Households worse off on universal credit win Court of Appeal test case | CPAG

Households worse off on universal credit win Court of Appeal test case

Published on: 
12 May 2020

Application of universal credit transitional provisions breached claimants' human rights

Two disabled households who were left worse off after they were forced to move to universal credit (UC) because their existing benefits were wrongly stopped by the DWP today won a breakthrough case in the Court of Appeal. The result means that depending on what remedy the DWP chooses, the two households – and potentially thousands like them subject to wrongful decisions by the DWP – will be able to return to their previous benefits or have their UC awards topped up to the level of their previous benefits.

The test case was brought by Child Poverty Action Group on behalf of a single mother and her disabled daughter and a woman with mobility difficulties who lives alone. It challenged the lack of protection against cash losses for claimants who are on UC only because of an incorrect decision by the DWP ending their earlier benefits when combined with the fact that such claimants are unable to return to their previous ('legacy') benefits after successfully challenging the incorrect decision, even if they are financially worse off on UC.

Both households* were significantly worse off on UC, yet they were unable to return to their original benefits because of the so-called 'lobster pot principle' (once on UC there's no way back). And unlike people who will in future be transferred to UC from their existing benefits as part of a mass, managed-migration process, they were not entitled to have their UC payments topped up to the level of their original benefits ('transitional protection' against cash losses at the point of transfer). Other than the DWP error ending their previous benefits, neither household had any change in circumstances which would have obliged them to claim UC.

'TD', the mother of the disabled child, was for a period almost £140 per month worse off on UC than her entitlement on her previous benefits because payments for some disabled children are lower in UC than in tax credits. For Ms Reynolds, the other claimant, the difference between her previous employment and support allowance (ESA) award and her UC award is around £180 per month. 

The court decided there was no justification for treating the two households differently from other claimants who remain on 'legacy' benefits and who will in the future move to UC through managed migration and will have transitional protection against income drops. Lord Justice Singh ruled that this difference in treatment of the two households, unfairly discriminated against them, breaching their rights under the European Convention on Human Rights:

"What is crucial …is that these Appellants were treated as they were despite their successful reviews [of the DWP decision to end their previous benefits] for reasons to do with administrative cost and complexity, which have nothing to do with the merits of their cases; and that the only reason in reality why they moved from legacy benefits to UC was as a result of errors of law by the state itself".

Lord Justice Singh drew attention to the practical reality the claimants faced when their previous benefits were stopped by DWP error: 

"Although it is true that the Appellants were not compelled by law to apply for UC, as a matter of practical reality they had no choice but to apply for UC. It is important that the legislation in this country governing social security should be interpreted in a way which conforms to practical reality, given the potential impact on some of the poorest people in society."

In March 2019, the High Court rejected CPAG's claim that the two households had suffered unlawful discrimination, considering that it was sufficient that the Secretary of State had considered whether it was justifiable to treat the two households differently to claimants remaining on legacy benefits and claimants who in future will be migrated to UC with transitional protection. But the Court of Appeal today overturned that decision, emphasising that the court itself needed to decide whether the difference in treatment of the two households was justified, rather than only whether it had been adequately considered by the Secretary of State.

Welcoming today's judgment, Child Poverty Action Group's solicitor Carla Clarke said:

"Today's judgment corrects a glaring injustice for the two households in this case, and many others in a similar situation, who end up worse off through no fault of their own. The court was clear that the way in which UC is implemented must comply with human rights. Claimants pushed onto UC when the DWP wrongly stops their old benefits should not have to tolerate an income drop that causes them real hardship simply because the DWP considers it is too costly or too complex to rectify its own mistake. Not least among those who will benefit from the judgment are children and adults who otherwise stood to lose out on crucial help with the extra costs of disability. The Secretary of State must act swiftly to implement the judgment so that any claimant who claims UC following an incorrect decision to end their previous benefits is protected against financial losses."

In a separate case brought by CPAG, which will be heard in the High Court today, a single mother on universal credit is challenging the DWP's approach to earnings in UC because it left her benefit-capped – and up to £5,000 worse off per year – purely because her employer paid her four-weekly rather than monthly. More information on the case - Pantellerisco and others v SSWP CO/3572/2019 - is here


Notes to editors:

Today's judgment is here

The claimants:

TD, a single mother, gave up her full-time job to care for her now 14-year-old daughter, AD, who has severe sickle cell anaemia and epilepsy. AD must have blood transfusions every 4 weeks in addition to other regular hospital appointments. Until early 2017, TD received carer's allowance, income support and child tax credits. AD received disability living allowance ("DLA") for a time-limited period, subject to renewal. In February 2017, TD was told that because AD's DLA award had expired, TD's carer's allowance and consequently her income support would also end. In fact, TD had put in a renewal DLA claim for AD (which was subsequently granted). But the jobcentre advised TD to claim UC once her income support ended. She did so. With help from Child Poverty Action Group, TD then got the decision to end her income support overturned on the grounds that she was the carer of a person who had claimed DLA and a decision was still pending on that claim. DWP accepted that there had been an error and paid some arrears. Despite the successful revision, TD received almost £140 per month less under UC than she was entitled to under her previous benefits for over 18 months because the additional amount received under UC for a disabled child is less than the equivalent amount under child tax credit other than for the most severely disabled children.

TD's UC entitlement is now equivalent to the amount she would receive if she had been able to remain on legacy benefits because the care component of her daughter's DLA was moved to the higher rate (from middle rate) and so she now qualifies for the higher rate disabled child addition.

Anonymity orders are in place for TD and AD.

The other claimant, Ms Reynolds, has mobility difficulties. She received employment support allowance ("ESA") and personal independence payment ("PIP"). Despite a deterioration in her health, DWP decided in May 2016 that she no longer qualified for PIP. Then, in March 2017, her ESA was terminated because she failed to attend a work capability assessment. Although Ms Reynolds went on to successfully challenge both the termination of her PIP and her ESA, because she had no other source of income except for her housing benefit, she felt she had no option in the meantime but to apply for UC. The difference between what she would have been receiving if she was still in receipt of ESA and her UC award has been as much as £187.95 per month. (This does not take account of the additional payments that are now being awarded to those on UC who have lost out on the severe disability premium).

Universal credit is currently available to people making a new claim for benefit, people on legacy (existing) benefits whose circumstances change and who must therefore make a new claim and people on legacy benefits who choose themselves to claim UC – known as 'natural migration' to UC. The Government is piloting the "managed migration" to UC of up to 10,000 current legacy benefit claimants, before bringing forward legislation to extend managed migration to all claimants of existing benefits. Under managed migration to UC of claimants of existing benefits, protection will be available to protect people whose circumstances have not changed against income losses at the point of transition to UC.

There are two additional amounts available in both child tax credits and universal credit for children with disabilities: one for those with moderate disabilities and one for those with severe disabilities. The amount for those with severe disabilities is the same in both benefits. However, for those with less severe disabilities, the lower rate of the 'disabled child addition' in UC (currently £128. 25 per month) is worth less than half the disabled child element in child tax credit (£284.58 per month).

The Severe Disability Premium ("SDP") is currently £66.95 per week for a single person, £133.90 for a couple. The Government has provided some additional protection for those disabled adults who receive SDP by agreeing that they can only move to universal credit through managed migration (qualifying them for transitional protection against losses) and is paying what is known as SDP transitional payments for those who have already moved over and therefore lost entitlement to the Premium. However, these measures do not fully compensate for the losses of those disabled people who were entitled to SDP and who were accepted as neither being able to work or to undertake activities to prepare themselves for work before they claimed UC. The SDP transitional payments have been the subject of separate litigation R (TP, AR and SXC) v SSWP [2020] EWCA Civ 37.


CPAG media contact: Jane Ahrends on 07816 909302