Samuels v Birmingham City Council (2019) UKSC 28

The Supreme Court, finally, has delivered its judgment on the issue of the assessment of ‘reasonable expenses’ when considering the affordability of rent in homelessness decisions.

In this case, where Ms Samuels was evicted for rent rent arrears and Birmingham CC had found her intentionally homeless, despite a shortfall in housing benefit of some £151 per month for the rent for the property. The Court of Appeal had upheld the review decision finding Ms S intentionally homeless for failure to pay the rent shortfall (Our report here. Yes, it is from 2015. For an explanation of quite why it took three years to get to Supreme Court, see Community Law Partnership’s post. In short, the Legal Aid Agency refused funding, repeatedly, even after permission to appeal to the Supreme Court was granted).

In a short, unanimous and pellucid judgment, the Supreme Court upheld the appeal and explained why all the previous courts and the reviewing officer were wrong. This is one of those glorious moments when the Supreme Court simply ignores all the complications, baroque legal filigrees and arguments of the courts below and simply sets out how things really are. One does wish the Court of Appeal might manage something similar on occasion, where not wrestling with precedent.

The brief facts. Ms S had been found intentionally homeless by Birmingham on the basis that there was “sufficient flexibility in your overall household income of in excess of £311 per week to meet a weekly shortfall in rent of £34”, as the review decision found.

Ms S income was entirely made up of subsistence benefits:

i) housing benefit (£548.51)

ii) income support (£290.33);

iii) child tax credit (£819.00);

iv) child benefit (£240.00).

Total £1,897.84, or £1,349.33 excluding housing benefit.

(Note figures not entirely correct, but errors too small to be of any significance.)

Ms S, via her solicitors, had given living expenses totalling £1,934.99 (including rent of £700), so an overall shortfall of £37 per month,

As noted above, Birmingham’s review letter had stated that Ms S had ‘sufficient flexibility’ in her non HB income of of £311 per week to meet the £34 per week rent shortfall over HB.

The Supreme Court, in Lord Carnwath’s judgment, cuts to the chase.

The Homelessness (Suitability of Accommodation) Order 1996 (SI 1996/3204) states:

“2. Matters to be taken into account

In determining whether it would be, or would have been, reasonable for a person to continue to occupy accommodation … there shall be taken into account whether or not the accommodation is affordable for that person and, in particular, the following matters –

(a) the financial resources available to that person, including, but not limited to, –

(i) salary, fees and other remuneration;

(ii) social security benefits;

…

(b) the costs in respect of the accommodation, including, but not limited to, –

(i) payments of, or by way of, rent;

…

(d) that person’s other reasonable living expenses.”

This means that any assessment must be of full income and expenses, including any housing benefit income and rent liability.

Assessment of ‘reasonable living expenses’ “requires an objective assessment; it cannot depend simply on the subjective view of the case officer”, and must be on the basis of indefinite period of future occupation. This is a key point that we’ll come back to it.

The 2006 Code of Guidance recommended:

that housing authorities regard accommodation as not being affordable if the applicant would be left with a residual income which would be less than the level of income support or income-based jobseekers allowance that is applicable in respect of the applicant, or would be applicable if he or she was entitled to claim such benefit.

However, arguments about the interpretation of ‘income support’ in the Guidance, where the nature of benefits had changed over the years, were by the by.

Even if that recommendation in respect of income support is not interpreted as extending to benefits for children, the lack of a specific reference does not make the level of those benefits irrelevant. As the authorities referred to by Mr Stark (para 26 above) show, benefit levels are not generally designed to provide a surplus above subsistence needs for the family. If comparison with the relevant benefit levels is material to the assessment of the applicant, it is difficult to see why it should be any less material in assessing what is reasonable by way of living expenses in relation to other members of the household.

Moreover, when considering the household’s reasonable expenses:

Relevant also is the duty under the Children Act to promote and safeguard the welfare of children. The guidance makes clear, as one would expect, that amounts will vary “according to the circumstances and composition of the applicant’s household”. Further, it is to be noted that, immediately after the reference to the household, there is a reference to “a current tariff … in respect of such benefits” (plural), which suggests that the tariff may be looked at in respect of benefits other than income support, and is at least a good starting point for assessing reasonable living expenses.

So, subsistence benefit levels are a starting point for an assessment of reasonable living expenses And something of a base line.

Birmingham’s review officer had taken wholly the wrong approach. The question was not whether there was ‘flexibility’ in Ms S’s finances to enable her to cover a shortfall, or whether she could somehow ‘manage’ her finances to cover it. The question was rather

what were her reasonable living expenses (other than rent), that being determined having regard to both her needs and those of the children, including the promotion of their welfare.

As Ms S’s (non rent) expenses in her schedule were well within the (non rent) subsistence benefits amount, those expenses could not be seen as unreasonable by any standard.

Birmingham’s decision of intentional homelessness was quashed.

By way of postscript, the Supreme Court notes that Univeral Credit is changing benefits, and also that the 2017 Code of Guidance, following the Homelessness Reduction Act 2017, simply stated:

“17.45 Housing authorities will need to consider whether the applicant can afford the housing costs without being deprived of basic essentials such as food, clothing, heating, transport and other essentials specific to their circumstances.”

The 2018 Guidance – non statutory – states:

“17.46 Housing authorities will need to consider whether the applicant can afford the housing costs without being deprived of basic essentials such as food, clothing, heating, transport and other essentials specific to their circumstances. Housing costs should not be regarded as affordable if the applicant would be left with a residual income that is insufficient to meet these essential needs. Housing authorities may be guided by Universal Credit standard allowances when assessing the income that an applicant will require to meet essential needs aside from housing costs, but should ensure that the wishes, needs and circumstances of the applicant and their household are taken into account. …”

It is not clear whether the reference to UC ‘standard allowances’ includes the additional basic amounts payable in respect of children.

There is therefore a need for a clear, reliable objective guidance on reasonable levels of living expenditure. The Government is asked to look at this.

Comment

Affordability has long been a minefield, both for intentional homeless decisions and for suitability of accommodation. Local Authorities have adopted very different approaches to assessing income and expenditure, and applicants have, like Ms S, been at the mercy of council officers deciding that they could spend less on x, or y, or could surely afford £z per week, in order to meet any shortfall in rent, despite their only income being subsistence benefits.

The Supreme Court has now made it clear that the council officer’s subjective view on what the applicant should be doing with their household budget is not valid as an approach. The question is rather whether the household expenses are objectively at a reasonable level.

This will depend on the individual circumstances of the applicant and their household, but until there is further guidance, the Supreme Court is clear that subsistence benefit levels are a reasonable objective baseline – expenses at or below subsistence benefit income level (excluding housing benefit income and rent costs) are reasonable (though there may be the exceptional case).

But local authorities should be sure to note this is a baseline. Depending on the circumstances and composition of the household, reasonable living expenses may be above the ‘subsistence benefit’ level. Para 35 of the judgment makes clear this is a ‘starting point’ for assessment.

The position on Universal Credit in the 2018 Guidance may be unclear, but the rationale of this judgment would be clear – the appropriate baseline for UC would include all ‘subsistence’ elements – the standard allowances, plus payments in respect of children etc..

I should also add applause for CLP and counsel James Stark and Tom Royston for seeing this appeal through despite all that the LAA could throw at them. Even if it took three judicial review pre action protocol letters, three appeals, and months of arguing about CCMS.