NHS Business Services Authority v Ingram

In calculating Permanent Injury Benefit, “rates in operation” refers to the statutory rate properly applicable to the deductible benefit at the date employment ceased, not simply the amount initially paid. The benefit must be one properly payable, including an amount established or corrected retrospectively. A clerical, administrative or assessment error in Industrial Disablement Benefit should therefore be corrected when calculating Permanent Injury Benefit. Regulation 13(1)(b) addresses prospective commencement or cessation of a deductible benefit and does not require an error to remain effective indefinitely.

The NHS Business Services Authority appealed under section 151(4) of the Pensions Schemes Act 1993 against a decision of the Pensions Ombudsman concerning Edward Ingram’s Permanent Injury Benefit under the National Health Service (Injury Benefits) Regulations 1995.

The Ombudsman held that the benefit should be calculated by reference to the first Industrial Disablement Benefit assessment, despite later retrospective corrections. The central issue was the meaning and effect of “rates in operation” and “payable” in regulation 4(6)(b), and the relationship with regulation 13(1)(b).

1. Construction of the scheme. The Regulations pursue the purpose of securing the relevant percentage of average remuneration, after deducting income from specified benefits. The deduction should, so far as possible, reflect the individual’s actual entitlement to the deductible benefit.
2. Meaning of “rates in operation”. In regulation 4(6)(b), the phrase refers to the method and rate of calculation laid down by the statutory provisions governing the relevant benefit. For Industrial Disablement Benefit, the relevant rate was that prescribed by Part V of Schedule 4 to the Social Security Contributions and Benefits Act 1992, as in force at the date employment ceased.
3. Meaning of “payable”. A benefit is “payable” when the individual is entitled to claim it. Once a claim has been made, the eventual amount properly due forms the basis of the Permanent Injury Benefit calculation. A retrospective correction therefore affects the calculation where it establishes the amount that should have been payable from the relevant date.
4. Regulation 13(1)(b). That provision is directed to prospective changes, including the commencement or cessation of a deductible benefit. It provides certainty and avoids repeated reassessment following ordinary benefit-rate changes, but it does not preserve an error which was wrong from the beginning.
5. The Ombudsman’s construction would permanently preserve an incorrect assessment. The Authority’s primary construction would likewise preserve the clerical overpayment because the Benefits Agency had not reclaimed it. Neither result was consistent with the Regulations. The Permanent Injury Benefit was accordingly to be calculated using the Industrial Disablement Benefit rate after correction of the clerical error.
6. The appeal was allowed. Mr Ingram was not entitled to calculation by reference to the first June 2001 assessment, nor to the amount used in the November 2007 review. His complaint was rejected.

High Court (Chancery Division): The appeal from the Pensions Ombudsman was allowed. The Ombudsman’s decision was rejected and the complaint was dismissed.