The European Union (EU) and the UK remain locked in legal dispute over the UK’s ‘right to reside test’, which limits benefit claims by EU nationals that are ‘habitually resident’ in the UK.
This has now come to a head after the UK failed to inform the European Commission of the measures it intends to bring its legislation into line with EU law.
As a consequence of this failure the European Commission has decided to refer the UK to the EU’s Court of Justice over alleged discrimination against EU migrants.
Should the government lose then it would have to withdraw the ‘right to reside test’ and instead apply the EU’s ‘habitual residence’ test. Otherwise EU nationals denied access to benefits would be able to bring their cases before UK courts invoking the EU Court ruling.
Predictably the Tory party and right wing press alike have seized on these proceedings as yet further evidence of unwanted EU meddling.
The work and pensions secretary, Iain Duncan Smith promised that he will ‘fight this every step of the way’.
At one point in 2011 he claimed that if the UK test was abandoned, the cost to the UK could be more than £2bn a year; though he later revised this figure to £155m.
The Sunday Telegraph also recently waded in, suggesting that the whole thing has been triggered by just one case, the Polish painter involved being aghast at the entirely unintended consequences of his original complaint.
This issue is not likely to go away any time soon, especially now that Romanian and Bulgarian workers are due to be given full free movement from 1st January 2014, after a seven-year pause in which restrictions have been imposed.
So what is the background to the latest row between Brussels and Whitehall?
Benefit Tourism
The EU, broadly, allows national governments to prevent ‘benefit tourism’ in two ways. First, Member States do not have to provide to non-active EU citizens with certain non-safety payments (colloquially know as social assistance benefits) and which includes things such as housing benefit and income support, for the first three months of their stay and later only if doing so would not impose an unreasonable burden on the host country’s welfare system (Directive 2004/38 EC).
Second, as regards a second class of benefits (social security benefits) such as child benefit, child tax credit, income-based jobseekers allowance, state pension credit and income-related employment and support allowance, Member States can limit access to EU nationals that are workers, direct family members of workers or non-active people that are ‘habitually resident’ on their territory (EC Regulation EC 883/2004).
The dispute has two real consequences. The first is how, from perhaps a rather dry legal perspective, certain benefits are allocated and defined by the UK. The second, and politically more interesting, is whether Duncan-Smith and the rest are correct in their continued portrayal of the EU as trying to make Britain hand over money to people who turn up purely to claim benefits.
This is important because seemingly even eurosceptic groups such as Open Europe have accepted that the evidence overwhelmingly suggests migrants from EU countries come to the UK in search of work rather than to take advantage of the UK’s welfare system.
UK law and the EU
UK law makes certain residence-based social security benefits – Child Benefit, Child Tax Credit, State Pension Credit, Income-based Allowance for Jobseekers, Income-based Employment and Support Allowance – only available to those persons who pass the ‘right to reside test’ in the UK. This is because the British Government argues that these particular benefits fall in to the first class of payments – social assistance – and so can be legally fenced off through the right to reside test.
The Commission on the other hand believes these payments are actually social security benefits. The two family benefits should be provided to all EU citizens employed in the UK, even if they don’t reside there.
The other benefits should be made available, to all EU citizens that are workers, direct family members of workers or non-active people that are ‘habitually resident’ in the UK. The EU already has a strict, standard, and approved ‘habitual residence test’ which is widely used across Europe for migrants who want to claim residence-based social security benefits.
The Commission therefore argues that that Britain does not need its own, home-grown additional right to reside test because it could apply existing EU rules on the social security coordination (EU Regulation (EC) No 883/2004).
This test allows the UK to grant residence-based social benefits only to workers, direct family members of workers or non-active people who habitually reside in the UK and make sure that these social security benefits are only granted to those genuinely residing habitually within their territory. However instead of this the UK continues to insist on its right to impose the extra right to reside test.
The difficulty in terms of UK compliance with EU law is that UK nationals have the right to reside solely based on their UK citizenship, whilst other EU nationals have to fulfil additional conditions in order to pass the right to reside test. This, the Commission has forcefully argued, is indirect discrimination, something expressly prohibited by Article 4 of the EU Regulation.
Any discrimination in providing social security benefits (including non-contributory cash benefits) would also constitute an obstacle to free movement guaranteed by Article 21 of the Treaty. Recently, the European Court of Justice has strengthened this argument by declaring all systems denying social benefits automatically to EU citizens as incompatible with EU law.
The possible scale of discrimination
EU spokesman Jonathan Todd has commented that potentially thousands of EU nationals living legally in the UK may have been refused access to benefits to which they are entitled.
The UK Government estimates there were some 2.3 million nationals of other EU member states living in the UK in 2012.
Between 2009 and 2011, official figures show that benefits were refused to over 28,000 EU migrants. Whilst acknowledging that a number of those refusals would also have been refused under the EU’s ‘habitual residence test’, the EU Commission reports that it has received many – and certainly more than just one from a Polish painter – complaints from people who have lived, worked and paid taxes in the UK and then been refused benefits when they were made redundant.
What is the likely outcome?
Given the ‘right to reside test’ is automatically satisfied by returning UK nationals (even if the ‘habitual residence’ test is not) the test – it seems to me – is indirectly discriminatory, because UK nationals clearly have less obligation to fulfill than non-UK EU nationals.
The question of whether the indirect discrimination is justified was considered domestically by the Supreme Court in Patmalneice vs SSWP in 2011. In that case the Supreme Court said yes it was justified; in order to stop benefit tourism and protect the UK’s purse. But, Lord Walker dissented in that judgement and said the reason the test was imposed was to discriminate against economically inactive non-UK nationals. The increasingly ideological sound bites from the Tory administration (Grant Schapps threats to the BBC over its coverage of ‘health tourism being the latest) and the most recent ruling from the European Court of Justice, would tend to support Lord Walkers view – the test as framed and imposed is designed to discriminate –and cannot be justified as a necessary or proportionate response given the overwhelming evidence that ‘benefit tourism’ is neither systematic nor widespread (see 276-page EU report into “benefit tourism”)
