5 June 2015

Squaring EU free movement with greater control over the UK’s welfare system is going to be one of David Cameron’s biggest challenges in his renegotiation. This morning it would be fair to say the Prime Minister woke up to some mixed headlines following yesterday’s developments at the European Court of Justice. So what accounts for the confusion and varied interpretations?

Why does the Commission have a problem with the UK’s ‘right to reside’ test?

Firstly, it is important to differentiate between the UK’s stand off with the Commission over the UK’s interpretation of existing EU rules and David Cameron’s proposals to introduce much tougher eligibility criteria including a four-year qualification period for in-work benefits – the two issues are clearly related but need to be addressed separately.

Two years ago, the Commission announced it would be taking the UK to court over the ‘right to reside test’ – a mechanism devised to determine EU migrants‘ eligibility for UK benefits – but the preliminary hearing was only held yesterday. This is a very technical issue which ultimately comes down to how different benefits are classified under EU law. According to the Commission, the right to reside test unfairly discriminates between UK and Irish citizens and other EU nationals, denying them access to UK social security benefits they are entitled to under EU law. The UK contends that the benefits covered by the test (including child benefit and income based JSA) are ‘social assistance’ – which can be limited to member states’ own nationals – and not social security.

In a separate case, one of the ECJ’s Advocate-Generals gave an opinion which stated that Germany was indeed entitled to refuse certain benefits to an out-of-work Spanish migrant on the basis that “Granting entitlement to social assistance to EU citizens who are not required to have sufficient means of subsistence could result in relocation en masse liable to create an unreasonable burden on national social security systems.”

Some commentators have argued that this opinion – also delivered yesterday – is very helpful to David Cameron’s reform push. Others – such as the Lib Dem MEP Catherine Bearder – have claimed that “the UK government can reform unemployment benefits for EU migrants without having to change a single EU law. [Cameron] should not waste political capital on the red herring of benefit tourism.” However, this fundamentally misses the point – as noted above, the Commission is trying to force the UK to drop its existing safeguards to prevent unemployed EU migrants from accessing UK benefits on the basis these are ‘social security’ and not ‘social assistance’.

Current EU rules are inconsistent and don’t accommodate non-contributory welfare models

The problem is that the current EU rules make little accommodation for non-contributory welfare systems (like the UK model) which by their very design are more readily accessible, even for those who have not made any prior contributions, and which therefore require additional safeguards. In addition, the confusing distinction between ‘social security’ and ‘social assistance’ highlights the inconsistent and contradictory nature of the current regime. Back in June 2011, 13 national governments including the UK drew attention to this problem noting that:

Recent discussions… have revealed different interpretations at the European level on the interaction of the social security coordination Regulation 883/2004 with other relevant EU instruments, notably the free movement Directive 2004/38, including with regard to the concept of residence.

The member states called on the Commission to “look into this issue as a matter of priority… with a view to considering amendments to the current legislative framework, should these be deemed necessary.” Unfortunately, rather than heeding this advice, the Commission opted to take the UK to the ECJ, thereby risking undermining acceptance of the principle of free movement itself.

While this debate is highly legalistic, it is vital not to lose sight of the broader political principle at stake which is that national welfare systems are the product of domestic democratic politics and the EU should be flexible enough to strike a balance between maintaining free movement on the one hand, and accommodating different welfare systems on the other.

If the UK is able to win this case at the ECJ, it will make it easier for David Cameron to make the case for extending the principle that migrants should make an appropriate contribution before being eligible to claim to cover in-work benefits as well.