High Court rejects benefit cap claims

R(on the application of JS & Ors) v The Secretary of State for Work and Pensions and (1) Child Poverty Action Group (2) Shelter Children’s Legal Services (Interveners) [2013] EWHC 3350 (QB)

The High Court has rejected claims for a judicial review of the so-called "benefit cap".  Its judgment brings to an end – for the time being at least – speculation about the lawfulness of one of the Government’s most controversial welfare reforms and comes just months after the High Court rejected similar claims for a judicial review of the Social Sector Size Criteria, or so-called "bedroom tax".

The "benefit cap"

The "benefit cap" limits the amount of welfare benefits a claimant may receive. 
It is given effect by the Welfare Reform Act 2012, which sets the so-called "cap" by reference to a "relevant amount" of welfare benefits¹. Broadly, if the total benefits entitlement of a single claimant or couple exceeds the "relevant amount", entitlement is reduced by the amount of the excess.  Presently, the claimant’s housing benefit entitlement is reduced to accommodate the "cap"².

The "relevant amount" is determined by reference to the average net weekly earnings of a working household in Great Britain, though the Secretary of State has a discretion to set different caps for different cases³. 

At the moment, average net earnings are estimated to be £26,000 per annum and the "relevant amounts" fixed at £350 per week for single, childless claimants and £500 per week for all others⁴.

Only entitlement to prescribed benefits is considered when calculating a claimant’s total benefits entitlement⁵.  They include child benefit, child tax credit, housing benefit and all benefits to which those in work are, in principle, entitled⁶. 

Some benefits – state pension and retirement pension – may not be considered  and some claimants are exempt from the "cap" altogether⁸.  So, the "cap" does not apply: to working households (i.e. those entitled to Working Tax Credit⁹); or to those in receipt of certain benefits (disability living allowance, attendance allowance, a personal independence payment, an employment and support allowance which includes a support component, industrial injuries benefit, a war pension and an armed forces independence payment¹⁰). 

Housing benefit payments in respect of certain "exempt accommodation" – for example, refuges accommodating women fleeing domestic violence – also count as nil when determining a claimant’s total benefits entitlement.

The "cap" was introduced in four London boroughs (Bromley, Croydon, Enfield and Haringey) in April 2013 and elsewhere gradually from July 2013.  It is now in operation nationwide.

It is intended to serve several social and political aims, not least:

• introducing greater fairness between those receiving out-of-work benefits and tax payers in employment ("the fairness objective");
• reducing the cost of welfare benefits by encouraging claimants-
  –  to work; and
  –  to move to parts of the country, where rents are lower and the outlay of housing benefit therefore less; and
• preventing the potentially debilitating effect of long-term benefit dependency.

The claims

The claims for a judicial review were brought by six claimants – the mother and youngest child of three, single-parent families in London – for whom the "cap" had particularly harsh consequences.  In none of their cases were the ways of mitigating the cap’s effect particularly appropriate: none of them was able to work; none of them was able to make up the shortfall between the cap and their living expenses by more prudent housekeeping; Discretionary Housing Payments ("DHPs") provided only potential or temporary respite; and none of the claimants, for cultural or educational reasons, wanted to move far from their homes.

They challenged the lawfulness of the regulations implementing the ‘cap’ on three grounds.

1. Unlawful discrimination: the "cap", the claimants said, discriminated unlawfully against women and large families, on grounds of sex, race, religion and age, in the enjoyment of rights under Article 8 of- and Article 1 of the First Protocol ("A1P1") to the European Convention on Human Rights ("ECHR"), in breach of Article 14 ECHR. 

   They chose not to pursue a claim of direct discrimination.  Instead, they pursued closely-related claims of indirect and Thlimmenos discrimination: the former a consequence of the "cap" allegedly treating different claimants in the same way; the other of it failing to treat different claimants differently.  The claimants contended that the discrimination could not be justified.

2. Breach of the claimants’ rights under Article 8 ECHR and/or the Secretary of State’s obligations under the United Nations Convention on the Rights of the Child ("UNCRC") to ensure that the best interests of children are a primary consideration in all actions concerning children.
3. Irrationality at common law: the Secretary of State acted unreasonably, it was said, (a) by failing to obtain relevant information about the impact of the "cap" on single parents fleeing domestic violence and those in temporary accommodation and (b) by creating incentives to work for persons, such as the claimants, who are simply not in a position to work.

The claimants chose not to pursue a claim that the Secretary of State had breached the Public Sector Equality Duty imposed by section 149 of the Equality Act 2010.

The judgment in overview

It was common ground before the Court that the "cap" affected the claimants’ rights under A1P1.  The Court also accepted that it had a sufficient impact on the enjoyment of the claimants’ family life to bring it within the ambit of Article 8 ECHR.  The claimants’ rights under A1P1 and Article 8 ECHR were therefore capable of triggering the Secretary of State’s obligations under Article 14 ECHR.  The Article 8 argument added nothing, however, in the Court’s judgment, to the argument advanced under A1P1: the test of justification would be the same for both.

The Court accepted – and the Secretary of State conceded – that the "cap" had a disproportionate, adverse effect on women, because it affects lone parents disproportionately; and 92% of lone parents with children are women.

It did not accept, however, that the concept of family size fell within the purview of Article 14; nor was it prepared to accept that, by reason of its adverse effect on large families, the ‘cap’ discriminated indirectly against certain ethnic minorities or religious groups, for example Roma, Catholics and Jews.  It had no statistical evidence that any such groups tended to have larger families.  In any event, while the claims might have provided additional reason for the Secretary of State to have to justify the ‘cap’; they would not have added to the burden of justification.

As for justification, the appropriate test, as in R (MA) v Secretary of State for Work and Pensions and others [2013] EWHC 2213 (QB), the so-called ‘bedroom tax’ case, was whether the policy rationale of the "cap" was "manifestly without reasonable foundation"¹¹. 

The fact that social policy was at play meant that the Secretary of State enjoyed a wide discretion.

While it recognised the "genuine and very real hardship" the "cap" would cause for certain groups, the Court did not think that the scheme, as drafted, could possibly be said to be manifestly without reasonable foundation:

“The division of the resources of the state and more particularly the question to what extent state funds should be made available to those in need for one reason or another is par excellence a political question.  Similarly, it is not for the court to engage in a debate whether [as the claimants doubted] the objectives can in principle be achieved or not.  It is the considered view of the Secretary of State, supported by Parliament, that they can.  They take the view that a change in welfare culture is critical in the longer term, and that the imposition of a cap is an important element of that objective.”¹²

Further:

“…the immediate hardships are in many cases alleviated by the DHPs.  Whilst discretionary, temporary support of this nature does not eliminate the hardships, and cannot come near to providing justification for the policy, for the reasons given by Henderson J in Burnip v Birmingham City Council [2012] EWCA Civ 629 [2013] PTSR 117 para. 46, it is a factor which carries some weight in the proportionality exercise.”¹³

The Court considered a related but distinct argument by CPAG that, in order to achieve its fairness objective, the "cap" had to be capable of being described as "fair".  It could not be so described, CPAG argued, because application of the "cap" meant that unemployed claimants would receive considerably less than those earning the average national wage, supplemented by benefits such as child benefit.  Accordingly, the Secretary of State, it was said, was required to manipulate the benefits prescribed for the purposes of calculating the ‘relevant amount’ in order to achieve a fairer balance.

The Court considered this a forceful and cogent submission. It was uncertain whether Parliament had ever fully appreciated the extent of the differential.  However, it was in no doubt that Parliament had fully appreciated that the income of those in work would inevitably be greater than that of the unemployed.  Moreover, the claimants’ cases, though hard, were not typical of the effect of the "cap" on the country as a whole; the "bright line" rules of broad policy were necessarily arbitrary to some degree, but that did not render them disproportionate; and the Secretary of State had considerable leeway to frame the scheme in such a way as would best achieve the "cap's" objectives.

“No doubt many consider [the] exceptions to be too limited, and the cap to be too parsimonious.  But that is ultimately a policy issue, and for the reasons we have given we do not think it can be said that the scheme is so manifestly unfair or disproportionate as to justify interference by the courts.”¹⁴

The Court considered the claimants’ submission that the "cap" breached their rights under Article 8 ECHR to be "ambitious".  While the Court of Appeal had recognised that, “[w]here the welfare of children is at stake, Article 8 may require the provision of welfare support in a manner which enables family life to continue”¹⁵, it was pessimistic and premature to suggest that, in any of the claimants’ cases, family life would not continue as a result of the "cap".  The circumstances of their cases fell “well short of demonstrating a breach of Article 8”; and even if Article 8 were breached, the claimants’ circumstances would have to be typical of a class before it could be said that the scheme required amendment.  In that case, as it was in MA, the difficulty of defining the class with any precision would arguably justify any failure to provide an exception to the rule.

The Court determined the claim under the UNCRC as a preliminary issue.  In short, the UNCRC required only that national authorities treat the best interests of children as a primary consideration, not the primary consideration.  Given the explicit treatment of children’s interests in the Impact Assessment published with the Welfare Reform Bill in February 2011 and later updated, it could not conceivably be said that there had been any failure to appreciate the impact of the "cap" on children, or that the Secretary of State had failed to treat the best interests of children as a primary consideration.  Their interests were outweighed – and arguably served – by countervailing considerations of social policy: reducing long-term benefit dependency and encouraging benefit claimants to work.

Finally, the Court rejected the claim of irrationality.  There was no doubt that the Secretary of State had been well acquainted with the difficulties faced by those fleeing domestic violence or living in temporary accommodation, had consulted about them and indeed had attempted to frame the "cap" so as not to disadvantage women subject to domestic violence.  He had considered and rejected the possibility of exempting temporary accommodation.  Further, while the "cap" would bear particularly harshly on parents with young children, unable to work, it was not generally for the Court to use its common law powers to interfere with Government decisions about how to allocate funds.

Commentary

As with MA, interest in this judgment will surely be high, whether academic, legal or practical.

Academically, the judgment is interesting for its further treatment of the conceptual difference between indirect and Thlimmenos discrimination and the remedies to which they give rise.  According to Elias LJ:

“What is plain…is that as Laws noted in MA at paragraph 46, when fashioning the appropriate remedy for an unlawful act of Article 14 discrimination, the court has to have regard to the nature and extent of the alleged discrimination.  In some cases, the appropriate remedy will be to invalidate the rule or policy itself; in others – typically where the Thlimmenos formulation best captures the discrimination in issue – it may simply require its modification to deal with exceptional cases while leaving the body of the rule or policy intact.”

For Elias LJ, the consequence of that distinction here was that, if the Secretary of State had been unable to justify the "cap’s" adverse effect on women fleeing domestic violence, the Court would not have struck down the scheme as a whole: an amendment of the scheme to cater for the problems faced by victims of domestic violence would have sufficed.

Legally, the decision is interesting for its treatment, albeit brief, of DHPs. 

“Whilst discretionary, temporary support of this nature manifestly does not eliminate the hardships, and cannot come near to providing justification for the policy, for the reasons given by Henderson J in Burnip v Birmingham City Council [2012] EWCA Civ 629; [2013] PTSR 117 para. 46, it is a factor which carries some weight in the proportionality exercise.”

Elias LJ’s cautious assessment of their weight in the balance of justification falls, it is suggested, between the assessment made by the Court of Appeal in Burnip, in which broadly the availability of DHPs was considered incapable of justifying Article 14 discrimination, and that made in MA, in which, again broadly, it was the foundation of justification.  Clearly, it is suggested, the weight attributable to DHP availability is a matter with which the Court of Appeal will have to grapple again in due course.

Meanwhile, practically, local housing authorities will be readying themselves for a potential flood of homelessness applications under Part VII of the Housing Act 1996, the determination of which will, it is suggested respectfully, have been made no easier by the High Court’s judgment.

“…it seems to us inconceivable that an applicant, whether already housed or seeking housing, could properly be regarded as intentionally homeless where the rent has become unaffordable simply through the application of the benefit cap.  Moreover, it would no longer be reasonable to expect them to remain in the accommodation.  There will of course be cases where the question arises whether the reduced income resulting from the application of the cap is the real reason for being made homeless, but that does not affect the principle.”¹⁶

Whether academic, lawyer or practitioner, all will no doubt await the inevitable appeal to the Court of Appeal with interest.

1   Section 96, Welfare Reform Act 2012
2   Regulation 75D, Part 8A, Housing Benefit Regulations 2006
3   Section 97, Welfare Reform Act 2012
4   Part 8A, Housing Benefit Regulations 2006
5   Section 96(10), Welfare Reform Act 2012
6   Regulation 75G, Part 8A, Housing Benefit Regulations 2006
7   Section 96(11), Welfare Reform Act 2012
8   Section 96(4), Welfare Reform Act 2012
9   Regulation 75E, Part 8A, Housing Benefit Regulations 2006
10  Regulation 75F, Part 8A, Housing Benefit Regulations 2006
11  Applying inter alia Humphreys v HMRC [2012] 1 WLR 1545
12  Paragraph 85
13  Paragraph 87
14  Paragraph 95
15  Anufrijeva v Southwark LBC [2004] QB 1124
16  Paragraph 53