Blow to benefit tourists from Supreme Court
16 March 2011
Patmalniece (FC) (Appellant) v Secretary of State for Work and Pensions (Respondent)  UKSC 11 – Read judgment / press summary
The Supreme Court has ruled that pensioners from other European Union states should not have the right to claim pension credits in the UK. Although the current ban on claiming these benefits is indirectly discriminatory, the discrimination is a justified response to the legitimate aim of protecting the public purse.
The 4-1 majority ruling (Lord Walker dissented) is likely to calm fears of “benefit tourism” and will probably be wrongly reported as a victory of sensible limits on public finances over human rights. For the record, the appeal was based squarely on EU freedom of movement law and had very little, if anything, to do with human rights.
The full background to the case can be found in the UK Supreme Court Blog’s case preview. In short, Mrs Patmalniece was a Latvian pensioner who came in 2000 to the UK. She had worked for 40 years in Latvia where she was receiving a state pension. In May 2004 Latvia became part of the EU.
In the UK she was refused pension credit (a financial benefit for pensioners) on the basis that she had no “right to reside“. But this status is available automatically to UK nationals. The question for the court was whether the automatic granting of such a right – and therefore all of the benefits flowing from it – to UK nationals only represented discrimination under EU law, and in particular Article 3(1) of Regulation 1408/71, which provides that:
persons resident in the territory of one of the Member States to whom this Regulation applies shall be subject to the same obligations and enjoy the same benefits under the legislation of any Member State as the nationals of that State
Regulation 1408/7 has already resulted in a European Court of Justice ruling that most sickness and carer benefits are claimable across different states. This has been applied to other “non-contributory” benefits such as Disability Living Allowance, Attendance Allowance and Carer’s Allowance.
The Supreme Court found that the policy was indeed discriminatory, but not directly. This is an important legal distinction, as direct discrimination cannot be justified, where as indirect discrimination can.
Lord Hope gave the leading judgment, and explained why the discrimination was justified:
the Secretary of State’s purpose was to protect the resources of the United Kingdom against resort to benefit, or social tourism by persons who are not economically or socially integrated with this country. This is not because of their nationality or because of where they have come from. It is because of the principle that only those who are economical or socially integrated with the host Member State should have access to its social assistance system… A person’s nationality does, of course, have a bearing on whether that test can be satisfied. But the justification itself is blind to the person’s nationality. The requirement that there must be a right to reside here applies to everyone, irrespective of their nationality. 
However Lord Walker, dissenting on the issue of justification (he considered the policy could not be justified), did sound a note of concern which may echo in future cases:
There is an obvious temptation for governments, in the face of understandable popular feeling (in this case, against “benefit tourism”) to try to draft their way out of direct into indirect discrimination, with a view to avoiding having to distribute large sums out of public funds, or having to make some other commitment of national resources, to beneficiaries whom their electors would not regard as deserving. 
This ruling will come as a great relief to the government, who would have been liable to pay out thousands EU pensions claimants if Mrs Patmalniece had succeeded. It will also be a blow to those from other EU states who had hoped to live out their retirement in the UK. However, given the relative generosity of pension benefits in the UK as opposed to some other (particularly the newer) EU states, for now the UK’s policy may be an obstacle to freedom of movement between states, but it is a justifiable one.
For more detail, see the court’s press summary, which is reproduced in part below.
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The following is extracted from the Supreme Court’s press summary:
The court considers three issues: (1) do the conditions of entitlement for SPC give rise to direct discrimination? (2) If they give rise only to indirect discrimination, is that discrimination justified? (3) Is that conclusion undermined by the favourable treatment that the Regulation gives to Irish nationals?
All UK nationals would automatically satisfy the “right to reside” element of the test, whereas nationals of other Member States would not automatically do so. However, UK nationals still had to satisfy the requirement of “habitual residence”. The result is that the “in Great Britain” test would be satisfied by some, but not all, UK nationals, and some, but not all, nationals of other Member States. It was more likely to be satisfied by UK nationals than nationals of other member states:  – . The court applies the decision of the Grand Chamber of the European Court of Justice in Bressol v Gouvernement de la Communauté Française (Case C-73/08). In Bressol the ECJ had considered a Belgian law which set down eligibility criteria to study in Belgium which were similarly structured to the entitlement conditions for SPC. Although Advocate General Sharpston in Bressol had proposed that the ECJ treat the provisions of the Belgian law as directly discriminatory on the grounds of nationality, the ECJ did not follow her approach. Although the reasons for the ECJ’s position were not fully explained in its judgment, the court has decided that it should follow its conclusion and hold that the entitlement conditions for SPC were only indirectly discriminatory:  – , ,  – .
A difference in treatment which amounts to indirect discrimination can be justified only if it is based on objective considerations independent of the nationality of the persons concerned and is proportionate to a legitimate aim: , . The parties were agreed that the measures here were proportionate. The issues were whether the conditions pursued a legitimate aim and whether it was “independent of the nationality” of the persons affected. The majority holds that both tests are satisfied. The aim was to ensure that claimants were economically or socially integrated in the UK, or elsewhere in the Common Travel Area, thereby protecting the social security system against the risk of “benefit” or “social” tourism: , ,  – ,  This justification was independent of nationality. Lady Hale notes, additionally, that the Government’s aims in introducing the “right to reside” test were consistent with the aims of Regulation 1408/72 and that it is logical that if a person does not have a right under EU law to reside in a particular state, that state should not have the responsibility under EU law for ensuring their minimum level of subsistence: . Lord Walker dissents on the issue of justification. He would have held that the provisions were probably aimed at discriminating against economically inactive foreign nationals on the grounds of their nationality: .
The relevance of the treatment of Irish nationals
The Appellant argued that, as entitlement to SPC was extended to Irish nationals, it was discriminatory not to extend it to nationals of other Member States. The court rejects that argument. The provision for Irish nationals in the conditions is protected by Article 2 of the Protocol on the Common Travel Area, which provides that the UK and Ireland “may continue to make arrangements between themselves relating to the movement of persons between their territories”:  – , .
even though the supreme court dismissed the appeal, it is highly probably that the case will be won by the European Court
what with wars and blooming social benifits going on all the time it is only a matter of time before our country is bankrupt, we should stop paying out through the nose for those cheats and frauds that come here to the UK to get as much as they can financialy from our sytem then send it all back to to their own countrys,and as lots of them are working illegaly then they dont even contribute into the tax and pensions schemes, then of course so many of them bring their aging familys and relatives here with them that have never ever contributed to our system, and dont even speak a word of english simply because the UK social benifits are so easy to defraud.
The nhs is clogged up with elderly patients from other countrys thats why the waiting lists are so long and our own resident population have to wait for years to get major opperations, thats what happens when your country is at the end of the immigration line, other EU countrys especialy France activly encourage those illegals to get here to the UK thats why we have become flooded with them.
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