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The European Commission’s decision to take the UK to court over migrants’ access to benefits is a spectacular own goal

30 May 2013

Open Europe has today responded to the European Commission’s decision to take the UK to the European Court of Justice over the ‘right to reside’ test applied to EU migrants trying to access certain welfare benefits. The Commission says this test is illegal under EU law as British citizens pass it automatically. The UK Government is disputing this claim saying it is clear that the UK rules “are in line with EU law.” Whatever outcome, this has huge political and symbolic implications.

Details of the legal action will be announced later today.

Open Europe Research Director Stephen Booth said,

“The European Commission has thrown a hand grenade into an already intense debate about the UK’s continued EU membership. At a time when public support for both the EU and immigration are wafer thin, this is the worst possible issue the Commission could have sought to challenge, at the worst possible time.”

“Free movement of workers has been beneficial to both the UK and Europe but an absolutely key plank in maintaining public confidence in this area is to give national governments discretion to safeguard their welfare systems. If the Commission wants to push the UK out of the EU, it’s doing a pretty good job.”

“This is legally complex but the Government has no option but to fight this case all the way. It should also seek the help of other countries which have expressed similar concerns in order to rewrite EU rules to reflect the UK’s universal welfare system.”

BACKGROUND

Why is EU migrants’ access to benefits so contentious and complicated an issue?

- In a recent Open Europe/ComRes poll, 55% of UK voters cited ‘allowing the UK to have its own immigration policy’ as one of four issues the Government should prioritise when seeking to reform the UK’s relationship with the EU.[1] This is clearly a hugely politically sensitive area.

- The rules governing access to welfare for EU citizens are complex. Under EU rules, welfare benefits are generally divided into two broad categories: ‘social security’ benefits and ‘social assistance’ benefits, a distinction that does not necessarily fit well with the UK’s ‘universalist’ welfare system, which is largely made up of means tested benefits rather than contribution-based benefits.

EU law

- The EU’s Free Movement Directive establishes that EU member states are not obliged to provide ‘social assistance’ (e.g. Housing Benefit and Council Tax Benefit) to nationals of other EU countries during their first three months of residence, or if their only grounds for remaining in the UK for longer than three months are that they are actively looking and have “a genuine chance” of finding work.

- ‘Social security’ benefits (e.g. sickness, unemployment, family, and other benefits) are covered by a separate EU Regulation.[2] It establishes that these benefits must be made available to all nationals of EU member states without discrimination but can only be claimed by people who are ‘habitually resident’ in the member state.

UK law

- For contributory benefits, such as contribution-based Jobseeker’s Allowance, entitlement is based on whether a claimant has satisfied the contribution requirements and other conditions for the benefit, regardless of nationality.

- For income-related benefits, such as Income-Based Jobseekers Allowance, however, all claimants must satisfy the so-called Habitual Residence Test before they can claim means-tested benefits. The Habitual Residence Test has two elements: a legal right to reside and an objective assessment of habitual residence. A person has a ‘right to reside’ if they:

  • are a British Citizen or have the right of abode in the UK; or

  • have leave to remain in the UK under UK Immigration rules; or

  • have a right to reside under EU law

Why is the European Commission taking the UK to court?

- It’s extremely difficult to get to the bottom of what exactly is going on here since both the Commission and the UK Government have been less than transparent.

- In 2011, the European Commission launched ‘infraction’ proceedings against the UK, claiming that the ‘right to reside’ element of the UK’s Habitual Residence Test violates EU law because it “indirectly discriminates against non-UK nationals coming from other EU Member States” as UK citizens automatically pass the test.[3]

- It would appear the Commission also objects to the UK’s application of the ‘right to reside’ test to benefits it deems to be in the ‘social security’ category.

- The dispute between the UK Government and the European Commission is largely the result of a clash between the UK’s particular welfare model, which includes many non-contributory, means-tested benefits, and the EU Regulation, which prevents any discrimination and applies the same logic to every EU member state, despite the huge differences between individual countries’ welfare systems.

- In general, income-related benefits are not as integral to other EU countries’ social security schemes as they are to the UK’s.  Insurance-based benefits play a much greater role in most countries than in the UK and income-related (or safety-net) benefits tend to stand outside the main social security scheme as ‘social assistance’.  Such benefits are not generally covered by EU Social Security Regulations and EU rules give member states greater flexibility when granting access to ‘social assistance’ benefits.

What happens next?

- The UK Government is unlikely to back down and says it is “confident” that it has a strong legal case. In fact, in March, David Cameron announced plans to toughen up the Habitual Residence Test by strengthening the range and depth of questions asked.

- It can take years for the European Court of Justice to deliver an actual judgement, and a ruling is unlikely before 2015. The UK Government hopes that the change in Commission next year – and the departure of Social Affairs Commissioner Laszlo Andor who’s leading the charge – could lead to the case being dropped.

- If the UK loses the case at the ECJ, the maximum fine that can currently be imposed on the UK is roughly £225m a year.

- However, the political repercussions would be massive as it is likely to be interpreted as a major loss of national control over one of the most controversial areas in modern day politics. A Commission victory would severely undermine the case for continued EU membership. 

Is the Commission not only following the letter of the law?

- This clearly is a legal grey area and again, given how opaque the process is, it remains far from clear what the Commission’s legal reasoning actually is, or how many cases it’s meant to apply to.  However, the Commission risks interpreting EU law in the strictest possible sense at the expense of maintaining public and political confidence in free movement.

Is the UK alone in having concerns over access to benefits?

- While this case only applies to the UK, several other countries have stressed the need to make sure EU migrants move around to work, rather than to claim benefits. For example, Germany, Austria and the Netherlands signed a letter along with the UK calling for tighter restrictions to migrants’ access to welfare handouts and other state-funded services.[4]

For more information, see Open Europe’s report, ‘Tread carefully: The impact and management of EU free movement and immigration policy’,
http://www.openeurope.org.uk/Content/Documents/Pdfs/EUimmigration2012.pdf

NOTES FOR EDITORS

1) For more information, please contact the office on 0044 (0)207 197 2333, or Research Director Stephen Booth on 0044 (0)788 162 5889.

2) Open Europe is an independent think-tank calling for reform of the European Union. Its supporters include: Lord Leach of Fairford, Director, Jardine Matheson Holdings Ltd; Lord Wolfson, Chief Executive, Next Plc; Hugh Sloane, Co-Founder and Chief Executive, Sloane Robinson; Sir Stuart Rose, former Chairman, Marks and Spencer Plc; Jeremy Hosking, Director, Marathon Asset Management; Sir Henry Keswick, Chairman, Jardine Matheson Holdings Ltd; Sir Martin Jacomb, former Chairman, Prudential Plc; Lord Sainsbury of Preston Candover KG, Life President, J Sainsbury Plc; Michael Dobson, Chief Executive, Schroders Plc; David Mayhew, former Chairman, JP Morgan Cazenove; Tom Kremer, Chairman, Seven Towns Ltd; Michael Freeman, Co-founder, Argent property group.

For a full list, please click here:
http://www.openeurope.org.uk/Page/Supporters/en/LIVE


[1] Open Europe/ComRes poll 22-24 May 2013; http://www.openeurope.org.uk/Content/Documents/Open_Europe-ComRes_poll.pdf

[2] See Regulation (EC) No 883/2004, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2004:200:0001:0049:EN:PDF – Article 4 of the Regulation states, “Unless otherwise provided for by this Regulation, persons to whom this Regulation applies shall enjoy the same benefits and be subject to the same obligations under the legislation of any member state as the nationals thereof”

[3] European Commission press release, ‘Social security coordination: Commission requests United Kingdom to end discrimination of EU nationals residing in the UK regarding their rights to specific social benefits’, 29 September 2011, http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/1118&format=HTML&aged=0&language=EN

[4] Telegraph, ‘Britain and Germany demand EU cracks down on 'benefits tourism', 24 April 2013; http://www.telegraph.co.uk/news/politics/10014508/Britain-and-Germany-demand-EU-cracks-down-on-benefits-tourism.html

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