QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| (1) TD
(2) AD (A child, by her litigation friend TD)
(3) Ms Patricia Reynolds ('PR')
|- and -
|The Secretary of State for Work and Pensions
|- and -
|The Commissioners for HM Revenue and Customs
Edward Brown & Jack Anderson, Counsel (instructed by Government Legal Department) for the Defendant
No attendance by or on behalf of the Interested Party
Hearing dates: 23 & 24 January 2019
Crown Copyright ©
Mrs Justice May:
The Legislative Framework
An overview of welfare provision
"Universal Credit is a radical new approach to welfare
• It will bring together different forms of income-related support and provide a simple, integrated benefit for people in or out of work
• It will consist of a basic personal amount (similar to the current Jobseeker's Allowance) with additional amounts for disability, caring responsibilities, housing costs and children.
• As earnings rise, we expect Universal Credit to be withdrawn at a constant rate of around 65 pence for each pound of net earnings. Higher earnings disregards will also reinforce work incentives for selected groups.
When introduced, Universal Credit will initially apply to new clams. It will be phased in for existing benefit and Tax Credit recipients. There will be no cash losers at the point of change, ensuring that no will see their benefits reduced when Universal Credit is introduced." (emphasis added)
Introduction of Universal Credit
"1 Universal credit
(1) A benefit known as universal credit is payable in accordance with this Part.
(2) Universal credit may, subject as follows, be awarded to—
(a) an individual who is not a member of a couple (a "single person"), or
(b) members of a couple jointly.
(3) An award of universal credit is, subject as follows, calculated by reference to—
(a) a standard allowance,
(b) an amount for responsibility for children or young persons,
(c) an amount for housing, and
(d) amounts for other particular needs or circumstances."
"Provision …may secure that where an award of universal credit is made …..
(a) the amount of the award is not less than the amount to which the person would have been entitled under the terminated award, or is not less than that amount by more than a prescribed amount".
Regulations made regarding UC
Transfer to UC - cessation of legacy benefits
"8. – Termination of awards of certain existing benefits: other claimants
(1) This regulation applies where—
(a) a claim for universal credit (other than a claim which is treated, in accordance with regulation 9(8) of the Claims and Payments Regulations, as having been made) is made; and
(b) the Secretary of State is satisfied that the claimant meets the basic conditions specified in section 4(1)(a) to (d) of the Act (other than any of those conditions which the claimant is not required to meet by virtue of regulations under section 4(2) of the Act).
(2) Subject to paragraph (3), where this regulation applies, all awards of income support, housing benefit or a tax credit to which the claimant (or, in the case of joint claimants, either of them) is entitled on the date on which the claim is made are to terminate, by virtue of this regulation—
(a) on the day before the first date on which the claimant is entitled to universal credit in connection with the claim; or
(b) if the claimant is not entitled to universal credit, on the day before the first date on which he or she would have been so entitled, if all of the basic and financial conditions applicable to the claimant had been met.
(3) An award of housing benefit to which a claimant is entitled in respect of [specified accommodation] does not terminate by virtue of this regulation.
(4) Where this regulation applies and the claimant (or, in the case of joint claimants, either of them) is treated by regulation 11 as being entitled to a tax credit—
(a) the claimant (or, as the case may be, the relevant claimant) is to be treated, for the purposes of the 2002 Act and this regulation, as having made a claim for the tax credit in question for the current tax year; and
(b) if the claimant (or the relevant claimant) is entitled on the date on which the claim for universal credit was made to an award of a tax credit which is made in respect of a claim which is treated as having been made by virtue of sub-paragraph (a), that award is to terminate, by virtue of this regulation—
(i) on the day before the first date on which the claimant is entitled to universal credit; or
(ii) if the claimant is not entitled to universal credit, on the day before the first date on which he or she would have been so entitled, if all of the basic and financial conditions applicable to the claimant had been met.
(5) Where an award terminates by virtue of this regulation, any legislative provision under which the award terminates on a later date does not apply."
"13. – Appeals etc relating to certain existing benefits
(1) This regulation applies where, after an award of universal credit has been made to a claimant—
(a) an appeal against a decision relating to the entitlement of the claimant to income support, housing benefit or a tax credit (a "relevant benefit") is finally determined;
(b) a decision relating to the claimant's entitlement to income support is revised under section 9 of the Social Security Act 1998 ("the 1998 Act") or superseded under section 10 of that Act;
(c) a decision relating to the claimant's entitlement to housing benefit is revised or superseded under Schedule 7 to the Child Support, Pensions and Social Security Act 2000; or
(d) a decision relating to the claimant's entitlement to a tax credit is revised under section 19 or 20 of the 2002 Act, or regulations made under section 21 of that Act, or is varied or cancelled under section 21A of that Act.
(2) Where the claimant is a new claimant partner and, as a result of determination of the appeal or, as the case may be, revision or supersession of the decision the claimant would (were it not for the effect of these Regulations) be entitled to income support or housing benefit during the relevant period mentioned in regulation 7(3), awards of those benefits are to terminate in accordance with regulation 7.
(3) Where the claimant is not a new claimant partner and, as a result of determination of the appeal or, as the case may be, revision, supersession, variation or cancellation of the decision, the claimant would (were it not for the effect of these Regulations) be entitled to a relevant benefit on the date on which the claim for universal credit was made, awards of relevant benefits are to terminate in accordance with regulation 8.
(4) The Secretary of State is to consider whether it is appropriate to revise under section 9 of the 1998 Act the decision in relation to entitlement to universal credit or, if that decision has been superseded under section 10 of that Act, the decision as so superseded (in either case, "the UC decision").
(5) Where it appears to the Secretary of State to be appropriate to revise the UC decision, it is to be revised in such manner as appears to the Secretary of State to be necessary to take account of—
(a) the decision of the First-tier Tribunal, Upper Tribunal or court, or, as the case may be, the decision relating to entitlement to a relevant benefit, as revised, superseded, varied or cancelled; and
(b) any finding of fact by the First-tier Tribunal, Upper Tribunal or court."
(a) each of TD/AD and PR made a successful claim for UC,
(b) they succeeded in an appeal or on an application for a revision against decisions regarding a "relevant benefit",
(c) neither was a "new claimant partner", accordingly regulation 8 applied,
(d) the effect of regulation 8 was to terminate their entitlement to a "relevant benefit",
(e) it was not appropriate to revise the UC decision under regulation 13(5) as the UC decision itself was correct.
(i) The 2010 White Paper on UC, referred to above, recording:
"The Government is committed to ensuring that no-one loses as a direct result of these reforms. We have ensured that no-one will experience a reduction in the benefit they receive as a result of the introduction of Universal Credit"
(ii) A Briefing Note dated 11 September 2011 stating:
"Transitional protection will protect the existing entitlements of people already receiving the various premiums in the current system. In an individual case the need for transitional protection will depend on how the overall benefit entitlement is affected by the move to Universal Credit. The groups who may need some transitional protection as a result of the changes described in this paper include:
Families who receive the disabled child element of Child Tax credit (or the disabled child premium in income support) for a child but not the severely disabled child element
People who have been awarded the severe disability premium in the existing out of work benefits"
(iii) A further Briefing Note dated 10 December 2012 stating:
"The principle of offering Transitional Protection which avoids cash loss at the point of change and which erodes over time is an established one….
To ensure there will be no cash losers directly as a result of the migration to Universal Credit where circumstances remain the same, the Government will provide cash protection to claimants whose Universal Credit award would be less than under the old system, in the form of an extra amount to make up the difference between the old and the new. The maximum amount will be fixed at the point of change and cash protection will continue to be paid until the value of the award under the new system overtakes the levels of the pre-Universal Credit entitlement.."
(iv) The Government response to the House of Commons Work and Pensions Select Committee's third report of Session 2012-13 dated February 2013 containing the following, at para 65:
"65. Our reforms will create a simpler and fairer system with aligned levels of support for adults and children. More importantly, no-one, whose circumstances remain the same, will lose out in cash terms as a result of the move to Universal Credit. Where the total household Universal Credit entitlement would be lower than the household's total existing receipt of benefit and tax credits, Transitional Protection will be applied as a cash top-up to make up the difference. Over time, Transitional Protection will be eroded as claimants' circumstances change, allowing households time to adjust to the move to Universal Credit."
"(1) Claimants with a change of circumstances and who present fresh claims for payment ("known as 'natural migrants'); and"
(2) Claimants who have no change of circumstances and whose entitlement is recalculated by the state (known as 'managed migrants')"
Dr Fannon went on to say:
"It is the view of Government that there is a distinction between these cohorts (or that there will be when the status of managed migrant in fact comes into effect). Natural migrants are individuals who are, broadly speaking, in the same position as new claimants. They have presented a fresh claim for a wide range of reasons. They are easily recognisable and identifiable by virtue of that fact. Further, the whole process of entering claims by reference to legacy benefits is being phased out and it would make no sense to permit claimants bringing new claims (for whatever reason) to have that entitlement calculated by reference to legacy benefits rather than UC."
"The SSWP has given active and careful consideration to transitional protection for those groups who have lost disability premiums as a consequence of moving to UC in any circumstance. The social policy decision as to what transitional protection should be made available and to whom is manifested in the Draft Regulations, which the Government laid on 5 November 2018." (para 34, emphasis added)
"Claimants [currently receiving SDP] will, at some point in the future, receive a migration notice and will have to claim UC. This will be through the managed migration process. Upon managed migration, if the total amount of legacy benefit entitlement exceeds the amount of UC entitlement that difference will become a transitional element in their UC award."
TD and AD
(1) that the treatment of the Claimants amounts to unlawful discrimination contrary to Article 14 read with Article 1 of the First Protocol to the European Convention on Human Rights; in the case of TD/AD, it is said that their Article 8 rights are also engaged.
(2) that the decision of the SSWP to prevent persons in the position of these Claimants from returning to the legacy system, without providing for transitional protection, was irrational.
(3) that the SSWP has failed to comply with her Public Sector Equality Duty (PSED).
(1) Unlawful 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"
(i) whether there is differential treatment
(ii) on grounds of other status
(iii) in relation to a matter failing within the scope, or ambit, of Article 14, which
(iv) the defendant cannot show is objectively justified.
Decision of Lewis J in TP and AR
"62. The purpose, or aim, underlying the 2012 Act and the 2013 Regulations was to restructure the benefit system by introducing a simpler system which would replace the existing system of overlapping benefits with a single benefit. That was seen to be a means of ensuring the system was fairer, more affordable and better able to address poverty and worklessness. One of the things that was considered in making the 2013 regulations was the appropriate allocation of resources to those with disabilities. The view was taken that there should be a level of support for those with disabilities which was higher than the basic allowance previously paid to the support group but that there should not be additional components in universal credit equivalent to the former SDP and EDP.
64…the 2013 regulations pursue a legitimate aim, namely the proper allocation of resources and the appropriate method of structuring a welfare benefits system to provide, amongst other things, assistance to those with disabilities. The conclusion reached on how to achieve those aims was not manifestly without reasonable foundation. It is correct that where disabled persons have carers those carers will receive a cash payment in respect of the care provided to the disabled person. That reflects the view of the decision-maker that it is desirable to encourage people to act as carers and to provide them with a financial incentive to do so. Those without carers will not receive, as they formerly did, additional disability premiums in the form of SDP or EDP which they could have used, if they had wished, to purchase care. That, however, reflects the view that such disability premiums were not an appropriate mechanism for targeting support to those with such disabilities.
66. In all the circumstances it cannot be said that the decision to structure universal credit in the way that was done was manifestly without reasonable foundation. Consequently, applying that approach, it cannot be said that the differential treatment between those persons with disabilities who have carers, and those who do not, is not objectively justified."
"81. All parties accept the legitimacy of a phased transition from the existing benefits system to universal credit. I agree that the aim of achieving a gradual, or phased, introduction of universal credit is a legitimate aim. I further agree that it is legitimate to identify the fact that one aspect of the assistance needed, such as assistance with housing costs, is an appropriate trigger to move a person from the existing benefit system to universal credit.
82. The difficulty that arises in the present case, however, is the way in which the Transitional Regulations achieve that for the present group of claimants. The trigger is moving local housing authority area. Such a move however, has far-reaching consequences in relation to the income related benefits that the person receives. In particular, those who were in receipt of income related benefits in the form of the basic allowance and the SDP and EDP cease to be able to continue receiving those, and move to universal credit, and consequently suffer a considerable loss of income – but without any consideration, apparently, being given as to whether or not an element of transitional protection is appropriate for persons in this position. There is nothing in the contemporaneous material before this court to indicate that the decision-maker addressed the consequences of this method of implementation or whether, and if so what, element of protection might be appropriate.
83. Such a situation arises in a context where the Government has previously indicated that there may be groups (including severely disabled persons who were in receipt of additional disability premiums) who may need an element of transitional protection and where the Government has indicated that it needed to identify the groups for whom, and the circumstances in which, such transitional protection should be made available. That material indicates that the Government considered that this issue needed, at least, to be addressed and an element of protection may need to be provided at least in some circumstances to some groups. It is not a policy aim created or imposed by the courts. It is a potential need apparently recognised by the Government.
84. That potential need was recognised in the White Paper Cm 7957 presented to Parliament before the Bill which became the 2012 Act was enacted. It was referred to by the minister in Parliament in the debates upon the 2013 Regulations. It was referred to by the minister in correspondence in December 2012. The Briefing Notes issued in 2011 and 2012 refer to the issue and, indeed, appear to reflect the thinking of the then Government that an element of transitional protection for this group should be provided and that a change of circumstances arising out of changes in the need for housing assistance would not justify the ending of transitional protection for income related benefits.
85. Despite that, there is nothing in the material before me to indicate that the issue had been considered before the making of the Transitional Regulations either by the Government or by Parliament when the draft regulations were laid before it. There is no material indicating why the Transitional Regulations do not include any element of protection and why it is considered that the financial burden arising out of the differences between amounts received in respect of income related benefits for those with severe disabilities under the former system and payable universal credit should now fall on those who have moved from one local housing authority area to another. A change in housing circumstances may provide an explanation as to why it was appropriate to require them at that point to switch to universal credit. It does not explain why they should do so without any apparent consideration of whether any element of transitional protection should be provided in those circumstances in relation to the income related element of universal credit.
86. Applying the approach to justification favoured by the defendant, the decision to move a group of persons previously eligible for SDP and EDP onto universal credit because they move to another local housing authority area, without considering the need for any element of transitional protection (particularly in the light of earlier Government statements that an element of protection may be needed and the circumstances in which it should continue needed to be defined) is manifestly without reasonable foundation.
87. Applying the approach to justification favoured by the claimants and the Commission, the Transitional Regulations seek to pursue a legitimate aim, the phased transition to universal credit, and are rationally connected to that aim. In the absence of any evidence about the connection between that aim and the absence of any element of transitional protection, it is not easy to determine whether or not any less intrusive measure could have been adopted.
88. In any event, the material before court does not establish that the Transitional Regulations as they stand strike a fair balance between the interests of the individual and the interests of the community in bringing about a phased transition to universal credit. The impact on the individuals is clear. They were in receipt of certain cash payments (the basic allowance and SDP and EDP). They are now in receipt of cash payments which, overall, are significantly lower than the amount previously received. They are a potentially vulnerable group of persons as the Government in its own material recognises. On the material before me, there appears to have been no consideration of the desirability or justification for requiring the individual to assume the entirety of the difference between income related benefits under the former system and universal credit when their housing circumstances change and it is an appropriate moment to transfer them to universal credit. That is all the more striking given the Government's own statements over a number of years that such persons may need assistance and that there was a need to define with precision the circumstances in which they would not receive such assistance. In all the circumstances of this case, the operation of the implementation arrangements in the way they do is manifestly without reasonable foundation and fails to strike a fair balance."
Proposed comparators - status and ambit
(i) Individuals in respect of whose legacy benefits no error has been made, and/or
(ii) "managed migrants", being existing claimants whom it is proposed will, in due course, be moved to UC in a phased manner.
"Welfare benefits are inherently discriminatory in the obvious sense that they are not made available to all regardless of circumstance. Groups are defined by characteristics which policy or legislation consider appropriate for various forms of state assistance: child benefit, state pensions, disability benefits, housing benefit and CTC/UC and so on through the whole catalogue. Necessarily some fall outside those categories, whether on a blanket or bright or arbitrary line approach."
"Courts should not be over-ready to criticise legislation in the area of social benefits which depends necessarily on lines drawn broadly between situations which can be distinguished relatively easily and objectively. I would emphasise this as an important principle in terms rather more forceful than I think para 27 of Lord Wilson JSC's judgment conveys. In R (Animal Defenders International) v Secretary of State for Culture, Media and Sport  AC 1312, Lord Bingham's speech on this point read more fully at para 33 as follows:
"Thirdly, legislation cannot be framed so as to address particular cases. It must lay down general rules…A general rule means that a line must be drawn, and it is for Parliament to decide where. The drawing of a line 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.""
"64. Where a conscious, deliberate decision by a government department is taken on the distribution of finite resources, the need for restraint on the part of a reviewing court is both obvious and principled. Decisions on social and economic policy are par excellence the stuff of government. But where the question of the impact of a particular measure on social and economic matters has not been addressed by the government department responsible for a particular policy choice, the imperative for reticence on the part of a court tasked with the duty of reviewing the decision is diminished. In this case, DENI was not concerned about socio-economic choices when it decided to mimic the nomination requirement that was in place in England and Wales. It was motivated solely by the desire to maintain consistency between the two schemes. Of course, after the appellant's challenge materialised, the department addressed possible advantages that might accrue if the nomination requirement was maintained and, as I have said, these are not to be dismissed solely because they are the product of hindsight — nor even because they have been put forward post hoc as a possible justification for discrimination in reaction to the appellant's claim. But the level of scrutiny of the validity of the claims must intensify to take account of the fact that the claims are made ex post facto and the claimed immunity from review on account of the decision falling within the socio- economic sphere must be more critically examined."
"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"
"there appears to have been no consideration of the desirability or justification for requiring the individual to assume the entirety of the difference between income related benefits under the former system and universal credit when their housing circumstances change and it is an appropriate moment to transfer them to universal credit." (TP and AR at ) .
(i) the evidence of Dr Fannon, at para 41 of her first statement: "[t]he specific circumstances of claimants (such as TD and AD) whose challenge to legacy decision succeeds after their migration to UC has been specifically highlighted and considered by the Department and Ministers."
(ii) the contents of a written submission made to Lord Freud, Minister for Welfare Reform, dated 25 March 2015 entitled "UC Claimants who were previously on ESA/IB and who successfully dispute an ESA Work Capability Assessment decision" ("the March 2015 submission"), setting out matters of background, identifying and discussing possible solutions to the issue of protecting the financial position of such claimants, amongst other things whether they could be returned to the legacy system. Having set out various passages from this document in her witness statement Dr Fannon goes on to say (at para. 45):
"The 25 March 2015 submission made clear to Ministers that the situation had arisen as a consequence of a number of inter-related Ministerial decisions – to separate natural migration policy from managed moves policy and to proceed with a phased approach to roll out – which were necessary to ensure the safe and orderly roll out of Universal Credit and which resulted in the inability to provide transitional protection to appeals claimants and that such claimants may be worse off as a result"
Dr Fannon in her evidence went on to set out the "pros" and "cons" debated in the March 2015 submission before noting the recommendation made to Lord Freud that no action be taken.
(iii) a further submission made to the Minister dated 17 November 2015 entitled UC Claimants who were previously on ESA/IB and who successfully dispute a Work Capability Assessment decision ("the November 2015 submission"), looking at whether claimants could receive redress by way of special payments. Amongst other things, the submission set out and discussed a potential definition of "maladministration" as a basis for making special payments but went on to recommend no action, noting an existing scheme operated by the DWP allowing financial redress in special cases. Dr Fannon concluded as follows (at para 53):
"The March and November 2015 submissions together demonstrate that the Department explored a number of avenues related to UC Claimants who successfully dispute a legacy appeal and that these and the difficulties related to the options – both returning claimants to legacy benefits and paying some form of transitional protection – were fully considered by Ministers and that a conscious policy decision was made to retain the policy of keeping all claimants, including those who have successfully appealed a benefit decision on UC. The Ministers also considered that there would be situations where claimants would be worse off, with particular emphasis placed on the policy decisions not to replicate legacy disability premiums in UC."
(iv) Dr Fannon's evidence in her second witness statement at - above, together with the contents of the draft MM Regs and the recent enactment of provisions affecting claimants in receipt of SDP. It could readily be inferred from these, suggested Mr Brown, that the position of all benefit claimants with adverse decisions that were subsequently revised had been fully considered.
(a) it post-dated the implementation of the 2014 Regulations,
(b) it only recognised and analysed a very small subset of potentially affected claimants, namely those claiming ESA/IB in respect of whom a work capability assessment was later corrected.
(c) the position of children was not mentioned.
(d) Annex A to the submission showed that the discussion and recommendations were predicated on the basis that only a very small number of benefit claimants would be affected.
(e) the submission assumed (in 2015) that all benefit claimants would be moved very quickly (via managed migration) to UC, via a route which would involve transitional protection being made available to them.
"I fail to understand why, because DWP got it wrong…I should be the one who has to pay the price."
Conclusion on the issue of justification
"149 Public sector equality duty
(1) A public authority must, in the exercise of its functions, have due regard to the need to—
(a) eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under this Act;
(b) advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it;
(3) Having due regard to the need to advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to—
(b) take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it;