Secretary of State for Work and Pensions v MA

For income-related ESA, work has its ordinary, broad meaning. Commercial activity may be work even where it is criminal. The decisive question is whether the activities, viewed as a matter of fact and degree, are capable of being characterised as work. A sustained trade in buying and selling stolen goods is work; isolated criminal acquisitive conduct need not be.

Likewise, the ESA means test does not limit income to lawfully obtained money. A claimant’s resources are income or capital, and income counts unless a statutory disregard applies. Receipts from an illicit trade may be assessed as self-employment earnings, ordinarily by net profit, or as income other than earnings.

The claimant received income-related employment and support allowance while addicted to drugs and alcohol. During the relevant period, he handled and sold stolen bicycles through markets and deposited substantial cash sums into his bank accounts.

The First-tier Tribunal allowed his appeals against decisions ending entitlement and recovering an overpayment. It held that his criminal activity was neither work nor income for ESA purposes. The Secretary of State appealed on the construction of Employment and Support Allowance Regulations 2008, regulations 40 and 90–104.

The central issues were whether sustained buying and selling of stolen bicycles was “work” and whether its proceeds were income for the income-related ESA means test.

1. Appeals allowed. The First-tier Tribunal made errors of law. Its decisions were set aside and both appeals were remitted for rehearing before a differently constituted tribunal.

2. Under regulation 40 of the Employment and Support Allowance Regulations 2008, “work” bears its ordinary meaning and is ultimately a question of fact and degree. The claimant’s sustained sourcing, purchase, sale, repair and customer-facing activities in relation to stolen bicycles were work. Their illegality did not alter that conclusion. The statutory definition covers any work, whether or not undertaken in expectation of payment, and the specified exceptions contain no exclusion for criminal work.

3. The qualification is that the activity must genuinely be capable of being characterised as work. A single private sale would not ordinarily suffice. Nor would every criminal act amount to work: the judge gave pickpocketing as an example. On the facts found, however, a substantial and organised illicit bicycle trade plainly did.

4. The First-tier Tribunal also erred by treating the claimant’s addiction and incapacity as determinative of whether he was doing work. Those matters did not answer the separate factual question posed by regulation 40.

5. “Income” under the ESA means test is not confined to lawfully acquired receipts. The scheme requires an inclusive assessment of resources. Money is either capital or income, and all income counts unless a statutory disregard applies. There was no disregard for criminal proceeds.

6. The cash receipts could in principle be assessed as earnings from self-employment, with the relevant net profit calculated from gross receipts less acquisition costs. If that route were inappropriate, they could be assessed as income other than earnings. The fresh tribunal must assess work and income week by week on the available evidence.

• Upper Tribunal (Administrative Appeals Chamber): allowed the Secretary of State’s appeals, set aside the First-tier Tribunal’s decisions for error of law under section 12(2) of the Tribunals, Courts and Enforcement Act 2007, and remitted both appeals for rehearing.
• First-tier Tribunal (Social Entitlement Chamber): on 3 May 2022 allowed the claimant’s appeals against the entitlement and consequential overpayment decisions, holding that his criminal activity was neither work nor income for income-related ESA purposes.