Benefit sanctions handed out to thousands of people ‘unlawful’

The Court of Appeal dismissed a legal challenge by the Government

The Court of Appeal quashed the Government's legal challenge (AFP/Getty Images)

Sanctions imposed on thousands of benefit claimants for not taking part in the DWP’s so-called “back-to-work” schemes are unlawful, a court has ruled.

Three Court of Appeal judges upheld an earlier decision by the High Court, potentially paving the way for millions in refunds to people who had their incomes cut while they were unemployed.

After a previous Supreme Court judgment ruled some sanctions unlawful the Government passed a new law to make them legal.

But ministers argued that the new law also retroactively applied to people whose sanctions had been imposed before the law was passed.

The High Court and Appeal Court have now both ruled that the retroactive legislation is not lawful, however.

“We have … held - upholding the decision of the High Court - that in the cases of those claimants who had already appealed against their sanctions the Act was incompatible with their rights under the European Convention on Human Rights,” Lord Justice Underhill said.

“Under the Human Rights Act that 'declaration of incompatibility' does not mean that the 2013 Act ceases to be effective as regards those claimants; it is up to the Government, subject to any further appeal, to decide what action to take in response."

Stephen Crabb has recently been appointed as the new Work and Pensions Secretary (AFP/Getty)

The sanctions had originally been ruled unlawful because a court said the Government had not provided sufficient information to claimants on how to make representations before benefits were stopped.

That ruling was won by university graduate Cait Reilly, from Birmingham, who challenged having to work without wages at a local Poundland outlet.

The sanctions system has been widely criticised, including by MPs on the Work and Pensions Select Committee. A report by the committee suggested the system might be 'purely punitive' and not aimed at helping people find work.

The Government had originally feared that up to £130 million could be paid back in refunds, but the DWP now believes it will only have to pay back under £2 million because of the limited scope of the judgement.

The latest court judgement is the latest in a string of legal setbacks for the Government’s benefit reforms.

The controversial “bedroom tax” was branded “discriminatory” and “unlawful” by a court in January of this year.

Last month the Department also lost a legal challenge to keep problems with Universal Credit under wraps after a freedom of information request from campaigners.

A spokesperson for the DWP said: “It's only right that jobseekers do all they can to find work while claiming benefits. We are considering the judgment.”

Additional reporting by PA