Legal Challenge Against ‘Irrational’ Universal Credit Payment System

The High Court will hear a legal challenge tomorrow (Tuesday 27^th & 28th November 2018) against the government’s Universal Credit payment system which has left some families worse off and coping with dramatically fluctuating income from month to month because of its rigid, inflexible assessment system.

Danielle Johnson, 25, from Keighley West Yorkshire, is a single mum who works part-time as a dinner lady and receives Universal Credit to top up her income. She is challenging the government via judicial review along with three other women in a similar situation.

Danielle is represented by Leigh Day and the other three women are represented by the Child Poverty Action Group (CPAG). Their cases are due to be heard together in the High Court at the Royal Courts of Justice building in London on the 27 and 28 November 2018. This is the second judicial review of Universal Credit following the High Court’s finding in June of last year that the system was unlawfully discriminating against severely disabled persons.

Danielle, like many employees, is paid on the last working day of the month. However, her monthly UC assessment periods are rigid – running from the last day of each month, meaning that if she is paid before the last day of the month, because payment falls on a weekend or non-banking day, she is assessed as having been paid twice that month, and not at all the next month. Claimants are unable to change their assessment period dates. 

This has resulted in her receiving fluctuating UC payments throughout the year making it very hard to budget from one month to the next. It has also caused her to be around £500 worse off annually due to the fact that she is entitled to ‘work allowance’ as a parent. The work allowance is a disregard of £198 per month of a parent’s monthly earnings so in months where she is treated as having no earned income, she loses the whole benefit of the work allowance. In months where she is treated as having double income, she does not receive any extra work allowance.

As well as arguing that the UC payment system is irrational, and that the issues with varying pay dates could have been easily solved if properly considered, Danielle will also argue that the system is discriminatory because it disproportionately affects single parents, who are mainly female.

Danielle said:

“I have never been this financially unstable before, to the point of being unable to afford my rent and having to go into my overdraft when buying food. It is getting me into a vicious cycle of debt. Universal Credit is supposed to be simpler and fairer, but my experience of it is the opposite. I’m doing my best working part-time to make ends meet so that I can look after my daughter. I thought the government was supposed to help and support people like me trying to get back to work but I have found it to be the opposite.”

Tessa Gregory, partner at law firm Leigh Day, added:

“It is very clear through the multitude of problems reported that Universal Credit is a broken and ill-thought out system. Universal Credit is supposed to “make work pay”. It was purportedly designed to assist those in work being paid on a regular monthly basis, yet flaws in the system mean that our client, who has a regular monthly salary paid like many on the last working day of the month, is struggling to support her family. She has been left wondering why she ever went back to work, it is an absurd situation.  

“Our client has repeatedly asked the government to address this problem, but they have refused to take action, so our client has been forced to take her case to court. It is important that this issue gets addressed as soon as possible as once Universal Credit rolls out fully the numbers affected will run into the tens of thousands if not more.”

Child Poverty Action Group’s solicitor Carla Clarke said:

“Universal credit is promoted as a benefit that incentivises work but in practice its rigid assessment period system undercuts that claim. Our clients have been left repeatedly without money for family essentials simply because of the date of their paydays.  One of them, for example, did her utmost to find a workaround but ultimately had to decline a promotion in a job with good prospects when her then contract came to an end just to escape the trap.  We say that the DWP’s refusal to alter our clients’ assessment period dates to avoid this problem discriminates against working parents - one of the two groups who are entitled to a work allowance - as well as being irrational and undermining one of the stated purposes of universal credit- to make sure that work always pays.  This is a fundamental defect in universal credit and an injustice to hard-working parents and their children that must be put right for our clients and everyone else affected.”