2012 11 Welfare Benefits

Saturday 1 December 2012

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New DWP figures show that 64 per cent of reassessed Incapacity Benefit claimants were entitled to Employment and Support Allowance. The statistical release 'Employment and Support Allowance – Incapacity Benefits Reassessments: Outcomes of Work Capability Assessments, Great Britain', published on 6 November 2012, says that of the 139,200 people on incapacity benefits reassessed between December 2011 and February 2012, 64 per cent were eligible for ESA, with 25 per cent put in the support group and a further 39 per cent placed in the work related activity group. The report can be found on the DWP website - click here for link.

On 8 October 2012 the DWP launched the ‘Simple Payment’ for new claimants and pensioners who are unable to use a bank, building society, credit union or post office account. Claimants using the new service will be issued with a Simple Payment card that allows them to receive their cash at PayPoint-enabled outlets. Claimants currently receiving cheques will be migrated to the new system by March 2013. In the November edition of its Touchbase magazine, the DWP also advises that it is writing to people who are currently paid by cheque about the Simple Payment scheme. The November edition of Touchbase magazine is available from the DWP website – click here for link.

In a report published on 22 November 2012, 'Making Work Pay', the Chartered Institute of Housing (CIH) concluded that 400,000 low income working families will be worse off under Universal Credit. The CIH considered whether low income households will be better off under Universal Credit by comparing the benefit and tax system as it was in May 2010, before the Government's welfare cuts programme started, and the benefits and tax system as the Government intends it to be in 2015. The reports findings include that whilst couples without children and single people aged under 25 will see a clear improvement in their income, the following groups will be worse off:

• lone parents with one, two or three children will be worse off across the whole income range;

• most two child families with a single earner (either a lone parent or in a couple) who earns less than the living wage will be worse off; and

• couples with three children will be worse off if their earned income is less than £300 per week.

Making Work Pay is available from the CIH website – click here for link.

On 22 November 2012 the Work and Pensions Select Committee published a report entitled, 'Universal Credit implementation: meeting the needs of vulnerable claimants'. The report gives the following description of the new benefit scheme:

" Key features of Universal Credit

3. Universal Credit is a new benefit for people of working age, whether they are in or out of work. It will replace Income-based Jobseeker's Allowance (JSA), Income-based Employment and Support Allowance (ESA); Income Support; Child Tax Credits; Working Tax Credits; and Housing Benefit. The Government says that Universal Credit will help claimants and their families to become more independent and will simplify the benefits system by bringing together a range of working-age benefits into a single streamlined payment.

4. Universal Credit will be based on a standard allowance to which the following elements can be added for households which meet the criteria: limited capability for work/limited capability for work-related activity elements; child element; disabled child addition; childcare costs element; housing costs element; and carer element.

5. The Government plans to achieve its aim of ensuring work pays, and therefore increasing work incentives by using a single taper rate for deducting benefit as earnings increase and by putting in place a range of earnings disregards. Universal Credit is also intended to remove "cliff edges"; these are thresholds which exist in the current benefit and tax credit system that mean benefit is sometimes lost if a claimant works for more than a certain number of hours or only becomes eligible for certain payments if they are able to work a certain number of hours (usually 16 hours a week).

6. At the same time as replacing six separate benefits with one new single benefit, the Government is planning a number of other changes within Universal Credit to encourage greater digital inclusion, financial inclusion and personal responsibility among benefit claimants. These changes will mean that, once someone is transferred to (or makes a new claim for) Universal Credit, they will at the same time be required to move to online claiming; they will receive a single monthly payment; and housing costs will be included in the single payment rather than being paid direct to landlords."

The Committee said that whilst Universal Credit should help ease the transition from benefits to work, significant concerns remained about the potential impact of the changes on vulnerable claimants who may not be able to cope with the online claim system or budget for monthly payments of Universal Credit. At paragraph 92 of its report the Committee states:

“Witnesses also pointed out that some people, particularly those on a low income, chose not to use a bank account because of the risk of incurring charges. The University of Bristol Personal Finance Research Centre believed that "most bank accounts are inappropriate for day-to-day money management by people on low incomes who need to keep close control over their finances". It highlighted a wider problem "of low-income people incurring penalty charges for failed direct debits which far outweigh any cost saving achieved by paying bills by direct debit".

The Work and Pensions Committee Report Universal Credit implementation: meeting the needs of vulnerable claimants is available from the parliament website – click here for link.

Update on Zambrano

On 19 November 2012 the DWP issued new guidance following the amendments to the habitual residence test in respect of a derived right to reside under Ruiz Zambrano v ONEm (C-34/09). In DMG Memo 38/12, the DWP advises, with effect from 8 November 2012, that a person who has a right to reside solely on the basis of being a Zambrano carer will not satisfy the right to reside condition of the habitual residence test, and will therefore be a person from abroad with an applicable amount of £nil for the purposes of income support, income-based jobseeker's allowance and income-related employment and support allowance and will not satisfy the condition that they be 'in Great Britain' for the purposes of state pension credit. The derivative right under Zambrano is described in the following terms: “Someone has a derivative right to reside in the UK if they are the primary carer of a British citizen and that British citizen is residing in the UK and that British citizen would be unable to reside in the UK or another EEA state or Switzerland if the person was refused a right to reside.” The DWP goes on to advise decision makers on what action to take including: previous disallowances, appeals pending and cases with Zambrano issues prior to 8 November 2012:


6 A change in the law is a change of circumstances allowing supersession. The effective date of such a supersession will be the date the law change took effect (i.e. 8.11.12).

Previous Disallowances

7 DMs may already have issued decisions refusing benefit in accordance with the guidance in Memo DMG 7/12. Unless an appeal has been lodged against such a decision DMs need not revisit these cases.

Appeals Pending

8 Where an appeal to the FtT involving the Zambrano right to reside has been lodged by the claimant but not yet decided, appeals officers should notify the FtT about the law change and the date it takes effect. The FtT should be informed that, if they decide to allow the appeal and award IS, JSA(IB), ESA(IR) or SPC on the basis that the claimant has a Zambrano right to reside, that award will subsequently be superseded by a DM on the basis of the law change.

9 If the case is stayed by the FtT to await the outcome of cases being heard by the UT, DMs may wish to add that the Secretary of State maintains that appeals on this issue should be stayed to await the outcome of the lead cases.

Zambrano Issues – pre 8.11.12

10 DMs should continue to submit cases where an issue arises as to whether a third country national has a right to reside in accordance with Zambrano and thus entitlement to IS, JSA(IB), ESA(IR) or SPC for a period before 8.11.12 to DMA (Leeds) for advice."

DMG Memo 38/12 is available from the DWP website – click here for link.

Case law

In Case C-40/11 Yoshikazu Iida v Stadt Ulm the CJEU was asked to consider whether the applicant had a right to reside under Ruiz Zambrano v ONEm. The essential facts were that the European Union (EU) citizen child (Mia) had moved from her country of origin (Germany) to a second Member State (Austria) with her mother. Her third country national father, Mr Iida (a national of Japan), applied for a residence permit to continue to live in Germany based on being a family member of a Union citizen (i.e. his daughter) who was residing in Austria, but the application was refused (paras 23-29). Mr Iida also applied for a right of residence as a long-term resident, but voluntarily withdrew this (and pursued the family member application instead (paras 31, 45-46, 48 and 75). The CJEU concluded that given those circumstances "it could not validly be argued" that the decision to refuse Mr lida a residence permit based on being a family member of a Union citizen living in another Member State was liable to deny his daughter the genuine enjoyment of the substance of the rights associated with her status as a Union citizen (para 76). In other words, the daughter's legal position as a citizen of the Union was not under threat, which meant the criteria in Zambrano did not apply:

73 As regards cases such as that at issue in the main proceedings, first, it must be observed that the claimant, who is a third-country national, is not seeking a right of residence in the host Member State in which his spouse and his daughter, who are Union citizens, reside, but in Germany, their Member State of origin.

74 Next, it is common ground that that the claimant has always resided in that Member State in accordance with national law, without the absence of a right of residence under European Union law having discouraged his daughter or his spouse from exercising their right of freedom of movement by moving to Austria.

75 Finally, as may be seen from paragraphs 28 and 40 to 45 above, the claimant in the main proceedings has a right of residence under national law until 2 November 2012, which is prima facie renewable, according to the German Government, and can in principle be granted the status of long-term resident within the meaning of Directive 2003/109.

76 In those circumstances, it cannot validly be argued that the decision at issue in the main proceedings is liable to deny Mr Iida’s spouse or daughter the genuine enjoyment of the substance of the rights associated with their status of Union citizen or to impede the exercise of their right to move and reside freely within the territory of the Member States (see McCarthy, paragraph 49).

The CJEU also held that Mr Iida could not rely on the Charter of Fundamental Rights of the European Union, which lays down a right to respect for private life and certain rights of the child. Since Mr Iida does not satisfy the conditions of the Citizens Directive 2004/38 and as he had not applied for a right of residence as a long-term resident, his situation showed no connection with EU law, so that the Charter did not apply (click here for judgment).

In Pryce v LB Southwark [2012] EWCA Civ 1572 (Pill, Rimer and Burton LLJ) in which the Court of Appeal considered whether the appellant enjoyed a substantive EU right of residence and was eligible for homelessness assistance. It was agreed between the parties that where an applicant does have a valid Zambrano claim, then that person is not subject to immigration control. The appellant and the council produced an agreed statement which was approved by the Court. This includes the following statements of principle:

"1. Article 20 of the [TFEU] contains treaty rights which are directly applicable in the UK national legal order by virtue of section 2(1) of the European Communities Act 1972 without the need for transposition into national law.

2. A person in respect of whom a refusal of a right of residence would be inconsistent with Article 20 of TFEU in accordance with the principles established by the EU in Ruiz Zambrano v ONEm C-34/09 is not a person subject to immigration control for the purposes of s.185 of the Housing Act 1996 or s.7 of the Immigration Act 1988.

3. For the purposes of the Appellant's application for housing assistance, the Respondent (whose responsibility it is to make such a determination) has determined that the Appellant meets the requirements of the Zambrano principles.

4. The Appellant is such a person who derives a right of residence from the EU law …”

5. In the circumstances, the appeal ought to be allowed; the Order of HHJ Faber of 2 May 2012 ought to be set aside; and [the council's] review decision of 30 September 2011 ought to be varied pursuant to s.204(3) of the 1996 Act to a decision that the Appellant is eligible for assistance under Section 185 of the 1996 Act. "

Pill LJ who gave the judgment of the Court added the following important qualifications to this general statement of principle:

“Having considered the carefully drafted written submissions of the parties and their oral submissions, it appears to me that the council's concessions of fact and law are appropriate. I agree, on the central point identified by the parties and by the Secretary of State, that the propositions stated are correct. I repeat, however, that an important concession has been made and the court has not heard contrary submissions as to the effect of Zambrano. The judgment must be read in the light of that.” (At para [31]).

“I add that whether an applicant does have a Zambrano claim is clearly fact-sensitive. Moreover further questions may well arise as to the effect of an application of the Zambrano principles in particular situations. The court does not propose to analyse further the scope and extent of those principles. The court has thought it right to explore the basis for the submissions put forward by the parties and by the Secretary of State. Clarification has been obtained and accordingly this judgment is made.” (At para [32])

“ … we have been told that an amendment to the EEA Regulations comes into force tomorrow, 8 November 2011. Mr Staker tells the court that the amendments are intended to give full effect to the Zambrano decision. It is accepted that they do not apply in the present case and I make no further comment on them.” (At para [27].)

A copy of the judgment is available on the Deighton Pierce Glynn website - click here.

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