Readers of EUtopia Law may recall my comments in May on the government plans to introduce a duty upon landlords to check the immigration status of their tenants. I stressed that the proposed checks were likely to breach UK obligations under EU law. Since then, the plans have been modified in order to reduce the administrative burden and limit the reach of the envisaged rules. The intention now is to target the landlord duty only on those renting out properties in certain boroughs that are popular with migrants, such as Ealing and Hounslow in West London. I would contend that this does not rid the policy of problems, but changes them: such a focus is likely to breach the EU Race Directive 2000/43, as well as the public sector equality duty (PSED) in Section 149 of the Equality Act 2010.
The EU Race Directive sets out a framework for combating discrimination on the grounds of race and ethnicity. The scope, set out in Article 3 covers both public and private sectors and includes housing. Although the Directive explicitly excludes nationality, the landlord duty as currently envisaged is likely to disproportionately affect British black and minority ethnic communities. As a consequence of the demographics of housing, it is likely to prove difficult to target areas with high numbers of migrant populations without also targeting settled communities of colour. Ealing and Hounslow are examples of this: Lambeth and Stratford in South and East London are others. Beyond the Race Directive, the government should also consider the PSED, under which all public authorities must have ‘due regard to the need to’ not only eliminate conduct prohibited by Act, but also advance equality of opportunity and, perhaps most relevant to the landlord duty, foster good relations. The modifications may therefore be unlawful under national as well as EU law.
Should the government press ahead, it may well find itself subject to a complaint to the European Commission. Under Article 258 TFEU, any person may make a complaint to the Commission if they think that EU rules are not being followed in any member state. It is as easy as completing an electronic form. The Commission receives many such complaints: it has discretion on how to respond and has learnt to choose its battles. If it chooses to pursue the problem it will enter into a period of communication with the responsible national authorities. The matter may be solved during this phase by administrative action but if agreement cannot be reached after the Commission sets out its position in a ‘reasoned opinion’, judicial action before the CJEU between the Commission and the member state will follow.
The Commission tends to win these infringement cases. Furthermore, since the introduction of penalty payments and lump sum fines under Article 260 TFEU, national authorities incur financial sanctions if they ignore the CJEU ruling and fail to rectify the situation in a timely manner. The Commission requests these sanctions and tends to ask for more rather than less. The figures do not quite match the fines under EU competition law, but remain eye-watering. For example, Italy was ordered to pay a lump sum of 30 million Euro in 2011, which was indeed a fraction of the 1.1 billion Euro demanded of Intel in 2009 for its anti-trust practices under EU competition law. However, it is worth remembering that while commercial undertakings will bolster the EU coffers with their shareholders dividends, disobedient and recalcitrant states will be handing over taxpayer’s money.
If a complaint is made to the Commission about the planned landlord duty, it will again bring the UK treatment of EU migrants under scrutiny in Brussels. Rules introduced in 2005 are currently under investigation: eight years ago, the UK introduced a universal eligibility test for access to a range of social security benefits. There is little harmonisation of social security in the EU but Regulation 883/04 calls for co-ordination of social security for migrant workers and their families. The benefits in the UK covered under this Regulation include Child Benefit, Child Tax Credit, Jobseeker’s Allowance, Employment and Support Allowance, Income Support and State Pension Credit. Other UK benefits, such as Council Tax Benefit, Housing Benefit, State Pension Credit and Working Tax Credit, are protected by the UK eligibility test but do not fall under EU social security rules.
The test is universal in the sense that everybody – UK and non-UK nationals from the EU and elsewhere – wanting access to these benefits must pass it. In order to satisfy the so-called ‘habitual residence’, a person must show that they are 1) economically active (working, self-employed, job-hunting or temporarily unemployed, in education or vocational training) or 2) have permanent residence in the UK, or 3) that they are the family member of another EU/EEA national in one of those categories. If they demonstrate this, they are deemed to have a ‘right to reside’ and only then are eligible the above-mentioned UK benefits.
The test is problematic for a number of reasons. First, its name: Union citizens and migrant workers do not gain a right to reside in the UK from national law – the right to enter and remain is granted directly by EU law, as stated in case law from the CJEU:
‘The right of nationals of a Member State to enter the territory of another Member State and reside there for the purpose of seeking or pursuing an occupation or rejoining their spouses or families is a right conferred directly by the Treaty or by the provisions adopted for its implementation. The issue of a residence permit does not create the rights guaranteed by Community law and the lack of a permit cannot affect the exercise of those rights. Therefore, the enjoyment of the rights which a member of the family of a worker of a Member State derives from the provisions of Community law may not be made subject to the grant of a residence permit which meets certain conditions.’
Thus under EU law, EU migrants have an automatic right to reside. The Citizenship Directive 2004/38 provides this to all Union citizens and their families. Article 7 CD introduces a gradual system of residence rights which culminates in the right of permanent residence after 5 years. The conditions associated with each stage become more demanding: in the first three months, there are no formalities to satisfy, but there is also no automatic access to social assistance. Beyond three months, only certain groups enjoy the automatic right to reside – those who are economically active, studying or family members of these (EU and non-EU nationals).
Second, as the Commission argues, the test is indirectly discriminatory – while its wording is neutral and it applies to everybody including UK nationals, UK nationals will nearly always pass it unless they are returning to the UK after a period of emigration. The overwhelming majority of those who will fail it are non-nationals from the EU and elsewhere, even those who have lived and worked in the UK – if at the time of application they do not fall into one of the above-mentioned categories, perhaps due to caring responsibilities, their claim will be refused. A UK-national in the same situation would not be refused as they are likely to be permanently resident. Because the test does not treat nationals and non-nationals equally, the Commission announced last week that it was pressing ahead to the formal stage of the infringement procedure as it is satisfied that the test is contrary to EU rules. Its action is limited to those UK benefits covered by Regulation 883/04 (Child Benefit, Child Tax Credit, Jobseeker’s Allowance, Employment and Support Allowance, Income Support and State Pension Credit).
The UK is not alone – Finland is also in trouble with the Commission for a similar reason concerning access to unemployment benefit. The test requires all workers to have a minimum period of economic activity in order to be eligible for this, but EU migrant workers must in addition have worked in Finland for at least four weeks as an employee or have been self-employed for four months. If they have not done so, periods of employment or self-employment in another member state are not taken into account and the worker is not entitled to unemployment benefits. The Commission considers that this linkage between economic activity in Finland and other member states is contrary to both Regulation 883/04 and the free movement of workers under Article 45 TFEU thus Finland also received a ‘reasoned opinion’ last week: the Commission has asked the government to remove the discriminatory condition affecting migrant workers.
The Commission action does not indicate that the UK, Finland or any other member state may not regulate access to these benefits: the fear of ‘benefit tourism’ is recognized in EU law and the rules in Regulation 883/04 allow social security to be limited to those who genuinely have their home in the member state. This was recently re-affirmed by the CJEU in Salgado Gonzalez:
‘…according to settled case law, member states retained the power to organise their social security schemes. Therefore, in the absence of harmonisation at EU level, it was for the legislation of each member state to determine, in particular, the conditions for entitlement to benefits. In exercising those powers, member states had none the less to comply with the law of the European Union…’
Compliance requires agreement with Article 4 of the Regulation 883/04, which specifically prohibits indirect discrimination. Indirect discrimination can of course be justified under EU law and it is likely that the government has already tried to demonstrate that there is an objective reason for the rule which pursues a legitimate aim in a manner that is both appropriate and necessary. However, the fact that the Commission has now sent a ‘Reasoned Opinion’ to the UK and Finland indicates it is confidence that any justification will fail before the CJEU. Having received this formal Commission request to stop the application of the test and bring the rules in line with EU law, these member states now have two months to respond. After this, the Commission will probably refer the case to the CJEU and judicial proceedings will begin.
The same EU principles will apply to the planned landlord duty: EU law does not preclude national action to prevent abuse of the immigration rules but state action must respect law agreed in Brussels. If the planned legislation fails to do so, an Article 258 TFEU process is likely to follow on the European front, as is a judicial review on the domestic front. It might save time and will definitely save money if this can be avoided. The latter must be a priority for the austerity-driven government. Fortunately, time allows for the policy to again be re-considered before it is set down in legislation; this is to be recommended otherwise the desired savings in national administrative costs may ultimately be lost in EU infringement fines.
 C- 496/09 Commission v Italy
 Regulation 1408/71was replaced in 2010 by Regulation 883/04 for EU nationals only.
 Echternach and Moritz
 To understand the justification test, see C45/09 Gisela Rosenbladt v Oellerking Gebaudereinigungsges. MbH