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Social Welfare Update: Court of Appeal rules that the exclusion of EEA citizens with ‘Pre-settled Status’ from accessing Universal Credit is unlawful

Friday 26 February 2021

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The Facts 

The claimants were Romanian nationals, Ms Fratila and Mr Tanase, who came to the UK in 2014 and 2019 respectively. Each was granted pre-settled status, under the EU Settlement Scheme. The claimants' subsequent claims for universal credit were however refused as regulation 9(3)(c)(i) of the Universal Credit Regulations 2013, SI.376/2013 (as amended from 7 May 2019), treats pre-settled status as a non-qualifying right of residence. The claimants brought judicial review proceedings arguing that the case-law of the CJEU demonstrates that once an EU citizen is granted a right of residence in another member state, under the provisions of that state's law, he/she is entitled to the same benefits as nationals of that state would be entitled to. Hence the exclusion in the Universal Credit legislation is contrary to Article 18 of the Treaty on the Functioning of the European Union, which prohibits discrimination on grounds of nationality within the scope of the EU Treaties.

The Judgment 

The Court of Appeal agreed that the claimants could rely on TFEU Article 18 as a right of residence was capable of arising outside of the Residence Directive 2004/38/EC. This had been recognised in Trojani (C-456/02) and had recently been reaffirmed in Jobcenter Krefeld v JD (C-181/19) where the CJEU expressly stated that the codification of existing EU law in the Residence Directive was not exhaustive (para 71).

The Court by a majority (McCombe and Moylan LJJ) held that the rule in regulation 9(3)(c)(i) was directly discriminatory because it was aimed at excluding a specific group because they were EU nationals: Patmalniece v SSWP [2011] UKSC 11 distinguished (paras 60 and 90).  But for the exclusion in regulation 9(3)(c)(i), the claimants would have had an entitlement to benefits based on pre-settled status and this type of discrimination is prohibited outright: Trojani (C-456/02) applied (para 73).

Dingemans LJ delivered a dissenting judgment in which he concluded that the exclusion in regulation 9(3)(c)(i) was indirectly discriminatory and therefore capable of being justified: Patmalniece v SSWP [2011] UKSC 11 applied (para 102). Dingemans LJ accepted the Secretary of State’s justification for the discriminatory impact of the rule, namely that it was there to protect the social security system from “persons who come to the UK to live off benefits rather than to work”, so that access to benefits has to be restricted to persons who are "economically integrated" with the UK.

Comment

Over 1.9 million people in the UK have pre-settled status and so the impact of the ruling in Fratila is potentially huge. The judgment was initially stayed until 26 February 2021 and the Secretary of State has applied to the Supreme Court for permission to appeal and for the stay to be extended. Accordingly, until the outcome of the appeal is known, EEA citizens cannot, in practice, rely on their pre-settled status to access universal credit (or other benefits that have a right to reside as a condition of their entitlement).  

Child Poverty Action Group have prepared a note for claimants and their advisers on what to do in order to protect their clients’ position, which is available online: ‘Advice for people with pre-settled status following the judgment of the Court of Appeal’.

The judgment is available here.

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