BK v Secretary of State for Work and Pensions

These are two lead cases on issues that have arisen under Regulation (EC) 883/2004. One issue is whether residence in another Member State can be aggregated with presence here in order to satisfy the domestic past presence test for disability living allowance and attendance allowance. My answer is: no. The other issue is whether the legislation requiring a genuine and sufficient link to the United Kingdom’s social security system is valid under EU law. My answer is: no.

BK is Irish. He was born on 18 October 2000 and, apart from a break in 2003-2004, lived in Ireland until 26 June 2013, when he came to this country with his mother. She is British and last worked (in Ireland, for four months) before BK was born. While in Ireland, BK received a domiciliary care allowance and his mother received a carer’s allowance.

BK’s claim for a disability living allowance was made on 28 June 2013 and refused on 3 September 2013. The grounds for the decision were recorded by the decision-maker:

The tribunal gave the claimant permission to appeal to the Upper Tribunal.

MM is German. She was born on 30 December 1947 and came to this country on 29 May 2013, having lived continuously in Germany since 1998. Her claim for an attendance allowance was treated as made on 19 June 2013 and refused on 19 November 2013. The grounds for the decision were recorded by the decision-maker:

The tribunal refused the Secretary of State permission to appeal to the Upper Tribunal, but I gave the Secretary of State permission.

The Secretary of State conceded that: (i) both claimants were within the scope of Regulation 883/2004; (ii) they were both habitually resident in Great Britain; and (iii) the United Kingdom was the competent State for the payment of sickness benefits. Neither party challenged the generally accepted view that the care component of disability living allowance and attendance allowance were sickness benefits.

I directed an oral hearing of these appeals, to be heard together. The hearing took place on 4 November 2016. Declan O’Callaghan of counsel appeared for the claimants. Julia Smyth of counsel appeared for the Secretary of State. I am grateful to both of them for their written and oral arguments as well as for the subsequent written submissions that they provided on outstanding issues. As always, the Upper Tribunal is grateful for the support that the Child Poverty Action Group has given by representing both claimants.

Disability living allowance is governed by sections 71 to 76 of the Social Security Contributions and Benefits Act 1992. Section 71(6) provides:

Conditions as to residence and presence in Great Britain

Subject to the following provisions of this regulation and regulations 2A and 2B, the prescribed conditions for the purposes of section 71(6) of the Act as to residence and presence in Great Britain in relation to any person on any day shall be that–

on that day–

Regulation 2(1)(a)(iii) shall not apply where on any day–

the person is habitually resident in Great Britain;

a relevant EU Regulation applies; and

the person can demonstrate a genuine and sufficient link to the United Kingdom social security system.

For the purpose of paragraph (1)(b) and regulation 2B, ‘relevant EU Regulation’ has the meaning given by section 84(2) of the Welfare Reform Act 2012.

No entitlement to disability living allowance where UK is not competent state

Each of the following is a ‘relevant EU Regulation’ for the purposes of this section-

Regulation (EC) No. 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems.

Attendance allowance is governed by sections 64 to 67 of the Social Security Contributions and Benefits Act 1992. Section 64(1) provides:

Conditions as to residence and presence in Great Britain

Subject to the following provisions of this regulation and regulations 2A and 2B, the prescribed conditions for the purposes of section 35(1) of the Act* as to residence and presence in Great Britain in relation to any person on any day shall be that–

on that day–

Regulation 2(1)(a)(iii) shall not apply where on any day–

the person is habitually resident in Great Britain;

a relevant EU Regulation applies; and

the person can demonstrate a genuine and sufficient link to the United Kingdom social security system.

For the purpose of paragraph (1)(b) and regulation 2B, ‘relevant EU Regulation’ has the meaning given by section 84(2) of the Welfare Reform Act 2012.

The parties referred to two provisions of the Treaty on the Functioning of the European Union (TFEU). Article 21(1) provides:

The parties referred to these recitals to Regulation (EC) 883/2004:

The parties referred to these provisions of the Regulation:

The parties referred to this recital to Regulation (EC) 987/2009:

The parties referred to these provisions of the Regulation:

This case concerned the residence and presence conditions for an award of incapacity benefit in youth to a claimant who lived with her parents in Spain. One of the conditions was that the claimant had been present in Great Britain for not less than 26 weeks in the previous 52 weeks. The Court of Justice of the European Union decided that it was not compatible with EU law, as the condition deterred the claimant’s freedom of movement. Its analysis led to the introduction of the genuine and sufficient link for disability living allowance and attendance allowance:

The relevant part of the Court’s ruling was:

I have come to this decision for this reason. As Ms Smyth argued, Stewart lays down a general principle that a Member State may insist on a claimant demonstrating a genuine and sufficient link with that State as a condition for awarding benefit. If a claimant’s residence in another State could be aggregated under Article 6, it could render the Court’s decision nugatory and would do so in these cases. The Court derived that principle from Article 21(1) TFEU, and so it operates independently of Regulation 1408/71 (with which the Court was otherwise concerned) and of Regulation 883/2004. Article 6 cannot be interpreted in a way that is inconsistent with TFEU.

This argument was the subject of submissions after the hearing. Mr O’Callaghan argued that the supposed difficulty does not arise as a matter of EU law. It only arises as a result of the structure of the domestic legislation. Ms Smyth replied that Stewart accepted that it was permissible to have a past presence test, provided it was supplemented by a genuine and sufficient link test for EU citizens. Mr O’Callaghan’s argument does not undermine the ground on which I have made my decision. All States require some kind of connection before awarding benefit. One possibility is an insurance or contribution scheme. The most obvious alternatives are ones based on presence or residence. On Mr O’Callaghan’s argument, Article 6 would render any such scheme almost completely irrelevant. It is not possible to magic away the domestic conditions of entitlement as irrelevant, because the use of presence or residence conditions form the background against which the Court reasoned in Stewart. One way to read the judgment is that residence or presence together with other elements form a composite test for attaining the objective of requiring a connection with the State in question. The Court accepted at paragraph 93 that a reasonable period of presence could provide a link, but went on to say that it could not be used exclusively in the case of EU citizens. It said at paragraph 96 that the link ‘could be established from other representative elements’ and went on to apply that approach to the facts of the case. If Article 6 is allowed to operate in a way that will satisfy the presence test without reference to any other element that will bypass the role that other elements play under Stewart and by virtue of Article 21(1).

I refer to the other arguments put by Ms Smyth. They are, mostly, valid arguments and provide an alternative basis for the decision I have reached.

Ms Smyth argued that these general principles applied:

Regulation 883/2004 was concerned with coordination, not harmonisation.

Each State was entitled to decide for itself what social security provision to make.

There was no guarantee that the exercise of freedom movement between member States would be neutral in its effects.

The Court of Justice of the European Union had recognised that it was legitimate for States to protect their public finances and to prevent the economic cost of the benefit bill becoming unreasonable.

Ms Smyth’s approach to the aggregation issue was this:

Mere residence could not be aggregated, only residence that equates to insurance in a Member State.

The purpose of Article 6 was to preserve accrued rights.

Its effect was not to aggregate periods of residence, but to aggregate periods of residence ‘completed under the legislation of any other Member State’.

‘Period of residence’ was defined by Article 1(v) as meaning ‘periods so defined and recognised by the legislation under which they were completed’.

‘Residence’ was defined by Article 1(j) as meaning habitual residence, but that did not apply to ‘period of residence’. I am not sure that this is right, but I do not have to decide it.

Neither claimant had completed any period of residence under relevant legislation in any other Member State.

Asked whether any Member State had a residence-based insurance system, she said that this provision took account of the position in Sweden and Iceland. That is a matter of evidence and there is no evidence to that effect on either file. I was not referred to any preparatory material relevant to the Regulation.

Article 12 of Regulation 987/2009 provided for one State to obtain information from another. The Secretary of State did not go behind the information provided. I do not need to decide if that is the correct approach.

Article 12 would not be necessary if mere residence could be aggregated as claimants themselves could easily provide evidence of residence.

Annex XI of Regulation 883/2004 was consistent with Article 6. If it was not, it had to give way to the Article, which is the operative provision in the Regulation.

Mr O’Callaghan essentially relied on the wording of Article 6 read together with Annex XI.

Broadly, I accept Ms Smyth’s argument. It produces an interpretation that is consistent with the right of States to insist on a genuine and sufficient link as explained in Stewart. It makes sense of the language of Article 6, which refers to periods of residence under the legislation of another State. How does someone accumulate residence under legislation that is not insurance- or contribution-based? There are plenty of examples of provisions that require a claimant to be ordinarily or habitually residence in a country in order to qualify for an award. But that hardly fits the language of the definition in Article 1(v). Just because a person has to be habitually resident to qualify does not mean that this leads to a period of residence being defined, recognised or completed. Indeed, the EU concept of habitual residence (unlike the domestic concept of the same name) allows a person to establish habitual residence so quickly, as the Secretary of State has conceded occurred in these cases, that it is difficult to describe the time involved as a period.

As to paragraph 2 of Annex XI, this is consistent with Ms Smyth’s argument, although not for the reasons she gave. What the paragraph does is to take account of the past presence test in domestic legislation. It provides for periods of residence in another State to count towards satisfying the presence test. This is a necessary supplement to Article 6, which only provides for aggregation of residence abroad with residence here. It does not permit aggregation of residence abroad with presence here. On its own, Article 6 would not assist a claimant who had completed periods of residence under the legislation of another State. The flaw in Mr O’Callaghan’s argument is to assume that the purpose of Annex XI is to make clear that disability living allowance and attendance allowance are within Article 6. That is not why the Annex is relevant. What it does is to adjust the application of that Article, when it is satisfied, in order that it can apply to the past presence test.

As to the decision of the Court of Appeal in Secretary of State for Work and Pensions v Garland [2014] EWCA Civ 1550, the reasoning in that case was concerned with Regulation (EEC) 1408/71. I prefer to rely on the terms of Regulation 883/2004 rather than read across from the similar, but different, provisions of the earlier Regulation.

Ms Smyth showed me the forms that are now completed in order to implement Article 12 of Regulation 987/2009. These forms do not assist me with the interpretation of the Article. They assume what Ms Smyth sought to prove – that Article 6 only applies to contributory benefits. But they would be needed for those benefits anyway, even if that Article were not so limited. I have not relied on the forms in coming to my decision on this issue.

I accept Mr O’Callaghan’s argument on this issue.

For both attendance allowance and disability living allowance, the regulations require a claimant to ‘demonstrate a genuine and sufficient link to the United Kingdom social security system.’ Those final words are not authorised by Stewart. The Court repeatedly referred to a connection with the Member State without any addition of the words ‘social security system’. See paragraphs 90, 92, 95, 100 and 102, and the terms of the Court’s ruling. The Court did refer to connection with the social security system in paragraph 97, but only with the qualification ‘in the first place’. And having dealt with links with the British social security system in paragraphs 97-99, the opening words of paragraph 100 refer to ‘Other elements capable of demonstrating the existence of a genuine link between the claimant and the Member State’, which can only mean links other than with the social security system. Finally, the Court mentioned in paragraph 101 that the claimant had spent a significant part of her life in the United Kingdom, which of itself would not be relevant to show a link to the social security system. It is a small point, but I note that my analysis coincides with the way that the Court of Appeal summarised the effect of Stewart in Garland at [23], where it refers to a link to the Member State, not to its social security system.

Ms Smyth relied on the references by the Court to social security benefits. She is right that the Court referred in detail to the social security position of the claimant and her parents. But, as I pointed out at the hearing, that is because that was the information that I had given the Court in the reference. The Court does not, when dealing with a reference, undertake an investigation. It relies on the information provided by the referring court. I had included details of the social security benefits because they were potentially relevant to some of the questions that I had referred, which in the event the Court did not need to answer. I had not anticipated the Court’s answer, so I had not undertaken a wider investigation. The reference to the family’s benefit history was relevant as a matter of fact in applying the genuine and sufficient link test. The Court did not use it to show that benefits were the only relevant connection.

It follows that the proper approach for decision-makers and the First-tier Tribunal is to apply Stewart and to disregard the words ‘social security system’ in the legislation. I note that, despite the language of the legislation, the guidance to decision-makers on genuine and sufficient link that Ms Smyth provided states in paragraph 071787 that they ‘need to make a balanced judgement based on all the facts of the case. Among the relevant elements that may be considered are …’ The factors that follow are closely based on Stewart. That guidance, if applied strictly according to its terms, allows a decision-maker to comply with Stewart rather than with the terms of the legislation.

I accept Mr O’Callaghan’s argument that presence alone may demonstrate a genuine and sufficient link. The longer the period of past presence required in the legislation, the more likely that a case might occur in which a claimant has spent a relatively long period in a country. The past period required in Stewart was 26 weeks, which the Court described at paragraph 95 as ‘not … unreasonable’. The period required for disability living allowance and attendance allowance is four times as long. There may be an argument that that such a period would be unreasonable. That does not arise here, because both claimants had only just arrived in this country at the time of their claims. It is also doubtful whether that argument is the correct approach. It only arises because the domestic legislation treats the past presence period and the genuine and sufficient link as separate. That is not how Stewart analysed it. The Court said that States were entitled to require a link, that presence for a reasonable period would establish a link, but that other elements had to be considered to prevent an impediment to the freedom of movement. In other words, presence was merely one way of establishing the necessary connection. It might be sufficient on its own (see paragraph 93 of the judgment) or as one of a number of elements (see paragraph 101). The domestic legislation can be reconciled with Stewart in its application if decision-makers and tribunals attach greater significance to presence in this country the closer the period comes to satisfying the past presence test.

I asked the Secretary of State about the requirement that the claimant be habitually resident in Great Britain. Does the Secretary of State apply the domestic approach to habitual residence or the EU approach? Ms Smyth told me that decision-makers applied the EU approach as this was an EU context. She provided a copy of the guidance to that effect. This is not an issue that arises for decision, but I record it as (so far as I know) it is not generally known that this is the test applied. Article 11 of Regulation 987/2009 sets out the approach to be applied for Regulation 883/2004.

I consider that the legal position is clear without the need for a reference to the Court of Justice of the European Union. Which is not to say that the issues are not difficult, which is why I have said that I will give permission to appeal to the Court of Appeal if an application is made.

The tribunal was right on the aggregation issue by refusing to apply Article 6 and Annex XI. In his submissions after the hearing, Mr O’Callaghan argued that BK had been ordinarily resident in Ireland in order to be in receipt of domiciliary care allowance and his mother had been habitually resident there in order to be in receipt of carer’s allowance. As foreign law, those matters have to be proved as fact. I accept Mr O’Callaghan’s submissions as providing that evidence. I reject his argument and rely on one of the arguments put in reply by Ms Smyth. She pointed out that Mr O’Callaghan had not shown that the requirements for Article 6 were satisfied. In particular, he appeared to have overlooked the definition of ‘period of residence’ in Article 1(v). This has the effect that the periods taken into aggregation must be ones defined or recognised by the legislation. Nothing I have seen shows that the Irish legislation defines or recognises such periods. All that he has shown is that ordinary or habitual residence was a condition of entitlement. That is not the same thing.

The tribunal misdirected itself on the genuine and sufficient link issue by limiting its consideration to links with this country’s social security system. That raises the issue whether the mistake was material. I have considered Mr O’Callaghan’s case for BK, but decided that it does not show a sufficient link.

This was the case he put in his amended grounds of appeal:

I can see no relevance in the fact that the claimant and his mother came to this country to escape domestic violence. It explains why they came here, but it does not show or contribute to showing a sufficient link. I was referred to PB v Secretary of State for Work and Pensions [2016] UKUT 0280 (AAC), in which Upper Tribunal Judge Wright explained why he had accepted the Secretary of State’s concession that the claimant had established a sufficient link through his sister. On the basis of the judge’s reasoning, albeit only set out to explain why he accepted the concession, it is possible to establish a link through someone else. That is consistent with Stewart where the Court took account not only of the claimant’s links, but also of her parents’. In the case of a child, it is difficult to see how a link could otherwise be established. However, the connections identified with this country essentially rely on inheritance. BK himself has no connection and his mother’s connection has been relatively minor, certainly throughout his life. My conclusion is that, on the evidence, the tribunal could not properly have come to a different decision even if it had directed itself correctly on the law.

A decision-maker and a tribunal should always consider, when appropriate, the possibility of an advance award under regulation 13A of the Social Security (Claims and Payments) Regulations 1987. That regulation cannot assist BK. It only applies if a claimant will qualify within 3 months provided that there is no change of circumstances. Therein lies the problem: the position for BK is the reverse of when regulation 13A applies. He cannot qualify unless and until there is a change of circumstances – either through presence or through a genuine and sufficient link.

That is why I have dismissed BK’s appeal.

The tribunal misdirected itself in law by applying Article 6. The claimant did not satisfy the past presence test. On the evidence, the tribunal could not properly have found that that her connections with this country were sufficient to show a sufficient link. I have re-made the decision to that effect.

For the record, some of the evidence in this case was in German. It was not translated. I told the parties that if either wished to rely on this, it would have to be translated. Neither provided a translation, so I have not been able to rely on it.

As to an advance award, MM cannot benefit from this for the same reason as BK.