Welfare Benefits Update: Benefit Cap unlawful for lone parents of children under two years old

In R (on the application of DA) and Others v SSWP [2017] EWHC 1446 (Admin), a challenge was raised by a number of claimants who were (or would be) affected by the benefit cap.  Each claimant was a lone parent of a child under two-years-old.

Until such claimants work 16 hours or more, they are subject to the benefit cap. They argued that this position was unlawful because it unfairly discriminated against them: the cost of childcare for children under the age of two is expensive and limited in availability, meaning that it was difficult for them to go back to work and/or to afford the childcare to go back to work.

The High Court agreed with the claimants and held:

• The exceptions to the benefit cap did not consider the adverse effects on lone parents with children under two;
• It was highly likely lone parents will not be able to work 16 hours and/or arrange sufficient childcare;
• The benefit cap failed to apply the best interests of a child under two-years-old; and
• There was no reasonable justification for the cap.  Although there was reasoning behind the DWP’s approach (i.e. work incentive echoing the whole welfare reform programme), on this occasion the justification was not proportionate to the aims of the cap; the potential consequences would be more harmful than being in a workless household.

At this time there is no change in the legal position.  The DWP has announced that it will continue to apply the benefit cap to lone parents of children under two and in the meantime will appeal the decision of the High Court.

For landlords with tenants who are in this position, ensure they are fully encouraged to make an application for discretionary housing payments, as recommended by the DWP.

Child Tax Credits and Universal Credit – Two-child limit

RP landlords are likely to increasingly experience the effect of ‘two-child limit’ on payments to claimants of Child Tax Credits or the child element of Universal Credit.

Claimants with children can apply for the child element of Universal Credit.  Those not yet claiming Universal Credit (either in full or in part) will instead be eligible for Child Tax Credits.  Those payments will now generally be restricted to two children, for those households where a child was or is born after 6 April 2017; previously there has been no limit.

There are a number of exceptions to this new rule including where the child:

• was born as part of a multiple birth;
• was adopted from local authority care;
• is in the claimant’s care (formally or informally) and would otherwise be looked after by the local authority; or
• was conceived as a result of a non-consensual sexual act (including rape) or in a controlling or coercive relationship.

The Universal Credit payment system is currently unable to process a claim limiting the amount of child element to two children (it is expected that the payment system will be able to calculate such claims from November 2018).  Those claimants currently receiving Universal Credit for more than two children will continue to receive the same amount (unless there is a change of circumstance).

If a new Universal Credit claimant is responsible for three children, they are expected to claim individual benefits as per the previous welfare regime.  They will be able to claim Universal Credit once the payment system can account for the change (but will only receive the child element for two).  The amount of Child Tax Credits (and other means-tested benefits that they claim) will be limited to including a two-child limit for the relevant applicable amounts.

Whilst not directly linked to Housing Benefit or the housing element of Universal Credit, this change will, of course, impact upon the overall income available to those tenants of RPs claiming contributions.  That overall income may affect their ability to pay rent payments due, particularly in a regime of direct payments under Universal Credit and taking into account delays in processing claims.

If you have customers that are (or will be) affected by the two-child limit, CPAG is looking for test cases to challenge the lawfulness of the policy.

For more information

For more information or assistance about welfare benefits, including these updates, please contact Zishaan Saleem.