ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE RIGHT HONOURABLE LORD JUSTICE ELIAS & THE HONOURABLE MR JUSTICE BEAN
IN THE MATTER OF A CLAIM FOR JUDICIAL REVIEW
Strand, London, WC2A 2LL
B e f o r e :
THE RIGHT HONOURABLE LORD JUSTICE LONGMORE
THE RIGHT HONOURABLE LORD JUSTICE LLOYD JONES
| THE QUEEN (ON THE APPLICATION OF SG & ORS (Previously JS & ORS))
|- and -
|THE SECRETARY OF STATE FOR WORK AND PENSIONS
- and -
1) CHILD POVERTY ACTION GROUP
2) SHELTER CHILDREN'S LEGAL SERVICE
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Mr Clive Sheldon QC & Ms Karen Steyn (instructed by The Treasury Solicitor) for the Respondent
Mr Richard Drabble QC, Mr Tim Buley & Ms Zoe Leventhal (instructed by Herbert Smith Freehills LLP) for the Child Poverty Action Group
Mr Jonathan Manning & Ms Clare Cullen (instructed by Freshfields Bruckhaus Deringer LLP) for the Shelter Children's Legal Service
Crown Copyright ©
Master of the Rolls: This is the judgment of the court to which each member has contributed.
"(6) The amount specified under subsection (5) [the "relevant amount"] is to be determined by reference to estimated average earnings.
(7) In this section "estimated average earnings" means the amount which, in the opinion of the Secretary of State, represents at any time the average weekly earnings of a working household in Great Britain after deductions in respect of tax and national insurance contributions.
(8) The Secretary of State may estimate such earnings in such manner as the Secretary of State thinks fit."
In fixing the relevant amount, therefore, the Secretary of State has to focus on the net average earnings of a working household, but he has a broad discretion how to determine that figure. He may also determine different caps for different cases: section 97(1).
i) unlawfully discriminate against (a) women generally or (b) women who are victims of domestic violence, in breach of article 14 read with A1P1;
ii) infringe article 3(1) of the United Nations Convention on the Rights of the Child ("UNCRC");
iii) unlawfully discriminate against families in breach of article 14 read with article 8 of the Convention;
iv) infringe article 8 of the Convention as a free standing claim; and
v) are unlawful at common law on the grounds of irrationality.
Article 14 read with A1P1
Discrimination against women generally
"The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, political or other opinion, national or social origin, association with a national minority, property, birth or other status."
The relevant test for justification
Is the discriminatory effect of the 2012 Regulations against women generally justified?
"The Government believes that linking the level of the cap directly to average earnings is the most transparent means of achieving its goal of increasing fairness between those out of work and receiving benefits and those tax-payers in work. The Government acknowledges that some households earning at the level of the average wage may have their income increased by in-work benefits such as Child Tax Credit or housing benefit. But calculating the level at which the benefits received by those who are not working by reference to in-work benefits would undermine the financial incentives the benefit cap provides for people to move into work. The benefit cap will only incentivise people on benefits to obtain work if it makes it more likely that a person's income will rise on entering work. Likewise, if the level of the benefit cap was based on the number of children in a household it would undermine the intention that there should be a clear upper limit to the amount of benefit families can receive."
"The Government argued that its exclusion would have undermined one of the key drivers for introducing the cap, that ultimately there has to be a limit to the overall amount of financial support that households in receipt of out of work benefits can expect to receive in welfare payments. Agreeing to exclude child benefit from the cap would have effectively resulted in there being no limit to the amount of benefit a household could receive. Further, Child Benefit, like other welfare benefits, is provided by the state and funded by tax payers and therefore with the aim of reducing welfare expenditure and reducing the deficit the Government believes it is right that it is taken into account along with other state benefits when applying the cap."
"However, after careful consideration the Government rejected this. The very high levels of rents charged for people living in temporary accommodation act as a work disincentive and the Government is therefore keen that local authorities actively seek to secure accommodation that is suitable for the applicant to move to as quickly as is feasible. The Localism Act 2011 gives local authorities additional flexibility in this respect as it enables them to end the homelessness duty by placing people into suitable tenancies in the private rented sector rather than just the social rented sector as previously. In respect of the future arrangements for helping to meet housing costs for people in temporary accommodation through the benefit system, Ministers have consulted with representatives of local authority associations in Great Britain and expect to make an announcement in the near future."
"The primary objective is to tackle the culture of welfare dependency by setting a clear limit to what people can expect from the benefits system. It is important that the system is fair and that it is seen to be fair to the taxpayers who pay for it. It is not reasonable or fair for households receiving out-of-work benefits to have a greater income from benefits than the net average weekly wage for working households. Many working people have to cope with difficult circumstances, and that have to live within their means."
"The clause is not primarily a cost-saving measure. It may save costs, but fundamentally it is about creating a more credible welfare system. It is about tackling the culture of welfare dependency in the country by setting a clear limit to what people can expect to receive from the benefits system. It is very much about fairness. Fairness applies in both directions here. Fairness also applies to taxpayers who pay for the system. We do not believe that it is reasonable or fair that households getting out-of-work benefits should receive a greater income from benefits than the average weekly net wage for working households. That is the core principle that we are seeking to put in place here.
I do not believe that we can or should write into an enabling clause in primary legislation all the different caveats that have been brought forward this afternoon. We need to work through the preparation of the regulations so that we get it right. There will clearly be further debate about the impact of the decisions that we make and about the detail of the regulations that we bring forward. What I am asking the Committee to back in the clause is simply the mechanisms to have that discussion, a discussion in which all members of the Committee are welcome to participate and to share their concerns so that we get it right."
"That our proposed level for the cap is lower than the total income of someone who is receiving in-work benefits while earning the average wage, but surely we should be ensuring that people are better off in work………..[W]e are not setting the cap at an absurdly low level. There has to be a dividing line."
"Mr Drabble makes a good case for submitting that there will be a number of cases under this policy where it is simply untrue to say that those subject to the cap will face essentially the same problems as many in work. But we do not accept his thesis that this demolishes the fairness objective which is a central plank of the whole policy. First, whilst it is true that the fairness concept has sometimes been justified by relying on the notion that those on benefit should face difficult decisions of the kind facing those in work, that will often in fact be the case. Second, the concept of fairness described by Mr Holmes recognises that there is no complete equivalence between the two precisely because of the impact of benefits on the income of those in work but that the other objectives of incentivisation and cost-saving justify adopting that principle. The Secretary of State is claiming no more than that the scheme in a general sense strikes what he considers to be a fair balance between the interests of working tax payers and those who, for one reason or another, cannot obtain work and rely on benefits. That may be described as a broad political concept of fairness; and in our view the scheme is consistent with it."
"Hence the European cases clearly establish that a member state may decide for itself how much it will spend upon its benefits system, or presumably upon its justice system, or indeed upon any other area of social policy. But within that system, the choices it makes must be consistent with the principles of equal treatment and non-discrimination. A discriminatory rule or practice can only be justified by reference to a legitimate aim other than the simple saving of cost."
"Shelter has long argued that for many benefits claimants, work does not pay. This is because households claiming housing benefit and other benefits face a steep withdrawal of benefit whenever their income increases. We welcome the fact that the government has recognised this problem and is taking a proactive approach to tackle it. "
"The reality is that the measure has to apply across the spectrum….In policy terms, we have indicated a number of areas where we would make exceptions or where we would not include benefits in the benefit cap. This set of reforms should apply across the board, and we have made provision for that…..the impact of the amendments would be to totally change that. They would write off significant parts of the welfare spectrum in terms of the people who would be excluded from these measures. In effect, the amendments would make it impossible to implement a benefit cap that would be even remotely credible in the eyes of the public."
"The Secretary of State also points out that if the difficulties highlighted by the claimants were to be eliminated by removing from the cap the benefits which can be claimed by those at work (as CPAG have suggested fairness requires), the result would be, in effect, to make the cap irrelevant in almost all cases. It would bite in very few cases indeed and would to all intents and purposes involve the effective dismantling of the policy."
Discrimination against victims of domestic violence
"One particular difficulty they face is that the Housing Benefit Regulations 2006 provide that housing benefit can be paid temporarily on two homes where a claimant is fleeing violence, while steps are taken to exclude the abuser and protect the claimant on her return to the property. Such dual payments would be liable to be caught by the cap. The government is, however, alive to the problem. The 2012 Regulations attempt to meet it by providing that housing benefit which pays the rent for a claimant in "exempt accommodation" is to be ignored; and the intention was to cover women's refuges. Lord Freud, the Parliamentary Under-Secretary who introduced the regulations, conceded in a letter in April 2013 that the definition of exempt accommodation has been too narrowly drawn and that some bona fide refuges are not within it (although there is a dispute about how many). The intention is to widen the exemption and consideration is being given to doing that. It may be that if this issue is not satisfactorily resolved a future claimant will seek to challenge by way of judicial review the inclusion of rent payable for her refuge accommodation in the benefit cap. But none of these claimants falls within that category. It is therefore unnecessary to decide in this case whether being a victim of domestic violence is an "other status" within Article 14. We will only observe that the answer is not obvious, not least because in an area of law where bright line rules are inevitable, there may be very real problems of definition."
"We would like to make clear our intention to protect providers [of supported accommodation] from any unintended consequences. For example, we wish to protect refuges and hostels where care is provided by or arranged through a 'managing agent' rather than the landlord. Such arrangements may not meet the precise definition of exempt accommodation but in all other ways the provision is identical to that which does.
Due to the legislative constraints it is not possible to put a solution in place for April. However, officials are working closely with other government departments and key stakeholders to develop workable solutions, through a change to the definition or other means, without increasing current spend …
Proposals will be brought forward at the earliest opportunity."
Conclusion on article 14 read with A1P1
UN Convention on the Rights of the Child (UNCRC)
"In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration."
"In making the proportionality assessment under article 8, the best interests of the child must be a primary consideration. This means that they must be considered first. They can, of course, be outweighed by the cumulative effect of other considerations" (para 33).
"This means, in my view, that such interests must always be at the forefront of any decision-maker's mind, rather than that they need to be mentioned first in any formal chain of reasoning or that they rank higher than any other considerations" (para 98).
(1) The Treasury Spending Review of October 2010 made clear that a principal objective of the Government was to raise children out of long term poverty (para 1.54).
(2) The Impact Assessment of 16 February 2011, quoted at length by the Divisional Court at para 48, shows that the Government was keenly aware of the impact the benefits cap would be likely to have on children.
(3) The Equality Impact Assessment of March 2011 again emphasised that an objective of the proposal is to reverse "the disincentive effects and detrimental impacts of benefit dependency on families and children" (at para 5). It acknowledged that the cap would affect large families with several children and stated that the Government was looking at ways of easing the transition for families and providing assistance in hard cases. There was further acknowledgement of the particular position of children of single mothers (para 27).
(4) The first witness statement of Mr. Holmes demonstrates that the Parliamentary debates focussed time and again on the interests of children.
(5) The Impact Assessment of 16 July 2012 addressed the grace period and the availability of DHPs to provide short term relief to families who might have to adapt their circumstances because of the effects of the cap. It also revised its assessment of the number of children likely to be affected by the cap (para 14).
Article 8 of the Convention
(1) The claimants submitted that article 8(1) was engaged and that this enabled them to rely on article 14; and
(2) The claimants made a further, free-standing submission that the cap was an unjustified interference with their article 8 rights.
"(1) Everyone has the right to respect for his private and family life, his home and his correspondence.
(2) There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others."
Homelessness and the effect of the cap
"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."
The court also pointed out that it had already been held in the Administrative Court that a local authority which owes an applicant a full housing duty does not discharge that duty by offering accommodation that is not affordable: see R (Best) v Oxford City Council  EWHC 608 (Admin).
"is conditional and contextualised by … the wide jurisdiction of the authority, the broad range of matters which can legitimately be taken into account by the authority and the extremely narrow right of challenge that exists."
As the Divisional Court said (para 54), the bottom line is that the local authority will retain an obligation to find some accommodation which the family can afford. This may mean that the accommodation offered is not where the family would like to be, but neither this nor the fact that it may be difficult to challenge a local authority decision is a reason for holding that the cap is unlawful.
Article 14 read with article 8
Is article 8(1) engaged?
"We would be inclined to accept that the imposition of the cap does have sufficient impact on the enjoyment of family life to bring it within the ambit or purview of Article 8, particularly given the relatively liberal way in which the Strasbourg Court applies that test. It can therefore trigger the Article 14 obligation. But in our opinion, in the circumstances of this case at least, Article 8 adds nothing to the argument based on A1P1. The test of justification would be the same, as the Court of Appeal considered that it was in similar circumstances in Swift v. Secretary of State for Justice  EWCA Civ 193, paras. 24-31."
Breach of article 8 (read with article 14)
The free-standing claim of breach of article 8
(1) It failed to consider the risk of loss of one's home as a result of the cap.
(2) It applied too high a test in relation to interference with family life: article 8 is capable of giving rise to a positive obligation to provide support, in particular where the absence of, or limit to, such support interferes with the family unit.
(3) It failed to give proper effect to article 3 of the UNCRC.
We have already dealt with (3) at paras 67 to 75 above. It calls for no separate consideration here.
Risk of loss of home
"It is important to recall that Article 8 does not in terms give a right to be provided with a home. Nor does any of the jurisprudence of the Court acknowledge such a right. While it is clearly desirable that every human being has a place where he or she can live in dignity and which he or she can call home, there are unfortunately in the Contracting States many person who have no home. Whether the State provides funds to enable everyone to have a home is a matter for political not judicial decision" (at para 99).
"[I]t is in my judgment important to recognise that on the Strasbourg learning art 8 does not require the state to provide a home: see Chapman v. UK (2001) 10 BHRC 48 at 72 (para. 99); nor does it impose any positive obligation to provide financial assistance to support a person's family life or to ensure that individuals may enjoy family life to the full or in any particular manner: see Vaughan v. UK App no 12639/87 (12 December 1987, unreported), Anderson and Kullmann v. Sweden (1986) 46 DR 251, Petrovic v. Austria (2001) 33 EHRR 307 at 319 (para. 26)" (at para 26)."
Interference with family life
"We find it hard to conceive … of a situation in which the predicament of an individual will be such that Article 8 requires him to be provided with welfare support, where his predicament is not sufficiently severe to engage Article 3." (para 43)
It then went on to explain that "where the welfare of children is at stake, article 8 may require the provision of welfare support in a way which enables family life to continue" (para 43). It was on this basis that it considered that Sullivan J. was correct to accept in Bernard that article 8 is capable of imposing on a state a positive obligation to provide support.
(1) MG is a single mother who has four sons living with her. Before the imposition of the cap MG's total weekly benefit income was £746.81, which included housing benefit of £395.50. Following the imposition of a cap of £500, the disposable weekly income after paying rent is £104.50 (whereas previously it was £351.31).
(2) NS is a single mother who has three sons living with her. Before the imposition of the cap NS's total weekly benefit income was £550.44, which included housing benefit of £270. Following the imposition of a benefits cap of £500, the disposable weekly income after paying rent is £230 (whereas previously it was £280.44).
(3) SG is a single mother who has three children living with her. Before the imposition of the cap SG's total weekly benefit income was £585.40, which included housing benefit of £300. Following the imposition of a cap of £500, the disposable weekly income after paying rent is £200 (whereas previously it was £285.44).
(1) MG would receive weekly benefits of £260.78 under section 95. This compares with her actual disposable weekly income, after application of the cap, of £104.50.
(2) NS would receive weekly benefits of £202.82 under section 95. This compares with her actual disposable weekly income, after application of the cap, of £230.
(3) SG would receive weekly benefits of £202.82 under section 95. This compares with her actual disposable weekly income, after application of the cap, of £200.
"… [W]hen a statutory instrument has been reviewed by Parliament, respect for Parliament's constitutional function calls for considerable caution before the courts will hold it to be unlawful on some ground (such as irrationality) which is within the ambit of Parliament's review. This applies with special force to legislative instruments founded on considerations of general policy."
"There will be a full evaluation of the benefit cap which will explore its effectiveness and analyse the appropriateness of the policy design and delivery model. The evaluation will inform any decisions on whether the cap would benefit from any changes to its structures or delivery."