K, R (on the application of) v Secretary of State for Work and Pensions

A statutory power to recover Universal Credit overpayments is discretionary and must be exercised according to public law principles. A waiver policy must be published to the extent necessary for affected persons to understand the criteria and make meaningful representations. Decision makers must consider all relevant circumstances, including the cause of the overpayment, the claimant’s conduct, good faith, reliance, hardship and the public interest. The public sector equality duty may require reasonable enquiry where there are grounds to suspect an adverse equality impact, even if that impact is not obvious. A clear representation based on an error of law may found a legitimate expectation where protecting it would not require breach of statutory duty.

The claimant was overpaid Universal Credit because the Secretary of State repeatedly treated her son, who was undertaking an apprenticeship, as being in full-time education. She had repeatedly disclosed the relevant facts and queried her entitlement. The First-tier Tribunal confirmed that the overpayment was recoverable under section 71ZB of the Social Security Administration Act 1992.

The claimant then sought waiver of recovery. The Secretary of State refused waiver in decisions dated 19 October 2021, 20 December 2021 and 28 April 2022, applying the Benefit Overpayment Recovery Guide. The issues included publication of unpublished waiver guidance, fettering of discretion, failure to consider relevant matters, legitimate expectation and compliance with the public sector equality duty.

1. Claim allowed. The refusals to waive recovery of the Universal Credit overpayment were unlawful. The decisions were quashed, with the precise order left for further argument.
2. The power under section 71ZB of the Social Security Administration Act 1992 is discretionary, not mandatory. The BORG 2022 was not unlawful when read as a whole, but it was not the complete policy. The Secretary of State was required to apply the BORG together with the Decision Makers Guide to Waiver, insofar as the latter was more favourable to applicants.
3. The failure to publish the DMGW was unlawful. Applying Lumba and B, affected persons needed to know the operative policy in order to make informed and meaningful representations. The BORG alone did not adequately disclose the policy, including the relevance of public interest, good faith, detrimental reliance and cumulative factors.
4. The third decision unlawfully failed to consider material matters. It did not adequately address the repeated official errors, the claimant’s good faith, her repeated attempts to clarify entitlement, the public interest, or her detrimental reliance on the overpayment. The decision was also irrational insofar as its reasoning failed to distinguish the claimant’s case from the DMGW case studies.
5. The claimant had a legitimate expectation that she was entitled to the child and disabled child element during the relevant period. The representation was clear and unambiguous in context, despite being legally mistaken. Protecting the expectation would not conflict with statutory duty because recovery under section 71ZB was permissive. Fairness required protection of the expectation, given the claimant’s reliance, changed position, family circumstances and the repeated official errors.
6. The public sector equality duty applied to promulgating and revising the waiver policy. The duty to make reasonable enquiry was engaged because there were grounds to suspect that the policy might adversely affect disabled people, particularly those with mental health difficulties. The Secretary of State had not assessed the risk and extent of the adverse impact or how it might be addressed.
7. The claims that the BORG 2022 itself unlawfully fettered discretion, authorised unlawful conduct, or was irrational were rejected. The earlier decisions were also unlawful for failure to consider material matters, although it was unnecessary to determine all challenges to the earlier policy.