Restricting access to social benefits by mobile EU citizens has represented the most controversial aspect of the often toxic and uniformed Brexit debate on migration issues. In a letter sent to Mr. Tusk on 10 November 2015, Mr. Cameron emphasized that “on immigration, we need to tackle the welfare incentives that attract so many people from across the EU to seek work in Britain”.
The second assumption is that there is a need to restrict the access to social benefits in order to preserve the financial sustainability of the national welfare system. This claim is hard to accept, especially if read in the light of the inconclusiveness of data.
This request rested on two interrelated, and both largely unsubstantiated, assumptions. First, such a move could remove—or, at least, limit—the pull effect of the generous British welfare system on people coming from other EU countries, and especially Eastern European ones. However, it is far from certain that access to social benefits is one of the major factors attracting these people in the UK: a thriving labour market and higher wages are likely to have a far greater impact in this regard. The second assumption is that there is a need to restrict the access to social benefits in order to preserve the financial sustainability of the national welfare system. This claim is hard to accept, especially if read in the light of the inconclusiveness of data, even of those relied upon by the Government. In this regard, it is quite revealing that, when the Commission urged the UK to provide some evidence, the answer was “We consider that these questions place too much emphasis on quantitative evidence”.
This notwithstanding, these concerns got recognition by EU institutions and the other Member States, although not nearly as much as the British government had hoped for. Having rejected the idea of introducing a cap on incoming EU citizens or to allow the UK to unilaterally impose a waiting period before EU mobile citizens could have access to social benefits, the “New Settlement for the UK in the EU” contained some reassurances and some promises of change. Inter alia, it reiterated that safeguarding the sustainability of national social security system is a reason of public interest that States can invoke to justify non-discriminatory measures limiting access to social benefits by mobile EU citizens. Furthermore, the document of the Heads of State and Government promised to introduce an alert and safeguard mechanism to be activated in case of inflow of workers of an exceptional magnitude.
On June 14, 2016 less than ten days before the Brexit referendum, the Court of Justice of the European Union (hereafter “the Court”) sought to join in the efforts to defuse British voters concerns with migration-related issues in a judgment concerning United Kingdom’s restrictions on access to social security benefits by mobile EU citizens (ECJ, Judgment of 14 June 2016, Case C-308/14, European Commission v. United Kingdom of Great Britain and Northern Ireland). The decision adopted a remarkably pro-State reading of the EU rules on free movement, citizenship and access to social benefits, trying to convey the message that such rules do not impair host States’ capacity to keep under tight control access to their social security systems. With the benefit of hindsight, we can now say that the attempt did not work out. However, unlike the New Settlement, the judgement at stake is bound to become a lasting legacy of the Brexit question. It is thus worth examining its content, also in the light of some recent judgments of the Court on the same issue, so as to assess its potential impact on the interaction between mobility and national welfare spaces.
The Judgment: Background and Issues at Stake
The case originates from an infringement procedure brought by the Commission against some UK legislative provisions limiting the access to certain social benefits only to those having right of residence in the UK. The action of the Commission focused on child benefit and child tax credit, both aiming to provide support to persons, especially low income ones, responsible for one or more children and both financed out of general taxation.
The main complaint put forward by the Commission concerned the choice to read the condition according to which only persons “habitually resident in the UK” could claim child benefit and child tax credit as meaning that these persons must have “the right to reside in the UK”. Indeed, the “right to reside” requirement is nowhere to be found in Regulation 883/2004 on the coordination of social security, and it unduly deprives a number of people from having access to the social benefits at issue. This is the case of economically inactive EU citizens not having “sufficient resources for themselves and their family”, according to Article 7 of Directive 2004/38. Conversely, the Commission argued that the notion of “residence” within Regulation 883/2004 is just a conflict rule aiming at, on the one hand, ensuring that only one social security system is applicable and, on the other, that none of those covered by the Regulation is left without social security. Therefore, the notion only designates the place where the person has the habitual centre of interests and it has nothing to do with its legal status.
In its defence, the UK Government acknowledged that the notion of residence within Regulation 883/2004 is a conflict rule, but it rejected the idea that this forbids Member States from relying upon the right to reside test in order to restrict the access to certain social benefits. In this regard, it emphasized that this possibility has been duly recognized in the Brey judgment (ECJ, 19 September 2013, case C-140/12, Brey). In that case, the Court held that “there is nothing to prevent, in principle, the granting of social security benefits to Union citizens who are not economically active being made conditional upon those citizens meeting the necessary requirements for obtaining a legal right of residence in the host Member State”.
The Court found in favour of the State, rejecting the main complaint put forward by the Commission and reiterating that Regulation 883/2004 only aims at coordinating social security systems, leaving to each Member State’s autonomy to lay down the conditions for the granting of social benefits. In so doing, the Court relied heavily on its own dictum in Brey, as it found that EU law does not prevent the application of the “right to reside” requirement to claimants for the social benefits at stake.
The Commission put forward a second, and alternative, complaint, contending that the introduction of the right to reside requirement inevitably results in direct discrimination, prohibited by Article 4 of Regulation 883/2004. Indeed, the requirement only applies to nationals of other Member States, as UK nationals that are resident in the UK satisfy it automatically. The Commission added that, even accepting that the requirement only results in indirect discrimination, the respondent States had failed to provide a viable justification for the unequal treatment.
Once again, the Court was swift in finding in favour of the State, not even taking into consideration the direct discrimination complaint and uncritically accepting that the need to protect public finances is a valid reason for introducing an indirectly discriminatory requirement.
The UK, rejecting the charge of direct discrimination, accepted that the requirement is more readily satisfied by UK nationals and, thus, it may have indirectly discriminatory effects. However, it also contended, relying again on Brey, that the measure represents a proportionate response to need to protect public finances, especially in the light of the fact that the social benefits at stake are not financed by recipients’ contributions, but out of general taxation. Once again, the Court was swift in finding in favour of the State, not even taking into consideration the direct discrimination complaint and uncritically accepting that the need to protect public finances is a valid reason for introducing an indirectly discriminatory requirement.
Some Critical Remarks
The judgment at stake is broadly in line with a host of recent decisions concerning the thorny relationship between intra-EU mobility and access to national welfare spaces. In all these cases (ECJ, 11 November 2014, case C-333/13, Dano; ECJ, 15 September 2015, case C-67/14, Alimanovic), the Court showed sensitivity toward the concerns expressed by some Member States as to the detrimental political and economic effects of granting unrestricted access to social benefits to citizens of other Member States, especially those non economically active. However, in the case at hand the Court seemed to go even further, clearly driven by the desire to make its voice heard on such a topic and to offer a clear-cut response to some of the arguments put forward by the Leave campaign. To this end, the decision tends to gloss over some controversial issues and, in some other instances, to adopt legally questionable solutions.
As provided by the Treaty, Member States can adopt discriminatory measures to restrict the free circulation of persons only if justified on the grounds of public policy, public security or public health. Therefore, the UK could not invoke the sustainability of national social security system as valid ground for the imposition of a discriminatory requirement.
This analysis focuses on the treatment reserved by the Court to the Commission’s second complaint, since it represents the most problematic part of the judgment. First, the Court utterly disregarded the direct discrimination argument put forward by the Commission, maintaining that the right to reside test only gives rise to indirect discrimination, “as such a residence condition is more easily satisfied by United Kingdom nationals, who more often than not are habitually resident in the United Kingdom, than by nationals of other member States” (para. 78). The finding rests on the confusion between two different requirements: the right to reside test and the residence condition. While the latter has just to do with the place where the person has its centre of interests and can be applied to all claimants, the former concerns the capacity of persons not to be a burden for the public finances and it applies only to citizens of other Member States. Indeed, UK nationals residing in the United Kingdom, even if not economically active, are clearly exempted from it. Therefore, there is little doubt that the requirement is directly discriminatory and, thus, in breach of one of the founding principles of the EU legal order. A more accurate assessment of the requirement’s nature would have made a huge difference as for the justification of the requirement. As provided by the Treaty, Member States can adopt discriminatory measures to restrict the free circulation of persons only if justified on the grounds of public policy, public security or public health. Therefore, the UK could not invoke the sustainability of national social security system as valid ground for the imposition of a discriminatory requirement.
Second, even accepting that the requirement is only indirectly discriminatory, it is hard to escape the feeling that the Court has been far too swift in yielding to the justification put forward by the British Government. After accepting that protecting the finances of the host State represents “in principle” a valid justification for the requirement, the Court engaged in a skewed review of proportionality, neglecting some of the most troublesome issues at stake.
In particular, the judgment found that the requirement was proportionate, since “it is only in case of doubt that the United Kingdom authorities effect the verification necessary to determine whether the claimant […] has a right to reside lawfully in the United Kingdom” (para. 84) and not systematically. The claim plainly contradicts what stated in the previous paragraph, where the Court explained that all claimants have to provide the data revealing whether or not they have the right to reside and that “those data [are] subsequently checked by the authorities responsible for granting the benefit concerned”. The fact that British authorities, quite obviously, perform a more in-depth control only in those cases where data reveal a scarcity of financial resources and, thus, a potential problem with the right to reside does not make the mechanism less systematic.
Furthermore, the Court completely overlooked the claim made by the Commission, according to which the right to reside test is “an automatic mechanism that systematically and ineluctably bars claimants who do not satisfy it from being paid benefits, regardless of their personal situation and of the extent to which they have paid tax and social security contributions in the United Kingdom”. This is completely at odds with Brey, which, after being the main reference point in the first part of the judgment at stake, here fades into irrelevance. In that case, the Court made clear that authorities cannot infer that a person has not sufficient resources only because he or she applied for a benefit, as they are still bound to carry out “an overall assessment of the specific burden which granting that benefit would place on the national assistance system as a whole, by reference to the personal circumstances characterizing the individual situation of the person concerned” (para. 47). Conversely, in Commission v. UK the Court ignored this aspect, seemingly following in the footsteps of some recent judgments—such as Dano—where the Court found that a case-by-case assessment was not necessary.
The Court should have adopted a more cautious and fine-grained approach, avoiding to come to conclusions that, de facto, give Member States carte blanche when it comes to denying the right to reside to persons experiencing financial difficulties.
This is all the more problematic since this judgment originates from an infringement procedure directed against legislative provisions that are capable of being applied to a wide array of different cases and it does not refer to the specific situation of a non-integrated person, as it was the case in Dano. The Court should have adopted a more cautious and fine-grained approach, avoiding to come to conclusions that, de facto, give Member States carte blanche when it comes to denying the right to reside to persons experiencing financial difficulties. In the judgment at hand there is no consideration as to whether this difficulties are just limited and temporary, or whether the persons concerned could be eligible on different grounds, such as, for instance, a sufficiently high level of integration in the society of the host State.
Lastly, one cannot but notice that in this judgment the Court did not make any reference to the notions of solidarity and citizenship. What was “destined to be the fundamental status of nationals of the Member States” entailing “a certain degree of financial solidarity between nationals of a host Member State and nationals of other Member States” (ECJ, 20 September 2001, C-184/99, Grzelczyk) has not just lost its primacy vis-à-vis other competing interests, but it has been pushed out of the picture altogether.
Photo Credits CC: Nicholas Schooley