2011 10 Welfare Benefits

Tuesday 1 November 2011

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Case Law

In Child Poverty Action Group v Secretary of State for Work & Pensions [2011] EWHC 2616 (Admin), the High Court considered a challenge to the Local Housing Allowance reforms by the Child Poverty Action Group (CPAG). It was argued by the claimant that the housing benefit schemes in force from time to time showed a consistent area-based approach, the underlying concept being that the level of housing benefit payable, and the extent to which the scheme should intervene in the market, must be set by reference to local conditions. The absolute caps imposed by the changes were ultra vires because by making a large area of central London no longer accessible to housing benefit claimants in the private rented sector, the changes were contrary to the statutory purpose of having a national scheme which prevented homelessness. The claimant referred to Sedley LJ’s observations in R (Saadat) v Rent Service [2002] HLR 32 at para.13:

“The fundamental purpose of the housing benefit scheme is the very opposite: it is to ensure that people who are not under-occupying property and not over-paying rent are not made homeless through genuine inability to pay.”

Supperstone J rejected these arguments holding hat the purpose of the housing benefit scheme was to assist claimants with rent, while also protecting the public purse. It was designed to enable the Secretary of State to strike an appropriate balance between the interests of claimants and of taxpayers. There was nothing in primary legislation to prevent the DWP from introducing maximum caps in addition to the existing area-based calculation of housing benefit. Sedley LJ’s observations related to the purpose of the provision to be found in Schedule 1 to the Rent Officer Order that introduced the local reference rent regime and concerned the secondary legislation, not the primary legislation. Supperstone J therefore accepted the Secretary of State’s submission that while the express purpose of the new caps was not to “drive people… out of more affluent areas”, it could “fairly be deduced” that the caps were intended to end the subsidising of the most expensive rents across the country.

In relation to CPAG's second ground, that the Secretary of State for Work and Pensions had failed to comply with his general equality duties under the Race Relations Act 1976 and the Sex Discrimination Act 1975, Supperstone held that the Secretary of State was well aware of his equality duties and paid specific regard to them before reaching a decision to introduce any reforms to LHA arrangements, having carried out two Equality Impact Assessments (IEAs) in July and November 2010 respectively, (click here for transcript).

In Ahmed v Secretary of State for Work and Pensions [2011] EWCA Civ 1186, (click here for transcript) the Court of Appeal considered the legislation governing the payment of housing costs for homeowners. In particular the exemption to the general rule that a claimant will not be eligible for housing costs on a loan taken out after they have started claiming means-tested benefits unless it has been taken out to ‘acquire alternative accommodation more suited to the special needs of a disabled person' under paragraph 4(9) of Schedule 3 to the Income Support (General) Regulations 1987 (SI 1987/1967).

The claimant was the mother of a severely disabled child. She had lived in a privately rented house in Old Trafford until 2001 when she moved to a rented flat in Manchester. In 2006 her landlord defaulted on his mortgage payments and, as a result of possession proceedings by the mortgagee, housing benefit ceased to be paid to the claimant from April 2006. In 2007 the claimant purchased the flat with an interest only mortgage. However, her application to the DWP for help with her housing costs was refused on the grounds that the loan was not to purchase ‘alternative accommodation more suited to the special needs of a disabled person’ and had been entered into when the claimant was in receipt of income support. A tribunal allowed the claimant’s appeal against that decision having regard to the approach in CIS/3295/2003 where it was held that a gap of one year between a claimant moving into a property and obtaining a mortgage to purchase the property from her ex-husband did not necessarily entail that paragraph 4(9) could not apply and that each case had to be decided on its facts. The decision was overturned by the Upper Tribunal and the claimant appealed.

It was common ground before the Court of Appeal that the flat in Manchester was, when it was acquired, more suited to the child’s special needs than was the house in Old Trafford. The issue was whether the flat was "alternative accommodation" and whether it was "the accommodation which was occupied before the acquisition" of the flat by the claimant. The Court held that while there may be borderline cases, the answer in the present case was clear. The 6-year gap between leaving the house in Old Trafford and moving into the flat in Manchester, on the one hand, and purchasing the flat on the other, could not be ignored and it could not sensibly be said that there was the necessary link between the move and the acquisition. The Court said that the Upper Tribunal had been “absolutely right” to hold that what had happened in the present case was not that the loan was taken out for the acquisition of alternative more suitable accommodation but that the loan was taken out for the purposes of the acquisition of the existing, already suitable, accommodation.

News Update

London's Poverty Profileand the Housing Benefit cuts

In a new London's Poverty Profile report dated 20 October 2011 (click here for link), the Trust for London updates a wide range of indicators on housing, work, health and income poverty to assess what has changed since the first report in 2009. The report includes a section on ‘Changes in the Housing Benefit System’. This contains the following findings on the shortfall between Housing benefit paid under the Local Housing Allowance (‘LHA’) scheme and the rents actually charged:

  • In total, an estimated 104,000 households in London will have to supplement their LHA with other income in order to cover their rent.
  • Of these, 12,000 are single adults aged under 35 currently living alone who will now only receive the single room rate of LHA.
  • Most households affected will be in one or two-bedroom accommodation. The number of places with 4 or more bedrooms that will be affected is estimated at around 5,000.
  • On average, 1- and 2-bedroom households in Outer London are affected by a few pounds per week. It is the larger households (mainly families with children) who will face the most serious difficulties in paying their rent

Given the shortfall between the level of rents and the level of benefits paid created by the Housing Benefit reforms, and the fact that this means that parts of every borough will become “unaffordable” to private renters dependant on benefits, the report lists four possible responses to the Housing Benefit cuts: -

“Firstly, the household could cut back on expenditure in other areas. The scope for this among households that are already on low incomes must be limited.

Secondly, the landlord could lower the rent. But a survey by London Councils found that 60% of landlords would not lower their rents, and almost no landlord was prepared to lower the rent by more than £20 per week.

Thirdly, households could move into smaller, cheaper properties. This would add to the already rising levels of overcrowding in London.

Finally, households could move out of the area and move elsewhere. But … this [is] not simply a matter of moving from the expensive Inner boroughs to the cheap Outer boroughs. There will be a shortfall of affordable accommodation right across London.”

Social security coordination: Commission requests United Kingdom to end discrimination of EU nationals residing in the UK regarding their rights to specific social benefits

The European Commission released a press statement on 29 September 2011 (Reference: IP/11/1118) (click here for link) in which it stated that the 'right to reside' test contravenes EU law as it indirectly discriminates against non-UK nationals coming from other EU Member States and has requested the United Kingdom to stop its application in relation to social security benefits (e.g. Pension Credit, Tax Credits and Child Benefit as opposed to social assistance such as Income Support and Housing Benefit). Tribunals deciding social security appeals are, however, bound to apply the Supreme Court’s ruling in Patmalniece v Secretary of State for Work and Pensions (AIRE Centre intervening) [2011] UKSC 11; [2009] 4 All ER 738, in which it was held that the indirect discrimination against EU/EEA nationals was objectively justified, as it represented a proportionate response to the legitimate aim of protecting the United Kingdom's public purse against social security tourism.

The DWP issued an Urgent Bulletin (U5/2011) to its decision makers in response in which it advises -

'You may have seen a statement issued by the European Commission declaring that the right to reside test breaches EU law. DWP will be responding to the Commission on the points raised in their statement. You should continue to make right to reside decisions as normal.'

Public justice at risk, warns Administrative Justice and Tribunals Council

The Administrative Justice and Tribunals Council (AJTC) published a report on 20 October 2011 called: Securing Fairness and Redress: Administrative Justice at Risk? (click here for link). The report expresses concern about recent developments in administrative justice that make it harder for individuals to challenge government decisions. This is clear from the following extracts from the report’s conclusion at paragraphs 91-93 (highlighting added):

91. The AJTC is greatly concerned by Government proposals to remove legal aid from many areas of administrative justice. Coupled with the reduction of funding for help and advice services available from local authorities, this will mean that far more people will need to address complex administrative matters on their own. This will surely add to the current burden on administrative tribunals, leading to ever greater delays.

92. Notwithstanding these immediate concerns, the development of administrative justice into a modern, coherent and responsive system will require both a much broader strategic approach and significant cultural reform. That reform should properly start with the laws, rules and regulations underpinning administrative justice. These are often labyrinthine and impenetrable and cannot form a solid foundation for a fair and transparent system of justice. When users cannot understand the rules, reform is needed; when officials appear not to understand them, or not to know which set of rules to apply on a particular date, then that need is urgent.

93. However, any reform based solely on structural change or on ‘black letter’ law is destined to fall short. Instead, government must address a culture which persists in treating individuals and families as the subjects of government decision-making rather than as citizens and customers. It is quite simply unacceptable that government departments get decisions wrong so often, that they make it so difficult and time-consuming to get decisions corrected and that they fail to learn lessons from repeated disputes. This state of affairs contrasts ever more sharply with the rhetoric of ‘public service’ and ‘customer focus’ espoused by successive governments.

In a section headed "Help, advice and representation to pursue redress”, at paragraph 50 the AJTC expresses its “alarm” at the planed reductions to the legal aid budget and parallel reductions in local authority and similar grant-aided funding (highlighting added):-

"The AJTC is alarmed at five potential and serious consequences of cutting legal aid, which is likely to:

  • reduce access to justice,and in doing so diminish people’s confidence in the system of justice in the UK. Users who are unable to get help and advice may decide not to pursue perfectly valid cases;
  • lead to many more, and longer, hearingswhere users are unable to participate properly because they are unsure of what is expected of them;
  • increase the number of weak cases that go to tribunal. As Leggatt noted, help and advice often has the dual role of supporting people with valid cases and discouraging those with weak cases;
  • give the appearance of government acting in its own cause by making it difficult for people to challenge its decisions.

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