Four single working mothers have successfully challenged the government in the High Court over its universal credit benefits system.
The women had lost hundreds of pounds in benefits each year and had seen large variations in universal credit awards because of the dates on which their payday and benefit assessment periods fell.
If the mothers were paid early one month, they were treated as receiving two monthly wages in one assessment period and would receive a smaller benefit payments, causing cash flow difficulties.
The Department for Work and Pensions (DWP) said the way income was being assessed was lawful, and that the problems were an issue for employers rather than the government.
Tessa Gregory, solicitor from Leigh Day who represented one claimant, said: “My client is a hard working single mum doing her very best to support her family. She is precisely the kind of person universal credit was supposed to help, yet the DWP designed a rigid income assessment system which left her £500 out of pocket over the year and spiralling into debt due to a fluctuating income.
“Quite rightly the court has found that the Secretary of State has been acting unlawfully and ruled that a correct interpretation of the regulations would not lead to such absurd results.
“It is extraordinary that when this issue was first raised, the Secretary of State did not act quickly to remedy the problem, instead choosing to fight these four women in court arguing that the system was fit for purpose despite the hardship being caused to working families.
“This is yet another demonstration of how broken Universal Credit is and why its roll out must be stopped.
“In light of the judgment, Amber Rudd must take immediate steps to ensure that no other claimants are adversely affected and she should also ensure all those who have suffered because of this unlawful conduct are swiftly and fairly compensated.”
The government's defeat comes as work and pensions secretary Amber Rudd set out a fresh approach to the highly criticised universal credit scheme.
Rudd said the government will not extend the two-child limit for children born before April last year and will begin a pilot to support 10,000 on to universal credit.
She also announced pilot schemes to make more frequent payments for new claimants, a new online system for private landlords and a more flexible approach to childcare provisions.