Social Security Co-ordination (Revocation of Retained Direct EU Legislation and Related Amendments) (EU Exit) Regulations 2020 Debate

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Department: Department for Work and Pensions

Social Security Co-ordination (Revocation of Retained Direct EU Legislation and Related Amendments) (EU Exit) Regulations 2020

Lord Duncan of Springbank Excerpts
Tuesday 8th December 2020

(3 years, 3 months ago)

Grand Committee
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Baroness Stedman-Scott Portrait The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)
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My Lords, these regulations, which concern policy areas of my department and Her Majesty’s Treasury, and apply UK-wide, were laid before both Houses on 16 November. They are required to clear the way for the legislation which will implement our new system of social security co-ordination with the EU, EEA states and Switzerland.

The current EU social security co-ordination regulations—I will refer to these as the SSC regulations—operate to facilitate the EU’s free movement rules. They ensure that individuals pay social security contributions in only one member state at a time; they set out which member state is responsible for the payment of social security benefits; they require the export of some benefits to claimants resident in the EU; and they provide for the aggregation of social security contributions when claiming certain benefits and the state pension. These rules require equal treatment for citizens across the EU, overriding any domestic legislation. They have continued to apply to the UK throughout the transition period.

As the Committee will be aware, the Immigration and Social Security Co-ordination (EU Withdrawal) Act came into force on 11 November 2020, Section 6 of which provides a power to modify these SSC regulations, which have been retained in UK law. Before I go into the detail of the draft regulations, I will provide the Committee further details on the context in which they are being made. I hope noble Lords will forgive the lack of originality in what I am about to say, which is very similar to the update provided by the Minister in the other place yesterday.

As I have stressed to your Lordships on a number of occasions, citizens covered by the withdrawal agreement and related agreements with the EEA and Switzerland will be unaffected by these regulations as long as they remain covered by those agreements. Arrangements in this area for UK and Irish nationals moving between the UK and Ireland will also continue unchanged under a recent reciprocal agreement with Ireland.

The Government are negotiating future arrangements with the EU, similar in kind to the social security relationships the UK has with nations outside the EU. This means that there will be changes in social security co-ordination policy with the EU from the end of the transition period, regardless of the outcome of negotiations. The Government have been clear about this, including as the ISSC Bill passed through Parliament and in public communications.

As the Committee will be aware, negotiations with the EU are at a very advanced stage. It is the Government’s position that new rules, whether or not there is a future agreement, should take effect from the end of the transition period. These regulations are a core part of our legislative preparation and will stand whatever the outcome. We are also in discussions on future social security co-ordination rules with a number of EEA states and Switzerland.

I will now summarise the regulations we are debating today. Part 1 sets out that the regulations come into force at the end of the transition period, with the exception of some amendments being remade in Part 4. These amendments will come into force on the day after the day on which the regulations are made.

Part 2 revokes the EU SSC regulations retained under Section 3 of the European Union (Withdrawal) Act 2018 and the unilateral fixing statutory instruments made under Section 8 of that Act. The fixing SIs were brought forward to prepare for a scenario in which the UK did not leave the EU with a withdrawal agreement and would have enabled the UK to operate some of the retained SSC regulations unilaterally, so far as possible. This revocation is in line with the approach the Government set out in the draft illustrative regulations shared with the House during the passage of the ISSC Bill.

This means that the rules for those individuals who are not covered by the withdrawal agreement and move between the UK and the EU, EEA states and Switzerland after the end of the transition period will be determined by any new international agreements in place or, in the absence of an international agreement, the respective domestic law in each country. For UK benefits this means, for example, that the UK will no longer export child benefit to children living in the EU, with the exception of Ireland, delivering on the manifesto commitment. For national insurance contributions this means that, where no reciprocal agreement applies, the rules on payment of national insurance contributions for individuals moving between the UK and the EU, the EEA and Switzerland will be the same as the rules for the rest of the world.

These regulations make four limited savings from the general revocation of the retained SSC regulations in Part 3. First, they save the retained SSC regulations on the co-ordination of benefits in kind; namely, health- care, which is a policy competence of the Department of Health and Social Care. DHSC has made separate secondary legislation in respect of the reciprocal healthcare aspects of the retained SSC regulations.

Secondly, they save the existing debt recovery provisions which will enable the UK to collect overpaid HMRC benefits and social security contributions on behalf of a foreign social security authority where the individual or employer is present in the UK, as part of a reciprocal agreement on social security. Full details of the specifics of these provisions have also been set out in public correspondence.

Thirdly, they save the retained SSC regulations to the extent necessary to provide for continued operation of the agreement on social security between the Governments of the UK and Gibraltar. I can confirm that it is the intention of the UK and Gibraltar Governments to agree a new relationship not based on the EU SSC regulations. Once that has been implemented, this saving will no longer be required and will later be revoked.

Fourthly, they save provisions relating to aggregation and uprating of the state pension in the absence of agreements being in place with the EU, EEA states and Switzerland by the end of the transition period. This saving will provide for continued state pension aggregation and uprating in those countries up to the end of the financial year 2021-22. In the absence of a future agreement with the EU, the UK would seek to put in place reciprocal agreements on social security with individual EU countries instead; even where such negotiations are progressing well, the saving may be needed for a short period beyond March 2022 to finalise and implement bilateral agreements. For this reason, the saving is not time limited. However, it is a strictly interim measure targeted at those who move to the EU, the EEA and Switzerland after the transition period, while future arrangements are put on a reciprocal footing.

Part 4 makes related amendments in other EU exit legislation. This includes bringing forward the day on which amendments will be made to Section 179 of the Social Security Administration Act 1992 and the equivalent Northern Ireland Act. These amendments were previously made by the Social Security (Amendment) (EU Exit) Regulations 2019 and the equivalent Northern Ireland regulations, which are not revoked by this instrument. These amendments were otherwise due to come into effect at the end of the transition period.

While the UK has left the EU, we are not leaving the European Convention on Human Rights; in my view the provisions of the Social Security Co-ordination (Revocation of Retained Direct EU Legislation and Related Amendments) (EU Exit) Regulations 2020 are compatible with the convention.

In summary, these regulations make changes to prepare the statute book for the end of the transition period, particularly in relation to preventing the unilateral export of benefits, delivering on the manifesto commitment to prevent people claiming child benefit for children living outside the UK. They also ensure that the Government have the option to make a future social security co-ordination agreement with the EU through an Order in Council before the end of the transition period, should this be needed. I beg to move.

Lord Duncan of Springbank Portrait The Deputy Speaker (Lord Duncan of Springbank) (Con)
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My Lords, for the information of those on remote calls, the first 90 seconds of the Minister’s speech were lost, but I think the gist of the speech was contained. If there are any particular issues that noble Lords wish to tease out during the questioning, I am sure the Minister will be happy to respond in her summing up. I call the first speaker, the noble Baroness, Lady Ludford. I understand she is having technical difficulties, so we will come back to her. We move on to the noble Lord, Lord Bhatia.

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Lord Duncan of Springbank Portrait The Deputy Speaker (Lord Duncan of Springbank) (Con)
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My Lords, the next speaker is the noble Baroness, Lady Janke. She is not there, so we will move on to the next speaker and come back to the noble Baroness later. I call the noble Baroness, Lady Sherlock.

Baroness Sherlock Portrait Baroness Sherlock (Lab) [V]
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My Lords, I thank the Minister for her explanation of these regulations. I am also grateful to her for giving me access to her officials, who have been a source of very helpful briefing throughout this process.

Ministers have explained previously that their intention was to revoke the provisions of the social security co-ordination regulations at the end of the transition period, the idea being to clear the decks for the implementation of the contents of a deal with the EU and/or with the EEA and Switzerland. I have repeatedly asked the Minister over the year to spell out what will happen to social security co-ordination after the transition period for those outside the scope of the withdrawal agreement.

Ministers have consistently declined to answer questions on the grounds that the Government aim to get a deal, and that if we can wait until then we will be told everything. We are now here, three weeks before the end of the transition period, debating regulations that terminate the current co-ordination provisions, and we still do not know what is to replace them because we still do not know if there will be a deal.

Can the Minister tell the Committee how, if there is a deal, its provisions will be enacted in law? Specifically, how will Parliament get to examine the content and implications of the deal? If there is no deal, anyone moving between the UK and the EU, including the EEA and Switzerland, will be in the same position as somebody currently moving between here any other country in the world, except of course that we have agreements with many other countries, and far more people move between the UK and the EU and the EEA than anywhere else. According to the House of Commons Library, last year there were some 3.7 million EU nationals living in the UK and the best part of a million UK nationals living elsewhere in the EU, excluding Ireland.

If we end up without a deal, what will the position be? It is good to have it clarified that the regulations save provisions relating to the aggregation and uprating of the state pension. So if there is no deal in place by the end of the transition period, there will at least be continued state pension aggregation and uprating in the EU and EEA states and Switzerland up to the end of the next financial year and potentially for a wee bit longer, if necessary, for ongoing negotiations.

The intention is presumably that, in the absence of an EU-wide agreement, the UK would seek to put in place reciprocal arrangements with individual European states instead. Just for the record, can the Minister confirm that in the absence of a deal with the EU, this means that if a British pensioner moves to France in January she will find that her state pension is uprated in April as though she had never left the UK? Will there be any reimbursement of healthcare charges for her, or indeed for anybody getting long-term exportable benefits? Will there be any healthcare coverage for someone making a short stay in an EU state from the UK after the transition period? What will happen to those affected by Covid, such as students who started their courses virtually, intending to move physically next term? What will be the impact on their entitlements?

The fact that nothing else is safe will leave people moving between the UK and the EU very exposed. The obvious exception is Ireland, with which we now have an agreement, and we are told that there is an intention to have a deal with Gibraltar. These regulations save the intended SSC regulations on social security between the Governments of the UK and Gibraltar. Can the Minister confirm—I apologise if she did this in her opening remarks—whether the extent of those savings is just on uprating and aggregation, like a state pension, as it is with the EU as whole, or whether it is broader for Gibraltar?

The other outstanding areas relate to things such as double payment or aggregation of national insurance contributions. I understand that, at the moment, if there is no deal, the rules that apply to any other country in the world that does not have a reciprocal agreement with the UK will also apply to those moving for work between the UK and the EU or EFTA or Switzerland. I presume they will pay NICs for 52 weeks and then be subject to the local regimes. Could the Minister confirm for the record that someone in that position would therefore end up being potentially liable to paying contributions in both countries, while being insured in the UK only?

Finally, the Explanatory Memorandum says that no impact assessment has been prepared for this instrument, but that, when negotiations are concluded,

“DWP intend to publish … an update to the social security co-ordination impact assessment published during the passage of the … Act.”

Can I ask the Minister why no impact assessment was prepared? How soon after negotiations are concluded will DWP update the impact assessment published during the passage of the Act? If there is a deal, can the Minister assure the Committee that we will see an impact assessment for any measures brought forward to implement the deal and an updated impact assessment for these measures before the provisions of any deal are implemented?

This entire process is highly unsatisfactory. We are three weeks from the end of the transition period and Parliament is being asked to approve regulations that remove the transitional provisions without any clarity as to what will replace them. That leaves uncertainty for anyone moving between the EU and the UK who is outside the scope of the withdrawal agreement. It leaves us, as parliamentarians, with no knowledge as to when, how or even if Parliament will get to scrutinise and debate what is coming next. I deeply regret that Parliament has been put in this position, but I look forward to hearing any further clarification the Minister is able to give.

Lord Duncan of Springbank Portrait The Deputy Speaker (Lord Duncan of Springbank) (Con)
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My Lords, I apologise to the noble Baroness, Lady Ludford. We have been unable to connect with her because of various technical reasons, for which I apologise. I return to the noble Baroness, Lady Janke. I hope we can now speak with her.

Baroness Janke Portrait Baroness Janke (LD) [V]
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I thank the Minister for her presentation. I and others supported efforts to restrain the transfer of widespread powers to Ministers under the Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020. The DPRRC recommended the removal of this clause from the Bill.

This order, as the Minister has said, is laid through the powers of the Bill, which are seen by many to be excessive and undemocratic in their scope and the authority they give to Ministers. Revocation of the clauses in this order dismantles the system of reciprocal arrangements for future workers from the EU or the EEA. The social security regulations are widely recognised as a well-established system of administrative co-operation between countries that ensures the effective operation of the co-ordination rules, dispute resolution and secure data sharing. Although the order and the revocation of these clauses from UK law does not apply to existing EU citizens living in the UK or UK citizens in the EU, it is a retrograde step to inhibit and hinder workers, many of whom are essential to the UK.

Like the noble Baroness, Lady Sherlock, I wonder why there is no impact assessment on, for example, how this will affect the care services or the National Health Service. Has there been any consultation with caring services or the NHS? If so, why are we not seeing the results? What about businesses dependent on workers from the EU and the EEA, such as the tech industries, aerospace and the automotive industry?

As others have said, the exercising of these powers underlines the inadequacy of the procedure for amending primary legislation and the use of the wide-ranging powers the Government have given themselves. Important questions arise here, as the messages the Government are sending out at the moment are at best ambiguous and at worst undermining of confidence in the future of the UK economy. The value of and benefits from trade deals and investment depend on the quality of the relationship between Governments. Trust and confidence are key factors.

The whole issue of good faith and trust is in question due to powers the Government have given themselves in the United Kingdom Internal Market Bill. The revoking of the social security regulations adds to the lack of international confidence in the UK. If we are unwilling to ensure future arrangements for such things as pensions and benefits to citizens from other countries —people who bring their essential skills and experience to work here—how can other countries, business and investors have confidence in the UK or its economy?

If these revocations and the revocation of the fixing arrangements that were put in place in case of no deal are agreed, there will be a policy vacuum. How is that to be addressed? What are the Government’s plans, and what is the timescale? Are we talking about reciprocal arrangements between each EU country? Presumably that will take quite a long time. Are we correct in assuming that this will be addressed through secondary legislation and that Parliament will have no role to play in future agreements?

It will be important to reassure future trade and investment partners of the robustness of the arrangements underpinning the UK economy. As the noble Lord, Lord Bhatia, said, it is important that this does not end in chaos in our new global context. I would welcome some understanding of how the Government will address this and in what timescale. I look forward to the Minister’s response.

Lord Duncan of Springbank Portrait The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)
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We have been having some gremlins today, but we will try to return now to the noble Baroness, Lady Ludford.

Baroness Ludford Portrait Baroness Ludford (LD) [V]
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Thank you. My sincere apologies: I am jinxed on the IT front today. I am on the phone.

I repeat the objections to the powers in Clause 5 of the Immigration and Social Security Co-ordination (EU Withdrawal) Bill, which became Section 6 of the Act, which I and others expressed during the passage of the Bill. I cited then the reports of our Delegated Powers Committee, which were rightly damning about the extent of these powers, which include Henry VIII powers.

The committee said in its 49th report of January 2019 that this provision was

“an inappropriate delegation of power”

and that

“the clear impression is that the Government are seeking these powers in order to avoid … having to prepare a detailed bill implementing their policy once it is settled, and any future arrangements with the EU are concluded”.

In its 22nd report of August 2020, the committee said that it was a “significant open-ended power”.

This statutory instrument fully illustrates the problem. If these regulations were just tidying-up measures, they could have been done under Section 8 of the European Union (Withdrawal) Act. In fact, they make new policy, and that should be done by primary legislation.

This instrument brings forward the day on which amendments will be made to primary legislation: the Social Security Administration Act 1992 and its Northern Ireland counterpart. The Explanatory Memorandum says that these amendments are

“for the purpose of implementing, and giving effect to, reciprocal agreements with international organisations”.

Such organisations include the EU.

Can the Minister tell us what other international organisations it is envisaged signing reciprocal agreements on social security with? Can she also tell us what will fill the void as far as the EU is concerned? As I said in Committee on the Bill, and I apologise for quoting myself:

“There is a range of possibilities for a future arrangement on social security co-ordination, from ‘skinny’ coverage … to something much more similar to the present coverage. The draft agreement that the UK Government published in May 2020 was quite limited. They already said that they would stop the export of child benefit, and expect that arrangements regarding disability and unemployment benefits will change and are less likely to be comprehensive in future. They forecast that some benefits would be available for a time-limited period.


Altogether, these would be quite substantial changes. One other that pensioners fear is the possibility of no uprating in pensions for UK citizens resident in EEA countries in future. Certainly, the draft text of the agreement published by the Government in May did not cover cash benefits other than state pensions. It also did not cover healthcare costs for pensioners in EEA countries, where they now get a so-called S1 form, which enables them to get healthcare coverage.”—[Official Report, 16/9/20; col. 1363.]


I assume, as perhaps I did not understand at the time, that that issue is covered by regulations from the Department of Health.

Can the Minister now tell us what we can expect as content for a social security agreement with the EU? Can she also explain why these amendments to primary legislation will be made the day after this instrument is made, rather than on what the Government call IP completion day but the rest of us call the end of transition; namely, 31 December? By the way, if there is an implementation period for any deal that is reached this week, the Government will have a challenge as to what to call it.

The idea of the four fixing SIs was apparently to ensure that the retained EU social security co-ordination regulations were operable in the event of the UK leaving the EU without a deal. Unless the Minister knows something I do not, whether the UK is leaving with or without a deal is currently unresolved. If we leave with a deal, might we again need the fixing SIs, and indeed the five EU regulations to come back into UK law?

The Explanatory Memorandum recalls that EU law, including the five social security co-ordination regulations, will continue to apply to the EEA citizens covered by the withdrawal agreement, and that hence that law continues to form part of domestic law for those purposes. Thus, the Explanatory Memorandum says that this instrument has no impact on anyone covered by the withdrawal agreement.

However, can the Minister explain how revoking the EU SSC regulations in this instrument ensures that they are retained in domestic law for the purposes of the withdrawal agreement? I have not understood—that is probably my limitation—how those Chinese walls work legally and legislatively.

I would also be grateful if the Minister could explain a little more how the savings in Part 3 of this statutory instrument are to work. She referred to this in her opening speech, but I do not quite understand how we revoke the amendments for some purposes but we save them for others. It is a bit of a jigsaw, and I find myself in some difficulty in trying to understand it all.

Leaving those questions aside, the bigger issue is that what is created by the revocation of the five EU regulations which until now were retained law, along with revocation of the four fixing SIs of 2019, is a void. The Government propose to fill that void without any reference to Parliament whatever; they propose to use the amended power in the 1992 Act to implement by Order in Council any reciprocal social security agreements reached and to amend or modify retained EU legislation in order to give effect to them. So Parliament will have no role at all in assessing or agreeing such agreement, which is a perfect illustration of how the Brexit slogan of “take back control” meant only take back control for the Executive. This instrument, as foreseen by our Delegated Powers Committee, is a democratic travesty.

What proposals are there to consult the public and not just the Social Security Advisory Committee on the content and implementation of any new reciprocal agreement? Surely, the Government do not intend to shut out the public as well as Parliament. I thank noble Lords for tolerating my IT problems.

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Motion agreed.
Lord Duncan of Springbank Portrait The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)
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The Grand Committee stands adjourned until 3.30 pm. I ask Members to sanitise their desks and chairs before leaving.