Administrative Court rejects challenge to treatment of self-employed Universal Credit claimants


The Administrative Court (Elisabeth Laing J), in the case of R (on the application of Parkin) v Secretary of State for Work and Pensions [2019] EWHC 2356 (Admin), has dismissed an application for judicial review of the treatment of self-employed claimants of Universal Credit (“UC”).

When calculating a claimant’s UC entitlement their earnings are (subject to an allowance and a taper) deducted from the maximum amount of UC to which they could be entitled. In the case of employed claimants their actual earnings are used for this purpose, but for “gainfully self-employed” (“GSE”) claimants if their self-employed earnings are below a certain minimum level broadly equivalent to the National Minimum Wage level of earnings for their expected working hours per week (the Minimum Income Floor (“MIF”)), their earnings are deemed to at the (higher) MIF level rather than their (lower) actual level. An effect of this can be that that a self-employed claimant can receive less UC than would an employed claimant with the same level of earnings. The Government had several reasons for introducing the MIF, including that as a matter of fairness there should be a limit to the extent to which the taxpayer should be expected to subsidise self-employed businesses that were not capable of generating a minimum level of earnings and the need to have an incentive in place for the self-employed UC claimants to obtain more, or better paid, work in circumstances where they were not subject to the conditionality regime and sanctions that apply to employed and unemployed UC claimants.

The Claimant challenged the regulations introducing the MIF on the grounds that: (1) the MIF discriminated against the self-employed contrary to Article 14 of the European Convention on Human Rights (prohibition on discrimination), read with Article 8 (right to family life) and Article 1 of the First Protocol (“A1P1”) (right to peaceful enjoyment of possessions); (2) common law irrationality; and (3) (by amendment) breach of the public sector equality duty (“PSED”) under section 149 of the Equality Act 2010.

In respect of the human rights ground, the Secretary of State had accepted that the case fell within the ambit of A1P1, but the Judge also considered that it was “at least arguable” that the case also fell within the ambit of Article 8. The Judge also accepted that self-employment was an “other status” for the purposes of Article 14. The Judge found that it was appropriate to consider the issue of analogous position as a separate stage in the analysis and she accepted the Secretary of State’s submission that the self-employed and employed were not, in the circumstances, in relevantly analogous positions. The Judge went on to consider, in the alternative, whether the difference in treatment was justified. The Judge accepted that the appropriate test for justification in the light of recent Supreme Court authority was simply whether the measure was manifestly without reasonable foundation (“MWRF”). The Judge held that the MIF was not MWRF as it cohered with the aim of encouraging those with persistently low self-employed earnings carefully to consider whether they should continue to be GSE.

For similar reasons, the Judge rejected the common law irrationality challenge. The Judge, whilst granting permission to pursue the PSED challenge, dismissed this ground as well. The Secretary of State had had the necessary due regard to the equality objectives in formulating the MIF as she was entitled to assess the equality impacts of the scheme of UC (including the MIF) as a whole. Accordingly, the claim for judicial review was dismissed.

The judgment can be found here.

James Cornwell of 11KBW successfully represented the Secretary of State (leading Paul Skinner of Matrix).