[2023] UKUT 124 (AAC)

As the Secretary of State submits and the First-tier Tribunal decided, it is clear that, notwithstanding section 18(4)(b) of the 2007 Act, regulation 160 of the 2008 Regulations has the effect that a person “undergoing imprisonment or detention in legal custody” is not disqualified for receiving contributory employment and support allowance (and so remains entitled to that allowance because regulation 159 does not apply) unless a “penalty” within the meaning of regulation 160(5)(c) is imposed at the conclusion of relevant criminal proceedings.

The First-tier Tribunal decided that no “penalty” had been imposed in this case. The judge was critical of the submission made by the Secretary of State in response to his direction on the ground that the Department had chosen “to reassert its position baldly, without deigning to explain itself”, but that seems a little unfair because the direction had shown that the judge had the relevant statutory provisions in mind and he had not indicated why he considered that the definition of “penalty” was “narrow”. Insofar as it might nonetheless be said that the Secretary of State had not explicitly explained why she thought the definition was in fact broad in its scope, she more than made up for that on this appeal through Mr Anderson’s 11-page submission.

What the First-tier Tribunal appears to have done when considering the definition of “penalty” is read the words “under section 90 or 91 of the Powers of Criminal Courts (Sentencing) Act 2000” (and, perhaps, all of the following part of the definition) as describing both “imprisonment” and “detention”. Because it understood that those sections of the 2000 Act and the other statutory provisions applied only to those under the age of 18, the First-tier Tribunal appears to have concluded that no “penalty” had been imposed on the claimant because he was well above that age. The First-tier Tribunal also said it would be a nonsense for regulation 160(1)(b) to provide that there was no disqualification for payment for someone serving a sentence but for regulation 160(2) then to say the opposite.

However, the Secretary of State argues that, because sections 90 and 91 of the 2000 Act (which have now been repealed) and the other statutory provisions mentioned were concerned only with detention, the effect of the First-tier Tribunal’s construction is to render the reference to “imprisonment” entirely otiose.

Moreover, section 18 of the 2007 Act and regulation 160 of the 2008 Regulations are clearly derived from section 113 of the Social Security Contributions and Benefits Act 1992 (which may be traced all the way back to section 87(3) of the National Insurance Act 1911) and regulation 2 of Social Security (General Benefit) Regulations 1982 (SI 1982/1408) (which may be traced back to regulation 6 of the National Insurance (General Benefit) Regulations 1948 (SI 1948/1278), which was amended by the National Insurance (General Benefit) Amendment Regulations 1960 (SI 1960/1282) so as to introduce the present structure and the concept of a “penalty”). The definition of “penalty” in regulation 2(8)(c) of 1982 Regulations and its predecessors, which applied to incapacity benefit and earlier predecessors of contributory employment and support allowance, always clearly included imprisonment. The Secretary of State argues that it is unlikely that it was intended that imprisonment should effectively be excluded from the scope of the definition in the 2008 Regulations, particularly as there is no discernible policy reason for a distinction being drawn between those under 18 and adults to the disadvantage of the former.

I broadly agree with the Secretary of State’s submissions. It seems obvious that the definition of “penalty” is intended to include all sentences of imprisonment and those forms of detention for persons under 21 that may be regarded as equivalent. I accept that the relationship between regulation 160(1)(b) and regulation 160(2) (presumably derived from the drafting of regulation 2(2) of the 1982 Regulations) appears unsatisfactory, but other ways of drafting the regulation might have had other disadvantages in terms of clarity and at least the outcome, as construed by the Secretary of State, makes sense in policy terms, which the First-tier Tribunal’s construction does not.

The drafting of the definition of “penalty” itself could perhaps have been clearer and may have contributed to the First-tier Tribunal’s error, and there may be a lacuna, to which I draw attention although it is not relevant to these proceedings. Section 89(1)(a) of the 2000 Act, which has now been replaced by section 227(1) of the Sentencing Code, prohibited a court in England and Wales from passing a sentence of imprisonment on a person for an offence if he or she was aged under 21 when convicted of the offence.I would therefore have expected a reference in the definition of “penalty” in the 2008 Regulations to section 96 of the 2000 Act and section 262 of the Sentencing Code, which respectively provided and provide in England and Wales for the detention of a person aged at least 18 but under 21 in a young offenders institution, particularly as there is a reference to the equivalent Scottish provisions (sections 205(3) and 207 of the Criminal Procedure (Scotland) Act 1995). I also observe that, contrary to the submission of the Secretary of State and the view of the First-tier Tribunal, one of the statutory provisions mentioned in the definition of “penalty” does provide for imprisonment. Section 205(1) of the Criminal Procedure (Scotland) Act 1995 provides that the punishment for murder where the perpetrator is aged at least 21 is “imprisonment for life”. Only subsections (2) and (3) provide for detention of those under 21 and so the reference to that section should perhaps be confined to those subsections, although it is not actually wrong to refer to “detention … under section 205”).

In any event, I am satisfied that, reading the definition of “penalty” as a whole and in its context, with due regard to its antecedents, it is clear that any sentence of imprisonment imposed at the end of criminal proceedings is a penalty. The First-tier Tribunal erred in law in deciding otherwise. On the undisputed facts, the claimant was disqualified for receiving contributory employment and support allowance from 3 January 2020 to 21 December 2020, because a sentence of imprisonment was imposed upon him at the end of the relevant criminal proceedings.

It follows that, by virtue of regulation 159, the claimant fell to be treated as not having limited capability for work and so lost his entitlement to contributory employment and support allowance. However, there is potentially an issue as to whether entitlement was lost only from 14 February 2020 (the 43^rd day of his imprisonment), which was the view favoured by the First-tier Tribunal in its statement of reasons, or from the first day of that period, as the Secretary of State submits.

I incline towards the Secretary of State’s construction of regulation 159, which has the considerable virtue of being consistent with a literal reading of that regulation. I do not find the First-tier Tribunal’s reason for rejecting that construction – “[w]e do not wait upon some contingent happening to discover if a claimant was entitled to benefit in the past” – compelling in this context, where there must often in any event be a suspension of payments until a “penalty” is imposed because it is only then that it is possible to decide whether the claimant has been disqualified for receiving payments. On the other hand, the alternative construction was accepted by a Tribunal of Commissioners in CIB/3645/2002 at [30] on the materially indistinguishable language of regulation 4(b) of the Social Security (Incapacity Benefit) Regulations 1994 (SI 1994 No 294), although that appears to have been without argument and the point was not essential to the Tribunal of Commissioners’ conclusion that disqualification from receiving payments was not a decision as to the claimant’s entitlement to incapacity benefit which, as the Tribunal of Commissioners held, was in any event clear from the language of section 113 of the Social Security Contributions and Benefits Act 1992. (The point was not raised in the subsequent appeal to the Court of Appeal (Campbell v Secretary of State for Work and Pensions [2005] EWCA Civ 989)).

It is not strictly necessary to resolve this issue in this case, because it can make no practical difference to the claimant which construction of regulation 159 is accepted. Even on the First-tier Tribunal’s construction, he was still disqualified for receiving payments from 3 January 2020 and he was still treated as not having limited capability for work from 14 February 2020, so that he lost his underlying entitlement to contributory employment and support allowance for the last ten months of his imprisonment which, importantly (see paragraph 29 below), was a period of more than twelve weeks. In all the circumstances, I prefer not to resolve this issue of law in this case. It is sufficient that I decide that the claimant is to be treated as not having had limited capability for work from either 3 January 2020 or 14 February 2020 to 21 December 2020 and that, therefore, he was not entitled to contributory employment and support allowance from either 3 January 2020 or 14 February 2020 to 21 December 2020.