Salvato, R (On the Application Of) v Secretary of State for Work and Pensions

Indirect discrimination may arise where a welfare rule has disproportionately prejudicial effects on women, including where the rule concerns access to a benefit predominantly claimed by women. The relevant comparator is not necessarily all claimants to that benefit. The court must examine whether the rule produces a disproportionate disadvantage within the relevant group.

In welfare and socio-economic policy cases, justification is assessed by asking whether the measure has a legitimate aim and is proportionate, applying the manifestly without reasonable foundation standard. The intensity of review depends on the protected ground, Parliamentary scrutiny and whether the precise policy choice was considered. General, unparticularised administrative-cost assertions do not suffice. A rule may also be irrational where it materially frustrates an underlying purpose of the statutory scheme.

The claimant, a single mother receiving Universal Credit, challenged the requirement that childcare charges must have been paid before the childcare costs element could be included in an award. She argued that the rule indirectly discriminated against women contrary to article 14 of the ECHR, read with article 8 and A1P1, and was irrational.

The Secretary of State relied on the architecture of Universal Credit, including monthly assessment and payment in arrears, and on the objectives of reducing fraud and error. The court considered the operation of the childcare and housing costs elements, the policy evidence, and the authorities on indirect discrimination, proportionality and rationality.

1. Indirect discrimination. The Proof of Payment Rule had material adverse effects on a significant number of claimants. The evidence showed that most recipients of the childcare costs element were women, that women generally earned less than men, and that childcare costs were volatile. The rule therefore had disproportionately prejudicial effects on women, both because the childcare group was overwhelmingly female and because women within that group were less likely to afford upfront payment.
2. Convention ambit. The childcare costs element was a measure by which the state showed respect for children and family life. Discrimination in the way it was paid therefore fell within the ambit of article 8. It also fell within the ambit of A1P1 because, but for the condition complained of, the claimant would have had an enforceable domestic-law entitlement to the benefit.
3. Justification. Reducing fraud and error was a legitimate and sufficiently important aim. However, the precise distinction between proof of payment and proof of liability to pay had not been directly considered by Ministers. The asserted administrative costs were general and unsupported by concrete evidence. A system based on liability to pay would not necessarily involve estimates, payment in advance or a departure from payment in arrears. The Proof of Payment Rule was therefore not objectively justified and was incompatible with article 14.
4. Rationality. The maintenance of the rule had striking similarities to the problem considered in R (Johnson) v Secretary of State for Work and Pensions. It frustrated the objective of encouraging work by forcing claimants to reduce their hours because they could not fund childcare upfront. The justifications advanced did not adequately explain why liability to pay could not replace actual payment as the trigger for entitlement. The maintenance of the rule was irrational.
5. The claim succeeded. Further submissions were invited on the appropriate form of order.

Permission to apply for judicial review was granted by Mostyn J on 25 February 2020. The judgment records no earlier merits decision.