Immigration and Social Security Coordination (EU Withdrawal) Bill (Seventh sitting)

Alok Sharma Excerpts

Thursday 28th February 2019 Public Bill Committees

[Afzal Khan (Manchester, Gorton) (Lab)]

Once again, it is a pleasure to serve under your chairmanship, Mr Stringer. I start by thanking my hon. Friend the Member for Stretford and Urmston for laying out this amendment.

The Henry VIII powers would allow the Government to remove rights to aggregate pensions and disability entitlements that EU citizens in the UK and UK citizens in the EU have built their lives around. It is vital that the Government do not make regulations that might remove the ability of British citizens and European economic area nationals to aggregate pension rights and social security benefits without proper scrutiny by Parliament, so we support this amendment. These social security rights are vital for EU citizens in the UK as well as UK citizens in the EU.

People will have moved back and forth between the UK and the EU on the assumption that they will be able to bring their pension entitlements with them. For example, a German national might move to the UK midway through their career, work here for 10 years, and then go back to Germany to retire. The current EU regulations allow them to receive a pension based on their contributions both in Germany and in the UK. The same is true for a UK national who moves to work in Germany.

If we have a withdrawal agreement, those rights will be guaranteed, but if we do not have a withdrawal agreement we do not know what will happen. Perhaps the Minister can help us with that.

In an evidence session, it was pointed out by British in Europe witnesses that 80% of the British people living in Europe are of working age or below, and more than 1 million people are affected by social security implications. Removing the ability to aggregate social security benefits will deter EU citizens from coming to work in the UK, because they will not be able to export social security from the UK, despite having paid into the system. The same would apply for UK citizens moving into the EU.

There is a particular concern among UK citizens living in the EU about the uprating of pensions. The percentage increases can accumulate to be very significant for pensioners living in the EU, particularly in the context of the declining value of the pound.

The UK state pension is already the lowest in all the OECD countries, and a refusal to uprate would cause significant hardship for many UK citizens. At the moment, the Government have committed to continue the uprating of pensions until April 2020, but not beyond. Can the Minister provide some much-needed clarity for the UK citizens living in the EU about the position of pensions beyond 2020?

If the UK introduces restrictions on social security, it is to be expected that the EU will respond in kind. We heard during our evidence session from the TUC that it is

“very worried about the increasing social insecurity and the welfare repercussions for British people abroad.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 12 February 2019; c.38, Q109.]

We heard from the British in Europe witnesses during our evidence session that the Bill has had a negative effect on discussions with EU Governments. Kalba Meadows was clear that

“national Governments across the EU27 are reticent in coming forward with their own legislation, because they are concerned that the rights of their nationals living in the UK will not be equally protected.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 14 February 2019; c. 146, Q364.]

[The Minister for Employment (Alok Sharma)]

It is an absolute pleasure to serve under your chairmanship today, Mr Stringer. I start by thanking the hon. Member for Stretford and Urmston for her amendment to clause 5. She made a wide-ranging speech, which covered many of the points that might be raised when we consider clause 5 stand part, and I will try to address some of the points that she made. I put it on record that whatever our political differences, I have always thought of the hon. Lady as one of the most courteous and considered Members in the House, and for that we should all be grateful.

The hon. Member for Manchester, Gorton made some interesting remarks. Before I discuss amendment 26, I say generally that if colleagues want to give citizens certainty, the best way of doing so is to support the withdrawal agreement and the deal that will be returning to the House. Many sincere views are expressed, and people are concerned for citizens—I completely get that—but the best way of providing certainty is to support the deal.

[Kate Green]

I am grateful to the Minister for giving way, and I particularly thank him for his remarks a few moments ago. There would be certainty during the transition period, but that would not really give certainty beyond 2020, would it? As I have already pointed out, for example, we do not know the Government’s intentions in relation to pensions uprating, whether or not there is a deal after 2020.

[Alok Sharma]

Let me come on to those points. I am sure that we will have a chance to discuss them further.

On amendment 26, I note the hon. Lady’s assertion that the provisions in clause 5 could be used to remove the ability of UK and EU nationals to aggregate periods of work, insurance or residence in other member states, in order to meet domestic entitlements for contributory benefits and pensions. I reassure her that although future policy on social security co-ordination is subject to further consideration, the Government are committed to exploring options to protect past social security contributions made in the EU and the UK as part of our ongoing discussions with the EU and member states.

The Government have always been clear that protecting the rights of citizens is a priority. It is important that UK and EEA nationals in the EU who are currently receiving aggregated pensions and benefits have those payments protected. I therefore make it clear that the Government will not retrospectively remove the entitlements of UK and EU nationals living in the UK to UK contributory benefits.

I further reassure the hon. Lady that, in a deal scenario, the power in clause 5 will not be exercised to remove or reduce commitments made in relation to the individuals within the scope of the withdrawal agreement. The withdrawal agreement protects rights and entitlements, including aggregation and uprating, in accordance with EU legislation for those EU and UK nationals covered by the withdrawal agreement. The exercise of the power will be subject to further discussion with the EU—for example, in relation to a future agreement. However, it is important that the Government have the provisions in the clause to reflect the UK’s new relationship with the European Union, either if we are in a no-deal scenario or if we do not have a future agreement.

As the hon. Lady acknowledged in her remarks, the nature of the current social security co-ordination framework means that a multilateral partnership must be in place in order for it to function effectively. Aspects of the current system, including aggregation, rely on reciprocity from the EU27 and are underpinned by data sharing between the member states. I fully understand her position, which is that it would be preferable for a system of aggregation of contributions to continue. Indeed, in the UK Government’s publication on our proposal for the future relationship between the UK and the European Union, we set out exactly that ambition. We explained that we will seek reciprocal arrangements around some defined elements of social security co-ordination. That could cover aggregation rules.

However, without reciprocity, there are limits to what the UK Government can do by ourselves. Although the UK has powers in domestic legislation to pay state pensions and benefits, if the UK leaves the European Union without a deal, we could not bind other member states to recognise contributions made in the UK. Accepting this amendment could prevent the UK Government from responding effectively to certain scenarios following our exit from the European Union.

[Kate Green]

I accept what the Minister says about the nature of reciprocity, but it is within the Government’s power to make a unilateral commitment to the ongoing uprating of pensions beyond 2020. That has been clear since at least 1996, in relation to a memorandum issued by the then Department of Social Security.

[Alok Sharma]

I thank the hon. Lady for her comments, and I will come on to the point about pensions shortly.

The titles of regulation 883 cited in amendment 26 cover a broader range of issues than just aggregation rights. They cover a wide range of social security co-ordination provisions, ranging from definitions of key concepts, the scope of the regime, prohibition of residence requirements for certain benefits and the export of cash sickness benefits. Accepting an amendment that prevented the Government from removing those provisions would go much further than the hon. Lady’s stated intention of preventing the Government from making changes to aggregation policy. Doing so could remove the Government’s ability to reflect our future relationship with the EU on a wide range of policy issues. Furthermore, the amendment would prevent the removal of the listed titles, but it would not prevent their modification or amendment. With respect, therefore, it does not achieve its purported objective.

Let me address some of the issues that the hon. Lady raised, which were all perfectly valid. She made a point about the inclusion of universal credit in the social security co-ordination system, and she said that it was not currently part of that system. She will know that that is because universal credit is treated as social assistance, and therefore will not be affected by the clause.

The hon. Lady made a point about healthcare. It is not our intention to use this clause to make changes to healthcare policy. Any such changes are a matter for the Department of Health and Social Care, and they will be dealt with in the Healthcare (International Arrangements) Bill.

--- Later in debate ---

[The Chair]

With this it will be convenient to discuss the following:

That schedule 2 be the Second schedule to the Bill.

That schedule 3 be the Third schedule to the Bill.

[Alok Sharma]

Clause 5 provides an essential legislative framework to ensure that the Government can reflect their preferred social security co-ordination policy outcomes after the UK has left the European Union, responding to the outcome of negotiations. It will enable the Government to deliver policy changes post exit both in the event of no agreement being reached on future social security co-ordination matters and to support deal scenarios in which a UK-EU agreement differs from current social security co-ordination measures.

The clause provides a power for the Secretary of State or Her Majesty’s Treasury to modify the current social security co-ordination regulations. The regulations provide for social security co-ordination across the EEA and will be incorporated into domestic law by the European Union (Withdrawal) Act when the UK leaves the EU. Clause 5(3) sets out some examples of the manner in which the power may be used. One such example is that regulations may make different provision for different cohorts, and some reference points for differentiation are suggested. This is particularly relevant in a no-deal scenario, as the regulations could, for example, provide protection to those who would otherwise have been in the scope of the withdrawal agreement in line with a unilateral offer. Very importantly, regulations made using powers in this clause will be subject to the affirmative procedure, so they will be scrutinised and must obtain the approval of both Houses.

In subsection (4), the clause also gives the Government the ability to make consequential changes to other primary legislation and other retained EU law to ensure that the changes to which the main power gives effect can be appropriately reflected. It may, for example, be used to address technical matters, inoperabilities and inconsistencies.

In subsections (5) and (6), the clause makes it clear that any directly affected rights that will have been saved by the European Union (Withdrawal) Act shall cease to be recognised to the extent that they are inconsistent or capable of affecting the changes made using the powers in the clause. This is necessary to address inoperabilities and conflicts of law that might arise as a result of regulations made under this clause. It will ensure that any policy changes are able to be delivered effectively.

It is vital that, across all EU exit legislation, the UK Government continue to honour any commitments that they have made in the devolution settlements. Therefore, subsections (1) and (7) of the clause confer powers on the devolved Administrations to legislate in areas for which they have competence. Officials in the UK Government and devolved Administrations have worked together on the correct approach for this clause, and legislative consent motions will be sought from the devolved legislatures in relation to this approach. Subsection (7) defines an appropriate authority, clarifying that the power is exercisable by the Secretary of State or the Treasury, a devolved authority, or jointly.

It is reasonable to assume that, in a deal scenario, if a withdrawal agreement is reached, the implementing vehicle for the withdrawal agreement will provide the necessary protections for those who fall within its scope, and Parliament has the power to ensure that that is the case. I want to reassure colleagues that the power in this clause will not be exercised to remove or reduce commitments made in relation to those individuals within the scope of the withdrawal agreement. The exercise of any powers within this clause will also be subject to the outcome of further negotiations with the EU on a future agreement. In a deal scenario, the clause will be necessary to deliver policy changes to the retained regime that will cover individuals who fall outside the scope of the deal, to reflect the reality of our new relationship with the EU.

In addition, this clause is essential to ensure that the UK Government are able to provide appropriate protections and make appropriate policy changes in a no-deal scenario. Without the clause, the Government have only the power contained in the European Union (Withdrawal) Act to fix deficiencies within the retained system of social security co-ordination. The current social security co-ordination regime operates on the basis of reciprocity. The European Union (Withdrawal) Act power allows us to ensure that the regime will operate on day one of exit, but does not enable us to deliver policy changes, including those that would help us to deliver effective support for UK nationals in the EU. This clause allows us to amend the rules in an appropriate and manageable way if the Government need to operate the system unilaterally, and to deliver changes to the retained regime.

As a responsible Government, we are preparing for all eventualities, and the power in this clause is necessary to provide the Government with the flexibility required to respond to a range of scenarios.

The aim of schedule 2 is straightforward. It sets out the power of the devolved authorities under the social security co-ordination clause—clause 5. The clause confers new powers on Scottish Ministers and, indeed, the Northern Ireland department, to amend the limited elements of the social security co-ordination regulations that fall within devolved competence. We are thus providing the devolved Administrations with the powers that they need to amend aspects of the regulations in areas of social security that are devolved—in the same way as, rightly, the UK Government have powers with respect to laws affecting the UK as a whole.

It is important that the powers in the Bill should not be so narrow as to hamper the devolved Administrations’ ability to amend the elements of the regulations that are within their competence. It is also important to set out, as the schedule does, the parameters for the powers. They should not be wider than is necessary to achieve their purpose. For example, the schedule ensures that the same rules on consent and consultation that the devolved authorities must follow when making provisions in their own legislation apply for regulations made under clause 5. We sought that balance by focusing on the specific aims and applying safeguards to ensure, for instance, that the powers will not be used in ways that might be outside devolved competence.

Schedule 3 simply gives further detail about the making of regulations under the social security co-ordination clause. It provides further detail about the form that regulations will take under the clause, whether they are statutory instruments, Northern Ireland statutory rules or Scottish statutory instruments. The schedule also provides that the use of the power is subject to full parliamentary scrutiny. Its exercise will be subject to the affirmative procedure, which means that regulations made using the power must obtain the approval of each House. It also gives clarity to the procedures that the devolved authorities will need to follow.

Paragraph 4 provides that where the UK Government and a devolved authority exercise the powers under clause 5 jointly, the affirmative procedure applies in both the UK Parliament and the devolved Parliaments or Assemblies. Paragraph 5 permits other regulations, subject to the negative procedure, to be included in an instrument made under clause 5. That means that even where a regulation would be subject to a lower level of scrutiny, if it is combined with regulations under clause 5 a higher level of scrutiny—the affirmative procedure—will apply.

[Afzal Khan]

Labour believes that if the Government want to make far-reaching changes to social security, they should be subject to scrutiny, in primary legislation. As we discussed in the clause 4 debate, secondary legislation does not provide Parliament with an opportunity for adequate scrutiny and oversight of major policy changes. The rights in question were brought in by primary legislation, and it is only right that their removal should be possible only with the same level of scrutiny.

The powers in the clause are not necessary. If the Government really want to tidy up the statute book or make other, minor, changes to legislation, section 8 of the European Union (Withdrawal) Act 2018 already gives them the power to remove the co-ordination regulations and replace them. In fact, they have already laid four regulations under the Act. We feel that the power in the clause would enable the Government to set out global changes to social security, which should rightly be done through primary, not secondary, legislation.

That position was set out by Justice during our evidence sittings. It was concerned about

“the extraordinary breadth of power that it creates”.––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 12 February 2019; c. 59, Q157.]

The witness set out clearly:

“It is simply not appropriate to leave that to a policy change by way of delegated power, but it seems to us, from their memorandum, that Government are expressly intending to do that to get around the limitations in section 8.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 12 February 2019; c. 60, Q158.]

Similarly, Professor Steve Peers was clear that

“the Government should not have unlimited powers and some constraints should be set by primary legislation.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 14 February 2019; c. 123, Q308.]

Urgent, widespread changes to social security co-ordination are not needed in a rush. Thanks to the 2018 Act, there is law in place. The statutory instrument amendments are in place and there is no urgent need for an overhaul of social security co-ordination that would justify such a lack of scrutiny.

The House of Lords Delegated Powers and Regulatory Reform Committee is clear that the Government have provided an inadequate justification for the transfer of power from Parliament to the Government in the clause. It recommended the removal of clause 5 in its entirety. It refers to a requirement to provide an “exceptional justification” for a skeleton Bill, which has not happened in this case. As the Committee puts it,

“Parliament is being asked to scrutinise a clause so lacking in any substance whatsoever that it cannot even be described as a skeleton.”

[Gavin Newlands]

It is a pleasure to serve under your chairmanship, Mr Stringer, and to rise to speak for the first time in the Committee—potentially the last time, as the Leader of the House has announced that the Northern Ireland Budget (Anticipation and Adjustment) (No. 2) Bill will be debated on Tuesday. I apologise in advance for my absence on Tuesday.

I cannot match the almost giddy levels of excitement displayed my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East in approaching matters of immigration law in the previous session—only an immigration lawyer could generate that kind of excitement—especially because I detest the Bill. It brings into effect one of the worst repercussions of the Government’s approach to Brexit, namely the ending of free movement. It is an act of sheer folly and economic vandalism, combined with the fact that the Government, as in almost all Brexit-related legislation, have granted themselves huge discretionary powers.

With that off my chest, I will move on to clause 5, which is no different. It gives broad and powerful Henry VIII powers to Ministers to make changes to social security co-ordination post Brexit—a move that the3million and British in Europe would describe as moving the goalposts. I feel deeply uncomfortable about approving the clause and giving the Government that agency for many reasons, not least because of the history of “Go home” vans and the creation of the hostile environment, although I happily concede that they predate the current ministerial team.

As was referenced a moment ago, in response to the question that the hon. Member for Stretford and Urmston asked about existing social security rights, Jodie Blackstock, the legal director of Justice, said:

“The Bill does not protect those rights, because it does not set out the principles by which it will do so. It simply provides the structure for the removal of all current reciprocal arrangements. As with the discussion we had on clause 4, it creates the power for not only a Minister but an appropriate authority to replace those current rights with an alternative arrangement.

For us, clause 5 is the most concerning clause in the Bill, as if clause 4 was not concerning enough. Our view is that the clause ought to be entirely deleted, and we say that for a few reasons—not just the extraordinary breadth of power that it creates, but the fact that the provision to remove the co-ordination regulations and replace them is already provided for by way of section 8 of the European Union (Withdrawal) Act 2018. Indeed, there are four regulations that have already been laid, pursuant to that Act, before Parliament and that comply with what are perhaps broad powers, but at least are curtailed far more than the power here; and, because they have been laid, it is possible for them to be scrutinised by Parliament.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 12 February 2019; c. 59, Q157.]

As Jodie said, it appears to many—outside the Home Office, at least—that the powers are entirely unnecessary. Section 8 of the European Union (Withdrawal) Act 2018 does provide the scope to replace the current arrangements on co-ordination and the EU has not agreed or announced changes to those arrangements. In the modern world, more people, certainly in the EU, are living lives between different states and cherish the right to chase the opportunity to work where they please. That is an opportunity that many in the next generation will not be afforded in the manner to which we have been accustomed.

Despite being vastly inferior to freedom of movement, there will still be various routes open to EU citizens post Brexit, including the tier 2 and the 11-month low-skilled worker visa options. That makes social security co-ordination a hugely important issue for many more people in the future, in addition to the 3.5 million EU citizens in the UK and the 800,000 UK nationals in the EU. It is not justifiable, therefore, for future policy changes in the area to be made through delegated powers.

I am sure that the Minister will insist that the Government do not plan to remove benefits or further co-ordination—in fact, he addressed that in response to the previous amendment and in his opening remarks in support of the clause—but even if we take him at his word, that is not good enough, because the EU and UK citizens affected by the issue want to be assured and to have certainty. If they cannot have certainty, they want to ensure that any changes in the area have the rigorous scrutiny of primary legislation.

As it stands, clause 5 also risks politicising social security co-ordination and leaves us with the real prospect of losing reciprocation from the European Union’s 27 member states in addition to EFTA’s four member states. Without that co-ordination, there is no guarantee that rights such as pensions and others that hon. Members have spoken about at length will continue to accrue for British citizens in the EU. That risks deterring people from moving abroad.

The Government have already awarded themselves too many broad Henry VIII powers. All too often, the Government’s answers to the question of why they need those broad powers are wholly insufficient. We firmly believe that the Bill should not be legislation at all. In the context of this debate, we firmly believe that clause 5 should not stand part of this regrettable Bill.

[Alok Sharma]

Perhaps I can respond to some of the points raised by the hon. Member for Manchester, Gorton and the hon. Member for Paisley and Renfrewshire North.

The hon. Member for Manchester, Gorton asked whether the powers would be too broad. I want to be absolutely clear that the power can be used only to make changes to specified retained EU social security co-ordination regulations that are listed in the clause, and to make consequential changes to primary legislation or other retained direct EU legislation that is not listed in the clause. The power is broad, because it provides the Government with the flexibility to respond to a range of scenarios. I repeat for the third time that regulations made using this power will be subject to the affirmative procedure, so they will be scrutinised and voted on by both Houses.

Both hon. Gentlemen called for the clause to be removed from the Bill. We believe that it is very important that the clause remains part of the Bill, so that the Government can respond at pace to the outcomes of negotiations and the scenarios that we find ourselves in. Without the clause, the Government would not be able to deliver policy changes to the retained social security co-ordination system, including those that could help us to deliver effective support for UK nationals abroad.

The current rules around aggregating and paying benefits pro rata and paying pensions based on contributions across member states depend on reciprocity. I have made that point a number of times. The power allows us to amend the rules in an appropriate and manageable way if the Government need to operate the system unilaterally and deliver changes beyond the scope of the deficiency fixes. Taking this enabling power is the most appropriate option, because it provides us with the flexibility that is required.

The hon. Member for Manchester, Gorton spoke about the fixing SIs. I think I responded to that point earlier, in the debate on amendment 26.

I know that Members on both sides of the Committee have raised these points with a great deal of interest in making sure that we get the matter right for citizens. The hon. Member for Paisley and Renfrewshire North has just said that he wants to give citizens certainty. That is what I and Conservative colleagues want, and the best way of doing that is for all of us to support the deal and the withdrawal agreement that are on the table.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Schedules 2 and 3 agreed to.

Clause 6

Interpretation

Question proposed, That the clause stand part of the Bill.

[The Minister for Immigration (Caroline Nokes)]

The clause is minor and technical in nature. It simply clarifies how certain terms within the Bill should be interpreted—for example, “devolved authority” and “domestic law”. In doing so, the clause helps us to ensure the clarity and coherence of the legislation.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Clause 7

Extent, commencement and short title.