The Court of Appeal in England has upheld a ruling against the UK Government regarding the payment of universal credit to people whose earnings are paid on variable dates.
Judges refused an appeal by the DWP in a case challenging the legality of the system under which benefit may be withheld from people who receive more than one wage payment within a monthly assessment period, simply due to variations in payment date caused by weekends or bank holidays.
The case was brought by four single mothers who had all experienced significant loss of benefit income solely as a result of such variations. At times they were treated as having earned two monthly salaries in one universal credit assessment period and nothing in the next, leading to fluctuating monthly benefit payments and the loss of the work allowance they should have received as working lone parents.
Lord Justice Underhill, Lord Justice Irwin and Lady Justice Rose agreed with the Divisional Court that the variations in the claimants' awards purely as a result of the timings of salary payments were perverse and irrational. "They lead to significant variations not only in the benefit award but in the combined income for the household from benefits and salary in a particular assessment period", said Lady Justice Rose in the leading judgment. "They cause considerable hardship and they create perverse incentives affecting a claimant’s employment choices, cutting across the policy of the overall scheme."
She could not accept the DWP’s argument that the computer program supporting the scheme could not be modified. It was irrational for the Secretary of State not to change the system to solve the problem, given the number of people affected, the duration of the impact on them, the arbitrary occurrence of the problem and the inconsistency between the effect of the problem and the aims of the universal credit regime.
She concluded: "The threshold for establishing irrationality is very high, but it is not insuperable. This case is, in my judgment, one of the rare instances where the [Secretary of State’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 [Secretary of State] would have struck the balance in that way.”
Carla Clarke, solicitor for the Child Poverty Action Group which supported three of the women, commented: "Justice has been done and common sense has prevailed. The court has recognised that it’s not enough to say 'the losses weren’t real and the computer system can’t be changed', when the losses were very real to the mothers in this case who are working hard to try and give their children a secure and stable income."
She added: "Ironically, the universal credit system itself pays early if the normal payment day is a non-banking day. It’s a credit to these mothers that having exhausted everything they could do to try and address the situation themselves, they were prepared to go to court to get the situation corrected for themselves and to prevent others from experiencing the hardship, stress and humiliation that they experienced."