Factual and Procedural Background
The Appellant, the Secretary of State for Work and Pensions, introduced the Social Security (Income-related Benefits) (Updating and Amendment) (EU Exit) Regulations 2019 (“the 2019 Regulations”). Those regulations barred persons whose only right to reside in the United Kingdom derived from “pre-settled status” under the EU Settlement Scheme from relying on that status to qualify for universal credit and six other non-contributory benefits.
The Respondents, both Romanian nationals resident in the United Kingdom on the basis of pre-settled status, applied for universal credit and were refused. They sought judicial review, contending that the 2019 Regulations infringed the prohibition on nationality discrimination contained in Article 18 of the Treaty on the Functioning of the European Union (“TFEU”).
At first instance, Judge Swift (Administrative Court) dismissed the claim, holding that any discrimination was indirect and justified. The Court of Appeal (Judge McCombe, Judge Moylan and Judge Dingemans; Judge Dingemans dissenting on justification) allowed the Respondents’ appeal. The Supreme Court granted permission to appeal and stayed execution of the Court of Appeal’s order pending determination of this appeal.
Meanwhile, a preliminary reference in CG v Department for Communities in Northern Ireland on materially similar regulations was pending before the Court of Justice of the European Union (“CJEU”). Because Articles 86(2) and 89(1) of the Withdrawal Agreement make such CJEU judgments binding in the United Kingdom for pre-IP completion day references, the Supreme Court adjourned its hearing until the CJEU decided CG. The CJEU delivered judgment on 15 July 2021, after which the Supreme Court proceeded to determine the present appeal on written submissions.
Legal Issues Presented
- Whether EU citizens who possess only a domestic right of residence (pre-settled status) are entitled to invoke Article 18 TFEU to obtain equal treatment in access to non-contributory social benefits.
- If Article 18 TFEU is engaged:
- whether the exclusion imposed by the 2019 Regulations is a form of prohibited direct discrimination incapable of justification; or
- whether, if it is indirect discrimination, it is objectively justified.
Arguments of the Parties
Appellant's Arguments
- Article 18 TFEU is inapplicable because individuals without a residence right under EU law cannot rely on it.
- Even if Article 18 applies, any nationality discrimination is indirect and justified by the legitimate aim of protecting the social security system from claims by persons insufficiently integrated into the United Kingdom.
Respondents' Arguments
- Once an EU citizen is lawfully resident—whether under EU or solely domestic law—Article 18 TFEU guarantees equal treatment in relation to social assistance.
- Refusal of universal credit constitutes direct nationality discrimination not capable of justification.
- (Raised for the first time after the CJEU’s decision in CG) EU citizens with pre-settled status may instead rely on Articles 1, 7 and 24(2) of the EU Charter of Fundamental Rights to obtain universal credit.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Patmalniece v Secretary of State for Work and Pensions [2011] UKSC 11 |
Distinction between direct and indirect nationality discrimination; possibility of justification for indirect discrimination. |
Relied on by Judge Swift to classify the 2019 Regulations as indirect discrimination. |
| Bressol v Gouvernement de la Communauté française (C-73/08) [2010] ECR I-2735 |
CJEU guidance on nationality discrimination in education and social advantages. |
Cited by Judge Swift in support of the indirect discrimination analysis. |
| Dano v Jobcenter Leipzig (C-333/13) [2015] 1 WLR 2519 |
Equal treatment in social assistance is conditional on residence meeting Directive 2004/38 requirements. |
Quoted by the CJEU in CG; forms part of Supreme Court’s reasoning that Article 18 was not engaged. |
| CG v Department for Communities in Northern Ireland (C-709/20) [2021] WLR 5919 |
EU citizens may invoke Article 18 TFEU only where no specific non-discrimination rule applies; equal treatment under Directive 2004/38 requires residence in accordance with that Directive. |
Binding on the Supreme Court; definitively answered Issue 1 against the Respondents. |
| Test Claimants in the FII Group Litigation v Revenue and Customs Commissioners [2020] UKSC 47 |
Appellate courts’ discretion to refuse entirely new points raised for the first time on appeal. |
Used to reject the Respondents’ late Charter-based arguments. |
Court's Reasoning and Analysis
1. Binding Effect of CG: Under the Withdrawal Agreement, the CJEU’s decision in CG is binding on United Kingdom courts for preliminary references made before the end of the transition period. CG holds that an EU citizen may invoke the Article 18 TFEU prohibition only where the matter is not governed by a specific non-discrimination provision, and that equal treatment in social assistance is instead governed by Article 24 of Directive 2004/38. Because the Respondents’ residence did not satisfy that Directive, they fall outside the scope of Article 18.
2. Consequent Disposition of Issues: The first issue is resolved in favour of the Appellant. Once Article 18 is unavailable, the second issue—whether the discrimination is direct, indirect or justified—does not arise.
3. Late Charter Argument: The Respondents sought to rely for the first time on Articles 1, 7 and 24(2) of the EU Charter of Fundamental Rights. Citing guidance in Test Claimants, the Supreme Court refused to entertain the new argument because (a) it had not been pleaded below, and (b) it would necessitate fact-finding not undertaken in prior courts.
4. Conclusion: With no extant ground upon which the Respondents can rely, there is no basis to disapply or quash the 2019 Regulations. The appeal is therefore allowed.
Holding and Implications
APPEAL ALLOWED.
Immediate Effect: The refusals of universal credit to the Respondents stand, and the 2019 Regulations remain operative.
Broader Implications: The decision confirms, following CG, that EU citizens holding only pre-settled status cannot invoke Article 18 TFEU for social assistance claims unless their residence meets Directive 2004/38 conditions. No new domestic precedent on justification of indirect discrimination was set because that issue became academic.