The gaps in the welfare ‘safety net’ and the scope for using judicial review

Desmond Rutledge considers the use of judicial review as a remedy of last resort in welfare benefits cases where the claimant is in financial crisis


The growth of gaps in the welfare safety net – the political backdrop

Since coming into office in May 2010, the Coalition Government has introduced a series of radical and far-reaching changes to the welfare benefits system.  The programme of ‘welfare reform’ is part of a broad-based strategy that aims to address perceived problems in the welfare benefits system, such as high expenditure and poor work incentives.  But the Government maintains that the reforms will not penalise those ‘in genuine need’ (DWP reform: DWP’s welfare reform agenda explained, April 2014, p 3).  Yet the position of working-aged claimants and their families has become more precarious in the wake of the changes introduced under the welfare reform programme.  According to reports from NGOs and advice agencies, a significant number of claimants are being left with little or no income for significant periods of time due to a combination of delays, conditionality and sanctions.  The debate on whether this means there are gaps in the welfare safety net hit the national headlines on 17 February 2014, when speaking to the Telegraph, Archbishop Nichols, the leader of the Catholic Church in England and Wales, said:

“People do understand that we do need to tighten our belts and be much more responsible and careful in public expenditure.  But I think what is happening is two things: one is that the basic safety net that was there to guarantee that people would not be left in hunger or in destitution has actually been torn apart. It no longer exists and that is a real, real dramatic crisis.  And the second is that, in this context, the administration of social assistance, I am told, has become more and more punitive. So if applicants don’t get it right then they have to wait for 10 days, for two weeks with nothing – with nothing. For a country of our affluence, that quite frankly is a disgrace.”

The Archbishop’s forthright views sparked a national debate on welfare reform and the growth in the use of food banks  (See: David Cameron: Why the Archbishop of Westminster is wrong about welfare, the Telegraph, 18 February 2014, New Catholic cardinal renews attack on ‘disgraceful’ UK austerity cuts, the Guardian 18 February 2014 and Letter from 43 Christian leaders, including 26 Anglican Bishops, calls on government to act to end hunger, Daily Mirror 20 February 2014).  Commentators have argued that the increased use of food banks can be regarded as a direct consequence of changes introduced by welfare reform (Benefits blunders forcing thousands to use food banks says TORY think tank, the Daily Mirror 3 March 2014, Government ‘in denial’ about welfare reform and food bank link, Inside Housing, 2 June 2014).  But Government ministers have denied that there is “robust evidence linking food bank usage to welfare reform”(Anger as Employment Minister Esther McVey denies food bank use is linked to welfare reforms, the Independent, 14 May 2014).  Both sides of the argument are set out in Food Banks and Food Poverty, Standard Note: SN06657 (9 April 2014), p 1:

 “A variety of factors may have contributed to the growth in food bank usage. High global food prices have made food proportionately less affordable for low-income households in the UK whilst the recession saw unemployment increase significantly and earnings stagnate or decline. A number of significant changes to the benefits system have also been made including: the abolition of the Social Fund and the introduction of local welfare provision, the reassessment of incapacity benefit claimants, measures to control Housing Benefit expenditure and the introduction of a new benefits “conditionality and sanctions” regime. Many speculate that such welfare reforms are having the biggest impact on the growth of food banks but the Government maintains that there is “no robust evidence” to link the two.”

Measuring the cumulative impact of the changes introduced by welfare reform

The changes introduced by welfare reform are intended to reduce expenditure and increase work incentives but there is concern that it is also producing unintended consequences for vulnerable claimants who are in need of support.  The Social Security Advisory Committee has called on the Government to carry out research on the cumulative impact of welfare reform which would “identify and evaluate the interaction between elements in the welfare reform agenda, particularly as they affect vulnerable groups” (SSAC, Occasional Paper No.12, The Cumulative Impact of Welfare Reform: A commentary, April 2014, p 48)  The Government, however, has said that it is ”unable” to accept the SSAC’s call for a cumulative impact of welfare reform (Government response: SSAC report on the cumulative impact of welfare reform 25 July 2014).  On the other hand, a report published on 31 July 2014, commissioned by the Equality and Human Rights Commission, has concluded that the impacts of tax and welfare reforms are more negative for families containing at least one disabled person, and that women lose out compared to men.

Changes that have undermined the welfare safety net

There have been numerous changes made under the Government’s programme of welfare reform, including:

  • The Transfer of Incapacity Benefit claimants to Employment and Support Allowance;
  • The changes to Housing Benefit including the caps on the Local Housing Allowance rate and introducing the size criteria for social rented property;
  • The household Benefit Cap;
  • The replacement of disability living allowance by a new benefit (the Personal Independence Payment);
  • The replacement of Council Tax Benefit by the less generous Council Tax Reduction Scheme.

The two welfare changes, however, that have done most to undermine the basic welfare benefits safety net are: (1) The introduction of a tougher sanction scheme at the end of 2012  and the subsequent dramatic increase in sanctions and (2) The abolition of the Social Fund and the transfer of responsibility for crisis loans to local authorities.

(1) The changes to the sanction scheme including the expansion of conditionality and the stricter demands placed on claimants.  These changes have resulted in a dramatic increase in the numbers receiving benefit sanctions (More sanctions imposed on jobseeker’s allowance claimants, the Guardian, 14 May 2014, Citizens Advice sees 60 per cent increase in problems with JSA sanctions, press statement, 15 April 2014).  The House of Commons’ Work and Pensions Committee said that the evidence presented to it suggested that many claimants “have been referred for a sanction inappropriately or in circumstances in which common sense would suggest that discretion should have been applied”: (Second Report of Session 2013-14 The role of the Jobcentre Plus in the reformed welfare system (HC 479), 28 January 2014, para 91).  Michael Meacher MP during the Debate on sanctioning of benefit recipients (Hansard: 3 April 2014: Column 1056-1057)  produced a number of examples of inappropriate sanctions given by the DWP including:

“A security guard at a jobcentre turned away a man with learning disabilities who had arrived 20 minutes early to sign on. The man then returned two minutes late to sign on and had his JSA sanctioned for 4 weeks.

A woman claiming employment and support allowance had been diagnosed with cervical cancer and had given the back-to-work scheme provider a list of her hospital appointments. She was sanctioned for failing to attend an appointment in the middle day of her three-day hospital stay. The woman had two daughters but her ESA was reduced to £28 a week. She asked for reconsideration, but had heard nothing five weeks later.

A woman whose ESA was sanctioned had her benefit reduced from £195 to less than £50 per fortnight because she missed a back-to-work scheme appointment owing to illness. Her sister had rung two days beforehand to say that she could not attend and arranged another date, when she did attend.

An epileptic man had his JSA sanctioned for four weeks because he did not attend a back-to-work scheme meeting as his two-year old daughter was taken ill and he was her sole carer that day. He rang the provider in advance, but was told this would still have to be noted as “did not attend”. During the four-week sanction he suffered hunger, hardship, stress and an increase in epileptic attacks, but he was not told about hardship payments or food banks or how to appeal the sanction decision.

Lastly, a man in Yorkshire and Humber was sanctioned for allegedly failing to attend back-to-work scheme events. He had in fact attended, and the provider had no record of any failures. His hardship request was not processed, his housing benefit was stopped, and he fell into rent arrears and had no money for food, gas or electricity.”

(2) The abolition of the Social Fund and the transfer of responsibility for crisis loans to local authorities.  Previously, those in need could turn to the Social Fund, which offered loans averaging about £50 to overcome short-term financial crises – usually caused by delayed payments or unforeseen circumstances.  The abolition of crisis loans means that those in need now face widely varying offers of support from local authorities, depending on where they live (Benefit Changes: Warnings as crisis loans scrapped, BBC News 29 March 2013).  According to freedom of information requests, the vast majority of LWAS (81 per cent) have replaced cash assistance support with ‘in-kind’ benefits, such as food bank vouchers and pre-paid store cards, and most do not provide loans (62 per cent) or only provide them with interest (through credit unions) (Children’s Society Report “Nowhere to turn? Changes to emergency support”, 2013).

The schemes designed to provide a safety net for claimants subject to delays in payments and sanctions

In addition to a comprehensive statutory appeals system for determining a claimant’s proper entitlement to benefit, there are three statutory schemes designed to protect claimants who are left with little or no income due to delays in payment or the imposition of a sanction.  These are: (i) Short-term Benefit Advances, (ii) Hardship payments and (Iii) Local Welfare Assistance.

The Short-term Benefit Advances (STBA) – These are small repayable loans of future entitlement to certain benefits.  STBA are designed to support claimants in financial need who are waiting for an initial payment or an increase in their entitlement.  There are complex rules which determine the amount of an STBA and the method of recovery but the core conditions for an STBA are that: (1) the claimant has made a claim that has not been determined or they are waiting for an award to be paid; (2) the Decision Maker (DM) thinks it likely that the claimant is entitled to the benefit; and (3) the DM thinks the claimant is in “financial need” because of the delay in the benefit being paid. “Financial need” is defined to mean “a serious risk of damage to the health or safety to the claimant of any member of their family” (SI 2013/383, reg 7).  Official Guidance gives two examples of circumstances where there could be a serious risk of damage to a claimant’s health and/or safety, where the claimant is  fleeing domestic violence or is “without money to put into a gas or  electricity meter” (Short Term Benefit Advances for Benefit Processing and Decision Making Teams at para 54, which is available on CPAG’s website: Short-term benefit advances: tools for advisers).

Local Welfare Assistance Schemes: – These are intended to provide assistance where a claimant cannot afford to purchase essential household items or where the claimant is without any income.  But the funding from central government has not been ring-fenced for any particular purpose and there is concern that the amount of help available has become a postcode lottery.  Moreover, in January 2014, the DWP announced that the funding for LWAS would be cut completely by April 2015.  It is unclear whether the funding will be redirected via the Department of Communities and Local Government.

The Hardship Payments Scheme – These are payments that may be available where a JSA or an ESA claimant has been sanctioned by Jobcentre staff or by staff running a work programme.  The essential conditions that need to be satisfied to be eligible for a hardship payment are that: the claimant is a member of a ‘vulnerable group’ and without the payment the claimant (or a member of their family) will experience hardship (SI 1996/207, reg 140).  “Hardship” is not defined in the regulations, but according to DWP guidance it should be given its normal everyday meaning of “severe suffering or privation” and that “privation” means a lack of the necessities of life (DMG Vol 6, Chapter 35, para 35155).

Why these schemes are not working properly

First, the volume of short-term benefit advances (STBA) is significantly lower than the former system of crisis loans given for “alignment purposes” (e.g. in cases of benefit delay) which they replaced.  A total of £3,287,000 was spent on STBA in the period from April to November 2013, compared to £72,799,600 spent on crisis loans in the same period of the previous year (Hansard, 6 Jan 2014: Column 61W).

Secondly, the LWAS are less generous than the Social Fund and do not always provide the same type of help as was available under the previous scheme.  In 2010/2011, £329m was allocated for Community Care Grants and Crisis Loans through the Social Fund.  But only £178m was allocated for LWAS in 2013/2014 (a reduction of £151m).

Thirdly, there is concern that in some cases DWP staff are simply taking the path of least resistance – handing out a food bank referral voucher instead of considering a STBA request.  In the case of hardship payments, only those JSA/ESA claimants that asked about help in Jobcentre Plus were told about the hardship system (Matthew Oakley’s independent review of Jobseeker’s Allowance  sanctions for claimants failing to take part in back to work schemes, (DWP, 22 July 2014) p 38), No one should die penniless and alone’: the victims of Britain’s harsh welfare sanctions, The Guardian, 3 August 2014)

One of the unintended consequences of sanctioning JSA claimants is the knock-on effect for housing benefit where the local authority suspends payment and this leads to rent arrears (‘Unintended’ housing benefit cuts hit tenants Inside Housing 17 January 2014).  According to the regulations, someone on income-based JSA remains entitled to housing benefit despite being disqualified from payment due to a sanction (SI 2006/213, reg 2(3).  Instead of applying the law, there is a tendency for local authorities to suspend payment and refuse to restore the claim unless the claimant provides proof of income.  Where this does not happen, the local authority will regard the claimant as being at fault and insist that a new claim form be submitted.

What can the Administrative Court do for welfare benefits claimants in financial crisis?

Against this background there is a growing need for the Administrative Court to intervene to ensure that welfare benefit claimants can gain access to the statutory schemes intended to prevent financial hardship due to delays and sanctions and to monitor unlawful housing benefit decisions which put claimants’ homes at risk.  It is important to be clear that the Administrative Court is not being asked to determine the claimant’s entitlement to a welfare benefit – for that is the role given to the statutory authorities by Parliament.  Rather, the Court is being asked to carry out its supervisory role of ensuring that the statutory authorities are complying with the law and that the relevant statutory schemes designed to prevent claimants falling into hardship or from losing their homes are operating properly.

Hence, in a challenge to a decision, an action or inaction of a defendant benefit authority which does not carry a right of appeal (e.g. a failure to make a decision on an application for a STBA), the claimant would be asking the Court to order the benefit authority to issue a decision where none has been made or quash an unfavourable decision on public law grounds and direct that a fresh decision be made by the authority in accordance with the law.

Or in a challenge to a decision that does carry a right of appeal (e.g. a refusal to make a hardship payment or non-payment of housing benefit) the claimant will be asking the Court to order that the defendant benefit authority issue a fresh decision while the appeal is still pending or that the hearing of the appeal be expedited.

It is well known that a claim for judicial review is meant to be a remedy of ‘last resort’ (R (McIntyre & Anor) v Gentoo Group Ltd [2010] EWHC 5 (Admin), at [108]).  This means that, as a general rule, if an alternative remedy is available (such as a right of appeal to a tribunal), then this should be used instead of judicial review unless there are exceptional circumstances (R (Lim) v Secretary of State for the Home Department [2007] EWCA Civ 773 at [13]).  What might count as exceptional circumstances will depend on the particular facts of the case, but a claim for judicial review may well be justified in a welfare benefits case if the consequences of having to wait for the statutory appeal to be heard would be so serious that the statutory appeal  would not amount to an ‘effective’ alternative remedy.  In the following scenarios judicial review is being used as a remedy of last resort in order to prevent the welfare benefit claimant falling through the gaps in the welfare safety net:

  • Scenario One: A lone parent claims income support following a relationship breakdown.  After 14 days the claimant requests an advance payment due to ‘financial need’ as the children’s benefits do not cover the family’s essential living costs.  The DWP fail to respond.  A letter of complaint is sent to the DWP on the claimant’s behalf.  A further 14 days pass but neither the claim nor the application for an advance payment is processed.  A pre-action letter is sent to the DWP and the Treasury Solicitors with a 14 day-deadline.  There is no response and the lone parent’s circumstances have deteriorated further.  An urgent claim for judicial review is issued with a request for interim relief in the form of an order that the DWP determine the application for an advance payment within a set time (e.g. 14 days) and that a payment of income support be made on account in the interim.
  • Scenario Two: An income-related ESA claimant is subject to a three months sanction on their benefit. The claimant applies for hardship payment but this is refused.  The claimant appeals but this will normally take months to be heard by a tribunal.  Further representations are made to the DWP and HMCT are asked to expedite the hearing.  Both letters are ignored.  A pre-action letter is sent to the DWP giving a deadline of 14 days.  The deadline passes but the matter is not resolved.  An urgent application for judicial review is issued which seeks interim relief in the form of an order: (i) that the DWP make a fresh decision on the hardship payment or the hearing of the hardship payment appeal be expedited; and (ii) an order that the DWP provide interim relief in the form of hardship payments pending the hearing of the judicial review or the statutory appeal, whichever is earlier.
  • Scenario Three: An income-based JSA claimant is a tenant of a flat in the social sector.  Payment of income-based JSA stops due to a sanction being imposed by the DWP.  This results in the local authority suspending payment of housing benefit which leads to rent arrears.  Consequently, possession proceedings are issued.  The local authority refuse to restore payment of housing benefit despite being informed that the claimant’s income-based JSA has been subject to a sanction and that reg 2(3) of the HB Regs 2006 (SI 213) applies.  The local authority’s housing department refuses to adjourn the possession hearing.  An urgent claim for judicial review is issued with a request for interim relief in the form of an order requiring the benefit department to issue a fresh housing benefit decision and an order prohibiting the local authority’s housing department from proceeding with possession proceedings pending the outcome of the housing benefit decision.

Why are there so few welfare benefits judicial reviews?

According to official figures, however, a total of only 17 civil representation certificates were issued in respect of welfare benefits in the year 2012-13 (Legal aid statistics in England and Wales – Legal Services Commission 2012-2013, table 8, p 34).  This can be contrasted with the number of certificates issued over the same period in housing (10,130), debt (173) and community care cases (768).  Yet judicial review for welfare benefits remains in scope under the Legal Aid, Sentencing and Punishment of Offenders Act 2012 under  paragraph 19(2)(a) of Schedule 1, Part 1 to LASPO, providing that the usual criteria in regulations 39, 53, 56 of the Civil Legal Aid  (Merits Criteria) Regulations 2013 (SI 104) are satisfied, as explained in paragraphs 7.34 -7.44 of the Lord Chancellor’s Guidance under s.4 of LASPO (June 2014) on Public Law claims.  This suggests there is an unmet need in the field of welfare benefits.  Historically, welfare benefits provided a safety net which covered essential living costs (including housing costs) and thereby prevented disadvantaged groups from falling into a state of destitution or losing their home due to rent arrears.  Hence, the reason why there were hardly any judicial reviews in the past was the existence of a safety net in the form of the Social Fund and the availability of a comprehensive statutory appeal system.  Post-welfare reform, the position has now changed and holes are now appearing in the basic welfare safety net.

The ability of the Administrative Court to grant interim relief in urgent cases has played an important role in protecting the rights of vulnerable individuals and families seeking to access community care services, housing assistance or emergency services for children.  As gaps are now appearing in the welfare benefits safety net, applications for urgent relief by way of judicial review may need to play a similar role in the field of welfare benefits to prevent claimants being exposed to financial hardship due to delays and sanctions and to ensure that claimants do not lose their homes due to the unlawful withholding of housing benefit payments.

This article is based on a paper presented by Desmond Rutledge at the Garden Court Chambers Public Law Conference on 28 June, 2014 – ‘Role of public law challenges in welfare benefits: the growth of discretion over entitlement’.

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