Social Security and Pension aspects of the Immigration and Social Security Co-ordination (EU Withdrawal) Bill


The Immigration and Social Security Co-ordination (EU Withdrawal) Bill contains measures for ending EU Citizens’ free movement, as well as measures in relation to Irish citizens, and measures and in relation to Social Security co-ordination, see my blog post The Immigration and Social Security Co-ordination (EU Withdrawal) Bill: The End of EU Citizens’ Free Movement.

The provisions for social security co-ordination will affect social security and pension entitlements for people who are not protected by the EU-UK Withdrawal Agreement and the European Union (Withdrawal Agreement) Act 2020. For more information as to the how the current EU scheme works and will continue to work for those within its scope, see my blog posts Pensions, Healthcare and Social Security for EU Citizens after Brexit: the forgotten aspect of Free Movement, The Withdrawal Agreement: Social Security, Healthcare and Pensions after Brexit, and Social Security, Healthcare and Pensions for EU Citizens under the UK’s European Union (Withdrawal Agreement) Bill. In particular, the provisions of the Immigration and Social Security Co-ordination (EU Withdrawal) Bill will affect UK nationals and EU citizens moving between the UK and the EU for the first time from 2021.

In practical terms, the benefits that may be affected by the Immigration and Social Security Co-ordination (EU Withdrawal) Bill  can be split into three groups:

  • the State Pension;
  • Department for Work and Pension (DWP) benefits, such as Employment and Support Allowance (ESA), Disability Living Allowance (DLA) (Care Component), Maternity Allowance, etc; and
  • Her Majesty’s Revenue and Customs (HMRC) benefits, Child Benefit and Child Tax Credits.

Powers to change Social Security and Pensions Co-ordination Law 

Clause 5 deals with Social Security and Pension Co-ordination and confers power to modify retained direct EU legislation in relation to these areas. It gives power to an appropriate authority to do so. An appropriate authority is the Secretary of State or the Treasury; a devolved authority (Scottish Ministers or a Northern Ireland department); or a Minister of the Crown acting jointly with a devolved authority.

The retained direct EU Regulations that may be modified are:

  • Regulation 883/2004 (and its implementing Regulation 987/2009)
  • Regulation 1408/71 (and its implementing Regulation 574/72)
  • Regulation 859/2003 (extending Regulation 1408/71 to nationals of non-EU Member States)

The power to make Regulations includes power:

  • to make different provision for different categories of person to whom they apply (where such categories may be defined by reference to a person’s date of arrival in the UK, their immigration status, their nationality, or otherwise);
  • otherwise to make different provision for different purposes;
  • to make supplementary, incidental, consequential, transitional, transitory, or saving provision; and
  • to provide for a person to exercise a discretion in dealing with any matter.

As regards the power to make supplementary, incidental, consequential, transitional, transitory, or saving, provision, it also includes power to modify:

  • any provision made by primary legislation passed before or in the same Parliamentary session of this Act
  • any provision made under primary legislation made before or in the same Parliamentary session as this Act is passed, and
  • retained direct EU legislation (not otherwise mentioned in the list of EU Regulations above).

Thus, it can be used to change an Act of Parliament; such powers are known colloquially as Henry VIII powers. It is a very widely drawn power and any regulations made under it will need to be carefully scrutinised.

Regulations made by use of this power are subject to the draft affirmative procedure for statutory instruments. They are not to be made unless a draft of that instrument has been laid before and approved by a resolution of each House of Parliament.

As regards the impact of regulations made using this power, EU-derived rights, powers, liabilities, obligations, restrictions, remedies and  procedures  (available in UK law under section 4 of the European Union (Withdrawal) Act 2018, and as modified by UK law)  cease to be recognised and available in domestic law in so far as they are inconsistent with, or are otherwise capable of affecting the interpretation, application or operation of, provision made by these regulations.

The Scope of the Power

The social security and pension co-ordination regime includes rules relating to the payment to social security/national insurance contributions and access to benefits across the UK, the EU, the rest of the EEA, and Switzerland, by UK nationals, EU citizens, EEA nationals, and in some case non-EU citizens from third countries.

Clause 5 in the bill allowed changes to be made to the social security and pension co-ordination regime as it has been fixed and retained in UK law by the EU (Withdrawal) Act 2018. At present it is impossible to know what new arrangements will be put in place as regards UK nationals and EU citizens moving between the UK and the EU for the first time from 2021 because the negotiations in relation to such arrangements are yet to take place.

The powers in clause 5 allow modification of the retained rules as appropriate and include the power to make regulations to implement new policies as regards co-ordination of social security and pensions. The clause also allows for the disapplication of certain directly effective rights, that have been saved into UK law by section 4 of the European Union (Withdrawal) Act 2018, to extent that they conflict with the exercise of that power.

Regulations may be made to modify UK-retained direct EU legislation, and to make different provisions for different categories of persons, for example for those who arrive before or after the end of the transition period (31 December 2020). The list of those possible reference points (immigration status, nationality, etc.)  is not exhaustive. Further, there is scope for provision to be made for those who are covered by the scope of the retained co-ordination regulations but who are out of scope of any EU-UK agreements.

Discrimination issues

Are the proposed changes compatible with the requirements of the Equality Act 2010? First, it should be noted that they only affect UK nationals and EU citizens (including EEA nationals and Swiss nationals) who are not protected by the EU-UK Withdrawal Agreement and the European Union (Withdrawal Agreement) Act 2020. Second, the UK and Ireland have completed a separate agreement to regulate social security and pension issues for Irish citizens and UK nationals in the Common Travel Area.  In the result, the use of the powers in Clause 5 of the Bill will primarily affect those who move or who have social security issues for the first time after the end of the transition period (31 December 2020). However, the powers in the Bill may also be used to modify UK-retained EU law so as to keep track of changes to the EU’s social security and pension regime as it affects those protected by the Withdrawal Agreement and as permitted by that Agreement.

The DWP policy equality impact assessment of the social security and pension aspects of the Bill  is remarkably opaque and perhaps inadvertently misleading in places. For example, as regards sex,  it notes as regards the export of child benefit to other EU states, 76% of those exporting are male whilst only 24% are female. That suggests that it is men rather than women who benefit. However, that approach takes no account of the fact that the persons to whom child benefit is often paid are the parents with care, usually a woman rather than a man in a mixed-sex relationship. The current provisions of EU law allow for a parent  (say a male EU citizen worker in the UK) to be eligible to export the benefit, and  for the other parent (say a female EU citizen in her home state caring for their child) to be the recipient of the benefit in question. That suggests a more nuanced sex and gender analysis is required. In a typical case,  it is not simply that there is a man working in the UK and therefore eligible for the child benefit that he seeks to export to his children resident in an EU state. There is also a  woman who is receiving the benefit as the parent with care. She and women like her need to be considered when assessing sex discrimination issues.

As regards ethnicity, the DWP/HMRC appear not to hold any information on the ethnicity of all claimants. They do not envisage an adverse impact on these grounds. However, this takes no account of those who may have migrated into the EU and who may have been naturalised in EU states, or those born in the EU but from parents of non-European heritage; they will have an ethnicity associated with places outside the EU. For example, there are Dutch Somalis who have come to the UK. Strictly of course they are Dutch by nationality, however they are Somali by ethnicity. Such persons may have a greater mobility history than those who are simply Dutch by ethnicity and Dutch by nationality. No account seems to have been taken of this sort of issue by the DWP.

As regards to persons with disabilities, it appears that the DWP/HMRC cannot identify across all benefits those with a disability. In the EU there are apparently 8,000 claimants in receipt of DLA/PIP/AA and 6,000 in receipt of ESA. Those numbers are not large. However, the data is incomplete. It is of particular importance that persons with disabilities are able to maintain their access to state benefits if they are moving between the UK and the EU and vice versa. The DWP/HMRC must engage in further work in order to ensure the rights of persons with disabilities.

Where does all the money go?

 As to the amount of UK benefits exported, in 2018/19 over £2 billion was spent on around 500,000 claimants in the EU/EEA. Of this a staggering 90%+ went on State Pension payments and 90%+ of recipients were UK nationals or Irish citizens.  Further, about 90% of State Pension recipients live in the western European states who joined the EU before 2004, with over 60% living in just three countries (Ireland, 25%, Spain 20%, and France 15%).  In addition, the weekly average amount of UK State Pension paid to those in the EU is currently £80, compared to £152 in Great Britain. In France there are 65,800 State Pension recipients receiving a mean weekly amount of benefit of £108. In Ireland there are 132,000 receiving a mean weekly benefit of £62, and in Spain there are 105,500, receiving a mean weekly benefit of £112.

Given that the UK public debate on the export of benefits to people  in EU countries seems to be about benefit recipients in other countries ‘taking advantage’ of UK law, it is striking that in reality those in receipt of 90% of DWP benefits are  those who have paid into and who are entitled to the State Pension. The retired British banker who lives in Provence, the Irish academic back home on a pension in Galway, and the plumber from Kent who now lives out his last years in Spain, account for the vast bulk of the payments. By contrast, a UK-based self-employed Italian journalist who draws who Maternity Allowance back home during her maternity leave is statistically insignificant. As regards pregnancy and maternity, the DWP estimates that there are only around 100 claimants in receipt of Maternity Allowance in the EU.

While over 90% of State Pension recipients are UK nationals or Irish citizens, it appears that 70% of child benefit recipients and 73% of child tax credit recipients are from the eight eastern European states that acceded to the EU in 2004. But look at the sums involved:  in 2018/19 £2,050 million of benefits exported is State Pension payments to the EU/EEA/Switzerland to almost 500,000 people. By comparison, only £18 million was paid in the same period by way of DLA/Personal Independence Payments (PIP) to a mere 5,000 people. Moreover, in the same period, less than £ 1 million was paid to around 100 persons in receipt of Maternity Allowance.

Finally, as regards those persons in receipt of Chid Benefit, in the period to February 2019, expenditure was a mere £16.9 million, payable to 12,045 recipients; and the equivalent figures for Child Tax Credit are a mere £13.1 million, payable to 3,020 persons. The amounts paid to those not in receipt of the State Pension are very small.

Any concern about EU citizens gaming the UK benefits system for the advantage of family members back home is misplaced.

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