Does time limiting ESA breach human rights?

Issue 229 (August 2012)

Sarah Clarke considers the position.

From 1 May 2012, contributory employment and support allowance (ESA) has been time limited to one year for those in the work-related activity group. There was no transitional protection, so existing claimants in receipt of contributory ESA for a year on 1 May lost their benefit from that date.

This change is intended to save £2 billion. Earlier this year, the issue generated a great deal of publicity when Macmillan Cancer Support claimed that 7,000 cancer patients would lose out. In response, Iain Duncan Smith said that people were expected to dip into their savings to support themselves, and once their savings were diminished to £10,000, they could claim income-related ESA.

Who is most affected

There is a group of claimants who will not be able to do that. They are likely to be disproportionately affected by this change. They are members of couples without savings, where the claimant’s partner works less than 24 hours a week, but earns more than the couple’s applicable amount for ESA. These claimants will lose their entitlement to contributory ESA, and will not be able to claim any other benefits to replace it. They will no longer be able to claim working tax credit to make up their loss.

At the time when they claimed contributory ESA, these claimants could legitimately expect that their award would continue indefinitely, and they may well have made financial plans on this basis, such as taking out mortgages or other financial commitments.

What can claimants do if their ESA is terminated?

The termination of contributory ESA from 1 May can be mitigated for some claimants as follows.

Claimants whose savings are below the savings limit and whose income is below their applicable amount can claim income-related ESA.

Claimants with a case to argue that they should have been put in the support group can put in an appeal against either the decision to terminate their benefit, or to place them in the work-related activity group. They would need to do this within a month of the date of the decision. That time can be extended up to 13 months in total. If the appeal is late (that is, made after the one-month time limit but withim 13 months), they need to be able to explain why it would be fair and just to allow a late appeal.

Some claimants will be able to make a new claim when their contributory ESA runs out – they will need to wait 12 weeks once ESA ends so they are in a different period of limited capability for work, and can then requalify, as new tax years will be used for the calculation of entitlement. Some can claim income-based job-seeker’s allowance (JSA) in that 12-week period. For more details on all of the above see Bulletin 228.

Claimants in the work-related activity group who have savings or who have other income face a significant drop in their incomes. An issue arises about whether this amounts to an unlawful deprivation of property contrary to Article 1 of Protocol 1 to the European Convention on Human Rights (Article 1P).

Article 1P provides as follows:

Every natural and 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.

In Gaygusuz v Austria (App 17371/90) 23 EHRR 264, it was held that contributory benefits were within the scope of Article 1P. The Court took a similar approach in Koua Poirrez v France (App 40892/98) EHRR 12.

In social security cases, Article 1P has rarely been relied on on its own. It is much more common to use Article 1P taken together with Article 14 where the rules of benefit entitlement appear to discriminate against a particular group. Article 14 provides as follows:

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.

Article 14 can only apply in relation to the enjoyment of rights under another Article of the Convention. The claimant does not have to show that Article 1P has been breached, otherwise Article 14 would have no application; it is enough to show that it is engaged.

There is one case where the claimant did manage to argue successfully that his rights under Article 1P had been breached by the removal of his entitlement to a benefit. This is the case of Kjartan Ásmundsson v Iceland (Application no 60669/00).

Mr Ásmundsson was a seaman who suffered an accident in 1978 in the course of his employment, which meant he was unable to continue working as a seaman. He got an on-shore job, but this did not pay as well as working as a seaman would have done. He received a pension on the grounds of his disability. He underwent regular disability assessments and was each time assessed as 100 per cent disabled in relation to his previous job.

In 1992, the Icelandic government changed the law on entitlement to pensions so that disability was to be assessed not on the basis of the claimant’s ability to perform her/his previous work, but work in general. The provisions were applied not only to new claimants, but also to existing claimants. The reason for the change was that the pension fund had a substantial deficit.

Mr Ásmundsson was assessed under the new rules, and was assessed as having a loss of capacity of 25 per cent for work in general, below the new minimum level of 35 per cent. As a result he ceased to be paid the disability pension and related child benefits which he had been receiving for nearly 20 years since the accident in 1978. Fifty-three other claimants did not reach the level of 35 per cent.

The Court held, in line with previous caselaw, that Article 1P is made up of three distinct rules:

1. the principle of peaceful enjoyment of property;

2. deprivation of possessions being made subject to certain conditions;

3. the recognition that the contracting states are entitled, among other things, to control the use of property in accordance with the general interest.

In this case it was not argued that there was a deprivation or attempt to control property. However, both sides accepted that the termination of the claimant’s disability benefit amounted to an interference with the peaceful enjoyment of his possessions. The issue was whether that interference was proportionate; ‘whether a fair balance was struck between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights. In this connection, regard will be had to whether unjustified differential treatment occurred in the instant case.’

The Court took into account the following factors:

On one hand, the introduction of the new pension rules was prompted by ‘legitimate concerns’ about the fund’s financial difficulties. The ‘changes made to disability entitlements were based on objective criteria’ – ie, a new medical assessment in respect of an amended test. The pension fund’s old age provisions had also been considerably reduced by virtue of the 1994 Act.

On the other hand, the claimant was one of a small group of 54 claimants whose pensions were discontinued altogether. The fact that most of the claimants carried on getting their pension was not consistent with concerns about the fund’s financial situation. This differential treatment suggested that the measure was unjustified for the purposes of Article 14, which in turn carried ‘great weight’ in assessing proportionality.

The claimant was particularly harshly affected because he was totally deprived of a pension he had received for 20 years. He could ‘validly plead an individual legitimate expectation that his disability would continue to be assessed on the basis of his incapacity to perform his previous job.’

The claimant was allowed to work under the terms of the pension, provided he did not earn more than his loss of income.

The claimant did not lose his pension because of a change in his own circumstances, but because of a change in the law on the disability test.

The claimant was still considered 25 per cent incapacitated, but lost all of this pension, which made up a third of his income.

Conclusion

In this context, the Court found that ‘as an individual, the applicant was made to bear an excessive and disproportionate burden which, even having regard to the wide margin of appreciation to be enjoyed by the State in the area of social legislation, cannot be justified by the legitimate community interests relied on by the authorities.’ If the pension had been reduced proportionately, instead of being terminated altogether, there would have been no breach.

There was also an argument under Article 14 taken together with Article 1P, but the Court found that no separate issue arose here.

Remedies

If a claimant is a member of the disproportionately affected group identified above, s/he may have an argument under Article 1P, based on the Court’s analysis in the Ásmundsson case. S/he would need to be a long-term claimant; those who have made claims for contributory ESA since the government announced this change will have done so knowing they could only receive it for 12 months.

These claimants will have lost their entitlement with effect from 1 May 2012, so they will now be out of time for appeal or judicial review.

Claimants could appeal out of time on the basis that it would be fair and just to admit a late appeal in these circumstances. Claimants could also request an anytime revision of the decision to terminate their benefit and judicially review a refusal.

CPAG is interested in a test case on this point. The claimant would need to be someone who :

  • does not now qualify for income-related ESA;
  • is not able either to argue s/he should be in the support group;
  • cannot make a fresh claim on the basis of recent national insurance contributions.

If you would like to refer a case to us or you would like help with submissions at the First-tier Tribunal, please contact sclarke@cpag.org.uk

Note added 3 Sept 2012: The provision time limiting contributory ESA is contained in s 51 of the Welfare Reform Act 2012. The Human Rights Act does not affect the validity of primary legislation. A "designated court" can make a declaration that s 51 is not compatible with the Human Rights Act under s 4 HRA 1998. The First tier and Upper Tribunals are not designated courts for the purposes of the HRA. This means that to get a remedy, a claimant will need to ask for an any time revision of a decision on grounds of official error using the arguments set out above, and then apply for a judicial review of any refusal. The High Court can grant a declaration of incompatibility.

WTC entitlement

In our article in Bulletin 229, we wrongly suggested claimants whose partners worked 24 hours a week or less would lose out – in fact this should have been 16 hours.

It is also worth reiterating the point made in Bulletin 228, ‘Tax credits: the truth is rarely pure and never simple’, that claimants who lose their child benefit or employment and support allowance (CBESA) continue to get national insurance credits, as long as they retain limited capability for work. This brings them within the definition of incapacitated for working tax credit (WTC) entitlement. They can still qualify for WTC if they are a couple with children and their partners work 16 hours or more a week, on the basis that the non-working partner is incapacitated. We understand the letters HMRC has sent to claimants may not explain this clearly, and HMRC does not have systems set up to get the relevant information from the DWP. That means qualifying claimants on tax credits need to tell HMRC if their CBESA stops and point out that they remain entitled to WTC on the basis that their partner is working 16 or more hours a week and they count as ‘incapacitated’. Claimants in this situation will get some compensation for their lost CBESA in the form of increased WTC. Advisers also need to be alert to the possibility that some claimants’ WTC may have been stopped in error.

Remedies

In our article in Bulletin 229, we should have pointed out that the provision which time limits contributory ESA is contained in s51 of the Welfare Reform Act 2012. The Human Rights Act (HRA) does not affect the validity of primary legislation. A ‘designated court’ can make a declaration that s51 is not compatible with the Act under s4 of HRA 1998. The First-tier and Upper Tribunals are not ‘designated courts’ for the purposes of the HRA. This is likely to mean that to get a remedy, a claimant will need to ask for an anytime revision of a decision on the grounds of official error using the arguments set out above, and then apply for a judicial review of any refusal. The High Court can grant a declaration of incompatibility. However, that does not necessarily mean the individual claimant will end up getting her/his benefit restored.

This in turn means any claimant interested in pursuing this argument needs to be eligible for legal aid. Claimants need to be legally represented in proceedings for judicial review. That is because if they lose a case in the High Court, they will be ordered to pay the DWP’s costs. Advisers should consider every other avenue before considering this option.

 


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