England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		24 October 2013

Timothy Brennan QC :

Introduction

1. This claim for judicial review raises an issue about access to discretionary social security benefits, namely whether depriving the claimant of access to a discretionary community care grant (CCG) from the social fund amounted to unjustified discrimination against her on a ground falling within Article 14 of the European Convention on Human Rights (ECHR) as given effect through the Human Rights Act 1998, s 1(3), s 3 and Schedule 1, Parts I and II. The claimant challenges the lawfulness of Direction 25 of the Social Fund Directions, which has the result that she is ineligible for consideration for a grant.
2. The claim proceeds only against the Secretary of State as Second Defendant because the First Defendant, the Independent Review Service (of the Office of the Social Fund Commissioner), ceased to exist with effect from 1 August 2013.

Narrative

3. As a result of health and relationship problems the claimant, who had previously been in work and paying national insurance contributions (NIC), moved out of what had been a family home and lived in various hostels. She was without relevant means and claimed employment and support allowance. She was awarded contribution based employment and support allowance (CBESA), without means testing, on the strength of her NIC record. Had that record been less full, she would (subject to means testing) nonetheless have been entitled to receive income related employment and support allowance (IRESA).
4. In due course, as part of a planned programme of resettlement, the claimant was successful in obtaining an unfurnished council property with effect from 27 May 2011. She had no furniture or other possessions and applied for a discretionary CCG in order to pay for items for her new home, including a bed, sofa, cooker, washing machine and fridge. The total amount of the expenses subject to the application was a little over £2000.
5. On the application form for the grant, dated 25 May 2011, doubtless on advice, the claimant ticked a box against the text:

I am getting income-related Employment and Support Allowance.

This was erroneous, because she was getting CBESA, not IRESA. CBESA is not a qualifying benefit for obtaining access to the social fund for the purposes of a discretionary CCG while IRESA is such a qualifying benefit.

6. The claim was refused on 24 July 2011 in a decision expressed as follows:

Direction 25 not satisfied: NIL AWARD

In context, as appears below, this meant that the refusal was because the claimant was not in receipt of a qualifying benefit (and the only potentially relevant such benefit was IRESA). She had not qualified for exercise of the discretion and the question whether she should receive a discretionary grant, and how much, therefore never arose.

7. After reviews, the decision was ultimately upheld by a decision of the First Defendant dated 22 September 2011.

Legislative framework

8. I was provided, on behalf of the claimant, with an uncontroversial analysis of the evolution of the social fund. I accept that employment and support allowance (both CBESA and IRESA) is in the nature of an income replacement benefit. The forerunners of CBESA in the social security system include invalidity benefit and incapacity benefit. The forerunners of IRESA include supplementary benefits and income support. None of these earnings replacement benefits provide a claimant with the possibility of meeting one-off payments for essential purchases outside repeating weekly expenditure on food, heating and the like. Prior to enactment of the Social Security Act 1980 that gap was filled by a system of discretionary "exceptional needs payments". On a change in 1980, a long list of the purposes for which single payments could be made was set out in regulations. In 1988 the social fund was introduced, on further change to the regime. At the time of the claimant's application for assistance the discretionary award of a CCG was the means by which that gap between weekly expenditure and one-off needs might be filled.
9. The social fund scheme was at the material time governed by the Social Security Contributions and Benefits Act 1992, Part VIII. Ignoring later changes which took effect from 1 April 2013, two types of payment might be made from the social fund. They are: (under s 138(1)(a)) payments of prescribed amounts to meet maternity expenses and funeral expenses and (under s 138(1)(b)):

Payments by way of community care grant, crisis loan or budgeting loan to meet other needs in accordance with directions given or guidance issued by the Secretary of State.

10. There is no entitlement to a community care grant. A decision whether a payment is to be made, and how much it is to be, is to be made by an appropriate officer of the Secretary of State (s 139(1)) who must have regard to all the circumstances of the case (s 140(1)), including the nature, extent and urgency of the need (s 140(1)(a)) and the amount of any relevant allocation of amounts for payment from the social fund by the Secretary of State (s 140(1)(e)). If dissatisfied with the decision of the appropriate officer, an applicant for a grant could seek internal review and then a further review by a social fund inspector under the Social Security Act 1998, ss 36-38.
11. The directions given by the Secretary of State (s 138(1)(b)) included the following:

Direction 4 – Community Care Grant qualifying conditions

4. Subject to Directions 25 and 26 a social fund payment may be awarded to promote community care –

(a) by assisting an applicant with expenses … where such assistance will –

(i) help the applicant … to establish himself in the community …

(ii) help the applicant … to remain in the community …

(iii) ease exceptional pressures on the applicant …

…

(v) help the applicant to set up home in the community … following a period during which he has been without a settled way of life.

Direction 25 – Community Care Grant eligibility

(1) For the purposes of this direction, a qualifying benefit is:

(a) income support;

(b) income-based jobseeker's allowance;

(c) state pension credit; or

(d) income-related employment and support allowance.

(2) A social fund payment under direction 4 shall only be awarded to an applicant if:

(a) the application is treated as made on a date upon which the applicant is in receipt of a qualifying benefit;

…

12. Further, Direction 42 required decision makers to have regard to budgetary considerations, including the limits on amounts allocated for this purpose.
13. The statutory underpinning for employment and support allowance is to be found in the Welfare Reform Act 2007, s 1 and Schedule 1. In short, a claimant is entitled to an employment and support allowance if he satisfies certain basic conditions and either he satisfies further conditions (relating to national insurance) set out in Part 1 of Schedule 1, or he satisfies certain conditions relating to financial position set out in Part 2 of that Schedule. If he satisfies the national insurance conditions, he gets CBESA. If he is in receipt of CBESA, it is common ground that his income is such that he does not qualify for IRESA. If he is not entitled to CBESA but satisfies the financial eligibility conditions, he is entitled to receive IRESA. In one sense CBESA and IRESA are the same benefit (and in the same amount), reached by different routes for qualification, but this is an incident of drafting. The criteria for award of CBESA and IRESA are not the same.
14. In order to confirm that an applicant is entitled to IRESA, means-testing is carried out. The evidence establishes that such testing in these circumstances is conducted by specially trained personnel by reference to formal criteria; it involves various inquiries and checks, including consideration of the means of any personal partner of the relevant applicant. It takes time and trouble.
15. When the claimant applied for a CCG, she was in receipt of CBESA and not IRESA and she had not undergone means-testing. Since she was not in receipt of IRESA, or any other qualifying benefit, she was not entitled to consideration for the relevant grant.

Article 14

16. In challenging the structure of this aspect of the social security system, the claimant contends that the failure to give her access to a CCG breaches the prohibition of discrimination in ECHR Article 14 which provides:

Prohibition of discrimination

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, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.

17. It is contended by the claimant, and the Secretary of State concedes, that the facts of this case fall within the ambit of ECHR Article 8 (right to respect for private and family life) and accordingly that the Article 14 prohibition on discrimination is engaged. The Secretary of State's concession on Article 8 makes it unnecessary to decide a further, and disputed, point namely whether the facts of the case fall also within the ambit of Article 1 of Protocol No 1 (protection of property) on the basis that access to a CCG is an incident of the qualifying benefits.
18. The claimant's case on discrimination under Article 14 is that she is discriminated against on the grounds of "property" (a ground expressly listed in Article 14), alternatively that she is discriminated against on the grounds of "other status".

Property

19. The claimant's argument under Article 14 on "property" proceeds as follows.
20. She accepts that access to a CCG, a discretionary payment, is not itself something which qualifies as a property right for the purposes of the Convention. Article 1 of Protocol No 1 creates no right to acquire property. Only if legislation provides for payment as of right (rather than by way of discretion) must it be regarded as generating a proprietary interest falling within the ambit of Article 1 of Protocol No 1. So much was decided by the European Court of Human Rights in Stec v United Kingdom (Admissibility) (2005) 41 EHRR SE18, [54].
21. However, she argues, both IRESA and CBESA are benefits which arise out of legal entitlement and are therefore appropriately regarded as property. The system has attached to property held in one form (IRESA) an advantage that is not awarded to property held in a different form (CBESA). Accordingly the ability to apply for the CCG is an incident of the property right attaching to (or consisting in) the right to an employment and support allowance and she is being discriminated against because her employment and support allowance takes the form of CBESA rather than IRESA. The critical issue (she argues) is not whether CCG gives rise to a property right, but whether the differential treatment of different forms of property for the purposes of the threshold conditions for CCG falls within the ambit of Article 1 of Protocol No 1. The difference in treatment based on the difference between IRESA and CBESA is a difference in treatment based on a difference between different forms of property, or is at least so closely related to such a difference as to fall within the reference to "property" in Article 14.
22. I accept as correct that, within the law of the Convention, the claimant had a proprietary right to the employment and support allowance which she received because she was entitled to it as of right. But there was no interference with that right. She was entitled to the payment and she received it. That she was refused CCG had nothing to do with her enjoyment of her proprietary right in CBESA. Ability to apply for a CCG was not an incident of the claimant's CBESA, because CBESA did not qualify her to apply for CCG. The refusal of the CCG was because she did not meet a threshold condition, namely being in receipt of a qualifying benefit. That she was receiving a benefit which was not a qualifying benefit was irrelevant. Similarly, it would have been irrelevant to Article 14 if (hypothetically) she had been refused access to CCG because she happened to have had available capital resources. Neither situation amounts to discrimination on grounds of property; in each situation she simply does not qualify for the grant in the first place.
23. The claimant was indeed treated differently from a hypothetical comparator who was not entitled to CBESA but who was in receipt of a qualifying benefit. But there is nothing odd about this difference of treatment, because each of the four qualifying benefits listed in Direction 25(1), including IRESA, is a means-tested benefit. Being in receipt of one of those means-tested benefits is necessary, but not sufficient, to qualify for consideration for a grant. Everyone who does so qualify will already have been means-tested and found to have very limited means. Any given grant will be a single non-recurring payment, award of which might rationally be thought not to justify extensive means-testing. It is therefore not arbitrary or objectionable that entitlement to a means-tested benefit is itself the gateway which gives access to eligibility for consideration for the grant.
24. I therefore conclude that there was no discrimination against the claimant on the grounds of "property".

Other status

25. The claimant goes on to argue that she is being discriminated against on the grounds of "other status".
26. She qualified for CBESA, with no means testing, because of her recent full working record which had given rise to her NIC position. In contrast, long-term unemployed people would not so qualify because they would not meet the contribution conditions, but they would (or might), after means-testing, meet the conditions relating to financial position and qualify for IRESA and hence for CCG. This, she argues, is discrimination against those, including her, with a recent full working record, and this feature of her history amounts to an "other status" within Article 14.
27. In my judgment the concept of "other status" in Article 14 is not as wide as the claimant argues.
28. Certain of the prohibited grounds of discrimination in Article 14 relate to core personal characteristics (for example sex, race, colour) and differential treatment based on those innate and largely immutable characteristics will be scrutinised particularly carefully by a court. Other characteristics are more concerned with what people do, or what happens to them. The relevant search is for a characteristic which is personal to the relevant individual. This generally requires one to concentrate on what somebody is, rather than what he is doing, what is being done to him, or what has happened. The more peripheral or debateable any suggested personal characteristic is, the less likely it is to come within the most sensitive area where discrimination is particularly difficult to justify. These propositions derive in particular from R (RJM) v Work and Pensions Secretary [2008] UKHL 63, [2009] 1 AC 311 in the speeches of Lord Walker of Gestingthorpe at [5] and Lord Neuberger of Abbotsbury at [44]-[46].
29. Further, the relevant "personal characteristic" is not to be defined by the very differential treatment of which a person complains (R (Clift) v Secretary of State for the Home Department [2006] UKHL 54, [2007] 1 AC 484 at [28] (Lord Bingham of Cornhill). If it were, any difference of treatment between the claimant and another person which is explained by a factual difference might be said to be based on the "other status" which is identified by that difference, and all differential treatment would (subject to justification) be prohibited by Article 14 . But Article 14 does not prohibit discrimination on any ground whatsoever. That this is correct can be seen from R (S) v Chief Constable of the South Yorkshire Police [2004] UKHL 39, [2004] 1 WLR 2196 at [49]-[52] (Lord Steyn).
30. In my judgment the treatment of the claimant simply reflected her work record and the extent of her contributions for national insurance purposes. It had no, or no sufficient, element of personal characteristic in the sense which is relevant to the concept of "other status" for the purpose of Article 14. There was in my judgment no relevant discrimination on the grounds of "other status".

Justification

31. If I were to be wrong about discrimination, the question would still arise whether such discrimination is unjustified. It is common ground that the test to be applied is whether the discrimination was "manifestly without reasonable foundation, that is to say irrational", the formula adopted by the Court of Appeal in Humphreys v Commissioners for Her Majesty's Revenue and Customs [2010] EWCA Civ 56 at [41].
32. The evidence filed on behalf of the Secretary of State is to the effect that receipt of means-tested benefits is an administratively efficient criterion for identifying claimants with low incomes and low capital resources to allow them quick access to CCG payments without the need for further evidence. Hundreds of thousands of applications are made each year (there were 369,100 refusals of CCG applications in 2011). Means testing is a complex and time-consuming task, performed by specially trained staff (different staff from those who administer CCG payments). The CCG budget is cash limited and, if resources were put into means-testing applicants for individual CCG payments, there would be less money available for grants.
33. In answer to this powerful case for a streamlined system for making single, non-repeating, payments, the claimant contends that the Secretary of State should have in place a system which recognises that it is a characteristic of the statutory scheme that one can qualify for employment and support allowance (of the same amount) by two different routes. The Secretary of State should therefore be operating a mechanism (however crude, the claimant says) for identifying those who have qualified for that amount by the CBESA route and who are in circumstances which do not differ in any material respect from those who have qualified by the IRESA route.
34. It was initially submitted that this could be achieved by the simple expedient of enquiring of an applicant for a CCG who was in receipt of CBESA whether she had any income. If the answer was "No" then that applicant would be identified as being in circumstances which do not differ in any material respect from those who have qualified by the IRESA route and she should be entitled to consideration for a CCG. If the answer was "Yes" it would not be unreasonable to treat her as disqualified for a CCG. The weakness in this approach was neatly demonstrated on behalf of the Secretary of State by reminding me that the evidence shows that the claimant herself was in receipt of housing benefit at the material time. Her answer to the simple question whether she had any income would therefore have been "Yes" and she would have been disqualified for CCG, failing her own test. The simple expedient was thereupon modified in reply. Housing benefit is disregarded for the purposes of IRESA: this was demonstrated to me by reference to a weighty document entitled "Decision Makers Guide for Employment and Support Allowance, Chapter 51". It forms part of a complex series of provisions concerning income and benefits to be taken into account, to be disregarded in part, or to be fully disregarded for the purposes of this particular allowance. I accept that housing benefit is to be disregarded, but the point about housing benefit demonstrated the weakness of the claimant's position that an abbreviated form of means-testing could and should be developed for this purpose. It would be necessary in respect of each question to import some (if not all) of the rules which are applicable to means testing and to disregards of income and benefits. Other problems can readily be imagined, for example how the position of a small trader, dependent for his income on payment of his trade debts and due to pay his own suppliers, might be assessed without reference to the detailed machinery and rules of means testing which is operated for the purposes of IRESA and other means tested benefits.
35. I have to ask whether the system operated at the material time, by reference to Direction 25, of targeting CCG only at those who were in receipt of qualifying benefits is "manifestly without reasonable foundation" and irrational. I am satisfied that it was not. As Lord Neuberger put it in RJM at [54]:

policy concerned with social welfare payments must inevitably be something of a blunt instrument

And (quoting an observation of Lord Bingham of Cornhill):

a general rule means that a line must be drawn and it is for Parliament to decide where .. and this inevitably means that hard cases will arise falling on the wrong side of it, but that should not be held to invalidate the rule if, judged in the round, it is beneficial.

36. In my judgment it is not for the court to redesign this corner of the system of social welfare payments in the way suggested by the claimant. Accordingly, had I concluded that there was any relevant discrimination for the purposes of Article 14 I would nonetheless have held that it was justified.

Conclusion

37. I therefore dismiss this claim for judicial review.