Court of Appeal Finds That EU Nationals Legally Resident In UK Were Unlawfully Excluded From Claiming Universal Credit

BENEFIT DECISION - Two EU nationals, a severely disabled man and his carer, have won a landmark Court of Appeal case against the DWP which establishes their right to support from universal credit.

The judgment means that EU nationals with pre-settled status cannot be treated differently to UK citizens in relation to access to means-tested benefits.

The judgment, handed down today, means an estimated 1.8 million* EU nationals with ‘pre-settled status’ under the EU Settlement Scheme who are resident in the UK will be able to access means-tested benefits on the same basis as British citizens, should they need to call upon them.

The test case was brought by Child Poverty Action Group (CPAG) on behalf of two Romanian nationals, Ms Fratila and Mr Tanase, who came to the UK in 2014 and 2019 respectively.  In 2019, each was granted limited leave to remain in the UK under the EU Settlement Scheme (also known as ‘pre-settled status’) but were subsequently refused universal credit on the grounds that their pre-settled status was not a sufficient right to reside to enable them to access means-tested benefits.

But the Court of Appeal today agreed with Child Poverty Action Group and ruled that excluding Ms Fratila and Mr Tanase from claiming universal credit (UC) on the basis of their pre-settled status unlawfully discriminated against them on the grounds of nationality, breaching EU law.

‘Pre-settled status’ (which confers a ‘limited leave to remain’) and ‘settled status’ (indefinite leave to remain) were introduced by the Home Office as part of the EU Settlement Scheme in anticipation of the UK leaving the European Union.  The scheme was introduced in recognition that EU citizens who came to the UK before the UK’s exit from the EU did so on the basis that they would be able to settle permanently and build a life in the UK.

The scheme enables EU nationals, nationals of non-EU EEA member states, and Swiss nationals and their eligible family members, who are already living in the UK before the 31 December 2020, to apply for either settled status, if they have been in the UK for a continuous period of five years, or pre-settled status, if they have been in the UK less than five years. Those who obtain either status can live and work in the UK with no further conditions.

Since 2004, it has been a condition of entitlement to a range of benefits that a claimant has a “right to reside” in Britain – this is part of what is called the “habitual residence test”. For EU nationals and their family members, their rights of residence came from EU law – primarily EU nationals relied on those parts of EU law which give freedom of movement (and residence) for EU workers and the self-employed. Pre-settled status, however, gives people a right to reside under British immigration law. This meant that all EU nationals, and not just those who could demonstrate a sufficient connection to performing economic activity or some other complex EU law right, could now show they had a right to reside in the UK.

However, social security regulations were amended in 2019 with the effect that the right to reside in the form of pre-settled status was no longer considered sufficient for entitlement to means-tested benefit.

In today’s case CPAG successfully argued that case law has established that EU nationals with a right of residence under domestic law cannot be treated differently to a UK national in relation to access to social security. The Court found unanimously, that under EU law, as it applies in the UK up to the end of the transition period on 31 December 2020, the fact that the UK had granted under its national law a right of residence to Ms Fratila and Mr Tanase means they are entitled to rely on the EU Treaty’s prohibition on discrimination, including in relation to social assistance. 

A majority of the 3-judge Court further found that the exclusion of pre-settled status as a sufficient right to reside for the purposes of claiming means-tested benefits was prohibited as made clear in previous cases. The same majority found that the rule was directly discriminatory on the grounds of nationality and as this type of discrimination is not capable of being justified under EU law, it was unlawful. The decision means that those with pre-settled status who are present in the UK can now rely on that status in order to meet the habitual residence requirement for means-tested benefits.

In his leading judgment today, the Court of Appeal’s Lord Justice McCombe agreed with CPAG’s argument that once a right of residence had been granted by the UK, the discrimination was prohibited outright:

“It is perhaps not surprising that EU law should, in principle, allow EU nationals to take benefit from particular national laws of individual States if they lawfully reside in the State in question, without discrimination on the basis of nationality. Such entitlement would be entirely consonant with the aims and objects of the Union.”

CPAG estimates that to date there are over 50,000 households who were refused benefits they were entitled to since November 2019 as a result of the application of the unlawful policy and who will be able to benefit from today’s decision by challenging the unlawful decisions.** Thousands more are estimated to have been unlawfully refused between May 2019 (when the unlawful amendments to the legislation were made) and November 2019 but they may struggle to obtain the support they have missed out on due to time limits on bringing challenges to benefit decisions. The denied benefits include support which should have been provided for children (some of whom will be British) looked after by an EU parent, for example the child element of universal credit.*** 

The Court of Appeal also refused the DWP’s application for permission to appeal and said it was questionable whether there are genuine legal issues which the Supreme Court should consider. However, the Court gave a short stay to 26 February 2021 during which time the DWP do not have to implement the judgment. Benefit claimants affected should still take action now to protect their rights.

Commenting on today’s judgment, Child Poverty Action Group’s Welfare Rights Adviser Martin Williams said:  

“This is a very welcome decision which confirms that EU nationals with pre-settled status in the UK cannot lawfully be treated less favourably than British nationals in respect of their entitlement to means-tested benefits. We are pleased that the Court of Appeal has recognised that the denial of this support to EU citizens, whose homes and lives are in the UK, is discriminatory and unlawful. The judgment will bring justice and protection to thousands of EU citizens who have made Britain their home whilst the UK was still part of the EU, or during the transition period, and are on the path to settled status in the UK.

“The coronavirus pandemic has graphically illustrated how anyone can suddenly find they need help from the benefit system to get by. We have seen EU citizens and their children left destitute by this discriminatory rule, through no fault of their own. Vulnerable groups such as women and children who may have, for example, previously had support from a British partner or father until relationship breakdown, have been left without access to a vital safety net. CPAG has also seen evidence of the effect of the rule on survivors of domestic violence, who have needed social security support in order to establish financial independence after fleeing their relationship.

We commend our clients Ms Fratila and Mr Tanase for their commitment to achieving justice not only so that they might continue to build their own lives in the UK but also so that other EU nationals who have made their homes in communities around the country can receive the support they may need. We hope that the UK government will now take steps to ensure that this group continue to be supported after the transition period ends.”

A response to a Freedom of Information request made by CPAG to DWP revealed that at the height of the coronavirus pandemic in April – May 2020, at a time when thousands of businesses were forced to close and schools were shut (and it was therefore particularly difficult for EU nationals, especially women with children, to acquire a right to reside by working), over 18,000 new claims for universal credit were refused as a result of failed habitual residence tests. CPAG believes most of the rejected claims would have been made by claimants with pre-settled status, with many more being made by claimants who would be entitled to pre-settled status under the EU Settlement Scheme.

The Court of Appeal judgment follows a High Court judicial review challenge by Ms Fratila and Mr Tanase against DWP’s decisions that they were not entitled to UC. The High Court dismissed their claim in April this year but the Court of Appeal then granted them permission to appeal. The Court of Appeal heard their case in October this year. Today’s judgment (Fratila and Tanase v SSWP [2020] EWCA Civ 1741) is here. 

The case brought by CPAG on behalf of Ms Fratila and Mr Tanase was supported by The Advice on Individual Rights in Europe Centre (AIRE Centre), which intervened in the case at both High Court and Court of Appeal stages.

The Order of the Court of Appeal quashes both the legislation which provides that having ‘pre-settled status’ is not a sufficient right to reside for the purposing of accessing means-tested benefits and the decisions of DWP refusing Ms Fratila’s and Mr Tanase’s claims for universal credit. The effect of the quashing of the legislation is that, once the stay is lifted, anyone with pre-settled status satisfies the ‘right to reside’ test for access to means-tested-benefits.

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