The Government has been considering different measures that could prevent an influx of people not only from Romania and Bulgaria but also from Southern Europe countries and limit its impact on the UK economy. In fact, there are huge concerns in the UK, as well as in other countries, over so-called “benefit tourism”, whereby people go from their home country to another EU member state to claim benefits, abusing free movement, and taking advantage of social welfare systems in host countries, which puts pressure on public budgets. The UK is not alone in its fight against this.
Last April, Theresa May, and the interior ministers of Germany, Austria and the Netherlands, in a joint a letter to the European Commission, raise concerns related to the free movement of EU citizens within the Union. Stressing that some cities in their countries were being put "under a considerable strain by certain immigrants from other member states", and noting that “...a significant number of new immigrants draw social assistance in the host countries, frequently without a genuine entitlement, burdening the host countries' social welfare systems", they demanded the European Commission to share their concerns and tighter restrictions on access to welfare benefits and other state-funded services for EU migrants. There was therefore a warning on "benefit tourism" by several EU member states. However, the European Commission has not taken this concern seriously, as it immediately said that there was no evidence of ‘social tourism’ within the EU.
The above-mentioned four ministers wanted to start a debate on how to tackle this issue, so they could put pressure upon the European Commission to allow EU member states to limit access to social benefits and tackle the abuse of their social security systems by citizens of other EU member states. There is a general recognition of the problem but there is no agreement on how to deal with the issue. Whereas the UK has called, according to Theresa May “for follow up work in the Council with a report back to JHA Ministers” several member states and the European Commission did not accepted this and asked for the Commission to led the discussion and to investigate the issue. Hence, last June, the Justice and Home Affairs Council, invited the Commission to look into the effects of free movement on member states’s social benefit schemes, and, to particularly focus on guidance on fighting abuse of these rules. The Commission has been asked to present an interim report to the Justice and Home Affairs Council by October 2013 and a final report by December 2013.
Mrs May is hoping to persuade Brussels to reform freedom of movement rights in order to counter benefit tourism, as the EU's free movement laws will continue to be abused by some migrants who travel to the UK to claim benefits becoming, in this way, a burden to the welfare system. However, according to Viviane Reding, commissioner responsible for justice, fundamental rights and citizenship, the number of documented cases of abuse does not justify the complaints coming from the UK, Germany, Austria and the Netherlands.
The European Commission presented its interim report to the October’s Justice and Home Affairs Council and informed “that according to the data transmitted there is no factual evidence of widespread abuse of the right of free movement and no evidence of large numbers of EU citizens claiming social benefits and social assistance in other member states.” According to the European Commission the evidence gathered has suggested that the main motivation for EU citizens to make use of free movement is work-related and shows that the percentage of EU citizens who exercise the free movement right and receive benefits is lower comparing to Member States' own nationals and non-EU nationals. Viviane Reding has stressed that figures provided by member states show that “The share of those who are economically inactive is small” and the majority of EU migrants are “net contributors and not 'welfare tourists'” contributing therefore to national social security schemes.
In the meantime, a consultancy firm ICF GHK published a study commissioner by the European Commission's DG Employment and Social Affairs “as a response to concerns from some EU member states about the application of EU law on social security to migrants”. This study analyses the Member States' social security systems on the entitlement of non-active intra-EU migrants to benefits and healthcare granted on the basis of residence. According to the report the overall intra-EU migration has increased from 1.3% in 2003 to 2.6% in 2012. The consultancy noted that although the number of non-active EU migrants has risen from 0.7% in 2003 to 1.0% in 2012 they represent a very small share of the total population in each Member State. Moreover, the consultancy pointed out that in 2012 71% of the non-active EU migrant population were pensioners, students and jobseekers and that 79% of non-active EU migrants live in economically active households, with only a minority of them living with other household members out of work. It also noted, “On average EU migrants are more likely to be in employment than nationals living in the same country”. It has also noted that “Evidence shows that the vast majority of migrants move to find (or take up) employment.” In fact, the report stressed that data has shown “...that in most countries, immigrants are not more intensive users of welfare than nationals” and “Where they are more intensive users, they tend to use intensely only specific types of benefits linked to their socio-economic circumstances as migrants.” Hence, the study concluded “that the share of non-active intra-EU migrants is very small, they account for a similarly limited share of SNCB recipients and the budgetary impact of such claims on national welfare budgets is very low.”
According to the report the UK's share of EU migrants was 1.8% in 2002, 3.9% in 2011 and 4% in 2012 whilst non-active EU migrants was 0.8% in 2002, 1.2% in 2011 and 2012 and non-active EU migrants without economically active household members was 0.53% in 2002, 0.59% in 2011 and 0.63% in 2012. The consultancy also noted that since 2008, in the UK, the number of job seeking migrants from the EU-15 has increased by 53%, from the EU-10 by 140% and from the EU-2 by 633%. Moreover, the number of non-active intra-EU migrants aged 15 and above in the UK has risen from 436,642 in 2002 to 611,779 in 2012. A spokesman for the European Commission immediately said that this number includes job seekers as well as retired people, schoolchildren, and students. Nonetheless, as the prime minister's spokesman said, according to the Daily Telegraph, "The 600,000 includes groups such as children and students and the like, but nonetheless there is widespread concern."
The study also points out that since 2006 till 2012 , the number of EU migrants aged 15 and above increased by 70% and the number of non-active EU migrants has increased by 42% in the UK. However, it noted, “compared to the national population, the EU migrant population resident in the UK had a lower share of economically non-active (43% compared to 30%, respectively) in 2012.” But, it also noted that “the number of job seeking EU migrants increased by 73% between 2008 and 2011, while the total EU migrant population (active and non-active) increased by only 28% in that period." The consultancy particularly noted that there has been an increase in non-active, and particularly job seeking EU migrants between 2008 and 2011 which has been reflected “in the unemployment rate among EU migrants which rose from 5.0% in 2008 to 7.4% in 2012.” It also stated “Furthermore, Data from UK’s national statistics office shows that the share of those who migrated for work who were still looking for a job at the point of immigration has been rising from 23% to 39% between 2002 and 2011”. The consultancy noted that in 2011 EU nationals formed 31% of all non-UK nationals claiming JSA but the report points out that of around 1.4 million people who claimed JSA in the UK in 2011 under 38 000 were from other EU member states which represents just 2.6% of total JSA claimants.
The Commission asked all member states to provide factual information on issues related to free movement. According to the Daily Telegraph, the Home Office conceded, in its response to the European Commission’s demand “that it is unable to state the number of EU nationals claiming welfare compared to Britons on social security benefits over a "given period". In fact, The consultancy pointed out, “There is limited data on the expenditure on benefit claims granted to EU migrants residing in the UK.” Hence, due to lack of official date on non-active EU migrants, most of the figures provided in the report are estimates. It particularly highlighted that it “was not possible to estimate the budgetary impact and future trends in expenditure for EU jobseekers acceding JSA.” Moreover, there is no data on the proportion of non-active EU migrants who have never paid social contributions, but according to a consultancy estimate, in 2011 37% of all jobseekers from other EU member states and residing in the UK have never worked in the UK. As MigrationWatch noted, “The UK has one of the lowest rates of unemployment among EU migrants at 7.5% yet has the largest percent of EU migrant job-seekers who have never worked in their country of residence at over one third 37% (compared to 16% in France and 18% in Germany)" which suggests “that our residence based benefits system is all too easy to access.”
The report dismissed claims about the costs of granting benefits to non-active EU migrants in the UK. The study has concluded that non-active EU migrants were far from being a financial burden. However, as noted by MigrationWatch the report does not provide data on claims for benefits such as housing benefit, and for child tax credit and child benefit. They then stressed, “Without these additional benefits it would be much more difficult for an EU migrant to stay long in the UK while unemployed. They may not have come for benefits but they are claiming benefits none the less, often despite having never worked.”
The consultancy firm ICF GHK recall that the UK healthcare system is based on residence therefore “all non-active intra-EU migrants are in principle eligible for healthcare (irrespective of their employment status or previous social contributions).” It found that unemployed EU migrants on average only cost 0.2% of the overall health budget and the UK only spends 0.7-1.1% of the NHS budget on non-active intra-EU migrants. It has estimated the annual cost to the NHS of treating non-active intra-EU migrants at €1.8 billion.
The study found little evidence that benefit tourism has been a problem in the UK. In fact, pointed out that in 2008/09 “A8 nationals were found to have paid 37% more in direct or indirect taxes than was spent on public goods and services which they received.” The European Commission has not only dismissed the government claims of abuse of the UK welfare system but it stressed that migration from other EU member states has been good for the British economy. Jonathan Todd, the spokesman for the European employment commissioner, told the Guardian, "...EU nationals are net contributors to the UK welfare system. They pay more in tax and social security contributions than they receive in benefits. So the more EU migrants you have the better off the UK welfare system is."
The study concluded “that those coming to the UK are in search of work, not to use the benefit system.” However, such conclusion is highly misleading. In fact, as MigrationWatch pointed out “The report highlights an interesting feature of employment of EU nationals in the UK that reflects both strong job opportunities and ease of access to benefits.” This is not a surprise as the European Commission has been systematically ignoring the government's claims that EU migrants were taking advantage of Britain’s social welfare systems. There are serious concerns over the increase in numbers of nationals from other EU member states that moved into the UK and can have full access to the UK-benefit system.
The Government dismissed the European Commission’s criticisms, as it still believes the current system is not working. Obviously, the Government still wants to tighter EU rules on access to benefits. As Theresa May said, the government wanted to tighten rules to ensure that those who come to Britain “want to contribute to the economy”, and “are not coming here to abuse our system”.
The UK has been working with other EU member states to tighter the rules on access to benefits. However, the commission has dismissed these demand on the grounds there was no evidence for their claims. The study, commissioner by the European Commission, challenged the UK, Germany, Austria and the Netherlands claims that their social security systems are under strain. It has dismissed these countries' concerns over abuse of benefits by EU migrants. In fact, the European Commission has been consistently contesting that ‘benefit tourism’ is a problem.
The Commission has no appetite to amend free movement rules for tighter restrictions on access to welfare benefits and other state-funded services for EU migrants. Viviane Reding, Vice-President of the European Commission, made clear the EU-treaty-based right to free movement is not up for negotiation. She said to the Member States “You will always see me fighting for preserving free movement, but I will also always be on your side when it comes to using existing EU tools to effectively fight against abuse.” However, according to the European Commission “the cases of abuse should be addressed on a case-by-case basis and within the existing legal framework.” The true is that the existing EU legal framework does not provide for adequate safeguards to ensure free movement without overburdening member states’s public finances. In fact, despite what the Commission has been saying, the existing system is not working and needs to be reformed.
Viviane Reding has said to the Member States that “EU rules do not harmonise neither national security nor social assistance schemes.” She stressed “Member States can freely decide which benefits they want to set up, under which conditions they are going to pay, how much and for how long.” In fact, under the EU Treaties social policy is a matter for member states’ governments but “The Union may take initiatives to ensure coordination of Member States' social policies.” It is important to note that the Regulations on the coordination of social security systems are based on Articles 48 TFEU whereby “The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure, adopt such measures in the field of social security as are necessary to provide freedom of movement for workers”. The member states’ social security systems are the result of long traditions deeply entrenched in national culture and preferences. It is essential that member states maintain their national sovereignty over social security. The EU Regulations do not provide for the harmonization of the national social security systems, but for their coordination. However, the so-called coordination of national systems, does not fully allow the Member States to retain their sovereignty with regard to social security. The rules for coordination of national social security systems fall within the framework of free movement of persons so that equality of treatment under the different national legislation for the persons concerned is guaranteed within the EU. In order to ensure that the application of the different member states legislations does not adversely affect the right to free movement, all member states authorities, including social security institutions and courts are obliged to comply with common rules and principles provide by the coordination provisions. Hence, Member States are not totally free in deciding their social security systems, as they must take into consideration, the fundamental freedoms as well as general principles of Union law. Consequently, coordination rules and principles can have a huge impact on national social security systems.
According to the European Commission “The EU free movement Directive and the EU regulation on social security coordination do not impose on Member States to grant benefits unconditionally to everyone.” Although EU migrants are not automatically entitled to claim benefits in the UK the EU rules do not require migrants to meet stringent requirements, as has been claim by the European Commission, before they can be entitled to benefits, such as Income Support or Housing Benefits, or for social security benefits, including child benefit, invalidity benefit or contribution-based Jobseekers’ Allowance.
Under the Directive on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States all citizens from all EU member states as well as their family members from third countries have the right to move and right of residence for up to three months, without any conditions, to another member state. Then, after three months, the directive subject the right of residence to certain conditions. Article 7 of Directive 2004/38 provides that all EU citizens have the right to move and reside in another Member State as workers, self-employed or students or if they “have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State” as well as “comprehensive sickness insurance cover in the host Member State.” There is therefore a right of residence for members of the family of EU citizens who satisfy the above-mentioned conditions. The EU law does not impose further conditions for EU citizens who are workers or self-employed, as well as their family members to be entitled to social assistance benefits in the UK. They have therefore full access to social assistance. On the other hand non active citizens from other member states who live in the UK supposedly are not eligible for these benefits as under EU law they are required to have sufficient resources.
Ms Reding said “EU citizens working only become eligible for social security benefits under a very strictly defined habitual residence test. All this is in the national law, all this is clear”.
The EU rules on equal treatment and coordination of social security benefits can be exploited by non-active EU migrants who, under EU law, can access certain residence based healthcare and special non-contributory benefits, which overburden the UK social security system as the non-active EU citizens who move here do not contribute directly to it. Under the Regulation on the coordination of social security systems “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.” It does not apply to social assistance. This Regulation applies to all social security benefits, sickness benefits, maternity and equivalent paternity benefits, invalidity benefits, old-age benefits, survivors' benefits, benefits in respect of accidents at work and occupational diseases, death grants, unemployment benefits, pre-retirement benefits, family benefits. Hence, all EU citizens, and their third country family member, who are working in the UK are entitled to social security benefits on the same terms as UK nationals. Under Regulation 883/2004 non-active persons are required to demonstrate, before they are entitled to claim equal treatment with UK nationals as regards social security benefits that, they have established their habitual place of residence in the host Member State.
The Directive 2004/38/EC on the right of citizens of the Union and their families to move and reside freely within the territory of the Member States has been transposed into UK law by the Immigration (European Economic Area) Regulations 2006. Since 2006, to avoid welfare tourism, and protect the social system, the UK requires EU jobseekers to pass both the ‘right to reside’ and the ‘habitual residence’ tests in order to have access to certain benefits. The government amend legislation so that a person cannot be ‘habitually resident’ unless they have the ‘right to reside’ in the UK. All nationals from EU Member States must satisfy the test, which covers benefits such as Income Support, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Pension Credit, Housing Benefit, Council Tax Benefit, Child Benefit, Child Tax Credit.
The European Commission, in response to a petition by a Polish national to the European Parliament regarding the UK authorities’ refusal of his application for Jobseeker’s Allowance, noted that the UK has transposed the conditions for the ‘right to reside’ test from Directive 2004/38/EC, however it pointed out that social security benefits fell within the scope of Regulation (EC) No 1408/71 which requires equal treatment between UK’s nationals and persons from other EU countries and prohibits both direct and indirect discrimination. The Commission said, “As regards the hierarchy of norms (Regulation 1408/71 and Directive 2004/38), in view of its direct legal effect the Regulation takes precedence and Member States cannot use their national implementation of the Directive to impair Union rights which are directly applicable by virtue of the Regulation.” In fact, it is important to recall that under EU law regulations have always direct effect. The direct effect is a fundamental principle of European law, which was created by the Court of Justice, whereby individuals may immediately invoke European law before courts, independently of whether national law exist.
The European Commission has stressed “where citizens are entitled to social security/healthcare on the basis of residence under Regulation 1408/71, residence should be assessed within the meaning of this Regulation. Such rights cannot be restricted on the basis of the more restrictive residence conditions emanating from the Directive.”
The report commissioner by the European Commission, above discussed, suggests that it is difficult for EU jobseekers to access income-based JSA. It noted that the UK requires EU jobseekers to meet the ‘right to reside’ and the ‘habitual residence’ test in order to access this benefit. The consultancy stressed “that the main reason for refusing applications for income-related benefits is the failure to pass the ‘right to reside’ and ‘habitual residence’ tests.” It pointed out “While some conclude that access to unemployment benefit is much easier in the UK than in other EU countries, others record high refusal rates (e.g., 69% in 2009) for A8 nationals due to the residence criteria.” As MigrationWatch noted, the right to reside in the UK as a job-seeker and the habitual residence test are easy to achieve and “Claims by the European Commission to the contrary are deeply misleading.” According to MigrationWatch the figures provided in the report to demonstrate that there has been a considerable number of applications for benefits which were refused are “relate to Eastern European nationals from the A8 accession states and pre-date 2011.” They noted, “Until May 2011 nationals from the A8 countries were not eligible for income-related benefits unless they had worked for 12 months continuous employment” but this has now been changed.
According to Viven Reding, “Member States can deny social assistance to non-active EU citizens who move to another Member State during the first three months of residence” and “during the first five years of residence, national authorities can check whether a citizen has become an unreasonable burden.” However, this is extremely hard to prove and it is not so simple, as she is want us to believe, that “Member States can refuse residence and withhold the benefits” if that is the case. It is important to recall that the ECJ has also been ruling on entitlement of benefits in the UK. Although under the EU rules economically inactive persons are required to have sufficient resources, including sickness insurance, in order not to become an unreasonable burden on the host country's social assistance system, the ECJ ruled in the Case C 310/08, London Borough of Harrow v Nimco Hassan Ibrahim, Secretary of State for the Home Department, that a parent who is the primary carer of a child who is in education have a right of residence in the host Member State, in this case the UK, even if they cannot support themselves without social assistance. The case concerned a Somali national, Ms Ibrahim, married to a Danish citizen, Mr Yusuf, and with four children. Under the Immigration (European Economic Area) Regulations 2006 a ‘qualified person’ is a national of a State of the EEA who is in the UK as a job seeker, worker, self-employed person, self-sufficient person or student, and they are entitled to reside in the UK for so long as they remain a “qualified person.” Hence, Mr Yusuf has ceased to be a ‘qualified person’ when he stopped working and left the UK. Ms Ibrahim separated from her husband after he left the UK in 2004. As the Court noted, Ms Ibrahim has never worked in the UK and completely depends on social assistance. In 2007, the housing assessment officer of the London Borough of Harrow rejected her application for housing assistance on the grounds that under the Housing Act 1996 and the Allocation of Housing and Homelessness (Eligibility) Regulations 2006 neither Ms Ibrahim nor her husband are entitled for housing assistance as they have no right of residence in the UK conferred by EU law. However, the ECJ ruled that “the children of a national of a Member State who works or has worked in the host Member State and the parent who is their primary carer can claim a right of residence in the latter State on the sole basis of Article 12 of Regulation No 1612/68, without being required to satisfy the conditions laid down in Directive 2004/38” and “without such a right being conditional on their having sufficient resources and comprehensive sickness insurance cover in that State.” Hence, Ms Ibrahim who has never worked in the UK has been able to claim house as well as other benefits. Consequently, the ECJ ruling has allowed them to become a burden on the UK’s social support system.
The EU regulation on the coordination of social security systems provides that EU citizens that can show that they are working in the UK or they are unemployed but habitually resident in the UK are fully entitled to treatment by the NHS on the same terms as UK nationals. Hence, all EU citizens who reside in the UK have full access to NHS treatment. Under Article 7 of the EU’s Free Movement Directive, EU citizens who live in another EU country but do not work there are required to have enough resources and sickness insurance. Under the EU free movement rules such insurance is a condition to reside in other member states. In the UK access to the NHS is not considered to be sufficient to meet this requirement. The UK government wants to put in place controls aiming at ensuring the NHS is not overburdened with treatments for unemployed and economically inactive non-UK citizens, hence, in the UK, the NHS cannot be seen as an insurance policy to EU citizens without health insurance. The UK requires private health insurance. However, in April 2012, the European Commission sent a reasoned opinion, second step of the infringement procedure, to the UK, formally requesting it to comply with EU rules on the free movement of EU citizens and their families across the EU. According to the Commission the UK has breached EU Law by not considering entitlement to treatment by the NHS as sufficient to allow EU citizens who live but have no job in the UK to stay in the country for more than three months. According to the European Commission the UK is required, under EU law, to consider NHS cover as sufficient sickness insurance when assessing whether or not a non-active EU citizen is entitled to remain in the UK under the free movement rules. The Commission is therefore requiring the Government to allow jobless EU citizens who want to reside in the UK to claim the NHS as their sickness insurance. The UK is required to amend its national rules in order to comply with the reasoned opinion and to notify the Commission the measures it has taken to bring UK law in line with EU law. Failing this, the Commission may refer the case to the European Court of Justice, which may impose financial penalties on the UK. In this way Brussels is interfering in the way the UK sets up its national health-care system.
The European Commission recall that Directive 2004/38/EC “allows restricting the free movement of citizens who represent a serious threat to public order and security” and “allows Member States to refuse, terminate or withdraw free movement rights in case of abuse and fraud” , such as marriages of convenience. It noted that “In both cases, the restrictions may be enforced by expulsion measures, and under certain circumstances, be accompanied by re-entry bans.” However, as the UK and other member states pointed out in a letter to the European Commission "The way the provisions are construed, (…), means that they may not be subject to a ban on re-entry. In fact, those who have actually been expelled because of fraud or document forgery cannot be stopped from re-entering the country virtually the next day". Hence, the existing system does not work. It is important to recall that the ECJ has ruled that Member States must indicated on case-by-case basis the exact reasons for imposing restrictions on the right of entry and the right of residence of EU citizens. Member States are required, before taking an expulsion decision, to assess several factors such as “the period for which the individual concerned has been resident, his or her age, degree of integration and family situation in the host Member State and links with the country of origin.” In fact, “Only in exceptional circumstances, for overriding considerations of public security, can expulsion orders be served on a Union citizen if he has resided in the host country for ten years”.
Mrs Reding has recently said to all Member States that “The Commission stands by the Member States when they make use of all the safeguards provided by EU law.” James Brokenshire, Parliamentary Under Secretary of State for Security, noted that “the commission would support member states in using existing EU tools to fight such abuse” and that “These tools included sanctions, such as expulsion and re-entry bans in certain circumstances and with the appropriate safeguards.” However, as above mentioned, it is extremely difficult to national authorities to refuse residence and withhold benefits when an EU citizen has become an “unreasonable burden”. In fact, James Brokenshire also pointed out “there was a need for consistent interpretation of the Free Movement Directive, for example on expulsion and re-entry bans”. Moreover, it is important to note that every time the UK attempts to protect its welfare and public health systems from abuse and huge burdens, by tightening rules on who can claim UK benefits, it faces a legal challenge from the European Commission.
On 8 October, at the Justice and Home Affairs Council, Viviane Reding proposed five actions intend to enhance implementation of free movement rules and “strike the right balance between rights and obligations”, and asked member states to endorse them. Although the European Commission has acknowledged that fraud and abuse was an issue, it has also stressed that there was not evidence of benefit tourism. By just proposing these five actions the Commission clearly showed that it has not taken the UK, and other member states, concerns seriously.
In order to fight abuse and fraud to free movement the European Commission is producing a handbook on marriages of convenience. According to Viviane Reding, “This handbook will provide clarity to national authorities on the framework in which they can operate.” It is important to recall that in 2008 the ECJ gave its judgment in the Metock case concerning the interpretation of Directive 2004/38/EC on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States. The Irish law implementing the Directive required lawfully residence in another Member State to a national of a third-country who is a family member of an EU citizen to reside with or join that citizen in Ireland. Ireland as well as other Member States who submitted observations to the Court argued that Member States have exclusive competence “to regulate the first access to Community territory of family members of a Union citizen who are nationals of non-member countries.” However, the ECJ rejected this argument. It held that family members, third countries nationals, of a Union citizen who has exercised his right of freedom of movement by establishing himself in a Member State other than his own have rights of entry into and residence in a Member State under Directive 2004/38. Denmark and Ireland following the ECJ´s ruling called for a modification of the directive in order to deal with marriages of convenience. However, the European Commission has not revised the Directive but it adopted a Communication “on guidance for better transposition and application of Directive 2004/38/EC on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States.” The Communication main aim was to provide guidance to Member States on how to interpret and apply the Directive, but it was described by Danish politicians as "absurd" and “unacceptable.”
The Commission also wants to clarify the concept of "habitual residence" pursuant to Regulation 883/2004 on coordination of social security, and will publish by the end of the year a guide. Viviane Reding said “This will concretely help authorities to use the Habitual Residence Test to its full extent.” Ludicrously, she believes that by clarifying the concept of "habitual residence" national authorities will be enable to prevent benefit tourism. It is important to recall that in September 2011, the European Commission opened an infringement procedure against the UK concerning the application of the “right to reside test”. The European Commission has requested the Government to stop the application of this test. The Government had two months to comply with the Commission demands, meaning amending national legislation and stop applying this test.
The Government stuck to its guns, as it has decided not to comply with the Commission requests. Iain Duncan Smith, the Secretary of State for Work and Pensions, wrote in The Telegraph in September 2011 “The UK has no problem playing its part in supporting the free movement of labour in the EU” but, he stressed “what the EU is now trying to do is get us to provide benefits for those who come to this country with no intention to work and no other means of supporting themselves, with the sole purpose of accessing a more generous benefit system.” He recalled, “The EU settlement is supposed to protect the right of member states to make their own social security arrangements” then showing great concern, he pointed out that “we are now seeing a rising tide of judgements from the European institutions using other legal avenues to erode these rights”. He was absolutely right in saying “This decision confirms the worry that the EU is pulling more areas of national competence into its fold.”
Nevertheless, last May, the Commission has decided to refer the UK to the ECJ, over the right to reside test imposed on citizens from other Member States when claiming social security benefits. It is important to note that the European Commission’s legal action against the UK concerns ‘social security’ benefits under EU law, which includes Child Benefit, Child Tax Credit, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Income Support and State Pension Credit.
The European Commission recalled that under the EU Regulation on the coordination of social security systems, which concerns social security benefits and not social assistance benefits, “EU citizens have the same rights and obligations as nationals of the country where they are covered” and noted “The EU directive on the free movement of EU citizens (…) allows for restrictions of access to social assistance only, but it cannot restrict the access to social security benefits”. The Commission has stressed, “EU rules on coordination of social security do not allow for restrictions on social security benefits in the case of EU nationals that are workers, direct family members of workers or habitually resident in the Member State in question.” Hence, according to the Commission the UK shall solely apply to social security benefits the habitual residence test as it is provided in EU law. Under the EU law “habitual residence” test, individuals are considered to habitually reside in a Member State if their habitual centre of interest is located there, taking into account factors such as family situation, duration and the continuity of presence, employment and housing situation and in which country the person pays tax . The Commission believes these criteria “are strict enough and thus ensure that only those people who have actually moved their centre of interest to a Member State are considered habitually resident there …”. In fact, according to the European Commission “A thorough and strict application of these criteria for determining habitual residence constitutes a powerful tool for Member States to make sure that these social security benefits are only granted to those genuinely residing habitually within their territory.”
Furthermore, the European Commission pointed out, “The “right to reside” test is an additional condition for entitlement to the benefits in question which has been imposed unilaterally by the UK. UK nationals have a “right to reside” in the UK solely on the basis of their UK citizenship, whereas other EU nationals have to meet additional conditions in order to pass this “right to reside” test.”
Consequently, according to the Commission, “the UK discriminates unfairly against nationals from other Member States”, breaching “EU rules on the coordination of social security systems which outlaw direct and indirect discrimination in the field of access to social security benefits.”
It has been reported that between 2009 and 2011 there were over 40,000 applications for social security benefits in the UK by EU citizens and that 64% of these claims have been rejected, which, according to the European Commission, means that the UK has refused social security benefits to people entitled to it under EU law. This clearly shows the burden that EU rules on free movement and social security benefits impose on the UK’s welfare system. Obviously, the situation would get much worse if the UK’s residency test is scrapped. It is important to recall that last year, Ian Duncan Smith, the Secretary of State for Work and Pensions, told the House of Commons, “The habitual residence test is vital to protect our benefits system and to stop such benefit tourism.” He also pointed out, “If we did not have the British residency test, it is estimated that right now the cost would be something in the order of £155 million, although that could change.”
According to the Government “If the European Commission’s view prevails, people with no right of residence and links to a country will be able to claim welfare benefits.”
Economically inactive nationals who presently are not entitled would be able to claim benefits by just showing that they are factually habitually resident, becoming in this way a burden to the welfare system. The Government believes therefore that the EU “habitual residence” test is a weak tool, which could lead to an influx of non-UK nationals claiming social security benefits. A Government spokesperson said, “It is absolutely imperative that we do all we can to protect our benefits system from abuse by migrants. The ‘right to reside’ part of our Habitual Residence Test is a vital and fair tool to ensure that benefits are only paid to people who are legally allowed to live in Britain.” The Government stressed “Our rules on access to benefits are not discriminatory” and “fully support the freedom of workers to work or look for work, while making sure there are reasonable restrictions on access to benefits for those who have never worked in the UK and have no intention of doing so.”
Against what the Commission has been saying “benefit tourism” has been a problem in the UK and if the UK is compelled to amend its legislation on the right to reside, an increase in “benefit tourism” is likely to happen. If the UK is required to revise the ‘right to reside’ test and with it its benefit system more citizens from the EEA member states will have access to benefits, in fact there will be further incentives to come to the UK and abuse the system, which, obviously would entail further costs to the UK’s taxpayer. The Government has estimated costs between £155 million and £2billion a year.
It is well known that the ECJ has been playing a fundamental role in defining and extending the scope of social security coordination. The ECJ has been using the EU Regulations on the coordination of social security systems as instruments intended to ensure the right of EU citizens to move and reside freely within the EU, independently of the exercise of any economic activity. In fact, unsurprisingly, by broadly interpreting the principle of non-discrimination according to nationality, the ECJ has built its case law on equal treatment in favour of EU citizens. Moreover, the ECJ has developed in its case law the concept of indirect discrimination as an obstacle to free movement. The Court will now investigate the Commission’s allegations and will consider whether the UK is in breach of EU law. The ECJ will consider whether the UK, by applying the “right to reside” test is discriminating against nationals of a Member State who make use of their right to move freely within the EU. If the ECJ finds that the UK is contravening EU rules on the coordination of social security systems and rules therefore against the UK, the Government would have to followed its ruling and take measures to bring UK law in line with EU law. If the UK fails to take the required measures to comply with the Court's judgment, meaning amending national legislation, it might face fines. The UK, as well as all EU Member States, is required to fully comply with the ECJ’s judgements. The ECJ has the power to impose financial penalties on Member States, which fail to comply with a previous Court’s judgment. Hence, if the Court considers that the UK has not complied with its judgement it may impose a lump sump or penalty payment on it. The Court has total discretion in setting penalty levels, with no upper limit. This would be a huge blow for taxpayers. The UK’s taxpayers would face a bill of Court’s costs and penalty payments, on top of that, as the Daily Mail noted, “The taxpayer will be appalled to discover that, if the UK loses the case, jobless migrants who have never contributed a penny to the Exchequer will be free to travel here and instantly pocket millions in State handouts.”
If the UK decides against the UK, it would be very difficult for the Government to introduce measures intended to prevent abuse of the welfare system. Ian Duncan Smith said that the Government is “…determined to fight court action by the European Commission who want to challenge a key part of our safeguards to ensure that benefits are only paid to people who are legally allowed to live in Britain.’ He told the House of Commons, " so let me simply say that our own assessment – our habitual residency test – currently prevents people who could be working and not on benefits from claiming those benefits. It is the commission that is trying to get us to change that, and I am utterly refusing to do so." Hence, contrary to what Viven Reding said, the Commission is in fact trying to prevent the UK to have in place safeguards to protect its welfare system as it is try to block attempts to reform the habitual residence test. The Commission is therefore undermining the Government’s plans to reform the welfare system.
Iain Duncan Smith stressed , “…I will continue to press on with reforms of the measures we currently have in place, not only to enforce the “right to residency” test we have now but also to strengthen the test.”
The government believes the existing system is not working in the UK’s interest hence it is seeking to tackle pull factors that attract EU citizens to move into the UK by tightening access to the NHS and social housing as well strengthening the habitual residence test. However, the British Government’s efforts to limit the impact of the EU’s rules through domestic legislation is likely to be challenged, again by the European Commission and struck down by the European Court of Justice.
The Government is particularly keen in limiting access to benefits. David Cameron, in his immigration speech, announced the government plans to make it harder for immigrants to claim social and housing benefits, he said “We are also going to take forward negotiations with European partners to explore ... whether we can make economically inactive migrants the responsibility of their home country before they gain any eligibility for UK benefits. ..." He also said “I am going to introduce new statutory housing allocations guidance this spring ... to create a local residence test. ... This should mean that local people rightly get priority in the social housing system. ... And migrants will need to have lived here and contributed to this country for at least two years before they can qualify.” However, presently, there is not much that Government can do to limit access to benefits without breaching EU’s rules. It is important to recall that the Commission has launched infringement procedures against the UK for breaching EU rules in this area.
Vivien Reding noted that from January 2014 20% of the European Social Fund (ESF) could be allocated to social inclusion, if member states agreed to it. Presently 15 percent of the fund is allocated in each member state to meet social inclusion challenges. According to the European Commission “The European Social Fund can be used to support local authorities facing the challenge of marginalised citizens on their territory.” The European Commission is proposing therefore to spend more taxpayers’ money in measures which have no contribution in addressing the benefit tourism issue.
Vivien Reding also announced the Commission is planning to invite mayors in spring 2014 to discuss challenges and exchange best practices. One can only hope she will listed to Boris Johnson, who, according to the Daily Mail, “urge the Prime Minister to demand a change in EU laws to delay migrants’ access to benefits.”
According to Mr Duncan Smith the government is currently working with other member states on the possibility of amending the current EU’s rules in order to strengthen the habitual residence test to make it harder for migrants from EU member states to claim benefits. Vivien Reding said, “I am as strong in upholding the right to free movement as I am firm in fighting fraud and abuse.” However, it is not just a fraud or abuse issue. There are several cases which comply with the EU rules but, nonetheless, they entail a huge burden in the UK’s welfare system.
It is important to recall that the unaccountable and unelected European Commission, which has no democratic mandate but it has almost the exclusive right of initiative over all EU legislation. The Commission is also in charge of putting forward proposals to amend or repeal existing legislation. As above-mentioned, the Commission has no appetite to revise EU’s free movement rules. Moreover, the Commission defines in its proposals the common interest or the interest of the Union, it does not take into account member states's individual interests. In the EU decision-making process, the common interest prevails over national interests. The text ultimately adopted by the EU legislative bodies takes into account the EU interests as a whole. James Brokenshire said that at the October’s JHA council “Many member states supported the UK’s position, recognising that whilst free movement was a fundamental principle, fraud and abuse had to be counteracted.” However, this does not mean member states are willing to amend EU legislation as some believe that can be done through the Commission proposed five point of action.
The UK must have the exclusive right to decide eligibility and structures for welfare benefits. Social security benefits should be dealt at national level and not at EU level.
The Member States’ social security schemes are coordinated by EU primary EU law (Article 48 TFEU) and secondary legal acts, set out in Regulation (EC) No 883/2004 and the Implementing Regulation (EC) No 987/2009. It is important to note that any amendment to primary law such as Article 48 TFEU whereby the European Parliament and the Council are allowed to adopt measures in the field of social security as to provide freedom of movement for workers, or any other amendments to the text of the EU treaties on freedom of movement will require the agreement of all EU Member States. Although all member states agreed that abuse of free movement of persons has to be combated not all member states are willing to reopen issues on social law and amend the Treaties. Moreover, they would never agreed to amend the treaties in a way that would give back to the UK control over this area of law. Even if the European Commission puts forward a proposal amending Regulation (EC) No 883/2004 and the Implementing Regulation (EC) No 987/2009 intended to strengthen the habitual residence test there is no guarantee such proposal would address the UK's concerns. Moreover, any proposal to amend these regulations will be subject to the Ordinary legislative procedure and QMV. A blocking minority of at least four Council members could prevent the adoption of such proposal. Moreover, the ordinary legislative procedure enables the European Parliament to override a decision taken by the Council. The European Parliament is very unlikely to accept any proposal intended to strengthen the habitual residence test. The European Parliament will consider any proposal intended to limit access to social benefits as a restriction to freedom of movement. The MEPs won't agree to restrict free movement and limit access to benefits. Hence, the UK would not be able to get the European Commission, the other Member States, and the European Parliament to agree to a satisfactory change to the EU secondary law, which would enable the UK's to protect its social security system from abuse. In the meantime, the EU's free movement laws will continue to be abused by some migrants who travel to the UK to claim benefits becoming, in this way, a burden to the welfare system.
The EU, its legal system and the European Court of Justice, have a seminal impact on the daily lives of the British people. The framework of European law within the jurisdiction of the Court of Justice has obvious implications for parliamentary sovereignty. The only solution to this problem is to lift the supremacy of EU law as well as the direct applicability of EU law. The UK must regain control over its social policy. The ECJ’s powers and the impact of its rulings in the UK must be properly addressed. Hence, not only these issues but the whole relationship with the EU must be negotiated, As Bill Cash has been saying “the most important thing is to have a fundamental change in our relationship, not just nibbling at the treaties.” According to Bill Cash “Nibbling at the treaties won't do the job.” The EU treaties must be therefore renegotiated along with our relationship with Europe. In the meantime, the Government should start passing legislation using the formula-notwithstanding the European Communities Act 1972, which would enable us to override European legislation where necessary. Parliament must be able to override all EU legislation, which is deemed not to be in Britain's national interest. It is important to recall that the referendum bill will have its report stage, that is nearly its final stage in the House of Commons, on the 8th of November.