R (Winder and others) v Sandwell Metropolitan Borough Council

The court held that Sandwell Metropolitan Borough Council’s two‑year residence requirement for working‑age applicants in its Council Tax Reduction Scheme was unlawful. The primary legal conclusion was that, on the true construction of section 13A(2)(b) of the Local Government Finance Act 1992 and Schedule 1A, classes for council tax reduction must be characterised by reference to financial need; a residence criterion is not a proxy for financial need and therefore defining a class by past residence was ultra vires.

In the alternative, and cumulatively, the residence requirement was unlawful because the council failed to take into account material considerations (including central Government policy), failed properly to consult on a fundamental part of the scheme, unlawfully created a potential barrier to EU freedom of movement and amounted to unjustified indirect discrimination (race/nationality and sex), and breached the public sector equality duty in section 149 of the Equality Act 2010. The claim for judicial review was allowed and a declaration was granted that the residence requirements were outside the council’s powers and unlawful for the stated reasons.

Background and parties: This judicial review was brought by three individuals (the claimants), supported by the Child Poverty Action Group, challenging Sandwell Metropolitan Borough Council’s inclusion of a two‑year residence requirement in its Council Tax Reduction (CTR) Schemes for 2013–14 and 2014–15. The Equality and Human Rights Commission intervened. The claimant class comprised working‑age council tax payers refused CTR because they had not been resident in the borough for two years; about 3,600 such refusals had occurred by the time of the hearing. The council had introduced the requirement at full Council on 4 December 2012 to discourage perceived inward migration from higher‑cost areas and to limit demand on the scheme; the change resulted in the loss of transitional grant funding of about £675,000.

Nature of the claim and relief sought: The claimants sought judicial review relief challenging the lawfulness of the residence requirement. The claim framed multiple grounds: (i) that the requirement was ultra vires the power to make CTR Schemes under section 13A and Schedule 1A to the Local Government Finance Act 1992; (ii) irrationality/failure to take into account material considerations (including central Government policy and wider consequences if other authorities adopted similar measures); (iii) failure to consult on a fundamental element of the scheme; (iv) that the requirement created an unlawful barrier to EU free movement; (v) indirect discrimination (contrary to EU law, the Equality Act 2010 and article 14 read with A1P1); and (vi) breach of the public sector equality duty under section 149 of the Equality Act 2010.

Issues and reasoning:

• Construction/ultra vires: The court held that section 13A(2)(b) requires that classes "consist of persons whom the authority considers to be, in general, in financial need". On its true construction, the class‑defining criterion must be a predictor or proxy of financial need. Defining the class by past residence bore no relation to financial need and thus fell outside the statutory power. The judge emphasised that statutory powers must be exercised for the purposes for which they were conferred.
• Material considerations and purpose: Even if the power had been wide enough, the council’s dominant purpose in adopting the residence requirement was to discourage in‑migration and to reduce demand rather than to identify and assist those in financial need; that use of the power was an unauthorised purpose. The council lacked evidence that migration from higher‑cost areas would occur or that the measure was necessary; it had not analysed alternatives or assessed the adverse impact on vulnerable persons.
• Consultation: The council had not consulted on the residence requirement when adopting the 2013–14 scheme and, for 2014–15, the limited web‑based request for feedback was insufficient. The procedural failure rendered adoption of the requirement unfair and unlawful.
• EU free movement and discrimination: The requirement could operate as an obstacle to freedom of movement and was indirectly discriminatory (more likely to affect non‑British nationals and women fleeing domestic violence). The council offered no adequate evidential justification or proportionate means to pursue its stated objective.
• Public sector equality duty: The council failed to give due regard under section 149 to impacts on protected characteristics; no adequate equality assessment was undertaken in respect of the residence requirement.

Disposition: Permission to proceed was granted; the claim succeeded. The court made a declaration that the residence requirements were outside the council’s statutory powers and unlawful for the reasons set out.

The application for judicial review is allowed. The court declared that the two‑year residence requirements in Sandwell’s 2013–14 and 2014–15 Council Tax Reduction Schemes were outside the council’s powers and therefore ultra vires because section 13A(2)(b) requires class criteria to be predictive of financial need; alternatively the requirement was unlawful for failure to take into account material considerations, for inadequate consultation, for creating a potential obstacle to EU free movement and for unjustified indirect discrimination, and for breach of the public sector equality duty. A declaration to that effect was granted.