The Motherhood Plan v HM Treasury
| Jurisdiction | England & Wales |
| Judge | Lord Justice Underhill,Lord Justice Baker,Nicola Davies LJ |
| Judgment Date | 24 November 2021 |
| Neutral Citation | [2021] EWCA Civ 1703 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | C1/2021/0614 |
[2021] EWCA Civ 1703
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
The Hon Mrs Justice Whipple
CO24442020
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Underhill
(Vice-President of the Court of Appeal (Civil Division))
Lord Justice Baker
and
Lady Justice Nicola Davies
C1/2021/0614
The Queen (on the application of)
and
Jude Bunting, Clare Duffy and Donnchadh Greene (instructed by Leigh Day and Co) for the Appellants
Julian Milford QC and Rupert Paines (instructed by The Treasury Solicitor) for the Respondent and Interested Party
Hearing date: 13 July 2021
Approved Judgment
Lord Justice Underhill and
This appeal concerns a challenge to the lawfulness of the Self-Employment Income Support Scheme (“SEISS”) introduced by the government in April 2019 during the first lockdown in the COVID-19 pandemic. The appellants contend that, contrary to Article 14 of the European Convention on Human Rights (“the Convention”), read with Article 1 of the First Protocol, the SEISS unlawfully discriminated against self-employed women who took a period of leave relating to maternity or pregnancy in any of the three relevant tax years since the level of support granted to them under the scheme was not representative of their usual profits. Their application for judicial review was dismissed by the judge. They now appeal against her decision with the leave of the single Lord Justice.
BACKGROUND
Although the early history of the pandemic in this country, and of the government's response, is well known, it is important to recite it in outline to illustrate the speed with which events unfolded in March 2020. The summary set out below is substantially based on the witness statements of Suzanne Kantor, the Co-Director for Personal Tax, Welfare and Pensions at HM Treasury filed in these proceedings and dated 27 October 2020, and Max Hacon, the Project Director responsible for the SEISS.
On 31 January 2020, Public Health England announced the first cases of people in England to test positive for COVID-19.
On 3 March 2020, the government published its Coronavirus Action Plan. On 11 March, the Chancellor of the Exchequer announced a number of welfare support changes to provide assistance for those affected by the pandemic. On 12 March, the Prime Minister announced that from the following day, anyone with symptoms of the virus would need to stay at home for seven days, adding that it was likely that further social distancing measures would be required in the next few weeks. Four days later, on 16 March, he made a further announcement that those with symptoms should stay at home for 14 days, that all non-essential contact and travel should cease, and that people should work from home wherever possible. On 17 March, the Chancellor announced that government-backed and guaranteed loans would be made available to businesses, that business rates would be suspended for the forthcoming financial year and other rate relief made available, and that mortgage lenders would offer mortgage holidays of at least three months.
In her statement in these proceedings, Ms Kantor, looking back to that point, stated:
“It was clear in light of social distancing measures announced by the Prime Minister that large parts of the economy would be very substantially affected, and that large emergency measures would be required to deal with those effects. There was a risk that many sound businesses would permanently cease trading as a reaction to short-term pressure on cash flow from fixed costs and disappearing revenues. Preventing failures of otherwise sound businesses and large-scale job losses could only be achieved by quickly moving to alternative sources of cash flow.”
It was in that context that officials in the Treasury and Her Majesty's Revenue and Customs (“HMRC”), respectively the Defendant and the Interested Party in these proceedings (“the respondents”) started work on policy initiatives to support employed and self-employed workers, which led to the establishment of two schemes – the Coronavirus Job Retention Scheme (“CJRS”) for employed workers (commonly referred to as the “furlough scheme”) and the SEISS for the self-employed – alongside other initiatives (including business loan arrangements and deferrals of income tax and VAT) devised in conjunction with other government departments. The development of the schemes was described through a series of Ministerial Briefing Notes from 22 March to 12 June 2020, considered in more detail below.
On 18 March, the Prime Minister announced the closure of schools taking effect two days later. On 19 March, the Coronavirus Bill was introduced into Parliament with the aim of granting the government wide-ranging emergency powers to manage the pandemic. On 20 March, the Chancellor announced that the government was setting up the CJRS under which the government would pay employers 80% of the costs of employment for furloughed workers up to a maximum of £2,500 per employee. Details of the scheme were announced on 26 March and it came into force on 20 April. At or around the same time as announcing the CJRS, the government set out its plans for tax deferrals, support for renters, and a £20 increase in universal credit. Meanwhile, pubs and restaurants were ordered to close from 21 March. On 23 March, the Prime Minister announced a further tightening of restrictions, introduced by statutory instrument and enforced by the police, preventing people from leaving their homes save for very limited purposes and prohibiting all social events. Thus in less than three weeks from the announcement of initial measures, the country had entered what subsequently became known as the first lockdown.
On 25 March, six days after being introduced into Parliament, the Coronavirus Act 2020 received Royal Assent. The powers granted to the government under the Act were to expire after two years and be subject to six-monthly reviews in the interim. Section 76 of the Act provides:
“Her Majesty's Revenue and Customs are to have such functions as the Treasury may direct in relation to coronavirus or coronavirus disease.”
Under section 71, such directions may be signed by a single Treasury Commissioner or another Treasury minister.
On 26 March, the Chancellor announced the details of the SEISS. Under the scheme, the government would pay self-employed people a taxable grant worth 80% of their average monthly profits over the last three years, up to £2,500 per month, for three months or longer if necessary. In his announcement, the Chancellor said:
“Providing such unprecedented support for self-employed people has been difficult to do in practice. And the self-employed are a diverse population, with some earning significant profits. So I've taken steps to make this scheme deliverable, and fair:
• To make sure that the scheme provides targeted support for those most in need, it will be open to anyone with income up to £50,000
• To make sure only the genuinely self-employed benefit, it will be available to people who make the majority of their income from self-employment
• And to minimise fraud, only those who are already in self-employment, who have a tax return for 2019, will be able to apply.
95% of people who are majority self-employed will benefit from the scheme. HMRC are working on this urgently and expect people to be able to access the scheme no later than the beginning of June. If you're eligible, HMRC will contact you directly, ask you to fill out a simple online form, then pay the grant straight into your bank account. And to make sure no one who needs it misses out on support, we have decided to allow anyone who missed the filing deadline in January, four weeks from today to submit their tax return …”
In the course of March and April, the details of the scheme were worked out, the process being described in the series of Ministerial Briefing Notes. Meanwhile, on 3 April and 27 April, the government announced details of two business loan schemes for larger and smaller enterprises. The latter scheme, called the Bounce Back Loan Scheme, included self-employed individuals and provided government-backed loans of between £2,000 and up to 25% of their turnover, up to a maximum of £50,000.
On 30 April, the Chancellor signed a direction under the Coronavirus Act giving effect to the SEISS – the Coronavirus Act 2020 Functions of Her Majesty's Revenue and Customs (Self-Employed Income Support Scheme) Direction. It is this direction, hereafter referred to as “the First Direction”, which is the subject of the challenge in these proceedings. Following the First Direction, the SEISS opened for applications on 13 May and closed on 13 July 2020. The structure of the scheme is described in greater detail below.
On 1 July, a further direction (“the Second Direction”, not subject to challenge in these proceedings) was signed modifying and extending the SEISS. Under this direction, a second round of SEISS grants, worth 70% of average monthly trading profits, were made available by HMRC, with applications opening on 17 August and closing on 19 October 2020. Subsequently, further grants were introduced by later directions extending the support into 2021. The CJRS scheme has also been extended by parallel directions. Other schemes have been extended or introduced to mitigate the economic consequences of the pandemic which it is unnecessary to recite here.
THE LEGISLATION
THE FIRST DIRECTION – RATIONALE AND DETAILED PROVISIONS
In her statement, Ms Kantor identified a number of challenges facing the Treasury and HMRC when designing “a fair,...
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