High Court finds council policy on disability living allowance and DHPs "unlawful"

A local authority’s policy of taking into account the care component of disability living allowance when assessing the amount of a discretionary housing payment (DHPs) was unlawful, a High Court judge has ruled.

In the case of Hardy, R (on the application of) v Sandwell Metropolitan Borough Council [2015] EWHC 890 (Admin) the claimant, Mr Hardy, and his wife lived in a three-bedroom council house which had been adapted to help them deal with their disabilities.

Mr and Mrs Hardy were entirely reliant on state benefits for their income. Until April 2013, the rent for their house was discharged in full by housing benefit.

In April 2013 regulations came into force introducing housing benefit "size criteria" for public sector accommodation. The effect of the "spare room subsidy" – or "bedroom tax – in this case was that the house was deemed to be under-occupied.

As a result, Mr Hardy's housing benefit entitlement was automatically reduced by 25%, leaving a shortfall of £23.32 per week. The claimant applied to Sandwell for DHPs to make up the shortfall.

The council calculated that Mr and Mrs Hardy's income, excluding the mobility component of their disability living allowance ("DLA(m)"), but including the care component (“DLA(c)”), exceeded their expenses by £16.63 per week.

Assuming that that surplus income could be applied towards their rent, Sandwell awarded DHPs at the rate of £6.69 per week, a decision which it confirmed on 13 September 2013 after a second reconsideration.

Mr Hardy challenged that decision by way of judicial review on the grounds that:

1. Sandwell’s policy of taking DLA(c) into account as a matter of course in assessing the rate of DHPs to award was contrary to the Department for Work and Pensions' Discretionary Housing Payments Guidance Manual Including Local Authority Good Practice Guide issued in April 2013 ("the DHP Guidance") and an unlawful fetter on the council's discretion;

2. the council's decision constituted unlawful discrimination arising from disability contrary to Article 14 of the European Convention on Human Rights (ECHR);

3. the council violated the Public Sector Equality Duty imposed by section 149 of the Equality Act 2010; and
4. failed to make reasonable adjustments to its policy as required by section 29(7) of the 2010 Act.

Mr Justice Phillips upheld Mr Hardy’s claims and quashed Sandwell’s decisions.

The judge ruled that the local authority’s policy of always taking into account DLA(c) as income when assessing awards of DHP, as reflected in the Sandwell Policy, failed to have due regard to the DHP Guidance, constituted a failure to exercise the council's discretion and fettered any future exercise of that discretion.

He also concluded that the council’s approach was an example of indirect or Thlimmenos discrimination because it treated disabled applicants and their disability-related income in exactly the same way as it treated others and their non-disability related incomes, giving rise to unfavourable treatment to the disabled applicants.

Mr Justice Phillips added that given that the discriminatory effect of the HB size criteria on disabled persons was only justified by the availability of DHPs to "plug the gap", and given that paragraph 2.7 the Good Practice Guide referred to additional funding having been allocated for these purposes, it was “difficult to see any reasonable justification for the council's approach, nor that it is a means of achieving a legitimate aim, let alone a proportionate one”.

Neeraj Sharma, director – governance at Sandwell, said: “We welcome this judgement. Like many other local authorities, we took the care component of DLA into account as income when calculating DHP. Sandwell was used as a test case.

"This now clarifies the situation for us and for other councils up and down the country. We will be changing our policy to ensure DLA is no longer taken into account.”

Fiona McGhie, the Hardys’ lawyer at Irwin Mitchell, claimed that the decision could go on to have wider consequences for many other local authorities across England and Wales.

She said: “The council’s policy has been struck down as being unlawful. Where the bedroom tax leaves a black hole in a disabled person’s household budget – the council cannot demand that they fill that black hole with DLA.”

McGhie added: “This decision is an important one which provides important clarity on whether councils should include disability related benefits as income when considering applications for DHP to help with housing costs.”