The Digitisation of Welfare and Irrationality Review: SSWP v Johnson
In  EWCA Civ 778, the England & Wales Court of Appeal took the uncommon step of holding an executive decision unlawful for Wednesbury irrationality. Johnson highlights that irrationality is not merely a desperate ground of last resort for judicial review applicants. The case is also an important illustration of how substantive review may be relied upon by those affected by the digitisation of welfare.
The Johnson Applicants challenged how the Secretary of State for Work and Pensions (‘SSWP’) applied regulation 54 of the (‘the Regulations’). Regulation 54 set out how universal credit welfare benefits were to be calculated. The SSWP’s application of regulation 54 disadvantaged universal credit recipients who, like the Applicants, were scheduled to receive their monthly salary on fixed days, sometimes coinciding with non-working days. The universal credit scheme operated such that when this occurred, affected individuals would have to account for income actually received over two months within one assessment period. Their universal credit awards would therefore fluctuate significantly, inversely in relation to whether their income was assessed as unusually high or low. This feature of regulation 54 caused the Applicants difficulties in relation to the actual benefits they could enjoy, and in relation to their personal liquidity ().
As previously explained on , the High Court , holding that the SSWP had misinterpreted regulation 54. The Court of Appeal however disagreed, taking the view that the Applicants’ difficulties were not the product of misinterpretation ().
The Court of Appeal hence considered a new argument raised by the Applicants, that the ‘ongoing failure of the SSWP to include in the Regulations a further express adjustment’ for those in their position was irrational (). The Applicants’ case was that the SSWP’s decision to continue implementing the Regulations in the manner described above was unlawful because it was perverse in substance. The Court of Appeal agreed with the Applicants (). This is important for two reasons.
First, Johnson illustrates that, as noted by Rose LJ in her lead judgment, the ‘threshold for establishing irrationality is very high, but it is not insuperable’ (). It is unusual for English courts to overturn executive decisions for irrationality. The orthodox formulation from the Wednesbury case prescribes that a decision can only be held substantively unlawful if it is ‘’.
However, Johnson is a reminder that the Wednesbury irrationality standard ‘’. As Paul Daly has argued, courts have shown that irrationality review is conducted with sensitivity to context – . This was evident in Johnson. Rose LJ expressly recognised that the conflict between the SSWP’s decision and ‘one of the underlying principles of the overall [statutory] scheme’, namely to incentivise work, militated in favour of a finding of irrationality ().
Second, Johnson is notable because of the context in which the irrationality challenge succeeded. At issue was the functioning of an extensive, digitised system for the automated calculation of universal credit awards. The Court of Appeal acknowledged that deference was required, since the design of such a system was ‘an exercise of mind-boggling complexity’ (). Nevertheless, the Court of Appeal was prepared to compare in detail the disadvantages of crafting a solution for those in the Applicants’ position, with the disadvantages entailed by leaving their situation unaddressed (-).
This analysis, and its conclusion that the balance struck in favour of the latter course was irrational, will be welcomed by those sharing UN Special Rapporteur for Extreme Poverty Philip Alston’s regarding digital welfare schemes generally. Johnson illustrates how doctrines of substantive review can assist those affected by what the Special Rapporteur termed ‘’ to ensuring that these schemes comply with domestic legal requirements.
Considered in the round, Johnson demonstrates the continued relevance of irrationality as a ground of judicial review. The case shows how irrationality review, when tailored to the statutory context at issue, plays an important role in addressing emerging challenges in public administration.