Social Security Coordination (Council Regulation (EEC) No 1408/71 and Council Regulation (EC) No 859/2003) (Amendment) (EU Exit) Regulations 2019

Baroness Sherlock Excerpts

Tuesday 5th March 2019 Lords Chamber

[Baroness Janke (LD)]

My Lords, I too have some questions. In May 2018, the Commons European Scrutiny Committee raised very strong concerns about providing legally binding arrangements to protect existing rights. We have already heard mention of non-emergency healthcare; these regulations apparently do not provide that. There are also issues about EU-wide dealings or the need for bilateral arrangements with EU and third countries.

The noble Baroness spoke about data and information sharing. Again, this is a vexed area of negotiation. Certain laws govern the ability to share information and, unless we have some form of legally binding agreement, I cannot really see how this can happen, having looked at the evidence of various people who have looked into data sharing with the EU after Brexit.

We are talking about removing inoperable clauses, under the withdrawal Bill, in relation to the administrative commission. We have mention of disputes; who will settle disputes? There will be a need for medical assessments if they are not provided by individual countries.

It is not clear what is meant by “evidence”. I know that, in my own city, EU citizens have had a very hard time providing evidence of residence in this country, even though some of them have lived here for 40 years. I would like to know what sort of guidance will be given on the quality of the evidence, and how that will be provided to people.

On disputes and the removal of provisional payments, again it is not clear how and under what authority disputes are to be resolved. What is the final authority? This is left fairly open, and could be open to legal action. How will rulings be managed if we come out without a deal and are not proposing to recognise the European Court of Justice?

I am sure it is important that the Government look ahead to the possibility of no deal, but it seems to me that there are lots of very open areas in these regulations that need to be fleshed out. We are talking about the rights of individuals and how they can manage without benefits—where there are disputes, for example.

I very much echo the calls made by other Members here for an impact assessment. It seems to me that there is a fundamental need, given the potential impact of these systems not working after Brexit day, for an impact assessment to be carried out.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for her introduction and all noble Lords for their contributions. I start with an apology, because I will not be brief. I do not often make lengthy speeches in this House, but I have been through these regulations as best as I can—and there are a lot of them—read the Explanatory Memorandum and listened carefully to the Minister’s introduction, and all that I have read in the Memorandum and the introduction implies that these are simply technical amendments which will not make much difference or have much impact. I must therefore have misunderstood them, so I apologise because I will ask quite a lot of questions, since I can only conclude that my understanding of their impact is in some way erroneous. I look forward to having that corrected.

First, my understanding is that the current rules about social security co-ordination within the EU are based on four principles: the single state principle, which means that at any point in time I am covered only by the social security system of one country and pay contributions only in one country; equal treatment, which means that if I am in another member state then I am treated by it the same way as one of its nationals; aggregation, by which periods of insurance, employment or residence in another member state count when determining my eligibility for benefits; and exportability, which means I can receive benefits from one member state even when I am living in another one.

If we have a deal, the withdrawal agreement will cover the transition period during which EU social security co-ordination will continue to include the UK and our citizens, and the political declaration says that the UK and the EU agree to consider future social security co-ordination in the light of future movement of persons. I guess that the presumption, therefore, is that the UK will seek to strike a single deal with the EU rather than bilateral agreements with member states.

However, if there is no deal, there are no provisional transitions, and in the absence of comprehensive alternative arrangements, problems could arise on all those fronts, including whether you can aggregate contributions, export benefits to other member states, the risk of having to pay double national insurance contributions, a lack of clarity about which country is responsible for paying someone’s benefits, and no mechanism for resolving disputes.

The scale is significant. The House of Commons Library briefing on the immigration Bill said:

“In 2017-18, UK benefits totalling around £2 billion were exported to around 500,000 claimants living in EEA countries. Over 90% … was on State Pensions, and over 90% of the recipients … were UK or Irish nationals.”.


In addition, more than 1 million people will be affected by the aggregation issues, according to evidence given to the Commons committee on the immigration Bill by British in Europe.

My first question for the Minister is this. There were some bilateral agreements between the UK and some EU member states, which predate either their or our entry into the EU. Would any of those still be applicable in a no-deal scenario? Would we seek to update them, would we want to negotiate additional unilateral arrangements with other member states, or is it our intention to seek a whole EU deal in the event of there being no deal?

If we end up with no deal, we could see UK citizens returning to the UK, perhaps in significant numbers, and needing help. DExEU published a policy paper on 6 December called Citizens’ Rights—EU Citizens in the UK and UK Nationals in the EU, which accepted the importance of returning UK nationals being able quickly to access benefits and housing. Paragraph 24 stated:

“Arrangements will be made to ensure continuity of payments for those who return and are already in receipt of UK state pension or other UK benefits while living in the EU. We are considering how support could be offered to returning UK nationals where new claims are made and will set out further details in due course”.


Given that “in due course” is running out, can the Minister tell the House what continuity arrangements have been put in place for those whose benefits are already in payment, and what support will be offered to new claimants?

The European Commission has called on member states to protect citizens by taking account of periods of work or insurance in the UK before Brexit for both EU 27 and UK nationals, by ensuring the aggregation benefits for those who carry on living in the UK, and more crucially, by encouraging member states to carry on exporting pensions to the UK even though it will then be a third country. But we do not know what will happen in practice. The Government’s website has a page entitled “UK nationals in the EU: benefits and pensions in a ‘no deal’ scenario”. However, it tells you very little at all, except that if someone is already getting UK benefits for a state pension transferred to another member state, that can carry on being paid there, and that their entitlement to any in-country benefits will depend on what the EU decides. So we are very much in the dark.

As my noble friend Lord McKenzie said, the whole system of social security co-ordination relies on reciprocity, which cannot be assumed in a no-deal world, so we cannot make other states give us information or co-operate, or require them to apply the current rules to us. The Explanatory Memorandum said—and the Minister has said—

“These regulations aim to address deficiencies in retained law caused by the UK withdrawing from the EU and ensure citizens’ rights are protected as far as possible in a no deal scenario”.


In other words, they are designed to maintain the status quo. I have never liked this language of “deficiencies”, because these are not accidental deficiencies but a direct consequence of the Government refusing to rule out no deal. Those deficiencies are a loss of all kinds of rights, acquired in some cases over decades, which people may experience. This is entirely avoidable—it is simply because we could be in a no-deal situation.

These regulations are intended to maintain the status quo, so I want to try to test the veracity of that claim in a no-deal scenario. The current rules allow you to use periods of insurance contributions elsewhere which can be aggregated together. So someone who has worked in other member states can make one application to the relevant agency in the country in which they live. In the UK, this is the International Pension Centre in Newcastle.

The Commons brief on the immigration Bill gives a really good example, if noble Lords will allow me to describe it. Someone called Jo worked in France, after leaving university, before returning to the UK in 2008. He carried on working here, paying UK national insurance contributions until he reached state pension age in November 2018. As things then stood, Jo did not have to make separate claims to get his French and UK pensions. He had to submit a single claim to the international pension authority, and the centre in Newcastle contacted the French pension authorities. They calculated his entitlement to a French pension and put it into payment. The centre also calculated that Jo was entitled to 9/35ths of a full UK state pension because he had paid nine years of contributions here. That was put into payment as well. The only reason he got it was because his period of insurance in France meant that this tipped him over the minimum of 10 years of national insurance contributions that you have to have to get into the British state system in the first place.

My primary question is: do these regulations preserve the right of UK and EU nationals to aggregate periods working in other EU member states when determining entitlement to UK benefits and the state pension? Where is this spelled out? Is it in domestic legislation? Is it remaining unchanged? Does it include EEA states? Where is it laid out unequivocally?

Secondly, the regulations allow the DWP to ask claimants to provide the relevant evidence where the EU member state cannot or will not. The Explanatory Memorandum says, at paragraph 7.2:

“in the event that the information provided by the claimant is insufficient, the UK will no longer be required to fulfil any obligation under the Coordination Regulations”.

This sounds quite harsh. What would happen to Jo if he retired after a no-deal Brexit? He would have to do two things. First, he would have to access his French pension. Would this be done through the International Pension Centre, as it is at the moment? Or would he have to apply directly to the French authorities? Crucially, would he definitely be able to have that French pension paid to him in the UK? In other words, would France export the pension, as requested by the Commission? If not, Jo could be in an impossible position. He might need to return to the UK to care for elderly parents, but if he could not get the bulk of his pension here, what would he do? What if some of our citizens found that they had no residence rights anywhere else, so were forced back to the UK and yet could not access the benefits or pensions they needed because they had entitlement in other member states? What would happen to them?

Then Jo would need to access his UK pension. To get that, he would need evidence that he had paid national insurance contributions in France, as he would need a minimum of 10 qualifying years to get into the UK system. This would raise other questions. Would the International Pension Centre in Newcastle contact the French pension authorities to get this evidence for Jo, or would he have to get it himself? Either way, if the French did not oblige, what would Jo have to produce? If he did not have documents that the DWP liked, he would get no pension at all in the UK, even though he was legally entitled to it. Would he have to pay to get documents translated and notarised? How long would this all take?

As the noble Baroness, Lady Janke, said, it is crucial to know what would count as evidence. I could not produce payslips from 20 years ago, and I think a lot of noble Lords could not either. So, if the authorities in another EU state refuse to co-operate, what should people do? They could go back to their employer, but firms go out of business or merge. In most countries, they would not be required to keep records dating back decades. So, would other forms of evidence be accepted—for example, witness statements from co-workers, neighbours or doctors? Has the evidential basis been published? If not, will the Minister guarantee to conduct a consultation on it at once, so that we can see what would happen?

If a UK firm posted a worker abroad, could the firm be compelled to provide the necessary information to the DWP? If Jo were legally entitled to a state pension here, but could not prove it because the French Government would not co-operate, who would decide that he would not get that to which he was entitled? How could he appeal a refusal?

I have a few more short questions. The Commons brief points out that these regulations remove entirely article 4 of EU regulation 883/2004 which contains the equal treatment provisions to which I referred at the outset. The Explanatory Memorandum does not explain why this provision has been removed. Can the Minister tell us why it was? UK nationals working in the EU and EU residents working in the UK could be required to pay national contributions here as well as paying contributions in another EU member state, so a worker posted to Germany by her British company could end up paying double national insurance contributions. Did the Government consider waiving NICs for someone in this country, which would of course replicate the status quo rather more precisely that what seems to be in here? If not, as my noble friend asked, how could they then say that there are no costs attached to these regulations?

The regulations abolish provisional payments while a dispute is being resolved with an EU member state. The memorandum says that these provisions are hardly ever used, but since there will not be any resolution mechanisms in the future and there will not be a common rulebook, it is entirely possible that the situations which might require them to be used could be far more numerous. What assessment was made of the likelihood of disputes arising in no deal which would trigger payments of this sort? While these regulations are operational, if they ever come to be, what is the status of post-Brexit contributions in other EU states? Will UK state pensions be uprated when paid in other EU member states after no deal? Ministers have said that they will be for 2019-20, but what happens after that?

I want to say a brief word on the point raised by my noble friend Lady Lister about the Immigration and Social Security Co-ordination (EU Withdrawal) Bill, which has been debated in another place and which in its territory overlaps very much with this instrument. As we have heard, that Bill contains eye-watering Henry VIII powers that basically would allow Ministers to rewrite the social security co-ordination rules at will. I am not a Brexit specialist, so can the Minister can explain this to me? If there is no deal, does that Bill fall? If it does not, how do the Government intend to honour the commitments spelt out by the Minister herself and spelt out in the memorandum when they have the power to rewrite them entirely? Will they commit to use those Henry VIII powers only to replicate the provisions of these regulations?

Finally, if there is a deal, what is the status of these regulations?

I apologise for asking so many questions, but they are all important for the great many people who could be affected. I gave the Minister notice of my technical questions, albeit only yesterday, but my priority is to get things answered on the record. The date of 29 March is only three weeks away. If the Government allow a no-deal scenario, these problems will become a reality for many UK citizens living in the EU and vice versa. They and I look forward to the Minister’s reply.