A local authority acted illegally when it introduced strict residency criteria designed to prevent it becoming a magnet for "benefit tourists" priced out of high-cost areas of London and the south-east by welfare reforms, a judge has ruled.
Labour-controlled Sandwell council in the West Midlands brought in a policy over a year ago which prevented people on low incomes claiming council tax support unless they had been resident continuously in the borough for two years prior to the claim.
Rather than discouraging "incomers" from the south-east, however, the court heard that the policy seemed to mainly affect people who had been born in Sandwell and had strong family connections there, while also discriminating against local women affected by domestic violence.
Thousands of Sandwell residents denied council tax support since April 2013 may now be eligible to claim their money back.
In a stinging judgement, Mr Justice Hickinbotton ruled the council acted outside its powers, and failed to comply with government policy, which was to ensure local council tax support schemes provided for the most vulnerable.
In addition, the judge ruled the policy was "irrational", discriminatory on grounds of race and gender, and that Sandwell had neglected to carry out proper public consultation before it introduced the ruling, and ignored its equality duties.
Sandwell council leader Darren Cooper said the ruling was "extremely disappointing" and the council was considering whether or not to appeal.
The judicial review was brought by the charity Child Poverty Action Group (CPAG) on behalf of three women who had been denied council tax support. Two were born and brought up in Sandwell. All three were on unemployment or incapacity benefit and received a council tax bill which they were unable to pay. One was threatened with bailiffs and two were forced to leave the borough.
One of the women, Sheila Winder, who is in her early 50s, was born in Sandwell and lived there for the most of the first 46 years of her life. She moved a few miles away to neighbouring Dudley in 2008 because she was suffering from domestic abuse from her husband. She subsequently became homeless and was housed by Dudley council in a women-only hostel in Sandwell.
In April 2013 she was refused council tax support by Sandwell under the new residency rule. Although her unemployment income was £71.70 a week – reduced to £42 a week after she was sanctioned –she was sent a council tax bill for £660. When she could not pay she was sent a summons by Sandwell for £732 including costs, and threatened with a bailiff.
Winder was subsequently housed as homeless by Sandwell and under some concessions to its council support scheme introduced in April now qualifies for the full council tax reduction.
Cooper said the rule was introduced as a result of "tough decisions" the council had to make because of a £3.2m shortfall in the money it had available for council tax support when local authorities were obliged to set up local schemes to replace national council tax benefit arrangements in April 2013.
He added: "Our aim was to prioritise support to vulnerable people who've lived here continuously for two years or more at the point of making a claim and discourage people from other parts of the country moving here to take advantage of cheaper housing and adding further demands to our reduction scheme".
But the judge said that there was "no evidence that 'benefit tourists' from the south of England were or were likely to be a problem, and thus no evidence that the measure was necessary".
He noted: "There is no evidence of a single individual who has been refused a council tax reduction on residence grounds, who has moved to Sandwell voluntarily from anywhere further away than Birmingham."
All of the three claimants, he noted, had lived in Sandwell, or very close to the borough, for most of their lives in modest circumstances and that "each in her own way is or was vulnerable".
Alison Garnham, chief executive of CPAG, said: "This ruling confirms what should have been obvious to the council from the start: it cannot be sensible or right to charge people on low incomes a higher rate of council tax simply because they are new to the area.
"If Sandwell council had given any thought to this policy, or held a consultation it might have realised this earlier. Instead thousands of people have been threatened with arrears and some people, even those who like these claimants were originally born and bred in Sandwell, have been forced to move away."
Sandwell – and two other councils understood to operate similar schemes – Basildon and Tendring, in Essex – will now have to withdraw their council tax support residency tests.