Barring benefits to EU citizens

In the last election, at least three major parties were undertaking to restrict the rights of EU citizens from claiming benefits.  The Labour Party manifesto said that “With a Labour Government, migrants from the EU will not be able to claim benefits until they have lived here for at least two years.”  The Conservative manifesto said that “We will insist that EU migrants who want to claim tax credits and child benefit must live here and contribute to our country for a minimum of four years”.   UKIP had said that “all new migrants to Britain will have to make tax and national insurance contributions for five consecutive years before they will become eligible to claim UK benefits, or access to more than non-urgent NHS services. ”  Between them, these parties polled more than 24 million votes.  As a committed European I dislike the policy, but it’s going to happen.

The basic obstacle to the proposal as it stands is that it seems to propose a breach of the European treaties, because it discriminates directly against European workers on the basis of their nationality.  It follows from that that either the UK would have to renegotiate the treaties, or they have to find some way to make the proposal compatible with European law.  Renegotiation is not going to happen – Poland has already said they will veto it.   Nor would it be possible to change the rules in a way that discriminates.  In 2014, the Coalition reviewed the possibility of offering workers the equivalent of their home countries’ benefits; the European Commission warned then that this would have to go to all EU members for approval.

That implies a different approach.   The UK can legitimately deny benefits to EU workers if, and only if, it denies benefits to British workers on the same basis.   It can do that.  The main problems come from some current ‘coordination rules’, which are not fundamental principles, but ways the EU has tried to interpret the situation: they are subject to interpretation.

There are three different kinds of benefits to consider.   Contributory benefits are relatively easy to regulate; all the government has to do is to impose contribution conditions.  Currently the NI system has two main conditions:  a ‘first contribution condition’ that that must be satisfied to receive any benefits at all, and a ‘second contribution condition’ based on payment in the relevant tax years preceding the current benefit year. The government could tighten up one or both conditions.  That would have an effect on groups who have never worked, primarily school leavers – but the government is committed to reducing their benefits already.  There is however a further complication, which is the principle of “aggregation” – that people who pay contributions in one country can have their contributions credited to meeting conditions in another.   It could lead to long delays in payments, but it would not necessarily relieve the government of the responsibility for paying the benefits.

The second category includes non-contributory benefits.  Here there are already several residence rules.  The CPAG Handbook  helpfully lists seven different types of rule, based on

  • presence in the country
  • past presence
  • “living in ” the country for a period
  • residence
  • ordinary residence
  • habitual residence, and
  • having the right to reside.

This sort of rule necessarily catches British citizens returning from abroad – and there are more than five million British expatriates.

The most tricky category is the third:  benefits which are also tax allowances – such as Child benefit, which incorporates the child tax allowance.  Having said that, there is no strong reason why tax credits and child benefit should still be treated as tax, and it would be possible to reframe the legislation to avoid the situation altogether.

It follows, I think, that the Government could create barriers to claiming within a specified period, and that it could do it in a way that would not violate EU law.  But should it?   The approach I’ve suggested would make particular problems for young people, who are already disproportionately represented in households on very low incomes.  There would be further problems for British citizens returning from abroad.  Then there are the probable effects on British citizens moving to Europe.  Many benefit entitlements are reciprocal, the EU rules assume that one state or another will be “competent” to pay benefits, and if both countries have a four-year restriction, the UK will be liable for supporting its people abroad for four years.  More than two million Britons live in rest of Europe – this restriction could end up costing money.   Last but not least, we should ask whether putting up barriers to claiming is such a good idea.  There is no reason to suppose that the claims of EU migrants present any problem, either administratively or financially.   The benefit system is far too complicated already.  Creating further restrictions will still include some people we want to exclude, and exclude others we want to include.  I suppose the idea must make sense to someone, to have been accepted by so many politicians, but I’m not sure I can see it.

One comment

  1. Michael

    I think it made sense electorally, because it sounded good in the media. But it was done without mentioning the downsides like applying the same rules on British nationals, having to take care of British pensionados in Spain and expats working in Germany and the bureaucratic burden it brings. I suspect it will be quietly dropped or adjusted beyond recognition.

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