Documents considered by the Committee on 27 April 2011 - European Scrutiny Committee Contents

3   Coordination of social security within the European Economic Area




SEC(10) 1013




SEC(11) 261

Draft Council Decision on the position to be taken by the European Union in the EEA Joint Committee concerning an amendment to Annex VI (Social Security) and Protocol 37 to the EEA

Amended proposal for a Council Decision on the position to be taken by the European Union in the EEA Joint Committee concerning an amendment to Annex VI (Social Security) and Protocol 37 to the EEA

Legal base(a) Articles 48, 218(9) and 352 TFEU; unanimity; EP consent

(b) Articles 48 and 218(9) TFEU; co-decision; QMV

Document originated(a)  9 September 2010

(b)  8 March 2011

Deposited in Parliament(a)  8 October 2010

(b)  14 March 2011

DepartmentWork and Pensions
Basis of consideration(a)  EM of 15 October 2010 and Ministerial letter of 19 January 2011

(b)  EM of 23 March 2011

Previous Committee Report(a)  HC 428-xv (2010-11), chapter 3 (2 February 2011) and HC 428-vii (2010-11), chapter 2 (10 November 2010)

(b)  None

To be discussed in CouncilNo date set
Committee's assessmentLegally important
Committee's decision(a)  Cleared

(b)  Not cleared; further information requested


3.1  The purpose of the amended draft Decision — document (b) — is to update the European Economic Area Agreement ("EEA Agreement") to include new EU Regulations on the coordination of social security systems which took effect within the EU on 1 May 2010. It replaces the Commission's original proposal — document (a) — which we considered in our Seventh and Seventeenth Reports and which remains under scrutiny.

3.2  The EEA Agreement seeks to establish a homogeneous economic space covering the EU Member States plus Iceland, Liechtenstein and Norway. It does so by extending much of the EU's free movement acquis to the latter three States. So, for example, in order to facilitate labour mobility within the EEA, the Agreement incorporates EU laws on the coordination of social security systems which ensure that any entitlement to benefit acquired by workers, the self-employed and their dependants is not lost if they move to another country within the EEA. The new EU Regulations which took effect last May extend the personal scope of existing arrangements for social security coordination to include non-economically active EU citizens, such as those who have never worked because of sickness, disability or caring responsibilities. By including these Regulations within the EEA Agreement, the draft Council Decision would maintain symmetrical arrangements for social security coordination for nationals of EU or EEA States moving within the EEA.

Previous scrutiny of document (a)

3.3  The Minister for Employment (Chris Grayling) told us that the Government disagreed with the substantive legal base proposed by the Commission — Articles 48 and 352 of the Treaty on the Functioning of the European Union (TFEU) — and considered the correct legal base to be Article 79(2)(b).[15] Article 79(2)(b) provides for the adoption of measures defining 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. As it is contained in Title V of Part Three of the TFEU, the Minister told us that the UK's Title V opt-in applied and that the Government had decided not to opt in. This was because the Government opposed any extension of social security rights at a time "when we are having to take difficult decisions on access to welfare at home."[16] He added that the Government would continue to press during negotiations for the inclusion of a Title V legal base in the draft Council Decision and for recitals reflecting the UK's position to be added to the text of the EEA Agreement.

3.4  We agreed that there was a case for citing Article 79(2)(b) TFEU as the substantive legal base for the draft Decision, while noting that this Article — like Article 48 TFEU on the coordination of social security for EU migrant workers — concerned movement within the EU. We also noted that the use of a Title V legal base would have wider consequences as it would make it impossible for Denmark, and optional for Ireland, to participate in the draft Council Decision. There might therefore be a risk of fragmentation and loss of homogeneity within the EEA.

3.5  We expressed concern that the Government's assertion of its opt-in, regardless of whether or not the draft Council Decision cited a Title V legal base, created the risk of considerable legal uncertainty and might not be in accordance with Protocol 21 on the Position of the United Kingdom and Ireland in respect of the Area of Freedom, Security and Justice. We therefore decided to keep the proposal under scrutiny pending agreement on the appropriate legal base.

Document (b) — the amended draft Council Decision

3.6  The amended draft Council Decision is the same, in substance, as the proposal it replaces — document (a). The only change is to the legal base. According to the Commission, Article 352 TFEU is no longer needed as Article 48 TFEU "covers all the substantial elements of the relevant acquis. This has been confirmed by the jurisprudence of the European Court of Justice."[17]

The Government's view on document (b) — the amended draft Council Decision

3.7  The Government continues to disagree with the legal base proposed for the draft Council Decision. The Minister tells us:

"[T]he Government believes that since the proposal concerns the social security rights of workers moving between third countries (the EEA States) and the EU, Article 48 is not the appropriate substantive legal base, as that Article is concerned with movement of EU citizens wholly within the EU.

"We believe that Article 79(2)(b) is the appropriate legal base in this instance and we have discussed this with you in correspondence with both Committees. Therefore, despite the fact that the proposal has not been presented to the Council pursuant to Title V TFEU, the UK is currently considering whether it wants to opt into the measures. This action, which focuses on the nature of the proposal rather than the given legal base, is taken to ensure that we protect our national interests."[18]

3.8  The Minister says that the Government has until 11 June 2011 to decide whether the UK should opt into the amended draft Council Decision. He adds that the Commission does not accept that Title V TFEU is relevant to the proposal. He continues:

"The explanatory memorandum to their proposal explains that Article 352 TFEU is no longer necessary because the self-employed migrant is now covered by Article 48 TFEU. However they do not explain why they have chosen to treat EEA nationals as covered by a legal base relevant to EU nationals. Nor do they explain why they have not taken account in this proposal of similar discussions on amendments to the EU Swiss agreement, where a Title V legal base was agreed."[19]

3.9  The Minister sets out the factors which the Government will take into account when deciding whether or not to opt into the amended draft Council Decision and says that "we will give very careful consideration to the acceptability in principle of extending social security rights to any migrants from outside the EU who have never worked", not least because even a small extension of social security rights might "set a precedent for extending them to much larger groups in the future."[20]


3.10  We note that the Commission's original proposal — document (a) — has been superseded by document (b). We therefore clear document (a) from scrutiny.

3.11  The change to the legal base proposed in the amended draft Council Decision — document (b) — will have important consequences for the UK. First, the proposal still does not cite a Title V legal base so doubt remains as to the application of the UK's opt-in. Second, the removal of Article 352 TFEU, which requires unanimity within the Council, entails the loss of a power of veto and the possibility that the UK could be bound by a measure in which it appears reluctant to participate.

3.12  We think that the determination of the correct legal base for the draft Decision is likely to depend on an assessment of its predominant purpose, in light of the aims and content of the proposal. We are not convinced by the Commission's brief analysis, in its explanatory memorandum accompanying the amended draft Council Decision, of its reasons for relying exclusively on Article 48 TFEU as the substantive legal base for the proposal. Although Article 48 specifically concerns arrangements for the coordination of social security systems, it only covers EU citizens who are "employed and self-employed migrant workers and their dependants." It is difficult to see how this legal base could also cover EU citizens and, by extension, EEA nationals who are not economically active, other than as the dependants of workers. By contrast, Article 79(2)(b) appears to be broader in scope since it does not differentiate between different categories of third country national on the basis of their economic activity.

3.13  The Minister tells us that a Title V legal base has been agreed for a similar draft Council Decision concerning amendments to the social security provisions of an Agreement between the EU and Switzerland on the free movement of persons. Although we cleared that draft Council Decision from scrutiny last November, we asked to be informed of the outcome of deliberations on the choice of legal base and regret that the Government has chosen to do so indirectly.[21] Nevertheless, the citation of a Title V legal base would appear to be a material factor in our scrutiny of this draft Council Decision. Contrary to what the Minister says, we think it is precisely because the proposal as it stands has not been presented to the Council pursuant to Title V that the UK's opt-in does not apply. We therefore ask the Minister to tell us when the legal base for the Council Decision authorising changes to the EU-Switzerland Agreement was agreed, and which Treaty Articles are cited. As indicated previously, we intend to keep the draft Council Decision concerning the EEA Agreement under scrutiny until the uncertainty as to the appropriate legal base has been resolved and ask the Minister to keep us informed of developments.

15   The Government and the Commission are in agreement that Article 218(9) TFEU - which sets out the procedure for the EU to determine its position within the Joint Committee established by the EEA Agreement - should also be cited. Back

16   See Minister's letter of 19 January 2011.  Back

17   See the Commission's Explanatory Memorandum, p. 2.  Back

18   See para 8 of the Minister's Explanatory Memorandum.  Back

19   IbidBack

20   See paras 12 and 16 of the Minister's Explanatory Memorandum. Back

21   See HC 428-vii (2010-11), chapter 9 (10 November 2010). Back

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Prepared 10 May 2011