Would Del Boy be able to claim ESA?: A case note on Secretary of State for Work and Pensions v MA [2024] UKUT 131 (AAC)

Most of the time the Upper Tribunal involves highly vulnerable people who are caught up in the byzantine complexity of social security law. Occasionally, however (and despite the fact that Mr. MA had significant problems with substance abuse and depression), there are cases which can be both tragic but with a comedic tinge. This is one of those cases.

Mr. MA was found selling stolen [?] bikes at/in? a London Market in 2015. At the time he was receiving Employment and Support Allowance (ESA) because of his mental health difficulties. He was convicted and sent to prison for his part in what was called a “bicycle handling conspiracy”. He was found to have £29,000 in his bank account despite being officially only in receipt of some £6,500 in benefits at the time in question. The Secretary of State for Work and Pensions decided that he would require that Mr. MA repaid the monies he had received between 1 October 2014 – 5 April 2016 by way of ESA as he was working on a self employed basis, had not declared this and the work he did was above the required limit. He was asked to pay back nearly £10,000.

Mr. MA appealed to the First Tier Tribunal refuting that he was a market trader or that the DWP could prove he did self employed work. He did however accept that he was handling stolen goods during that time and at the hearing accepted that he was buying and selling bikes that he knew were stolen. He accepted that he made money from this, but spent it all on his substance misuse.

The First Tier Tribunal decided that this did not amount to “work” and the monies from it was not “income”. Unsurprisingly, the Secretary of State appealed. Someone cannot claim ESA whilst they “work” (under Regulation 40 of the ESA Regulations 2008) – this is subject to a few limited exceptions – including sitting as a member in the First Tier Tribunal. Work is not defined, but work can include that done without the expectation of payment. To claim income related ESA, someone must meet financial conditions, which involves not being engaged in “remunerative work” (WRA 2007 Schedule 1, paragraph 6(1) (e) and Reg 41 of the ESA regulations). Various arguments were deployed about whether illegal activities could ever be work, and made reference to contractual cases whereby one cannot enter into a contract to undertake something which is illegal.

Upper Tribunal Judge Wikeley was unequivocal in his answer. What was being done was work. Work is a question of ordinary interpretation. The judge said that MA’s activities were the same as those of a legitimate bike seller: he was carrying out all the activities of work and so should be considered as undertaking such. He supported this by the fact that the legislative scheme says that someone cannot make a claim if they work, and then lists things which are exceptions to that work. There is no such exclusion for criminal activity. The judge also identified that examining the definition of employment under the Regulations includes any trade, business, profession, office or vocation – again a very broad concept. The judge found that given the breadth of this concept, it would not make sense that “work” could only be income generating employment. Furthermore, under revenue law, if one is carrying on a trade, it matters not if that trade is legal or illegal, and those principles have been applied to child support legislation – so that someone who played poker for a living could be seen as plying a trade (French v Secretary of State for Work and Pensions [2018] EWCA Civ 470).

The judge did say however, that the activity must be capable of being characterised as a form of work – although he said that the earnings from, for example, pickpocketing would count when assessing if someone could receive ESA as they would have income, albeit not in the form of earnings which – subject again to exemptions which does not include ill gotten gains – are assessed as to whether someone qualifies for the benefit.

The Upper Tribunal also found that the monies he earnt from this “work” was income. Income is earnings – whether that is by way of a pay slip or working out an annual weekly wage when looking at monies from self employment. As the judge said – why should someone engaged in criminality be exempt from a means test based on income, when a person undertaking precisely the same activity but in a lawful manner is not. Further, money – for the assessment of someone’s means for this and other benefits is that it is something – whether that is capital or income – and this includes all forms of income – whether earned or unearned in the way that the legislative scheme is set out in respect of these benefits (which is to be contrasted with Universal Credit where different consideration applies).

So the next time you hear the Only Fools and Horses theme tune, just think of adding “no benefits” just before the bit about Shepherd’s Bush……

This blog was written by Fiona Scolding KC.

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