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Court of Appeal confirms Universal Credit payment cycle for working claimants unlawful

Laura Banks

23 July 2020

We previously wrote about a challenge to Universal Credit taken in England, which has the potential to bring about an important change in the way that the benefit is paid to those in work.

The challenge was initially brought by four working single mums who successfully argued that the Secretary of State acted unlawfully and irrationally by making Universal Credit Regulations which fail to take account of the date monthly salaries are paid. The effect of these Regulations is that where the date of salary payments vary each month because of weekends or bank holidays resulting in two salary payments in the same month, Universal Credit payments are drastically reduced. This results in extreme fluctuations in income which causes cash flow problems with many thousands of claimants being unable to pay their housing costs and bills.

The Secretary of State challenged the decision in the Court of Appeal where it was unanimously dismissed. All 3 judges agreed that it was unlawful and irrational to make Regulations which have such a severely harmful, “perverse” effect on very large numbers of vulnerable claimants. It was acknowledged that a non- banking day salary shift is common and entirely predictable but the way Universal Credit deals with this is detrimental with some claimants then having to borrow money to make ends meet, relying on food banks and falling behind on council tax and rent. It has been said that the arbitrary system in which Universal Credit is paid has actually disincentivised work and caused widespread cash flow problems, despite being designed to make social entitlement provision fairer.

It is hoped that this case will bring about a change in the way that payments are made, particularly as it is understood the Secretary of State for Work and Pensions is not intending to appeal the decision further.

If you are a Universal Credit claimant whose salary is paid on varying dates each month and you are experiencing fluctuating payments, you are advised to seek a mandatory reconsideration on the grounds of this case and also to make a note on your Universal Credit journal. For further advice or information on this issue, please contact your local advice centre.

For legal advice on any benefit related issue, please contact Laura Banks by email on lbanks@fhanna.co.uk or phone 028 9024 3901.