Housing benefit challenge rejected

Issue 225 (December 2011)

Sarah Clarke explains the options for claimants who are affected by the April 2011 changes to the housing benefit (HB) scheme it the light of the Court’s decision in CPAG v Secretary of State for Work and Pensions [2011] EWHC 2616 (Admin).

By a judicial review in the High Court, CPAG challenged two changes to the HB rules for tenants in the private rented sector that were made with effect from 1 April 2011:

  • an overall cap on HB which mainly affects central London;
  • a reduction in the number of bedrooms that can be covered by HB to four.

CPAG argued that the overall cap went beyond the powers given by Parliament in setting up the HB scheme. We argued that Parliament intended that the scheme should be national, and the government went too far in making rules that exclude a large area of central London from the HB scheme for private tenants.

We also argued that the government had failed in its duties under the Race Relations Act 1976 and the Sex Discrimination Act 1975 bynot carrying out a proper equality impact assessment. If a proper assessment had been done, it would have shown the measures would have a disproportionate impact on particular ethnic groups.

The Court accepted CPAG had an arguable case by giving permission to proceed with the claim. It also agreed the case raised issues of general importance and it was in the public interest that they be heard, by making a protective costs order to protect CPAG from costs being awarded against it if the case was lost.

It is widely acknowledged that the HB changes will result in widespread social upheaval, and are likely to cost local authorities a considerable amount in dealing with homelessness applications, and have other consequences including disruption to children’s education and social services. The Social Security Advisory Committee advised the government not to proceed with the changes, arguing that the risks outweighed any financial savings. An internal memo was leaked showing that the Department for Communities and Local Government itself thought that around 20,000 homelessness applications would be made as a result of the changes.

Evidence was produced to show that around 9,000 London households will have to leave their homes as a result of the caps, and that about 4,600 will be unable to find anywhere else to live ‘locally’. This could mean upwards of 20,000 children having to move, 14,000 out of their local area,1resulting in disruption to education, health and social services.

We showed that a properly conducted equality impact assessment would have concluded that the government’s policies had a disproportionate impact on certain minority ethnic groups and communities, already at higher risk of poverty.

However, in a very disappointing judgment, Mr Justice Supperstone dismissed CPAG’s claim. He agreed with the government that the purpose of the HB scheme is not to prevent homelessness, but to help claimants with their rent while also protecting the public purse. He has also held that there is nothing in the statutory scheme to prevent the government from setting an overall cap in this way. In relation to the government’s equality impact assessment he held that the government had ‘due regard’ to the need to eliminate unlawful racial discrimination. See p13 for full details of the decision.

What can claimants who are affected do

Claimants affected are all tenants renting in the private sector, except those who have been claiming since before April 2008 and still have their HB assessed under the local reference rent rules (LRR). Claimants who get HB assessed under the local housing allowance rules (LHA) will have the changes applied to them from the anniversary date of their claim. However, where HB is reassessed on the basis that the claimant is now entitled to more bedrooms or that it is the anniversary of their claim, HB will be protected at its current level for nine months. So the first date from which most existing claimants will be affected by the changes is January 2012. We understand claimants are getting letters from local authorities advising them of the change. Can they do anything about this?

We think there are arguments individuals can rely on, even after the judgment against CPAG. Whether these arguments apply or not depends on which changes the claimant is affected by, and her/his circumstances.

These are difficult arguments and it will take a long time for them to get through the appeal processes. The claimant therefore needs to do everything s/he can to sort out her/his situation in the meantime, such as apply for discretionary housing payments (see Bulletin 224, p11), negotiate with the landlord to see if s/he will reduce the rent, and consider moving to a more affordable area. The local authority should help.

Change to the 30th percentile

If the claimant is affected by the change to the 30th percentile, which is the change that most widely affects people, although we do not agree with this change, we do not think there are any grounds to challenge it because it treats all claimants equally badly. We think it leaves HB claimants with far too little of the rental market to choose from, and will create shortfalls in rent which HB claimants will not be able to afford.

Abolition of five-bedroom rate

If the claimant is affected by the limitation to four bedrooms from five bedrooms, we think s/he can appeal against this decision and argue the following.

If the claimant comes from an affected ethnic group, s/he can argue s/he is being discriminated against on grounds of race contrary to Articles 1P and 14 of the European Convention on Human Rights. CPAG produced evidence that showed that this change discriminated against claimants of the following origins: black, black African and Asian. We will put this evidence on our website so claimants can use it in support of appeals.

Whether or not the claimant comes from one of the affected ethnic groups, s/he could argue that s/he is being discriminated against on the ground s/he has a large family by comparison with a HB claimant who has a small family. This is likely to be a more difficult argument, and it might be best to bring it for an extended family – that is, a family with different generations living together.

The government may argue that this difference in treatment is justified, and therefore is not unlawful, on the following grounds:

  • it desperately needed to save money because of the financial situation the country was in;
  • it has mitigated against the most extreme effects of the changes by making more money available for discretionary hardship payments.

The following arguments may apply against this. These changes represent the smallest savings in a package of measures put forward by the government; the change to the 30th percentile is meant to save £1 billion over four years, whereas this change is meant to save only £45 million over four years. You can argue the government did not need to pursue this change in addition to all the other changes it was making to save money.

Evidence suggests that these changes will not in fact save any money, because the costs of dealing with the social consequences in terms of homelessness, disruption to education services, health services and social services will outweigh any financial savings. There is already evidence from Crisis that homelessness is greatly increasing.

Cap on maximum amounts

If the claimant is being affected by the overall cap and being forced to move out of central London because of this, s/he can argue s/he is being discriminated against by comparison with a claimant in an area not affected by the overall cap contrary to Article 1P and Article 14 of the European Convention on Human Rights. The arguments on justification are likely to be similar.

By section 3(1) of the Human Rights Act 1998, the First-tier Tribunal has to read the Housing Benefit Regulations compatibly with Convention rights so far as possible, and if this is not possible, it can strike them down. You can therefore argue that the Housing Benefit (Amendment) Regulations 2010 and the Rent Officers (Housing Benefit Functions) Amendment Order 2010 are unlawful insofar as they give effect to a change in the maximum eligible property size for LHA purposes from five to four bedrooms and implement caps on the amount of maximum HB in accordance with Article 2(3)(b)(iii) of the Rent Officers (Housing Benefit Functions) Amendment Order 2010.


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