[2024] UKUT 10 (AAC)

On 21 September 2023 the Secretary of State provided submissions, but did not support the appeal. He submitted that

“4.

For the purposes of this Response, the Secretary of State proceeds on the basis that the claimant’s fundamental concern is as set out at para. 7 of the President of the PAT’s decision granting leave to appeal dated 2 August 2023:

Essentially, the applicant argues that the legislation does not permit the abatement of UnSupp in respect of UC because UC is not named in Article 12(10) of the SPO as one of the benefits that the Secretary of State can take into account when adjusting an award of UnSupp to take account of other benefits.

5.

Assuming that is the claimant’s central complaint, it is misconceived.

6.

Of note, the claimant also seems to argue that his current conditions merit a higher assessment than the 70% he currently receives. That is the subject of a different appeal (UA-2023-SCO-000076). Accordingly, the Secretary of State does not address that issue in this response. The claimant also appears to challenge the finding that his NCFI is not severe enough to prevent him working. Given the Secretary of State has agreed that Unemployment Supplement should be paid, any such challenge is irrelevant.

The Secretary of State was entitled to abate in terms of Art 52

Abatement under Art. 52

7.

Art. 52 (1) of the Naval, Military and Air Forces etc. (Disablement and Death) Service Pension Order 2006 provides:

“(1)

Where the Secretary of State is satisfied that—

(a)

compensation has been or will be paid to or in respect of a person to or in respect of whom a pension or gratuity is being or may be paid; or …

the Secretary of State may take the compensation into account against the pension or gratuity in such manner and to such extent as he thinks fit and may withhold or reduce the pension or gratuity accordingly”.

8.

“Compensation” is defined in Art. 52(3) and includes:

“any periodical … payment in respect of the disablement … of any person … being a payment for which provision is made by or under any enactment”.

9.

The clear policy basis of this rule is to prevent double-compensation. If the recipient of a pension is compensated from another source, it is not appropriate for the state to also make an analogous payment via a war pension. That policy can be ascertained having regard to the whole scheme of the 2006 Order, including Arts. 52, 56 and 12(10). Accordingly, the Secretary of State is afforded a discretionary power to withhold or abate pension payments “as he thinks fit”.

Universal credit payment

10.

The claimant is in receipt of Universal Credit with a LCWRA component. Of note, it is the LCWRA component which has been the reason for abatement of the claimant’s pension payments.

11.

Universal Credit is provided for in terms of Part 1 of the Welfare Reform Act 2012 and replaced various previous social security benefits. The definition of limited capability for work related activity is set out at s. 37(2) of the 2012 Act:

“(2)

For the purposes of this Part a claimant has limited capability for work-related activity if—

(a)

the claimant's capability for work-related activity is limited by their physical or mental condition, and

(b)

the limitation is such that it is not reasonable to require the claimant to undertake work-related activity”.

12.

Accordingly, a LCWRA payment shall only be made in circumstances where a physical or mental condition renders it unreasonable for the individual to undertake work-related activity. Whilst expressed with different language, that is plainly analogous to “disablement” in terms of Art. 52(3) of the 2006 Order.

Justification for abatement

13.

Having regard to the above, it is clear that the Secretary of State was entitled to abate the claimant’s pension. Each of the three ingredients in the definition of “compensation” for the purposes of Reg. 52(3) have been met:

I. The pursuer receives a periodical payment: the LCWRA component of Universal Credit;

II. It is “in respect of disablement” as a result of a physical or mental condition which renders it unreasonable for him to undertake work-related activities: s. 37(2) of the 2012 Act; and

III. It is a payment for which provision is made under an enactment: the 2012 Act.

14.

Those elements having been met, the decision to abate was one for the Secretary of State to consider “as he thinks fit”. The Secretary of State had regard to the policy justification of avoiding double-compensation. His decision was rational. He had a reasonable basis to conclude that the claimant ought not to receive overlapping payments from both the Department for Work and Pensions and the Ministry of Defence in respect of his unemployability, as a result of his physical conditions. The Secretary of State was entitled to abate the claimant’s pension by reference to Art. 52 of the 2006 Order. The appeal ought to be refused.

Art 12(10) of the Order

15.

Having regard to the above reasoning, it was not necessary for the PAT to engage in the analysis of Art. 12(10) of the 2006 Order which it did. Abatement for the LCWRA component of Universal Credit clearly falls within the scope of the statutory language in Art. 52, without having to read any principles across from Art. 12(10). Nonetheless, the PAT’s analysis is consistent with the conclusion that Art. 52 allows for abatement in these circumstances.

Art 56 of the Order

16.

In her decision granting permission to appeal, the President of the PAT suggests that Art. 56 of the Order may be the correct vehicle through which to abate the claimant’s pension. The Secretary of State submits, respectfully, that such an analysis is misconceived.

17.

Art. 56 provides:

“(1)

Where a pension is awarded to or in respect of a person for any past period for which benefit under an Act referred to in paragraph (3) has also been paid to or in respect of that person (“the relevant period”), the amount of pension awarded may be abated by an amount calculated in accordance with paragraph (2)”.

18.

As noted by the President, Universal Credit falls within the scope of para. 3 of Art. 56. However, Art. 56 is directed at a separate, distinct context. Art. 56 bites “where a pension is awarded for any past period”. The decision subject to appeal related to a decision as to abatement of pension payments going forward. In such circumstances, for the reasons set out above, Art. 52 provides the correct vehicle for abatement of pension payments.

19.

Esto Art. 56 is the correct vehicle for abatement, any error of law on the part of the PAT has been immaterial. Art. 56(2) prescribes the method of abatement:

“(2)

The amount referred to in paragraph (1) is the amount by which the amount of benefit paid during the relevant period exceeds the amount of benefit which would have been payable if the pension had been paid at the same time as the benefit”.

20.

That is substantively the approach which was adopted by the Secretary of State. Any error was immaterial.

Conclusions

21.

For the reasons set out above, the Secretary of State invites the Upper Tribunal to refuse the appeal.”