No housing benefit for unemployed EU migrants from April - effect on UC

This will, presumably, need to be carried into Universal Credit as well.  That should help with the increasing simplicity of the scheme.

What will happen, for example, with work allowances? Perhaps it will be simple enough to remove the housing element from the needs calculation but that wiill trigger the higher earnings disregard.  How long before the Daily Mail starts pointing out that immigrants are getting more than UK citizens?

This will only make a difference once people on Universal Credit start having kids or disabilities but the ‘lobster pot’ is intended to keep them in the system.  (i’ve put up a little bit more about this and the difficulties with the lobster pot on my blog at http://blog.cix.co.uk/gmorgan )

but once they start working won’t they be a worker, not job seeker (so long as work is not marginal or ancilliary) so the housing costs should come back in shouldn’t they??

I wondered about that but there is no real concept of ‘marginal’ work.  Earnings don’t make any difference until they get to the level above the lower work allowance (which is below tax & NI levels). 

At what point do you decide that they’re a worker?  Remember there’s no hours measure in Universal Credit, only income.

I went to the DWP operational stakeholders meeting last week and apparently there is going to be legislation put in place that gives an earnings threshold which will establish if they are a worker so maybe that will apply to UC as well. But we don’t yet know what the threshold will be. Apparently they reckon the legislation is likely to be in place by April 2014 so I guess we have to wait and see what that says.

And I guess you’re right if they don’t count as a worker then the higher work allowance will apply (though that’s no help if they don’t have children or disability)

Welcome to the even simpler system.

Shall we have a sweepstake or just set some odds?

35 times minimum wage -  5/1
16 times minimum wage - evens
8 times minimum wage 10/1

i think you’re right with your assessment of the favourite 😉

It also introduces a nice new cliff-edge poverty trap.

if we round 16 x minimum wage to £100 then we get a few nice examples.

For simplicity make the rent £100 as well (and assume all the other Universal Credit bits add up to an artificial £150 for a single person with 1 child)

No work or income - needs are £150
Treated as worker - needs are £250

Earns £99.99. 
  Needs are £150. 
  £169.38 work allowance - earnings completely disregarded
  Universal Credit - £150
  Total Income £249.99

Earns £100.01
  Needs are £250
  £60.69 Work allowance - £39.31 is relevant, 65% taken into account - £25.55 deducted
  Universal Credit - £224.45
  Total Income - £324.46

So by earning 2p extra a week the claimant gains £74.47.

What happens next month when the earnings drop by 10p?
What happens if they are auto-enrolled into a pension scheme and net earnings drop?
What happens if they’re self-employed?

Sigh!

(ps. Do the sum yourself for the case where they’re crammed into a shared property and paying £20 a week)

Daphne - 04 February 2014 09:20 AM

I went to the DWP operational stakeholders meeting last week and apparently there is going to be legislation put in place that gives an earnings threshold which will establish if they are a worker so maybe that will apply to UC as well.

Can the DWP define a “worker”, for the purposes of EU law, is it not beyond their powers, does it, in fact, not have to go through the parliament?

I’m not a lawyer but I keep pondering the question, is it open to ultra vires challenges against the SoS/UK govt/DWP?

Wondering aloud but maybe totally off the mark!!

I would expect it to be done as an amendment to the Immigration (EEA) Regs 2006 to say that no person shall be treated as a worker or self-employed for the purpose of Reg 6 unless he satisfies some kind of hours/earnings formula. It would be Home Office legislation, but since a right to reside under that legislation drives entiotlement to all the means-tested benefits they would automatically follow suit.

I hope they consult the agonised decisions of Mark Rowland on this subject before making any hasty changes: he has been coming back to the idea of an objective measurement for years and years and has not so far concluded that it is possible.

Also to have any effect on self-employed people it would need to refer to earnings rather than hours - something like the UC minimum income floor.

I would expect them to do it that way as well.  However, advisers should be on the look out to see if, in their opinion, any amendment restricts the scope of the EC Directive beyond its original intention and argue that the Directive should be followed instead.

Seems IDS has announced today how “effective and genuine work” is going to be defined:

http://www.bbc.co.uk/news/uk-politics-26254735

Have to wait for the Regs before we know for sure but it appears that it isn’t as clear-cut as some might have expected (and that is no surprise given the difficulty the courts have had over the years with trying to fix hard and fast criteria for “effective and genuine” work):

Any European migrant who declares an income below the threshold, which will rise to £153 a week in 2014-15, will face further assessment of whether they are in the UK to undertake “genuine” work

So it seems that anyone who has been earning above the threshold for at least three months will automatically be assumed to be in effective and genuine work, whereas anyone who does not satisfy that requirement will face more detailed scrutiny.

That’s pretty much what happens now isn’t it?

Under current EU law the definition of a ‘worker’ is very broad meaning that those who work just a few hours a week in a pub once a week can access Housing Benefit, Child Benefit and Child Tax Credits. I believe there was a case at Wimbledon a few years back where a young man from South America - I think, worked there for the two weeks and was deemed a worker.

EU law, as confirmed by the Court of Justice’s case-law, defines a ‘worker’ as including any person who carries out genuine and effective work for which he or she is paid under the direction of someone else. The Court of Justice’s case law makes clear that part-time workers, trainees and au pairs can be classified as ‘workers’, provided their activity has an economic value and is genuine and effective. This case-law makes clear that a definition of a worker according to the amount he or she earns is not compatible with EU law.

My question is this

Does this apply to British Nationals who return from working overseas who might need to claim, or will it discriminate against Non UK nationals only, because that would be a violation of the ECHR as well, doesn’t it?

This will only affect British citizens whose family members are seeking a right to reside via the “Surinder Singh” route.

As to the discriminatory nature of the right to reside test generally, well that’s the question that people have been asking ever since the test was made a condition of entitlement to means-tested benefits in 2004.  Clearly the right to reside test discriminates in favour of British and Irish citizens and against all other EU nationals, because British or Irish nationality alone is sufficient to have a right to reside in the UK or Ireland ... but the UK will say this is not prohibited because as soon as other EU nationals bring themselves into an economic category that engages substantive treaty rights they are treated equally.  This is the subject of a complaint to the Commission supported by the AIRE Centre which is due to be looked at by the European Court at some point.

The Wimbledon case was Barry v Southwark - Dutch national who did two weeks’ reasonably well-paid work at the tennis tournament (won the men’s singles actually - it went Federer, Federer, Nadal, Federer, Barry, Nadal, Federer, Federer ...  OK, he was a steward).  His fairly solid work history up to that point obviously counted in his favour but one of the judges said the Wimbledon job would have swung it on its own.  The relevant European cases were Raulin and Ninni-Orasche.

I don’t agree that the case law is in any way clear at all about the relevance of earnings to the question whether work is effective and genuine - it seems to me to be one of the most troublesome issues affecting EU claimants and the courts and UT have struggled with it for years.  I give three examples by way of illustration:

- Kempf, where low earnings did not stop a person from enjoying the rights associated with worker status because the domestic court had already conceded that the work was effective and genuine (basically the wrong question was referred) 
- CH/3733/2007 which says factors outside the employment relationship can be taken into account, including the financial viability of the claimant relying on his/her earnings
- Genc, which emphasises the need not to overlook less easily measured factors such as entitlement to holidays, sick pay, standard terms and conditions as part of a work force etc: these count alongside such more obvious factors as hours and pay.

On the face of it there is some merit in the idea of an earnings level above which work is unquestionably effective and genuine, while earnings below that level mean the case comes in for closer scrutiny.  Only problem is ... it’s the bleedin’ obvious, this is exactly what decision makers do already (and they probably set the bar lower - 16 hours would probably swing it for most people)

I am sure that some lawyers might feel this guidance is important or helpful ...but it is only till the next bit of European caselaw which…. ironically wont be dictated by precedent….