“… a fundamental move away from previous policies for supporting the poorest and most vulnerable members of our society. It has been a central platform of the Government's social policy reform agenda since 2010 and will be the most significant welfare reform in the past 70 years. It is intended to make social entitlement provision fairer, more affordable and better able to tackle poverty, worklessness and welfare dependency.”
“Even if leap years were not accommodated at all, multiplying by 365 every year would manifestly be superior to the current approach: instead of being wrong every year, it would be right ¾ of the time, and wrong by one day instead of two in leap years, so a shortfall in rent would accrue at a much slower rate.”
“7(1) Where any relevant payment is to be taken into account under paragraph 6, the amount of that payment is to be calculated as a monthly amount.
“(3) Where a renter is liable for relevant payments under arrangements that provide for one or more rent free periods, subject to sub-paragraph (3A), the monthly equivalent is to be calculated over 12 months by reference to the total number of relevant payments which the renter is liable to make in that 12 month period. (3A) Where sub-paragraph (3) applies and the relevant payments in question are - (a) weekly payments, the total number of weekly payments which the renter is liable to make in any 12 month period shall be calculated by reference to the formula - calculated by reference to the formula - 38. … where ‘RFP’ is the number of rent-free periods in the 12-month period in question.”
“Prohibition of discrimination The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
“The loss assumptions wrongly assume full housing costs support for every tenant and wrongly assume continued reliance on housing costs support without end. However, UC is an ‘in and out’ work benefit designed to encourage claimants to return to the labour market.”
“An appropriate amount will be added to the Universal Credit award to help meet the cost of rent and mortgage interest. For those who rent their accommodation, this amount will be similar to the support currently provided through Housing Benefit. The intention is that this support for rent, currently delivered by Local Authorities, will over several years be replaced by Universal Credit.”
"Entitlement is assessed by reference to a claimant's circumstances during a monthly assessment period. Recipients usually receive their first UC payment around five weeks after their claim - made up of a one-month assessment period and up to seven days for the payment to reach a claimant's account. Their UC entitlement is then calculated for each assessment period in the same way. Changes in circumstances can therefore be taken into account from month to month. … 21. The calculation of UC in each monthly assessment period is a cornerstone of UC policy. All changes that occur in the assessment period are applied to the whole assessment period, and each policy consideration is looked at across the assessment period - such as the inclusion of disability elements, child elements, childcare costs, carer's element, conditionality arrangements, the treatment of income, capital, deductions, etc. 22. The assessment period is calculated as a calendar month. A calendar monthly basis is used as it is considered to best reflect the most common payment cycles (whether in terms of income, such as salary, or outgoings, such as bill payments). 23. The objective of workability and efficiency requires the same structure to operate for the whole population, notwithstanding that there are, of course, different types of payment cycles (such as irregular pay or weekly or lunar monthly pay). 24. The calendar month structure reflects the general position in modern working life, where individuals, even in more precarious employment, are usually paid monthly. Where claimants are unemployed, monthly assessment and payment of UC creates the discipline of budgeting and managing money on a monthly basis, which is considered to help improve skills which would reduce poverty whether in work or not. The same approach is applied whether a claimant is employed, unemployed or self-employed. This allows UC to be calculated on the same basis whether a person moves in and out of work or whether their earnings are composed of mixed employed and self-employed earnings."
“… I need to make the point about the difference between assessment periods and payment periods, which is important to bear in mind. Currently, existing out-of-work benefits are made on an assessment period of a week, with a fortnightly payment cycle. That is fairly typical. The universal credit benefit represents a new approach focused clearly on work, which encourages out-of-work households to budget on a monthly rather than a fortnightly basis in the belief that it will better prepare people for the reality of working life. The figures have already been used. Currently, 75 per cent of all those in employment and 51 per cent of those earning less than£10,000 a year receive earnings monthly. In addition, monthly direct debits for household bills are often cheaper than more frequent billing options. …… If you separate assessment from payment, the monthly assessment is intended to reduce the burden on claimants and reduce the risk of overpayments compared with a system where benefits are reassessed on a weekly basis, so there is a separation between the assessment period and the payment period.”
“(3) Where a renter is liable for relevant payments under arrangements that provide for one or more rent free periods, the monthly equivalent is to be calculated over 12 months by reference to the total number of relevant payments which the renter is liable to make in that 12 month period.”
“This aligns with the current conversion provisions which apply to cases where a renter does not have any rent or service charge free weeks, and ensures that the rental calculation provisions fit with overall Universal Credit design by avoiding the need to reassess cases on the limited occasions (which occur roughly every 5 to 6 years) when the day on which weekly rent or service charge payments are due occurs 53 times rather than 52 times.”
“The 53-week year issue arises every 5 or 6 years as a consequence of the calculation used in Universal Credit to convert weekly rent to a calendar monthly figure. 2019/20 is the first financial year this will happen alongside significant number of tenants in receipt of Universal Credit rather than Housing Benefit. Schedule 4, Part 3 of the Universal Credit 2013 regulations state that to convert a weekly rent figure to monthly figure DWP should multiply by 52 and divide by 12. In a financial year that has 53 weeks a tenant whose rent is charged weekly will not receive enough rent to cover the whole year – he or she will be 1 week short. Tenants with rent free weeks will also be affected. The regulations were amended in 2014 to specify that the calculation for cases with rent-free weeks will be 52 minus the number of rent free weeks. This will apply even in years where there are 53 rent weeks. Tenants with monthly tenancies are not affected by this rule and the Universal Credit they receive will be based on the total rent charged for that year. The issue is one of unfairness across different tenants – the 52 week limit only affects tenants paying rent on a weekly basis – and of people being worse off under Universal Credit compared to Housing Benefit. All that is needed to avoid this is a change in the Universal Credit Regulations so that (a) the numerator is always the number of rental gales in the year (instead of capping it as 52 as at present), and (b) the divisor is always 12 (to arrive at a monthly figure). This would be a slight simplification of the current regulation.”
“… Weekly tenancies remain the norm in the social sector and while some landlords are moving to monthly tenancies for new tenants under this approach it will take a long time for this to be the majority. It is both unrealistic and unreasonable to expect landlords to move all tenants to monthly tenancies. For existing tenants, a switch from weekly to monthly tenancies would have to be agreed with each affected tenant, by the issuing of fresh tenancies.”
“DWP does not accept that being a weekly tenant is a status for the purpose of Article 14. As set out above, it is not accepted that there is a difference as alleged by the Claimant, although it is accepted that there might be a small differential effect of between 0.274% and 0.546% of the annual amount that the Claimant states they should be paid, but only where all other circumstances are entirely equal (existence of rent-free weeks, dependents, non-dependents, spare room subsidy, benefit cap, unearned income). For the Claimant this amounts to approximately£1.07 in each monthly cycle and£12.81 in a calendar year. 95.However, as explained above the formula is chosen for the reasons set out above and at paragraph 68 of the summary grounds. There is no cliff-edge and this is one part of a calculation made up of various different components. The formula is not alleged to have any particular impact on the basis of any protected characteristic, and the differential amount (if it applies) is a modest amount. 96.As explained above, the Claimant’s proposals do not in fact address the issue of ensuring complete parity between monthly and weekly tenants, nor do they take account of other types of tenancy or rent-free weeks. An amendment would require IT changes to the UC system, which would incur additional cost and lead to the deprioritisation of other changes which have already been announced. It would also mean that there would be a difference in calculations for monthly amounts within UC, for example a difference in treatment between housing liability and unearned income. 97.DWP contends that the above amounts to justification for any differential treatment of tenants with weekly liabilities.”
“The effect of these swings in universal credit award and monthly income is described in detail in the witness statements of the Respondents. Ms Johnson states that she finds it impossible to budget for sudden drops in income in the months following an assessment period in which two salary instalments have been counted. She becomes overdrawn at the bank during the month in which the low universal credit award is received. She then incurs interest and bank charges. She expresses her doubts whether she will ever be able to get back on top of her finances and worries that cash flow problems will mean she is unable to pay her rent, jeopardising her tenancy. Ms Woods also says that she feels unable ever to get a foothold on stabilising her finances. She has never previously been so far into her overdraft or unable to pay her rent. She has been forced to attend food banks. Ms Stewart describes how in the months where she receives a reduced universal credit award because she is treated as having received two salary instalments in the preceding assessment period, she does not have enough income to cover her rent and childcare as well as other outgoings.”
“… that the result of the SSWP's construction for these claimants and the many thousands of other claimants in the same position is so arbitrary and contrary to the aims of the universal credit reforms that the Regulations should be struck down on grounds of irrationality in so far as they mandate that result.”
“What is alleged to be irrational is the initial and ongoing failure of the SSWP to include in the Regulations a further express adjustment to avoid the consequence of the combination of the non-banking day salary shift and the application of regulation 54 for claimants in the position of the Respondents. [Counsel for the Secretary of State] at the hearing fairly accepted that the consequence of regulation 54 for these Respondents was arbitrary and that there was no policy reason why these particular Respondents should face the difficulties that they describe. The SSWP's case is that a solution has not been devised or implemented because other factors outweigh the desirability of finding an answer to the problem. It is the rationality of that conclusion that is the subject matter of this challenge.”
"113. We accept that in principle it was open to the Lord Chancellor to adopt a policy response which did not directly correspond to the problem which it was designed to meet. A policy-maker may reasonably decide that the disadvantages of a finely tuned solution to a problem outweigh its advantages and that a broader measure is preferable, even if the broader measure is both over- and under-inclusive in that it catches some cases in which there is no or no significant problem and fails to catch some cases in which the problem occurs. Such an approach is in any event consistent with the nature of the Scheme, which uses criteria such as PPE [pages of prosecution evidence] as proxies for the complexity of cases. It is inherent in the use of such proxies that they will result in under-compensation in some cases. But this does not cause unfairness if it is off-set by overcompensation in other cases. What matters is that overall a reasonable balance is struck."
“That, I believe, provides a helpful framework for how to approach irrationality in this case too. We need to consider what are the disadvantages of deciding not to ‘fine-tune’ the Regulations thereby allowing the non-banking day salary shift problem to persist unresolved; what are the disadvantages of adopting a solution to the non-banking day salary shift problem; would a solution be consistent or inconsistent with the nature of the universal credit regime; and has a reasonable balance been struck by the SSWP - or rather is it possible to say that no reasonable Secretary of State would have struck the balance in the way the SSWP has done in this case ?”
“Other factors I consider relevant to the rationality of the ongoing decision not to create an exception to allow for the nonbanking day salary shift are (a) the size of the cohort affected; (b) the duration of the impact on them; (c) the arbitrary occurrence of the effect and (d) the inconsistency between the effect of the problem and the aims of the universal credit regime.”
“… cause considerable hardship and they create perverse incentives affecting a claimant's employment choices, cutting across the policy of the overall scheme.”
“It is inevitable that in any scheme designed to simplify and reduce the cost of delivering benefits there will need to be bright lines. I agree that there will often be hard cases with people falling just on the wrong side of the line where their needs and circumstances are otherwise indistinguishable from those falling just on the right side – the requirement that the claimant be 18 years old is an obvious example. It may well be rational to introduce such a requirement on the ground that the benefits outweigh the disadvantages arising from those bright lines. In my judgment, however, those situations are readily distinguishable from the significant, predictable but arbitrary effects on benefit of a regular monthly salary which frequently falls into different assessment periods because of the nonbanking day salary shift.”
“… one of the rare instances where the SSWP's refusal to put in place a solution to this very specific problem is so irrational that I have concluded that the threshold is met because no reasonable SSWP would have struck the balance in that way.”
“… I regard this as a case which turns on its own very particular circumstances. It has no impact on the lawfulness of the universal credit system more generally.”
“The consequence of the lunar month problem is that for 11 months out of 12 the First Claimant's earned income is treated as being her earnings for just 28 days. The result of that is that the benefit cap is applied, and her UC is reduced, by perhaps as much as 20%. As discussed above, the disadvantages of allowing the lunar month problem to persist are manifest and serious.”
“Following Johnson … the rationality challenge here must be viewed as a Wednesbury challenge. The question to be addressed is whether the decision of the Secretary of State, as to the drafting of the Regulations was outside the range of reasonable decisions open to the decision maker.”
“I deal with the first three issues identified by the Court of Appeal first [in Johnson, [50]]. I then address the ‘other factors’ relevant to the rationality of not creating an exception to which Rose LJ referred at [92]. I then consider the final, and determinative issue; whether it should be concluded that no reasonable Secretary of State would have struck the balance in the way that it was struck here. In addressing that last crucial issue, I remind myself that the ‘threshold for establishing irrationality is very high, but not insuperable’ ([107]).”
"… raises four questions, although these are not rigidly compartmentalised: (1) Do the circumstances ‘fall within the ambit’ of one or more of the Convention rights? (2) Has there been a difference of treatment between two persons who are in an analogous situation? (3) Is that difference of treatment on the ground of one of the characteristics listed or ‘other status’? (4) Is there an objective justification for that difference in treatment?"
“For my part, in company with all your Lordships, I prefer to keep formulation of the relevant issues in these cases as simple and non-technical as possible. Article 14 does not apply unless the alleged discrimination is in connection with a Convention right and on a ground stated in Article 14. If this prerequisite is satisfied, the essential question for the court is whether the alleged discrimination, that is, the difference in treatment of which complaint is made, can withstand scrutiny. Sometimes the answer to this question will be plain. There may be such an obvious, relevant difference between the claimant and those with whom he seeks to compare himself that their situations cannot be regarded as analogous. Sometimes, where the position is not so clear, a different approach is called for. Then the court's scrutiny may best be directed at considering whether the differentiation has a legitimate aim and whether the means chosen to achieve the aim is appropriate and not disproportionate in its adverse impact.” disproportionate in its adverse impact.”
“Any allegation of breach of Article 14 must relate to the ‘enjoyment of the rights and freedoms set forth in’ the ECHR. This has been interpreted to mean that the complaint must fall within the subject matter, or ‘ambit’, of another Convention right. It is not necessary to show a breach of some other Convention right, because in that case Article 14 would add nothing. It is enough that the complaint relates to some interest protected by another such right. Since it is now well established that entitlement to a social security benefit is a ‘possession’ within A1P1, complaints about discrimination in the provision of such benefits fall within the ambit of A1P1: see R (RJM) v Secretary of State for Work and Pensions[2008] UKHL 63 ,[2009] 1 AC 311 . It is therefore common ground that the provisions of Article 14 are potentially engaged in the present case.”
“21. It is well established that Article 14 is not freestanding, in other words it does not prohibit all discrimination by the state: it can be invoked only if the subject-matter falls within the ambit of another Convention right. It is also well established, and is common ground in this case, that, so far as material, social security benefits are a form of property (or ‘possessions’) and therefore fall within the ambit of A1P1. It is accordingly common ground that, in principle, the Appellants are entitled to rely on Article 14, read with A1P1, in this case.”
“32. The fundamental reason for applying the manifestly without reasonable foundation test in cases about inequality in welfare systems was given by the Grand Chamber of the European Court of Human Rights in [Stec v United Kingdom(2006) 43 EHRR 47 , para 52]. Choices about welfare systems involve policy decisions on economic and social matters which are pre-eminently matters for national authorities.”
"Lords Carnwath and Hodge, in separate majority judgments [in DA], concurred with Lord Wilson's endorsement of the test of manifestly without reasonable foundation. As Lords Reed and Hughes agreed with Lord Carnwath, it follows that this test was endorsed by five of the seven members of the Court. In passing, the very recent consideration of this issue by a Chamber of the ECtHR, in JD and A v United Kingdom (Applications Nos 32949/17 and 34614/17), a 5/2 majority decision, did not feature in the parties' arguments. The majority confined the ‘manifestly without reasonable foundation’ test to contexts where ‘... an alleged difference in treatment resulted from a transitional measure forming part of a scheme carried out in order to correct an inequality’ (at [88]). As the robust joint dissenting judgment demonstrates this may prove controversial and will, predictably, feature in future decisions of the UKSC and the Grand Chamber. Our decision in this case is made in a context shaped by section 3(1) of the Human Rights Act and the doctrine of precedent whereby this court is bound by the decision in DA."
"What has to be justified is not the measure in issue but the difference in treatment between one person or group and another."
“Although it is not immediately obvious how the 'manifestly without reasonable foundation' test relates to the assessment of proportionality that the court must undertake, the explanation may be that the court is required to ask whether the difference in treatment is manifestly disproportionate to the legitimate aim. This would accord with the statement of the European Court in Blecic v Croatia(2005) 41 EHRR 13 , para 65, that it will accept the judgment of the domestic authorities in socioeconomic matters 'unless that judgment is manifestly without reasonable foundation, that is, unless the measure employed is manifestly disproportionate to the legitimate aim pursued' (emphasis added). It also reflects how the Supreme Court applied the test in the recent case of In re McLaughlin[2018] 1 WLR 4250 , paras 38–39 (Baroness Hale PSC) and para 83 (Lord Hodge JSC).”
“The more peripheral or debateable any suggested personal characteristic is, the less likely it is to come within the most sensitive area where discrimination is particularly difficult to justify.”
“36. The assessment period is calculated as a calendar month. A calendar monthly basis is used as it is considered to best reflect the most common payment cycles (whether in terms of income, such as salary, or outgoings, such as bill payments). 37. The objective of workability and efficiency requires the same structure to operate for the whole population and for each part of the calculation of UC, notwithstanding that there are, of course, different types of payment cycles (including irregular pay or weekly, fortnightly or monthly pay) and liability cycles (varying from weekly, four weekly, monthly to annual rent liabilities). 38. The calendar month structure reflects the general position in modern working life, where individuals, even in more precarious employment, are usually paid monthly (of those on Tax Credits, 57% are paid monthly and 12% are paid 4-weekly). Where claimants are unemployed, monthly assessment and payment of UC creates the discipline of budgeting and managing money on a monthly basis, which is considered to help improve skills which would reduce poverty whether in work or not. The same approach is applied whether a claimant is employed, unemployed or self-employed. This allows UC to be calculated on the same basis whether a person moves in and out of work or whether their earnings are composed of mixed employed and self-employed earnings. 39. The assessment period structure was the subject of debate through the passage of the Welfare Reform 2011 Bill and the 2012 secondary legislation.”