It is a pleasure to serve under your chairmanship, Sir Edward. Given the nature of the clause, I will spend a few minutes outlining its impact to the Committee. The clause and associated schedules 2 and 3 provide an essential legislative framework to ensure that the Government can make changes to our social security system when the transition period ends, alongside the launch of the future immigration system. The provisions will enable the Government to amend the retained European Union social security co-ordination rules and to deliver policy changes from the end of the transition period.
The clause provides a power to the Secretary of State, the Treasury or, where appropriate, a devolved authority to modify the social security co-ordination regulations. Those EU regulations provide for social security co-ordination across the European economic area, and will be incorporated into domestic law by the European Union (Withdrawal) Act 2018 at the end of the transition period. Clause 5(4) gives the Government the ability to make necessary consequential changes to other primary legislation and other retained EU law to ensure that the changes given effect by the main power are appropriately reflected. That power may be used, for example, to address technical matters, inoperabilities or inconsistencies. Schedule 2 sets out the power of the devolved authorities under clause 5.
This social security co-ordination clause confers powers on Scottish Ministers and the relevant Northern Ireland Department to amend the limited elements of the social security co-ordination regulations that fall within devolved competence. It is important that we provide the devolved Administrations with the powers that they need to amend the aspects of the regulations for which they are responsible, just as it is right for the UK Government to have the powers for the laws that affect the UK as a whole. The powers are equivalent to those conferred on UK Ministers and will allow the devolved Administrations to respond to the UK’s withdrawal from the EU in areas of devolved competence, either to keep parity with Westminster or to deviate in line with their own policies.
Without the powers in the Bill, the devolved Administrations would need to bring forward their own parallel legislation to give them equivalent powers to amend the retained EU social security co-ordination regulations in areas of devolved competence. Before the Bill was introduced, letters were sent to the devolved Administrations to seek legislative consent in principle, in line with the Sewel convention.
Schedule 3 provides further detail on the form that regulations will take under the clause, whether as statutory instruments, statutory rules or Scottish statutory instruments. The schedule provides that the use of the power is subject to the affirmative procedure. It also gives clarity on the procedures that the devolved Administrations will need to follow. Paragraph 5 permits other regulations, subject to the negative procedure, to be included in an instrument made under the clause.
Without the clause and associated schedules 2 and 3, the Government and relevant devolved authorities will have only the power contained in the 2018 Act to fix deficiencies in the retained system of social security co-ordination, restricting our ability to make changes. I reassure the Committee that the power in the clause will not be exercised to remove or reduce commitments made either in relation to individuals within the scope of the withdrawal agreement, for as long as they remain in the scope of that agreement, or in relation to British and Irish nationals moving between the UK and Ireland.
We are currently in negotiations with the EU about possible new reciprocal arrangements on social security co-ordination, of the kind that the UK has with countries outside the EU. The clause will enable the UK to respond to a variety of outcomes in those negotiations, including when no agreement is achieved by the end of the transition period. The clause will be necessary to deliver policy changes to the retained regime that will cover individuals who fall outside the scope of the withdrawal agreement, to reflect the reality of our new relationship with the European Union.
The Government have been clear that there will be changes to future social security co-ordination arrangements, including, as announced at Budget 2020, stopping the export of child benefit. The social security co-ordination powers in the Bill will enable the Government to deliver on that commitment and to respond to the outcome of negotiations with the EU to deliver changes from the end of the transition period. I therefore beg to move that clause 5 stands part of the Bill and that schedules 2 and 3 are agreed to.
Good morning, Sir Edward. It is a pleasure once again to serve under your chairmanship. Social security arrangements set out in EU regulation 883 of 2004 and elsewhere are currently directly applicable in the UK. They cover the co-ordination of social security, healthcare and pension provision for people who are publicly insured who move from one EU state to another.
The regulations ensure that individuals who move to another EEA are covered by the social security legislation of only one country at a time and are, therefore, liable only to make contributions in one country; that a person has the rights and obligations of the member state where they are covered; that periods of insurance, employment or residence in other member states can be taken into account when determining a person’s eligibility for benefits; and that a person can receive benefits that they are entitled to from one member state, even if they are resident in another.
The co-ordination regulations cover only those social security benefits that provide cover against certain categories of social risk, such as sickness, maternity, paternity, unemployment and old age. Some non-contributory benefits fall within the regulations but cannot be exported, and benefits that are social and medical assistance are not covered at all. Universal credit, for example, is excluded.
As we heard from Jeremy Morgan of British in Europe in his oral evidence to the Committee last week, most UK nationals resident in the EU are of working age. It is important to note that the number of people claiming the working-age benefits that are covered by the regulations—jobseeker’s allowance or employment and support allowance—has declined sharply since the introduction of universal credit. We might therefore expect social security co-ordination arrangements to apply to a declining number of working-age adults. The regulations will, however, still be of importance for a sizeable number of individuals, and not least for pensioners.
The co-ordination regulations also confer a right on those with a European health insurance card to access medically necessary state-provided healthcare during a temporary state in another EEA state. The home member state is normally required to reimburse the host country for the cost of the treatment. Under the European Union (Withdrawal Agreement) Act 2020, protection of healthcare entitlements is linked to entitlement to cash benefits.
Clause 5(1) provides an appropriate authority with the power to modify the co-ordination regulations by secondary legislation. The power is very broad, placing no limits on the modifications that appropriate authorities are able to make to the co-ordination regulations. By virtue of subsection (3), the power explicitly
(a) to make different provision for different categories of person to whom they apply…
(b) otherwise to make different provision for different purposes;
(c) to make supplementary…consequential, transitional, transitory or saving provision;
(d) to provide for a person to exercise a discretion in dealing with any matter.”
The power is further enhanced by subsection (4), which provides for the ability to amend or repeal
“primary legislation passed before, or in the same Session as, this Act” and other retained direct EU legislation.
Since the UK left the EU at the end of January this year, the relevant EU regulations pertaining to social security, pensions and healthcare have been retained in UK law by section 3 of the European Union (Withdrawal) Act 2018. I accept that the Government need to be able to amend co-ordination regulations to remedy deficiencies in them resulting from the UK’s exit from the EU, but the 2018 Act already contains a power in section 8 to modify direct retained EU law. Indeed, the Government have already exercised this power for four of the co-ordination regulations. Any changes that do not fall within the scope of the power in section 8 of the 2018 Act must necessarily, therefore, not relate to any ability for the law to operate efficiently or to remedy defects, but be intended to achieve wider policy objectives. I think the Minister acknowledged as much in his opening comments.
I was, however, surprised that the Minister said that only the European Union (Withdrawal) Act 2018 provided such powers. My reading of the legislation is that the Secretary of State has further powers as regards social security, healthcare and pension rights for those who are protected by the withdrawal agreement under the European Union (Withdrawal Agreement) Act 2020. Section 5 of that Act inserts new section 7A into the 2018 Act so as to secure withdrawal agreement rights in domestic law, and that protection is buttressed by section 13 of the 2020 Act, which confers a power to make regulations in respect of social security co-ordination rights protected by the withdrawal agreement. Given the powers that already exist under the European Union (Withdrawal) Act and the European Union (Withdrawal Agreement) Act, as well as the fact that those powers have already been used by the Government, why does the Minister feel they are inadequate?
Paragraph 30 of the delegated powers memorandum is instructive. It states that the Government want to use the power in clause 5 to
“respond flexibly to the outcome of negotiations on the future framework and make changes to the retained social security co-ordination rules.”
Does the hon. Lady agree that, given the proliferation of judicial reviews and the test cases that often come forward, it is better to adopt a belt-and-braces approach so that we underline the Government’s intention in both the Bill and the withdrawal Act?
The issue is the mission creep and scope creep involved in using secondary legislation to amend primary legislation and retained EU rights, particularly a mission creep that now encompasses the ability to make significant policy changes.
As we heard in oral evidence from our witnesses last week, it is important to recognise the considerable importance of policy and legislation in relation to social security co-ordination. It is vital to labour mobility, and to protect the rights of EEA nationals who come to live in the UK and UK nationals who go to live in EEA member states. Policy in this area has the potential to impact the lives of millions, affecting their right to receive benefits to which they are entitled through national insurance contributions over periods of residency, and which they have a legitimate expectation that they will receive. Changes to policy in these important areas should, I submit, be given effect in primary legislation.
In response to the evidence that the Committee took from British in Europe last week, the Minister said that the Secretary of State could not make regulations that would breach an international treaty, and he offered some reassurances this morning to those who fall within the scope of the withdrawal agreement. However, as British in Europe pointed out last week, the powers in clause 5 mean that Parliament will not be able to properly scrutinise regulations that might breach our international treaty obligations—if not deliberately, then inadvertently.
The Minister also referred to the need to be able to reflect the ongoing negotiations with the European Union, and we heard from Adrian Berry of the Immigration Law Practitioners Association last week about the UK’s draft social security treaty, which is an annex to the Government’s proposed future trade agreement. Mr Berry highlighted the Government’s intention to continue the protection of the European health insurance card scheme for short-term travel and the uprating of old-age pensions, but noted that disability pensions and healthcare attached to pension rights are missing from the draft treaty. He also highlighted the limitations of the new EHIC, which would require those with long-term health needs to get prior authorisation from the UK Government, and that there would be no S2 cover, which enables people to obtain healthcare in the EU that they cannot get on the NHS in the UK. Will the Minister put on the record whether such changes could be introduced using clause 5, and can he confirm which classes of person they can be applied to?
The Government have argued that the use of the powers in clause 5 will be subject to parliamentary scrutiny, through the use of the affirmative procedure. Will the Social Security Advisory Committee have a role in scrutinising regulations introduced under this measure? Does he not in fact accept that changes in this important area require full debate and scrutiny in Parliament, and that the principles of any future policy should be set out in primary legislation?
Finally, clause 5(5) states that EU-derived rights cease to apply if they are “inconsistent” with any regulation made under the section, but the Government are under no obligation to specify where and when such inconsistencies arise. This creates considerable uncertainty for individuals who are affected, for their advisers, and indeed for politicians and the wider public. As we discussed last week on clause 4, such an approach is inimical to good lawmaking. The Government should spell out which parts of retained EU law might be affected by these provisions, and I hope that the Minister will do so in his response.
It is a pleasure to serve under your chairmanship again, Sir Edward.
I am grateful to the Minister and to the hon. Member for Stretford and Urmston for setting out the nature of these regulations in quite some detail, and also for explaining why they are hugely significant for a large number of people.
We acknowledge that there is a need for the appropriate authorities to have some powers in this area, but those powers should be focused on making technical fixes rather than providing carte blanche. The powers in the clause are hugely broad. In fact, they are basically without any limit, either in terms of scope or time, and it is worth reflecting on what exactly clause 5(1) says:
“An appropriate authority may by regulations modify the retained direct EU legislation mentioned in subsection (2).”
There is no constraining test at all.
As Adrian Berry argued when he gave evidence last Tuesday, all these clauses should at least have the test of being “appropriate”, if not being “necessary”, as a qualification. Opposition MPs have been championing the “necessary” test, but the Government have always preferred the test of appropriateness. However, even that is absent from the clause. On paper, therefore, we are creating powers to make inappropriate regulations, which seems quite an unusual concept. More than ever, we need reassurance on what exactly the intended use of these regulations is, and we will look carefully at what the Minister said about that this morning.
I also want to raise an issue on schedule 2, which the Minister also referred to. Schedule 2 sets out who can make use of the powers in clause 5, and I want to flag up an issue in relation to devolution that needs to be addressed. It was flagged up by the Scottish Parliament’s Delegated Powers and Law Reform Committee last year in relation to the predecessor Bill. The Committee reported on that Bill precisely because there are implications for some devolved competences around social security.
There are three routes by which the clause’s powers could be used in relation to devolved social security competence. First, Scottish Ministers could exercise these powers, sometimes with the requirement to consult UK Ministers, if that were required where a different route was used to achieve the same means. The Committee found those powers acceptable.
There is also a route for joint exercise of the powers, which would be considered where a change is so significant that it would be appropriate for joint exercise and scrutiny. Again, while the Committee sought some clarity on precisely when that route would be used, it supported the idea in principle.
Thirdly, however, there is the route of UK Ministers acting alone, by laying regulations in the UK Parliament that could still relate to devolved competence. The Committee’s report says:
“The Committee emphasises that as a matter of principle the Scottish Parliament should have the opportunity to scrutinise the exercise of legislative powers” by the Executive. However, it notes that the Scottish Parliament has no formal role in relation to the scrutiny of secondary legislation passed by UK Ministers acting alone.
The Committee went on to note that there was silence in relation to the circumstances in which it would be appropriate for UK Ministers to exercise powers in relation to devolved social security acting on their own. It noted that there was nothing on the face of the Bill requiring UK Ministers to seek the consent of Scottish Ministers prior to the exercise of the powers in that way by relevant UK Ministers or the Treasury. It repeated the view that it had provided in relation to the Bill that went on to become the European Union (Withdrawal) Act—that UK Ministers should be able to legislate in devolved areas only with the consent of the devolved Administration, also advocating for a role for the Scottish Parliament in that process.
As far as I can see, the issue raised this time last year has not been addressed in the Bill, which has simply been reintroduced as before. Will the Government comment on that and consider committing to amending the Bill so that there is at least a duty on UK Ministers to consult Scottish Ministers before choosing to exercise the clause 5 powers in relation to devolved social security competencies? I look forward to hearing what the Minister has to say in that regard.
I thank hon. Members for their contributions. On the powers under clause 5, the Government have been given clear advice that they are necessary, particularly when we look at the ongoing negotiations. There are two parties to the negotiations, and the purpose of having a wider scope is to reflect whatever the outcome of the negotiations is. Hopefully, we will quickly be able to implement an agreement, in the same way that we have an agreement with Ireland bilaterally in terms of the co-ordination of social security, given the unique position of Irish citizens in the UK and UK citizens in Ireland, who are considered settled from day one. That is where we are.
One of the examples Opposition Members gave was of those protected by the withdrawal agreement. It is worth noting that this measure looks towards those who arrive after the end of the transition period and starts to look towards changes there, rather than at those who specifically have their rights protected by the withdrawal agreement.
In terms of the scope and whether the powers would be used in a devolved area, the UK Government continue to respect the devolution settlement. We are in discussions —officials certainly are, and I and my colleague in the Department for Work and Pensions wrote to the relevant Scottish Minister last week to set out where we are. We hope to have a legislative consent motion from the Scottish Parliament, but we have also set out what the position is if we do not get an LCM—for the Committee’s benefit, the Government would amend the Bill on Report to remove the powers in relation to devolved matters in Scotland.
Fundamentally, the clause is intended to ensure that we can implement powers and make the changes necessary, as outlined, to deliver the specific policy changes that we made clear in our manifesto, particularly around the export of child benefit, and also to ensure that we do not end up in a bizarre position where the UK is trying unilaterally to implement what is meant to be a reciprocal system, should we not be able to get a further agreement or if we have an agreement but are not able quickly and promptly to implement it.
Again, I would point out that using the affirmative procedure means that both Houses of Parliament will scrutinise any regulations and will have the opportunity to block them if they felt they were inappropriate. To be clear, if a Minister made wholly inappropriate regulations, such matters in secondary legislation, unlike primary legislation, can be reviewed in the courts as well.
It is therefore right that we stick with the clause as it is, certainly to ensure that we can implement whatever the outcome of the agreement is, including if we need to look at putting in place a system that reflects the fact that there has not been a further agreement.
I just want to clarify whether the Minister would at least consider putting in a requirement that, before UK Ministers exercise these powers in relation to devolved competencies, they would consult Scottish Ministers. A cross-party Scottish Parliament Committee made that recommendation this time last year. It is surely at least worthy of consideration before Report.
To be clear, we will continue with our position of respecting devolution in areas of social security, hence the respect we have shown to the Scottish Government by consulting them about the Bill. We have also set out the Government’s position, were there not a legislative consent motion from the Scottish Parliament, in the letter we sent last week to the relevant Scottish Ministers. Obviously, separate discussions are going on with the Executive in Northern Ireland.
This is the right process. Parliament still has the appropriate ability to scrutinise how the powers are used and, if it wishes, may block the use of those powers under the affirmative procedure. This is about ensuring clear certainty that we can deliver whatever we can agree with the European Union on, we hope, a continuation of a reciprocal arrangement, which we cannot do if we do not have the powers in the clause. In other areas, powers are more restricted.
These are wide powers, but that reflects the wide range of outcomes that are still possible in the next six months. It is right to have a functioning and effective social security system and co-ordination of it. That is why the Government have brought the power forward in this Bill, as in the previous one. We maintain that the clause and the attached schedules are appropriate to the Bill.
Does the Minister anticipate, in the event of an agreement and treaty before the end of this year, a further piece of primary legislation to give effect to that? If so, would it not be possible at least to encompass the principles agreed into that primary legislation?
A lot would depend on the nature of the agreement. If it is part of a wider treaty, we may well see further legislation. However, our understanding is that if we can achieve agreement on this area, we would look to implement it rapidly through regulation, which is why the power is in the Bill. Our priority would be to avoid a situation where something is agreed of benefit to both UK citizens going to live in the European Union and EEA citizens coming to live here, with which we and the European Union are happy, but we are unable to provide that benefit because we are still going through a parliamentary process to implement it. That is why we believe the clause to be appropriate. It allows us to react to circumstances as necessary.