European immigrants should be able to claim handouts and pensions without first having to pass a test proving that they have settled in Britain, the European Union has said.
By Rowena Mason, Political Correspondent
10:00PM BST 11 Oct 2012
The demand is the latest response in a continuing row after Iain Duncan Smith said that such a system would mean immigrants could get benefits on the first day of entering Britain.
The Work and Pensions Secretary said last month that it would cost taxpayers £155 million a year if the UK was forced to get rid of the “habitual resident test”.
The test makes sure that foreigners have genuinely lived and paid taxes in the country before they can claim welfare payments.
His department has been holding talks with the European Commission for months in an effort to find a solution, but sources said on Thursday that Brussels was preparing to sue Britain by the end of this year unless the test is scrapped.
László Andor, the European commissioner for social affairs, has now accused Mr Duncan Smith of spreading “simply untrue” claims that foreigners could get benefit payments immediately under the European system. Mr Andor said that Britain was the only member state requiring foreigners to pass a test to prove that they legally resided and paid taxes in the particular country.
Brussels argues that Britain’s rules go beyond stopping unfair claims and have the effect of preventing foreigners who have legitimately worked in the country from receiving benefits when they need them.
Sources said that the EU did not believe it had gained much ground in getting Britain to change its mind during the talks.
“An acceptable solution would be that the UK applies the same criteria as the 26 other member states,” the source said.
“We’ve not made a lot of progress. Nobody is suggesting that the UK should pay out benefits to anyone who just turns up. But they should be paying social security to people who’ve paid taxes.”
Under the British test, an applicant for benefits must have been in the country for an “appreciable time” and must also have an “intention to settle”.
Britain is fighting several cases against foreigners who are trying to claim higher benefits, including a Latvian woman who is seeking to get her pension of £50 a month topped up to the British pension credit level of £133 a week.
Chris Grayling, the former employment minister, called a meeting of European ministers to form a coalition against the EU’s demands in July.
His move has failed to get much support among other states but Britain is determined to stand its ground to
prevent a potentially huge extra cost threatening to undermine efforts to cut billions from the welfare budget.
Last month, Mr Duncan Smith indicated in a speech to MPs that he would not back down.
“The European Commission wants to end the habitual residence test,” he told the House of Commons.
“As a result, we would have to pay benefits to EU migrants as and when they arrive and they would not have to prove that they have been here, are working and have a residence.
“I believe that is fundamentally wrong, as do the Government.
“The habitual residence test is vital to protect our benefits system and to stop such benefit tourism.
“I also do not believe that the EU has any rights in that area, and we are working with other countries that feel much the same.
“I want to put it on the record that the costs of the proposal could be enormous. If we did not have the British residency test, it is estimated that right now the cost would be something in the order of £155 million, although that could change.”
On Thursday night, a spokesman for the Department of Work and Pensions said: “The EU has no right to interfere in this way and we will continue fighting it.”