Samuels v Birmingham City Council [2019] UKSC 28

Ms Samuels, a single mother of four reliant on benefits, was evicted for rent arrears and found intentionally homeless by Birmingham City Council on the basis her accommodation was affordable. The Supreme Court allowed her appeal, holding the council misapplied the affordability assessment under the 1996 Order.

Facts

The appellant, Ms Samuels, was an assured shorthold tenant of 18 Dagger Lane, West Bromwich, where she lived with her four children. She was entirely reliant on social security benefits, with a total monthly income of £1,897.84, comprising housing benefit (£548.51), income support (£290.33), child tax credit (£819) and child benefit (£240). Her rent was £700 per month, leaving a shortfall of £151.49 between rent and housing benefit. After falling into rent arrears, she was given notice to quit in July 2011 and subsequently applied to Birmingham City Council as homeless under Part VII of the Housing Act 1996.

The council decided she was intentionally homeless on the basis that the accommodation had been affordable and reasonable for her to continue to occupy, and that she had deliberately failed to pay the rent. That decision was upheld on review in a letter dated 11 December 2013. Appeals to the County Court and Court of Appeal were both dismissed.

Issues

The central issue was whether the council adopted the correct approach in determining that the accommodation was “affordable” for the purposes of sections 191(1) and 177 of the Housing Act 1996 and the Homelessness (Suitability of Accommodation) Order 1996. A related issue was whether the reviewing officer had properly had regard to paragraph 17.40 of the Homelessness Code of Guidance, including whether the reference to “income support” in that paragraph should be understood as extending to benefits received in respect of children, such as child tax credit.

Arguments

Appellant and Interveners

Mr Stark, supported by Mr Westgate QC for Shelter and the Child Poverty Action Group, submitted that it was wrong in principle for the council to treat Ms Samuels’s non-housing benefits as containing a surplus available to make up shortfalls between housing benefit and rent. They argued that benefits are set at subsistence level and are designed to meet basic living needs, relying on authorities including Humphreys v Revenue and Customs Comrs [2012] UKSC 18, Mathieson v Secretary of State for Work and Pensions [2015] UKSC 47, and Burnip v Birmingham City Council [2012] EWCA Civ 629. They further submitted that paragraph 17.40 must be read as including benefits for children, to reflect the policy behind the guidance and to avoid arbitrary differences caused by changes in the structure of benefits for claimants with children after 2004. Reliance was also placed on the authority’s duty under section 11(2) of the Children Act 2004 to safeguard and promote the welfare of children.

Respondent

Mr Manning, for the council, submitted that the reviewing officer had correctly applied the 1996 Order, which required consideration of all sources of income, including all social security benefits, against relevant expenses. There was nothing in the Order excluding non-housing benefits from consideration. He argued that paragraph 17.40’s reference to “income support” should not be strained to include child tax credit, and that statements in the authorities about subsistence level were made in different statutory contexts.

Judgment

The Supreme Court, in a judgment given by Lord Carnwath (with whom Lady Hale, Lady Black, Lord Lloyd-Jones and Lord Kitchin agreed), unanimously allowed the appeal and quashed the review decision.

Lord Carnwath accepted that there was nothing in the 1996 Order requiring the exclusion of non-housing benefits from the income side of the affordability assessment. However, the Order also required comparison with the applicant’s “reasonable living expenses”, and the assessment of what is reasonable required an objective assessment and could not depend merely on the subjective view of the case officer. Affordability had also to be judged on the basis that the accommodation would be available indefinitely (citing R (Aweys) v Birmingham City Council [2009] UKHL 36).

Although he did not find it necessary to resolve the debate over whether references to “income support” in paragraph 17.40 should be read as extending to child-related benefits, Lord Carnwath held that even if they did not, the level of such benefits was not irrelevant. Benefit levels are not generally designed to provide a surplus above subsistence needs, and if benefit levels are material to assessing the applicant’s position, they were equally material in assessing reasonable living expenses for other household members, having regard to the Children Act duty. The reference in paragraph 17.40 to “a current tariff of applicable amounts in respect of such benefits” (plural) suggested that the tariff could be looked at more broadly as a starting point for assessing reasonable living expenses.

Applying this approach, the reviewing officer had erred. He had asked whether Ms Samuels had sufficient “flexibility” to bridge the £151.49 shortfall, rather than asking what her reasonable living expenses (other than rent) actually were, having regard to her needs and those of her children. The figure of £1,234.99 put forward by her solicitors was well within the £1,349.33 available to her in non-housing benefits, and in the absence of any other source of objective guidance it was difficult to see how that level of expenses could be regarded as other than reasonable.

Lord Carnwath added that, on the information available, it was hard to see on what basis a finding of intentional homelessness could properly be upheld, and expressed the hope that the council would on reconsideration accept full responsibility under Part VII for Ms Samuels and her family.

Implications

The decision clarifies the approach that local housing authorities must take when assessing whether accommodation was “affordable” under article 2 of the Homelessness (Suitability of Accommodation) Order 1996. Authorities must make an objective assessment of what constitutes reasonable living expenses, having regard to the needs of all members of the household including children, and cannot simply ask whether the applicant could somehow manage her finances to cover a shortfall between housing benefit and rent.

The judgment affirms that welfare benefit levels, which are set broadly at subsistence level, provide at least a useful starting point or benchmark for assessing reasonable living expenses, and that the duty under section 11(2) of the Children Act 2004 to safeguard and promote the welfare of children is a relevant consideration in this exercise.

The judgment is of particular significance to benefit-reliant households facing shortfalls between contractual rent and housing benefit, a phenomenon the court noted had become more common due to changes in social security policy. It is also important to local authorities, who must ensure that their affordability assessments are properly grounded in objective analysis rather than subjective judgments about household budgeting.

Lord Carnwath expressly noted the limits of the judgment: this was an appeal concerning a particular decision taken more than five years earlier, not a general review of the law and policy in the area. He also noted subsequent changes, including the Welfare Reform Act 2012 and the revised 2018 Code of Guidance, and expressed the hope that the problem of inconsistency between authorities and the shortage of reliable objective guidance would be drawn to the attention of the relevant government department.

Verdict: The appeal was allowed and the council’s review decision dated 11 December 2013 was quashed. Lord Carnwath expressed the hope that on reconsideration the council would accept full responsibility for Ms Samuels and her family under Part VII of the Housing Act 1996.

Source: Samuels v Birmingham City Council [2019] UKSC 28