This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement no 320294

EU

EU Citizens, Social Rights and Brexit

The new ‘settlement’ for the UK – EU Citizens, Social Rights and Brexit [1]

After long hours of negotiations the European Council reached a ‘new settlement’ on the EU membership of the United Kingdom.[2] The British electorate will now vote in an ‘in-out referendum’ on 23 June 2016 whether to remain or leave the EU. Core to the decision for significant parts of the electorate is the compromise with regard to immigration and social rights. Leaving the EU could have a significant impact on social rights of British citizens.

Although the new settlement might address populist views especially with regard to alleged ‘benefit tourism’ not only in Britain, but also in Germany and other Member States, it is highly problematic from a principled perspective. Many elements of the compromise seem rather symbolic, as they are stating the obvious, such as, that Britain is not part of ‘an ever closer Union’ or that multiple currencies exist within the EU, but the compromise with regard to social rights of EU migrant citizens has high political, and potentially legal, significance, as it aims to discriminate EU migrant citizens from Central and Eastern Europe (CEE). Seemingly, the threat by the British Prime Minister to leave the EU was perceived as so serious and potentially so costly for the Union, that Heads of State and Government sacrificed the core principle of non-discrimination when suggesting that Britain could “limit the access of newly arriving EU workers to non-contributory in-work benefits for a total period of up to four years from the commencement of employment” (No 2b Annex I of the Conclusions) and “index such [child] benefits to the conditions of the Member State where the child resides” (Annex V). Both of these measures are clearly aimed at workers from CEE countries, as these tend to have lower wages (Spreckelsen/Seeleib-Kaiser 2016) and living standards (see Eurostat) and are therefore more likely to rely on in-work benefits and be affected by the restrictions of child benefits than workers from other parts of the EU.

However, should the British electorate vote OUT the principles of the EU will remain in tact, as the Council has agreed that it will not proceed with the legislative process to enact measures it has agreed upon.[3] This suggests that the Council’s decision was primarily driven by the desire to appease the British Prime Minister and his demands.

Should the British electorate vote IN, the ‘emergency brake’ to curtail in-work benefits and the reduction of child benefits in line with the living conditions in other Member States could still be stopped by the EU Parliament, as MEPs have to agree on the secondary legislation to amend the respective directive and regulation as part of the decision procedures in line with the Treaty on the Functioning of the European Union (TFEU Article 294). The European Court of Justice has the right to eventually declare the legislative act incorporating these amendments as void, should it, for instance, decide these new measures violate the principle of anti-discrimination enshrined in the Treaty (TFEU Articles 263, 264, 266).

From a substantive perspective it will be interesting to see how the EU Commission will design the specific legislative proposal, which subsequently has to be agreed by the Council as well as the European Parliament. Let’s assume that the EU Commission takes GDP per capita in Purchasing Power Standards (PPS) as a benchmark for adjusting child benefits. Then benefits for children living abroad in a number of Member States, such as Denmark, Ireland and Germany, would actually have to be increased significantly as the living standards in these countries are higher than in the United Kingdom (see Eurostat); only adjusting child benefits downwards for countries with lower living standards would surely be discriminatory.

Based on the current compromise a Welsh parent working in London with his/her children living in West Wales, with a GDP per capita in PPS of 67.4 per cent of the EU average (see Eurostat), would receive the full UK child benefit, whereas a Hungarian or Polish worker employed in London with his/her children living in Hungary or Poland, both with an average GDP per capita in PPS of 68 per cent, would only receive approximately two-thirds of the benefit paid to the Welsh worker. Such an approach would seem to clearly discriminate against CEE workers based on nationality and limit the freedom of movement within the EU. It could therefore be opposed by the European Parliament or eventually challenged in the European Court of Justice. All this raises much bigger questions of different living conditions, not only across Member States, but also within Member States. The differences within Member States are at times larger than between Member States. To take the regional differences within Member States into account, the EU for instance bases the allocation of its structural funds on regional GDP per capita in PPS. Following the logic of this approach would mean to reduce child benefit for a worker with children in Wales to two-thirds of the UK average and massively increase the child benefit for children living in Inner London to be reflective of the living conditions there (GDP per capita in PPS of 325 of the EU average).

A precondition for pulling the emergency brake in relation to in-work benefits would be compelling evidence demonstrating that UK Tax Credits function as “a pull factor“ leading to an “inflow of workers from other Member States of an exceptional magnitude over an extended period of time” (Sec D, No 2, b of Conclusion of the European Council Meeting). However, to my knowledge such evidence has not been made publicly available and is very unlikely to exist at all. The EU Parliament would be well advised to demand clarifications of what constitutes a “pull factor” and how “exceptional magnitude” is defined. It remains to be seen how the EU Commission will design the so-called emergency brake and whether the EU Parliament will agree to such a legislative proposal. But what seems to be clear is that Prime Minister Cameron cannot be certain of the outcome of the parliamentary deliberations. Assuming the EU Parliament will not significantly amend or veto a legislative proposal developed in the spirit of the Council decision, the UK Government would eventually have to present compelling evidence to the Council for it to be able to authorise the UK Government to pull the emergency brake. In other words, the emergency brake is dependent on the authorization by the Council. Furthermore, the amendment to Regulation (EU) No 492/2011 can also be challenged in the European Court of Justice.

To summarize: The European Parliament and the European Court of Justice could still ‘undo’ the new UK settlement after the British electorate has voted to stay IN the EU, despite the fact that, especially, the decisions taken by the Council in regards to immigration are core to the REMAIN campaign! The REMAIN campaign should at least acknowledge that the UK remains semi-sovereign until such time as it leaves the European Union.

However, semi-sovereignty can also be turned into an argument for the REMAIN camp by those, who want to be sure that minimum workers’ rights remain protected, irrespective of the government in power at Westminster. For instance an act of Parliament would be insufficient to undo the social protection guaranteed by the Working Time Directive (minimum number of holidays each year, rest breaks, no more than 48 hours of work per week etc.), the Parental Leave Directive (minimum entitlement for leave of four months to care for children up to eight years old), or the Directive on Temporary Agency Work (principle of non-discrimination regarding essential conditions of work and employment). These directives can only be changed at the EU level. However, if the UK left the EU the protections granted under these directives would no longer protect British workers.

Assuming the British electorate votes to leave the EU, what effect could this have for British citizens in addition to the loss of social protection described above? Amongst others British citizens would no longer be entitled to following rights:

  1. Freedom of movement within the EU, affecting not only workers, but also students and most importantly pensioners;
  2. Access to (free) medical treatment in another Member State;

Ad a) Currently not only EU citizens from other Member States have the right to live in the UK, but obviously also British nationals have the right to live and work anywhere in the EU. According to EUROSTAT more than 740.000 Britons live in another Member State, many of them as pensioners in Spain. Leaving the EU would mean that the British government could pay lower pensions, more specifically not provide yearly increases, to those living in another Member State, similar to the practice in place for British pensioners living in jurisdictions outside the EU. Britons would no longer be entitled to spend their retirement in Spain, as other Member States could demand a valid visa and restrict the purchase of a retirement property. British students studying at universities in another Member State could not only be charged tuition fees at the level of third country nationals, but could also be required to hold a valid visa and be barred from working to supplement their income. Approximately 13.000 British university students per year could no longer participate in the Erasmus exchange programme. Working in another Member State could be extremely difficult, as visas and work permits could only be given to UK nationals, if EU citizens could not fill a vacancy. British workers who would receive a work permit could still be discriminated against and would no longer benefit from the EU coordination of social security and from the social rights associated with EU citizenship, i.e. not be entitled to cumulate/export pension rights earned in a Member State of the EU, to family benefits or to other social benefits.

Ad b) Currently, EU citizens have access to (free) medical treatment in another Member State, if they are a pensioner, student, tourist or worker, either through the European Health Insurance Card (EHIC), a special arrangement for pensioners, or by enrolling in the local scheme as a worker. Leaving the EU would mean that people traveling to another Member State would have to carry private medical insurance. Especially for pensioners retiring in France, Germany or Spain this could mean significant monthly costs, easily reaching more than €300 per month. Furthermore, EU citizens are entitled to go to another EU country for medical treatment and get reimbursed for it, according to the Directive on Patients Rights in Cross-border Healthcare. Should Britain leave the British patients would obviously no longer have this right.

To sum-up: Irrespective of the big arguments relating to British EU membership and the economy or national security, the EU offers tangible social rights to ordinary British citizens. Losing them could be costly!

[1] This assessment builds on research funded as part of the FP7 project bEUcitizen by the EU Commission (grant no320294). See C. Bruzelius et al. (2015) Social Rights of EU Migrant Citizens, in Social Policy and Society, FirstView Article, October 2015, pp 1 – 14. C. Bruzelius/M. Seeleib-Kaiser (2016) “Social Rights of EU Citizens,” in: Patricia Kennett (ed.) Handbook of European Social Policy. Cheltenham: Edward Elgar, forthcoming

[2] See European Council (2016) European Council Meeting (18 and 19 February 2016) — Conclusions. EUCO 1/16. Brussels.

[3] European Council (2016); No 4 of the Conclusion of the European Council Meeting of February 18/19 states: “It is understood that, should the result of the referendum in the United Kingdom be for it to leave the European Union, the set of arrangements referred to in paragraph 2 above will cease to exist.”