Court of Appeal upholds Universal Credit child custody rules
November 15, 2021
Salvato v Secretary of State for Work and Pensions  EWCA Civ 1482 – read the judgment
The Court of Appeal allowed the Secretary of State’s appeal against a ruling that the universal credit child care calculation system indirectly discriminates against women. The judgment below was reported in the blog here.
Care costs under Universal Credit
This is a case concerning the payment of childcare expenses under the universal credit. Applicants for Universal Credit can claim an item reimbursing them up to 85% of childcare costs while they go to work.
Ms Salvato, a single mother, claimed that the system for calculating childcare costs was indirectly discriminatory against her on the grounds of sex, contrary to Article 14 read with Article 1 Protocol 1 of the European Convention human rights. His complaint was about the way child care costs are calculated. Unlike other elements of the Universal Credit, such as the housing costs element, the childcare costs element is only payable after the claimant has already paid the costs of the costs, rather than simply having incurred them (Ms Salvato’s legal representatives have dubbed this requirement the “proof of payment” rule). She argued that the rule put her (and other women in her position) at a disadvantage because unlike many men, she couldn’t afford to pay childcare expenses up front.
Before the administrative tribunal, Chamberlain J conceded that the rule indirectly discriminates against women on the grounds that they are disproportionately dependent on state-funded childcare services to access the labor market and are generally less able to afford child care upfront. He considered that the discriminatory effects of the rule had not been justified, as there was no evidence that a receipt-based system would be more likely to avoid error and fraud than a system based on receipts. on invoices.
The judgment of the Court of Appeal
Andrews LJ agreed, “not without hesitationThat the judge below was entitled to find that the rule indirectly discriminated against women. There was evidence of “various different organizations”That the Proof of Payment Rule created a real practical difficulty for women. However, it was ruled that the judge erred in concluding that women faced greater barriers to work because of the Rule, solely on the basis of a “general earnings comparisonBetween single male and female parents.
As to the justification, the judge correctly applied the four-step approach Banque Mellat v HM Treasury (N ° 2)  UKSC 39. As this was a case in the context of social protection, he had also correctly considered whether the measure was “”manifestly without reasonable basis“, While recognizing that”weight reasonsWill be necessary to justify discrimination based on sex.
The judge took a “Wrong turnHowever by examining whether the policy was the result of deliberate political choice. In fact, it had never been suggested to the Secretary of State, either in policy formulation or in oral argument, that child care costs should be calculated by an alternative method. The oral arguments themselves focused on whether there should be exceptions to the policy.
This led the judge to apply the wrong level of scrutiny to the Secretary of State’s rationale for the rule, in an area where there should have been a “substantial degree of deference. “In the opinion of the Court of Appeal, the system as formulated had a rational connection with the objective of reducing the possibilities of fraud and error and had a “Obvious simplicity and certainty. “At first glance, then, the rule had a reasonable basis, although some single mothers may have more difficulty than some single fathers complying when they first apply.
In any event, switching to a proof of liability system would only make a practical difference if the Universal Credit payment was made in time to allow the applicant to pay the child care provider before the care was provided. . It would cross the “fundamental architecture»A system of payment in arrears (even the housing cost element is due for housing already provided). No viable alternative system had therefore been proposed: even a payment system based on invoices, would only benefit the poor if the daycare agreed to wait until the end of the evaluation period for payment.
Therefore, the proof of payment rule had a reasonable basis and was therefore justified.
Given the absence of any proposed alternative, it was held that the trial judge was also wrong in concluding that it was irrational of the Secretary of State not to provide a solution to the problem. The Court of Appeal had recently applied a more restrictive approach to rationality in Pantellerisco v Secretary of State for Work and Pensions  EWCA Civ 1454, a similar case involving the 28-day payment rule for universal credit and the application of the benefit cap. In reversing the decision of the administrative tribunal in this case, Underhill LJ had underlined the “extraordinary complexityTo design a new system and commented that:
… a court must avoid the temptation to conclude that a particular feature of such a system is “irrational” simply because it produces harsh, if not very harsh, results in some individual cases.
Writing on the judgment of Chamberlain J in Salvato, I pointed out that the administrative tribunal took “a relatively interventionist approachIn his scrutiny of universal credit legislation and noted that it was generally a good thing for the health of a new system designed from the ground up. If his recent stops in Salvato and Pantellerisco are something to pass, the Court of Appeal apparently does not share this approach. It follows in the footsteps of the Supreme Court, which has also sought to show greater deference to social protection in recent judgments (see SC versus Secretary of State for Work and Pensions  UKSC 26, covered on the blog here).
It remains to be seen whether this increased deference is a permanent feature of the law in this area, or specific to the facts of these cases. In the meantime, it will be up to Parliament to correct the shortcomings and injustices in the design of the universal credit system.
Michael spencer is a lawyer at Doughty Street Chambers. He tweets @MikeSpencerLaw.