7 Coordination of social security between
the EU and Switzerland
| (33298)
16231/11
COM(11) 671
| Draft Council Decision on the position to be taken by the European Union in the Joint Committee established under the Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons as regards the replacement of Annex II to that Agreement on the coordination of social security schemes.
|
| Legal base | Articles 48 and 218(9) TFEU; QMV
|
| Document originated | 24 October 2011
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| Deposited in Parliament | 3 November 2011
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| Department | Work and Pensions
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| Basis of consideration | EM of 16 November 2011
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| Previous Committee Report | None, but (31756) 11630/10: HC 428-vii (2010-11), chapter 9 (10 November 2010) and HC 428-ii (2010-11), chapter 6 (15 September 2010) are relevant
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| Discussion in Council | 15 December 2011
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| Committee's assessment | Legally important
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| Committee's decision | Not cleared; further information requested
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Background
7.1 In 1999, the (then) European Community and its Member States
entered into an Agreement with Switzerland on the free movement
of persons to enable EU or Swiss nationals to live and work in
each others' territories. The Agreement entered into force on
1 June 2002 and includes provision for the co-ordination of social
security systems for the following purposes:
- securing equality of treatment;
- determining the legislation applicable;
- aggregation, for the purpose of acquiring and
retaining the right to benefits, and of calculating such benefits,
all periods taken into consideration by the national legislation
of the countries concerned;
- paying benefits to persons resident in the territory
of the Contracting Parties; and
- fostering mutual administrative assistance and
cooperation between authorities and institutions.[39]
7.2 Annex II of the Agreement sets out the relevant
EU instruments on the co-ordination of social security systems
which EU Member States and Switzerland are required to apply,
as well as any necessary modifications to take account of Swiss
social security legislation. Annex II may be amended by a decision
of the Joint Committee established by the Agreement and comprising
representatives of the Contracting Parties.
7.3 On 1 May 2010, new EU Regulations on the co-ordination
of national social security schemes came into effect which, for
the first time, brought within their scope EU citizens who are
not economically active, perhaps because of sickness, disability
or caring responsibilities.
7.4 In our Second and Seventh Reports, we considered
a draft Council Decision which proposed amending Annex II of the
EU-Switzerland Agreement to incorporate the new EU Regulations.
The draft Decision set out the position to be taken by the EU
in the EU-Swiss Joint Committee, the body authorised under the
Agreement to make changes to the Annexes. The changes were intended
to ensure that the same arrangements for social security coordination
would apply for nationals of EU Member States and Switzerland
when living and working in each others' territories.
7.5 Unusually, the draft Council Decision did not
cite the provisions of the Treaty on the Functioning of the European
Union (TFEU) on which it was based. The Minister for Employment
(Chris Grayling) told us that this was because there was some
uncertainty as to the correct legal base. The Government said
that it agreed with the view of the Council Legal Services that
Article 79(2)(b) TFEU — which provides for the adoption
of EU measures on "the definition of the rights of third
country nationals residing legally in a Member State, including
the conditions governing freedom of movement and of residence
in other Member States" — should be cited. He added
that this Article was subject to the UK's opt-in and that the
UK had decided not to opt in because, "at a time when we
are considering measures to control public expenditure, we feel
that, as a matter of principle, any extension of social security
rights is unacceptable".[40]
7.6 Following notification of the Government's decision
not to opt in, we decided to clear the draft Decision from scrutiny
but asked the Minister to inform us of the outcome of further
deliberations on the choice of legal base and the consequences
for the UK if the draft Council Decision did not cite a Title
V legal base.
7.7 We heard no more from the Minister but, in the
course of scrutinising a similar draft Council Decision proposing
amendments to the social security provisions of the European Economic
Area Agreement (which applies to EU Member States and Iceland,
Liechtenstein and Norway), we reminded the Minister that we were
awaiting information on the choice of legal base for the EU-Switzerland
Agreement.[41]
7.8 In a letter dated 17 August 2011, the Minister
told us that the Council had a agreed on a Title V legal base
— Article 79(2)(b) — in November 2010. The Minister
continued:
"Since then the European Commission and
Member States have been considering how to handle the various
issues arising from the different positions of the UK, Ireland
and Denmark, none of whom is bound by the Decision. I understand
that this is the first time this situation has arisen in relation
to the Swiss (and, indeed, the EEA) Agreement and so there was
particular interest in how the position of the 24 Member States
who adopted the Decision would be presented to the Swiss authorities
along with the position of the other three. The outcome was that,
at the meeting of the EU-Swiss Joint Committee on 14 June, the
Commission presented the position set out in the Council Decision,
and informed the delegation of those Member States who, while
not bound by that Decision, wished to align themselves with it.
A delegate from the UK attended the meeting, and presented our
position as a proposal to amend the draft Decision of the Joint
Committee. The Swiss authorities are now considering our proposal
and will respond in due course. Again, I will keep you informed
of progress."[42]
7.9 By contrast, he also told us that a Council Decision
to amend the social security provisions of the EEA Agreement had
been adopted on the basis of Article 48 TFEU, which concerns the
coordination of social security for EU migrant workers, and that
it did not cite a Title V legal base. We asked the Minister to
explain why he thought that the Council had agreed different legal
bases to amend the social security provisions of the EU-Switzerland
and the EEA Agreement. In his letter of 25 October 2011, the Minister
told us:
"[T]he Commission did not originally propose
Article 79(2) TFEU as the legal base for the Swiss proposal and
accepted that legal base only as a result of further discussions.
It is therefore possible that the Commission fundamentally believes
that Article 48 is the correct legal base for both proposals but
was prepared to acquiesce to a different legal base in the context
of the Swiss proposal for reasons of what they perceived at the
time to be pragmatism. What is absolutely clear, however, is the
UK's view that our right to make a decision on an opt-in should
not be bypassed when Title V is relevant to the subject matter
of a proposal."[43]
7.10 On receipt of this letter, we invited the Minister
to give oral evidence. We again asked why he thought that Member
States had agreed to a Title V legal base for the EU-Switzerland
Council Decision, but not the EU-EEA Decision. The Minister told
us:
"They have changed their mind since then
and I am afraid I have a rather cynical view of this that the
Commission sets about a policy and all too often it seeks to find
a different way of getting that policy through if it doesn't get
it through the first time . . . It was all about trying to get
this through and they formed the view that if they went for an
Article 48 basis for the EU-Swiss and the EEA Agreement that they
could avoid the situation where opt-ins could be exercised. We
take a very different view from that and this is the essence of
the case that is going to the European Court."[44]
7.11 We also asked the Minister to explain what practical
or legal difficulties had been encountered as a result of the
use of a JHA legal base for the changes to the EU-Switzerland
Agreement. His legal adviser told us:
"What happened with the Swiss situation
is that the UK and Ireland did not opt in. Denmark could not opt
in because it had the Title V legal base. So Ireland, the UK and
Denmark were in a sense negotiating as separate parties in the
Joint Committee, in that international forum. Ireland and Denmark,
in that context, were intending to sign up as separate contracting
parties to the agreement, so they were not part of the EU position
but they were part of the international agreement. The UK was
not prepared to agree to the amendments as they were being put
forward in the Joint Committee."[45]
The draft Council Decision
7.12 In its explanatory memorandum accompanying the
draft Council Decision, the Commission notes that its proposal
is in substance the same as the Council Decision which we cleared
from scrutiny in November 2010 and which was adopted in December
2010.[46] The only difference
concerns the choice of legal base. Whereas the earlier Council
Decision cited Article 79(2)(b) TFEU, the new proposal is based
on Article 48 TFEU (the same as the legal base agreed for the
Council Decision amending the social security provisions of the
EEA Agreement).
7.13 The Commission notes that the earlier Council
Decision did not bind the UK and Ireland (as neither chose to
opt into it) or Denmark (by virtue of its opt-out of all Title
V measures). The Commission then sets out in some detail the reasons
justifying the publication of a new draft Decision with a different
legal base:
"Ireland and Denmark subsequently aligned
themselves with the position of the Union, but not the United
Kingdom. The representative of the EU within the Joint Committee
proposed to Switzerland the adoption of the draft Joint Committee
decision on the basis of the position taken by the Council, on
behalf of the EU and of its Member States, including Ireland and
Denmark (which had aligned themselves with the position of the
Union), but with the exception of the United Kingdom. The United
Kingdom presented its specific position on its own. The United
Kingdom proposed, more concretely, the non-applicability of the
rules on coordination of social security systems to those economically
non-active persons who are covered under the EU coordination rules
since the entry into force of Regulation No 883/2004, in the relations
between Switzerland and the United Kingdom.
"By letter dated 2 September 2011, Switzerland
has informed the representative of the EU within the Joint Committee
that the proposed Joint Committee decision and the proposal from
the United Kingdom are not acceptable to Switzerland as such.
First of all, Switzerland regrets that the EU has not endorsed
the text which had already been approved by the Swiss Government
in March 2011. This text corresponds to the original Commission
proposal. Secondly, Switzerland indicates that it could only accept
any such reservation for the United Kingdom if further derogations
were introduced as regards non-active persons which would be applicable
in relation to all EU Member States.
"The Swiss refusal implies that a new Council
Decision is necessary on the position to be taken by the EU within
the Joint Committee for the revision of Annex II. This proposal
for a new Council Decision is based on Article 48 TFEU, in conjunction
with Article 218(9) TFEU, as the Commission remains convinced
that this is the correct legal basis. Moreover, this proposal
takes into account the text of the draft Joint Committee decision
which had met the approval of the Swiss Government in March 2011,
which can also best ensure achievement of the objective of homogeneous
and coherent application of the EU legislation on the coordination
of social security systems in the relations between the EU and
Switzerland."[47]
The Government's view
7.14 The Minister confirms that the draft Decision
is the same in substance as the Decision adopted by the Council
in December 2010, save for the legal base which now cites Article
48 TFEU instead of Article 79(2) TFEU. He continues:
"The Government believes that, regardless
of the cited legal base, the measures are pursuant to Title V
of the Treaty; and will therefore decide again whether to opt
in to the measure. As our views on the content of the proposal
have not changed, it is unlikely that our decision will be any
different.
"In the meantime the Government will press
for the reinstatement of the correct legal base. We have requested
that the Council refer the measure to the European Court of Justice
for an advisory opinion pursuant to Article 218(11) TFEU; and
that the Commission justify the change of legal base. We are also
seeking advice on all the legal avenues open to us should the
Council refuse our request and try to proceed with the proposal
on the basis of Article 48."[48]
7.15 Turning to the policy implications of the proposal,
the Minister notes that the draft Decision (if endorsed by the
EU-Swiss Joint Committee) would extend social security rights
to all Swiss migrants and that "non-active migrants, that
is, people who have never worked rather than those who are not
currently economically active, would acquire the right of access
to certain social security benefits."[49]
He says that the UK currently pays benefits to around 8,600 individuals
in Switzerland, of whom the vast majority are retirement pensioners.
He continues:
"There are no analogous figures for people
who have come from Switzerland to the UK. If we were to participate
in the proposals it is extremely difficult to estimate how many
more people would become entitled to benefits but we believe the
numbers would be small.
"At a time when we are considering stringent
measures to control public expenditure we also consider that if
we accept the extension of social security rights to this small
group now in this Agreement, it would set a precedent for extending
those rights in future agreements."[50]
7.16 If the UK decided not to opt in, the Minister
notes that the UK would be required to run parallel systems of
social security coordination — one applicable to EU nationals,
the other to Swiss nationals — but adds that this is already
the case for other third country nationals.
7.17 The Minister tells us that three-month deadline
under the UK's opt-in Protocol for notifying the Council Presidency
of its opt-in decision expires on 28 January 2012. Departmental
officials have since confirmed that the Decision is likely to
be proposed for adoption as an 'A' point at the Agriculture Council
on 15 December 2011 and that the UK intends to table a Statement
for the Council minutes outlining its position, notably that the
proposal is subject to the UK's opt-in and that the UK had decided
not to opt in.
Conclusion
7.18 The draft Decision is, in substance, the
same as the earlier Decision agreed in December 2010, save for
the citation of an Article 48 TFEU legal base instead of Article
79(2)(b) TFEU. The consequences of the change in legal base are,
however, of particular significance for the UK since the use of
an Article 48 TFEU legal base would mean that all Member States
would be bound by the EU position, thus overcoming the Swiss objection
to differential arrangements for the UK alone. In his oral evidence
to us on a similar draft Council Decision concerning the social
security provisions of the EEA Agreement, the Minister confirmed
that the UK would be legally bound by the changes made to the
EU-Switzerland and EEA Agreements,[51]
notwithstanding the view expressed by the Minister for Europe
that "the UK is not bound by a measure which creates JHA
obligations unless we have opted in pursuant to the Protocol.
We consider this is the case irrespective of whether a JHA legal
base has been cited."[52]
7.19 The draft Council Decision again illustrates
the difficulties associated with the application of the UK's opt-in
to EU proposals which do not cite a Title V legal base and which
we described in our Report, Opting into international agreements
and enhanced Parliamentary scrutiny of opt-in decisions.[53]
Whilst it is perhaps not surprising that the Commission should
seek to propose a non-Title V legal base for the draft Council
Decision in order to promote the uniform application of EU social
security law, the fact that other Member States appear willing
to acquiesce must be more troubling for the Government.
7.20 We note that the Minister has not asked us
to consider clearing the draft Decision from scrutiny in advance
of the Council meeting on 15 December. We assume, therefore, that
the Government does not intend to take part in the vote for the
reasons stated by the Minister in his recent oral evidence:
"We think that there is no basis for
requiring us to participate. The Commission has taken a different
view and is basically saying, 'You are part of this'. We believed
that by participating in the debate and casting a vote against,
we would effectively be saying to the European Court of Justice,
'We have accepted the principle that we are part of this'. Accordingly,
we thought it was better to say, in legal terms, 'We are not part
of this because we have an optin. It is for you guys to
decide what you do'. That gave us a sound legal basis for nonparticipation
and if, as it has done, the Commission pursued the line that we
had a duty to take part anyway, we would have a stronger legal
case for saying no to them."[54]
7.21 The Minister tells us that the Government
has asked the Council to refer the draft Decision to the Court
of Justice for an advisory opinion on its compatibility with the
EU Treaties pursuant to Article 218(11) TFEU. We note, however,
that Article 218(11) includes provision for an individual Member
State to seek the opinion of the Court. We ask the Minister to
tell us whether the UK has done so and, if not, to explain why.
7.22 The Minister's Explanatory Memorandum does
not tell us the reasons why the Council Decision agreed in December
2010 was not accepted by the EU-Swiss Joint Committee. The Commission
says that it was rejected by the Swiss who were not willing to
accept that different arrangements should apply for the UK. The
Minister's legal adviser told us that the UK was not willing to
agree amendments being proposed in the Joint Committee.[55]
We ask the Minister to explain why the Joint Committee was unable
to reach an agreement.
7.23 Finally, we have welcomed the Government's
decision to initiate proceedings in the Court of Justice to challenge
the validity of the Council Decision concerning changes to the
EEA Agreement, not only because it should establish the correct
legal base but also because it might help to clarify the circumstances
in which the UK's Title V opt-in applies, especially as regards
EU measures which do not cite a Title V legal base. We ask the
Minister whether the Government similarly intends to challenge
the validity of this draft Council Decision, if it is adopted
by the Council.
7.24 Pending the Minister's response, the draft
Council Decision remains under scrutiny.
39 Article 8 of the Agreement, see OJ No. L 114, 30.04.02,
p. 8. Back
40
See HC 428-vii (2010-11), chapter 9 (10 November 2010). Back
41
See (32023) 13493/10: HC 428-xv (2010-11), chapter 3 (2 February
2011). Back
42
See (32587) 7591/11: HC 428-xxxv (2010-12), chapter 3 (7 September
2011). Back
43
Letter of 25 October 2011 to the Chairman of the European Scrutiny
Committee. Back
44
Q 19. Back
45
Q 20. Back
46
Although adopted on 6 December 2010, it did not appear in the
Official Journal until 17 August 2011: see OJ No. L 209, 17.08.2011,
p.1. Back
47
See pp. 1-2 of the Commission's explanatory memorandum. Back
48
See paras 9 and 10 of the Minister's Explanatory Memorandum. Back
49
See para 18 of the Minister's Explanatory Memorandum. Back
50
See paras 23 and 24 of the Minister's Explanatory Memorandum. Back
51
Q 21. Back
52
Letter of 10 November 2011 from the Minister for Europe (David
Lidington) to the Chairman of the European Scrutiny Committee.
Back
53
See HC 955-l (2010-12). Back
54
Q 14. Back
55
Q 20. Back
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