2015 03 Welfare Benefits

Wednesday 1 April 2015

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The Budget and future cuts to benefits

In a speech introducing the Budget on 18 March 2015 the Chancellor announced that a further £12bn in welfare savings needed by 2017/2018. Other benefit and tax credit measures outlined in the Budget (some of which have been previously announced) included:

  • EEA nationals’ access to universal credit - from 2015, the government confirms it will restrict access to universal credit for EEA migrants who are out of work.
  • universal credit waiting days - described as an 'updated delivery schedule', the government says that it plans to implement seven waiting days for universal credit in July 2015.
  • tax credits for the self-employed - from 6 April 2015, a new test will require those working tax credit claimants relying on self-employment to meet the entitlement conditions to be undertaking an activity which is commercial and profitable, or working towards profitability. This test will apply to the working hours required to qualify for working tax credit as a self-employed claimant.

According to a report on BBC News, Election 2015: Conservative benefit cut options leaked - the following benefits are under consideration for change:

  • Carer's Allowance - this could be restricted to those eligible for Universal Credit. Leaked documents suggest about 40% of claimants would lose out. DWP predicted saving - £1bn
  • The contributory element of Employment and Support Allowance and Job Seekers Allowance - currently claimants who have paid enough National Insurance contributions can get the benefits with little means testing; DWP analysis suggests 30% of claimants, over 300,000 families, would lose about £80 per week. DWP predicted saving - £1.3bn in 2018/19
  • Disability benefits - Disability Living Allowance, Personal Independence Payments and Attendance Allowance (for over 65s who have personal care needs) would no longer be paid tax free. Possible saving - £1.5bn per annum (based on IFS Green Budget calculation)
  • Industrial Injuries Compensation Scheme - could be replaced by companies providing industrial injury insurance policy for employees. Any that did not would become members of a default national industrial injuries scheme, similar to the programme for asbestos sufferers. DWP predicted saving - £1bn
  • Council Tax Support - to be incorporated into Universal Credit. Possible saving - not known
  • Child Benefit - Limiting the benefit to the first two children. Possible saving IFS estimates £1bn saving per annum in the long run but little initially
  • Regional Benefit Caps - The £23,000 limit would vary in different parts of the country, with for instance Londoners receiving the top amount due to the higher cost of living. Possible saving - not known and dependent on where levels were set

Cuts for young persons

According to new research from Heriot-Watt University and campaign group End Youth Homelessness (EYH) the proposed cuts to housing benefit for 18-21 year old would only save £3m and not the £120m announced by the Government. In Lifeline not Lifestyle, published 17 March 2015, it is reported that, if housing benefit were removed from all 18-21 year-olds who also claim jobseeker’s allowance, the scale of homelessness that resulted would virtually wipe out any savings to the taxpayer through increased evictions and resulting use of public services when people become homeless, including increased costs to the criminal justice system. Commenting on the research Seyi Obakin, chief executive of Centrepoint (which is part of EYH), said -

“Implementing this cut to housing benefit would be simply catastrophic, forcing thousands of young people back on to the streets. For the most vulnerable young people in this country housing benefit is not a lifestyle, it’s a lifeline.

We recognise the aim of reducing the welfare bill, but the price of leaving thousands of young people without a safety net is one that no government should be prepared to pay. This report sends a clear message to all political parties in this country that there is no economic case for cutting housing benefit for 18-21 year-olds.”

For more information see Only £3m Saved By Cutting Housing Benefit, Research Shows from the Centrepoint website.

Sanctions and Food Poverty

A report ‘Time to Rethink Benefit Sanctions', concludes that the design of the sanctions scheme includes both the threat and the use of hunger as an instrument of policy. The report is by the Church of Scotland, the Church in Wales, the Methodist Church, the Baptist Union of Great Britain, the United Reformed Church and the charity Church Action on Poverty. It highlights research indicating that: (i) over 100 people assessed as unfit for work due to mental health problems are sanctioned each day; (ii) approximately 100,000 children were affected by sanctions in 2013/2014; and (iii) a total of almost 7,000,000 weeks of sanctions were imposed in the year 2013-2014; up from 1-1,500,000 weeks per year during the previous decade. Moreover, the penalties attached to sanctions often do not appear reasonable or proportionate to the 'failure' that has occurred. The report states:

“Those who have devised the sanctions system accept that “it would be usual for a normal healthy adult to suffer some deterioration in their health” if the person has no other resources to fall back on. The policy requires that many people in this situation must wait for two weeks before receiving any assistance.”

“The evidence that we went on to collect indicates these are not isolated examples and that the problems have indeed increased dramatically over the past three years. While it is tempting to suggest that this is the result of the regime being misapplied, such hardship occurs even when the system is used exactly as intended. The design of the sanctions system includes both the threat and the use of hunger as an instrument of policy.'

In light of these findings, there is an urgent need to re-think sanctions. The report includes the following recommendations: (i) the revision of the hardship payments system to avoid the deliberate imposition of hunger; (ii) for sanctions to be suspended for people with children and for those experiencing mental ill health; and (iii) a change of culture from one of enforcement and punishment to one of assistance and support.

See also Churches call government welfare sanctions 'inhumane and un-Christian' from guardian 2 March 2015, which include the following quote from the archbishop of Wales, Barry Morgan: “The findings of this report are disturbing. It exposes a system that is harsh in the extreme, penalising the most vulnerable of claimants by the withdrawal of benefits for weeks at a time.”

On 25 March 2015 the Work and Pensions Committee published Benefit sanctions policy beyond the Oakley Review. The Committee concluded that sanctions increase food poverty and severe hardship and that the Government has not demonstrated that its tougher sanctions regime is more effective than less harmful measures. The report calls for better protections for vulnerable laimants, and independent investigation of claimant suicides. The Committee has called for a full independent review of the benefit sanction scheme – “to investigate whether sanctions are being applied appropriately, fairly and proportionately, in accordance with the relevant Regulations and guidance, across the Jobcentre Plus network. “ The report makes a number of further recommendations including:

  • changes are required to the hardship payments system to ensure that it is more effective in mitigating the risk of sanctions causing severe financial hardship - in particular, the report emphasises widespread concern that standard JSA hardship payments are not available until the 15th day of a sanction period;
  • the DWP should develop guidance which is specifically intended to assist JCP staff to identify vulnerable claimants and tailor conditionality according to the claimant’s individual circumstances;
  • JCP staff training on the statutory single parent flexibilities designed to protect single parent JSA claimants from inappropriate benefit conditionality should be improved; and
  • the DWP should review ESA sanctioning within the Work Programme.

On 25 March 2015 the Labour Party announced a five point plan to reduce food bank dependency. The five measures are to -

  • tackle low pay by raising the minimum wage to at least £8 an hour before 2020, promoting a Living Wage, and ending exploitative zero-hours contracts;
  • ensure a co-ordinated government approach to food policy;
  • reduce delays in benefit payments, including jobseeker's allowance and personal independence payment
  • abolish targets for benefit sanctions and ensure the system is implemented fairly by raising awareness of hardship payments, reducing waiting times for hardship payments, and making sure protections are in place for the most vulnerable including those with mental health issues, carers, pregnant women and people at risk of domestic violence;
  • abolish the bedroom tax.

Source - Labour announces new plan to cut food bank use:

Increases in overpayment recovery rates

New regulations in force from 6 April 2015 will increase the overpayment recovery rates for ‘non-innocent’ overpayments. Where recovery of the overpayment is being made via deductions from ongoing benefit, the maximum rate of deduction from a claimant’s benefit will increased from 25 per cent to 40 per cent of the personal allowance for a single claimant where an overpayment of benefit has resulted in a finding or acceptance of guilt for an offence, or the individual has accepted an administrative penalty as an alternative to prosecution. The new regulations also double amount recoverable through direct earnings attachment in most cases: Social Security (Overpayments and Recovery) Amendment Regulations 2015 (SI.No.499/2015).

NB: The personal allowance for IS/HB/ESA/JSA from April 2015 is £73.10. This means the weekly deduction for ‘non-innocent’ overpayments will be an eye watering £29.24 per week. The current rate of deduction (2014/15) is £18.25 per week

Benefit Fraud

The upper limit of £5,000 on the maximum fines that magistrates can impose for benefit fraud has been removed. The new rules will apply to a range of offences that include making false statements or representations to obtain social security benefits. For more information, see the Ministry of Justice press release Unlimited fines for serious offences from gov.uk

Mandatory reconsiderations

Responding to a written question about the average clearance time for personal independence payment in the House of Lords on 26 March 2015, Lord Freud, Minister for Welfare Reform, said that the DWP plans to introduce a clearance time target for all benefits, starting with ESA from April 2016 - see HL5873 Hansard.

In the March 2015 edition of Touchbase the DWP confirmed that comprehensive guidance has been issued to jobcentre plus staff following concerns relating to employment and support allowance (ESA) claimants who had been found fit for work and were claiming JSA during the mandatory reconsideration period. The guidance confirms that that JSA conditionality can be modified for claimants with health conditions who have been found fit for work. In particular, that JSA claimants with health conditions can restrict their availability for work as long as the restrictions are reasonable in light of their condition.

NB: Under the mandatory reconsideration process the claimant must give DWP the opportunity to reconsider its decision before they can lodge an appeal with the Tribunal Service. Click here for a one page summary.

Statistics released this month

The DWP awarded just over £4m in short term benefit advances between April 2014 and February 2015, according Employment Minister Esther McVey. The written answer, published 18 March 2015, is available from 228133 Hansard.

The March 2015 statistical release, Employment and Support Allowance: Outcomes of Work Capability Assessments Great Britain show that three quarters of ESA claims started between April and June 2014 have either not reached or completed the work capability assessment (WCA) process. The statistical release also shows that, of completed initial assessments adjusted to account for outcomes after appeals for claims made in the period from April to June 2014, 79 per cent of claimants with an outcome for their claim were entitled to ESA

According to a DWP freedom of information response published 2 March 2015, 29 per cent of housing benefit claimants in the private rented sector have their rent paid direct to the landlord as at May 2014: see Statistics on HB claimants in the private rented sector at May 2014, GB.

Tax credits civil penalties totalling more than £28m were applied in 2013/2014, according to a written answer to parliament by the Commercial Secretary to the Treasury Lord Deighton on 9 march 2014. The amount had more than doubled since the previous year. See HL4462 Hansard.

NB: “If you receive tax credits you’re not entitled to, this is called ‘being overpaid’. You must repay any overpaid money, and you may receive a penalty. This could be up to £300 if you report a change late or up to £3,000 if you give wrong information carelessly or on purpose.” from Tax Credits on GOV.UK.

According to the Legal aid statistics: October to December 2014, the volume of work undertaken post the LASPO cuts is continuing to shrink in several areas:

  • Housing is down 9% year on year; debt down 29%; public law down 22% and family down 3%
  • Legal aid grants for judicial reviews down 41% year on year, and 16% fewer certificates granted.
  • Only 35 non-inquest cases got Exceptional Case Funding last quarter.
  • The telephone gateway still handles 4 in 5 cases entirely over the phone, with few referrals to face-to-face advice.

NB: The Joint Committee on Human Rights reported on the UK's progress on recognising children's rights in law and policy. The committee said that legal aid cuts were a 'black mark' on the government, adding that there were "firm grounds for a new government of whatever make-up to look again at [LASPO] reforms and to undo some of the harm they have caused to children."


In CS v Secretary of State for Work and Pensions (JSA) (Jobseekers allowance: other) [2015] UKUT 61 (AAC) (N. Wikeley) the claimant had been in receipt of jobseeker’s allowance (JSA) and had been signing on fortnightly as required. On one of his signing on days he was allegedly told that he must sign on weekly. This was recorded in an ‘Action Plan’, although no time or place was given for the required attendance. The claimant failed to sign on the following week and the DWP imposed a four week sanction. The decision was made on 12 February 2014. The claimant appealed on the grounds that he had not been notified verbally or in writing about the requirement to sign on the following week. A First-tier Tribunal dismissed his appeal 16 June 2014. The Upper Tribunal (‘UT’) allowed the appeal on 5 February 2015. The Secretary of State conceded that the entry on the Action Plan was inadequate notice as it omitted to specify time and place. The UT therefore set the FtT’s decision aside and substituted its own decision to the effect that the claimant had not been properly notified of the requirement to sign on and therefore had good cause for not doing so, removing any grounds for imposing a sanction. Click here for the judgment.

The Supreme Court, by a majority of 3:2 held that the benefit cap was lawful in R (SG and others (previously JS and others) v Secretary of State for Work and Pensions [2015] UKSC 16 (Lady Hale, Deputy President, Lords Kerr, Reed Carnwath and Hughes). The Court considered the question of whether it was lawful for the Secretary of State to make subordinate legislation imposing a cap on the amount of welfare benefits which can be received by claimants in non-working households. Regulations fixed the cap at £350 a week for a single claimant without dependent children, and £500 for all other claimants. The benefits taken into account include housing benefit, child benefit and child tax credit, which means that in practice, that non-working households with several children, living in areas with high rents are most likely to be affected. The appellants argued that as the regulations have a disproportionate impact upon lone parents the scheme was indirectly discriminatory on grounds of sex under article 14 of the ECHR when read with article 1 of the First Protocol to the Convention (‘A1P1’). The Secretary of State accepted that the scheme is indirectly discriminatory but submitted that it was justified. The courts below held that the indirectly discriminatory impact of the scheme upon lone parents could be justified. The courts accepted having regard to the aims of providing a greater incentive to work and the need to achieve savings in public expenditure the Regulations could not be described as ‘manifestly without reasonable foundation’ – and that the scheme was therefore lawful. The Supreme Court also dismissed the appellants’ appeal after considering an additional argument - the extent to which the obligations of the UK under the United Nations Convention on the Rights of the Child (UNCRC) are relevant to the issue of justification of the indirect discrimination under the ECHR. In particular, article 3(1) which provides that "in all actions concerning children … the best interests of the child shall be a primary consideration". A minority (Lady Hale and Lord Kerr) held that article 3(1) of UNCRC was directly relevant to the issue of whether the discrimination against women in relation to their A1P1 rights was justified:

“It cannot possibly be in the best interests of the children affected by the cap to deprive them of the means to provide them with adequate food, clothing, warmth and housing, the basic necessities of life.” (At para [226]).

“Viewed in the light of the primary consideration of the best interests of the children affected, therefore, the indirect discrimination against women inherent in the way in which the benefit cap has been implemented cannot be seen as a proportionate means of achieving a legitimate aim.” (At para [229]).

A majority (Lords Reed, Hugh and Carnwath), however, rejected this argument holding that article 3(1) of the UNCRC did not form part of the proportionality assessment under article 14 of the ECHR read with A1P1. They gave the following reasons for their conclusion:

  • In order for the UNCRC to become relevant to the construction of an ECHR issue there has to be the necessary connection between the international law invoked and the Convention right under consideration. It was not sufficient that children are as a matter of fact affected by the decision or legal framework under consideration.
  • The necessary connection was present, in the cases X v Austria (2013) EHRR 14, Ponomaryov v Bulgaria (2014) EHRR 20 and Burnip v Birmingham CC [2013] PRSR 117, as the international instrument referred to was directly concerned with the particular form of discrimination in issue.
  • The necessary connection between the ECHR right under consideration and the UNCRC was not however present in the instant case. The lack of a necessary connection could be demonstrated by the fact if the comparator of a lone non-working father was used the children were treated in the same way but he would have no article 14 claim to discrimination (based on gender).

In short, article 3(1) of the UNCRC could only apply if the indirect treatment complained of was in respect of the children rights, whereas in the present case the discrimination is against their mothers and their “possessions” under A1P1. The majority therefore rejected the minority view that a when it comes to receiving state benefits, a lone mother’s interest are “indissociable from those of her children”. The majority therefore concluded that the regulations introducing the benefit cap were lawful. However, Lord Carnwath, who had prior to the additional argument had been of the view that the benefit cap had been incompatible with the Secretary of State’s obligation to treat the best interest of children as a primary consideration added that he hoped the government would address the implications of the finding that it was in breach of article 3(1) when it came to their review of the scheme. Click here for judgment.

The transcript of the bedroom tax challenge by woman whose home has been adapted under a Sanctuary Scheme is now available – R (A) v Secretary of State for Work and Pensions [2015] EWHC 159 (Admin) (HHJ Worster) – click here.

The High Court held that, whilst bedroom tax policy has a disproportionate effect on women, it is not 'manifestly without reasonable foundation'. While noting that in Burnip v Birmingham City Council it had been held that DHPs did not come anywhere near providing an adequate justification for the discrimination in that case, HHJ Worster chose to follow R (MA & Others) v Secretary of State for Work and Pensions [2014] EWCA Civ 13, Rutherford & Ors v Secretary of State for Work And Pensions [2014] EWHC 1613 (Admin), and R (Cotton) v Secretary of State for Work and Pensions [2014] EWHC 3437 (Admin):

“But whilst these factors and the human effect of all this on A and those like her weighs in the balance, the question I have to determine is not simply whether it would be a good idea to put A's home in jeopardy. It is whether the Defendant's decision to adopt this policy (or to implement it in this way) is manifestly without reasonable foundation.

Here I need to have in mind the need for caution which Lord Dyson MR refers to at paragraph [81] of MA. The scheme as a whole was the subject of detailed consideration. … Whilst it would have been helpful to have considered the effect of this scheme on those in Sanctuary Schemes, it is perhaps not surprising that no specific reference was made to them given the relatively small numbers of people involved. This is a policy which raises a great number of issues, and it would be a near impossible task to foresee all of them and then to engage in a debate about them. The scheme in general was vigorously debated in Parliament, and whilst this sub-group was not referred to, it was expressly recognised that there would be other hard cases, and that the provision of DHPs was there to cater for them. The DHP fund has been reviewed and apparently adequately funded (so far) and the DHP Guidance has been revised to bring out the power to make longer term payments.

Given the decisions in MA and the cases which follow it, I have reached the clear conclusion that on the evidence before me the Defendant has established that it is not irrational or manifestly without reasonable foundation to have adopted a locally administered scheme of discretionary payments to deal with the issues which arise from those in Sanctuary Schemes affected by these changes to Housing Benefit.” (At paras [63]-[65]).

Note: the claimants in R (MA & Others) v Secretary of State for Work and Pensions [2014] EWCA Civ 13 have been granted permission by the Supreme Court and the case is due to be heard in March 2016.

In R (Hardy) v Sandwell Metropolitan Borough Council[2015] EWHC 890 (Admin) (Phillips J) the court ruled that a local authority's decision to take the care component of disability living allowance (DLA) into account when assessing discretionary housing payments (DHPs) was unlawful. In particular, the decision and policy was a fettering of discretion. Secondly, the decision amounted to indirect or Thlimmenous discrimination for the purposes of Article 14 of the ECHR. The Court found that the discrimination is not justified, bearing in mind that, according to case law, the discriminatory effect on disabled persons is only justified by the availability of DHPs to 'plug the gap'. In addition, the decision was a breach of Sandwell’s Public Sector Equality Duty (PSED). Click here for judgment.

For the further information on this topic see Challenging discretionary housing payments by way of judicial review posted on the Garden Court Chambers Blog by D Rutledge on 7 May 2014.

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