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Hardy v Sandwell and DHPs

Ruth Knox
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RAISE Benefits Advice Team, Liverpool

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What are people finding about Local Authority’s approach to taking PIP/DLA into account for means test in relation to DHPs?  I’ve always assumed that since this case the Local Authority has no right to take the disability benefit into account or ask for an explanation as to how it is spent - this is what happens in Liverpool - we identify it as income and we identify a corresponding amount as expenditure on disability needs with no further explanation.  I can’t see any other interpretation of the decision.  However, I would be interested to know what happens in other parts of the country, or if colleagues dissent from my view of it.  Thanks a lot Ruth

Timothy Seaside
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Housing services - Arun District Council

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In DHP applications and financial statements generally I would almost always include PIPDL and PIPM as income, and then offset them 100% with spending on care and transport.

Hardy v Sandwell specifically finds that local authorities can treat DLA(C) as income. It reinforces the point that they must consider disregarding such income, and makes it very hard for a local authority to include DLA(C) income in bedroom tax cases. But DLA(C) is not ringfenced in the same way as DLA(M) generally is.

Where there’s earned income, or where it’s an LHA shortfall which is nothing to do with bedroom entitlement and carers, I can see that there could be situations where an authority could justify taking PIPDL into account - like when a disabled claimant has chosen to take an unnecessarily large and expensive PRS property, knowing there would be a shortfall which they could cover with their PIP.

My instinctive feeling is that it’s wrong to ask disabled people to contribute to their housing costs with PIP, but my instinctive feeling is also that it’s wrong to ask people with children to use CTC or CHB to top up their rent. However in homelessness law CTC and CHB are taken into account when considering affordability. It’s not fair.

Ruth Knox
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Yes in practice I do as you say, in on the income side and out as additional care costs on the expenses side and my Local Authority is happy.  But I have the impression that other authorities do not: they ask for details of the care expenditure and I have heard a few times the comment that Sandwell went wrong only by fettering its discretion rather than by taking the disability benefit into account per se. . 

But I have gone back to the decision and I can’t find any understanding of the decision on Issue 2 as summarised in paragraph 62 other than that when considering DHPs a council would be discriminating without justification if it took the disability income into account.

Z2K also tried (issue 4)  to argue that regardless of the ECHR and 2010 Act it was inherently irrational or contrary to the intention of the statutory scheme to take the care element into account and it was this point that was rejected. But once the discrimination arguments are engaged then to do so breaches the human rights legislation.  So I can’t read it as specifically finding that it’s possible for a council to take the care element into account.

It seems to me the judge finds that it is a breach of the law on grounds 1, 2, and 3 but not on Issue 4.  In other words it is a breach of the law but it is the human rights argument which makes it so and not the “inherently irrational “ argument. Am I misinterpreting or overlooking something here?  Ruth

Ruth Knox
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On your other point Timmy yes it would be unfair to grant a DHP for a very expensive private rent but it would be the rent figure which made it so rather than the claimants income. On the child benefit CTC argument I agree but I suppose you get into unfairness by definition once you start to consider that an amount - the Applicable Amount - which is defined as being the amount necessary to cover basic subsistence needs is then considered as available for other purposes such as a top up of rent. It’s even unfair in the case of single people on 73 10. Ruth

Ken Butler
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This is an extract from the DWP’s Discretionary Housing Payments Guidance Manual that advises how LAs should consider DLA/PIP payments -

“3.9 When deciding how to treat income from disability-related benefits such as Disability Living Allowance (DLA) or the Personal Independence Payment (PIP), you must have regard to the decision of the High Court in R v. Sandwell MBC, ex parte Hardy. This decision places an obligation on LAs to consider each DHP application on a case by case basis having regard to the purpose of those disability related benefits and whether the money from those benefits has been committed to other liabilities associated with disability.”

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/692240/discretionary-housing-payments-guide.pdf

MartinB
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Just for Info. The Homelessness code looks at all income, but there are caveats. 

The Homelessness Code of Guidance.

17.46 Housing authorities will need to consider whether the applicant can afford the housing costs without being deprived of basic essentials such as food, clothing, heating, transport and other essentials specific to their circumstances. Housing costs should not be regarded as affordable if the applicant would be left with a residual income that is insufficient to meet these essential needs. Housing authorities may be guided by Universal Credit standard allowances when assessing the income that an applicant will require to meet essential needs aside from housing costs, but should ensure that the wishes, needs and circumstances of the applicant and their household are taken into account. The wider context of the applicant’s particular circumstances should be considered when considering their household expenditure especially when these are higher than might be expected. For example, an applicant with a disabled child may have higher travel costs to ensure that the child is able to access additional support or education that they require and so this should be taken into account when assessing their essential needs, and the income that they have available for accommodation costs.

Ruth Knox
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I feel as if I am looking at this in a different way from everyone else!  Sandwell Borough Council was found to be wrong on a number of counts - failure to exercise discretion, failure to do a proper Equalities Assessment etc - but on the central issue of breach of Human Rights my reading of it is that it’s not enough to say ” We will take DLA care into account but of course if you identify the additional disability expenditure we will take that into account as well”. As a matter of fact Sandwell were willing to do this with Mr Hardy.  And my understanding of the decision on this issue is that you accept that the state has already made a decision that the disabled person needs the additional income to off-set the disability and bring them back to a level with everyone else, so if you are doing a means assessment you must ignore that income or you are discriminating unlawfully.  So I disagree with the DWP Guidance on this issue. 

On the homelessness issue, I think it’s as was said in the last couple of paragraphs of the Sandwell judgement - in ordinary English law there is no inherent reason why the care component should be disregarded but once you engage human rights issues that might well turn out to be the case. So, so long as there is no challenge to that procedure, it can continue.

I know this is a small point, and it’s a bit theoretical, because, as Timothy Seaside has already said,  most authorities seem happy if you just put it in on the income line as PIP/DLA and put it in the expenditure line as “additional disability needs” but I am really puzzled as to where I am getting it wrong, or what caveat I have overlooked in my reading of the decision.  So I would be really grateful for anything that either agrees with me or shows me what I have overlooked.  Ruth

Brian JB
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I think it was the blanket policy of taking DLA (C) into account when assessing income for DHPs that is ruled out by Hardy v Sandwell

Ruth Knox
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Yes, this is what everyone keeps telling me!. I think it is clear that the first reason why the appeal succeeded was that Sandwell had a blanket policy of taking DLA care into account and the judge ruled this was wrong. But there were a number of other issues that the judge ruled against Sandwell on, and one issue where he ruled against the intervenor (Z2K). The issue where he ruled against the intervenor was on whether it was inherently illogical in English law to exclude taking care income into account and he said no. But on the issue as to whether taking it into account was discriminatory once ECHR and Humans Right Act engaged he said it was. So as I read it, following Sandwell, it would ALWAYS be discriminatory to take it into account even if there wasn’t a blanket policy of doing so. Do you have a different interpretation of the ruling on the discrimination issue.? Ruth

HB Anorak
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The difficult part of the decision is concerned with Issue 2 (discrimination) at paragraphs 56 to 60, which can be summed up as saying the expenses that people on DLA(c) face as a result of disability are not easy to pin down in a weekly income v outgoings statement.  Attempting to do so amounts to “Thlimmenos” discrimination.  Therefore “the Council’s approach to awarding him DHPs discriminated against him because of his disability”.  But it would be reasonable for the Council to deduct from the outgoings side of the equation an amount equal to the DLA(c) provided those outgoings related to the “provision of care”.

This is contradictory and confusing.  What difference is there really between disregarding the income and excluding the related expenses on the one hand, and including both the income and expenses on the other?

I think the court is trying to say that a DLA(c) claimant might well have expenses that are both quantifiable as regular care-related outgoings (eg means tested home care charges payable to Adult Social Care) and other less easily quantifiable and more sporadic expenses which together could exceed the amount of DLA(c).  To the extent that the quantifiable expenses are met by DLA, they can be excluded from the account of the claimant’s outgoings, but the DLA also should be excluded from the income side.  That way, additional expenses over and above the amount of DLA could still be looked at.  I am really not convinced that such an approach achieves a great deal in practice that is different from including everything quantifiable on both the income and expenses side.

The decision is further confused by Issue 4 where the court declines to say that it is irrational ever to take DLA(c) into account as income in a means test.

Ruth Knox
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I don’t think it is confusing really. All that is being said in paragraph 59 is that you cannot on the one hand exclude DLA care on the income side and then include all of your additional disability expenses (including for instance the personal care charges) on the expenditure) and this is kind of self evident.  So the sensible thing to do is not to enter the DLA in the income side and not to enter the disability expenditure on the expenditure side. What a lot of people do including myself is to enter the DLA on one side and offset it completely as “disability related expenditure” on the other. This is in practice the same thing. I would regard it as a courtesy /or a “for your information “ practice rather than an acknowledgement that the LA has the right to take it into account. The only problem might arise is where a disabled person went on to claim further disability expenses but this is no different from a person without a disability having particular circumstances which lead to high heating/travelling or other costs and would have to be assessed on a case by case basis.

But the reason I started the thread was that I feel very strongly that Sandwell established that, up to the level of DLA care (or PIP Daily Living) the LA should not ask for an accounting of the expenditure but accept that it is not available for other purposes such as covering a shortfall. But I encountered a number of times the argument that all Sandwell does is say the LA should not have a blanket policy - and this seems to be what the Guidance says. I think this is wrong! I think Sandwell says you can’t do it!

If you read his summary on the discrimination issue in paragraphs 61 and 62 together I just don’t see how you can come to any other conclusion.

I wonder if the fact that the judge left to last the one issue where he did not accept the appellant’s (actually the intervener’s) argument muddies the waters. As HB Anorak says, he declined to say that in general it would always be wrong to take DLA care into account when assessing for another benefit.  So the very last words (paragraph 77) we read are “taking into account DLA care in calculating another benefit is not in itself irrational”.  But what he is saying here is that to take DLA care into account when assessing for another benefit is not irrational (Issue 4) but in the case of DHPs it is discriminatory (Issue 2)  and that it might well be that other cases would also engage the HRA.  However all he is doing is making a decision “as above”  on the facts of the DHP case.  Ruth

Timothy Seaside
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Okay, Ruth, you’ve won me over with your 6am on a Saturday posting dedication. Thank you. The clincher is in para 62 when Phillips J says he fully agrees with the conclusion of Stuart-Smith J in Rutherford; that councils were acting wrongly by including DLA(c) in household income for DHP. That seems pretty clear now.

I think it is helpful to break down the judgment into the “four” issues.
1. Policy - the judge found that Sandwell’s blanket policy of including DLA(c) was unlawful because it fettered discretion and failed to have regard to statutory guidance.
2. Discrimination - Yes, Article 14 is engaged. Including the DLA(c) is indirect discrimination, and it is not justified, so it is a breach of the Equality Act.
3. PSED and Failure to make reasonable adjustments - The judge agreed there was a clear breach of PSED, and Sandwell didn’t attempt to defend the reasonable adjustment point - but findings on issues 1 and 2 mean it doesn’t have any bearing on the outcome.
4. Statutory purpose and irrationality (Z2K’s points) - The judge concluded that the statute would have excluded DLA(c) as it does DLA(m) if that was what parliament intended. And he concluded that it was not irrational (in public law terms) to include DLA(c) in benefit calculations.

I think I was misreading it because I wasn’t fully following the layout of the judgment. But yes, as well as saying that you can’t have a blanket policy of including DLA(c), and saying that there was unjustified indirect discrimination in this case, it does appear that Phillips J is saying that councils would be wrong to include DLA(c) in household income for DHP.

So I think the judgment is useful in cases where a council refuses to accept the 100% of DLA(c) offset of “care costs” in expenditure, or where the applicant hasn’t offset the care costs themselves, and the council has treated the DLA(c) as spare money. But I can’t see it helping in a case where the council is including DLA(c) but also accepting the full offset because the net effect is that DLA(c) is being disregarded, but in a transparent way.

Ruth Knox
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Yes Timothy, totally agree with all of this analysis. Thanks for taking the time to look at the whole decision as I was really beginning to doubt my understanding. I think the problem may have arisen because Issue 1 was dealt with clearly at the beginning and Issue 4 in the final paragraphs so the crucial decision which was Issue 2 got lost in the middle. But it is worrying that the DWP guidance, on which the Local Authorities are entitled to rely, is so misleading. Probably also worrying that I’m again posting this early morning whilst on holiday.  Ruth