R JS and Others v The Secretary of State for Work and Pensions Child Poverty Action Group and Another (Interveners)

JurisdictionEngland & Wales
CourtQueen's Bench Division (Administrative Court)
JudgeLord Justice Elias
Judgment Date05 November 2013
Neutral Citation[2013] EWHC 3350 (Admin)
Docket NumberCase No: CO/6197/2013
Date05 November 2013

[2013] EWHC 3350 (QB)

IN THE HIGH COURT OF JUSTICE

QUEENS BENCH DIVISION

ADMINISTRATIVE COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Elias

Mr Justice Bean

Case No: CO/6197/2013

In the Matter of a Claim for Judicial Review

Between:
The Queen on the Application of JS and Others
Claimants
and
The Secretary of State for Work and Pensions
Defendant

and

Child Poverty Action Group

and

Shelter Children's Legal Service
Interveners

Mr Ian Wise QC, Ms Caoilfhionn Gallagher and Ms Sarah Steinhardt (instructed by Hopkin Murray Beskine) for the Claimants

Mr James Eadie QC, Ms Karen Steyn and Mr Simon Pritchard (instructed by The Treasury Solicitor for the Defendant

Mr Richard Drabble QC, Mr Tim BuleyandMs Zoe Leventhal (instructed by Herbert Smith Freehills LLP) for the Child Poverty Action Group

Mr Jonathan Manning (instructed by Freshfields Bruckhaus Deringer LLP) for the Shelter Children's Legal Service

Hearing dates: 2–4 October 2013

Lord Justice Elias

This is the judgment of the court.

1

The Welfare Reform Act 2012 has as its objective the reform of welfare benefits. The aim is not only to reduce the cost of these benefits — currently the welfare budget is larger than for health, education and defence taken together – but also to bring about a change in the culture by incentivising people to work, thereby reducing what the Government believes is the debilitating effect of long term dependency on benefits. In addition the Government believes that the Act strikes a fairer balance between the interests of tax paying working households and those on benefits.

2

The Act received Royal Assent on 8th March in 2012. Among the major reforms which it introduces is the "benefit cap", so called because it sets a cap to the amount of welfare benefits a recipient may receive. Section 96 of the Act introduces the concept of a "relevant amount" of prescribed welfare benefits: this constitutes the cap. Where a single person or couple's total entitlement to such benefits exceeds the relevant amount, their entitlement is reduced by the amount of the excess (section 96(2)).

3

The broad principles for determining the "relevant amount" are laid down in the primary legislation (sub-sections 96(6) to (8)). However, the precise manner of its calculation and the amount actually determined are to be specified in regulations (subsections 96(4) and (5)). Regulations may also provide for exceptions to the application of the cap (subsection 96(4)(b)).

4

Sub-sections 96(6) to (8) are as follows:

"(6) The amount specified under subsection (5) [the "relevant amount"] is to be determined by reference to estimated average earnings.

(7) In this section "estimated average earnings" means the amount which, in the opinion of the Secretary of State, represents at any time the average weekly earnings of a working household in Great Britain after deductions in respect of tax and national insurance contributions.

(8) The Secretary of State may estimate such earnings in such manner as the Secretary of State thinks fit."

In fixing the relevant amount, therefore, the Secretary of State has to focus on the net average earnings of a working household, but he has a broad discretion how to determine that figure. He may also determine different caps for different cases: section 97(1).

5

However, when determining the amount, if any, by which the benefits exceed the cap, the scheme does not in all cases have to take account of all benefits received by a beneficiary, for two reasons. First, the cap only applies to "any prescribed benefit, allowance, payment or credit" (section 96(10)) so if a benefit is not specified, it will not count in calculating the total benefits received for the purposes of imposing the cap. Moreover, section 96(11) specifies in terms that state pension and retirement pension cannot be prescribed as relevant welfare benefits. Second, section 96(4)(c) provides for exceptions to be made to the application of the cap; welfare beneficiaries falling within the exceptions are taken outside the scheme altogether.

6

By sub-sections 97(3) and (4) Parliament provided that the statutory instrument containing the first regulations under section 96 could only be made when a draft had been laid before, and approved by resolution of, each House of Parliament (the affirmative resolution procedure). Subsequent regulations were to be subject to annulment in pursuance to a resolution of either House (the negative resolution procedure). The first regulations under s96 were the Benefit Cap (Housing Benefit Regulations 2012) ("the 2012 Regulations"). These were made on 29 November 2012 after the draft had been approved by affirmative resolutions of each House. The draft regulations were accompanied by an impact assessment and an equality impact assessment ("EIA").

7

The 2012 Regulations insert a new Part 8A into the Housing Benefit Regulations 2006. They fix the "relevant amount" under section 96(2) at £350 per week for a single claimant (that is to say one who is not a member of a couple and has no children living with him or her) and £500 per week for all others. The latter figure represents a gross salary of some £35,000 and a net salary, after deduction of tax and national insurance, of around £26,000.

8

There is a list in regulation 75G of the benefits which are deemed to be welfare benefits for the purposes of the cap. It includes child benefit, child tax credit and housing benefit, all benefits to which those in work are in principle entitled. The mechanism for giving effect to the cap is by deducting the excess of benefits over the "relevant amount" from the housing benefit: see regulation 75D.

9

Exceptions to the application of the cap are found in regulations. Regulation 75E provides for the most significant exception: it disapplies the benefit cap to working households. The regulation does not in terms say this but it is the result of specifying that the cap does not apply where the claimant or the claimant's partner is entitled to working tax credit. They become so entitled, and therefore exempt from the benefit cap, by working 16 hours per week if a single parent or a disabled person; and 24 hours per week if a couple with children (providing at least one of them works for 16 hours). In addition the provision also exempts those who have who have recently been in work by granting A 39 week period of grace from the last day on which the benefits claimant, or their partner, was employed or engaged in work.

10

Regulation 75F has the effect that where a person in the household is in receipt of certain specified benefits, the benefit cap will have no application. The exempt benefits specified are: employment and support allowance which includes a support component; industrial injuries benefit; an attendance allowance; a war pension; disability living allowance; a personal independence payment; and an armed forces independence payment. A subsequent amendment to the regulations has also provided that for certain accommodation described as "exempt accommodation" the housing benefit paid should count as nil when determining the benefits received. Some women's refuges which take in women fleeing domestic violence fall into that category.

11

The benefit cap was brought into force in April 2013 in four London boroughs and more widely later in the year. It was obvious from the outset that the introduction of the cap would have severe and immediate consequences for claimants who had been receiving substantially in excess of the relevant amount. The Government sought to mitigate the difficulties by providing additional funds to local authorities to make discretionary housing payments (DHPs) as a transitional measure in hard cases. As the claimants' evidence points out, the budget for DHPs is cash limited for each year. Local authorities have the power to supplement the amount up to a certain limit but currently budgetary pressures are such that only a few (some 14% we were told) have chosen to do so.

12

The two items most likely to trigger the operation of the cap is housing benefit, the other being the number of children in the family. Housing benefit reflects (but does not necessarily meet in full) the cost of housing, whether social or private. Accordingly, the cap will bear most heavily on those in receipt of benefit who live in areas where rental costs are high. In practical terms, therefore, this means that those who live in London or in the centre of other big cities where rents tend to be high will be most likely to be affected. It is a striking feature of the scheme — and lies at the heart of this application — that the cap applies equally to a childless couple in an area with cheap and plentiful social housing as it does to a lone parent mother of several children in inner London compelled to rent on the private market. But the aim of the scheme is in part to encourage those subject to the cap back to work; alternatively, to move to different areas of the country where rents are cheaper and housing benefit correspondingly less. The evidence from Shelter highlights the problems with the latter option such as the fact that many local authorities will give lower priority to those without a link to the area, the absence of available accommodation in many areas, and the fact that where housing is available and cheap, this is because the area is generally deprived and is likely to suffer from high unemployment. Indeed, it was because of these problems that Shelter suggested that housing benefit should be excluded from the benefits taken into account when calculating the cap. But the Government did not accept that proposal; and the Secretary of State considers that Shelter has exaggerated the difficulties of moving to new areas.

The claimants

13

There are six claimants in these proceedings. They comprise the mother and...

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