Challenges to the ‘bedroom tax’ and DHPs

Jed Meers analyses the recent High Court ruling in Rutherford and the evolving role of Discretionary Housing Payments.

Even those working at the peripheries of social housing will be aware of the difficulties, and associated legal challenges, caused by the Coalition Government’s ‘Removal of the Spare Room Subsidy’ – known by nearly everyone else as the ‘bedroom tax.’

The Local Government Lawyer has covered its development in detail, and regular readers will be familiar with the policy’s mechanics. Its legislative underpinning is contained within the amended Housing Benefit Regulations 2006,[1] and it functions by imposing a penalty for ‘under-occupation’ based on the amount of eligible rent for the property – a 14% cut for under-occupying one room, 25% for two or more.

Having been introduced in April 2013, the policy is now comfortably past its first year in force, and despite a succession of legal challenges, remains largely intact. In the higher courts, the focus of the legal disputes has fallen on the line between statutorily exempted populations found in the reg.B13 (5)-(9) Housing Benefit Regulations 2006, and those subject to discretionary exemption though the use of Discretionary Housing Payments (DHPs). The statutory protections are limited, and only apply to relatively narrow classes of people affected by the policy (such as those serving in the armed forces, or following Burnip v Birmingham City Council [2012] EWCA Civ 629, children who cannot share a room by reason of a disability), consequently the majority of heavy-lifting is done by the previously small, locally administered DHP scheme.

The use of these payments is central to the ongoing legality of the ‘bedroom tax,’ and the latest judicial review case that has come in front of the Court, Rutherford v Secretary of State for Work and Pensions [2014] EWHC 1631 (Admin), raises some questions about their ongoing role as an exemption mechanism in the delivery of the policy.

Outline of the Case

The case revolves around the application of the ‘bedroom tax’ to the Rutherfords – a household composed of Warren Todd, who suffers from Potoki-Shaffer syndrome, and his grandmother and step-grandfather who care for Warren full-time. The care requirements of Warren were described by Stuart-Smith J as "intensively burdensome" (para.11) and their home had been "significantly adapted" to meet his needs (para.13). Warren’s grandparents are not in good health themselves, and help is provided by a professional carer who sometimes stays the night at the property in the ‘spare room’ which finds itself subject to the 14% penalty.

Although by virtue of reg.B13(5), adults who require overnight are exempted statutorily, children in Warren’s position are not. Consequently, the claimants contended that:

1. As housing benefit is protected under art.1 pt.1 European Convention of Human Rights, the policy was unlawfully discriminatory contrary to the art.14 prohibition of discrimination.
2. That the failure to exempt children who require an overnight carer, even when adults in the same position are exempted, is "manifestly without reasonable foundation" and therefore is not justified, due to: (a) Warren falling within a readily identifiable and relatively small group, and therefore being distinguishable from the broader class of disabled tenant considered in MA; (b)  Warren’s case being indistinguishable from the successful challenge in Burnip, which considered children who were unable to share a bedroom due to disability; (c) DHPs not being a satisfactory alternative to statutory exemption due to their discretionary, and often time-limited, nature.

The judgment of the Court was dominated by the consideration of DHPs. Stuart-Smith J surveys familiar ground on the wide margin of appreciation given to the Secretary of State in the proportionality exercise on art.14, especially in the "context of a scheme which was introduced to meet a compelling social and political objective at a time of extreme national financial austerity" (para.61). The most interesting element is his joining of the previous cases of R. (on the application of MA) v Secretary of State for Work and Pensions [2014] EWCA Civ 13 (a broader challenge to the discriminatory impact of reg.B13 on disabled people) and Burnip (a successful challenge to the local housing allowance scheme to disabled children unable to share a room)  – both binding on the court – where Stuart-Smith J held that "while a scheme including the use of DHPs as the conduit for payment may be justifiable, it will not be justified if it fails to provide suitable assurance of present and future payment in appropriate circumstances" (para.48).

So the consideration here was whether such an assurance existed in the current case (para.60), and the court’s assessment was that "the current DHP covers the shortfall until 6 April 2015… [and] there is no evidence to suggest that Pembrokeshire will refuse to make up the rental shortfall by further DHPs in the future" (para.17). The court goes further by suggesting that "on the information that is available to me… a decision to withhold DHPs [in this case] would appear to be unjustifiable" (para.53) and if an award had not been made to the Rutherfords, "different considerations may apply" (para.54).

Comment

What we see in this case is an extension of the thinking found in MA – namely, that DHPs can serve the same function and operate largely in the same way as a statutory exemption. There are a number of potential problems which arise from this assumption.

Firstly, there is an uneasy tension in the supposed characteristics of DHPs. The utilisation of a discretionary exemption mechanism is justified in the present case partly on the basis that it is a supple tool in comparison to a statutory exemption. Stuart-Smith J summaries this when he says, "one of the advantages of DHPs is that they provide the flexibility to sweep up [cases attributed to disability]," (para.57) and a similar position was advanced in MA when the ability of DHPs to respond to the "flexible and changing nature of disability related needs" was highlighted as a virtue (para.74 of MA). This sits oddly alongside the clear judgment of the court that the DHP scheme cannot be justified if it "fails to provide suitable assurance of present and future payments in appropriate circumstances" (para.48). Reaching this bar clearly requires a degree of permanence to the payments made – in other words, DHPs need to work to emulate the security provided by statutory exemption, rather than exhibit the flexible and changing characteristics indicative of a short-term discretionary payment.

This issue bleeds into the second potential problem. As was canvassed by Helen Mountfield QC representing the Equality and Human Rights Commission intervening in MA, if it is the case that certain classes of tenant are expected to be exempted (such as children who require carers who stay overnight), an exemption mechanism built into reg.B13 Housing Benefit Regulations 2006 would incur very minor, if any, expense; indeed, "authorities must exercise their discretion under this regulation and consider applications for DHPs in any event" (para.68 of MA). Highlighting the virtues that DHPs provide over a statutory exemption therefore becomes a little difficult. This position is underscored when the court states clearly that withholding DHPs for the Rutherfords would "appear to be unjustifiable" (para.53).

Thirdly, and again related to the two problems above, the judgment of the court throws the connection between the use of DHPs being tied to ‘localism’ and ‘austerity’ into question. Stuart-Smith J refers to MA’s assessment that "local authorities [are] accountable locally for the money they spend [on DHPs]" (para.32), but under the current rubric, the only ‘localism’ which appears to be offered to councils is the identification of appropriate cases and the interpretation of centrally determined good practice guidance. Their use is thereby, under the legal framework at least, reduced to a mechanistic function similar to simply applying a statutory exemption. The notion of ‘austerity’ is also problematic, and the formation of the policy at time of "extreme national financial austerity" (para.61) is highlighted by the Court. It is not clear how an exemption mechanism serves the objective of austerity – surely the only way is by not exempting individuals who would otherwise warrant exclusion from the policy?

Other practical questions remain following this judgment; especially with regards to DHP awards which do not cover the full deduction imposed under the regulations and provide ‘partial exemption’ from the ‘bedroom tax’ policy. This case does, however, make clear the onus on local authorities to ensure that their methods for allocating DHP payments are watertight against a challenge through the public law toolkit. As this case, and the other judicial review case MA, progress through the Courts (perhaps on a joint basis), the role of these problematic payments is certain to be considered further.

Jed Meers is a PhD student at York Law School. He can be contacted This email address is being protected from spambots. You need JavaScript enabled to view it..