Winder & Ors, R (on the application of) v Sandwell MBC

A billing authority may define classes entitled to council tax reductions only by criteria identifying persons who are, in general, in financial need. A residence requirement designed to discourage migration, rather than identify financial need, is outside the power conferred by section 13A of the Local Government Finance Act 1992. Such a requirement may also be unlawful where the authority fails to consider material national policy objectives, consult fairly, assess its discriminatory effects, or comply with the public sector equality duty. A purported power to reduce liability in individual cases outside the scheme does not cure those defects.

The claimants challenged Sandwell Metropolitan Borough Council’s council tax reduction schemes for 2013–14 and 2014–15. The schemes required working-age applicants to have lived in Sandwell for at least two years, subject to limited exceptions. The requirement had been introduced to discourage people from areas with higher housing costs from moving into the borough and increasing demand on the scheme.

The claim alleged that the requirement was ultra vires, adopted without proper consideration or consultation, an obstacle to EU free movement, indirectly discriminatory, and contrary to the public sector equality duty. The central issue was whether the Council had power to impose the residence requirement and, if so, whether its adoption was otherwise lawful.

1. The claim was allowed. The court granted permission to proceed and declared that the residence requirements in both schemes were outside the statutory powers and unlawful on the additional grounds pleaded.
2. Section 13A(2)(b) of the Local Government Finance Act 1992 requires a class to consist of persons whom the authority considers to be, in general, in financial need. The authority has considerable discretion over criteria identifying financial need, but criteria that do not make membership predictive of financial need fall outside the power. The Council’s two-year residence requirement bore no relationship to financial need.
3. The requirement also pursued an unauthorised purpose. Its dominant purpose was to discourage incomers from areas with higher housing costs and to avoid subsidising their council tax, rather than to relieve financial need. The residual discretion under section 13A(1)(c) did not cure the defect.
4. The Council failed to take account of material considerations, including the Secretary of State’s policy objectives of protecting vulnerable people, maintaining work incentives and achieving appropriate consistency between schemes. It also failed to assess the wider consequences if other authorities adopted similar restrictions.
5. Consultation on the 2013–14 scheme did not include the residence requirement. The later web-based process was not fair consultation because it gave inadequate information and wrongly suggested that the requirement had previously been consulted upon. Fairness, rather than rigid application of the Gunning criteria, is the touchstone of lawful consultation.
6. The requirement was, on its face, capable of obstructing EU freedom of movement and indirectly discriminating on grounds of nationality and sex. The Council provided no evidential foundation for its claimed objective or proportionality. It therefore could not justify the measure.
7. The Council also breached section 149 of the Equality Act 2010. It had not consciously considered the race and sex impacts of the residence requirement before adopting it, and the later evidence was insufficient to show due regard.