The illusion of self-reliance in the legal system: the childcare benefits scandal
By Nathalie Schnabl
The so-called ‘childcare benefits scandal’ in the Netherlands, which unfairly targeted parents for fraud with childcare allowance, has dominated the national and international newspapers from 2019 onwards. Over 26.000 parents are involved in a legal struggle with the tax authorities about the withdrawal and reclaiming of (large amounts) of childcare allowance. A small administrative mistake was enough for the tax authorities to label these parents as fraudulent.
The legal issue between these parents and the tax authorities (and the state attorney) was not covered by financed legal aid as it falls under administrative law. Administrative procedures are deemed to be low-threshold in nature by the Dutch Legal Aid Board, which leads to an almost immediate rejection of an application for legal aid. Individuals are supposed to be self-reliant enough to participate in these proceedings themselves, without any legal assistance. Applications for subsidised legal aid are, therefore, in principle, rejected. Only when a lawyer indicates, with arguments, that the case is so factually and/or legally complex that legal assistance is necessary, a legal aid subsidy can be provided. Granting such an application is, however, exceptional.
Self-reliance is an often-heard term in the political domain but is it reality or an illusion? I submit that individuals need three resources to successfully participate in the legal system: 1) money, 2) knowledge, and 3) a social network. The presence of these resources is not self-evident as the childcare benefits scandal so poignantly showcases.
Based on the ECHR, individuals have a right to free legal assistance when faced with a criminal charge, or in cases related to ‘civil rights and obligations’ when access to the court would be theoretical and illusory without free legal aid. In the academic literature, it is debated whether the withdrawal and reclaiming of a massive amount of social benefits meet the definition of ‘criminal charge’. The Council of State of the Netherlands has repeatedly decided that the withdrawal and recovery of social benefits are not punitive and deterrent. Instead, they aim to end the offence, to prevent recurring offences, and to eliminate its consequences. Consequently, the parents had to pay for legal assistance themselves, even though they were tens or even hundreds of thousands of Euros in debt to the tax authorities. Paying for legal assistance was, therefore, out of the question for most parents.
The parents also needed specialised knowledge to stand a chance against the authorities. The legal system, and especially the allowance system, is extremely complicated to understand. Knowledge of the written and unwritten law (so-called general principles of good administration) and case-law was essential. The question remains, however, whether even full knowledge of the law and legal procedure would have sufficed to help them through the legal maze. In the end, the Council of State of the Netherlands has long maintained that the principle of proportionality could not be taken into account and that a strict all-or-nothing approach was necessary because a hardship clause was missing from the law. Even a small error led to the recovery of the entire allowance. And above all, it was a political stance to take firm action against potentially fraudulent individuals in the case of obtaining social benefits.
The Legal Services Counter, which provides clients with advice and information on all areas of law, did not help the parents adequately in their search through the legal maze. Due to the lack of required economic resources and knowledge, the parents had to find a lawyer who was willing to help them free of charge. While some were fortunate enough to find such a good Samaritan, most parents were not so lucky. They all were dependent on themselves or their social network.
Evaluating the self-reliance test
Overall, the parents in the childcare benefits scandal did not have a chance to get through the legal system for years because of the self-reliance it assumes. Recently, a subsidy scheme has been announced to provide legal assistance to affected families. This is too little, too late for these parents. Besides, they are not the only individuals who struggle to participate in the legal system due to the illusion of the self-reliance of individuals. The principle of equality of arms is under threat when individuals are powerless against the much stronger government. Re-evaluating the individualist perspective is thus essential. Fortunately, a motion in the Dutch Parliament was submitted on 11 February 2021 to evaluate the self-reliance test in the context of financed legal aid.
Nathalie Schnabl is a PhD Candidate at the Open Universiteit. Her PhD research focuses on the social dimension of the rule of law.