Benefits (EU Nationals)

Steve Webb Excerpts

Tuesday 12th July 2011 Westminster Hall

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I congratulate the hon. Member for St Albans (Mrs Main) on securing this debate on what she rightly says is an important issue, which I know is of concern to the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling). He has responsibility for employment issues and ordinarily, he would have responded to this debate, but unfortunately he is unable to do so. As I shall explain, he is already taking steps to address some of the issues the hon. Lady raised today. As she knows, as things stand the Department for Work and Pensions’ benefit payment systems do not record the nationality of people receiving benefits. The reason for that is that nationality per se is not a condition of entitlement, and the system records conditions of entitlement such as being available for and actively seeking work, in the case of jobseeker’s allowance, or meeting contribution conditions for contributory benefits such as the state pension. So a person’s nationality is not, of itself, an entitlement condition.

The hon. Lady gave a figure—I think it was £200 million —but the truth is that we do not know what the figure is, which is a matter of concern. I assure her that Ministers are concerned about the lack of data, and we know that other Members share that concern. We consider it right that we should know the extent to which people from other countries are claiming benefits in the UK. I am therefore sure she will be pleased that the Minister with responsibility for employment announced at oral questions last month that he has commissioned work to find means of making information available about the nationality of benefit claimants. That information would help to inform debate on this subject.

To provide some context, I will discuss immigration more generally. The right hon. Member for Oxford East (Mr Smith), who is himself a former Secretary of State for Work and Pensions, talked about the positive impact that inward migrants can have. We fully recognise that positive impact, and we will continue to encourage the brightest and the best to come to the UK to promote growth and enterprise here. However, we will reduce the degree to which we currently rely on migrant workers through a radical shake-up of the welfare system and by improving the skills of the British work force. Our goal as a Department is to ensure that people are better prepared, have more incentive and face more requirements to take up work in the UK, which will mean that demand for migrant workers can be reduced. Clearly, although immigration has enriched our culture and strengthened our economy, it must be properly managed.

[Mrs Main]

The Minister is making a valid point. However, when I looked at the statistics on this issue, I was shocked to realise that some of these migrant workers are hugely overqualified for the jobs they come here to do. I am not disputing that we are attracting well qualified people, but they are not qualified to do the jobs they are doing; if anything, they are overqualified for them. We have a problem, in that we have a dearth of people who want to do those low-skilled jobs, so we have qualified people coming in to do them. That is the problem and I do not see how we will solve it.

[Steve Webb]

No, I do not see how we can solve that, in the sense that, if we have a single labour market we cannot constrain individuals who bring particular skills and prevent them from doing jobs that are, as it were, less demanding than the skills they bring in. That is correct.

The hon. Lady raised the question of benefits claimed by the nationals of other EU member states working in the UK. I shall explain what they are. In preparing for the debate, I had to find out how the system works and was surprised by some of what I learned.

Under the freedom of movement rules, as we have just heard, many UK nationals are living and working in other EU countries and have reciprocal rights. Free movement of persons is fundamental to Community law; indeed, it is an essential element of European citizenship. However, the rights are not unlimited. Those who wish to live in the UK for longer than three months must be exercising a treaty right as a worker, a workseeker, a self-employed person, someone of their own means and self-sufficient, or a student. If EU citizens do not meet one of those requirements, they will not have a right to reside in the UK, and may be liable to removal. The Government are clear that EU citizens who benefit from the right to free movement must adhere to the responsibilities it brings and abide by our laws.

[Mrs Main]

The problem is that that list covers just about everything. As I have said, anybody who cannot do a particular thing can declare themselves self-employed by doing a menial job such as selling The Big Issue or another such publication. That is the problem: the list does not seem to prohibit anybody.

[Steve Webb]

When I looked at the list I wondered whether someone could say, “Oh, I am looking for a job.” That is not sufficient. The definition of a workseeker would be similar to the requirements placed on someone claiming jobseeker’s allowance, for example. I take the hon. Lady’s point that there may be loopholes that need to be looked at. However, if someone says they have come here to look for a job, it not enough merely to assert it; they have to provide evidence that they are actively doing so. Let me now make a bit of progress, as I am keen to respond to the points the hon. Lady has raised.

The failure of past policies has left many people continuously on out-of-work benefits for more than a decade, 90% of them on incapacity benefits. Many of our fellow citizens want to work but have not been provided with the help and support they need. The crucial point is that one reason why employers take on EU migrants is that many of our fellow citizens have not been effective participants in the labour market. The Secretary of State is determined to change that through the Work programme and universal credit, to try to ensure that when employers are looking at a list of potential employees, the UK citizen—the domestic worker—is a credible alternative to the EU migrant. We believe that the success of those policies will reduce the demand for EU migrants in the situation described by the hon. Lady.

On access to benefits, EU nationals have rights under the European treaties to enter and remain in the UK, including the right to seek and take up work. Where EU nationals are here in exercise of a treaty right, the UK, through its obligations under both European and international law, allows them access to income-related benefits. As the hon. Lady says, EU nationals who are working here have access to in-work benefits, such as housing benefit, council tax benefit and child tax credits. If they are unemployed and looking for employment, they may also claim income-based jobseeker’s allowance. There will, however, be some who have no intention of seeking work—benefit tourists, as the hon. Lady says—and they may try to access benefits. We do not believe, on the whole, that that is the main reason why people come here, but we accept it is a danger and it is one of our concerns.

That is why we have rules in place to prevent the abuse of the benefits system and benefit tourism. The principal measure is the habitual residence test, which ensures that income-related benefits are paid to people with reasonably close ties to the UK and who intend to settle here. Its underlying principle is that the taxpayer should not have to subsidise people with very tenuous links to this country.

[Mrs Main]

Will the Minister give way?

[Steve Webb]

Will the hon. Lady allow me to make a bit more progress, as she has raised a lot of points and I have got only seven minutes to respond?

To be eligible for an income-related benefit of the sort listed, claimants must satisfy the two-part habitual residence test—I may be coming to the point the hon. Lady was going to raise. That requires the individual first to demonstrate that they have a right to reside here and, secondly, to show that they are habitually resident. Anyone who does not have a right to reside is not habitually resident, and is not entitled to any income-related benefits.

To clarify, the term “habitual residence” is not defined specifically in UK social security legislation. To determine actual habitual residence, decision makers look at a range of things that we think should rightly be taken into account, such as whether the person is returning to resume past habitual residence; attachment to and intentions in the UK; reasons for coming; employment record; and length and continuity of residence in another country. The information is gathered by interviewing the claimant, and decision makers must be satisfied on objective grounds that a person who claims income-related benefits after arriving in the country has genuinely adopted the UK as his or her place of habitual residence.

[Mrs Main]

I have had all that information from a series of questions I have tabled. I was shocked to realise that people need to be resident for only a month or possibly even less, which is open to interpretation by the individual doing the interview. That is a very low bar.

[Steve Webb]

Although the hon. Lady is right to say that a month enables someone to be considered, I have listed the criteria that the decision makers have to apply, and I suspect a lot of those would be hard to satisfy after a month. So, although that is technically true, I suspect that in many cases people have been here for a lot longer.

Child benefit, which has been mentioned, is clearly quite cyclical in terms of foreign nationals coming to the UK. The hon. Lady was right to praise the hon. Member for Witham (Priti Patel), who established through a written question that the number of families getting child benefit for children in Poland was, in October 2009, just under 23,000. However, the answer to that question showed that that figure fell to 17,000 in July 2010. I can provide an update today—the figure fell again to just over 16,000 in June 2011. There has been a 29% fall in the number of Polish people working here and claiming child benefit for children at home. I am sure the hon. Member for St Albans would say that that is 16,000 too many.

However, it is worth stressing that such situations are not static. They change, and in this case there has been a fall of more than a quarter. The reason for the payment is that it is only made in respect of UK national insurance contributions. That is an important part of the mix. We are paying the benefit to somebody who is putting money into the UK Exchequer through national insurance. We have a legal duty to pay at the higher rate. In his intervention, the hon. Member for Kettering (Mr Hollobone) asked whether we should pay at the Polish, rather than the British rate. The courts have determined that we have to pay at the higher rate. The logic is that the entitlement is based on UK national insurance contributions, which will be based on UK wages and taxes. Therefore, the parallel entitlement is to a UK benefit. I understand the emotional reaction that we probably all have when we hear that.

In the few minutes remaining I should move on to the question of EU citizenship and access to benefits—what is called benefit exportability. Since the UK joined the EEC in 1973, it has been part of the system for co-ordinating social security for people who move between member states. The rules protect UK citizens abroad as well as EU citizens who come to the UK. Every EU member state has exclusive responsibility for organising and financing its national social security schemes, and for setting out the conditions governing entitlement, provided that they comply with the principles of equal treatment and non-discrimination on grounds of nationality. However, there are EU regulations on the co-ordination of social security to ensure that, where someone has earned an entitlement, they do not lose it because they have moved between member states. That is to remove one of the barriers to the free movement of workers, which is one of the basic tenets of the EU’s internal market.

The rules set out under what circumstances a person retains, or can claim, social security benefits when they move between member states. In particular, the rules protect workers who live in one member state and work in another. On the question of adding things together, people coming into the UK may be entitled to benefits on the basis of their social insurance payments in another member state; and people going from the UK can be entitled to benefits in another member state on the basis of their UK national insurance. That is known as aggregation—where a person’s contributions are added together to give them entitlement. The country that pays, however, is still usually the country where the person is working or last worked. Again, that makes the point that the payment that is made is not necessarily something for nothing; it may well be something for something. In the case of a British worker, the contribution may have been made in the UK before they left, or, in the case of a foreign worker, in their home country before they came here. There is a reciprocal arrangement.

I turn to the question of topping up child benefit and child tax credits paid, for example, in Poland. Let us take the example of a family in which dad is in the UK and mum is at home with the children. If dad is paying national insurance and mum is at home, we would pay full UK child benefit to the family, in return for his national insurance. That is what he is paying for. However, if mum was working and therefore earning some Polish benefits, we would top up. Funnily enough, although people say it is strange that we are topping up Polish benefits, when we do so we are paying less money than when we are not topping up but paying the full amount.

These are clearly complex and difficult issues. Once there is a single labour market with free movement, a lot of things follow that are difficult to disentangle. However, I can reassure the hon. Lady that the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell is seized of the importance of the issues and, I hope, will be able to make progress on them in due course.

Question put and agreed to.