Legal Levy

carolina bracken, 4 July 2012

Two prisoners lost their High Court battle yesterday, as Mr Justice Sales rejected their challenge to the legality of a levy on prisoners’ wages. Reaction to the decision varied from delight to disappointment. Yet, in finding for the Secretary of State, the Court merely confirmed the legality of the scheme; it did not endorse the policy behind it.

The Facts

The case involved two separate judicial review claims, brought by two unnamed prisoners in open prisons. The Claimants challenged the legality of a levy scheme, which makes deductions from prisoners’ wages to pay to Victim Support. The scheme applies to the few hundred prisoners working on release schemes outside prison, and deducts 40% of all earnings above £20 [25] (brackets relate to judgment paragraphs).

The first prisoner, ‘S’, is a 40 year old male serving an indeterminate sentence. He has been privately employed in full-time manual work outside the prison since June 2011, and uses a small car to get to work. S had been granted a partial exemption from the full effect of the levy to assist him with fuel costs, however his weekly earnings had still plummeted from £210 to £140 [29]. Consequently, S finds it “extremely hard” to cover the expenses of running his car and save any remainder for his family or his release. Were he not working outside the prison, he may be better off financially, and eligible to receive money towards travel costs for day release.

The second claimant, ‘KF’, is a mother who is due to be released on 9 August 2012 [3]. KF attends college on release from prison twice a week, and has chosen not to seek part-time work outside prison because of the possible impact of the levy, travel costs, and other associated expenses.

The Legal Framework

The Prison Service Instructions under challenge were PSI 48/2011 (taking effect from 8 August 2011) and its replacement, PSI 76/2011 (taking effect from 1 January 2012), which, along with the Prisoners’ Earning Act 1996 (PEA), establish and regulate the deductions regime [1].

The Instructions, it was submitted, are unlawful on the grounds that they violate Article 1 of Protocol 1 (“A1P1”, protection of property) ECHR [2], Article 7 (no punishment without law) and Article 14 (prohibition of discrimination) [3].

The PEA 1996 Regime

Under PEA 1996, s.1, where a prisoner receives enhanced wages above a prescribed amount, having deducted income tax, national insurance, and other payments such as Child Support, “the governor may make a deduction from those earnings” of  a proportion specified (s.2(1)). Though s.2 sets out a number of purposes for which amounts may be deducted, in an effort to achieve maximum efficiency, the Ministry of Justice (MoJ) decided not to split funds amongst different objectives and prioritised victim support (s.2(1)(a)). A threshold of £20 was suggested, above which a deduction of 40% could be made for all eligible prisoners [9].

Although the PEA scheme did feature in the much hyped Breaking the Cycle consultation in December 2010, discussion was “limited”, as the proposal was one “among many” and “at a high level of abstraction” [10]. Nonetheless, in June 2011, amendments were made to the Prison Rules in order to introduce the £20/40% levels proposed. The new PSI, PSI 48/2011, explained that, while “Government policy is that levies should be made…it would be open to Governors to decide not to do so in a particular case, for example where there are very exceptional circumstances” (emphasis added, para.1.10). This was somewhat tempered by the accompanying statement of policy: “we anticipate that exemptions from the levy will be infrequent and will only be granted in very exceptional circumstances.”

In December 2011, the Secretary of State issued PSI 76/2011, to come into effect and replace PSI 48/2011 on 1 January 2012. With a nuanced difference in emphasis, governors’ discretion could now be exercised in “exceptional”, rather than “very exceptional” circumstances (para 1.11), and the new Annex B set out non-exhaustive guidance as to when such circumstances might occur [24]. These included where a prisoner or their family would suffer “severe financial hardship” as a result of the levy, with particular consideration given to whether “the prisoner normally (i.e. when not in prison) has responsibility for the care…of a child…[or whether the levy] would damage the prisoner’s relationship with that child”.

A1P1

The Claimants contended that the restrictive regime, allowing only for a reduced levy in ‘exceptional’ circumstances, is too intrusive an interference with prisoners’ A1P1 rights. In order to be lawful, the Claimants argued, the Instructions should allow prison governors a much greater discretion to respond to the individual circumstances and needs of prisoners.

Under A1P1, “[e]very natural or legal person is entitled to the peaceful enjoyment of his possessions”, although this provision “shall not…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”.

Although Sales J had no hesitation in finding that the deductions are “closely analogous to a tax”, he noted that “the state is afforded a wide margin of appreciation…in setting rules in contexts which call for broad social and economic judgments” [45]. Looking to Strasbourg jurisprudence, he commented, “[t]he ECtHR will only find that the state has acted in violation of A1P1” if its judgment is “manifestly without reasonable foundation” (James v United Kingdom (1986) 8 EHRR 123). In particular, a scheme whereby a prisoner was compelled to pay half the money received from his family to the State was held to fall within the wide margin of appreciation afforded to states under A1P1 (Laduna v Slovakia, ECtHR, judgment of 13 December 2011) [46].

Reflecting “social and economic judgments made by Parliament and the Secretary of State,” the web of statute and Instructions on which the levy is based were thus held to fall “well within the national authorities’ margin of appreciation” [45].

Article 7

In addition, KF argued that the Prison Service Instructions violated Article 7 ECHR, which proscribes the imposition of any penalty heavier than one “applicable at the time the criminal offence was committed”. This submission, however, found short shrift: “there is no requisite connection between the offence committed by a prisoner and the application of the deductions regime… nor does the deductions regime have elements which indicate that it is punitive” [78]. Not only do prisoners choose to enter the work programmes, but the deductions operate as a tax, rather than being tied to any assessment of individual culpability.

Article 14

Finally, it was submitted on behalf of KF that the PSIs violate Art 14, taken with A1P1; although “on their face they are applicable equally to men and women”, in practice their impact on women is excessive and disproportionate and consequently amounts to unlawful indirect discrimination [3].

An Equality Impact Assessment published by the MoJ in July 2011 acknowledged that, since there is no data “that links the wages and the sex of those prisoners working out of prison,” it was not possible to “rule out a potential for disproportionate impact in relation to sex”. In particular, Prison Service Order 4800 on Women Prisoners, on which KF relied, accepted that “women prisoners are more likely to try to ‘run’ their families from inside prison than male prisoners”. This, KF contended, demonstrates that “women have special needs beyond those of men, such that a more generous regime should have been formulated for application to women” [80].

However, such a scheme, it was held, “would involve a requirement that the interests of the victims of crime should be sacrificed… to the objective of giving preferential treatment to female prisoners”; and subjecting male prisoners to higher deductions to compensate for the sums not collected from female prisoners would “create a greater risk” of infringing male prisoners’ A1P1 rights. This, in turn, would “jeopardise the entire policy” [85]. In light of the unavoidable impact on male prisoners of a preferential scheme for women prisoners, Mr Justice Sales concluded: “as a matter of practical reality and justice, female prisoners are not in a significantly different position from male prisoners for the purposes of assessment under Article 14” [86]. In any event, the deductions regime is already flexible enough to allow for adjustments based on need, through the discretion granted to prison governors [90]. Given this flexibility, “there are no significant grounds for regarding the application of a single set of rules to them all as prima facie questionable” [86].

Yet Sales J went further still. “Even if,” he continued, the state must show “that there is objective justification for applying the unified deductions regime…I consider that application of a unified regime is objectively justified” [91]. The aim of the regime – to raise funds for victim support – is a “legitimate objective properly relevant to both male and female prisoners”, and its equal application “is proportionate to that objective” [93]. And, in a variation of a previous theme, this proportionality “is underwritten by the width of the margin of appreciation to be applied” [93].

The Policy

The decision was, unsurprisingly, well-received by the MoJ. The PEA, Ken Clarke declared, “is the start of government getting the balance right”.

However, for some, concern remains that this ‘balance’ is now even further out of kilter. The title of the paper produced by UNLOCK in October 2011 – ‘The Victims’ Levy: Undermining Rehabilitation’ – rather speaks for itself [32]. Pressing for the rescission of the levy, the paper cautions that cutting prisoners’ earnings in this way could deter prisoners from seeking work outside prison, and “undermine objectives such as assisting prisoners to earn and save money to help them get settled after release”. While Ken Clarke applauded the scheme for “forcing prisoners to take responsibility for their crimes”, UNLOCK forewarned that it would “undermine efforts to encourage prisoners to take personal responsibility for planning and saving” [32]. Similar fears were echoed by the Prison Governors’ Association and the Howard League [33].

Although “[p]risoners who do paid work within prison can earn only about £10 a week” [26], “[w]orking outside a prison is entirely voluntary” [27]. Of course, the “opportunity to demonstrate that they are responsible individuals and suitable for release” will operate as some incentive, but dramatically reducing the financial benefits of external work may well dwarf the appeal of such benefits. This is all the more so given that “prisoners who work outside prison may lose other sources of financial support provided by the Prison Service to other prisoners” [27]. According to UNLOCK, the levy scheme may bar some prisoners from engaging in external work altogether:

Those working fewer hours, or with high travel or other costs, may find that there is insufficient money left with which to meet them, and even be placed in a situation where expenditure exceeds income resulting in an inability to afford either to attend work or go on home leave. (para 8)

There is a danger that all this talk of ‘tax’ and ‘money’ masks the fact that the real issue at stake is resettlement. Victims should be at the heart of criminal justice and, as Victim Support Chief Executive, Javed Khan, spelled it out, prisoners are “in prison to be punished, they’re not in prison to make money for themselves”. But the crux is this: it is a fallacy to suggest there exists any binary division between the needs of ‘offenders’ and those of ‘victims’. Obligating working prisoners to assist financially the indispensable work of Victim Support does, in theory – and to some extent in practice – help the victims of past crime. But effective rehabilitation and resettlement will help victims of crime both past and future. As Javed Khan puts it: “Getting prisoners working and developing workplace skills should help them on the path to reform. This will be very much welcomed by victims as they are united in wanting offenders to stop committing crimes.”

Did, then, Mr Justice Sales arrive at the wrong conclusion?

Although protagonists on both sides of the debate came out in force in the wake of the judgment, the decision in fact merely confirms the legality of the PEA regime; it is not, nor should it be, an assessment of the merits of the policy. Indeed, throughout the judgment, Sales J emphasised that “in formulating the deductions regime Parliament and the Secretary of State (and, in applying it, prison governors) are entitled to the benefit of a wide margin of appreciation” [91]. For all of the Government’s recent nightmares of maverick judges, hell-bent on churning out disruptive judicial legislation, here is a textbook example of a judge getting the balance right.

But all is not lost for proponents of prison work. A considerable proportion of the judgment debates the operation and efficacy of the ‘exceptional circumstances’ discretion. Although prison governors “may be expected to give considerable weight” to the Secretary of State’s guidance contained in the Instructions [38], “[o]n the evidence, the discretion to grant relief in exceptional cases is in practice exercised and cannot be regarded as a dead letter” [47]. Indeed, of the “significant number” of prisoners who have applied for a waiver of the 40% levy, almost two thirds were successful [28].

This is not to lambast all variations of a prisoner contribution scheme. It is entirely appropriate that those who can should help fund victim services. Indeed, in its first six months alone, the PEA raised nearly £400,000 for Victim Support, and this is being used “to deliver real, practical support for victims and communities”. But imposing on prisoners a burden that risks deterring some – however few – from engaging in real work defies good sense and grates against the MoJ’s purported commitment to revolutionising rehabilitation. As Juliet Lyons, Director of the Prison Reform Trust, puts it: “It’s always a problem if people leave prison with absolutely nothing”.