R (Parkin) v Secretary of State for Work and Pensions

The claimant challenged regulation 62 of the Universal Credit Regulations 2013 (the minimum income floor or MIF) as discriminatory under article 14 ECHR, irrational at common law and as made without due regard to equality duties under section 149 of the Equality Act 2010. The court held that self-employment qualifies as an "other status" for article 14 but that employed and gainfully self-employed claimants are not in relevantly analogous positions because of legal and practical differences (for example the protection of the National Minimum/Living Wage and employer control). Applying the manifestly without reasonable foundation standard for social security measures, the court found the MIF justified by legitimate policy aims of preventing long-term taxpayer subsidy of unprofitable businesses, reducing fraud and promoting incentives to increase earnings, and therefore not discriminatory. The court also rejected the common law irrationality challenge and concluded that the Secretary of State had had due regard for equality considerations in the regulatory and impact assessment process.

Background and parties: This is a first-instance judicial review claim by Charmaine Parkin, a self-employed actor and mother, against the Secretary of State for Work and Pensions. Permission for judicial review was granted on paper. The claimant challenged the operation and lawfulness of regulation 62 of the Universal Credit Regulations 2013 (the MIF).

Nature of the claim and relief sought: The claimant sought declarations and relief challenging (i) breach of article 14 ECHR by unlawful discrimination against the self-employed in the application of the MIF, (ii) irrationality of regulation 62 at common law, and (iii) failure to comply with the public sector equality duty in section 149 of the Equality Act 2010 when formulating the MIF.

Facts: The claimant had low and variable self-employed profits, some employed income and a Universal Credit award subject to a monthly MIF (her MIF was £861.11). Over 20 months she received combined UC and earned income substantially less than she would have received if treated as an employed or unemployed claimant. The Secretary of State determined she was in gainful self-employment (GSE); the First-tier Tribunal dismissed her appeal against that determination.

Issues framed:

• Do the circumstances fall within the ambit of Convention rights? (A1P1 and article 8 were considered relevant or assumed)
• Is self-employment a protected "status" under article 14?
• Is there differential treatment between employed and self-employed claimants and are their situations analogous?
• If there is discrimination on ground of status, is it objectively justified?
• Is regulation 62 irrational at common law?
• Did the Secretary of State comply with the equality duty in section 149?

Court’s reasoning: The court assumed the case fell within the ambit of article 8/A1P1 and accepted that self-employment can amount to an "other status" for article 14. The court identified differential treatment in the operation of regulation 62 but concluded employment and gainful self-employment are not relevantly analogous given legal and practical differences (for example statutory wage protections, control and predictability of paid employment), which justified different regulatory mechanisms to influence behaviour. Even if analogy were found, the MIF was not manifestly without reasonable foundation: Parliament and the Secretary of State legitimately aimed to prevent indefinite public subsidy of unprofitable businesses, reduce error and fraud and provide behavioural incentives, and regulation 62 cohered with those aims (including mechanisms such as start-up periods and the definition of GSE). The common law irrationality challenge failed on similar grounds, and the court concluded the Department had carried out and relied on impact assessments and other evidence such that the public sector equality duty had been discharged in formulating the UC scheme and the MIF.

Disposition: The application for judicial review was dismissed.

The claim is dismissed. The court held that (i) self-employment is a status for article 14 purposes but employed and gainfully self-employed claimants are not in relevantly analogous circumstances for the Universal Credit scheme; (ii) in any event regulation 62 is not manifestly without reasonable foundation given legitimate policy aims (preventing long-term subsidy of unprofitable businesses, reducing error and fraud and encouraging increased earnings); (iii) regulation 62 is not irrational at common law; and (iv) the Secretary of State complied with section 149 of the Equality Act 2010 in designing the scheme.