SC v Secretary of State for Work and Pensions (Ouseley J)

This judicial review concerned the introduction by ss 13–14 of the Welfare Reform and Work Act 2016 of a cap on the child element of child tax credit and the equivalent element in universal credit (the "two child rule"). The claimants sought declarations under s 4 Human Rights Act 1998 that the primary legislation was incompatible with Articles 8 and 12 ECHR and that Article 14 was breached when read with Articles 8, 9, 12 or Article 1 of Protocol No. 1. They also challenged aspects of the 2017 regulations, in particular the sequencing rule in the non-parental caring exception, as irrational/ultra vires.

Key legal principles and findings:

• The court rejected any argument that the 2016 primary legislation directly engaged Article 8, Article 9 or Article 12 by the mere fact of limiting future entitlement to a child-related benefit.
• Article 14 could, however, apply where a difference in treatment fell within the "ambit" of another Convention right; the court analysed ambit and the appropriate tests (drawing on Stec, RJM and Supreme Court authority).
• The appropriate standard of review for justification of a measure of social or economic policy was whether it was "manifestly without reasonable foundation" (per the Supreme Court in MA/Carmichael) rather than a more exacting proportionality standard.
• The court found the two child provision pursued legitimate social and fiscal objectives (reducing welfare expenditure, changing incentives and aligning claimant choices with those who do not receive benefits), was rationally connected to those aims and, insofar as indirect discrimination arose (notably the disproportionate impact on women), it was not shown to be manifestly without reasonable foundation.
• The non-parental caring exception in the 2017 Regulations was generally permissible but the sequencing/ordering rule (dependence on whether responsibility for the cared-for child arose before or after the arrival of another child) was irrational and therefore unlawful in that respect.

Background and parties: The claimants were three families and eleven children challenging amendments to s 9 of the Tax Credits Act 2002 and s 10 of the Welfare Reform Act 2012 effected by ss 13–14 of the Welfare Reform and Work Act 2016 which limited the individual child element to two children save for prescribed exceptions. The Secretary of State and Treasury were defendants and the Equality and Human Rights Commission intervened in support of the claimants.

Nature of proceedings and remedies sought: The claimants sought declarations under s 4 Human Rights Act 1998 of incompatibility with the ECHR (Articles 8 and 12 directly; Article 14 taken with Articles 8, 9, 12 or A1P1) and a declaration that part of the 2017 Regulations (the sequencing rule in the non-parental caring exception) was irrational and ultra vires.

Issues framed by the court:

• Whether the two child provision directly interfered with Articles 8, 9 or 12;
• whether Article 14 could be engaged by reference to the "ambit" of Articles 8, 9, 12 or A1P1 in relation to this welfare measure;
• what constitutes an appropriate comparator or "other status" for Article 14 purposes;
• the applicable test of justification for measures of social and economic policy;
• the interpretative role, if any, of the UN Convention on the Rights of the Child and General Comment 14 in assessing Convention compliance; and
• whether the sequencing rule in the non-parental caring exception was irrational.

Court’s reasoning and conclusions: The judge undertook detailed doctrinal analysis. He concluded there was no established Strasbourg or domestic authority to treat the absence or limitation of a future or prospective welfare entitlement as a direct interference with Article 8 or Article 12; the authorities pointed the other way unless effects reached the threshold of very serious breaches (e.g. Article 3 level consequences). The court accepted that Article 14 may apply where the issue falls within the ambit of another right (drawing on Okpisz, Stec, RJM and related authority) but held that the two child provision did not fall within the ambit of Article 1 of Protocol No. 1 or Article 8 in the way necessary to drive an Article 14 breach based on the status alleged by claimants.

The judge applied the "manifestly without reasonable foundation" standard to the challenge to discriminatory effects. He accepted the policy objectives (fiscal savings, changing incentives and encouraging work) were legitimate and rationally connected to the measure. The claim that the measure discriminated against a newly defined category such as "children with multiple siblings" was rejected as an inappropriate or bootstrapped definition of "other status". Indirect sex discrimination (because the majority of lone parents are women) was accepted to exist but was not shown to be manifestly without reasonable foundation. The court considered the UNCRC and General Comment 14 as potential interpretative material but held they did not alter the outcome.

Finally, the court accepted the challenge to the sequencing aspect of the non-parental caring exception in the 2017 Regulations as irrationally arbitrary: whether the cared-for child gave entitlement to an exception depended perversely on timing of arrival and thus was not rationally connected to the exception’s purpose. The court declared that part unlawful and ordered submissions on relief.

Procedure: First instance judicial review in the Administrative Court (decision dismissing most of the application but upholding the irrationality challenge to the sequencing rule).

The claim is dismissed in large part. The court held that the two child provision in ss 13–14 of the Welfare Reform and Work Act 2016 is compatible with the ECHR: Articles 8, 9 and 12 are not directly engaged and Article 14 (where it arises) is not breached because the measure is not "manifestly without reasonable foundation". However, the sequencing rule in the non‑parental caring exception in the 2017 Regulations is irrational and unlawful; that limited challenge to the regulations succeeds.