Charlotte O'Brien, Senior Lecturer, York Law School
The political message being sent
by irate governments to ‘back off’ from national welfare systems’ assumed
prerogative to discriminate between home nationals and EU nationals is being
received and applied with alacrity by the Court of Justice. The current direction
of travel resiles from earlier progressive visions of EU citizenship, and in C-140/12
Brey, C-333/13 Dano and C-67/14 Alimanovic we see that which was once ‘destined to be [our] fundamental
status’ receding ever further from view. Advocate General Cruz Villalón’s Opinion in Commission v UK continues the
retreat, arguing that the Commission’s action challenging the UK right to
reside test for family benefits should be dismissed. The result may, in the
current environment, be unsurprising. But getting there with existing legal
tools is problematic.
The Opinion contains a number of
uncomfortable contortions to give undue deference to the national rules, and
avoid tackling the underlying conflict of rules and approaches. It represents
quite startling judicial activism in embroidering the legislation with
unwritten limitations as to personal scope, tinkering with the subject matter,
and asserting an unwritten licence to discriminate whenever something smells
like a welfare benefit. The effect is as though the Court’s new teleological
guiding principle should be that the legislature would have wanted at all costs
to avoid offending the UK government.
The UK right to reside (RTR) test
prevents any EU national who does not meet the criteria in Art 7 Directive
2004/38 from receiving Child Benefit or Child Tax Credit, both of which
were accepted as being ‘family benefits’, so ‘pure social security’ (rather
than special non-contributory benefits in Brey, Dano and Alimanovic) under Regulation
883/2004. The Commission challenged the test’s lawfulness on two grounds –
that it imported extra conditions into the ‘habitual residence’ test, to
undermine the effects of Regulation 883/2004, and that it is discriminatory
since it only applies to non-UK citizens. The AG’s Opinion is remarkable, in
its ability to reject both without engaging with either. This analysis deals
with four key issues arising from the Opinion: (i) stitching, splicing and
embroidering Reg 883/2004; (ii) the ‘inherent’, ‘inevitable’ and ex ante
discrimination fudge; (iii) the parallel reality in which the UK does not
presume unlawful residence; and (iv) the failure to notice that the UK
automatically refuses social assistance to those reliant on ‘sufficient
resources’.
(i) stitching, splicing and embroidering Regulation 883/2004
The AG is at some pains to
determine whether the ‘right to reside’ test is part of the habitual
residence test (HRT), or a separate test added on, suggesting that it is only
if it is presented as the former, does the Commission have a case. As the UK
government ‘distanced’ itself during proceedings from the combined test
approach, and argued that it was a separate test of lawful residence, so the AG
commented that the Commission’s case was ‘weakening over the course of the
dispute’. Indeed, on the basis that the test was ‘independent’ of the HRT, the
AG argued that the first ground should be dismissed. This is perplexing. It
seems to be a matter of regulatory semantics whether the RTR is part of the
HRT, or is applied as well as the HRT, if the effect – to undermine Regulation
883/2004 – is the same.
For the record, the conclusion
that they are separate tests is unconvincing anyway. For all benefits with an
official ‘habitual residence test’ the regulations
provide that a claimant cannot be habitually resident unless she has the right
to reside in the CTA (Income Support (General) Regulations 1987, reg 21AA;
Jobseeker Allowance Regulations 1996, reg 85A; Employment and Support Allowance
Regulations 2008, reg 70(2); State Pension Credit Regulations, reg 2; see DWP,
DMG,
072771). For CB and CTC the terminology is slightly different – the words
‘habitually resident’ are not used, but a person must be treated as being in
the UK. And to be treated as being in the UK, you have to have a right to
reside (Child Benefit Regulations 2006, Reg 23(4)(a); Tax Credits (Residence)
Regulations 2003, Reg. 3(5); CBTM10010 - Residence and immigration: residence –
introduction).
However, whether we treat the RTR
as part of habitual residence, or as an extra test, the effect in both cases is
to add conditions onto the circumstances in which a person is treated as
meeting the ‘residence’ criteria of Regulation 883/2004. That Regulation offers
a clear, exhaustive list for allocating ‘competence’ of Member States for
benefits, providing a residual category for the economically inactive, at Art
11(3)(e) in which the Member State of residence is competent. Once competence
has been established, that State is then responsible for the payment of family
benefits, subject to the non-discrimination provision.
The scheme of the Regulation is
intentionally broader than that of Directive 2004/38 – applying a different personal
scope for a start (covering all those who ‘are
or have been subject to the legislation of one or more Member States’), and covering pensioners, those between
jobs, those who might fall outside of the Dir 2004/38 Article 7(3) retention
provisions – essentially, those who should be covered by social security
provisions. To apply the right to reside test is to hack down the rationae
personae of the Regulation to emulate that of Directive 2004/38 – an approach
not endorsed, implied or merited in the Regulation. The AG’s assertion that law
should not exist in ‘separate compartments’ as justification for splicing the
instruments together and embroidering an extra condition into the Regulation
rather too easily ignores the different purposes and scopes of the instruments.
Similarly, the different material issues – the restriction of social assistance
now embodied in Directive 2004/38, versus award of social security, are inappropriately
assimilated. The AG notes, apparently approvingly, the UK’s assertion that ‘the two benefits at
issue in the present case have some characteristics of social assistance’. This
goes unexamined, and helps form the context in which the different nature of
social security, and different subject matter of the Regulation, is effectively
ignored. In sum, we have an approach in which if a benefit is a ‘bit like’
social assistance, and a legal instrument is in roughly the same area as
Directive 2004/38, then unwritten restrictions kick in.
In the specific case of family
benefits, the Regulation’s residual category should provide a guarantee that
families do not fall through the cracks and find themselves disentitled to any
family benefits, since many Child Benefits are tied to residence. This also
serves the ‘bonus’ purpose of protecting children, who are not the agents of
migration, and who the legislature and the Court have hitherto taken pains to
protect from suffering the penalties of their parents’ choices and/or
misfortunes – either out of an interest in child welfare, or as an instrumental
way of avoiding disincentives (risks to their children’s welfare) for workers
to migrate.
Here it is worth emphasising that
when we speak of falling through the cracks, we mostly speak of people who have
been working (rather than those who have never worked). The right to reside
test results in a strict bifurcation between those ‘working’ and those not. The
rules on retention of worker status are stringent and exclusionary, so that
people can be working and contributing for many years and still fall over
welfare cliff edges. Regulation 883/2004 should offer some protection to their pre-school
children in such cases, even where Directive 2004/38 is (according to emerging
case law) rather harsher to the parents.
However, in the AG’s approach we can
see the Directive, having already been transformed from an instrument to
promote free movement into a instrument to prevent benefit tourism (Dano); being promoted to the status of a
fundamental principle of limitation, to be (retrospectively) mainstreamed into
other (higher) legislative instruments – exerting restrictions that are not
there written.
(ii) the ‘inherent’, ‘inevitable’ and ex ante discrimination fudge;
The AG avoided dealing with the
question of whether the RTR test discriminates contrary to Regulation 883/2004,
by finding that the RTR prevented the Regulation from being applicable at all –
apparently treating ex ante discrimination as de facto lawful. This conceptual
approach is deeply problematic – can Member States really avoid the
non-discrimination obligations contained in legislation by applying
discriminatory gateways to access that legislation?
As noted above, once competence
of a Member State has been established for the purposes of Regulation 883/2004,
it is then – according to that instrument, bound by non-discrimination duties
(Article 4). However, under the proposed approach, there will be people for
whom no Member State has competence,
because competence is to be determined according to a set of restrictions in a
completely different instrument which apply a different concept to a different
set of people for a different set of benefits. And if they are in this way
found not be within any State’s competence, the question of discrimination is
avoided.
To the extent that the AG does
engage with non-discrimination duties, it is part of an imprecise discussion
about the likelihood of the lawfulness of curbing benefits from non-nationals
(benefit restrictions are ‘traditionally associated’ with requirements of legal
residence). In drawing upon Dano and Brey, the fact that those cases dealt
with benefits therein defined as social assistance is swept aside somewhat as
the AG finds ‘there is nothing in those judgments to indicate that such
findings apply exclusively to the social assistance benefits or the special
non-contributory cash benefits with which those cases were concerned and not to
other social benefits’. But there is plenty to indicate that social security
benefits should be treated differently in their coverage in a different piece
of legislation. It is surely very odd to suggest that the Court should list
those instruments on which it was not
ruling.
Recognising that the rules do
treat UK nationals and non nationals differently, the Opinion makes some
rhetorical points about discrimination as part of the natural ecosystem of free
movement – ‘one way of
looking at it is that this difference in treatment as regards the right of
residence is inherent in the system and, to a certain extent, inevitable… In
other words, the difference in treatment between UK nationals and nationals of
other Member States stems from the very nature of the system.’ None of this does
anything to address the question of the problem of direct versus indirect discrimination
– the latter being rather easier to justify. It almost suggests that some
degree of direct discrimination has
to be accepted as a matter of pragmatism. Indeed, the characterisation of the
rules as indirectly discriminating on
the grounds of nationality is one of the most contentious issues in the case.
Much as in C-184/99 Grzelczyk, an extra condition
is imposed only upon non-nationals. Hiding behind the banner of indirect
discrimination seems unconvincing if we posit a brief thought experiment.
Imagine all EU national men automatically had an RTR, but all EU national women
had to pass the RTR test; that could not be described as indirectly discriminating on the grounds of sex. While it could be
argued that nationality is a different type of ground to sex, and so different
differences are acceptable, the fact that we are dealing with direct
discrimination remains. And this is not explored. The only thing that needs
justification, under this analysis, is not the test, but the procedural
checking, which we look at next.
(iii) the parallel reality in
which the UK does not presume unlawful residence
The AG states that it cannot be
inferred that the UK presumes that claimants are unlawfully resident, adding
that European citizenship would preclude such a presumption, and that claimants
should not systematically be required
to prove they are not unlawfully resident.
However, the whole claims process
in the UK does systematically require proof of claimants that they are (not un)lawfully
resident. The right to reside test takes the limitations of Directive 2004/38
and makes them a priori conditions of
the existence of the right to move and reside. There is no general
citizenship-based right to reside that can be modified by limitations, with
some discretion. The conditions come first, and must be demonstrably met, in
each and every case. The UK’s assertion that ‘In cases in which there is doubt as to whether the claimant
has a right of residence, an individual assessment of the claimant’s personal
circumstances is carried out’ rather masks the process of assessment that
decision makers are required to undertake according to the decision maker guidance on establishing whether a claimant really is or was a
worker - using the UK’s own definition. That definition is flawed in itself,
requiring evidence to meet a higher threshold than set in EU law, and the
evidential hurdles can be considerable. Even for the most straightforward cases
of worker, proof is required that earnings have been at or above the Minimum
Earnings Threshold for a continuous period of at least three months. Those with
variable earnings are expected to provide considerable evidence if they wish to
‘prove’ their right to reside. In cases where HMRC have reason to doubt
conditions continue to be met for tax credit awards, they issue further,
penetrating compliance checks, and in the UK government’s Budget Policy
costings document, the government announced that the
restrictions on benefits ‘will be augmented by additional HMRC compliance
checks to improve detection of when EEA migrants cease to be entitled to these
benefits. The checks will apply to all
EEA migrant claims’. The system is set up to make the conditions
constitutive of the right to free movement, effectively requiring all claimants
to prove that they are not unlawfully resident, notwithstanding the apparent ‘background’
of EU citizenship, and claims are subject to systematic checking, notwithstanding
Article 14(2) of Directive 2004/38.
The AG however, took the position
that such checks are not systematic, but may be indirectly discriminatory, but
that they were lawful, with the briefest of nods to justification – as though
the mere mention of the UK’s public finances is sufficient to provoke a
reverential hush, genuflection and swift retreat from the subject:
‘without any need to pursue the argument
further, I consider that the necessity of protecting the host Member State’s
public finances, (75) an argument relied on by the United Kingdom, (76) is in principle sufficient justification for a Member State
to check the lawfulness of residence at that point.’
No data, it
seems, is required.
Nor is any engagement with the question as to whether purely
economic aims are legitimate aims for the purpose of justifying discrimination
or restricting a fundamental freedom – on this, see AG Sharpston’s Opinion in
C-73/08 Bressol.
(iv) the failure to notice that
the UK automatically refuses social assistance to those reliant on ‘sufficient
resources’.
The AG rounds up the Opinion by
noting that in any case, the economically inactive are not completely hung out
to dry – they should have their circumstances examined to determine whether
they have sufficient resources not to become a burden on the public purse.
Here, the AG emphasises that mere recourse to public funds should not bar a
claimant from having a right to reside based on sufficient resources, and that
their case should be assessed as to whether they are an ‘excessive’ burden.
This is all very well, but speaks to a rather different reality to that
experienced in the UK, in which the economically inactive are automatically barred from claiming social
assistance because they are automatically treated as not having
sufficient resources at the point of claim. Moreover, the Upper Tribunal has
suggested that ‘sufficient resources’ means sufficient to provide for the
migrant’s family for five years; a migrant cannot claim to have had
sufficient resources for a short period of time between jobs if those resources
would not have lasted for five years.
In short, the Court should be
wary of following the AG’s lead in backing off from the apparently prohibited
area of UK welfare benefits quite so hastily. The Regulation’s personal and
material scope, and purpose, cannot simply be ignored or modified, nor can the
Directive be transformed into an all-encompassing, higher principle, through pro-Member
State judicial activism. The right to reside test adds conditions to the
application of the Regulation’s provisions, and it does so in a directly
discriminatory way. The Court must address these points honestly; if it is
prevented from doing so by the political wind – or if it too conjures up a
default forcefield around benefits regardless of type, and gives licence to
‘inevitable’ discrimination – the ramifications will tell not only upon
claimants, their children, the vanishing strands of EU citizenship and the
obstructed freedom to move, but also upon the Court’s credibility.
Photo credit: www,kilburntimes.co.uk
Barnard & Peers: chapter 9
