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High Court Finds DWP Unlawful on UC Assessments

In a test case victory for a group of working lone mothers in January, the High Court found that the way the Department for Work and Pensions (DWP) has been assessing income from employment through its Universal Credit (UC) work assessment periods is unlawful.

The court ruled that the DWP has been wrongly interpreting the universal credit regulations. They said in their judgment that treating claimants as having earned twice as much as they do if they happen to receive two paycheques in one monthly assessment period, and as having no earnings in the next assessment period is “odd in the extreme” and “could be said to lead to nonsensical situations". They added that the DWP’s incorrect interpretation of the regulations had caused “severe cash flow problems for the claimants, living as they do on low incomes with little or no savings”.

The judicial review case challenged the rigid, automated assessment system in universal credit which meant mothers lost several hundreds of pounds each year and were subject to large variations in their universal credit awards because of the dates on which their paydays and universal credit 'assessment periods' happened to fall.

Flaws in the system denied working parents the additional financial support that they are entitled to so as to help them in work and ensure that work always pays. The severe fluctuations in their universal credit awards and therefore their total monthly income also caused major cash flow difficulties for parents on very low incomes, leading to them falling into debt and, for some, having to choose between paying their rent or paying their childcare costs.

The DWP refused to adjust the mothers’ assessment periods or to attribute monthly wages paid early to the actual assessment period in which they were earned, so as to enable them to avoid varying awards and cash losses. During the court proceedings the Secretary of State argued that despite the hardship being caused, the way in which income was being assessed was lawful, it made sense given the automated nature of Universal Credit and that this was an issue which employers should remedy rather than the DWP.

These arguments were rejected by the Court which found that correctly interpreted, the regulations mean the DWP can and should adjust its calculation of universal credit awards when “it is clear that the actual amounts received in an assessment period do not, in fact, reflect the earned income payable in respect of that period”. In other words, wages are to be allocated to the month in which they were earned, rather than to the assessment period in which they were received.

In light of the judgment, Amber Rudd must take immediate steps to ensure that no other claimants are adversely affected and she should also ensure all those who have suffered because of this unlawful conduct are swiftly and fairly compensated.”