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[2006] UKSSCSC CIS_3182_2005 (01 September 2006)

CIS/3182/2005

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. I dismiss the claimant's appeal against the decision of the Enfield appeal tribunal dated 2 August 2005.

REASONS

2. I held an oral hearing of this appeal (at the same time as I heard the appeals in CH/3314/2005 and CIS/3315/2005 in which will issue a separate decision). The claimant was represented by Mr Tim Samuel of the London Advice Services Alliance, assisted by Ms Ros White, and the Secretary of State was represented by Mr Jason Coppel of counsel, instructed by the Solicitor to the Department of Health and the Department for Social Security. I am very grateful to both advocates for their clear and helpful submissions.
3. The material facts of this case are straightforward and not in dispute. The claimant is a Dutch national who came to the United Kingdom in April 2004. She obtained work as a cleaner from 30 July 2004 to 20 September 2004 but then gave up the work because she was pregnant. She gave birth to her son prematurely (at 28 weeks) on 22 October 2004. He remained in a delicate condition for some time and she had not returned to work by 23 December 2004 when her claim for income support, made on 8 November 2004, was disallowed on the ground that the claimant was a "person from abroad" with an applicable amount of "nil" by virtue of regulation 21 of, and Schedule 7 to, the Income Support (General) Regulations 1987 (S.I. 1987/1967 as amended). More specifically, the claim was disallowed on the ground that the claimant had no right to reside in the United Kingdom and therefore could not, by virtue of regulation 21(3G), be treated as habitually resident in the United Kingdom for the purposes of the definition of a "person from abroad" in regulation 21(3). The claimant appealed but her appeal was dismissed on 2 August 2005. She now appeals with the leave of a salaried tribunal chairman.
4. Mr Samuel's first submission was that the claimant was entitled to income support by virtue of Regulation (EEC) 1408/71. He submitted, correctly, that, when she claimed income support, the claimant was within the personal scope of the Regulation because she had been an employed person while previously working and that income support falls within the material scope of the Regulation, as a special non-contributory benefit referred to in Article 4(2a) and listed in Annex IIa. He then submitted that the claimant was entitled to income support by virtue of the combined effect of Articles 3(1) and 10a(1), which provide –

"3. (1) Subject to the special provisions of this Regulation, persons resident in the territory of one of the member States to whom this Regulation applies shall be subject to the same obligations and enjoy the same benefits under the legislation of any Member State as the nationals of the State.

…

"10a. (1) Notwithstanding the provisions of Article 10 and title III, persons to whom this Regulation applies shall be granted the special non-contributory benefits referred to in Article 4(2a) exclusively in the territory of the member State in which they reside, in accordance with the legislation of that State, provided that such benefits are listed in Annex IIa. Such benefits shall be granted by and paid at the expense of the institution of the place of residence."

5. I agree with Mr Coppel that Article 10a is irrelevant (save, perhaps, that it confirms that income support falls within the scope of the Regulation). It exists to provide an exception to those provisions of the Regulation that require the payment of benefits to people living in Member States other than the one responsible for payment and in any event confers only a right to benefit "in accordance with the legislation of that State", which in the present context includes the "right to reside test" imposed by regulation 21(3G) of the 1987 Regulations. It does not provide any broader right to benefit to those who are habitually resident in the relevant State. In any event, it is unnecessary for Mr Samuel to rely on Article 10a. Article 3 by itself outlaws discrimination on the ground of nationality in respect of entitlement to income support, as Mr Coppel accepted.
6. The question, therefore, is simply whether the "right to reside test" involves discrimination on the ground of nationality. Plainly it potentially gives rise to unlawful indirect discrimination because it is far less likely that a foreign national will be able to show a right to reside than a British national. Mr Samuel, however, argued that the right to reside test involved direct discrimination which, he submitted, cannot be justified. The language used to describe types of discrimination is not always employed consistently. Indeed the term "discrimination" itself is sometimes used to refer to unequal treatment that is potentially unlawful and is sometimes used refer to unequal treatment that is actually unlawful. However, the principles are clear. Where discrimination on the ground of nationality is prohibited, the prohibition applies to both overt and covert discrimination. Discrimination that is based on nationality and no other related or unrelated consideration can never be justified and is always unlawful. Any attempt to justify unequal treatment that appears to be discrimination on the ground of nationality must identify some other consideration that is the real basis of the inequality. Then, an attempt may be made to justify the unequal treatment and show that it is the consequence of a proportionate means of implementing a legitimate social policy and not truly discrimination on the prohibited ground of nationality. It seems to me to be wholly unnecessary to have a two stage process in which one first decides whether an attempt may be made to justify the discrimination or not. Referring to "direct discrimination" is usually simply a way of describing overt discrimination on the prohibited ground that is obviously unjustifiable in practice, rather than being unjustifiable in principle.
7. Mr Samuel submitted that there was direct discrimination in the present case because citizens of the Common Travel Area countries always, with negligible exceptions, have the right to reside in the United Kingdom whereas citizens of other Member States of the European Union do not necessarily have that right. Whether or not this situation can properly be said to amount to direct discrimination – which I doubt – it is certainly not the sort of discrimination overtly based on nationality that the Secretary of State is not entitled to try to justify. It is not even the case that applying a test based on a right of residence has the same effect as applying a test based on nationality. I accept Mr Coppel's submission, in which he referred to Würtembergische Milchverwertung-Südmilch AG v. Ugliola (Case 15/69) [1969] E.C.R. 363, Commission v. Ireland (Case 61/77) [1978] ECR 417 and Regina (Bidar) v. Ealing L.B.C. (Case C-209/03) [2005] QB 812, that an attempt at justification is permissible in a case like the present.
8. I turn, then, to the question of justification. Article 3 of Regulation (EEC) 1408/71 applies specifically to social security benefits a more general principle of non-discrimination on grounds of nationality enshrined in Article 12 of the European Communities Treaty. In CIS/3573/2005, a Tribunal of Commissioners held that making a right to reside a condition of entitlement to income support did not amount to unlawful discrimination contrary to Article 12 of the Treaty because it was objectively justifiable. Mr Coppel relied upon that decision. It is not in dispute that a single Commissioner ought to follow a Tribunal of Commissioners (see R(I) 12/75), just as a single High Court judge will follow a decision of a divisional court of the High Court (Regina v. Greater Manchester Coroner, ex parte Tal [1985] Q.B. 67).
9. Mr Samuel acknowledged that the Tribunal of Commissioners' reasoning would apply equally to Article 3 of the Regulation but he sought to distinguish this case. He submitted that the justification advanced and accepted in CIS/3573/2005 was the prevention of "benefit tourism" by people who were not economically active and intended to live off benefits, whereas, in the present case, he submitted, the claimant had been economically active and had been forced to cease that activity through no fault of her own and so could not be regarded as a "benefit tourist". The refusal of income support in cases such as the present was, he submitted, not a proportionate way of meeting any legitimate aim. Mr Coppel, however, argued that the justification considered by the Tribunal of Commissioners had not been limited to the prevention of "benefit tourism" and that its decision had to be regarded by me as binding on the issue of justification for the purposes of the present case.
10. I accept that the argument advanced before the Tribunal of Commissioners went further than the prevention of "benefit tourism" because it relied upon a policy statement of the Secretary of State, set out in part in paragraph 26 of the Tribunal of Commissioners' decision, that included a wider justification. That statement was made in response to concerns raised by the Social Security Advisory Committee and is published in the Command Paper (Cm 6181) containing the report of the Committee on the draft of the 2004 Regulations that inserted regulation 21(3G) into the 1987 Regulations. Indeed, it is apparent that the Secretary of State regarded the "habitual residence" test by itself to be the primary method of preventing benefit tourism and that the "right to reside" test was to be introduced because other provisions had been shown to be ineffective "to restrict longer-term access to the income-related benefits payable out of general taxation among people who, for various reasons, may decide to live indefinitely in the UK without being economically active" (see paragraph 14 of the Secretary of State's statement). The rationale for the new Regulations was set out in paragraph 17 of the Secretary of State's statement –

"The Government believes that it is not unreasonable to expect that, whatever their nationality, people should show that they have a right to reside in the UK before being entitled to benefits funded by the UK tax-payer: indeed, correspondence that I and my Ministerial colleagues have received suggests that the public generally expects this. The proposed regulations are thus intended to fill a gap in measures to safeguard the public purse against exploitation by people with no right to reside here, irrespective of nationality. Their purpose is therefore different from the more limited purpose of the habitual residence test."

No more explicit justification for that policy was advanced either in that statement or in the explanatory memorandum that the Secretary of State had submitted earlier and the Committee expressed some concern about the lack of information as to the number of people who would be affected and recommended that the proposal should not be proceeded with until "sufficient information has been gathered to justify and measure the effects of such a change" (paragraph 53 of the report but my emphasis).

11. The Tribunal of Commissioners, however, referred to Westminster City Council v. Morris [2005] EWCA Civ 1184 at [47], a housing case where Sedley LJ said –

"The problem is in all significant respects a problem of foreign nationals either coming to this country (benefit tourism) or outstaying their leave to be here (irregular status) in order to take advantage of the priority housing status accorded to homeless families. Measures directed at this, I accept, require no explicit justification, whether because they are an aspect of immigration control or because they are an obviously legitimate response to a manifest problem."

12. The Tribunal of Commissioners said –

"28. We consider that the Secretary of State's statement is material to the issues in the present case. The statement does not seek to interpret the amended regulations. It seeks to demonstrate the policy decision behind the insertion of paragraph (3G) in regulation 21 and it is something that should be taken into account when considering objective justification. That we do and find that the policy as stated in the statement justifies the indirect discrimination for the reasons set out below. In any event, even if we had not considered the statement for the purposes of justification relevant, Sedley LJ's remarks … suggest to us, in the context of the circumstances of this case, that no explicit justification by the Government of the policy is required as regulation 21(3G) is 'an obviously legitimate response to a manifest problem".

"…

"31. Both the Treaty of Rome, as amended, and EEC Directive 90/364 make it entirely clear that national governments are entitled to restrict the right to residence of European Union nationals and to restrict any social assistance to them, even if they are, in fact, resident under a lawful right of entrance and no steps have been taken for their removal. …

"32. In our view, the policy outlined in Command Paper Cm 6181 is one which is well within the margin of discretion that a national government is entitled to include in its regulations. In particular, we consider that the regulations are consistent with the scope within which a Member State is allowed to operate in light of the specific terms of the Treaty of Rome and the EEC Directive 90/364."

13. In effect, the Tribunal of Commissioners took the view that, since the European Union legislation did not require the provision of social assistance to those without a right of residence, it was obviously legitimate to refuse social assistance to such people in order to combat the problem of people coming to, or staying in, the United Kingdom for the purpose of obtaining benefits funded by the tax-payers of the United Kingdom. As Sedley LJ commented in Westminster City Council v. Morris at [41], such a policy operates not only by discouraging people from coming to the United Kingdom if they are not self-sufficient but also by putting people who do come under pressure to leave.
14. I accept Mr Samuel's point that the justification accepted in CIS/3573/2005 may not apply in all cases. Justification of unequal treatment requires answers to two questions: whether the provision under consideration implements a legitimate social policy and whether the method of implementing the social policy is proportionate having regard to the desirability of both that policy and the avoidance of covert discrimination. It is one thing to apply a "right to reside" test to put pressure on people to leave the United Kingdom when they have never been economically active here and have not been here for very long but it may be less clear that the blanket application of the test represents a proportionate response to the problem that concerns the Government if it results in pressure to leave the United Kingdom being placed on people who have been economically active in the past or have been established here for many years but for some reason or other have not acquired a permanent right of residence. Indeed, this has been recognised to some extent in new legislation that has come into force this year, although the approach that has been taken has been to clarify, or extend, the right to reside in the United Kingdom rather than to create exceptions to the application of the test.
15. What is clear from CIS/3573/2005 is that the policy underlying regulation 21(3G) of the 1987 Regulations is a legitimate social policy and that the regulation was a proportionate way of implementing the policy in the case of a person who had never been economically active in the United Kingdom and who had been resident in here for only a matter of months when she was refused income support.
16. It is also clear from CIS/3573/2005 that regulation 21(3G) of the 1987 Regulations is not ultra vires merely because its application might conceivably be inconsistent with European Union law in some cases. The proper approach is to disapply it in relation to any class of case where there is such an inconsistency. There would be such an inconsistency if there were to be a case where a claimant could show covert discrimination on the ground of nationality because the blanket application of the right to reside test was not a proportionate response to the perceived need to prevent nationals of Member States outside the Common Travel Area from placing an unreasonable burden on the United Kingdom's social assistance schemes and a more refined test that would not have excluded the claimant and others in similar circumstances from entitlement to benefit could have been imposed. Because I am not satisfied that there is covert discrimination in the present case, it is unnecessary for me to say whether there might be such a case or whether a claimant who might otherwise be able to complain of unfair treatment might in fact be found on closer examination to have a right of residence (as to which see paragraphs 23 and 24 below).
17. I am not satisfied that there is covert discrimination on the ground of nationality in the present case because, if, as was held in CIS/3573/2005, the application of the "right to reside test" is justified in the case of those who have been in the United Kingdom for a short period without ever being economically active, it must remain justified in respect of those who have been economically active for only part of such a period and who no longer have a right of residence because they have ceased to be in the job market or to be merely temporarily incapable of work. Otherwise, an obvious loophole would present itself as it would be possible to secure a right to social assistance by working only briefly. In the present case, the claimant worked for less than two months of the nine months for which she had been in the United Kingdom by the time the Secretary of State disallowed her claim for income support. Mr Samuel is no doubt right to say that it was not the claimant's fault that her child was ill and that it might have been impossible for her to travel to Holland while the child was ill in hospital, but she had known she was pregnant and presumably knew that she would be without support if she were to be unable to work through childcare responsibilities and were to receive no support from the child's father and so it cannot be said that she had not previously had the opportunity to return to Holland where she would have been entitled to benefit. I therefore reject Mr Samuel's first submission.
18. Mr Samuel's second submission was that the claimant did have a right of residence by virtue of regulation 14 of the Immigration (European Economic Area) Regulations 2000 (S.I. 2000/2326), which provides that a "qualified person" within the scope of regulation 5 shall have such a right. Regulation 5(1)(a) provides that a "worker" is a "qualified person" and regulation 5(2)(a) provides –

"(2) A worker does not cease to be a qualified person solely because –

(a) he is temporarily incapable of work as a result of illness or accident; or

(b) he is voluntarily unemployed, if that fact is duly recorded by the relevant employment office."

19. Mr Samuel accepted that pregnancy was not per se an illness but argued that, after the birth of her child, the fact that she had to care for her child meant that the claimant was temporarily incapable of work by reason of child's illness and that that was sufficient for the purposes of regulation 5(2)(a).
20. It was common ground that the claimant had been a "worker" when actually working but Mr Coppel submitted that the claimant could not rely on regulation 5(2)(a) both because there had been a gap between her working and the period when she claimed to be incapable of work and because it was implicit in regulation 5(2)(a) that the incapacity had to be due to an illness or accident suffered by the person who claimed to be a worker. I accept the second of Mr Coppel's submissions and therefore it is unnecessary for me to express a view on the first.
21. The language of regulation 5(2) echoes that of Article 7(1) of Directive 68/360/EEC which it is plainly designed to implement. Mr Samuel argued that it was necessary to construe subparagraph (a) so as to include incapacity due to the illness of a dependant in order to avoid a person losing a right of residence in circumstances where that would be a disproportionate consequence of having to care for the dependant. He placed much reliance on the approach taken in Drake v. Chief Adjudication Officer (Case 150/85) [1987] Q.B. 166, although he accepted that the context was different. The question in that case was whether invalid care allowance, payable to a person when caring for someone who was severely disabled, was a statutory scheme providing protection against the risk of "invalidity" for the purposes of Directive 79/7/EEC in circumstances where the claimant was a "worker" within the scope of the Directive but the disabled person was not (or may not have been). The European Court of Justice took the view that invalid care allowance was a statutory scheme providing protection against the risk of "invalidity".
22. I accept that the general purpose of Directive 68/360/EEC is to facilitate the free movement of workers rather than to restrict it but no actual restriction of workers' rights is involved in taking the narrower approach to Article 7(1) for which Mr Coppel argued. The question is how far it was intended to extend workers' rights when the Directive came into force. It is clear that the Directive does not ordinarily extend rights to those who temporarily cease to be economically active because they need to look after children who are not ill and I can see no reason why there should be any difference in the case of a child who happens to be ill. This consideration leads me to conclude that Article 7(1) contemplates that the illness or accident must be suffered by the "worker" and that regulation 5(2)(a) must be construed to the same effect. I therefore reject Mr Samuel's second submission.
23. Mr Samuel's third submission was that the claimant had a right to reside in the United Kingdom by virtue of Article 18 of the European Communities Treaty and Article 1(1) of Directive 90/364/EEC. He accepted that the latter provision entitles a Member State to make it a condition of a grant of the right of residence that, inter alia, the person concerned have "sufficient resources to avoid becoming a burden on the social assistance system of the host Member State during their period of residence" but argued, by reference to the sixth preamble of the Directive and the decisions of the European Court of Justice in Grzelczyk v. Centre public d'aide sociale d'Ottignes-Louvain-la-Neuve (Case C-184/99) [2001] ECR I-6193 and Baumbast v. Secretary of State for the Home Department (Case C-413/99) [2003] ICR 1347, that "burden" had to be construed as "unreasonable burden" so that each case coming before a tribunal requires the circumstances of the claimant to be balanced against the cost to the State of awarding income support.
24. I accept Mr Samuel's argument that this is not the same issue as the question arising under Article 12 of the Treaty or Article 3 of Regulation 1408/71 as to whether discrimination can be justified. There is at least a theoretical distinction because here one is concerned with whether the claimant can satisfy the "right to reside" test, by showing that she has a right of residence, rather than with whether the test is legitimate at all. However, the issues seem to me to be closely related in practice because the question whether a burden on a social assistance scheme is reasonable must be considered in the light of the legitimacy of a policy of discouraging nationals of Member States from being a burden on the scheme and the proportionality of the means employed to implement the policy. I therefore do not accept that Article 18 of the Treaty and Article 1(1) of Directive 90/364/EEC require an additional exercise of discretion in circumstances where a claimant has virtually no resources and there would be no unlawful discrimination on the ground of nationality if the claimant were to be refused benefit. What I do accept is that, if there are circumstances in which refusing benefit to a claimant would not be a proportionate response to the perceived problem of people coming to the United Kingdom with a view to living on benefits, it might be possible to find the claimant to have a right to reside instead of disapplying regulation 21(3G) of the 1987 Regulations. Indeed, finding the claimant to have a right of residence might be the preferable course of action.
25. In my judgment, it follows from my rejection of Mr Samuel's first submission that the claimant would be an unreasonable burden on the social assistance scheme if allowed income support. I am therefore satisfied that she has no right to reside in the United Kingdom by virtue of Article 18 of the Treaty and Article 1(1) of Directive 90/364/EEC and I reject Mr Samuel's third submission.
26. Accordingly, this appeal fails.

(signed on the original) MARK ROWLAND

Commissioner

1 September 2006