The Court of Appeal is due to hear the government’s appeal of a ruling by the High Court that the way the Department for Work and Pensions (DWP) has been assessing income from employment through its Universal Credit (UC) work assessment periods is unlawful.
The hearing will take place on Tuesday 19th and Wednesday 20th May 2020 via video link, beginning at 10.30am.
The challenge to the government’s assessment period policy is brought by four working lone mothers: Danielle Johnson, represented by law firm Leigh Day, and three other women who are represented by the Child Poverty Action Group (CPAG).
In January 2019 the High Court found for the claimants and ruled that the DWP had been wrongly interpreting the Universal Credit regulations.
The judgment stated that treating claimants as having earned twice as much as they do if they happen to receive two pay cheques in one monthly assessment period, and as having no earnings in the next assessment period is “odd in the extreme” and “…. could be said to lead to nonsensical situations”.
Danielle is paid on the last working day of the month. However, her monthly UC assessment periods are rigid – running from the last day of each month, meaning that if she is paid before the last day of the month, because payment falls on a weekend or bank holiday, she is assessed as having been paid twice that month, and not at all the next month. Claimants are unable to change their assessment period dates.
Perversely, for high income households, if the government’s assessment period is found to be lawful, those that usually would not be eligible for UC because their household income is too high would be able to claim the benefit in months where their pay dates fell so that they were deemed as not earning that month.
As well as making it very hard to meet outgoings from one month to the next the fluctuating payments mean that some months Danielle loses out on the parent’s work allowance of £198 a month because this only applies to those earning.
So, in months where she is seen as not earning anything she doesn’t receive the allowance and in month’s where she is seen to have earned twice to receives no extra allowance. Overall Danielle was losing out on around £500 per year because of the rigid assessment periods.
It is believed that at least 80,000 households could be similarly affected once Universal Credit is fully rolled out.
The effect of the policy on the women bringing the cases includes: one who gave up work altogether because of the instability; one who passed up a promotion and took a lower skilled job with a different employer because it offered different pay dates; one who feels very stressed by the financial instability and some months is unable to afford rent; and one who has accumulated debt and had to use food banks.
Tessa Gregory, solicitor at law firm Leigh Day, said: “Our client, like millions of others, gets paid on the last working day of the month. It is absurd that due to the DWP’s rigid way of assessing income she has not been treated as having a regular monthly wage.
“Universal Credit is aimed at supporting people back into work but she has lost out on hundreds of pounds and had to deal with wildly fluctuating monthly income.
“The Government argue that the IT system underpinning Universal Credit has to be fully automated and cannot cope with variable pay dates but that simply doesn’t reflect the reality for most employees.
“We hope that the Court of Appeal will uphold the decision of the High Court and ensure that hardworking individuals and their families do not have to bear the brunt of a badly designed computer system.”