The Supreme Court on the Bedroom Tax: Three key issues

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The long-awaited Supreme Court decision on the 2010 Coalition Government’s “Removal of the Spare Room Subsidy” – known by everybody else as the “Bedroom Tax” – has been handed down (R. (on the application of Carmichael) v Secretary of State for Work and Pensions [2016] UKSC 58).[i] The case follows the familiar formula for judicial review action against policies stemming from the Welfare Reform Act 2012: a Human Rights Act 1998 based-challenge constructed with Thlimmenos discrimination under[ii] Article 14 ECHR (Prohibition of Discrimination), tied with either the First Part of the First Protocol (A1P1, Right to Property), and/or Article 8 (Right to Respect for Private and Family Life), coupled with a challenge (in this case, on the facts of A) based on a lack of compliance with the Public Sector Equality Duty (PSED) under s.149 Equality Act 2010.

Appendix 1 of Lord Toulson’s lead judgment details the circumstances of the seven claimants, but to give a crude summary, the case concerned three sets of interlinked appeals, with all of the claimants requiring an “extra” room than that allowed within Reg.B13 Housing Benefit Regulations 2006, or needing to stay in their current property which had more rooms than permitted under the regulations. The claimants fall into three implicit groupings: (i) a single parent, who has been a victim of domestic violence, living in a home adapted under a sanctuary scheme to provide a high level of security (A), (ii) a couple who are unable to share a bedroom by reason of a disability (Carmichael), and a child who requires overnight care (Rutherford), and (iii)  the broader MA class of tenant, where an “extra” room or continued occupation of the property is required due to a variety of circumstances, such as the storage of medical equipment (Rouke) or due to significant mental health problems, including obsessive-compulsive disorder, leading to the hoarding of newspapers (Drage).

There is some good news:[iii] the Rutherford and Carmichael claimants’ appeals were successful, with the Court determining that the Bedroom Tax policy unlawfully discriminated against (i) adults who cannot share a bedroom by reason of a disability, and (ii) children who require overnight care. This is welcome and the decision is testament to the tenacity of the claimants and their representation.

The position for the other five claimants is, however, more complicated. The Court determined that their circumstances could be distinguished from the Rutherford/Carmichael class on the basis of a lack of “transparent medical need for an additional bedroom” [Carmichael 42]; instead, Discretionary Housing Payments (DHPs) have to come to the rescue.

Despite the welcome decision on Rutherford and Carmichael, in my view the Court was pre-occupied with trying to fudge a key structural problem at the heart of the Bedroom Tax policy: a reliance on the capped, insecure, and largely temporary DHP scheme, which itself is subject to competing and increasing demands. The judgment does little to address this issue, which is bound to feature in the Courts again as the lowering of the Benefit Cap bites and the Universal Credit roll-out marches (albeit with a wobbly leg) onwards.

This blog looks more narrowly at three key issues within the judgment of the Court: the application of the manifestly without reasonable foundation test to assess the justification of the discrimination, the Court’s efforts to distinguish “social” and “transparent” medical needs, and lack of consideration given to the UK’s international obligations under the United Nations Convention on the Rights of the Child (UNCRC), and the United Nations Convention on the Rights of Persons with Disabilities (UNCRPD).

The Application of the “Manifestly without reasonable foundation” test

The Court held that when considering “choices about welfare systems” [Carmichael, 32] with a discriminatory effect, the assessment of justification should take the form of the high-bar “manifestly without reasonable foundation” test. This familiar formulation, a near omnipresent feature of the judicial review challenges following the Welfare Reform Act 2012, stems back to James v United Kingdom (1986), with its application by the Grand Chamber in Stec, and other subsequent decisions, forming the basis of the Court’s assessment in MA. The position can be concisely summarised: when considering “policy decisions on economic and social matters” [Carmichael, 32], and in particular “state benefits” [Carmichael, 29], the more stringent requirement for “weighty reasons” sometimes applied to core or listed grounds of discrimination gives way to the less rigid “manifestly without reasonable foundation” test.

This is a high bar, but is far from insurmountable. Notwithstanding arguments about the application of a “weighty reasons” alternative, in my view, the real problems lie with the test’s application. The Court’s assessment is unapologetically structural: it is focused on whether the decision to (i) provide statutory exemptions for some classes of claimant and (ii) have others reliant on the Discretionary Housing Payment scheme, can be justified. The Court determined that the “Secretary of State’s decision to structure the scheme as he did was reasonable” [41], before turning to whether the difference in treatment between the Rutherford and Carmichael classes within the regulations could be justified.

The Court is looking to justify the wrong thing. The test is not the extent to which the structural design of the scheme is “reasonable” or not “manifestly without reasonable foundation”, but whether the discriminatory impact on the claimants can be justified. This assessment should draw on the key stages of a proportionality assessment which have recently been underscored in Re. Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] UKSC 3.[iv] For the Court to contain its focus on the design of the scheme rather than its discriminatory impact, is to draw its consideration away from key issues that were put before it, particularly the capacity of the DHP scheme to provide an adequate means of mitigation. Indeed, the only explicit reference to the limitations of DHP provision is provided within Lady Hale’s dissenting judgment, where she says of the DHP scheme:

“It is discretionary, cash-limited  and  produces  less  certainty;  it  has  a  stricter  means  test;  it  offers different and less attractive routes of judicial challenge; it can be onerous to make applications; and it encourages short term, temporary and conditional awards.” [Carmichael, 77]

The numerous problems inherent in their operation and the, often very difficult, financial environment in which Local Authorities have to operate the scheme has been dealt with in more detail elsewhere. The point to underscore here is how the application of the “manifestly without reasonable foundation” test did not satisfactorily consider these issues.

Distinguishing between “social” and “objective medical” needs

The Court’s focus on the structural design of the scheme leads it to consider the “ironic and inexplicable inconsistency” [Carmichael, 47] in the Secretary of State’s approach to the Carmichael and Rutherford cases, namely providing a statutory exemption for (i) children who cannot share a bedroom by reason of disability, but not adults, and (ii) adults who require overnight care, but not children. The Secretary of State’s attempts at justifying the difference on the basis of the “best interests of the child” sets this inconsistency into sharp relief [Carmichael, 46]: if this is the focus for the Carmichael class, why is the opposite achieved in the Rutherford class under the same regulations?

The Court, however, goes on to provide a means of distinguishing the other claimants in MA and A from the Rutherford and Carmichael classes. In his lead judgment, Lord Toulson suggests that there are “some who suffer from disabilities such that they have a transparent medical need for an additional bedroom” [Carmichael, 42]. This is the Court’s solution to the problem of separating out what some view as large and unwieldy classes of claimants (such as those requiring a room by reason of a disability), with the tighter Burnip/Gorry  classes, where “small and easily identifiable” [MA CA 76] groups exist. The point of distinction is not simply challenges of delineation or the “likely number of people affected” [58], but rather this “transparent medical need” [Carmichael, 42].

This is not a clear distinction. For instance, the judgment distinguishes the Rutherford position, where the “extra” bedroom is required for the provision of overnight care, against Richard Rourke’s position, where the “extra” bedroom is required to store medical equipment. Could a transparent medical need include those suffering from certain mental health problems, or include situations where a disabled adaption will require an additional bedroom (for instance, a through-floor lift)?

I suspect the Government will interpret this thinly for the purpose of complying with the judgment. At the time of writing, the circular issued by the DWP does little to inspire confidence. It is possible to imagine a situation where Reg.B13 is amended to comply with the decision of the Court regarding Rutherford and Carmichael (namely, to address adults who cannot share a room by reason of disability, and children who require overnight care), with little else forthcoming.

The Absence of Arguments on the UNCRPD and the UNCRC

The Court did not assess arguments on the United Nations Convention on the Rights of Persons with Disabilities (UNCRPD) or the United Nations Convention on the Rights of the Child as an interpretive guide to Article 14 discrimination. There is a case to be made for UNCRPD relevance in wake of both the Supreme Court’s consideration of the “Benefit Cap” in R (on the application of SG) v Secretary of State for Work and Pensions [2015] UKSC 16 and of the room allowance for Local Housing Allowance (the same as under the bedroom tax regulations) in Burnip v Birmingham City Council [2012] EWCA Civ 629.

Firstly, the source of disagreement in SG focused on the ability to draw a conduit between discrimination on the grounds of gender under art.14, and the UNCRC. The court determined that such international treaties can be relevant where “the treaty in question was directly related to the particular form of discrimination there in issue” [SG, 119], however, there was “no such connection” [SG, 131] between the UNCRC – concerning the protection of the interests of children – and gender discrimination.

No such problem exists here for the MA/Rutherford claimants; the UNCRPD is clearly relevant. Indeed, when considering the justification for changes to Local Housing Allowance under the same room standard in Burnip, although the case turned on other grounds, Maurice J indicated that he would have been willing to utilise the UNCRPD in his interpretation of art.14 and find in favour of the claimants on that basis (Burnip, 22).

Its use has already led to a “heightened standard of scrutiny” elsewhere in ECHR case law,[v]48 and art.19 of UNCRPD in particular offers the potential to “illuminate our approach to both*J.H.L. 78  discrimination and justification” (Burnip, 22) in cases involving housing benefit, given its focus on the right of those with disabilities to live independently and choose their place of residence on an equal basis to others. More gung-ho interpretations have even pointed to the prospect of a “fusion” between ECHR disability discrimination and the norms of the UNCRPD.[vi]

The arguments on the relevance of the UNCRPD were put to the Court; I assume that the position advanced by the Secretary of State (which can been seen in the hearing recording here, argued by James Eadie QC at 1:25:34), was accepted. The convention’s absence from the case is set into sharp relief by the recent report of the Committee on the Rights of Persons with Disabilities, which found that the bedroom tax in particular “curtailed the right of persons with disabilities to choose a place of residence in accordance with article 19 of the Convention” (para 19). There is clear capacity here for the Courts to have considered this within their determination of Article 14 justification.

Overall, this judgment is welcome news for the Rutherford and Carmichael claimants, but its reasoning is not without problems. In particular, the way in which the “manifestly without reasonable foundation” test was applied, the distinguishing line between those with a “transparent medical need for an additional bedroom” and those without, and the lack of consideration of international obligations under the UNCRC and UNCRPD, are – in my view – problematic. The decision has implications for other policies adopting the “cut and devolve” approach to letting DHPs do the heavy lifting. We will wait to see how the DWP implements the judgment.

By Jed Meers

[i] For those struggling to fill their free time, at the time of writing, the hearings are still available to watch online at: https://www.supremecourt.uk/cases/uksc-2016-0029.html

[ii] Namely, the failure to treat differently persons whose situations are significantly different. See Thilemmenos v. Greece 34369/97 [2000] ECHR 162 (6 April 2000)

[iii] It is worth noting that Lady Hale dissented from the lead judgment in A, as she determined that the discrimination was not justified and the Secretary of State had not complied with the PSED [Carmichael, 76-79].

[iv] Namely, “(i) whether there is a legitimate aim which could justify a restriction of the relevant protected right, (ii) whether the measure adopted is rationally connected to that aim, (iii) whether the aim could have been achieved by a less intrusive measure and (iv) whether, on a fair balance, the benefits of achieving the aim by the measure outweigh the disbenefits resulting from the restriction of the relevant protected right.” [Wales Asbestos, 45 per Lord Mance]

[v] Andrea Broderick, “A reflection on substantive equality jurisprudence: The standard of scrutiny at the ECtHR for differential treatment of Roma and persons with disabilities” (2015) 15 International Journal of Discrimination and the Law 101, 115.

[vi] Broderick, “A reflection on substantive equality jurisprudence: The standard of scrutiny at the ECtHR for differential treatment of Roma and persons with disabilities” (2015) 15 International Journal of Discrimination and the Law 101, 116.