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Thursday, May 30, 2013

Why the Commission has grossly over-stepped the mark with its court challenge on right to reside

The Commission has now published its press release explaining its reasoning for taking the UK to court over its ‘right to reside’ test for EU migrants. This is the key passage:
“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. This means that the UK discriminates unfairly against nationals from other Member States. This contravenes EU rules on the coordination of social security systems which outlaw direct and indirect discrimination in the field of access to social security benefits.”
The benefits that the Commission cites as being affected are:

- Child benefit
- Child tax credit
- Jobseekers' allowance (income-based)
- State pension credit
- Employment and support allowance (income-related)

So, some are asking, isn’t this simply a case of the Commission enforcing the law?

To answer this question, you have to get to the real heart of the matter, which neither the Commission nor the UK Government has really set out explicitly. It is a rather complex technical issue of how certain benefits are defined and how the UK’s welfare system interacts with different EU laws.

The underlying issue is that most EU countries tend to have a generous ‘social security’ system but one which is generally financed by in-work contributions (so as a migrant you wouldn't get access without substantial contributions and neither would a host national). They tend to have a lower safety-net ‘social assistance’ scheme (if they have one at all).

EU law (under the Free Movement Directive) allows governments to indirectly discriminate when assessing claims for ‘social assistance‘ and prevents people gaining residence rights by simply accessing social assistance. For social security (for which there is a separate EU Regulation) all forms of discrimination are prohibited. It is important to remember that the right to free movement within the EU is not unqualified – you have to be travelling to work or seeking to work. Travelling to access social security was not envisaged, but workers should be treated equally while in work.

In the UK, for unemployment benefit for example, there is a flat rate Contribution-Based Jobseekers' Allowance and also Income-Based Jobseekers' Allowance. The former is nominally financed by employee and employer contributions through National Insurance (but in effect are funded through general taxation) as pay-outs are not linked to contributions and the latter is means tested.

From the Commission’s challenge it appears that it thinks both types of JSA should be considered ‘social security’ and therefore there can be no indirect discrimination, which they argue the ‘right to reside test’ is. However, unlike in other countries, that means incoming migrants can potentially get access to the bulk of UK welfare system having contributed very little, if anything at all. This is why the Government is defending the ‘right to reside’ test as a means of ensuring you can only claim in the UK if you have a legal right to be in the UK and an economic link to the country. The Government would also argue that Income-Based Jobseekers' Allowance should be defined as ‘social assistance’.

The heart of this then is not necessarily that the ‘right to reside’ test is indirectly discriminatory as that is already accepted. In 2011, the UK Supreme Court ruled that the ‘right to reside’ test is indirectly discriminatory but “that this discrimination is justified because the Regulations are a proportionate response to the legitimate aim of protecting the UK public purse and that this justification is independent of the claimant’s nationality.”

Another recent case is also interesting. Austria is fighting the Commission in the ECJ about granting access to a certain benefit to an incoming migrant from Germany. As Work and Pensions Secretary Iain Duncan Smith told the World At One earlier, “the Austrians were told, in the Brey case, that they could not…they had to pay somebody who was a German the income-related benefits, because they were essentially social security, not social assistance.”

However, yesterday, the ECJ’s Advocate-General came down in favour of the Austrians, whose argument was supported by the German, Irish, Netherlands, Austrian, Swedish and UK Governments, in saying that the particular benefit constitutes social assistance and that Austria can therefore impose safeguards. IDS has taken heart from this opinion and the Government believes the same principle applies in the UK case.

In Spain, there is now a different but related argument about the refusal of some hospitals to recognise the European Health Insurance Card – it is as yet not clear why the hospitals have refused but Spain is also subject to legal challenge from the Commission.

In short, the EU’s current rules in this area, which have largely developed through case law, are hugely complex and do not reflect the different national systems that are in place. As IDS said, the UK Government is already talking with “the Germans, with the Dutch, the Danes, the Spanish” about setting the limits to the EU’s power in this area. Given that, this is completely the wrong time for the Commission to launch an intervention as politically explosive as this.  It is also worth adding that there is a cross-party consensus on this issue with Shadow Home Secretary Yvette Cooper today backing the coalition's position.

The UK should therefore avoid merely a narrow defence of its right to reside test but use this opportunity to settle this issue once and for all with root and branch reform.


Rik said...

The immigration rules are clearly even without UK involvement completely unsustainable. So my strategy would be go for the biggie as OE suggest legally. Try to arrange things politically in a reneg for the UK or a complete overhaul of the rules.

But also built in some safeguards and buy time.
Time the longer it takes the more likely it is that the issue will be solved politically one way or another. With as extra advantage that welfare-Roma/Kosovars etc. will move to countries like Germany and Sweden were with the other uneducated immigrants they can be very useful in financing the future Swedish pensions. The present group is at the moment too busy with some green projects like reducing the number of cars on the road. As well as given some real Keynesian anti-austerity impuls to the Swedish economy by creating a lot of public spending in a huge number of projects.

Safeguards go for the MS strategy. In case of a negative ruling simply bring in another piece of legislation that achieves the same thing but via another way.

Basically I think the UK should be happy with this. Welfare tourism is politically at voter level totally unacceptable in basically total Northern Europe. And it is the stuff governments will be sent home about. No government will let itself be sent home because of some silly Malwoman policies.

This if properly managed should have been interpreted in the most restricted way possible as it clearly and totally misses a platform both political and social in the countries that carry the EU financially. So fall out should be minimised as much as possible.

The more problems other reform minded countries will face in this respect the better it is for the UK as far as the reneg goes. More support plus if it happens anyway not have to give compensation in a reneg scenario. And it makes the possibilty of a treaty change even higher.

My ideas were a couple of months ago that the EU would make itself more and more unpopular mainly because of the crisis. However things in this respect are going much faster now than I expected to be honest. They simply never miss an opportunity to expose themselves as incompetent, irritating, undemocratic, anti-British morons. The anti-British only being applicable for the UK as you will have understood.

This looks to go much too fast for a say 4-5 year reneg process. The EU makes itself especially in the UK but also in other places faster unpopular than Usain Bolt can run.

Important that Barroso gets reelected (or replaced by someone similar). He clearly completely misses that at one stage in one or more important countries you will require a popular platform to get things through. And when you bump into that problem at the moment you need it you are simply much too late.
Baroso is simply completely incompetent in managing that part of the job (PR part). Might be the most important issue at the moment.
But approval rates are appalling at best and trend further down. A one dimensional figure (somebody who is nearly totally predictable, as he solves things always in the same way or tries to do that in B's case.

It looks btw like the Commission did this thing. Normally it mentions the Commissioner to the media (like Reding with her women red tape ideas). Which makes moving away from it even more difficult than it already is. Battle you cannot win without a proper fall back position.

Rollo said...

The European Court of Justice is the enforcement arm of the politburo, and has nothing to do with justice.
Its remit is to find answers leading to ever closer union, in other words, tightening the noose of the circle of barbed wire tighter round the necks of nation states.
Let us hope they find against us: then even the dopiest imbeciles in our government will see that the only way out is out.

Anonymous said...

Blah. Blah. Blah.

UK = sovereign nation = EUSSR can kiss my ass.

Unknown said...

My view on this is that the right-to-reside and the HRC in the UK and Ireland are arguably inconsistent with the scheme and the objectives of Regulation 883/2004. To put it simple, the Directive 2004/38 applies only to social assistance. For the social assistance, the indirect discrimination is permitted. The Regulation applies to social security and special non-contributory benefits. Under the Regulation no discrimination is allowed. In Patmalnience case, the State Pension Credit, which was the payment in dispute, is according to the UK law treated as social assistance, thus under the UK legislation, the indirect discrimination is allowed. Under the EU law, the Annex X of the Regulation 883/2004 lists State Pension Credit payment as special non-contributory benefit and so bans any kind of discrimination for this payment.
Thus, The EU law then prohibits indirect discrimination (as well as direct) in the cases where the UK law allows it and justify it. The UK and EU law contradict each other in this matter. This inconsistency could be resolved by the CJEU (the UK v Commission), but it can be only speculated what the outcome will be. Regards to what you state about the Commission thinks that JSA should be treated as social security, I believe it wants it to be treated as Special Non-contributory Benefits. Annex X in the Regulation lists JSA as SNCBs, thus, there is really a slight chance that the Commission would want from the UK to treat JSA as social Security.