JN v Secretary of State for Work and Pensions (UC): [2023] UKUT 49 (AAC) [2023] AACR 7
Upper Tribunal Administrative Appeals Chamber decision by Judge Wright on 22 February 2023.
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Reported as [2023] AACR 7
Judicial Summary
Tribunal Procedure and Practice; Precedence of decisions; Universal Credit entitlement
The appellant worked as a records assistant at a hospital and was paid on a monthly basis on the last Wednesday of each month. She made a claim for universal credit on Tuesday 28 January 2020 and, based on the real time information received from His Majesty’s Revenue and Customs (HMRC) in respect of the assessment period starting on that date, had a nil entitlement to universal credit on account of having received two salary payments in the assessment period ( on Wednesday 29 January and Wednesday 27 February). Three further decisions - dated 28 May 2020, 28 August 2020 and 28 November 2020 - came to the same conclusion in respect of later assessment periods.
At the time, the earned income calculation in Chapter 2 of Part 6 of the Universal Credit Regulations 2013 (the UC Regs), and in particular regulations 54 and 61, calculated income taking account of what was actually received in an assessment period even when this was artificially high due to ‘non-banking day salary shift’ - when two months’ salary was received in a single assessment period.
The First-tier Tribunal (F-tT) refused the claimant’s appeal and upheld the four decisions of the Secretary of State for Work and Pensions dated 28 February 2020, 28 May 2020, 28 August 2020 and 28 November 2020. The effect of those decisions was that the appellant was said to be entitled to universal credit (“UC”) of £0.00 for the UC assessment periods covered by the four decisions.
The F-tT made its decision after the decision in Secretary of State for Work and Pensions v Johnson & Ors [2020] EWCA Civ 778 (Johnson) had been decided and found that the Court of Appeal’s declaration that the earned income calculation method in Chapter 2 of Part 6 of the UC Regs was irrational and unlawful for someone in the appellant’s position could not assist the appellant.
The Upper Tribunal considered whether the Court of Appeal’s declaration in Johnson that the UC Regulations in place at the time were irrational and unlawful has legal effect for periods prior to the amendment of regulation 61 or the Court’s decision.
Held, allowing the appeal that:
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the declaration in Johnson is a binding statement by the court pronouncing upon the existence of a legal state of affairs that the earned income calculation method in the UC Regs is irrational and unlawful, the Secretary of State was required to act in conformity with that declaration, such compliance is one of the core principles of the rule of law, and in these circumstances the lack of any coercive effect in the declaration is immaterial: R(NCCL) v SSHD and FCO [2018] EWHC 975 (Admin) and Craig v HM Advocate [2022] UKSC 6 and R(Majera) v SSHD [2021] UKSC 46 considered and applied (paragraphs 28 to 33);
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notwithstanding the wording of the declaration in Johnson, the Court of Appeal was not concerned with the vires of the UC Regs when first made but rather the irrationality of the Secretary of State not later taking legislative steps to amend the UC Regs when the problem in the earned income calculation became apparent, and the Court of Appeal intended the declaration to have effect at least from the dates of the UC entitlement decisions challenged on the judicial reviews by Ms Johnson and the other claimants (paragraphs 46 and 51);
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accordingly, at the time the Secretary of State made the four entitlement decisions of 28 February 2020, 28 May 2020, 28 August 2020 and 28 November 2020, it was wrong in law for him to apply the earned income calculation method in the Universal Credit Regulations to the appellant’s universal credit claims. This is because at that time, as a matter of law, the relevant regulations in the Universal Credit Regulations were irrational and unlawful as they applied to the appellant (paragraphs 56 and 59);
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it is only the Secretary of State who can sort out the problem identified in Johnson for periods before 16 November 2020, but in so doing he cannot apply the earned income calculation method in the UC Regs as they stood before 16 November 2020 as that would be unlawful (paragraph 61).
Last updated 24 November 2023 + show all updates
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Decision selected for reporting as [2023] AACR 7
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First published.