A Government failure to exempt individual family carers in receipt of carer's allowance from the benefit cap amounts to "objectively unjustifiable indirect discrimination" and is not lawful, a High Court judge has ruled.
The judge also called for reconsideration to be given to whether the present benefit regulatory regime is appropriate, "having regard to the hardship it can and does produce - and the lack of real benefit to the state in terms of the objectives of the benefit cap".
Mr Justice Collins, sitting in London, said that "a bright line approach is available by simply exempting (from the cap) those single recipients of carer's allowance who provide family care".
The judge said the aim of the benefit regulations included reducing expenditure for the country's economic well-being, incentivising work and imposing a reasonable limit on the total amount a household could receive in welfare benefits.
There was unchallenged evidence that unpaid carers "made a huge contribution to society" by saving the "staggering sum" of £119 billion each year which would otherwise require public funds.
But there was evidence that, because of the hardship produced by the cap, "carers have had to cease caring".
The judge said consideration should be given to exempting "at least individual family carers such as these claimants since these are very few and the cost to public funds if the cap is to be maintained is likely to outweigh to a significant extent the cost of granting the exemption."
The ruling was a victory for two families who brought test case challenges and told the court of the "devastating impact" the cap had had on them.
In both High Court test cases, adult relatives are providing full-time care to an elderly and severely disabled grandmother.
Ashley Hurley, 26, cares for her severely disabled grandmother Mary Jarrett, 72, in Peckham, south-east London.
Both are claimants in the case and won a declaration that they are victims of unlawful discrimination by the Government, contrary to Article 14 of the European Convention on Human Rights.
Ms Jarrett, whose lung cancer is in remission, suffers from a number of conditions, including emphysema and arthritis. She has difficulty breathing and poor mobility. Ms Hurley receives £62 a week carer's allowance for the care she gives her grandmother.
Single mother Ashley was at court and described the "nightmare" impact of the cap on her.
She welcomed the judge's decision, saying: "I feel so great. It means I should still be able to care for my nan and be able to have my own place at the same time."
Ashley said she is currently living with her grandmother with her own four children, the eldest of whom is six.
"Because of the cap I can't afford my own place. Me and the kids all sleep in a bed in one room. It is a nightmare."
She said her caring role took up considerably more than 35 hours a week. "From the moment I wake up in the morning until I go to bed I am caring for nan."
The third successful claimant is Lee Palmer, who provides regular care and support to his 81-year-old grandmother, described as being in "very poor health".
Mr Palmer, who lives in the London borough of Tower Hamlets, is said to often provide "considerably more" than 35 hours a week of care, travelling to his grandmother's home five or six times a week.
The judge said Lee Palmer had his own mental health problems and was severely dyslexic and had difficulty remembering and processing numbers.
Government lawyers had pointed out that the cap only meant a reduction in his benefits of £10.45, recently risen to £11.15, per week and suggested his grandmother could pay his fare.
But he had fully explained why she could not provide him with money.
The judge said Lee himself was "on the brink of inability to provide for himself" and added: "Those responsible for the benefit cap must realise that there are indeed those whose circumstances are such that even relatively small sums can tip them into destitution."
The judge noted that if Lee was unable to continue to care for his grandmother as he now does the cost to the state of caring for her "would greatly exceed £11".
Today's ruling was critical of the way Work and Pensions Secretary Iain Duncan Smith has operated the cap in relation to carers through the Housing Benefit Regulations.
Clive Sheldon QC, for the secretary of state, told the judge the secretary of state "does not accept that he acted unlawfully in proposing the exemptions and exceptions that Parliament has considered appropriate and that are therefore specified in the legislation".
Mr Sheldon submitted the cap had the "clear and reasonable policy aims of making the benefit system fairer for taxpayers by increasing incentives to work for households in receipt of high level of benefits and helping to incentivise behaviours that reduce long-term welfare dependency and contributing to the reduction of the budget deficit".
Caoilfhionn Gallagher, who represented the families, had told the court at a two-day hearing in October that the cap was designed to apply to "workless families".
But it was being wrongly applied to people who worked hard caring for others and were in receipt of carer's allowance benefit currently of £62.10 a week for a minimum 35 hours.
Ms Gallagher explained: "To qualify for a carer's allowance, the benefit claimant has to be providing full-time unpaid care - upwards of 35 hours a week - to a severely disabled person who receives disability living allowance (DLA).
"This means that anyone receiving carer's allowance is not available to work sufficient hours to avoid the cap whilst they receive it, because they must be providing unpaid care on a full-time basis."
Some individuals are exempt from the cap, for example those who provide care to a child under 18 or to a partner.
But the cap bites once the child reaches 18, and there is no exemption for people providing full-time care to elderly parents or grandparents.
Ms Gallagher told the judge: "Both of these challenges have at their core the submission that it is unreasonable to apply a cap aimed at 'workless families' to persons recognised to be providing, at a considerable saving to the public purse, at least 35 hours of unpaid care per week to a severely disabled person."
The judge announced in court that he had decided the cap was unlawful and discriminatory in the way it was being applied to carers.
He added: "In fact, the evidence has established (the cap) is not achieving the saving of public funds.
"Indeed, on the contrary, the evidence is that it has forced a number of carers to give up caring."