R (Salvato) v Secretary of State for Work and Pensions

[2021] EWHC 102 (Admin), Chamberlain J

The High Court ruled that the requirement that the childcare element (CCE) of Universal Credit (UC) could be paid to applicants only after they had actually paid for childcare, rather than becoming liable so to do (“the proof of payment rule”), was unlawful because it discriminated indirectly against women contrary to Article 14 ECHR read with Article 8 and/or A1P1 Further, having scrutinised the justification for the Secretary of State’s approach through the prism of Article 14, he went on to find that it was also irrational as a matter of common law. The decision engages intelligently with the sometimes tricky question of appropriate comparator pools, and shines useful light on the potential for common law rationality to accommodate discrimination-based claims even were direct reliance on Article 14 to become unavailable.

The Claimant was a single mother who wished to work but could not do so without assistance with childcare costs. The effect of the rule, which did not apply to the housing element of UC, was to render her unable to cover childcare costs with the effect that she had to reduce her working hours.

Chamberlain J rejected the argument put for the Secretary of State that the Claimant’s financial difficulties were not attributable solely to the rules governing UC but also to the failure of her child’s father to make financial contribution. It was, he said at §149, necessary only that the rule in question had “prejudicial effects” on her. It clearly did, and absent a claim for damages it was unnecessary to determine which causes of her financial difficulties predominated.

There was also sufficient evidence (as regards collective disadvantage) that women were disproportionately prejudiced by the rule in view of the fact that in August 2019 81% of all recipients of the childcare element of UC were single mothers; that single mothers earned significantly less than others; that childcare costs were subject to great fluctuations particularly as between term-time and school holidays; and that many childcare providers required payment and/or deposits upfront. The evidence was that the poof of payment rule contributed to UC recipients getting into debt in a sufficient number of cases, thereby having material adverse (therefore “prejudicial”) effects on a significant number of those entitled to the childcare element.

As to whether this discriminated indirectly against women, this turned on a comparison between the proportions of those prejudicially affected by the measure, and of a comparator group, who were women. The comparator group was acutely difficult to identify in the instant case because the CCE element of UC was targeted at a predominantly female group.

Chamberlain J did not accept that the appropriate comparator pool was those in principle entitled to the CCE. Had that approach applied here there would have been no disproportionate impact, since the group of those in principle entitled to CCE consisted disproportionately consisted of lone mothers. Nor (citing R (Adiatu) v HM Treasury [2020] EWHC 1554 (Admin) §146) was the fact that a benefit was disproportionately claimed by a particular group sufficient to make every adverse rule which applies to that benefit indirectly discriminatory against the group in question. In the instant case, however:

§156 … the Proof of Payment Rule flows from the basic architecture of the UC scheme, but it is plain from an examination of the rules for payment of the [housing element of UC] that there is no fundamental objection to payment on the basis of liability. The Secretary of State has decided to make eligibility dependent on liability to pay in the case of housing costs, but not childcare costs. What is really under challenge here is the decision to make an exception for one group of claimants (those claiming the HCE) but not another (those claiming the CCE). There is no evidence and no reason to suppose that there is any substantial disparity in the gender profile of the first group. The second group, however, is overwhelmingly female. In my judgment, this means that the decision has a disproportionate effect on women. The point may be illustrated in this way. Imagine an employer with one office where there is no marked gender disparity among staff and another where substantially more of the staff are women. An employer who decides to give more favourable terms to staff in the first office would be guilty of indirect discrimination, because his decision would put them at a particular disadvantage vis-à-vis men.

Further (§§157, 160):

“even among UC claimants in principle eligible for CCE, the median woman is bound to be earning significantly less per hour than the median man. The effect of the Proof of Payment Rule is to make access to the CCE conditional of being able to pay childcare costs in advance of receiving the CCE. This is bound to have a greater impact on lower-earning CCE claimants. This means that, even within the cohort of those in principle eligible for the CCE, women are likely to be more adversely affected by the Proof of Payment Rule than me…

 It is no answer to these points to say, as the Secretary of State does, that the CCE is “advantageous to women”. That is true only in a narrow and irrelevant respect: it makes the members of the (disproportionately female) eligible group better off than they would be without it. But the members of that group start off at a disadvantage vis-à-vis those who are not eligible for the CCE, because they are responsible for the care of children. Rather than describing the CCE as “advantageous to women”, it would be more accurate to say that it goes some way towards addressing a significant structural inequality: that women account for the great majority of the group whose access to the labour market depends on being able to pay for childcare.

Chamberlain J went on to rule that CCE fell within the scope of Article 8 (applying the decision of the Court of Appeal R (C) v Secretary of State for Work and Pensions [2019] EWCA Civ 615 §57) as (§163) “a way in which the state shows respect for children and the life of the family of which they are a part”, also within A1P1. This being the case, its legality turned on whether it could be justified. He noted that the matter requiring justification was (§167) “the measure which brings about the differential effect” (here the decision to apply the proof of payment rule to the CCE without exceptions), also that proportionality fell to be assessed in line with Lord Reed’s four questions in Bank Mellat v HM Treasury (No. 2) [2013] UKSC 39 §74. He then stated that the test to be applied in “the field of welfare benefits, as in other areas turning on judgments of socio-economic policy”, was the “manifestly without reasonable foundation” (MWRF). But while the state would succeed on putting forward:

“its reasons for having countenanced the adverse treatment … unless the complainant demonstrates that it was manifestly without reasonable foundation… reference in this context to any burden, in particular to a burden of proof, is more theoretical than real. The court will proactively examine whether the foundation is reasonable; and it is fanciful to contemplate its concluding that, although the state had failed to persuade the court that it was reasonable, the claim failed because the complainant had failed to persuade the court that it was manifestly unreasonable” (citing R (DA) v Secretary of State for Work and Pensions [2019] SC 21, §66; R (Langford) v Secretary of State for Defence [2019] EWCA Civ 1271, §54).

Chamberlain J cited C, Kennedy v Information Commissioner [2014] UKSC 20 and R (Joint Council for the Welfare of Immigrants) v Secretary of State for the Home Department [2020] EWCA Civ 542 to the effect that, even within the MWRF test, the intensity of review of the asserted justification depended on the context, in particular:

(i) the nature of the ground on which the allegation of differential treatment is made – differential treatment of “suspect” groups defined by reference to race, nationality, gender, sexual orientation, religion or sex will require “convincing and weighty reasons” by way of justification: C, §91]; JCWI §§136, 140;
(ii) whether and to what extent the matter involved a real socio-economic policy choice present to the mind of the decision-maker – the discretionary area of judgment to be accorded to the decision-maker will be wider if the measure under challenge was squarely considered: In re Brewster [2017] UKSC 8 §§50, 52 & 65; JCWI, §140;
(iii) whether and to what extent the measure under challenge has been approved by Parliament – if the measure has been approved in primary legislation, particular weight should be given to the considered assessment of the legislature (SG, [96]); but measures contained in statutory instruments may also attract a broad discretionary area of judgment within which the court will be slow to intervene, depending on the degree of scrutiny involved in the particular Parliamentary procedure to which the instrument is subject: SG §94]; C §92].
Objective justification could be established by reference to ex post facto evidence (citing Brewster, §52) but only where that evidence was ‘properly particularised: ‘general claims, unsupported by concrete evidence and disassociated from the particular circumstances of the claimant’s case’ will not suffice” (citing Brewster, §65; Langford, §§65-66). Applying all of that to the instant case, the aim of the proof of payment rule, which was to make UC simpler than the various benefits it replaced with a view to reducing fraud and error, was “plainly a legitimate aim” which was capable of justifying “the limitation of a protected right”. “[M]ore convincing and weighty reasons will be needed” in this case, which concerned “gender”, “than if the discrimination were on another, non-suspect ground”. There was evidence that the Minister had deliberately chosen to adopt a “childcare element” based on actual costs, rather than a “childcare disregard” of estimated costs, but not that specific consideration had been given to the “difference between a system which reimbursed payments made by claimants and one which provided an award for charges incurred, but not yet paid” (§170).

“172 Drawing the threads together, the decision not to deliver the CCE by direct payment to the childcare provider was made by Ministers. By contrast, there is no evidence that the decision to make payment of the CCE dependent on proof of payment (rather than proof that the charges have been incurred) was ever directly considered by Ministers. In considering whether that decision was manifestly without reasonable foundation, it is therefore not appropriate to apply a particularly wide discretionary area of judgment. However, the fact that the decision was given effect in an instrument approved by Parliament, and the amended version was laid before Parliament, must be recognised when applying the test.”

Having considered the Secretary of State’s evidence, the judge went on to conclude that no consideration had been given by the Minister to pinning CCE entitlement to liability to pay, rather than actual payment, despite the fact that the former would have had the same benefits as regards avoidance of fraud, and would have been as consistent with the arrears-based nature of UC, as the scheme under challenge, as well as with the approach to the housing element of UC. This being the case, (§174), the judge concluded that the proof of payment rule “lacks a reasonable foundation and is therefore not objectively justified, it is therefore incompatible with Article 14”. Having remarked that the MWRF approach to the justification of discrimination bore similarities to irrationality review whose intensity, similarly (§175), varied according to context, Chamberlain J concluded that the proof of payment rule was also irrational (§178).

 

 

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