Collapse of the Dutch Government: The Child Welfare Scandal and the Upcoming Election

Published on 21 January 2021 at 11:49

On Friday the 15th of January, long-serving Prime Minister of the Netherlands Mark Rutte announced that he and his cabinet would resign over the growing controversy over thousands of parents being falsely accused of fraudulently claiming child benefits. From 2013 to 2019, these parents were forced to pay back money they had received as part of their childcare benefits allowance, often in its entirety and amounting to thousands of Euro.


In 2013, a scandal gripped the Netherlands when it was revealed that hundreds of Bulgarian residents had exploited the welfare system’s vulnerabilities and committed welfare fraud, resulting in a loss of €4m to the Dutch taxpayer. In response to this scandal and the public outrage that followed, Mark Rutte’s government established a taskforce to strengthen the country’s anti-fraud enforcement capabilities, and a number of childminder agencies with dual national clients were subject to intense scrutiny over childcare allowances. Thus began the unfair practices for the next several years which would inflict severe financial hardship on thousands of families in the Netherlands.


The first government-commissioned reports on the unfair practices in welfare fraud investigation first emerged in 2018, highlighting a number of cases in which childcare allowance recipients were falsely accused of fraud and obliged to pay their allowances back. A common and noteworthy thread in these cases is that most of these recipients were dual nationals. This provoked cries of institutional racism and discrimination in the Dutch legal and justice system, and investigators described the practices at the Tax and Customs Administration as “discriminatory” and filled with “institutional bias” .


Following the publication of several investigative reports, Menno Snel, minister of finance and MP of junior coalition party “Democrats 66” resigned in December 2019. It would take over a year before the rest of the government followed suit and resigned on the 15th of January 2021. As late as the 11th, Rutte expressed reluctance to step aside, arguing that it was too late in the term to do so with the general election only two months away. When he finally resigned along with the cabinet, he declared at a press conference that “The buck stops here… If the whole system has failed, only joint responsibility can be borne. And that leads to the conclusion that I have just now offered the king the resignation of the entire cabinet.”


The resignations were not limited to the parties in the existing government. Lodewijk Asscher, leader of the opposition as the head of the Labour Party, also resigned as he had served as Minister of Social Affairs and Employment between 2012 and 2017 when the Bulgarian welfare scandal first came to light and as the unfair practices were first put into place.


So what will happen next in Dutch politics? Rutte has led the government of the Netherlands for ten years across three terms, and while he has resigned alongside his cabinet, they will continue to hold their positions in a caretaker capacity until the next general election on the 17th of March. In addition, Rutte has not resigned from politics and, short of another major scandal arising, will lead the VVD to the election. Further, it looks likely that the VVD will regain power in the next election, with the latest polls suggesting that the VVD would win between 41 and 45 seats out of 150 in the Dutch House of Representatives, an improvement over their current hold of 32, and far ahead of the second most favoured party, the right-wing populist Party for Freedom (or PVV) led by Geert Wilders.


It is important to note that this poll was published on the same day as the government’s resignation so it is unclear what impact, if any, the resignation has had on the VVD’s popularity. It is also important to remember that while this scandal has simmered for over a year, it does not appear to have had a significant negative impact on the government’s popularity. This was echoed by Rem Korteweg of the Clingendael Institute, a think-tank based in the Netherlands, who said that “This won’t have a huge effect on the governing parties’ polling. The minister who was in charge of the child benefits scheme is now in opposition and has resigned [referring to Lodewijk Asscher]; civil servants are being blamed for the predatory tax office. The government is taking ‘political responsibility’ but with little ‘political cost’.


This suggests that Rutte’s government and the VVD, far from being maligned by the public for their role in the scandal, appear to be taking credit for their resignation over a matter which has been deemed not to have been entirely within their control. Debates over the veracity of this claim aside, it so far appears as though Rutte is set to lead his party to another victory in the general election this March, perhaps even gaining some of the seats his party lost in the 2017 election.


As for the options available to the victims of the scandal, the government has set aside €500m to be distributed to families as compensation (amounting to €30,000 per family). In addition, twenty families impacted by the unfair practices have taken legal action against the governing parties and Asscher, alleging discrimination and a violation of children’s rights. While the popularity of the involved parties may not have taken a hit so far in the polls, this may not be the case for their finances, depending on the conclusion of the lawsuits. In any case, with the number of parties involved in the governments of the last seven years since the Bulgarian welfare fraud scandal arose, in addition to Mark Rutte’s longevity as Prime Minister, it appears likely that at least one of them will return to government following the  election in March.

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