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Throughout the relevant period, the father was in receipt of income support, contributory incapacity benefit and non-contributory disability living allowance. FAC |
Income support was, of course, a means-tested benefit equivalent to income-based jobseekers allowance and set at the officially prescribed subsistence level. FAC |
Following the introduction of CTC, the childrens needs were not taken into account in assessing the fathers entitlement to income support. FAC |
He claimed CTC in respect of both children but his claim was refused on the ground that the mother had the main responsibility for them. RLC |
He challenged this decision on the ground that the rule restricting entitlement to one household discriminated in favour of women. RLC |
He succeeded in the Appeal Tribunal (Ref: 201/07/453 and 08/337, 16 June 2008) but failed before Upper Tribunal Judge Jacobs in the Upper Tribunal (CTC/2608/2008, 4 February 2009) and before the Court of Appeal where the judgment of the court was delivered by Richards LJ: [2010] EWCA Civ 56; [2010] 1 FCR 630. RLC |
Child Tax Credit STA |
CTC and Working Tax Credit were introduced by the Tax Credits Act 2002 (TCA). Ratio |
CTC replaced the separate systems for taking account of childrens needs in the tax and benefits systems. Ratio |
Previously, people in work (or otherwise liable to pay income tax) might claim the childrens tax credit to set off against their income. Ratio |
This was administered by the tax authorities. Ratio |
People out of work (or otherwise claiming means-tested benefits) might claim additions to their income support or income-based jobseekers allowance to meet their childrens needs. Ratio |
This was administered by the benefits authorities. Ratio |
Under the new system, a single tax credit is payable in respect of each child, irrespective of whether the claimant is in or out of work, and is administered by Her Majestys Revenue and Customs (HMRC). Ratio |
CTC is like income support and jobseekers allowance, in that it is a benefit rather than a disregard and it is means-tested, so that the higher ones income the less the benefit, until eventually it tapers out altogether. Ratio |
But in several other respects, including the light touch and non-stigmatising way of measuring income, calculated for the year ahead based on the previous years income, with a balancing exercise at the end of the year, it is like a tax allowance. Ratio |
As the Government explained, in The Child and Working Tax Credits: The Modernisation of Britains Tax and Benefits System, April 2002, para 2.3: The Child Tax Credit will create a single, seamless system of support for families with children, payable irrespective of the work status of the adults in the household. Ratio |
This means that the Child Tax Credit will form a stable and secure income bridge as families move off welfare and into work. Ratio |
It will also provide a common framework of assessment, so that all families are part of the same inclusive system and poorer families do not feel stigmatised. Ratio |
CTC is, of course, separate from and additional to child benefit, which (at that time) was a universal flat rate benefit available to everyone with children, and also administered by HMRC. Ratio |
Like CTC, child benefit cannot be split between two claimants (Social Security Contributions and Benefits Act 1992, section 144). Ratio |
This single payment rule has been challenged but so far unsuccessfully: see R (Barber) v Secretary of State for Work and Pensions [2002] EWHC 1915 (Admin); [2002] 2 FLR 1181. Ratio |
Where separated parents share the care of their children, they may elect who is to receive the benefit. Ratio |
Failing that, HMRC has a discretion to decide who should have it, without any statutory test (Sched 10, para 5 of the 1992 Act). Ratio |
They may, therefore, allocate the benefit for one child to one household and for another child to the other: see R (Ford) v Board of Inland Revenue [2005] EWHC 1109 (Admin). Ratio |
Entitlement to CTC depends upon making a claim: TCA, section 3(1). STA |
A claim may be made either jointly by a couple or by a single person who is not entitled to make a joint claim: section 3(3). STA |
Opposite or same sex partners who are married or in a civil partnership or living together as if they were married or civil partners are a couple unless they are separated by court order or in circumstances in which the separation is likely to be permanent (section 3(5A) as substituted by paragraph 144(3) of Part 14 of... |
Joint claims are assessed on the couples aggregate income (section 7(4)(a)). STA |
Entitlement to CTC depends upon the claimant or either or both claimants in a couple being responsible for one or more children (section 8(1)). STA |
The circumstances in which a person is or is not responsible for a child may be prescribed by regulations (section 8(2)). STA |
If more than one person may be entitled to CTC in respect of the same child, the regulations may provide for the amount of the CTC for any of them to be less than it would be if only one claimant were entitled (section 9(7)). STA |
In other words, the regulations could provide for the CTC to be shared, for example between separated parents, but in fact they do not. STA |
Regulation 3(1) of the Child Tax Credit Regulations 2002 (SI 2002/2007), (as amended by article 4(3) of the Civil Partnership Act 2004 (Tax Credits, etc) (Consequential Amendments) Order 2005 (SI 2005/2919)), provides, so far as relevant: For the purposes of child tax credit the circumstances in which a person is or is... |
shall be determined in accordance with the following Rules. STA |
Rule 1 1.1 A person shall be treated as responsible for a child who is normally living with him (the normally living with test). STA |
1.2 This Rule is subject to Rules 2 to 4. STA |
Rule 2 2.1 This Rule applies where (a) a child . . . STA |
normally lives with two or more persons in (i) different households, or (ii) the same household, where those persons are not limited to members of a couple, or (iii) a combination of (i) and (ii), and (b) two or more of those persons make separate claims (that is, not a single joint claim made by a couple) for Child Ta... |
2.2 The child . . . STA |
shall be treated as the responsibility of (a) only one of those persons making such claims, and (b) whichever of them has (comparing between them) the main responsibility for him (the main responsibility test), subject to Rules 3 and 4. STA |
Rule 3 3.1 The persons mentioned in Rule 2.2 (other than the child . . .) may jointly elect as to which of them satisfies the main responsibility test for the child . . ., and in default of agreement the Board may determine that question on the information available to them at the time of their determination. STA |
As with child benefit, therefore, the parents are free to elect between themselves who is to have the CTC. Ratio |
Unlike child benefit, however, HMRC is constrained by the main responsibility test if the parents fail to agree. Ratio |
Although the Act allows for sharing, the decision not to provide for it in the regulations was deliberate. Ratio |
The Paymaster General, Mrs Dawn Primarolo, explained to Parliament (Hansard House of Commons Debates, 26 June 2002, vol 387, col 926-927): Together [the Act and the regulations] create a system that ensures that the family with main responsibility for a child will be provided with a suitable level of support, depending... |
That is similar to many current systems of support for children, and we believe that currently - it provides the most suitable means to ensure that we can focus support on raising children out of poverty. Ratio |
Our present aim is to enable one family to claim support for any particular child at any one time. Ratio |
That is the principle on which the Bill, the draft regulations and the business systems being developed are based. Ratio |
There are several sound reasons for that approach. Ratio |
Usually, the person or couple who have the main responsibility for care of a child bear more of the everyday responsibilities for the child, and meet the everyday expenditure for him or her. Ratio |
It is vital, especially for families on lower incomes, that enough support is directed to that family to lift the child from poverty, or to keep him or her out of poverty. Ratio |
The Government recognised that patterns of care may be changing, that many more families now share responsibility for children than was previously the case, and so, in future, directing support to one family might not be the right approach. Ratio |
But they had no intention . . Ratio |
. Ratio |
of making hasty or ill-considered changes. Ratio |
The question of shared responsibility for children goes wider than tax credits and affects other systems of support that recognise the needs of families with children, such as housing benefit. Ratio |
Consultation and contact with lobby groups had shown that payment of support to the family with the main responsibility for the child is seen as the most appropriate way to deal with the vast majority of families with children. Ratio |
Any change would also entail extensive and expensive IT and business systems changes. Ratio |
This no-splitting approach is in line with the approach generally adopted across the benefit system, including housing and council tax benefits, although splitting had earlier been provided for in the child tax allowances which were abolished as from 1982, in the short-lived childrens tax credits which preceded CTC, an... |
So the Government adopted a no-splitting policy having had some experience of operating the alternative. Ratio |
Under the Welfare Reform Act 2012, CTC and many other benefits will be replaced by a new benefit, Universal Credit. Ratio |
Initially this will apply only to new claims, so that existing claimants will remain on CTC until they are transferred to Universal Credit. Ratio |
The Government has announced that its current intention is to retain the no-splitting rule (Universal Credit: welfare that works, Chapter 2, para 40). Ratio |
After the decision not to provide for CTC to be split, there came the decision of the Court of Appeal in Hockenjos v Secretary of State for Social Security [2004] EWCA Civ 1749, [2005] EuLR 385. Ratio |
This concerned claims for child supplements to jobseekers allowance which had been made in 1997, long before the introduction of CTC. Ratio |
Father and mother were sharing the care of their two children roughly equally, but the mother was receiving the child benefit in respect of them. Ratio |
The father was claiming jobseekers allowance, but was denied the supplements applicable to children for whom the claimant was responsible because he was not in receipt of the child benefit. Ratio |
The regulations provided that the person in receipt of child benefit was to be treated as responsible for the child in question. Ratio |
Unlike CTC, jobseekers allowance was covered by Council Directive 79/7/EEC, article 4 of which prohibited discrimination on grounds of sex. Ratio |
The Court of Appeal held that the rule was indirectly discriminatory against fathers; that the link with child benefit could not be justified; and that treating only one parent as responsible in a shared care situation could not be justified. Ratio |
Following Hockenjos, officials in HMRC and HM Treasury conducted a review of the no splitting rule in CTC. Ratio |
They produced a Table of Policy Issues, assessing the options of Single Payment, Split Payment and Extra Payment against the criteria of Precedent, Rationale, Impact on the benefits system, Public expenditure, Support for Shared parenting, Administration and Other factors. Ratio |
The full table is annexed to Upper Tribunal Judge Jacobs decision and the columns relating to the Single payment and Split payment options are reproduced by the Court of Appeal at para 33 of their judgment (the Extra payment option no doubt being regarded by all as a complete non-starter). Ratio |
The full table is also annexed to this judgment. Ratio |
Unsurprisingly, officials concluded that there had been no material change in the balance of policies which had led to the original CTC scheme and so no further work was done. Ratio |
Upper Tribunal Judge Jacobs in the present case distinguished Hockenjos on the basis: first, that discrimination under EU law is different from discrimination under the ECHR; that cost is no excuse in EU law, but it may be a justification under the ECHR; that there were no competing claims in that case, because the mot... |
The Court of Appeal did not think that the differences between EU and ECHR law were likely to lead to materially different outcomes (para 53); but they were impressed that the Government had thought about the issue when introducing CTC and had reviewed the policy in the light of the Hockenjos case (para 55); that there... |
They therefore reached their own conclusion on justification rather than following Hockenjos: [2010] EWCA Civ 56. Ratio |
The test for justification? Ratio |
The proper approach to justification in cases involving discrimination in state benefits is to be found in the Grand Chambers decision in Stec v United Kingdom (2006) 43 EHRR 1017. PRE |
The benefits in question were additional benefits for people who had to stop work because of injury at work or occupational disease. PRE |
They were entitled to an earnings related benefit known as reduced earnings allowance (REA). PRE |
But on reaching the state pension age, they either continued to receive REA at a frozen rate or received instead a retirement allowance (RA) which reflected their reduced pension entitlement rather than reduced earnings. PRE |
Women suffered this reduction in benefits earlier than men because they reached state pension age at 60 whereas men reached it at 65. PRE |
The Court repeated the well-known general principle that A difference of treatment is, however, discriminatory if it has no objective and reasonable justification; in other words, if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the ai... |
However, it explained the margin of appreciation enjoyed by the contracting states in this context (para 52): The scope of this margin will vary according to the circumstances, the subject-matter and the background. PRE |
As a general rule, very weighty reasons would have to be put forward before the Court could regard a difference in treatment based exclusively on the ground of sex as compatible with the Convention. PRE |
On the other hand, a wide margin is usually allowed to the State under the Convention when it comes to general measures of economic or social strategy. PRE |
Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is in the public interest on social or economic grounds, and the Court will generally respect the legislatures policy choice unless it is manifestly w... |
The phrase manifestly without reasonable foundation dates back to James v United Kingdom (1986) 8 EHRR 123, para 46, which concerned the compatibility of leasehold enfranchisement with article 1 of the First Protocol. PRE |
In Stec, the Court clearly applied this test to the states decisions as to when and how to correct the inequality in the state pension ages, which had originally been introduced to correct the disadvantaged position of women. PRE |
Similarly, the decision to link eligibility for REA to the pension system was reasonably and objectively justified, given that this benefit is intended to compensate for reduced earning capacity during a persons working life (para 66). PRE |
The Grand Chamber applied the Stec test again to social security benefits in Carson v United Kingdom (2010) 51 EHRR 369, para 61, albeit in the context of discrimination on grounds of country of residence and age rather than sex. PRE |
The same test was applied by Lord Neuberger (with whom Lord Hope, Lord Walker and Lord Rodger agreed) in R (RJM) v Secretary of State for Work and Pensions [2008] UKHL 63, [2009] 1 AC 311, which concerned the denial of income support disability premium to rough sleepers. PRE |
Having quoted para 52 of Stec he observed, at para 56, that this was an area where the court should be very slow to substitute its view for that of the executive, especially as the discrimination is not on one of the express, or primary grounds. PRE |
He went on to say that it was not possible to characterise the views taken by the executive as unreasonable. PRE |
He concluded (para 57): The fact that there are grounds for criticising, or disagreeing with, these views does not mean that they must be rejected. PRE |
Equally, the fact that the line may have been drawn imperfectly does not mean that the policy cannot be justified. PRE |
Of course, there will come a point where the justification for a policy is so weak, or the line has been drawn in such an arbitrary position, that, even with the broad margin of appreciation accorded to the state, the court will conclude that the policy is unjustifiable. PRE |
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