Supreme Court Upholds “Benefits Cap”

The Supreme Court on 18 March 2015 handed down a controversial judgment in R(on the application of SG and others) v Secretary of State for Work and Pensions [2015] UKSC 16 in which the majority upheld the lawfulness of the Benefit Cap (Housing Benefit) Regulations 2012 (the “Regulations”). The Supreme Court divided 3:2, with Lord Reed, Lord Hughes and Lord Carnwath holding that the Regulations were lawful, while Lady Hale and Lord Kerr dissented.

The judicial review challenged the Regulations as indirectly discriminating against the property rights of women contrary to Article 14 of the European Convention of Human Rights (“ECHR”) taken with Article 1 of protocol 1 of the ECHR (“A1P1”).

The Regulations limit the amount of specified benefits a single person can receive to £350 a week and all other households to £500 a week, which is equivalent to the average net earnings of a working household in Great Britain. The benefits include housing benefit and crucially, child benefit. This means that women are most likely to be affected by the Regulations, since they make up the majority of single parents and are most likely to be in receipt of child benefit.

The aims of the Regulations are to save public expenditure, incentivise work and to reasonably limit the amount of benefits a household receives. The Supreme Court unanimously agreed that these were legitimate aims.

The key issue was whether the Regulation’s indirectly discriminatory effect on the property rights of women was a proportionate means of achieving its legitimate aims.

All parties agreed that the Regulations concerned the State’s social and economic policy and due weight needed to be given to the assessment of the Government and Parliament in enacting the Regulations. For this reason, the low intensity proportionality test of “manifestly without reasonable foundation” in Stec v United Kingdom (2006) 43 EHRR 1017 applied.

An important consideration was whether Article 3 of the United Nations Convention on the Rights of the Child 1989 (“Convention”), which requires the best interests of the child to be treated as a primary consideration, affected the proportionality test. Lord Reed, who gave the leading judgment, found that Article 3 of the Convention was not relevant to the proportionality test because the proceedings were concerned with (para 87):

alleged discrimination between men and women in the enjoyment of the property rights guaranteed by A1P1 not the best interests of their children.

Furthermore, Lord Reed found that Article 3 of the Convention had no impact on domestic law because the Convention was not incorporated into domestic law. This was based on the traditional principle that international treaties do not have effect on domestic law unless they are incorporated by an Act of Parliament, R (Corner House Research) v Director of the Serious Fraud Office (JUSTICE Intervening) [2008] UKHL 60; [2009] AC 756. However, Lord Kerr controversially argued that because the Convention was a human rights treaty an exception applied to the traditional principle and although the Convention was unincorporated, Article 3 still had direct effect in domestic law.

As regards the proportionality analysis, the majority found that the Regulation’s balance between the indirectly discriminatory effect on the property rights of women and the legitimate aims was not “manifestly without reasonable foundation”. This was because in the words of Lord Reed, (para 96):

the fact that they [Regulations] affect a greater number of women than men has been shown to have an objective and reasonable justification it was inevitable that measures aimed at limiting public expenditure on welfare benefits would have a differential impact on women as compared with men. That followed from the fact that women formed the majority of those who were out of work and receiving high levels of benefit.

Lady Hale and Lord Kerr dissented. They both argued that Article 3 of the Convention was relevant to the interpretation of Article 14 taken with A1P1 because it formed part of the justification defence for the indirect discriminatory effect of the Regulations on women. Lady Hale stated (para 224):

what has to be considered is whether the benefit cap as it applies to lone parents, can be justified independently of its discriminatory effects I have no doubt that it is right, and indeed necessary, to ask whether proper account was taken of the best interests of the children affected by it.

Lady Hale, with whom Lord Kerr agreed, found that the Regulations reduced the resources of children and so were not in their best interests and violated Article 3 of the Convention. As a consequence, the Regulations were a disproportionate violation of Article 14 taken with A1P1.

This judgment makes for important reading in all judicial review proceedings against the Government’s welfare reforms. Not only does it raise important issues regarding the role of international treaties in the interpretation of ECHR rights but also questions the extent the rights of some may be limited in order to achieve broader social and economic aims.

News 7 Apr, 2015