British social welfare arrangments provide for a class of non-means tested benefits such as Child Benefit and Income-based Employment Allowance that are only available to people who have resided legally in the UK for five years. The European Commission has declared this fencing-off to be in breach of EU law since it indirectly discriminates non-UK nationals coming from other EU Member States. EU rules on the social security coordination (EC Regulation EC 883/2004) allow the UK to grant social benefits to those persons who habitually reside in the UK; this EU test is satisfied by those who have been resident in the UK for two years or less. It is a common law test – a question of fact on the balance of probabilities, to be determined by looking at all the circumstances in each case. But those who pass this latter qualification can only claim means-tested benefits.
Confusing? Yes, and it gets worse. First, nowhere in the huge Regulation is “habitual residence” defined, but Article 4 prohibits Member States from imposing any additional requirements which might result in any indirect discrimination against EU nationals. The British residence test apparently offends this provision because it does not apply to British citizens so they can apply for non-means tested benefits even if they have resided abroad. The UK Government has said that the “right to reside” test is a necessary and proportionate response on its part to combat the problem of “benefits tourists” who would move to the UK from other Member States in order to claim generous UK welfare payments – see our post on the Patmainiece case. The European Commission strongly disagrees with the Supreme Court’s interpretation of the position in that decision, and has declared that the habitual residence test provides sufficient safeguards against benefits tourism. The trouble is that even when it puts its mind to it the Commission doesn’t seem to be able to come up with a hard-edged definition:
The concept of habitual residence has been defined at EU level as the place where the habitual centre of interests of the person is located.
What on earth is “centre of interests” supposed to mean, other than a beanfeast for lawyers? As Aiden O’Neill QC notes in his post on the issue, the hostility to the Commission’s position comes from the usual quarters, such as the Daily Telegraph, which predicts that if the European Court of Justice upholds the Commission’s view,
economically inactive people will be able to move between EU member states just to claim benefits, without any intention of working or contributing to the member state’s system.
and
These new proposals pose a fundamental challenge to the UK’s social contract. They could mean the British taxpayer paying out over £2 billion extra a year in benefits to people who have no connection to our country and who have never paid in a penny in tax. This threatens to break the vital link which should exist between taxpayers and their own Government.
This kind of “land grab” from the EU (Ian Duncan Smith’s description) is perhaps not the best way forward just when the European authorities are battling to convince recalcitrant member states of the legitimacy of their bailout proposals. Bagehot for the Economist has sought a direct explanation from the Commission as to why the habitual residence test is deemed to be sufficient for safeguarding against benefit tourism, but was only given the answer that they are a “powerful tool”. Obviously they are not sufficiently powerful, which is why the UK is sticking to its stricter residence test. No prizes for guessing which way the European Court will vote on this dispute.
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- Is Brussels really about to force Britain to admit benefit tourists?
- Benefits tourism in the EU: Analysis
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