23rd June, 2020
The Court of Appeal unanimously dismissed DWP’s appeal against a previous High Court ruling which had found in favour of 4 single mothers, supported by CPAG. The case revolved around the way in which the ladies monthly salaries were treated under Universal Credit rules, sometimes leaving them with little or nothing to live on and being forced to resort to foodbanks to survive.
In its judgment handed down yesterday (June 22nd) three judges at the Court of Appeal ruled that “the failure of the Secretary of State to ensure that the Regulations cater for the phenomenon of ‘non-banking day salary shift’ is unlawful”.
DWP pursued the case to the Court of Appeal after single mother Danielle Johnson, along with three other mothers, supported by the Child Poverty Action Group (CPAG), won a High Court legal challenge to the Government’s interpretation of regulation 54 of the Welfare Reform Act 2012 which meant some months she would receive much less in universal credit than in others.
Danielle, who works in school catering is ordinarily paid on the last working day of each month. Her UC “benefit assessment period” runs from the last day of the month to the penultimate day of the following month. This means in some months, due to a weekend being at the end of a month, her wages are deposited in her bank account a day or so earlier than in other months. The universal credit computer system interpreted this as Danielle having earned twice as much in one month and none in others, so her universal credit payment would be calculated accordingly.
The variation in Danielle’s benefit award caused her severe cash flow problems. Between them the four mothers fell into rent arrears, defaulted on council tax, incurred bank overdraft charges, borrowed money and even become reliant on food banks to make ends meet. One of the mothers had to decline a promotion and put her professional aspirations on ice because of the way the UC system treated her earnings. Another felt compelled to give up her job to look for alternative employment where there was no clash between her pay date and UC assessment period
In her judgment Lady Justice Rose described the situation faced by Danielle and the others as “perverse” and in finding against the Government she acknowledged the Court’s ruling could affect thousands (estimated at up to 85,000).
Leigh Day solicitor Tessa Gregory who acted for Danielle said:
“We are delighted with the Court of Appeal’s judgment which is a complete vindication of our client’s case. Universal credit was designed to ‘make work pay’ yet our client, who like millions of others is paid on the last working day of the month, found herself facing severe hardship because the Secretary of State made regulations which fail to take into account that the date when someone is paid may vary because of non-banking days.
“The Secretary of State committed to a “test and learn’ approach in rolling out universal credit yet she refused to listen to these four hard working mums when they raised this issue over two years ago. Our client hopes the Secretary of State will now accept the ruling and take urgent steps to fix this perverse situation which as noted by the Court only serves to disincentivise work.”
DWP will now need to revise its IT systems and related processes to accommodate the Court’s ruling. To do that, it will also have to acknowledge that some decisions may require the intervention of staff at a time when it’s hoping to keep recruitment to a minimum, to save the department money and meet its savings targets.
UC Advice & Advocacy Ltd