Four Single Mums Win Court Of Appeal Universal Credit Case

• Published date: 03 July 2020
• Subject Matter: Finance and Banking, Employment and HR, Financial Services, Retirement, Superannuation & Pensions, Employee Benefits & Compensation
• Law Firm: Leigh Day
• Author: Tessa Gregory

Three judges at the Court of Appeal have unanimously dismissed the Government's appeal and ruled that the Secretary of State for Work and Pensions (SSWP) has acted irrationally and unlawfully by making universal credit regulations which fail to take into account that the date monthly salaries are paid can vary because of weekends and bank holidays.

In a judgment handed down today (Monday, June 22) 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".

In her lead judgment Lady Justice Rose concluded:

"The threshold for establishing irrationality is very high, but it is not insuperable. This case is, in my judgment, one of the rare instances where the SSWP's refusal to put in place a solution to this very specific problem is so irrational that I have concluded that the threshold is met because no reasonable SSWP would have struck the balance in that way."

The judges accepted that up to 85,000 universal credit claimants may be affected by the ruling.

The Government went 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, a school-dinner lady is paid on the last working day of each month and her 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.

It resulted in extreme fluctuations in her income and, and in several months she lost the work allowance part of the universal credit payment, meaning she was around '500 per year worse off.

Although the judges overturned the lower court's interpretation of regulation 54, they agreed with Danielle and the three women CPAG represents that it is irrational of the SSWP not to come up with a system that accommodates universal credit benefit claimants' regular monthly pay dates...