Examination of Witnesses (Questions 80-99)
9 MARCH 2004
RT HON
BEVERLEY HUGHES
MP, MR DENIS
MACSHANE
MP, MS LORRAINE
ROGERSON AND
MR STEPHEN
HEWITT
Q80 Chairman: That is the policy as it
was established by the Government in 1994?
Beverley Hughes: Yes. That was
when there was agreement with the first countries.
Q81 Chairman: The arrangement that they
should be able to enter on that basis was a decision taken over
ten years ago, in fact under a previous administration?
Beverley Hughes: Absolutely, as
I made clear yesterday in the House.
Chairman: I am going to move on, Mr Taylor.
Try and catch my eye later on. We have spent 35 minutes on this
issue and I think we do need to move on to other issues.
Q82 Mrs Dean: I am turning now to measures
in place to restrict take up of benefit. I am not sure who will
want to answer. Given that the term habitually resident is not
actually defined in the regulations, could you briefly explain
how the Habitual Residence Test works in practice?
Beverley Hughes: Could I ask Stephen
Hewitt to address this question because they are DWP matters.
Mr Hewitt: Yes. The Habitual Residence
Test is primarily about a person's intentions, it is about whether
or not they are intending to set up their home and their future
life in this country. One is guided to a large extent by European
case law as to how that test should operate. In practice what
it generally means is that an individual who comes here, provided
they can demonstrate that they have severed their links with the
country that they have left, provided that they have some family
ties with this country, provided that they can demonstrate that
their intention is to make their lives in this country, then they
are deemed to have passed the Habitual Residence Test. That can
take anywhere between six weeks and three or four months in fact.
Q83 Mrs Dean: The last review of the
test was carried out in 1999. Do you consider this test to be
working effectively?
Mr Hewitt: The test was introduced
in 1994 to deal with a relatively small number of cases of people
coming to this country, I think from Spain, Italy and one or two
other countries, for a very short period of time. Indeed I think
they were students coming here during their summer holidays who
had no intention of living in this country but simply claimed
benefits whilst they were here. That is why the Habitual Residence
Test was introduced and all the evidence is that it is working
effectively in terms of preventing people who have no intention
of living in this country for an extended period from gaining
access to benefit.
Q84 Mrs Dean: What proportion of those
non workers who enter this country and are not subject to immigration
control are excluded as a result of this test?
Mr Hewitt: Generally it runs at
between 25 and 35%. It is difficult to quote those figures because
of course a substantial proportion of those who fail the Habitual
Residence Test may well reapply some time later at a point when
they can demonstrate that their intentions are to remain in this
country. That is the sort of figure it runs at.
Q85 Mr Taylor: Minister, may I draw to
your attention a written answer you gave on 27 January in which
you stated—and I quote—"the Habitual Residence
Test will ensure that no-one can simply come here and claim benefits".
May I ask you, Minister, why then were the recent reforms to restrict
benefits seen to be necessary? Was it felt that the test as it
originally stood failed to deter potential non working immigrants
from Eastern Europe?
Beverley Hughes: I think, again,
Mr Hewitt can come in on this.
Q86 Mr Taylor: Yes.
Beverley Hughes: I think the advice
initially from the Department for Work and Pensions and the legal
advice was that we thought it might be possible by changing the
Habitual Residence Test and strengthening it that that would be
a sufficient safeguard. The particular problem with that is that
changing the Habitual Residence Test would also have had to have
applied to returning UK residents and therefore we were in danger
of returning UK residents falling foul of a more stringent Habitual
Residence Test. That is partly why it took longer than we thought.
Then we had to look for another route to make sure that the benefits
issue was satisfactory. Mr Hewitt, would you like to add to that?
Mr Hewitt: I think that is exactly
it. It is a combination of the impact that it would have on returning
UK nationals and, as I was referring earlier, European case law,
which makes it quite plain that it is about intentions, it is
not about the length of time you have been in this country. So
tightening it in the sense of saying "Well, you have got
to be here six months" would almost certainly not work legally.
That is why we have adopted a rather different approach.
Q87 Mr Taylor: Minister or Mr Hewitt,
is it your view that the Habitual Residence Test needs to be tightened
for all potential immigrants and not just those from the EU accession
states?
Beverley Hughes: I am not sure
what group of people you are talking about? If you are talking
about people who are coming from countries that after accession
will be non EU countries then there are already rules which apply
there. People cannot routinely access benefits.
Q88 Mr Taylor: They are working satisfactorily
as far as you are aware?
Beverley Hughes: Mr Hewitt?
Mr Hewitt: Yes, I believe so.
Yes. I think the point is that those who are coming from outside
the expanded European Union will indeed either have a right to
reside or not as the case may be. If they have a right to reside
then the Habitual Residence Test is an entirely appropriate way
of determining whether or not their long term intention is to
stay.
Q89 Mr Taylor: Shall I move on to another
point, Chairman. Minister, there was no mention of the Habitual
Residence Test in the statement to the House on 23 February. How
does the new policy on benefits fit with that test?
Beverley Hughes: As I explained,
the legal advice was that the Habitual Residence Test did not
offer a way through without catching UK returning residents. So
we have had to look for a process in which, through the combination
of the two measures we have introduced, that is the registration
process for people who want to work together with the benefits
measures that DWP will put through secondary legislation, basically
we are saying that if people work and are self-sufficient then
they have a right to reside and it is only if you have a right
to reside can you claim benefits. I know that sounds fairly technical
but that is the legal mechanism we have had to use to make sure
we get a satisfactory process as far as A8 nationals are concerned
but do not catch UK returning residents. Mr Hewitt, have I explained
that properly?
Mr Hewitt: That is right. We will
be saying in the regulations that you cannot be habitually resident
in this country unless you have the right to reside here.
Q90 Mr Taylor: I would like just to explore
with you further, Minister, if I may, and by all means with Mr
Hewitt's assistance, on 23 February the Home Secretary also announced
that workers from the accession states will have had to register
for a year before they can start to claim benefits. Now this rule
does not apply to workers from current Member States so how do
we square this with the EC co-ordination rules which prohibit
discrimination with regard to social security on the grounds of
nationality, in other words, one set of rules for existing members
and another set of rules for accession states. What am I to make
of that?
Mr Hewitt: I think it is important
to understand two things. Firstly, these are transitional measures
which flow from the Accession Treaty and the derogation which
countries were permitted to introduce for two years and then subsequently
longer if they wished and, secondly, that the right of access
to the labour market is the thing that we are determining. What
we are saying is that you have to have a right of access to the
labour market in this country under the terms of the Treaty and
after one year you enjoy the same rights as other nationals from
other European nations.
Q91 Mr Taylor: Mr Hewitt, I am grateful
and I think the next question has to be political for the Minister
which is why did the Government not take advantage of the derogation
seeing that all the other existing Member States do with the exception
of Ireland and the United Kingdom?
Beverley Hughes: For the three
reasons I outlined earlier. In the context of both the best estimate
of the studies on likely numbers; in the context of having a labour
market that is very different than that of Germany and other European
countries in the sense that we have a very buoyant labour market
with lots of vacancies to fill that we are not filling from our
own indigenous workforce, very full employment, and particularly
the fact that as I said and stressed right at the beginning people
will have free movement, if they come and they want to work, we
want them to work legally. We do not want to add to the population
of illegal workers and we think it is right that people should
be able to come in and work legally from the outset. However,
we do feel that it is important that we monitor the numbers of
people coming in and that is the purpose of the registration process
coming in.
Q92 Chairman: Minister, just so that
I am clear, this may be one for Mr Hewitt and it is a question
essentially Mr Taylor has asked, perhaps I did not follow the
answer. The policy of restricting benefits, do I gather that you
will both be making amendments to the Habitual Residence Test
and introducing a new set of regulations which apply purely to
citizens from these states?
Mr Hewitt: There will be a set
of Home Office regulations which relate to the Accession Treaty
and the terms under which access will be granted to the labour
market. Then there will be a set of social security regulations
which add to the Habitual Residence Test by saying that you cannot
pass the Habitual Residence Test without enjoying a right of residence.
We are not amending the Habitual Residence Test as such, we are
adding to it.
Chairman: Thank you very much, that is
helpful.
Q93 Mr Prosser: Minister, both yourself
and the Home Secretary have made it clear that the announcement
on 23 February did not represent a change of policy but it was
really bringing into being a package of measures which the original
policy could have sustained. Would you not agree that it was a
very significant and important set of proposals and safeguards
and that an important element of making the announcement was to
get that message across to those people who might think that Britain
is a soft touch or that we are in a position to receive people
from the new entrant countries and provide them with benefits
and with support to which they are not entitled?
Beverley Hughes: Yes, I do agree
with that. I think once we knew the way in which we could achieve
our policy objectives and that we were ready to make an announcement—and
I have outlined a little the process by which we had to seek legal
and expert advice about the best mechanism—once we were
ready to do that I think it was important that we sent that double
message. I think the Home Secretary's statement did have a dual
message. On the one hand he started off by saying that we celebrate
enlargement. We want people to come here and work legally but
we are going to put measures in place which make it clear to people
that it is not going to be open to people to come and not work
or work for a short time and then think that they can access work
seekers' benefit and go on to jobseekers allowance and so on.
I think it is difficult when you have got the dual message like
that, one very positive but one very strong and saying we are
not going to tolerate any abuse of the system but those are the
two messages that are important.
Q94 Mr Prosser: Would you not agree that
the hysterical headlines that we can see in some of the tabloids
have done huge damage in areas of the country where they are still
struggling with bringing some harmony back to social relationships
and ethnic relationships in areas which have received large numbers
of asylum seekers? Would you agree a lot of damage has been done
already?
Beverley Hughes: I think that
they fuel people's fears about strangers and set people up to
see only potential downsides from migration and disguise the undoubted
benefits that migration brings, not just economically but culturally
and socially. I think we have to accept that has to be managed
and I think there can be important negative implications for social
cohesion and solidarity unless it is, but in a sense that is another
argument for the package we have put together because allowing
people to come legally, to register, to work legally, to be seen
to be contributing not just to the economy but through taxation
and national insurance to our benefits systems, open and above
board, I think that is a force for social cohesion. It was one
of the important thoughts that was in the Home Secretary's mind
in coming to a conclusion on this issue.
Q95 Mr Prosser: There is a view that
that carefully constructed balanced approach has been undermined
by all of this hysterical headline banter. With hindsight, would
it not have been the case that despite all the difficulties you
have described and the Home Secretary has described, the difficulties
of declaring this package of safeguards, the backstop, would it
not have been much better, much more beneficial, if they could
have been declared shortly after the White Paper and the Bill
were introduced? Would that not have saved a lot of difficulties
and short circuited a lot of the discussions we have had over
the last month or so?
Beverley Hughes: Well, maybe,
but we simply were not in a position, and given the process that
I have outlined that had to go on, a kind of iterative process
and testing out certain ideas, getting legal advice, that did
take some time. If you look at where other countries are in terms
of determining what they will do, while certainly one or two,
Germany in particular, made it clear last summer, it has only
been in recent weeks that we have seen Denmark and Ireland decide—Italy
still has not made clear what its approach will be. So in that
sense we are up there with the timescale that other countries
have used to look at the situation as it pertains as the date
for enlargement approaches and looks at that point at the factors—its
labour market, what other countries are doing—to make its
decisions about whether it will apply any transitional arrangements
or not. That is the only area for decision, of course. As I have
said many times, and I know most of the Committee will understand,
people will have free movement. It is only this question about
whether people can work legally that countries have any discretion
about at all in terms of whether they bring in transitional arrangements.
Q96 Mr Prosser: Is not the other downside
of making a late declaration of the announcement that we have
got much less time to get that important message across to the
new entrant countries? There is every possibility that whereas
I do not expect floods and masses of people coming in, even if
a few extra busloads come through the port of Dover, it is going
to be another set of headlines in the Daily Mail and Daily
Express?
Beverley Hughes: Possibly, although
I do think that perhaps had we made a very early decision in the
way that we have, and then it was only subsequently that other
countries made it clear that they were going to bring in transitional
arrangements, there could have arguably been from some quarters
an even greater clamour that we went down the same route. We have
made our decision at least in the full knowledge that other countries,
not all of them but other countries are applying transitional
arrangements. Our view is that it is still right for the UK, even
in that context, to take the position we have taken and we have
argued that case in the knowledge that other countries feel, from
their own economic point of view that they must take a different
course of action.
Q97 Mr Prosser: I want to move now to
some of the practical arrangements which are part of that package.
For instance, why did the Government decide to introduce a registration
scheme rather than just limit the number of work permits?
Beverley Hughes: Because we want
a "light touch" approach to this. We do not want to
have anything which puts a particular burden on employers. It
is predominantly a scheme so that we can monitor both numbers
of people and where they are going in the labour market. I think
the work permit scheme, if we had simply applied that, would have
been too bureaucratic and not offered us any advantages, and certainly
that is the view of employers who we spoke to. They were very
strongly of the view that we needed something quite simple and
straight forward which did not involve them in a great deal of
work.
Q98 Mr Prosser: Do you have any idea
at this moment how much that registration scheme will cost you
and how much the actual certificate of registration will cost
the incoming worker?
Beverley Hughes: I cannot give
you a figure in terms of the cost to the employer. What we are
considering, as you know, is achieving the cost of the administration,
the processing, by the introduction of a charge and obviously
by Treasury rules that depends on how many applications we have
to process as initial applications or potentially as renewals.
We will be giving further thought to that and trying to work out
the unit cost. It will have to be based initially on some projections.
Q99 Mr Prosser: What do you say to the
criticism that by charging people for the privilege of registering
you put them off taking that route and they will be bypassed into
the illegal black market?
Beverley Hughes: Most employers
want to employ people legally. They will have to register people
under this scheme. I have had direct discussions with employers
myself, as has Lorraine. My impression is they are fairly relaxed
about the charge. It will not be a great charge, it will not be
a large amount of money. We anticipate it will be under £50.
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