The Queen (on the Application of SG and Others (Previously JS and Others)) v The Secretary of State for Work and Pensions 1) Child Poverty Action Group and Another (Interveners)
| Jurisdiction | England & Wales |
| Judge | Master of the Rolls |
| Judgment Date | 21 February 2014 |
| Neutral Citation | [2014] EWCA Civ 156 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 February 2014 |
| Docket Number | Case No: C1/2013/3305 |
[2014] EWCA Civ 156
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
THE RIGHT HONOURABLE LORD JUSTICE ELIAS & THE HONOURABLE MR JUSTICE BEAN
IN THE MATTER OF A CLAIM FOR JUDICIAL REVIEW
Royal Courts of Justice
Strand, London, WC2A 2LL
THE MASTER OF THE ROLLS
The Right Honourable Lord Justice Longmore
and
The Right Honourable Lord Justice Lloyd Jones
Case No: C1/2013/3305
and
Mr Ian Wise QC, Ms Caoilfhionn Gallagher&Mr Sam Jacobs (instructed by Hopkin Murray Beskin) for the Appellants
Mr Clive Sheldon QC & Ms Karen Steyn (instructed by The Treasury Solicitor) for the Respondent
Mr Richard Drabble QC, Mr Tim Buley&Ms Zoe Leventhal (instructed by Herbert Smith Freehills LLP) for the Child Poverty Action Group
Mr Jonathan Manning & Ms Clare Cullen (instructed by Freshfields Bruckhaus Deringer LLP) for the Shelter Children's Legal Service
Master of the Rolls: This is the judgment of the court to which each member has contributed.
This appeal relates to what is generally known as the "benefit cap" imposed by the Welfare Reform Act 2012 ("the Act") and the Benefit Cap (Housing Benefit) Regulations 2012 ("the 2012 Regulations") which were made thereunder. In broad terms the appellants say that the 2012 Regulations have been made in breach of articles 1 of the First Protocol ("A1P1") and 8 read with article 14 of the European Convention on Human Rights ("the Convention") because their rights as women not to be subjected to discrimination and their rights to family life have been infringed. The Secretary of State contends that the aim of the benefit cap is primarily to bring about a change in 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 cap strikes a fairer balance between the interests of taxpaying working households and those on benefits. Any interference with family life and any discriminatory impact of the benefit cap on women generally (and female victims of domestic violence who flee from their homes in particular) is therefore said to be justified and lawful. The Divisional Court upheld the arguments of the Secretary of State. The claimants now appeal. We adopt, with gratitude, the outline account of the legislation and the facts from the Divisional Court's judgment.
The Legislation
The Act received Royal Assent on 8 March 2012. The cap is one of the major reforms which it introduces and is 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 the total entitlement to such benefits of a single person or a couple exceeds the relevant amount, their entitlement is reduced by the amount of the excess (section 96(2)).
The broad principles for determining the "relevant amount" are laid down in the primary legislation (section 96(6) to (8)). However, the precise manner of its calculation and the amount actually determined are to be specified in regulations (sections 96(4) and (5)). These regulations may make provision as to the benefits from which a reduction is to be made and may provide for exceptions to the application of the cap (section 96(4)(b) and (c)).
Section 96(6) to (8) provides 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).
However, when determining the amount, if any, by which the benefits exceed the cap, account is not taken 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)). Therefore, if a benefit is not prescribed, 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, (as we have already said) section 96(4)(c) provides for exceptions to be made to the application of the cap; welfare beneficiaries falling within the exceptions are outside the scheme altogether.
Section 97(3) and (4) 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 of a resolution of either House (the negative resolution procedure). The 2012 Regulations were the first regulations made under section 96. These were made on 29 November 2012 after the draft had been approved by affirmative resolutions of both Houses. The draft regulations were accompanied by an impact assessment and an equality impact assessment.
The 2012 Regulations insert a new Part 8A into the Housing Benefit Regulations 2006/213. Regulation 75G fixes the "relevant amount" under section 96(2) at £350 per week for a single claimant and £500 per week for all others. The latter figure represents a gross salary of £35,000 and a net salary, after deduction of tax and national insurance, of around £26,000.
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 housing benefit: see regulation 75D.
The 2012 Regulations provide for exceptions to the application of the cap. The effect of regulation 75E is to disapply the cap to working households. This is the result of providing 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 are therefore exempt from the cap, by working at least 16 hours per week if a single parent or a disabled person, and 24 hours per week if a couple with children (provided that at least one of them works for 16 hours). The regulation also exempts those who have recently been in work by granting a 39 week period of grace from the last day on which the claimant or the claimant's partner was employed or engaged in work.
Regulation 75F provides that the cap does not apply where a person in the household is in receipt of certain specified benefits. The 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. Regulation 75(C)(2) provides that, where the welfare benefit is housing benefit and the dwelling is "exempt accommodation", it shall count as nil in the calculation of the total amount of welfare benefits to which a person is entitled. Some women's refuges which take in women fleeing domestic violence fall into this category.
The 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 immediately have severe consequences for claimants who had been receiving benefits 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 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% the Divisional Court was told) have chosen to do so.
The two items most likely to trigger the operation of the cap are housing benefit and 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, 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 appeal — that the cap applies equally to a childless couple in an area with cheap and...
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