FOURTH SECTION

DECISION

AS TO THE ADMISSIBILITY OF

Application no. 42735/02 by Joyce BARROW against the United Kingdom

The European Court of Human Rights (Fourth Section), sitting on 27 April 2004 as a Chamber composed of:

Mr M. Pellonpää , President , Sir Nicolas Bratza , Mrs V. Strážnická , Mr R. Maruste , Mr S. Pavlovschi , Mr L. Garlicki , Mr J. Borrego Borrego, judges , and Mr M. O'Boyle , Section Registrar , Having regard to the above application lodged on 22 November 2002,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,

Having deliberated, decides as follows:

THE FACTS

The applicant, Mrs Joyce Barrow, is a United Kingdom national who was born in 1943 and lives in Wrexham.

A. The circumstances of the case

The facts of the case, as submitted by the parties, may be summarised as follows.

In August 2003 the applicant turned sixty years of age. Prior to that date she was in receipt of long-term incapacity benefit (IB), a benefit payable to people incapable of work who satisfy the eligibility criteria. She had qualified for the rate of 81.85 pounds sterling (GBP) per week. She was also paid GBP 39.95 per week in disability living allowance (DLA) and GBP 15.15 in DLA care. At age 60, which is the date of entitlement to the state pension for women, she ceased to be eligible for IB. In its place she became entitled to draw her state retirement pension which, based upon her contribution record, entitled her to GBP 57.81 per week (about 62% of the maximum rate as she had only contributed for 24 years out of 39). She continued to draw DLA. As a result, the applicant is some GBP 24.04 per week worse off as a result of her transition from IB to the state pension.

The applicant complained to the Department of Work and Pensions concerning the differential treatment but was informed that nothing could be done.

B. Relevant domestic law and practice

1. National Insurance

The National Insurance Act 1946, which first established the basis for the national social security scheme in the United Kingdom, set out a system of funding under which all employers and the majority of the working population, whether employed or self-employed, are liable to pay compulsory national insurance (“NI”) contributions into the National Insurance Fund (NIF). This legislation has since been replaced, most recently, by the consolidating provisions of the Social Security Contributions and Benefits Act 1992 (“SSCBA 1992”) and the Social Security Administration Act 1992.

Section 1(2) of the SSCBA sets out the various classes of NI contribution. Of these, the largest category is Class 1 contributions which consist of earnings related contributions paid by employers and employees. Such contributions are levied as a percentage of earnings which varies according to the employee's earnings band. The NI scheme is financed on “a pay as you go” basis, that is, current NI contributions fund current benefits: thus an individual's contributions fund not his or her own benefits but those of others ( R. (Carson) v. Secretary of State for Work and Pensions [2002] 3 All ER paragraphs. 25-26).

No contributions to NI cease to be payable on attainment of the state retirement age (section 6(3) of the SSCBA).

The NIF is currently the sole source of funding for payment of state retirement pensions as well a number of other benefits, including IB. Topping up into the fund by way of Treasury Grant is possible in times of shortfall but has not occurred since 1997/1998.

2. Invalidity Benefit (IB)

The Social Security (Incapacity for work) Act 1994 amended the 1992 Act so as to include provision for the payment of IB from April 1995. Section 1 provides, as relevant:

“... (1) Subject to the following provisions of this section, a person who satisfies either of the following conditions is entitled to short-term incapacity benefit in respect of any day of incapacity for work which forms part of a period of incapacity for work.

(2) The conditions are that -

(a) he is under pensionable age on the day in question and satisfies the contribution conditions specified for short-term incapacity benefit in Schedule 3, Part 1, paragraph 2;

...

(4) In any period of incapacity for work a person is not entitled to short-term incapacity benefit for more than 364 days.

(5) Where a person ceases by virtue of subsection (4) above to be entitled to short-term incapacity benefit, he is entitled to long-term incapacity benefit in respect of any subsequent day of incapacity for work in the same period of incapacity for work on which he is not over pensionable age.”

IB is a contributory benefit funded out of NI contributions, designed to compensate a person for financial loss as a result of their inability to work due to ill-health or disability. It is therefore available throughout the assumed working life. As a result the period of entitlement is directly linked, for men and women, to the period of entitlement (if any) to receive the state retirement pension.  When an individual reaches state pension age any entitlement to such a pension takes the place of IB. A full basic retirement pension pays GBP 77.45 per week, while the standard rate of IB is GBP 72.15.

3. State retirement pension

At the relevant time, section 122 of the Social Security Contributions and Benefits Act 1992 defined “pensionable age” as:

“(a) the age of 65, in the case of a man; and

(b) the age of 60, in the case of a woman”

Women in the United Kingdom therefore became eligible for a State pension at the age of sixty, whereas men are not eligible until sixty five.

Section 126 of the Pensions Act 1995 provides for the equalisation of state pension ages for men and women to the age of 65. The state pension age for women will increase gradually from 2010 and the equalisation will be complete in 2020. At the same time, the age until which women are liable to pay national insurance contributions will gradually increase in line with the increase in the state pension age.

Section 51(a) of the Sex Discrimination Act 1975 provides that any act done to comply with legislation passed before the Sex Discrimination Act is not unlawful under that Act. Therefore, the difference in state pension ages does not constitute sex discrimination for the purposes of the legislation.

C. European Union law

Council Directive 79/7/EEC of 19 December 1978 provides for the progressive implementation of the principle of equal treatment for men and women in matters of social security. However, in Article 7(1)(a) the Directive provides for derogation in the matter of “the determination of pensionable age for the purposes of granting old-age and retirement pensions and the possible consequences thereof for other benefits.”

In its judgment in Case C-328/91 Thomas and Others [1993] ECR I-1247 the European Court of Justice (ECJ) ruled that where, pursuant to Article 7(1)(a), a Member State prescribed different pensionable ages for men and women for the purpose of granting old-age and retirement pensions the scope of the permitted derogation defined by the words 'possible consequences thereof for other benefits' was limited to the forms of discrimination existing under other benefits schemes which were necessarily and objectively linked to the difference in pensionable age. That was the position where such forms of discrimination where objectively necessary to avoid disturbing the financial equilibrium of the social security system or to ensure coherence between the retirement pension scheme and other benefit schemes.

In Case C-92/94 in Secretary of State for Social Security v. Graham [1999] ECR I-2521, the ECJ considered the predecessor of IB, namely invalidity allowance and invalidity pension (both contributory benefits paid from NI contributions until pensionable age or until the cessation of any deferment in pension). It found that the measures were justified by both considerations of financial equilibrium and overall coherence and that the discrimination was necessarily linked to the difference in pensionable age for men and women, inter alia as invalidity benefit was designed to replace income from occupational activity and was replaced by a retirement pension at the age at which the recipients would in any event stop working.

The derogation was not however held to justify pension-aged linked discrimination in a number of benefits e.g. in R. v. Secretary of State for Social Security, ex parte Taylor [1999]  ECR I-8955, the ECJ held that the provision of winter fuel allowances for the elderly was not necessarily linked to the difference in statutory age of retirement for men and women and in R. v. Secretary of State for Health ex parte Richardson [1995] ECR I-3407 the ECJ found that the discrimination in age entitlement to free prescriptions was not objectively justified to ensure coherence between the retirement pension system and the regulations concerning prescriptions and was not necessarily linked to the difference between pensionable ages for men and women.

In the Case C-9/91 The Queen v. Secretary of State for Social Security , ex parte Equal Opportunities Commission [2000] ECR I-3701 (“the EOC case” concerning reference for a preliminary ruling from the High Court relating to the differing contribution periods applicable to men and women determined according to pensionable age) the ECJ found that:

- Article 7(1)(a) had to be interpreted as authorising the determination of  a statutory pensionable age which differs according to sex for the purposes of granting old-age and retirement pensions and also forms of discrimination which are necessarily linked to that difference;

- Inequality between men and women with respect to the length of contribution periods required to obtain a pension constitutes such discrimination where, having regard to the financial equilibrium of the national pension system in the context in which it appears, it cannot be dissociated from a difference in pensionable age;

- In view of the advantages allowed to women by national pension systems, in particular as regards statutory pensionable age and length of contribution periods, and the disruption that would necessarily be caused to the equilibrium of those systems if the principle of equality between the sexes were to be applied from one day to the next in respect of those periods, the Community legislature intended to authorise the progressive implementation of that principle by the Member States and that progressive nature could not be ensured if the scope of the derogation authorised by Article 7(1)(a) were to be interpreted restrictively. (Summary of judgment).

COMPLAINTS

The applicant complains that British social security legislation discriminates against her on grounds of sex, because she lost entitlement to IB when she reached the age of sixty, whereas a man in the same situation would continue to be entitled to the benefit until the age of sixty five. Whilst the applicant has received a state pension from the age of sixty, the amount she is entitled to receive is less than the amount she previously received in Incapacity Benefit.

THE LAW

The applicant complains that that she has lost her entitlement to IB at age 60 whereas a man could continue to draw the benefit until age 65. The relevant provisions of the Convention provide:

Article 14 of the Convention:

“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”

Article 1 of Protocol No. 1:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

A. Article 35 § 1 of the Convention – exhaustion of domestic remedies

The Government submitted that the applicant could have taken judicial review proceedings arguing that, as a matter of EC law, the derogation in Article 7(1)(a) of Council Directive 79/7/EEC did not justify continued discrimination in the provision of IB and that the linkage of IB to pensionable age was disproportionate in light of changed social conditions. They argued that the case-law showed that the State had to show that the linkage to pensionable age was necessary for genuine reasons of financial equilibrium or structural coherence and pointed to application of the directive to remove pension age-linked discrimination in a number of benefits e.g. free prescriptions for the elderly and winter fuel allowances.

The Government further submitted that the applicant could have applied to the High Court arguing that the refusal to pay her IB after the age of 60 was inconsistent with her human rights as set out in the Human Rights Act 1998, seeking a declaration of incompatibility under section 4. This would trigger special powers authorising Ministers to change primary legislation by secondary legislation where possible and where any change could only be made by primary legislation, the making of the declaration invariably led to the prioritisation of such remedial legislation. Thus a successful case would produce real, practical remedies. As the applicant had not brought her complaints, even in substance, to any domestic court and tribunal which were best placed to deal with such complex disputes, they submitted that she had not complied with the requirement to exhaust domestic remedies under Article 35 § 1 of the Convention.

The applicant stated that she had written to the Prime Minister who had directed her to the Department of Work and Pensions which had informed her that there was nothing to be done. They had not informed her of any possibility of taking the proceedings which they now referred to.

The Court reiterates that the rule of exhaustion of domestic remedies referred to in Article 35 § 1 of the Convention obliges applicants to use first the remedies that are normally available and sufficient in the domestic legal system to enable them to obtain redress for the breaches alleged. The existence of the remedies must be sufficiently certain, in practice as well as in theory, failing which they will lack the requisite accessibility and effectiveness. Article 35 § 1 also requires that the complaints intended to be brought subsequently before the Court should have been made to the appropriate domestic body, at least in substance and in compliance with the formal requirements laid down in domestic law, but not that recourse should be had to remedies which are inadequate or ineffective ( e.g. Akdivar and Others v. Turkey, no. 21893/93, §§ 65-67, ECHR 1996-IV; Aksoy v. Turkey , no. 21987/93, §§ 51-52, ECHR 1996-VI).

Regarding the Government's arguments that the applicant should have taken judicial review proceedings invoking the equality provisions in the EU Directive, the Court notes that Article 7(1)(a) provides a specific derogation in respect of discrimination linked to the existence of different pensionable ages. Furthermore, in the EOC case, the European Court of Justice held that the derogation was not to be interpreted restrictively, emphasising the purpose of the provision as being to enable States to make progressive changes to their systems without disturbing their equilibrium. The United Kingdom has acted with due reliance on this position in gradually phasing in equalisation of its present system. The Court is not persuaded in these circumstances that a challenge under the Directive would stand any realistic prospect of success, in particular since in the case of Secretary of State for Social Security v. Graham [1999] ECR I-2521, the ECJ found that the difference in treatment disclosed by the predecessor of IB, namely invalidity allowance and invalidity pension, was justified by both considerations of financial equilibrium and overall coherence and could be considered as necessarily linked to the difference in pensionable age for men and women.

Nor is the Court minded to change the view expressed in its previous cases that a declaration of incompatibility issued by the domestic courts to the effect that a particular legislative provision infringed the Convention cannot be regarded as an effective remedy within the meaning of Article 35 § 1. As stated in Hobbs v. the United Kingdom ((dec), no. 63684/00, 6 June 2000):

“In particular, a declaration is not binding on the parties to the proceedings in which it is made. Furthermore, by virtue of section 10(2) of the 1998 Act, a declaration of incompatibility provides the appropriate minister with a power, not a duty, to amend the offending legislation by order so as to make it compatible with the Convention. The minister concerned can only exercise that power if he considers that there are 'compelling reasons' for doing so.”

The Government's arguments have not given any basis for departing from this analysis in the present case.

Consequently, the Court considers that the Government have failed to establish that either of the domestic remedies referred to is sufficiently “effective” so as to be capable of providing the applicant with redress for her complaint, and so as to require exhaustion under Article 35 § 1 of the Convention.

The Court therefore rejects the Government's preliminary objection.

B. Article 14 of the Convention in conjunction with Article 1 of Protocol No. 1

The Government accepted that Article 1 of Protocol No. 1 applied to the case and that Article 14 was applicable to any discrimination in relation to the availability of benefits such as the IB, funded from the NIF. They submitted that the differential age for men and women had, however, an objective and reasonable justification. They emphasised that the social, historic and economic basis for the provision of the state retirement pension, as well as the decision to equalize the age progressively from 2010-2020 involved complex social and economic judgments in respect of which the Government enjoyed a broad margin of appreciation. It was not a simple case of sex discrimination but involved issues of fair balance under Article 1 of Protocol No. 1 where the Court had stated that it would respect the legislator's assessment in such matters unless it was devoid of reasonable foundation.

The Government submitted that Parliament decided to implement the reform to equalize state pensionable ages from 2020 as the measure had enormous financial implications both for individuals and the State. In particular, sudden change would adversely affect the interests of women who had been expecting to receive a state pension at age 60 and a long transitional period gave time for people to adjust their expectations and arrange their affairs accordingly. Nor would it be economically feasible for the Government to provide all 60-year-old men with pensions pending equalisation in 2020 as it would involve the diversion of substantial resources from other State needs (an estimated cost of GBP 75 billion). After a full public consultation exercise, the Government decided to bring the age up to 65 for all based on the considerations that people lived longer and healthier lives, there would be more pensioners supported by fewer people of working age, public expenditure on pensions was set to double by 2035 and occupational schemes were predominantly equalising at the age of 65 already. They pointed out that the European Union had accepted that Member States must be allowed a period of transition to plan and implement the move to equal ages. The United Kingdom's plans were in line with other developed nations and the European Commission had never suggested that its measures were in any way deficient or disproportionate but had impliedly accepted them.

The Government furthermore submitted that the linkage of the IB to pensionable age was objectively justified by the needs of financial equilibrium and systemic coherence. If IB were to be paid to women from the age 60 to 65 it would lead to significantly increased annual expenditure and such costs could affect the level of benefits paid from the NIF. As regarded systemic coherence, the linkage reflected that the purpose of the benefit was to protect against loss of employment up to retirement. It was for the State to set general conditions of entitlement to benefits and Article 1 of Protocol No. 1 could not be relied upon to obtain an improved benefit (i.e. pension at IB levels). It would also not be possible to change the linkage by setting all IB entitlements as lasting to age 65 as this would produce incoherent results and impact adversely, inter alia , on those women with more complete pension contribution records than this applicant who would find it more advantageous to receive their pension early and on the interests and fair treatment of other contributors to the NIF, particularly male contributors who were generally disadvantaged by the present scheme. They also pointed out that the discrimination complained of in this case had a very narrow compass, affecting only some women between age 60 and 65, in the context  of a scheme whose overall effects were in fact to discriminate in favour of women.

The applicant submitted that it was grossly unfair that she was worse off than a man in her position of the same age. The difference in benefit received was of considerable importance to her. She pointed to the Government's own White Paper on the subject which referred to the difference in state pension ages as “the last glaring inequality in the Government's treatment of men and women” and to measures introduced by the European Union requiring equality of treatment in benefits. The change in the law which would take effect in 2020 would be far too late to benefit her.

Having regard to the applicant's complaints and the parties' submissions, the Court finds that serious questions of fact and law arise, the determination of which should depend on an examination of the merits. The application cannot be regarded as manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. No other grounds for declaring it inadmissible have been established.

For these reasons, the Court unanimously

Declares the application admissible, without prejudging the merits of the case.

Michael O'Boyle Matti  P ellonpää Registrar President