The High Court today has ruled that the way the Department for Work and Pensions interprets Universal Credit regulations is ‘unlawful’.
Under the current system, the DWP treats UC claimants as having earned twice as much as they do if they receive two pay cheques in one monthly assessment period.
It also assumes they have no earnings in the next assessment period if they receive their monthly pay earlier than the start date of that assessment period.
This interpretation of the UC regulations impacts on the amount claimants are awarded.
Lord Justice Singh and Mr Justice Lewis, in a case brought by Child Poverty Action Group and solicitors Leigh Day on behalf of four lone mothers, ruled that this was wrong.
The four mothers lost several hundreds of pounds each year and were subject to large variations in their Universal Credit awards because their monthly paydays clashed with the dates of their UC assessment periods
Lord Justice Singh and Mr Justice Lewis characterised the DWP’s interpretation of UC regulations as ‘odd in the extreme’.
They added that the DWP’s interpretation of the regulations had caused ‘severe cash flow problems for the claimants living as they do on low incomes with little or no savings’.
The court found that correctly interpreted, the regulations mean the DWP should adjust its calculation of UC awards when ‘it is clear that the actual amounts received in an assessment period do not, in fact, reflect the earned income payable in respect of that period’.
The DWP argued that adjusting the assessment system would be costly.
In response, the court said: ‘If the regulations, properly interpreted, mean that the calculation must be done in a particular way, that is what the law requires.
‘We do not belittle the administrative inconvenience or the cost involved but the language of the regulations cannot be distorted to give effect to a design which may have proceeded on a basis which is wrong in law.’
Commenting on the judgment, Child Poverty Action Group solicitor Carla Clarke said: ‘This is a very welcome and common-sense judgment which clearly establishes that the DWP has been applying its Universal Credit regulations incorrectly.
‘Working parents on low incomes should not lose out on the support that Parliament intended them to receive because the DWP has designed a rigid process that is out of step with both actual reality and the law.’
Tessa Gregory, solicitor from Leigh Day who represented the first claimant, Ms Danielle Johnson, stated: ‘My client is a hard working single mum doing her very best to support her family. She is precisely the kind of person Universal Credit was supposed to help, yet the DWP designed a rigid income assessment system which left her £500 out of pocket over the year and spiralling into debt due to a fluctuating income.
‘Quite rightly the court has found that the secretary of state has been acting unlawfully and ruled that a correct interpretation of the regulations would not lead to such absurd results.’
‘It is extraordinary that when this issue was first raised, the secretary of state did not act quickly to remedy the problem, instead choosing to fight these four women in court arguing that the system was fit for purpose despite the hardship being caused to working families,’ she continued.
‘This is yet another demonstration of how broken Universal Credit is and why its roll out must be stopped.’
Ms Gregory called on Amber Rudd to take ‘immediate steps’ to ensure that no other claimants lose out and to compensate all those who have been adversely affected by the DWP’s ‘unlawful conduct’.
A DWP spokesperson said: ‘We are carefully considering the court’s judgment.’