R (Hardy) v Sandwell MBC

The claimant challenged the council's refusal to award discretionary housing payments (DHP) sufficient to meet the shortfall created by the Housing Benefit (HB) size criteria where the claimant received the care component of Disability Living Allowance (DLA(c)). The court held that the council had adopted an unlawful blanket policy of treating all income (other than the mobility component DLA(m)) as available for DHP purposes and had therefore failed to have due regard to the Department for Work and Pensions Discretionary Housing Payments Guidance (including the Good Practice Guide). That policy unlawfully fettered the council's discretion. The court further held that the council's approach gave rise to unlawful discrimination (Article 14 ECHR and/or section 29(6) of the Equality Act 2010) because it treated DLA(c) as ordinary income despite its disability-related purpose, and that the council had breached the Public Sector Equality Duty. A separate challenge that taking DLA(c) into account was irrational was rejected because existing authority (Turner) permits taking DLA(c) into account; accordingly the council's decision of 12 September 2013 and subsequent DHP decisions were quashed.

Background and parties:

• The claimant, Mr Hardy, and his wife lived in adapted three-bedroom council accommodation and were in receipt of benefits including DLA(c). After the 2013 HB size criteria were introduced, their HB was reduced by 25%, creating a weekly shortfall in rent. Mr Hardy applied for DHP to meet the shortfall; the council calculated household income including DLA(c) (but excluding DLA(m)) and awarded a smaller DHP, later confirmed on review.
• The claimant sought judicial review challenging the council's policy and decisions on four principal grounds: (i) unlawful policy and fettering of discretion contrary to the DHP Guidance; (ii) discrimination arising from disability contrary to Article 14 ECHR; (iii) breach of the Public Sector Equality Duty under section 149 of the Equality Act 2010 and failure to make reasonable adjustments under section 29(7); and (iv) irrationality/contravention of the statutory purpose in taking DLA(c) into account.

Issues framed by the court:

1. Whether the council adopted an unlawful policy and unlawfully fettered its discretion by routinely treating DLA(c) as available income for DHP purposes and failing to give proper consideration to the DHP Guidance and Good Practice Guide;
2. Whether the council's approach constituted unlawful discrimination (Article 14 and/or the Equality Act 2010) and whether it could be justified as proportionate or with reasonable foundation;
3. Whether the council breached the Public Sector Equality Duty or the duty to make reasonable adjustments;
4. Whether taking DLA(c) into account for DHP purposes was irrational or contrary to statutory purpose.

Court's reasoning and conclusions:

• On policy and fettering: the Sandwell Policy and the council's practice of assessing income "globally" (excluding only DLA(m)) showed that DLA(c) was routinely counted. The council had misstated its legal position (asserting it could not exclude DLA(c)) and therefore failed to have proper regard to the DHP Guidance which specifically allows authorities to consider disregarding disability-related benefits. The policy therefore unlawfully fettered discretion and the decision in Mr Hardy's case was unlawful.
• On discrimination: the court found that DHPs should be regarded as part of the housing benefit scheme as a whole and fall within the ambit of Article 1 of Protocol 1 and Article 8 in context; Article 14 was engaged. Treating DLA(c) as ordinary income produced an adverse effect on disabled applicants compared with non-disabled applicants and amounted to indirect discrimination (Thlimmenos type). The council could not show objective and reasonable justification in the circumstances, given the role of DHPs in "plugging the gap" for disabled persons under the size criteria.
• On PSED and reasonable adjustments: the council's equality impact assessment dated 2009 and subsequent monitoring did not address the 2013 HB changes or the DHP Guidance; the court found a breach of the PSED. The reasonable adjustments issue was not separately determinative beyond the discrimination finding.
• On irrationality/statutory purpose: the court rejected the argument that taking DLA(c) into account was per se irrational, following Richards J in Turner, noting Parliament had ring-fenced DLA(m) expressly but not DLA(c); Turner was not displaced by later authority for that legal point.

Relief and disposition: The court quashed the council's decision of 12 September 2013 and the council's further decisions on the rate of DHPs to Mr Hardy. The judge ordered further submissions on consequential orders.

The claim succeeded. The court quashed the council’s decision of 12 September 2013 and its subsequent DHP decisions because the council had adopted an unlawful blanket policy of treating the care component of Disability Living Allowance as ordinary income when assessing DHPs, thereby failing to have due regard to the DWP DHP Guidance and unlawfully fettering its discretion; the approach also amounted to unlawful discrimination contrary to Article 14 ECHR and/or section 29(6) of the Equality Act 2010 and breached the Public Sector Equality Duty. The court rejected the claim that taking DLA(c) into account was irrational, following Turner.