2012 02 Welfare Benefits

Thursday 1 March 2012

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Welfare Reform Bill 2011 Update

The Government lost a further vote in the House of Lords on the ‘bedroom tax’ in the Welfare Reform Bill 2011 (the reduction in housing benefit due to underoccupying where those people had no more than one spare room and no suitable accommodation was available). On 14 February 2012 peers voted, by 236 to 226, on an amendment which would exempt certain social housing tenants - those not required to seek work, carers, people with disabilities, war widows and foster carers - from the 'bedroom tax'. The DWP in a statement said that the government will seek to overturn the size criteria amendment when the bill returns for further consideration by the Commons.

Lord Freud announced concessions in relation to the treatment of people receiving treatment for cancer, including a presumption that those people should be in the support group of employment and support allowance (ESA) for the first six months, unless medical evidence suggested otherwise, [Hansard 14 Feb 2012: Column 736] and a review of guidance relating to the period of recovery from treatment to 'ensure that individuals can remain in the support group for as long as appropriate'. As to the concessions that the Government has already made as a result of the debates in the Housey Lord Freud said:

"On ESA time-limiting, we accepted the need to make amendments to protect those with degenerative conditions. On the benefit cap, we have put in a nine-month grace period and exempted those in the support group of ESA, again in response to debates in this House. On PIP, we have made a number of changes to the required-period condition and have restored the mobility component for those in residential homes. Within universal credit, we have put in £300 million a year to afford additional childcare. That all added up in this spending review period to £638 million. Looked at as an ongoing cost when universal credit is introduced, it amounts to an extra £518 million per annum in a steady state. Each of those concessions was made as a direct result of the debates that we had in this House."[Hansard: 14 Feb 2012: Column 692].

For the BBC story 'Ministers lose Lords welfare vote' click here.

For Hansard 14 Feb 2012: Column 681 click here

On 21 February 2012, MPs voted, by 316 to 263, to overturn the Lords amendment. Minister for Employment Chris Grayling told MPs that the amendment, which would cost £100m, infringed the 'financial privilege' of the House of Commons.

Mr Grayling also announced government support for an amendment to the Welfare Reform Bill 2011which would allow a future government, if they could identify an appropriate funding source, to increase the length of the contributory employment and support allowance time limit (currently proposed to be one year) through regulations rather than further primary legislation.

For the House of Commons Welfare Reform Bill debate in Hansard (21 Feb 2012: Column 750) click here

Discretionary Housing Payment Allocation

Local authorities are failing to spend all of their discretionary housing payment (DHP) allocation, according to government figures obtained under a Freedom of Information request. The Guardian on 1 February 2012 reported that figures obtained by director of the Landlord Information Network Claire Turner, show that nearly £1m of the £20m allocated by the DWP to local authorities for DHP's in 2010/2011 was not used, with six authorities using less than half of their allocation. Examples include Wirral which has underspend by 53%, Lincoln by 49%, Wolverhampton by 41% and Wiltshire by 34%

For the Guardian story 'Councils fail to spend thousands earmarked for housing poor tenants' click here

Mandatory Work Experience Scheme – Jobseeker's Allowance

Under the Jobseeker’s Allowance (Work Experience) (Amendment) Regulations 2011 (SI 789), which came into force on 5 April 2011, a claimant can be sanctioned for leaving a work experience placement if they fail to attend the placement on the first day; give up the placement after the first week; or lose the placement due to misconduct.

New DWP statistics published on 16 February 2012 show that 24,010 claimants were referred for mandatory work activity between May and November 2011. According to a Guardian report 'Tens of thousands of unemployed people made to work without pay'

"The first set of statistics on the government's mandatory work activity (MWA) programme reveals that from when the scheme started in May 2011 until November, 24,010 jobseekers were referred to work for four weeks unpaid for 30 hours a week.

Under the scheme – the first of its kind in the UK – jobcentre managers have the power to make unemployed people do a month's work experience at charities, government offices or high-street chains if they feel claimants "fail to demonstrate the focus and discipline necessary to seek out, secure and retain employment opportunities". If they do not take part, claimants have their benefits removed for 13 weeks. A second failure to take part means benefits are removed for six months."

For link to Guardian story 'Tens of thousands of unemployed people made to work without pay' click here

On 20 February 2012 the Guardian reported that the supermarket chain Tesco had asked the government to remove sanctions from the work experience scheme. Responding to public concern that it is profiting from the use of jobseekers as subsidised labour, Tesco issued a statement last Friday (17 February 2012) saying that it wanted the work experience scheme, under which claimants are expected to work for up to eight weeks for 30 hours a week, to be free from any sort of sanction:-

'We understand the concern that those who stay in the scheme longer than a week risk losing their benefits if they drop out before the end of their placement... We have suggested to DWP that to avoid any misunderstanding about the voluntary nature of the scheme, this threat of losing benefit should be removed.'

The Guardian also reports that Sainsbury's, Waterstones and TK Maxx have withdrawn from the scheme, and says that it understands that other major high street chains are reconsidering their involvement.

For link to Guardian story 'Tesco asks government to change flagship jobless scheme' click here

Recent Case-law

In Oxford City Council v John Basey [2012] EWCA Civ 115 (15 February 2012) the Court of Appeal considered whether a group home for people with learning disabilities counted as ‘sheltered accommodation’ for the purpose of the Housing Benefit Regulations 2006 ("the Regulations"). If the claimant resided in sheltered accommodation he was entitled to have his share of the costs of fuel for, and cleaning of, the rooms of common use in his accommodation included in his eligible rent for the purpose of calculating the amount of his housing benefit. The claimant, who had severe learning disabilities, was a tenant of a housing association and was one of four tenants of the property, all of whom had similar difficulties. Each tenant had their own bedroom and they shared one kitchen, one bathroom, two toilets, two sitting rooms and one other room. Care, support and supervision by staff were provided 24 hours per day, although only for two to three hours daily on a one to one basis. There were usually two staff member on duty in the morning, three in the afternoon, and two overnight (one awake and one sleeping) and there was a room reserved for the exclusive use of staff. The local authority had decided that the weekly charges relating to communal rooms could not be met by HB as the claimant did not reside in ‘sheltered accommodation’ for the purposes of para. 8 of Sch. 1 to the Regulations. The local authority argued that for accommodation to be ‘sheltered accommodation’ there must be (i) some type of warden or scheme manager and an emergency alarm system; (ii) the residents must be capable of living independently for part of the time, without round the clock supervision or support; and (iii) the property must be self-contained (i.e. with cooking and washing facilities within the unit of occupation).

The Court upheld the Upper Tribunal's decision [CH/322/2010; [2011] UKUT 136 (AAC) noted at Welfare Benefits Update for May 2011], that a broad view should be taken of the meaning of the term 'sheltered accommodation' and this meant that the cost of fuel and cleaning of communal rooms was covered under the Regulations (The Court rejected the local authority's submission that accommodation such as the claimant's should be described as 'supported accommodation', rather than 'sheltered accommodation', because its occupants were not able to live independently:

'In reality, there are varying degrees of ability to lead an independent existence, and the special provision made in Schedule 1 for the cost of lighting, heating and cleaning common rooms in sheltered accommodation is a recognition of the fact that the occupiers of such accommodation may well be leading less independent lives than those who occupy “ordinary” housing.' (paragraph 27).

Dismissing the local authority's appeal, the Court said that Upper Tribunal Judge Levenson was correct in his conclusion that the type of accommodation occupied by the claimant was sheltered accommodation for the purposes of the Regulations since:

'Parliament did not choose to define sheltered accommodation and the Court should not impose a prescriptive definition upon an inherently flexible concept which can take many different forms, and which now includes very sheltered or extra care sheltered accommodation.' (paragraph 33).

Click here for transcript

Wychavon DC v EM [2012] UKUT 12 (AAC) concerned payment of HB where the claimant lacked capacity. EM was profoundly physically and mentally disabled. Her parents moved her from a care home, with the support of Worcestershire CC to an annex which they constructed at their home. EM had previously lived in the garage at their home, but this was unsuitable as EM required round the clock care from three carers, who needed their own accommodation. An application for HB was made based on a tenancy agreement expressed to be between EM and her father. The agreement was signed by the father but in the space for EM it stated that she was “profoundly disabled and cannot communicate at all.” The local authority refused the HB claim saying that EM was not liable for rent. On appeal, a First-tier tribunal held that EM was liable because, notwithstanding her lack of capacity, she was bound by the tenancy, and the contract was voidable rather than void. The local authority appealed.

In an initial decision [[2011] UKUT 144 (AAC), CH/171/2011] Upper Tribunal Deputy Judge Mark had held that it was a void agreement because EM’s father clearly knew that she lacked capacity. Moreover, EM could not be a party to the tenancy as she could not communicate any agreement to it. As there was no agreement there could not be any liability to pay rent under reg 8 of the HB Regulations 2006 (SI. 2013). Nor could it be said that EM was liable to pay rent on the basis that she benefited from the agreement, as EM had no understanding of the basis on which she stayed at her home, either before or after her father signed the purported agreement.

When EM applied for permission to appeal, Deputy Judge Mark used the power in Rule 45(1)(a) of the Tribunal Procedure (Upper Tribunal) Rules 2008 to re-open the decision on the basis that he had overlooked a legislative provision or binding authority which could have a material effect on the decision. The new grounds being advanced on behalf of EM was that she was liable for the tenancy as a contract for necessaries, either under section 7, Mental Capacity Act 2005 or the common law position as exemplified by In Re Rhodes (1890) 44 Ch D 94. EM also referred to the commentary in Chitty on Contracts 30thedition, para. 8-008.

The Upper Tribunal concluded that the common law (if not section 7 of the 2005 Act) would cover EM's case as on the facts the provision of the accommodation was a necessary. As Judge Mark also notes that HB is not only payable where a person is liable for rent but in respect of payments for the dwelling which is occupied as a home and that EM was clearly liable in this sense.

"I am in some doubt whether “services” in section 7 of the Mental Capacity Act 2005 is wide enough to cover the provision of accommodation, but I have no doubt that insofar as it is not wide enough, the common law rules as to necessaries survive and that the provision of accommodation is an obvious necessary. In this case the accommodation was provided in circumstances which leave me in no doubt that it was provided with the intention that the claimant should pay for it with the assistance of housing benefit. I have no difficulty therefore in implying such an obligation on the part of the claimant.

To be entitled to housing benefit, the claimant does not have to be liable for rent as such. It is sufficient under section 130 of the Social Security Contributions and Benefits Act 1992 that she is liable to make payments in respect of the dwelling which she occupies as her home, an expression that is repeated in the 2006 Regulations. For the reasons given, she did have such a liability at the relevant time. (paragraphs 28-29)."

Click here for transcript

Welfare Benefits and International law

In B v the United Kingdom (36571/06) [2012] ECHR 255 (14 February 2012), the claimant, who has a severe learning disability, was in receipt of Income Support and Child Benefit in respect of her three children. The children were taken into care in October 2000, but the DWP were not informed of the change in circumstances until December 2001. As a result, the DWP decided that B had been overpaid an amount of Income Support and that the overpayment was recoverable from her by way of deductions from her future entitlement to benefit. Before the Court of Appeal B had submitted that there had been a violation of Article 14 of the Convention, when read in conjunction with Article 1 of Protocol No. I, in that the State’s interference with her possessions discriminated unjustifiably between people who were unable to report facts because they were not aware of them and people who, like the applicant, were unable to report them for some other reason. The Court dismissed B's appeal in 2005 in B v Secretary of State for Work and Pensions [2005] EWCA Civ 929, holding that the argument fell at the first fence because there were no possessions of the applicant at stake: what the Secretary of State was claiming was an entitlement to recover money which should not have been paid to the applicant in the first place. The Court refused permission to appeal to the House of Lords.

Before the European Court of Human Rights (ECtHR) B argued that a determination under section 71 of the Social Security Administration Act 1992 that there was a recoverable overpayment created a chose in action enforceable by the Secretary of State against any possessions which she might have. In the alternative, B complained that the overpaid benefit was itself a “possession” for the purposes of Article 1 of Protocol No. 1 because she had remained entitled to the increased award until the Secretary of State formally decided to supersede it. Consequently, the decision to recover the overpaid benefit amounted to an interference with her possessions, regardless of how it was to be achieved based on the Court’s approach in Moskal vPoland, no. 10373/05, 15 September 2009), in which it held that the discontinuation of a benefit wrongly awarded to the applicant interfered with her possessions for the purposes of Article 1 of Protocol No. 1. The Government submitted that the application should be declared inadmissible on account of its incompatibility ratione materiae with the Convention because there was no interference with any “possessions” of B as she had never satisfied the conditions of entitlement to the amounts of Income Support which were overpaid to her.

The ECtHR rejected B's first complaint as the Secretary of State had decided to recover the overpaid benefit by deducting it from future prescribed benefits. Hence there was no question of the Secretary of State interfering with B’s existing possessions. So far as any interference with a right to a possession was concerned the Court said that the decision in Moskal v Poland could be distinguished as the relevant mistake was that of the Polish Social Security Board, whereas in the present case the payment of benefit to which the applicant was not entitled was the result of her own failure to report the fact that her children had been taken into care. The Court said that where a benefit system relies on recipients to report any change in their circumstances, it would be perverse if they could acquire an assertable right to overpaid benefit where they have failed to report such a change. To hold otherwise would enable recipients of benefits to profit from their own omissions and, in some cases, fraud. Consequently, B did not have an assertable right to the overpaid benefit nor did it amount to a possession for the purposes of Article 1 of Protocol No. 1.

However, the Court went on to hold that the reduction of B's award of Income Support, to which the applicant was entitled, to recover the overpaid benefits, could be said to have interfered with a 'possession' for the purposes of Article 1:

"That being said, the Court observes that in order to recover the overpaid benefit the Secretary of State reduced the applicant’s future award of income support. Even after the increased award was superseded, the applicant continued to meet the criteria for the basic award (without the child allowance and family premium). She therefore had an assertable right to the receipt of income support at this reduced rate. The Court has previously accepted that the reduction of a benefit to which an applicant is entitled may amount to an interference with a possession (see, for example, Moskal v. Polandand Ásmundsson v. Iceland, both cited above). Consequently, the Court considers that the reduction of the award to which the applicant was entitled, albeit to recover overpaid benefits, could be said to have interfered with a “possession” for the purposes of Article 1 of Protocol No. 1 of the Convention."

Having held that B's interests in the payment of Income Support being reduced to recoup an overpayment was sufficient to render Article 14 applicablethe ECtHR went on to agree with the Court of Appeal that the two groups relied upon by B – those who could not reasonably be expected to report a fact which they were not aware of and those who were not aware of its materiality - could not be said to be in analogous, or relevantly similar, situations. The ECtHR did however, accept B's alternative formulation, namely that, as someone who did not have the capacity to understand the obligation to report, she should have been treated differently from someone who did, to be somewhat more persuasive. The Court said the situation of these two groups was sufficiently different to require the State to objectively and reasonably justify its failure to treat them differently. The Court nevertheless dismissed B's discrimination claim on the grounds that any failure to treat her differently from persons who understood the requirement to report a change in circumstances was objectively and reasonably justified as the aim of the legislation was legitimate and the state had taken sufficient measures to ensure that B was not required to bear an excessive burden:

"... the Court accepts that requiring decision-makers to assess levels of understanding or mental capacity before deciding whether or not overpaid benefits were recoverable would hinder their recovery and thereby reduce the resources available within the social security fund. It therefore considers that the decision not to treat the applicant differently from someone who had the capacity to understand the requirement to report pursued a legitimate aim, namely that of ensuring the smooth operation of the welfare system and the facilitation of the recovery of overpaid benefits.

With regard to the question of proportionality, the Court recalls that in the context of Article 1 of Protocol No. 1 it has held that public authorities should not be prevented from correcting mistakes in the award of benefits, even those mistakes resulting from their own negligence. Holding otherwise would be contrary to the doctrine of unjust enrichment, would be unfair to other individuals contributing to the social security fund, and would amount to sanctioning an inappropriate allocation of scarce public resources. However, the Court has observed that the above general principle cannot prevail in a situation where the individual concerned is required to bear an excessive burden as a result of a measure divesting him or her of a benefit (Moskal v. Poland,).

In the present case the Secretary of State took a number of steps to ensure that the applicant was not required to bear an excessive burden. In particular, the Court observes that she was not required to pay interest on the overpaid sums, there was a statutory limit on the amount that could be deducted each month from her award of income support, and the amount to be repaid was in fact reduced to reflect the fact that during the material time she was entitled to, but had not been in receipt of, a disability allowance. Indeed, the Court observes that it would have been open to the applicant to request that the Secretary of State waive his right to recover the overpaid benefit if there was evidence that recovery would be detrimental to her health or welfare. As she did not make any such request, the Court cannot accept that the recovery would have had such a detrimental impact" (paragraphs 59-61)

For a transcript of the ECtHR's judgment click here

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