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High Court rules against DWP in Universal Credit case
Four women have won a High Court battle against the government over the way Universal Credit awards are calculated for working claimants.
Judges ruled today that the Department for Work and Pensions (DWP) is unlawfully misinterpreting its own Universal Credit regulations when assessing people’s incomes from month to month.
They said the DWP’s practice of treating claimants as having earned double if they are given two pay cheques in one monthly assessment period and earned nothing if they do not get paid in the next month is “odd in the extreme” and leading to “nonsensical situations”.
Lord Justice Singh and Mr Justice Lewis added that the situation is causing people to suffer “severe cash flow problems”.
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The women, who are all working single mothers, had argued that the “rigid, automated” Universal Credit assessment system is costing them hundreds of pounds a year and causing huge variations in their funds from one month to the next, simply because their paydays clash with the DWP’s assessment periods.
Work allowances built into the Universal Credit system let claimants with children or those with disabilities earn up to a certain amount through work before their awards are tapered away at a rate of 63p per pound.
But if someone receives two pay cheques in a month – perhaps because a payday is pushed forward by a public holiday or a weekend – then they will exceed the work allowance threshold and get a smaller Universal Credit award, despite earning the same amount of money.
As a result, people claiming the housing element of Universal Credit would lose £125 when this happens, and people not claiming for housing costs would lose £258.
The court ruled that the DWP should count wages for the month in which they are earned, rather than the month in which they are received.
Child Poverty Action Group (CPAG) and solicitors Leigh Day brought forward the judicial review on behalf of the women.
“This is a very welcome and common-sense judgement which clearly establishes that the DWP has been applying its Universal Credit regulations incorrectly,” said Carla Clarke, solicitor for CPAG.
“Today’s result should mean that in future no one will lose out on their Universal Credit awards or face the hardship that my clients have faced simply because of when their payday happens to fall.”
Tessa Gregory, a solicitor at Leigh Day who represented one of the women, said: “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.”
The DWP has been approached for comment.
