Rutherford & Ors v Secretary of State for Work And Pensions [2014] EWHC 1613 (Admin)

This was the judicial review, supported by CPAG, of the failure of the bedroom tax regulations to address the position of tenants where a bedroom was needed for overnight carers for a child. The only statutory ‘exemption’ is for overnight carers for the tenant or their partner. I’ll spare you waiting for the end, the Claimants were given permission but lost the claim. However, for reasons I will try to explain at the end, it has left me feeling that this is a positive step in the unravelling of the bedroom tax, even before any (likely) appeal.

The issues in the case, were, for any seasoned bedroom tax observer, actually relatively straightforward. but the situation and commitment of the Rutherfords has to be fully appreciated:

The third Claimant (who I shall refer to as Warren) is now 14. He suffers from profound mental and physical disability caused by a very serious and rare genetic disorder called Potoki-Shaffer Syndrome. He needs round the clock care from at least two people. The first and second Claimants, Mrs and Mr Rutherford, are his maternal grandmother and step-grandfather respectively. Mrs Rutherford has looked after Warren since he was about 5 months old; Mr Rutherford has joined her in this intensely burdensome commitment since he became her husband in late 2010. The intensity of their burden and their commitment is increased by the fact that neither of them is in good health. They need, and receive, considerable help from professional carers who are funded by the Local Authority.

In the past Mr and Mrs Rutherford had been provided some respite by Warren being looked after for two nights a week away from home. But he was very unhappy and, in April and May 2012, a full assessment recommended that the respite care arrangements be changed. As a result, Warren now stays at home but respite is provided by carers staying overnight in the Claimants’ home twice a week. When staying overnight the carers do not stay awake all night, but are there to provide care at intervals when Warren wakes up. They need a bedroom in which to sleep. Without the help of the carers his grandparents could not cope and he would have to go into a care home; without their staying overnight, the Claimants would have to revert to the unsatisfactory arrangement of Warren going away from home two nights a week, to his considerable distress.

The Claimants live in a three bedroom house that has been substantially adapted for Warren’s occupation. It is rented from Pembrokeshire Housing Association who allocated it to the Claimants in 2009, the decision being taken by a panel which included Pembrokeshire Housing’s Housing Manager and Area Officer, Pembrokeshire County Council’s Senior Housing Officers and Occupational Therapists. As Warren has grown his needs have developed and further adaptation is required. A major programme of work has been identified and was ongoing between (at least) April and September 2013, being paid for by a grant from the Welsh Assembly Government. The Claimants have been told that there is no alternative three or two bedroom home in the county that would be suitable for Warren’s needs.

Nonetheless, the Rutherfords were subject to a 14% bedroom tax deduction. An application for DHP was made and initially refused but (it must be said under considerable media pressure) a reassessment awarded DHP for 2013/2014 and an award for 2014/2015 subsequently confirmed. (This will be important later).

I’m going to brutally précis much of the legal argument. The Rutherfords’ claim was article 14 disability discrimination by way of Art 1 Prot 1 rights. The Secretary of State, as per the finding in MA & Ors, argued that while the regulations per se might be discriminatory, the ‘scheme as a whole’ (including DHPs) was not without reasonable justification.

The battle line was clearly drawn on whether discrimination in this case was ‘manifestly without reasonable justification’.

Where the Rutherfords’ argument differed from MA & Ors in the Court of Appeal (MA & Ors, R (on the application of) v The Secretary of State for Work and Pensions [2014] EWCA Civ 13) was to argue that the Rutherfords’ situation was a discrete and identifiable situation, on a par with Burnip as there were clear parallels between :

the case of adults requiring overnight care on the one hand and children on the other; and they point to the fact that disabled adults may qualify for an additional bedroom under the terms of Regulation B13 while similarly disabled children do not. This has two consequences. First, it means that the Claimants’ category can be defined as has been done for some adults in Regulation B13(6) and (9). Second, it means that the category is neither too large nor too amorphous to be dealt with in the Regulation. I accept that, to this extent, the Claimants’ case shares features with Burnip and is not covered by that part of the reasoning in MA which focussed upon the size of the class and the difficulties of identification.

And lastly, the Rutherfords argued that DHPs were “not a satisfactory alternative to statutory entitlement under the Regulation because DHPs are discretionary and therefore unreliable.”

Meanwhile, the Secretary of State relied on the

endorsement of the scheme by the Court of Appeal in MA and upon its conclusion that the Secretary of State had provided “an objective and reasonable justification” for his decision to provide for the disability-related needs of some disabled persons for additional accommodation by means of the 2012 Regulations (as amended) and the needs of other disabled persons by means of DHPs

The first difficulty for the Rutherfords was that in MA, the Court of Appeal had ostensibly considered the facts of a specific case, the Carmichaels, as an individual (rather than ‘broad class’) of case. However, it is worth noting that the Carmichael case concerned the differential treatment of adults over children who could not share a bedroom (in Burnip/Gorry). The High Court in this case was, it seems prepared to ignore the Carmichael ‘precedent’ such as it was, as the Judgement finds that “It is technically correct that the question being answered in MA was not the same as the question in the present case”.

So, the position was clear, MA on the one hand and Burnip on the other, as far as each case dealt with DHPs as the basis for a ‘reasonable foundation’ for the discriminatory policy:

MA is binding on this Court. Accordingly, the Claimants’ case cannot succeed unless there are valid grounds for distinguishing their claim from the claims being advanced in MA. Burnip too is binding on this court, with the same consequence. The effect of Burnip and MA taken together is that, while a scheme including the use of DHPs as the conduit for payment may be justifiable, it will not be justified if it fails to provide suitable assurance of present and future payment in appropriate circumstances. For my part, I see no conflict of principle between Burnip and MA on this point; and it is apparent that the Court of Appeal in MA also saw none.

But MA did mean that the Claimant’s argument that the Rutherfords’ case was on all fours with Burnip and therefore should fall as unjustified could not succeed, as MA meant:

the mere fact that the scheme could have been structured differently so as to include a category of persons within the Regulation rather than under the provision of DHPs does not mean that it is unjustified

So, everything turned on provision of DHPS. While Burnip had found that ‘they could not be relied upon to plug the identified discriminatory gap’, the subsequent changes to DHP funding and the term of that funding, as well as DWP guidance to LAs on the exercise of discretion (non-binding, of course), had, as found in MA, changed the situation. And putting this together with the facts in this present case:

i) First, it is abundantly clear that the intention of the scheme as a whole is that DHPs should be used to plug the gap where, if Regulation B13 were to be viewed and applied in isolation, a person with an ascertained need for an additional bedroom would otherwise be the subject of discrimination on the grounds of disability. This intention does not emerge from the terms of the 2012 Regulations alone; but it emerges clearly from the materials set out in MA at [23]-[35] and at [6]-[10] above. Having considered the risks, advantages and likely criticisms of a DHP approach the Government decided knowingly to restrict the size criteria, to increase the monies for DHPs, and to monitor how the scheme worked in practice with a view to increasing the monies further if necessary;

ii) Second, in the event, it has not yet proved necessary to increase the monies available for the DHP fund. To the contrary, Pembrokeshire underspent in 2013-2014 and returned part of its allocated fund for that year; and it received an increased fund for 2014-2015;

iii) Third, although the awarding of DHPs remained discretionary, the position of disabled people living in specially adapted accommodation (a category which includes Warren and his grandparents) was specifically identified in the Good Practice Guide as being a category for whose support additional funds had been allocated to the DHP fund: see [8] above;

iv) Fourth, the Good Practice Guide also identified households having a health problem which meant that the choice of housing is restricted and claimants requiring an extra room because of a health problem that affects them or a member of their household (both of which include Warren and his grandparents) as groups meriting consideration: see [9] and [10] above;

v) Fifth, the award of DHPs by Pembrokeshire to the Claimants has plugged the gap and continues to do so. They have suffered and suffer no financial detriment as a consequence of being funded in part by the DHP conduit rather than entirely pursuant to the 2012 Regulations.

Against this framework, the Claimant’s arguments foundered. But, and this is, I think, crucial, they did so on the basis that DHPs were in payment and there was no evidence that they would not be in the future. Paragraphs 53 and 54 are important here.

53. For obvious reasons, any expression of view on my part in this judgment is not binding on Pembrokeshire or generally. However, on the information that is available to me, including Warren’s condition, the Claimants’ need for overnight carers requiring a bedroom, the fact that the property has been specifically adapted (twice) for Warren’s needs, the absence of any alternative suitable accommodation in the county, and the fact that Pembrokeshire has had and should continue to have available sufficient funds, a decision to withhold DHPs would appear to be unjustifiable. As it is, after the initial hiatus, no such decision has been made. Although Pembrokeshire’s undertaking to consider whether further DHPs were warranted if the Claimants’ HB entitlement were to be similarly limited in future does not amount to a written guarantee, the fact that Pembrokeshire has exercised its discretion in favour of an award for the last two financial years adds weight to the conclusion that it would appear perverse for Pembrokeshire to reach a contrary decision in the future if the scheme and the Claimants’ circumstances remain unchanged. As I have said, there is no evidence that Pembrokeshire will refuse to make up the Claimants’ shortfall by DHPs.

54. I therefore conclude that there is at present adequate assurance that the Claimants will continue to benefit from awards of DHPs to plug the gap that would otherwise exist. If the scheme or other circumstances were to change materially, different considerations might apply; but they do not apply now.

And it was on this basis that the claim failed. The Claimants were not financially disadvantaged by the scheme and there was no evidence that they would be.

On any remaining arguments as to disadvantage (again, worth quoting in full):

Since the Claimants are not financially disadvantaged by the intended and actual operation of the scheme, to what actual detriment or discrimination does the scheme expose them? Only three possible detriments have been identified:

i) Mr Drabble QC concentrated on the fact that DHPs are by definition discretionary, while the provisions of the Regulation are mandatory. That is correct, but the practical reality is that the purpose of the scheme as a whole is to provide full cover for the Claimants’ rent and it is fulfilling that purpose. What is more, for the reasons outlined above, there is an adequate level of assurance that Pembrokeshire will continue to award DHPs to fund the gap, assuming always that the scheme and the Claimants’ circumstances do not change;

ii) It is true that Pembrokeshire initially refused the Claimants’ application. However, whether or not it was influenced by media publicity, political or legal pressure, it subsequently granted a DHP for 2013/2014 and subsequently for the current financial year. This was in accordance with the intention of the scheme and there is no reason to suppose that it will not do so in the future;

iii) The first and second Claimants found the process of applying for the DHP to be time consuming and stressful, particularly until Pembrokeshire reversed its initial decision. Now that the structure and intention of the scheme is understood, there is no reason for such delays or the needless infliction of undue stress to be repeated.

I do not doubt or belittle the evidence of Mr Rutherford that the initial application and subsequent sense of uncertainty caused the Claimants anxiety. However, none of the detriments that have been suggested show “a serious flaw in the scheme which produces an unreasonable discriminatory effect.” Much of the anxiety will have been caused by the initial rejection and the uncertainty it engendered. On the information available to me that was an error on the part of Pembrokeshire, which it later recognised and rectified: it was not attributable to a serious flaw in the scheme, which should have been capable of proper operation from the outset.

This is not to say that the Secretary of State’s evidence was accepted tout court:

In particular, the assumption that non-resident carers providing respite care will not require a bedroom is unjustified and, in the Claimants’ case, wrong. However, taken either singly or cumulatively in the context of a scheme which MA has held to be structurally reasonable, these reasons cannot be characterised as irrational or manifestly without reasonable foundation.

The further evidence adduced by the Claimant on the operation of the DHP scheme was not considered as the case was not a ‘test case’ for a broader class and the evidence adduced did not relate to the Claimant’s specific situation:

60. It is common ground that this case falls to be decided on its facts and upon evidence that is relevant to the Claimants’ claim: it has not been set up or presented as a “test case” and the evidence for such a case is lacking. The Claimants submitted a report produced by the Papworth Trust in February 2014 on the effectiveness of the general distribution of DHPs. It was based upon survey responses from 222 councils across England and Wales. It provided evidence that councils are wrongly including DLA when looking at household income, that less than 25% of councils could tell whether applicants had a disability or not, that the average duration of DHPs is 5 months, and that 59% of disabled applicants were successful in their application for a DHP, compared with 67% of non-disabled people. This report might have a significant place in a broad-based legal or political discussion, but it does not affect the outcome of the present case: Pembrokeshire does not include the Claimants’ DLA when looking at their household income, it knows that Warren is disabled, the Claimants have been successful in their applications, and Pembrokeshire has awarded DHPs for 12 months at a time. The report does not have information of the precision or substance necessary to expose a serious flaw leading to an unreasonable discriminatory effect in the case of people in the position of the Claimants.

And thus the Claim was dismissed.

Comment

The Rutherfords lost. And lost on the most clear of disability related circumstances that one could imagine. So why am I quite upbeat about this decision? (which is, I would guess, almost certainly also going to the Court of Appeal).

The main reason is that this case shows, dramatically, how far the DWP has backed itself into a corner on DHPs being the basis for a ‘reasonable justification’ of the discriminatory effects of the bedroom tax (and LHA) scheme.  While MA & Ors relied on availability of DHPs in the the general sense, this case finds for the DWP on the basis of DHPs being in payment now, and for the immediate future, for this specific household and in the specific circumstances of this case.

While no decision is made on the prospects of future DHP payments (after March 2015) , it is clear from paras 53 and 54 that the High Court’s decision is predicated on both the current and future payment of DHP. In fact, that without payment of DHP, “different considerations might apply”.

In short, the consideration of this specific case relied pretty much entirely on DHP being in payment and with no prospects of it being withdrawn or not renewed in the immediate future.

The court would not entertain evidence on the broader issues of the availability of DHP for households with disabled people, and understandably so, given the pleading of this case as a specific case. However, the views expressed at paras 53 and 54, while in no way binding on the local authority’s exercise of discretion, make clear that the finding on discrimination is wholly dependant, in this specific case (rather than the abstract general position of MA) , on DHP being in payment for the foreseeable future.

Arguably, those paragraphs also give a basis for judicial review of a refusal of DHP where there is a potential article 14 argument.

So, where does the DWP go from here? Having conceded, in MA, that DHP was the basis for justification of the whole bedroom tax scheme, insofar as it discriminated against the disabled, they now find, in this judgment, that the justification of the Scheme as a whole is dependant on DHP being available and in payment for the foreseeable future, potentially for each household where Article 14 might apply.

If DHP had not been in payment in this case, if it had been applied for and refused, I wonder what the outcome might have been. While the immediate suggestion might have been that the proper course was a JR of the refusal to grant DHP, on the basis that, as at para 53, “a decision to withhold DHPs would appear to be unjustifiable”, it is also the case that this decision was made o the basis that DHP was paid and would continue to be, so there was no loss to the Claimant.

The DWP should have careful regard to para 54:

I therefore conclude that there is at present adequate assurance that the Claimants will continue to benefit from awards of DHPs to plug the gap that would otherwise exist. If the scheme or other circumstances were to change materially, different considerations might apply; but they do not apply now.

In practice, this appears to mean that the DWP is locked in to providing an additional level of funding for DHPs, but is also at the mercy of the vagaries of the very local, discretionary decisions it was so keen to champion.

And should councils should take close account of this decision (as well an MA and Burnip) when looking at the exercise of their discretion for DHPs. There is a clear threat of public law challenge for a refusal. There is also an indication that taking DLA into account as income when deciding whether to award DHP won’t do (though the Sandwell JR on that ground rumbles on).

But above all what is the functional point of a ‘cost saving’ policy that only avoids being unlawful by the payment of substantial and ongoing additional sums in DHP?