[2024] UKUT 305 (AAC)

The Secretary of State accepts that the First-tier Tribunal’s reasoning is not a model of clarity and that, in certain respects, it misdirected itself in law. In substance, however, the Tribunal made the only decision open to it, namely that the Appellant’s Welsh Government Learning Grant was, in practice, to be treated as student income, and thus included within her unearned income, for the purposes of her claim for Universal Credit.

The Appellant’s actual student loan amount constituted student income. It was a loan towards her maintenance and provided pursuant to regulations made under section 22 of the 1998 Act. Since the Appellant had a student loan, regulation 68(2) of the 2013 Regulations required her student income to be based on the amount of that loan. The First-tier Tribunal misdirected itself in law when it found that regulation 68(4) applied because that provision only applies where regulation 68(2) does not. However, that was an immaterial error. The same applies to the Tribunal’s erroneous reliance on regulation 70, a provision that was irrelevant in this Appellant’s case because it only applies where student income is to be based on the amount of a grant.

The question for the First-tier Tribunal was the amount of the Appellant’s student loan, as determined in accordance with the 2013 Regulations. The general rule is that any grant is to be disregarded (regulation 68(3)). The Secretary of State submits that none of the Appellant’s grants fell within the prescribed exceptions to the general rule. On the face of it, therefore, the Appellant’s Welsh Government Learning Grant (£2,939), special support payment (£5,161) and parent’s learning grant (£1,821) were to be disregarded.

The amount of a person’s student loan, for the purposes of the 2013 Regulations, may exceed the actual amount of the loan. This is because regulation 69(1) provides that, where regulation 68(2) applies, the maximum student loan is deemed to be the maximum “that the person would be able to acquire in respect of that [academic] year by taking reasonable steps to do so”.

The Secretary of State submits that a further deeming provision, not referred to in the First-tier Tribunal’s reasons, is the key to this appeal (the Appellant does not object to the Secretary of State arguing this point, which did not feature in the grounds of appeal). This provision is regulation 69(2). The Secretary of State’s skeleton argument submits that the effect of regulation 69(2) is as follows:

“It provides that in determining the maximum amount of student loan that would reasonably be available to the Appellant, “it is to be assumed no reduction has been made on account of… (b) any grant made to the person”.

Turning to the Welsh student finance legislation, the Secretary of State observes that the Appellant’s notional maximum student loan, for the purposes of the 2018 Regulations, must have been subject to a deduction for “the amount of any maintenance grant payable to the student that is not treated as special support payment” (regulation 56(2) of the 2018 Regulations, which applied because the Appellant was in receipt of a special support payment). The Welsh Government Learning Grant is in reality a maintenance grant payable under regulation 46 of the 2018 Regulations. By virtue of regulation 50(1), it is not treated as a special support payment. Returning to the 2013 Regulations, this means, according to the Secretary of State, that, for the purposes of regulation 69(2) of those Regulations, the amount of the Appellant’s Welsh Learning Grant was deemed to be available as part of her maximum loan amount. Any other construction would deprive regulation 69(2) of any substantive effect.

The First-tier Tribunal’s ultimate conclusion that the Appellant’s maintenance grant was to be “added onto her loan” was correct in law and accurately reflected the operation of regulation 56 of the 2018 Regulations. The Appellant’s argument that her loan could not have been reduced by her maintenance grant is wrong.

The Appellant relies on guidance published by Student Finance Wales in 2020. The Secretary of State submits that this is not an admissible aid to statutory construction but, in any event, the guidance states “maintenance loan entitlement will be the total support amount minus WGLG entitlement” which is consistent with the Secretary of State’s case.

The Secretary of State argues that it is unnecessary for any consideration to be given, for the purposes of regulation 69(2) of the 2013 Regulations, to whether the Appellant could realistically have persuaded Student Finance Wales to increase the amount of her loan. Had there been no reduction in the amount of the Appellant’s student loan on account of her Welsh Government Learning Grant, the ‘only available conclusion on the facts (given there is no dispute the Appellant was otherwise eligible for a student loan in the maximum amount) is that she could reasonably have obtained a loan in the sum of £8,239.00” which was her notional maximum amount under regulation 56(2) of the 2018 Regulations. This requires a fiction to be treated as fact but that is the very purpose of a deeming provision (O’Connor v Chief Adjudication Officer [1999] 1 FLR 1200).

The Secretary of State concedes that the First-tier Tribunal’s discussion of the Appellant’s ‘base grant’ of £1,000 has caused confusion. However, the Tribunal’s outcome decision was correct. Since the Appellant was in receipt of a special support payment, the entire £1,000 base grant was treated as part of the Appellant’s special support payment (regulation 50(1)(a) of the 2018 Regulations). What the Tribunal referred to as the Welsh Government Learning Grant was simply so much of the maintenance grant, under regulation 43 of the 2018 Regulations, as was not treated as a special support payment.

The Secretary of State submits that her preferred construction of the 2013 Regulations accords with longstanding government policy that full-time higher education is to be funded by student loans or grants rather than social security payments (see O’Connor v Chief Adjudication Officer [1999] 1 FLR 1200). That policy is served by treating a student whose maintenance loan has been reduced by reason of a maintenance grant in the same way as a student who has received the same total amount by way of a loan. The fact that student financing powers are devolved to the Welsh Government does not alter that longstanding policy and, moreover, social security is not a devolved competency.