THE appeal in R. (on the application of SG) (previously JS) v Secretary of State for Work and Pensions (Child Poverty Action Group and another intervening) [2015] UKSC 16 concerned a challenge to the cap on welfare benefits, one of the measures introduced as part of the Government's austerity-driven economic and social policy. The “benefit cap” operates to limit the amount of welfare benefits that can be received by non-working households, to the equivalent net median earnings of a working household. The Welfare Reform Act 2012 contains provisions allowing the Secretary of State to make regulations providing for a “benefit cap” scheme. It is implemented through the Benefit Cap (Housing Benefit) Regulations 2012 and operates by a reduction in housing benefit once a specified maximum amount is reached. Benefits covered by the cap include housing benefit, child benefit, and child tax credit. Once the cap is reached, no account is taken of the number of children in the family. The lawfulness of the Act itself was not challenged. The appellants’ argument was that the implementation of the scheme was discriminatory and contrary to the Human Rights Act 1998.

On the face of it, the “benefit cap” scheme is neutral but, in practice, as acknowledged by the Secretary of State, its operation is indirectly discriminatory. Families affected by the cap are predominately those with several children, living in high-cost housing areas. As explained by Lord Reed, “[t]his means that non-working households with several children, living in London, are most likely to be affected. The majority of non-working households with children are single-parent households, and the vast majority of single parents are women (92% in 2011). A statistically higher number of women than men are therefore affected by the cap” (at [2]). Thus it was argued by the appellants that the cap was contrary to Article 14 of the ECHR (prohibition of discrimination) read together with Article 1 of Protocol No. 1 (enjoyment of possessions). According to the appellants, in deciding whether there was unlawful discrimination, the position of the children of single-parent households had to be taken into account, as Article 3(1) of the UN Convention on the Rights of the Child (UNCRC) required “the best interests of the child” should be treated as a “primary consideration”.

By a majority of three to two (Lords Reed, Hughes, and Carnwarth in the majority), the court held that the cap did not unlawfully discriminate against women. Lord Reed, who delivered the leading speech, identified the appropriate test for deciding whether discrimination was unlawful in the welfare context as “manifestly and without reasonable foundation” (at [11]). It was acknowledged that the cap affects far more women than men, as usually women took responsibility for children on the break-up of relationships. According to Lord Reed, the question for the court to decide was whether the difference in treatment had an objective and reasonable justification and whether the benefit cap legislation had a legitimate aim and was a proportionate means of achieving it.

Lord Reed had no doubt that the Regulations pursued the legitimate stated aim of securing the economic well-being of the country. Encouraging benefit recipients to seek work and capping the amount a household could receive in benefits sought to achieve broader social objectives, and it was also legitimate for the Government to try and reduce welfare spending through these measures. Lord Reed then considered whether the aim was proportionate. For a family with children, the cap was the equivalent of a gross annual salary of £35,000 and half of the UK's working households received less than this amount. Whether the cap should be higher was a political question which had been the subject of detailed debate in Parliament: “It is not the function of the courts to determine how much public expenditure should be devoted to welfare benefits” (at [72]). Lord Reed also dismissed the appellant's argument that Article 3(1) of the UNCRC formed part of the proportionality assessment and should replace the test of “manifestly without reasonable foundation”. While unincorporated treaties cannot be applied in domestic law, Convention rights protected through the Human Rights Act could be interpreted “in the light of international treaties, such as the UNCRC, that are applicable in the particular sphere” (at [83]). This specific case, however, concerned the alleged discrimination between men and women and was separate from those of children. It was not unrealistic to separate the rights of the women and children as the cap affected single fathers as well as mothers.

Lord Carwarth concurred in the result but not in relation to the “best interests of the child” requirement of the UNCRC. The failure to exempt child benefit from the cap meant that children were deprived of money which had been allocated to them for reasons wholly unrelated to their needs (at [126]). As a consequence, this measure was not compatible with the UNCRC and the UK was in breach of its international requirements. Nevertheless, the breach would have to be addressed by political rather than legal means. He concluded by urging the Government to review the implications of the UNCRC and the benefit cap.

In dissent, Baroness Hale distinguished between the extensive debates in Parliament and “the decisions of the Government in working out those details” through the Regulations (at [159]). The implication was that the there is no separation-of-powers issue that should inhibit the court from assessing the implementation of the scheme. In Baroness Hale's view, it was the constitutional responsibility of the courts to safeguard against discrimination even in the area of welfare benefits, where government action was traditionally given greater leeway. It was up to the Government to justify the measure: it was not the benefit cap scheme as a whole that needed to be explained, but the fact that women were disproportionately affected by it. She drew an analogy with the definition of indirect discrimination in s. 19 of the Equality Act 2010.

Baroness Hale acknowledged the legitimacy of the Government's decision to introduce the benefit cap. She set out the Government justifications (somewhat differently from Lord Reed) as (1) to introduce greater fairness in the system between those receiving out-of-work benefits and employed tax payers; (2) to make financial savings; and (3) increase incentives to work. Both Baroness Hale and Lord Kerr concluded that the cap amounted to unlawful indirect discrimination against women. Baroness Hale was unconvinced that the scheme achieved fairness. She referred to the submission of the Child Poverty Action Group which indicated that, when in-work benefits were taken into account, families were already significantly better off in work. The cap increased “the differential which is already there” (at [192]). Moreover, the international law obligations regarding the rights of the child under the UNCRC required consideration of whether proper account was taken of the best interests of the children. According to Baroness Hale, the benefit cap scheme broke “the link between benefit and need. Claimants affected by the cap will, by definition, not receive the sums of money which the state deems necessary for them adequately to house, feed, clothe, and warm themselves and their children. Furthermore, the greater the need, the greater the adverse effect. The more children there are in the family, the less each of them will have to live on” (at [180]). Depriving children of these basic necessities of life was not in their best interests. Thus she concluded that the implementation of the benefit cap could not be a proportionate means of achieving a legitimate aim. The scheme failed to achieve fairness between working and non-working families, economic benefits could not be achieved through unjustified discrimination, and “changing the benefits culture has little force in the context of lone parents, whatever the age of their children” (at [229]). Lord Kerr, who agreed with Baroness Hale's conclusion, considered that Article 3 of the UNCRC should be directly enforceable in domestic law. He considered “that the time has come for the exception to the dualist theory in human rights conventions” (at [254]).

The narrow understanding of indirect discrimination by the majority is disappointing. The disproportionate burden of benefit cuts fall upon women and children, especially lone families. The Government's stated aims, although legitimate, provided no justification for this disproportionate adverse result.

Although this appeal was unsuccessful, it is significant for future decisions. A majority of judges supported the approach of Maurice Kay L.J. in Burnip v Birmingham City Council [2012] EWCA Civ 629, who suggested that the UN Convention on the Rights of Persons with Disabilities “has the potential to illuminate our approach to both discrimination and justification” (at [22]). Government policy is likely to come under increased scrutiny if a policy is found to contravene the UK's international law obligations.