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).
