R (The Motherhood Plan) v. HM Treasury

The Court of Appeal considered a challenge to the lawfulness of the Self-Employment Income Support Scheme (SEISS) as implemented by the First Direction under the Coronavirus Act 2020. The claimants argued that the scheme, which calculated grants by reference to average trading profits (ATP) for prior tax years, discriminated against self-employed women who took periods of leave for pregnancy or maternity contrary to Article 14 ECHR read with Article 1 of the First Protocol and breached the public sector equality duty (s149 Equality Act 2010).

The court concluded that the ATP method could give rise to prima facie indirect discrimination (and the appellants relied alternatively on a Thlimmenos-style argument), but that the measure was justified. The respondents demonstrated legitimate aims—rapid delivery, reliance on verified HMRC data, minimising fraud and error, avoidance of perverse effects and reasonable value for money—and the court held that, judged in the exigent context of the pandemic, the measure was not manifestly without reasonable foundation and was proportionate.

Accordingly the appeal was dismissed. The court also noted the First Direction was issued under powers in the Coronavirus Act 2020 (sections 71 and 76) and that a later Second Direction provided a targeted mitigation for some parents; the public sector equality duty challenge was rejected at first instance and not pursued on appeal.

Background and parties

• The claimants were The Motherhood Plan (Pregnant Then Screwed) and a self-employed woman (Ms Chamberlain). The defendant was the Chancellor (HM Treasury); HMRC was an interested party.
• The dispute concerned the First Direction implementing SEISS (grants payable at up to 80% of average monthly profits, subject to limits), which used average trading profits for the tax years 2016-17, 2017-18 and 2018-19 (or variants) as the reference for eligibility and quantum.

Nature of the claim and relief sought

• The claimants sought declarations that SEISS unlawfully discriminated against women who had taken pregnancy- or maternity-related leave, contrary to Article 14 ECHR read with Article 1 of the First Protocol (arguing conventional indirect discrimination and a Thlimmenos-type failure to treat differently those in a unique situation), and that the defendant had breached the public sector equality duty (s149 Equality Act 2010). They also sought a mandatory order to require reconsideration of the scheme.

Procedural posture

• Permission for judicial review was granted; Whipple J heard the claim at first instance and dismissed it. Leave to appeal to the Court of Appeal was granted by a single Lord Justice; the Court of Appeal heard the appeal and delivered judgment on 24 November 2021.

Issues framed by the court

• Whether the ATP-based SEISS measure fell within the ambit of Article 1 Protocol 1 and whether it amounted to unlawful discrimination under Article 14 (indirect discrimination or Thlimmenos-style discrimination) against recent mothers.
• If a prima facie discriminatory effect existed, whether the measure was justified: legitimate aim, rational connection, proportionality and whether the measure was "manifestly without reasonable foundation" in the pandemic context.
• Whether the public sector equality duty had been breached.

Court’s reasoning and conclusion

• The court reviewed Strasbourg, domestic and EU authorities on indirect discrimination, including the treatment of PCPs and the role of justification. It held that the ATP approach could produce a disproportionately prejudicial effect on self-employed women who had reduced trading in the reference years because of pregnancy or maternity; that therefore a prima facie case of indirect discrimination was established.
• Nevertheless, on justification the court held the measure pursued legitimate aims: rapid, large-scale economic support; reliance on verified HMRC self-assessment data to permit automated processing; minimisation of fraud and error; avoidance of perverse incentives; and reasonable public expenditure. The urgency and practical constraints arising from the pandemic and the available validated data were decisive factors. The Court of Appeal applied the nuanced approach to proportionality explained in R (SC) v Secretary of State for Work and Pensions and concluded that the SEISS design was not disproportionate or manifestly without reasonable foundation in context.
• The public sector equality duty challenge was rejected at first instance and was not advanced to alter the outcome on appeal.

Outcome

• Appeal dismissed: the court upheld the Treasury’s exercise of judgment in designing SEISS with ATP as the basis for eligibility and calculation, subject to the limited mitigations later introduced for particular cohorts by the Second Direction.

Appeal dismissed. The Court of Appeal held that although using average trading profits over the reference years could give rise to prima facie indirect discrimination against self-employed women whose past profits were reduced by pregnancy or maternity, the ATP-based SEISS was justified. The scheme pursued legitimate aims—rapid delivery, use of verified HMRC data, prevention of fraud, avoidance of perverse effects and value for money—and, in the emergency context of the pandemic, the measure was not manifestly without reasonable foundation and was proportionate. The public sector equality duty challenge (dismissed below) was not successful on appeal.

Appeal from the High Court of Justice, Queen's Bench Division (Administrative Court) (Whipple J) (CO24442020). Permission for judicial review was granted on 22 September 2020; the first instance hearing was in January 2021 and judgment given by Whipple J dismissing the claim. Leave to appeal to the Court of Appeal was granted by a single Lord Justice; this Court delivered judgment on 24 November 2021 ([2021] EWCA Civ 1703).