose of housing benefit if he did not take “reasonable steps” to acquire it, but not otherwise. The use of a different form of words suggests that the Secretary of State intended the phrase “reasonable steps” to mean something in practice and that the outcome required by regulation 64(3) is not the same as that required by regulation 42(2) or 49(2).

Although it is not the sole basis for my decision, I find that argument from alternative legislative wording more persuasive than the considerations that found favour in CH/4429/2006. I accept that the draftsman did not use the phrases, “where it is reasonable for him to do so” or “reasonable in all the circumstances”. Neither did he use the alternative form of words that I suggest in regulation 102 above. But he did use the wording in regulations 42(2) and 49(2), I have difficulty seeing why, if he wished to achieve the same result in relation to notional student loans, he did not use equivalent language in regulation 64(3)(b).

Moreover, the law as stated in CH/4429/2006 is in all practical respects the same as that which existed before the amendment of regulation 57A of the Former Regulations with effect from 1 August 1999. If that was what the legislator intended, it is difficult to understand why amendment was felt to be necessary. Both regulation 64 and the post-amendment version of regulation 57A contemplate that there will be circumstances in which a student will not acquire a student will not acquire a student loan despite taking reasonable steps to do so. If those reasonable steps are restricted to the mechanical steps necessary to complete the application form, then there are no such circumstances.

In that context, I note the Secretary of State’s acceptance that matters relating to at least some circumstances of an individual claimant may be relevant when assessing whether a step is reasonable (see paragraph 112 below).

Finally, even if I am wrong about all that—even if Mr Powell was correct to interpret “reasonable steps” as referring to the mechanics of making the application—then I cannot see that his conclusion follows.

Rather, I accept the claimant’s submission that the final “mechanical” step he would need to take to acquire the student loan would be to sign an agreement to the terms on which the loan was offered. That would involve agreeing to pay interest. And that is something his religion forbids him to do.

For all those reasons, I am sure that, as it relates to the construction of regulation 64, CH/4429/2006 was wrongly decided. I decline to follow it.