2012 10 Welfare Benefits

Thursday 1 November 2012

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Speaking to the Conservative Party conference on 8 October 2012 Chancellor George Osborne has confirmed that, if re-elected, the Conservative Party will make further cuts to the welfare budget of £10bn by the first full year of the next parliament.

Universal Credit

A new report published on 17 October 2012 from Children's Society, Citizens Advice and Disability Rights UK called 'Holes in the safety net: The impact of Universal Credit on disabled people and their families' has highlighted the loss of the disability premiums under the new regime for Universal Credit. It states that up to half a million disabled people and their families stand to lose out financially.

The report concludes that, whilst many people may be better off under Universal Credit, several key groups would lose financially under the new system –

  • 100,000 disabled children stand to lose up to £28 a week due to the replacement of the disability element of child tax credit, currently worth £57 per week, with a disability addition of £28 per week;
  • up to 116,000 disabled people who work could be at risk of losing around £40 per week due to the abolition of the disability element of working tax credit ...

Holes in the safety net: The impact of Universal Credit on disabled people and their families is available from childrenssociety.org.uk (click here for link).

Housing Benefit Cap

In a new ad hoc analysis published by the DWP on 17 October 2012 entitled: 'GB households and individuals in receipt of a letter notifying them they may be affected by benefit cap in April 2013', there are figures on the number of households who have been contacted by letter and the characteristics of those households. Key findings of the analysis include –

  • 46 per cent of households contacted are estimated to lose up to £50 per week as a result of the benefit cap, whilst 18 per cent of households are estimated to lose over £150 per week;
  • when the households contacted are split by local authority, nine of the top ten local authorities are in London.

The GB households and individuals in receipt of a letter notifying them they may be affected by benefit cap in April 2013 is available from the DWP website (click here for link).

Amendment to habitual residence test and Zambrano

New regulations have been issued in relation to income-related benefits and non-European Economic Area (EEA) citizens with a right to reside following the Court of Justice of the European Union decision in the 'Zambrano' case. In force from 8 November 2012, the Social Security (Habitual Residence) (Amendment) Regulations 2012 (SI 2012/2587) (click here for link) amends the legislation for income-related benefits so as to exclude people who require a right to reside in order that a British citizen is not deprived of the rights attaching to the status of European Union citizen (i.e. Zambrano carers). In short, the statutory instrument purports exclude Zambrano carers from claiming welfare benefits.

The benefits excluded under (SI 2012/2587) are Income Support, Jobseeker’s Allowance, State Pension Credit, Housing Benefit, Council Tax Benefit, and income-based Employment and Support Allowance.

The Child Benefit and Child Tax Credit (Miscellaneous Amendments) Regulations 2012 (SI 2012/2612) (click here for link) issued at the same time purport to exclude Zambrano carers from claiming Child Benefit and Child Tax Credit on behalf of their child.

The Explanatory Memorandum to SI 2012/2587) states that:

"7.2. Since the CJEU ruling 692 people (in 619 separate families) have applied for a Zambrano right to reside which contain a non-EEA national primary carer of a British child and appear to meet the criteria which would give them this right. The Home Office estimate that around 700 people a year could claim a Zambrano right to reside but this may increase given the historically high levels of migration in recent years and increased knowledge of the Zambrano ruling over time.

7.3. Therefore unless the income-related benefit regulations are changed, benefit costs could increase significantly: just on the basis of an estimated 700 cases per year.

  • if 40% claim income support, housing benefit and council tax benefit this would lead to an additional estimated Annually Managed Expenditure spend of £3.8 million;
  • if 100% claim income support, housing benefit and council tax benefit this would lead to an additional estimated Annually Managed Expenditure spend of £9.4 million."

The Explanatory Memorandum to (SI 2012/2587) states that:

"... the government also takes the view that this ruling does not explicitly carry with it a right to social security benefits, only a right to reside and a right to work in the United Kingdom."

Case law

In Jessy Saint Prix v Secretary of State for Work and Pensions [2012] UKSC 49 the Supreme Court (Lord Neuberger, President, Lady Hale, Lord Mance, Lord Kerr and Lord Reed) considered the issue of whether under Article 7(3) of EC Directive 2004/38, an EU citizen who is no longer working retains the status of a worker in certain specified circumstances, including illness or accident and whether these circumstances can be said to include ceasing to work by reason of late pregnancy or the immediate aftermath of childbirth.

The claimant, a French national, came to the UK in July 2006 and worked in various jobs between September 2006 and August 2007. She then started a teaching course, but gave it up when she became pregnant and realised that the baby would be born before the course could be completed. The claimant worked again between January and March 2008, but had to give up work when six months pregnant because she found the demands of her work, caring for nursery school children, too much. She claimed Income Support on 18 March 2008, but the claim was refused on the basis that she did not have the right to reside in the UK.

The claimant's argument was that, under EU law a broad interpretation was to be given to the term ‘worker’, and that it would be a substantial deterrent to the free movement of female workers, and amount to direct discrimination on grounds of sex, if they lost the right to reside around the time of giving birth.

The Secretary of State said that Article 7 was intended to be a codification of the existing EU law on ‘workers’ and women in the claimant’s position fell outside it. In addition, any discrimination was on grounds of nationality, which was indirect and was justified.

The Supreme Court was not persuaded that either case was clearly right:

"The Supreme Court is not persuaded that the case of either side is acte clair. We believe it likely that the Council and Parliament did think, when enacting the Citizenship Directive, that the Directive was codifying the law as it then stood. But we are not persuaded that in doing so it was precluding further elaboration of the concept of 'worker' to fit situations as yet not envisaged. The Court has developed the concept of EU citizenship in a number of ways: see, for example, Collins v Secretary of State for Work and Pensions [2004] ECR I-2703. We are further conscious that pregnancy and the immediate aftermath of childbirth are a special case. Equal treatment of men and women is one of the foundational principles of EU law. Only women can become pregnant and bear children. Thus in this respect they cannot be compared to men. Pregnancy is not to be equated with illness or disability. But unless special account is taken of pregnancy and childbirth, women will suffer comparative disadvantage in the workplace. There are also good reasons in health and social policy for allowing women to take a reasonable period of maternity leave without losing the advantages attached to their status as workers. This is different from leaving the workforce in order to look after children. Both men and women may do this and there is no sex discrimination involved in denying them both the status of worker for the time being. We do not see the sex discrimination argument as invalidating Article 7, but as indicating that it would be consistent with the fundamental general principles of EU law for the Court to develop the concept of 'worker' to meet this particular situation." (At para [20]).

The Court therefore referred the following question to the Court of Justice of the European Union (CJEU):

"1. Is the right of residence conferred upon a ‘worker’ in Article 7 of the Citizenship Directive to be interpreted as applying only to those (i) in an existing employment relationship, (ii) (at least in some circumstances) seeking work, or (iii) covered by the extensions in Article 7(3), or is the Article to be interpreted as not precluding the recognition of further persons who remain ‘workers’ for this purpose?

2. (i) If the latter, does it extend to a woman who reasonably gives up work, or seeking work, because of the physical constraints of the late stages of pregnancy (and the aftermath of childbirth)?

(ii) If so, is she entitled to the benefit of the national law’s definition of when it is reasonable for her to do so?"

(Click here for transcript).

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