[2025] UKUT 200 (AAC)

Legally, the starting point is the wording of section 71ZB of the 1992 Act. Section 71ZB(1)(a) to (c) are clear in their terms. They allow the SSWP to recover any amount of UC, NSJSA and NSESA that has been paid in excess of entitlement (overpaid).

Section 71ZB(3) imposes a condition for recovering an overpayment under subsection (1). The requirement is that the original decision to pay the benefit has been reversed or varied on an appeal or revised or superseded under the Social Security Act 1998. These phrases are all describing a way of changing, in a formal and valid way, the entitlement decision that led to the overpayment arising. There is therefore a requirement to validly change the entitlement decision that created the overpayment, before it can be recovered.

Other than that, however, section 71ZB does not set out conditions that must be met for an overpayment of UC, NSJSA or NSESA to be recoverable.

Section 12 of, and Schedules 2 and 3 to, the Social Security Act 1998 deal with which DWP decisions can be appealed to an FTT. For the purpose of this appeal, the relevant provisions are in Schedule 3 to the Social Security Act 1998.

Paragraph 5 of Schedule 3 gives a right of appeal in respect of decisions whether benefit payments are recoverable under section 71 or 71A of the 1992 Act. Paragraph 6 of Schedule 3 then gives a right of appeal as to the amount of (over)payment that is recoverable.

In 2012, the Welfare Reform Act 2012 amended the 1992 Act to add in section 71ZB, as part of the suite of changes that introduced UC and the concepts of new-style JSA and new-style ESA. The Welfare Reform Act 2012 also amended Schedule 3 to the Social Security Act 1998 to add in new rights of appeal about recovery of benefits. These are paragraph 6A (not yet commenced) and paragraph 6B.

The wording and structure of paragraph 6A, which relates to housing credit payments, is equivalent to paragraph 5. For the benefit of housing credit, Parliament has therefore decided to give claimants a right of appeal about whether an overpayment of that benefit is recoverable.

The wording and structure of paragraph 6B is equivalent to paragraph 6. For the purpose of all benefits covered by section 71ZB of the 1992 Act, Parliament has therefore decided to give claimants a right of appeal about the size of the overpayment that can be recovered.

The effect is that Parliament has created the equivalent of the appeal rights in paragraphs 5 and 6, but only for housing credit overpayments. For UC, NSJSA and NSESA overpayments, the only appeal right given by Schedule 3 to the Social Security Act 1998 is the right to appeal against the decision about the size of the overpayment that can be recovered. A claimant will therefore be able to require DWP to prove, to an FTT’s satisfaction, that it has correctly calculated the size of the overpayment that it states is recoverable.

I agree with Mr Lewis’ submissions that the wording of paragraph 6B of Schedule 3 should be interpreted within the context of paragraphs 5, 6 and 6A. The wording of those provisions, and the wording of paragraph 6B itself, make clear that paragraph 6B cannot be read as applying more widely than paragraph 6. It does not create an appeal right about whether an overpayment should be recoverable.

This leaves UC, NSJSA and NSESA claimants in the position where the SSWP can recover all overpayments of those benefits, irrespective of how they have been caused. Under section 71ZB(3), there must be a valid decision to change the original entitlement decision that caused the overpayment to arise in the first place. Subject to that requirement, however, there are no specific requirements for the SSWP to meet before she can recover the overpayment. A benefit claimant is therefore left only having a right of appeal about the size of the UC, NSJSA or NSESA overpayment that can be recovered by the SSWP.

This analysis is consistent with the decision of the Upper Tribunal in LP v SSWP [2018] UKUT 332 (AAC). In paragraph 10, Upper Tribunal Judge Jacobs set out the terms of section 71ZB of the 1992 Act. Judge Jacobs wrote:

“This is different from the law that previously applied to most social security benefits: liability does not depend on a claimant misrepresenting or failing to disclose. It is also different from the law that applies to housing benefit: liability does not depend on whether there has been an official error or whether the claimant could reasonably have been expected to realise that too much benefit was being paid. That means that a claimant is liable for an overpayment even it was caused by the Secretary of State.

While I am not bound by the decision in LP, as a matter of comity and for consistency of legal principle, single judges of the Upper Tribunal will normally follow the decisions of other single judges of the Upper Tribunal unless there is good reason to depart from them (Dorset Healthcare NHS Foundation Trust v MH [2009] UKUT 4 (AAC) at paragraph 37). In any event, I agree with the analysis Judge Jacobs applied in LP, which reflects my own.

It is also consistent with the judgment in R(K), which was decided some years later. In R(K), the High Court stated, at paragraphs 13 to 15:

“13.

An appeal lies to the First Tier Tribunal against a decision under s.71ZB(3) revising or superseding a determination of entitlement to UC. Subject to any successful appeal, such a decision determines conclusively that the claimant has received benefit in excess of entitlement, and has the effect that the defendant has a statutory right to recover that amount. There is no right to appeal against the decision to seek recovery, or not to waive recovery, of an overpayment of UC.

14.

It is plain, and there is no dispute, that the statutory power in s.71ZB to recover an overpayment of UC is wider than the statutory power in s.71 to recover overpayments. The s.71ZB power enables the Secretary of State to recover any overpayment of UC, irrespective of where any fault lies. It is true, as leading counsel for the defendant, Ms Ivimy, submits that s.71 is broad enough to encompass cases where the recipient has acted in good faith (as illustrated by Plewa v Chief Adjudication Officer [1995] 1 AC 249). Nonetheless, the claimant’s description of this as a “radically new statutory context” seems apt. With the introduction of s.71ZB, for the first time, Parliament gave the defendant the power to recover overpayments even in cases where the fault lay entirely with the defendant’s department, the benefit recipient having acted in good faith, disclosing all material facts with due diligence and making no misrepresentations.

15.

As is common ground, s.71ZB is a power, not a duty, to recover UC overpayments. And that power falls to be exercised in accordance with public law principles. Given the breadth of the power in s.71ZB, and the unavailability of the defences developed by the common law to avoid injustice, the Secretary of State’s discretion to waive recovery is of crucial importance. As Sedley LJ observed in B v Secretary of State for Work and Pensions (in the context of the narrower power in s.71),

“…his officials will have in a variety of cases to decide whether it is right to take advantage of his entitlement to recover overpaid sums which in all probability will have been spent, in cases like the present, by people who do not realise that they were being overpaid.

There are restrictions in the Regulations on how much can be withheld at a time from future payments by way of recoupment; but this does not touch the underlying issue whether it is fair to recover the money at all.”

This part of the judgment in R(K) reflects Ms D’s argument that if the SSWP can recover all overpayments, even where they were caused solely by DWP’s actions and / or failures, this limits the scope to hold DWP accountable for those actions and failures. However, as explained in R(K), it emphasises the importance of the SSWP exercising its power to recover in a fair way. It does not change the statutory interpretation of section 71ZB of the 1992 Act.

Before bringing her judicial review challenge, K appealed to the First-tier Tribunal against DWP’s decision that the UC overpayment in question was recoverable from her. Paragraph 63 of R(K) confirms that DWP’s failures caused K’s overpayment to arise in the first place. Paragraph 64 sets out the wording of the First-tier Tribunal’s decision, which concluded that although the overpayment was caused by DWP’s official error, the full amount of it was recoverable from K under section 71ZB. At paragraph 65 of R(K), Steyn J. confirmed that K acknowledged (before the High Court) the First-tier Tribunal made the only decision it was able to make in her case.

After K’s appeal to the First-tier Tribunal was unsuccessful, she asked the SSWP to waive recovery of the UC overpayment. When the SSWP refused to do so, K asked the High Court to judicially review the SSWP’s refusal. Although the High Court quashed (set aside) the SSWP’s decision, the High Court did so by using the powers it had been given to deal with judicial review challenges. As Mr Lewis submitted, the High Court’s decision required the SSWP to decide, once again, whether to waive recovering the UC overpayment.

There is nothing in R(K) to suggest that K had a right of appeal to the First-tier Tribunal that allowed her to challenge the SSWP’s decision to recover the UC overpayment from her. Instead, the High Court in R(K) emphasised that K could not successfully challenge the decision to recover the overpayment from her by appealing to the First-tier Tribunal.

Applying this to IL, his rights to appeal to the FTT against the SSWP’s decisions dated 30 November 2021 and 30 December 2021 were limited to:

Because of the limits on IL’s rights of appeal about the SSWP’s decisions, the FTT did not have the jurisdiction (legal power) to decide whether the NSESA overpayment was recoverable from IL.

The FTT’s Statement of Reasons stated the FTT considered it did have jurisdiction to make its decision because it stood in the shoes of the SSWP. This is a reference to paragraph 25 of R(IB)2/04. In that decision, a three-member panel of Social Security Commissioners indicated an appeal tribunal has power to decide any make any decision on a benefit claim that the decision-maker could have considered and made. The Commissioners’ decision stated: “The appeal tribunal in effect stands in the shoes of the decision-maker for the purpose of making a decision on the claim.”.

However, an FTT is created by primary legislation and can only exercise the powers that Parliament has given it to exercise. This means a FTT can only stand in the shoes of the SSWP in respect of a matter where a benefit claimant has a valid right of appeal to the FTT. The FTT’s Statement of Reasons does not address whether IL’s right of appeal under paragraph 6B of Schedule 3 allowed him to challenge DWP’s decision to recover the overpayment. Nor did the FTT address the decision in LP. DWP relied on both those matters as reasons why IL could not challenge whether the SSWP could recover the NSESA overpayment from him (see paragraph 5 of DWP response to appeal, page F of bundle for appeal 16511-1450-8074-3928).

Furthermore, while the FTT considered that R(K) gave a basis for it to decide that DWP made an error of law by failing to consider the consequences of recovering the overpayment from IL, the FTT did not address paragraphs 13 to 15, and 63 to 65 of R(K). As explained above, those paragraphs confirm a benefit claimant has no right of appeal against the decision to recover a UC (and, by extension, a NSESA) overpayment, and the only decision available to the FTT dealing with an appeal about one, is to decide the overpayment is recoverable, irrespective of the cause.

The FTT therefore made material errors of law, including by misdirecting itself in law.