On 19 January 2014, Iain Duncan Smith and Theresa May told the Daily Mail that Britain’s generous welfare system should no longer be a ‘magnet’ for citizens of other EU states and that they would be introducing a number of measures aimed at new migrant jobseekers from the European Economic Area (EEA).

“For those migrants who do come here, we’re ensuring they are unable to take unfair advantage of our system by accessing benefits as soon as they arrive.  For example, we introduced rules so that from January 1 this year we are banning individuals from receiving out-of-work benefits until they have been living in the UK for three months. And we will go still further: from the beginning of April we will be removing entitlement to housing benefit altogether for this group.”

The DWP has now issued the Housing Benefit (Habitual Residence) Amendment Regulations 2014 (SI 2014/539) as well as official guidance to local authorities HB Circular A6/2014.  While the change has been portrayed as being aimed at newly arrived EEA migrants (particularly those from Eastern Europe), it is now clear that it will also affect those EEA nationals who do not manage to pass the ‘more exacting test’ for genuine and effective work, in the form of the Minimum Earnings Threshold (‘MET’), when they claim JSA(IB).

How does the legislation work?

The habitual residence test for housing benefit (‘HB’) is contained in Regulation 10 of the Housing Benefit Regulations 2006 (SI 2006/213) as amended on 1 April 2006 can be found in (SI 2006/1026) which was made in consequence of the coming into force of Council Directive 2004/38/EC, transposed by the Immigration (EEA) Regulations 2006 (though there have been ten minor modifications to the Regulation 10 since that date).

• Under the previous version of the test, workers, the self-employed and those not currently in employment but who had retained their worker status all had a right to reside and were exempt from the habitual residence test by virtue of Regulation 10(3B).  Regulation 10((3)(3A), on the other hand provided that those who had a right to reside solely on the basis of being a jobseeker were not treated as habitually resident; this provision had no effect in practice because the habitual residence test provided that  those persons in receipt of JSA(IB)  were automatically exempt  (reg.10(3B)(k)).  This meant that EEA jobseekers could access HB regardless of the basis of their right to reside as jobseekers.

• Under the new version of the test, Regulation 10(3B)(k)) has been abolished, and so being in receipt of JSA(IB) will no longer be sufficient in itself to gain access to HB.  Regulation 2 of the 2014 Regulations inserts sub-paragraph (l) into Regulation 10(3B), which provides that only EEA jobseekers who have retained their worker status can access HB whilst in receipt of JSA(IB).

In the words of the guidance in HB A6/2014:

“A person who approaches DWP to claim JSA after a period in employment will be treated as a jobseeker and not a retained worker where the employment they were previously engaged in did not meet the MET and fails the enhanced scrutiny of whether it was genuine and effective.  So long as that claimant has been in the UK for three months, they will be immediately eligible to claim JSA(IB), but as an EEA jobseeker will not be eligible for HB.”

Saving provisions

There are saving provisions at regulation 3 of 2014 Regulations which provide that EEA jobseekers who are entitled to HB and JSA(IB) on 31 March 2014 will be protected.  They will be unaffected by the change until their JSA(IB) ceases or they make a new claim for HB, whichever occurs first.

Are the 2014 Regulations compatible with EU law?

In HB A6/2014 the DWP acknowledges that workers, the self-employed and those who retain their worker status have the same access to social security as nationals of the host Member State but goes on to say that for those EEA nationals who are not working and are in another Member State to search for work as jobseekers: “there is greater scope for their access to benefits to be restricted”.  The Circular does not expand on this statement but simply asserts that:

“This reform only removes EEA jobseekers’ access to HB and does not affect their EU treaty rights to reside in the UK whilst they search for work.”

The denial of access to HB to EEA jobseekers appears to be in breach of the anti-discrimination provisions in EU law (e.g. articles 18 and 45 of the TFEU).  Moreover, the immediate withdrawal of HB from EEA jobseekers seems difficult to reconcile with the fact that as jobseekers they have a right to stay in the UK in order to seek employment for a further period of six months.  Legal challenges are likely to focus on: (i) whether HB amounts to a benefit of a financial nature which is intended to facilitate access to employment in the labour market (Collins); and (ii) whether the automatic denial of HB to EEA nationals who  have the right to remain in the UK in order to search  for employment as  jobseekers is inconsistent with the general principles of EU law, including the principle of proportionality (Brey).

If an EEA national in receipt of JSA(IB) appeals against a decision that they do not retain worker status, they could be facing a delay of well over six months before their appeal is listed to be heard by a First-tier Tribunal (Social Entitlement Chamber).  Consideration will therefore need to be given to whether an application for interim relief should be made in order to protect the appellant’s EU rights pending the outcome of the appeal (Factortame).