5 March 2013

Mr Frank Field (Birkenhead) (Lab) (Urgent Question): To ask the Secretary of State for Work and Pensions if he will make a statement on what actions the Government are planning to restrict welfare to newcomers from Bulgaria and Romania from 1 January next year.

The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): May I congratulate the right hon. Gentleman on getting his urgent question on the second time of trying? He is a model of persistence and I, of course, was over the moon about his persistence.

The right hon. Gentleman has raised an important question and I want to deal with some aspects of it. First, however, I will set the scene as to what we are trying to deal with. I understand that Labour Front Benchers now admit that they fundamentally got it wrong on immigration, but the scope to which they got it wrong is why we have this issue. Between 1997 and 2010, net migration to the UK was some 2.2 million people—larger than the city of Birmingham. Interestingly, from 2004 to 2010, 1.1 million European economic area nationals registered to work in the UK. After the prediction of what was likely to happen, the scope of the problem is far greater than anything the Labour party wanted to tell the public. Most of all, I congratulate my right hon. Friend the Home Secretary and her team in the coalition for having begun the process of reducing net migration to Britain for the first time in a long time.

For the benefit of the House and in line with the right hon. Gentleman’s request—I know he particularly wanted me to answer that bit first, so having dealt with it I will get on with the rest of my answer—let me explain the current arrangement. A lot of nonsense is talked about what we are and are not capable of. First, people must pass the habitual residence test, introduced by the previous Government, before being entitled to claim income-related benefits. The current system was put in place in 2004 and has basically two elements—a legal right to reside and an assessment of factual evidence of habitual residence. As we know, EU citizens have the right to live in another member state as long as they are a qualified person, which basically means a worker, self-employed person, jobseeker, self-sufficient person or student. Tax credits have, I am afraid, been open to abuse outside that system from day one because the rules allow anybody from within the European economic area to claim self-employed status and receive full entitlement immediately. The Government are trying to wrestle with that problem, and I will return to it.

We are currently facing—not for the first time—a legal challenge from the European Commission because our habitual residence test states that people must prove they live in the UK habitually before they get access to benefits. It seems strange to me that anyone should be surprised that a habitual residence test requires that a person should live in the UK habitually, but we sometimes live in that George Orwellian political language world, which the Commission seems to foster with great alacrity. Secondly, on exportability, under the EU co-ordination rules, benefits under the main categories of social security are exportable—that is, payable elsewhere in the European economic area. So that we clear up the confusion, let me say that that includes, notably, child benefit, for example, and has for a while. We therefore pay child benefit to children who live in other EU states when their parents are working here. That causes a lot of concern, and quite legitimately so. When both parents work but in different countries, the EU rules apparently determine who has primary responsibility for paying, but any difference in entitlement is netted off. So, for example, if someone comes from Poland and works over here, the child support that we pay here is netted out against what they might have received had they been paid in Poland, and the net amount is therefore paid across. That is the existing rule. The UK system is obviously more generous, and that is why it pays people in a sense to be here, getting those benefits.

I recognise there are some real issues here. We are in the midst of looking at those issues with other countries as well, and I want to mention which ones are on the schedule. The Government are concerned that, although some protections are in place, they are not enough. That is particularly worrying given the issue, which the right hon. Gentleman raises, of 1 January 2014. So we are trying to look carefully at where the system is falling down at the moment, and I am exploring a series of options. Today, for example, I have called for another meeting of a series of European nations that share our concerns. Some people might have noticed today that Germany has woken up at last to the reality that it might face a large net migration. We are due to meet its representatives and others from around the EU to try to ensure that we deal with this. I do not believe that it is acceptable that we go on with it—I have told the European Commission that—and we will resist it.

The reality is that we are trying, for example, to figure out the rules that allow us to prevent individuals from staying in the UK for only a short time before claiming benefits—a rule that existed under the last Government. We are looking at the tests about accommodation and the length of time people spend here. We want to look at things such the leasing arrangements they have for their housing and over what length of time, and even at challenging the narrow and short-term definition of “habitual” used by the European Court of Justice. In other words, we are trying to lock people out from coming here solely for the purpose of claiming benefits.

I have to tell Opposition Members, who were making a noise just a second ago, that one of the big problems is that the last Government did not collect any data on how many migrants actually claimed benefits here. We have changed that. We are now totalling up who is here and who will claim benefits, and we will be on top of those figures.

In conclusion—I know the right hon. Member for Birkenhead (Mr Field) wants to ask some further questions—there are a number of things we need to do. We need to tighten up immediately the rules about habitual residency. We need to tighten up the rules about accommodation and the leasing length of time.

We need to tighten up and start the process of arguing hugely with the Commission that it is quite wrong to net out things such as child benefit and pay the higher level to people whose families do not even come with them into the country to work. Finally, many nations in Europe are just as angry as we are about this, and we have been meeting them since last summer and reaching a common purpose to deal with the Commission and force it to recognise that any further changes it wants to make, including by taking us to court over the British residency rules, are not acceptable. We will tighten up. I refuse to accept the Commission’s rules. I will not give way on the habitual residency test, and we will tighten up on net migration.

Mr Field: May I thank the Secretary of State for his answers, but might I now try to pin him down on four issues? Does he accept that, if the word “crisis” is used, it is a crisis that successive Governments have engendered by moving welfare from the basis that people had to make contributions to receive benefits to one where they receive them if their income proves needs? Is not his universal credit just one more move in that direction? When will the House know what further restrictions will be placed on universal credit to prevent it from being claimed immediately by people who arrive in this country? Does he not accept that the current situation—basically, a means-tested welfare state—is inconsistent with our European Union treaty obligations and is against the Prime Minister’s wish that we should be open for trade but not an easy touch? Are the Government now going to rescind the directions issued by primary care commissioning groups as Parliament rose for the summer last year, which instructed doctors that they had to take people on to their books if they had been here for 24 hours, including people here illegally? When will the Government act on that?

Will the Government use the powers they do have to instruct authorities that in allocating social housing, they must pay due attention to the length of time people have been waiting and to their good behaviour; and that they have a duty to publish data—on which the Government will insist—on whether social housing is being allocated to non-British citizens?

Finally, given that there are already 150,000 Romanians and Bulgarians here legally, and that they are arriving here at a rate of 25,000 a month, does he not accept that the answer he has just given us will prove ineffective against the movement that might well come after 1 January 2014? Will he therefore tell the House when he expects to report on what measures the Government will take? Will he ask for a whole day’s debate, so that the House can improve them before we rise for this summer’s recess?

Mr Duncan Smith: I have known the right hon. Gentleman for a considerable time and have huge respect for him that goes beyond party affiliation. I will deal with those four points, but I want to deal with a point he made right at the end.

I absolutely agree with the right hon. Gentleman that this is something of a crisis. For the past two years, I have been fighting a rearguard action against what was left to me by the previous Government. [Interruption.] Opposition Members can moan, but let us put the facts as they are: I inherited a habitual residency test that simply is not fit for purpose. We are trying to tighten
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that up dramatically and I am being infracted by the European Union for doing so. Before Opposition Members start lecturing us, let us remember what they left. The right hon. Gentleman is, however, absolutely right—I am with him on this—to describe this as a crisis.

The right hon. Gentleman made an important point about the contributory issue on welfare. Tax credits took things faster in that direction, which is why self-employed people coming in to the country are immediately able to claim tax credits even if they are doing only a little bit of work—we talked about The Big Issue sellers and so on. That is one area we have to look at in relation to universal credit, but I take the opposite view from him. Universal credit gives us an opportunity to redefine the nature of that benefit by absorbing the tax credit issue, taking away the right of individuals coming in from overseas to claim on that basis, and redefining it as something much more in line with our obligations, while being able to lock out many migrants who would come and claim immediately. I am happy to discuss that with him further, but I believe we will be able to make that move, which I am looking at at the moment.

The right hon. Gentleman is right to say that GPs and the health service often overstate their responsibilities to migrants. I talked to the Secretary of State for Health about this issue about a week ago, and he is looking carefully at issuing clear instructions that they do not have to do this. It is my view and belief that that is the case, and it is about making it clear that they do not feel they will be challenged. It is a little like health and safety rules—people over-interpret the situation. In fact, things are never as tough as that, and we need to provide strong guidance.

The right hon. Gentleman is also right about being clear to local government. I am working with the Secretary of State for Communities and Local Government to ensure that we publish and are clear about the number of people from overseas who are taking social housing ahead of those who have waited a long time in the queue. This is part of what we are trying to change—I agree and I will do that.

I am very happy to meet the right hon. Gentleman and to work with any colleague, from either side of the House, to make common purpose to tighten up our arrangements so that we do not have a problem when 1 January 2014 arrives. However, a little humility is required from Opposition Front Benchers in recognising that they signed the accession treaty that left us with this problem. It was they who created the habitual residency test that left the door open, and I wish they would apologise and work with us, rather than complain the whole time.

Source: Hansard, HC Deb, 5 March 2013, c823