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Summary

The claimant had her weekly housing costs (payable for each week of the year) converted to a monthly amount, as per the formula in paragraph 7(2)(a) to Schedule 4 of the Universal Credit Regulations 2013, SI No.376. That produced an average monthly cost over 52 weeks. The claimant challenged the use of 52 weeks in the year in the formula, as a year will consist either of 52 weeks and one day, or 52 weeks and two days, and in her case the formula left her UC short of her full housing costs by £10 a year. She also argued that the formula constituted a breach of Article 14 of the European Convention on Human Rights by unlawfully treating a person with weekly housing costs differently to someone whose costs were monthly, so that the person with weekly costs suffered a shortfall.

In the High Court, Mr Justice Julian Knowles rejected those arguments. He held that use of a formula based on a 52-week year was not irrational, as UC was not intended to cover every penny of a claimant’s housing costs, the formula provided consistency and simplicity and reflected the reality that in most year tenants will have 52 payments to make. Referring to the decisions, R (Johnson) v Secretary of State for Work and Pensions [2020] EWCA Civ 778 (regarding ‘non-banking day salary shift’ and treatment of earnings) and in R (Pantellerisco) and others v Secretary of State [2020] EWHC 1944 (Admin) (regarding exception from the benefit cap and treatment of earnings), the judge considered that ‘the regulations in issue in this case cannot be said to have produced such stark and arbitrary effects as the Regulations did in the two earlier cases. In other words, despite Mr Royston’s submissions, I remain unpersuaded that the formulae do in fact create a problem requiring a solution’ (paragraph 205).

There was no breach of Article 14 because the difference in treatment was not manifestly without reasonable foundation, as not manifestly disproportionate to the aims of the legislation: differences in treatment, even where they did occur, were very small and not disproportionate with simplicity and ease of explanation.

Summary

The claimant lived in specified accommodation and was entitled to housing benefit (HB) and universal credit (UC). The UC therefore did not include the housing element. But it did include a transitional severe disability premium (SDP) element (the claimant having been entitled to the SDP when she underwent natural migration from legacy benefits to UC). In May 2021, she moved out of her specified accommodation and into mainstream rented accommodation, in which the rent was lower. Due to the move, she lost entitlement to HB and instead became entitled to the housing element of UC. It was decided that her transitional SDP element was immediately reduced (or ‘eroded’) to nil, because the housing element, although lower than the HB, exceeded the amount of the transitional SDP element. On appeal, the First- tier Tribunal held that the erosion to nil in this case was unlawful discrimination and that the rule applying the erosion (at regulation 55(2) of the Universal Credit (Transitional Provisions) Regulations 2014, SI No.1230) should be disapplied in her case. The Secretary of State appealed to the Upper Tribunal. 

Judge Church upheld the tribunal’s decision, holding that it did not involve any material error of law. The erosion of the claimant’s transitional SDP element had involved discrimination (and therefore a breach of her human rights under Article 14 of the European Convention on Human Rights, read with Article 1 of Protocol 1). He also agreed that, in the light of the breach, the correct remedy was to disapply regulation 55 in her case, so that her transitional SDP element was not eroded at all. The Secretary of State argued that the claimant’s argument was an attack on the ‘erosion principle’ in regulation 55 that transitional protection would erode over time in line with ‘relevant increases’ in UC amounts, and (in summary) that the arguments for discrimination under Article 14 were not made out. 

The judge disagreed. There was no attack on the erosion principle; rather, what had happened here was not ‘erosion’, as properly understood. The tribunal had correctly identified, for the purpose of Article 14 discrimination, an ‘other status’ for the claimant, namely that of a person with a transitional SDP element who has moved from specified accommodation to mainstream rented accommodation. That was not so very different from the claimants in the TP litigation that had led to the creation of the transitional SDP element (see FL v SSWP), who were SDP-entitled claimants who moved home, albeit in those cases from one local authority area to another. The tribunal had also correctly identified a comparator for the discrimination, namely a claimant who instead moved from mainstream rented accommodation to another cheaper such property – ie, who would not have experienced erosion of the element, because they would not have had a relevant increase in their UC as a result. Similarly, someone who moved from one specified accommodation to another would not get more UC and not experience erosion. Given that she had lost her HB, and the UC housing element was for a lower amount than that, the immediate elimination of the transitional SDP element had occurred where in fact there had been no benefit increase on moving, but rather a ‘significant reduction in her benefit...’ (paragraphs 106– 107). The judge considered that the claimant’s loss of her transitional protection ‘could not properly be characterised as erosion’, but rather was the sort of ‘cliff-edge’ income loss found to be unlawful in the TP litigation, and which the transitional SDP element was supposed to protect against (paragraphs 108–109). On whether the difference in treatment could be justified, the Secretary of State had made no argument to the First-tier Tribunal, and at the Upper Tribunal relied on the clarity of parliament’s decision to provide for a UC system including erosion of transitional protection with increases in benefits. But it was the difference in treatment that had to be justified, not merely the underlying policy, and the Secretary of State still had not explained that. 

Comment from CPAG

Thanks to Elliot Kent of Shelter, who brought the case, for sending us this decision. Note that by no means all erosion of the transitional SDP element will be unlawful. But it would seem very likely where the claimant has moved from specified accommodation to mainstream rented accommodation – ie, and undergone ‘cliff-edge’ loss of benefit as a result.

Decision in brief

The tribunal judge, in refusing to grant permission to appeal to the Upper Tribunal, then gave reasons for rejecting the wife’s evidence – but, per the decision of the Court of Appeal in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs [2007] EWCA 498, the new reasons given at the permission state could form no part of the tribunal’s earlier statement of reasons – also, given that the permission was refused by the judge alone, it could not be clear that new reasons added there were the view of the tribunal panel

Summary

In this decision, the Court of Appeal in substance upheld the previous decision of the High Court in this case (Bulletin 273, p8). There, a challenge to the lawfulness of the equalisation between men and women of the state pension age and the raising of the pension age, based on alleged discrimination on grounds of age or sex (or age and sex combined), and of allegedly inadequate notice of the changes, was rejected. The claimants were both women who, under the changes, reach pension age at the age of 66.

In the Court of Appeal, the Master of the Rolls, Lord Justice Underhill, and Lady Justice Rose DBE unanimously rejected the claimants’ further appeal. Regarding alleged age discrimination contrary to Article 14 of the European Convention on Human Rights, although the court took a different view to the High Court in that it considered that older women might be a valid comparator group regarding the alleged discrimination, it agreed that any discrimination was nevertheless justified. It was right to regard the matter as one of macro-economic policy, and the court agreed with the High Court that ‘it is impossible to say that the government's decision to strike the balance where it did between the need to put state pension provision on a sustainable footing and the recognition of the hardship that could result for those affected by the changes’ was manifestly without reasonable foundation (paragraph 55). Regarding indirect sex discrimination or sex/age discrimination, firstly the court agreed with the High Court that the domestic law was not within the scope of European Union law. It also agreed that even if indirect discrimination under Article 14 had occurred, it was not unlawful under Article 14, as it was in any case justified as not manifestly without reasonable foundation. The evidence showed that proper consideration had been given to these measures, which ‘dealt with controversial matters of huge political weight and clearly fall within the macro-political field’ (paragraph 93).

Regarding notification, the High Court was ‘entitled to conclude as a fact that there has been adequate and reasonable notification given by the publicity campaigns implemented by the Department over a number of years’ (paragraph 120).

Decision in brief

ESA40 booklet sent to claimants and instructions to report changes and if claimant ‘gets’ pension income – claimant reported intention to claim his occupational pension at an unspecified date, but not his later receipt of it when it commenced or subsequent increases – recovery of overpayment for failure to disclose under section 71 of the Social Security Administration Act 1992 – words in the ESA40 booklet to be given their ordinary and natural meaning – ordinary meaning of ‘get’ is clearly the language of receipt – claimant was under a clear and unambiguous obligation to report receiving the pension, which he failed to do

Summary

The claimant was entitled to income-related employment and support allowance (ESA), including a severe disability premium (SDP) as a result of his entitlement to the middle rate of the care component of disability living allowance (DLA). In 2012, his entitlement to the middle rate of the care component was ended by the Department for Social Development; however, the claimant did not inform the ESA office of this and his ESA continued to include the SDP. In 2014, the Department removed the SDP and in 2015 decided the claimant was liable to repay the overpayment of ESA (ie, caused by the continued inclusion of the SDP) for the 2012 to 2014 period. The claimant’s appeal to the First-tier Tribunal was refused.

Commissioner Stockman allowed the claimant’s further appeal and substituted a decision that he was not liable to repay the overpayment. This was because the overpayment had not been caused by the claimant failing to disclose the ending of his entitlement to the middle rate of the care component of DLA. The ESA office of the Department was considered to have known about the change, and the claimant knew that it knew. The claimant was therefore not under a duty to report the change and could not have failed to fulfil that duty.

The First-tier Tribunal had rejected the claimant’s arguments that the ESA office already knew of the change, citing the decision of the House of Lords in Hinchy v Secretary of State for Work and Pensions [2005] UKHL 16, that a claimant was not entitled to rely on the Department’s systems or practices as satisfying the primary obligation to notify the Department of changes in circumstances. However, Commissioner Stockman considered that times had changed since the decision in Hinchy, and in particular that ‘…one cannot envisage a rational modern computerised system of administration of benefits, where the rate of one benefit (ESA) is conditional on entitlement to another (DLA), which does not verify the details of that other award’ (paragraph 45). Also, ‘Hinchy addressed a disjointed departmental administration in the period from 1993 to 1998 passing information about DLA awards around on pieces of card, where one branch did not know what the other was doing. The evidence in this case indicates that that system has been consigned to the past. Claimants are entitled to assume that when they receive their decision in relation to one benefit, the Department’s modern computerised systems will not just have communicated the decision to them, but also to any other branches of the departmental administration where that decision has an impact’ (paragraph 48); and ‘it is plainly time that the factual circumstances underpinning the House of Lords decision in Hinchy are distinguished in order to reflect the reasonably expected standards of 21st century benefits administration’ (paragraph 50). The claimant was therefore entitled to assume that the ESA office knew of the change.

Comment from CPAG

As a Northern Ireland decision, this decision is not formally binding in Great Britain, but may be considered persuasive. As such, it could be applied regarding the recoverability of any overpayment in Great Britain that is founded upon an alleged failure to disclose (this will not include overpayments under the universal credit system). The robust engagement with the practical consequences of the passage of time since Hinchy, and what it is reasonable to expect of claimants, are to be welcomed. However, it remains to be seen exactly how persuasive authorities in Great Britain will regard its decisive move away from the conclusions in Hinchy.

Summary

The claimant had originally been awarded PIP, including two points regarding problems with making budgeting decisions under Activity 10 of the daily living component. In January 2017 those points were removed. Further supersessions took place in 2019 and 2022, the latter restoring the Activity 10 points. In 2022, the Department made further decisions (followed by mandatory reconsideration notices) in the light of ‘LEAP’ (legal entitlements and administrative practices) exercises to correct mistakes (identified in caselaw) in the official approach to the award of points under Activities 3 and 9. Although dealing with entitlement during all the past periods, these LEAP decisions dealt solely with the Activity 3 and 9 issues, and did not reinstate the two points under Activity 10 for 2017–2022. On appeal against those decisions, the First-tier Tribunal held that it had no jurisdiction to consider disputes other than the Activities 3 and 9 points that were the subject of the LEAP exercises. 

Judge Wikeley allowed the claimant’s further appeal and substituted a decision to the effect that the claimant was entitled (on the available evidence) to the two points regarding Activity 10 from the point that they had been removed in January 2017. In this case, in effect the LEAP decisions had refused to revise the January 2017 decision for official error, and so there had been a mandatory reconsideration of that decision and, on appeal, the tribunal did have jurisdiction about the Activity 10 issue too. 

The tribunal would have been correct if was considering the January 2017 decision ‘simply on the basis that the decision maker’s view of the law was inconsistent’ with that set out in the caselaw behind the LEAP exercise (paragraph 39). But that was not the end of the matter. The Secretary of State submitted that if the LEAP decisions could properly be regarded as following a ‘non-hopeless application for an any-time official error revision’ of the January 2017 decision, then they contained a refusal to revise the decision on that ground, so providing jurisdiction for the tribunal to consider it in its entirety, per PH v SSWP (DLA). The judge was aware of ‘some uncertainty’ on the scope of issue in a LEAP appeal where the decision was being revised for error of law, and that ‘one view’ was that only issues that flowed from the error of law that was the subject of the LEAP exercise could be considered (paragraph 41). Although this was ‘not the case to resolve those difficulties’, the judge accepted that in this case (1) the claimant had asked for the decision concerning her entitlement from January 2017 to be reconsidered, (2) that request ‘was in no way hopeless’, not least because the relevant caselaw in the LEAP exercise dated from before the January 2017 decision, (3) the LEAP decision ‘could be properly understood to include a refusal to revise’ the January 2017 decision, and (4) the appellant had a right of appeal against that refusal (paragraph 42). 

Comment from CPAG

This decision is not straightforward authority that tribunals considering appeals following LEAP decisions can always consider matters not specifically at issue in the LEAP exercise. However, at the very least this is an example of a case in which, on the facts, that was accepted.

Summary

In this judicial review decision, the High Court rejected an argument that the treatment for UC purposes of maternity allowance as unearned income rather than earned income is unlawful.

The claimant was not entitled to statutory maternity pay (which is treated as earned income for UC), but was entitled to maternity allowance (which is not). In the calculation of her UC, the maternity allowance was therefore deducted pound for pound from her maximum entitlement, unlike statutory maternity pay, which as earned income only 63 per cent of which would have been deducted. The claimant argued that the relevant rule treating maternity allowance as unearned rather than earned income, at regulation 66 of the Universal Credit Regulations 2013, was unlawful, on the basis that it was discrimination contrary to Article 14 of the European Convention on Human Rights or, alternatively, was irrational. (The claimant also argued that the decision in making the 2013 Regulations to treat maternity allowance in this way was in breach of the public sector equality duty in the Equality Act, but permission to apply on this ground was refused by the judge as having been made out of time.)

Mr Justice Swift rejected those arguments. Although he had doubts about whether needing to claim maternity allowance rather than statutory maternity pay constituted an ‘other status’ for the purpose of an Article 14 challenge, he was content to focus on whether there was sufficient justification for the different treatment. He considered that there was. His reasons for that concerned the fact that statutory maternity pay was paid by employers through the payroll, that that was a real-time information (RTI) system used to report such payments, and the UC system was designed around allocating RTI payments as earned income. For the same reasons, the difference in treatment was not irrational. The claimant’s reliance on the United Nations Convention on the Rights of the Child did not alter that. Even to the extent that it was a legitimate tool for considering justification for different treatment or rationality arguments, the Convention did not impact on them as it remained that a total social security payment equivalent to maximum UC remained payable.

Summary

The claimant’s landlord was her son. He had bought the property and had been renting it out to the claimant, with a formally drawn-up tenancy agreement, since 2000. Until 2013, rent was paid in full. From that point, partly due to a drop in income caused by retirement, the claimant began building up rent arrears. The son took no action to enforce the arrears or to evict the claimant. She claimed HB in 2015. That claim was refused by the local authority on the basis that tenancy was not on a commercial basis. The First-tier Tribunal allowed the claimant’s appeal. The local authority appealed to the Upper Tribunal.

Judge Poynter formally set the decision aside but substituted a decision to the same effect as that of the First-tier Tribunal – ie, that the tenancy was on a commercial basis and so the claimant was not excluded from HB. The tribunal had erred in not having regard to the rent arrears before the claim was made as a separate matter to subsequent rent arrears, but on the facts that did not change the conclusion that the tenancy was on a commercial basis.

The relevant rule in this case was at regulation 9 of the Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006, SI No.214. That includes that the claimant is not regarded as liable for rent if ‘the tenancy or other agreement pursuant to which he occupies the dwelling is not on a commercial basis’. In this case, the local authority relied on what Judge Poynter called ‘trump-card’ facts (namely, the accrual of rent arrears before the claim, with the landlord not undertaking eviction proceedings), and the ‘notional commercial landlord’ who would not fail to act in that way. But both such approaches were wrong: the first by seizing on one particular fact to the exclusion of others, the second by positing that there is only one way for a landlord to behave in order for the tenancy to be commercial. As set out in R(H) 1/03, the commerciality of a tenancy is not a ‘primary’ fact, but rather a ‘compound’ fact – ie, a judgement that has to be reached with regard to all the relevant facts in the case. So the fact that a landlord had allowed rent arrears to accrue may be a relevant factor, but ‘it will usually be only one of many factors and must still be weighed against the others in the context of the evidence as a whole’ (paragraph 34). Regarding landlords, they were not identically motivated and were not a homogenous group: in R(H) 1/03 it had been pointed out that ‘Rachman is not the only model of a commercial landlord’. The judge held that the tribunal was right to hold that: ‘The test is whether the tenancy is not on a commercial basis. It is not whether the landlord is in business as a commercial landlord’ (paragraph 53).

The facts in this case showed, on balance, that the tenancy was commercial. The facts included that the rent had been paid without fail for many years prior to arrears starting to accrue, that the agreement remained legally enforceable, that some irregular payment had continued and that there was at least the possibility that the claimant’s ability to pay might improve, due to a possible increase in her husband’s earnings. The fact of applying for HB was in itself an attempt to improve her ability to pay the rent. The mere fact of applying for HB could not in itself be proof of non-commerciality. Although the judge accepted that a commercial tenancy could in some circumstances change to become uncommercial (and vice versa), he doubted – contrary to previous authority (R(H) 10/05) – that those circumstances included where the landlord did not take eviction action, as the correct focus had to be in the ‘agreement’ concerned. But even if landlord inaction could count as a change, on the facts of this case again that still did not mean the tenancy had become uncommercial.

Comment from CPAG

This extensively reasoned decision will be a key authority where there is a question about whether a tenancy is on a commercial basis. It is a forceful reminder that not all landlords have to be motivated by profit alone or be ruthless about enforcement for an agreement to be and remain commercial. The use of ‘trump facts’ and of the ‘notional commercial landlord’ is emphatically rejected as erroneous. As the judge indicated, there may need to be further authority on exactly when the commerciality of an agreement may be regarded as having changed.

Summary

The claimants were a ‘mixed-aged’ couple for UC. They claimed UC with the pension-age member of the couple formerly being the one who had been entitled to income-related employment and support allowance (ESA). Her entitlement to that came to an end when she reached pension age; however, she was not informed of the ending of the ESA until several days after that date. Consequently, she was not entitled to ESA when the joint claim for UC was made. Although (the pension-age member having been in the support group for ESA) a limited capability for work-related activity (LCWRA) element fell to be included in the UC, the DWP applied a waiting, or ‘relevant’, period of three months before it could be included. The claimant argued the failure to award the LCWRA from the start of the award was in breach of her human rights as discrimination on the basis of age. That was rejected by the First-tier Tribunal, who held there was no relevant exception to the application of the relevant period for the relevant rule (at regulation 28 of the Universal Credit Regulations 2023), although without actually explaining why that was not in breach of the claimant’s human rights. 

Judge Wright allowed the claimant’s further appeal and substituted a decision that no relevant period fell to be applied before the LCWRA was included in the UC award. It was true that neither regulation 28 nor regulations 19 or 21 of the Universal Credit (Transitional Provisions) Regulations 2014 provided for an exception to the relevant period, as the claimant had, because of her age, not been entitled either to ESA or (as it possible for someone under pension age) national insurance credits for LCWRA at the time of the UC claim. The failure of the rules to disapply the relevant period in a situation like this was in breach of human rights law as discrimination on grounds of age. The tribunal had failed to engage in any proper sense with the claimant’s human rights argument, rendering its reasoning ‘woefully inadequate’ (paragraph 10). Specifically, Article 14 (prohibition of discrimination) of the European Convention on Human Rights (the ECHR), read with Article 1 of Protocol 1 (right to property) had been breached. The judge held that in the light of that, it was required in this case to apply the rules so as to avoid the discrimination (by section 6(1) and (3)(a) of the Human Rights Act 1998), with the result that the LCWRA element was to be included from the start of the UC award. 

Before the Upper Tribunal, the Secretary of State made no attempt to argue that the rules did not discriminate against the claimant on grounds of age (and so accepted that Article 14 of the ECHR was breached). The Secretary of State further accepted that, if Article 1 of Protocol 1 applied, then the remedy to the discrimination was to the three-month relevant period in regulation 28 in this case. Rather, in opposing the appeal, the Secretary of State argued that the relevant period for the LCWRA was not within the ambit (ie, the scope) of Article 1 of Protocol, as it was not a ‘condition of entitlement’ at all, but rather merely a rule about the ‘mechanism and timing of payment’ of the LCWRA (paragraph 42). But Judge Wright rejected that argument. The seminal decision on whether and when social security benefits constituted ‘possessions’ for such purposes was that of the European Court of Human Rights in Stec v United Kingdom (2005) 41 EHRR SE 18. At paragraph 54 of that decision, the court did indeed refer to the claimant having unable to ‘receive’ all or part of a benefit by a particular ‘condition of entitlement’. But that phrase was not to be given a ‘narrow or technical’ legal meaning, and the correct approach was rather to identify the ‘substantive effect’ of the rule on the claimant receiving their benefit (paragraph 44). That was supported by the decision in R (RJM) v SSWP [2008] UKHL 63, reported as [2009] 1 AC 311, which was about the amount of income support (IS) the claimant was entitled to, in particular the inclusion of the disability premium, and that was a ‘possession’ for Article 1 of Protocol 1. Although IS was different to UC, the judge considered that the same reasoning applied to the LCWRA element to which the claimant in this case had been ‘in substance’ not entitled to for the first three months of the award (paragraphs 45–46). The Secretary of State’s argument that regulation 28 was concerned only with mechanism and timing of payment was ‘unreal’ (paragraph 50). The practical effect of the rule was that someone subject to the relevant period would never receive the LCWRA element for the first 13 weeks of their UC award. 

Comment from CPAG

This decision is notable as a reminder that a statutory rule can be held to be in breach of human rights by a tribunal and that, in some cases, it will be an available remedy to comply with the basic requirement to apply it so as to avoid such a breach.

For further information see our test case update: Three month wait for UC LCWRA element not applicable to claimant member of mixed age couple who reached pensionable age before claiming UC.

Summary

The claimants were a couple with capital (about £25,000) from the sale of their previous homes. They were refused UC because their capital was above the £16,000 capital limit. Following mandatory reconsideration, their appeal was refused by the First-tier Tribunal. The tribunal refused to apply the rule (at paragraph 13 of Schedule 10 of the Universal Credit Regulations 2013, SI No.376) that the capital could be disregarded where it is an amount ‘…received in the past six months which is to be used for the purchase of premises that the person intends to occupy as their home where that amount…is attributable to the proceeds of the sale of premises formerly occupied by the person as their home…’. The tribunal said that the words ‘which is to be used’ required more than a mere hope or wish to use the money to buy another home, but must have ‘an intent’ to buy, be ‘actively seeking’ to do so and have a ‘reasonable prospect’ of doing so. 

Judge Poynter refused the claimant’s further appeal, holding that the tribunal had not materially erred in law (although it had made errors). He considered caselaw on the meaning of the words ‘which is to be used’ (from different benefits but regarding the same wording). In particular, in R(IS) 7/01 it had been held that the essence of the test was ‘an element of certainty’ that the capital would be used to buy a home; and that it must be ‘reasonably certain’ that a home would be purchased within the relevant time. However, Judge Poynter noted that in Re B (Children) [2008] UKHL 35, the House of Lords held that ‘that there is only one civil standard of proof and that is proof that the fact in issue more probably occurred than not.’ Judge Poynter emphasised the distinctly different test envisaged there: ‘The civil standard of proof does not involve any form of certainty. It is about “whether a fact more probably occurred han not”. Although it is usually unhelpful to reduce the standard to percentages, it is illustrative in this case that the civil standard is satisfied if there is a 50.1 per cent chance that the money will be used to buy a new home and a 49.9 per cent chance that it will not. That is a very long way from any form of “certainty”, no matter what adjective is used to qualify that word’ (paragraph 30). To the extent that R(IS) 7/01 (and similar authority) required a test anything other than the balance of probabilities, the judge declined to follow it (paragraph 34).

Turning to what the tribunal in the present case had done, it had erred in law in holding that an ‘intention’ to use the capital to purchase a new home was the test; referring to a need for the claimant to be ‘actively seeking’ to purchase a property, and in requiring a ‘reasonable prospect’ of acquiring a property. The correct test was whether the capital ‘is to be used’ for that purpose. But it remained that the tribunal had not materially erred in law, because the decision would have been the same even applying the correct test. That was because the evidence showed that the claimants would be unable to get a mortgage (due to debt problems) and so, given that the amount of capital was not in itself enough to buy a home, the claimants could not establish that it was more probable than not that the capital would be used in that way.

Comment from CPAG

The departure from the test in R(IS) 7/01 of some ‘certainty’ and replacement with a ‘more probable than not’ test is significant. It may assist claimants who are unable to point to, for example, accepted purchase offers or written agreements, although the individual facts will be crucial.

Summary

The claimant applied for UC on 17 August 2021. On 11 September 2021, he was remanded in custody. On 20 September 2021, it was decided the claimant was not entitled to the housing element of UC because he was in prison. On appeal, the First-tier Tribunal held that the claimant was entitled to the housing element from the start of his claim and throughout the period he was remanded in custody. 

Judge Wikeley allowed the Secretary of State’s appeal and substituted a decision that the Secretary of State’s decision on 20 September, that the claimant was not entitled to the housing element, was correct. The tribunal had erred in wrongly interpreting the relevant rule, which was at regulation 19 of the Universal Credit Regulations 2013 No.376. That provides that ‘entitlement to universal credit does not arise’ in certain situations, including where the claimant is a prisoner. There was no dispute that the claimant counted as a prisoner while being held on remand (because of the definition of ‘prisoner’ at regulation 2). But at subparagraph (2) of regulation 19, an exception applies for a prisoner, so that such a person can be entitled to the housing element for the first six months as a prisoner where ‘the person was entitled to universal credit immediately before becoming a prisoner...’. It was this wording that the tribunal had wrongly interpreted (other requirements including that the housing element was included and that the person had not been sentenced to a term expected to last longer than six months were certainly met by the claimant). 

The First-tier Tribunal held that the claimant ‘had entitlement to universal credit from the date of his claim on 17 August 2021 onwards...’, and that was ‘in place immediately before he became a prisoner...’ (quoted at paragraph 19). But, held Judge Wikeley, that was wrong: 

‘The fundamental difficulty with the tribunal’s approach in this case was that it sought to interpret regulation 19 of the UC Regulations 2013, and in particular the concept of entitlement to benefit, in isolation from the overall architecture of the universal credit scheme’ (paragraph 23). 

In particular, section 7 of the Welfare Reform Act 2012 provides that UC is ‘payable in respect of each complete assessment period within a period of entitlement’, and that a ‘period of entitlement’ means ‘a period during which entitlement to universal credit subsists’. Given that an assessment period is (per regulation 21 of the regulations) a period of one month starting with the first date of entitlement, it followed that ‘... in order to be paid UC in respect of an assessment period, a claimant needs to be entitled to the benefit throughout that assessment period. Entitlement must subsist throughout, or the period in question is not an assessment period as so defined’ (paragraph 27). In the present case, the claimant had not been entitled to UC throughout his first assessment period (ie, his entitlement did not ‘subsist’ for that period), as he had become a prisoner before that period had ended. The claimant therefore failed to meet the requirement in regulation 19(2)(a) that he was ‘entitled to universal credit immediately before becoming a prisoner’, as that must refer to entitlement in the immediately preceding assessment period. 

Comment from CPAG

Put shortly, the problem for the claimant in this case was that he became a prisoner during his first UC assessment period. In this case, the result did not strike the judge as unlawful. The Secretary of State’s representative confirmed that things would have been different (ie, such that the claimant would have had entitlement to the housing element) had he become a prisoner in his second assessment period. The differential treatment of those who become prisoners in their first assessment period was explained by the overall structure of UC, which involved payment in arrears and complete assessment periods. That had an ‘inherent logic and is administratively efficient’. That harsh outcomes in individual cases did not automatically render benefit rules unlawful had been recognised by the Court of Appeal – for example, in the decisions in Pantellerisco and Johnson. The judge observed that, had a UC assessment period been set as one week rather than one month, then the claimant would have been entitled: ‘However, that was not the legislative choice adopted by parliament. I simply add that it will be no consolation to the claimant that the court recognises the risk of harsh outcomes when operating a complex welfare system’ (paragraph 34).