Parkin, R (On the Application Of) v Secretary of State for Work And Pensions

For Article 14 purposes, self-employment may constitute an “other status”, and the Universal Credit minimum income floor creates different treatment between self-employed and employed claimants. Nevertheless, the two groups are not in relevantly analogous situations because self-employed persons are not subject to the National Minimum Wage, employer control or a directly measurable work requirement. In any event, the minimum income floor is not manifestly without reasonable foundation. It is rationally connected with the policy of encouraging claimants to reconsider persistently unprofitable self-employment and reducing long-term subsidy of non-viable businesses. The Secretary of State also complied with the public sector equality duty by assessing the Universal Credit scheme as a whole and taking account of its equality impacts.

The claimant, an actor and director working as a self-employed person, claimed Universal Credit after separating from her partner. The Secretary of State treated her as being in gainful self-employment, so regulation 62 of the Universal Credit Regulations 2013 applied a minimum income floor to her award.

She sought judicial review on the grounds that the minimum income floor discriminated against self-employed persons contrary to Article 14 of the ECHR, was irrational at common law, and was made without due regard to the equality needs in section 149 of the Equality Act 2010. The central questions were whether self-employed and employed claimants were in relevantly analogous situations, whether the measure was justified, and whether the public sector equality duty had been performed.

1. Article 14. The court accepted that the claim fell within the ambit of A1P1 and assumed that it also fell within the ambit of Article 8. Self-employment was an “other status” for Article 14 purposes. The Universal Credit scheme treated employed and self-employed claimants differently because regulation 62 treated low-earning self-employed claimants as having income equal to the minimum income floor.
2. The groups were not, however, in relevantly analogous situations. Employees were entitled to the National Minimum Wage, worked under the control of an employer, and received remuneration directly related to their working time. Self-employed persons had no equivalent minimum remuneration, control or measurable relationship between working time and income. A different mechanism was therefore required to influence their behaviour under the statutory scheme. The discrimination ground consequently failed.
3. Alternatively, the measure was not manifestly without reasonable foundation. The minimum income floor was rationally connected with encouraging claimants in persistently low-profit gainful self-employment to consider employment or changing the balance of their activities. It was not necessary to apply separately the rational-connection and fair-balance questions proposed in R (DA) v Secretary of State for Work and Pensions because that approach was inconsistent with the controlling reasoning in [2019] UKSC 21 and its treatment in Langford v Secretary of State for Defence.
4. Regulation 99(6) did not demonstrate that the minimum income floor was irrational. It might create an incentive for a claimant with minimally profitable self-employment and some employed earnings to take more employment, but that was consistent with the scheme’s behavioural objective.
5. The common-law irrationality challenge failed. The statutory purposes included reducing fraud and error, encouraging productive activity and preventing indefinite subsidy of businesses that did not make claimants self-sufficient. The Regulations had received the highest level of Parliamentary scrutiny, and the threshold of irrationality in this social-policy context was not reached.
6. The Secretary of State complied with section 149 of the Equality Act 2010. Given the complexity and interaction of the Universal Credit scheme, it was lawful to assess its equality impact as a whole rather than each component separately. The application for judicial review was dismissed.

First-instance judicial review. Permission was granted on the papers by Murray J on 5 March 2019. The High Court dismissed the application.