Government Crisis

Netherlands: The Government is dead, long live the government

The Dutch government, led by liberal Prime Minister Mark Rutte, resigned last Friday amid a child benefit scandal in which thousands of families were wrongfully accused of fraud. As the Netherlands is due to go to the polls on 17 March, the electoral fortunes of the governing parties remain relatively unaffected. But it would be a mistake to forget the underlying issues that the affair brought to light.

After a long run-up, the Dutch government on Friday 15 January stepped down due to a child benefit scandal, in which the Dutch tax authority falsely accused more than 20.000 parents of fraud. The collective resignation of Prime Minister Mark Rutte’s Cabinet comes at a critical time, as the government was under increasing pressure by the coronavirus pandemic and general elections are due to take place on 17 March this year. Rutte and his ministers will stay in place for now in a caretaker capacity, until a new coalition is formed after the scheduled vote. 

False allegations of fraud with child benefits

The child benefit scandal that brought down the government has been looming over Dutch politics for more than two years. It came to a climax after a parliamentary inquiry committee in December published a damning report about the conduct of the tax authority. In the report, entitled “Unprecedented Injustice”, the committee concluded that between 2012 and 2019, a large number of parents were wrongfully accused of committing fraud over childcare subsidies. It describes a painful fraud hunt by tax officials, forcing around 10,000 families to repay tens of thousands of euros of granted subsidies without a possibility to appeal.

The anti-fraud campaign came at a great human cost and drove many victims into unemployment, bankruptcies and divorces. To make matters worse, it emerged that many families were singled out for special scrutiny based on their ethnic origin or dual nationalities. Combined with the lack of appeal options, the inquiry committee, therefore, concluded that “fundamental principles of the rule of law have been violated”.

Political responsibility

Politically, the scandal had broad implications across the party political landscape. Ministers from three out of the governing coalition’s four parties were responsible for the ministries involved - including those from Liberal parties VVD and D66. Uniquely, the scandal also led to the resignation of an opposition party leader, as the leader of the social democrats (PvdA), Lodewijk Asscher, resigned on Thursday. He was the social affairs minister in the previous government and, in that capacity, he shared responsibility for the fraud detection programme. The final responsibility, however, rested with Prime Minister Mark Rutte himself. Having been prime minister for the full duration of the anti-fraud programme, Mr Rutte also recognised this upon his resignation and said “there can be no doubt, this is a colossal stain”.

What happens next?

During the press conference on Friday, the government announced that until a new coalition is formed, it would only deal with “current affairs” – policies that are urgent and not controversial. Mr Rutte announced two priorities for the upcoming period: the coronavirus response and the compensation for the affected parents in the benefits scandal. The government has already pledged to pay all parents at least 30.000 EUR, which can increase based on further circumstances. 

From the former Cabinet, economic affairs and climate minister Eric Wiebes was the only minister who has resigned immediately. All other ministers will continue working towards the said priorities.

Electoral consequences

In terms of electoral fortunes, support for the resigned government parties remains relatively unaffected. Over the past few weeks, polls suggested that support for the parties involved remained stable, in spite of the picture emerging from the parliamentary inquiry report. In fact, the first polls after the government’s resignation even suggest a small increase of support for both Liberal parties, with projections for VVD going up by two seats and D66 gaining one extra seat.

Rutte, who has announced that he will stay on as party leader for the upcoming elections, is now expected to lead his party to a fourth election victory, with VVD projected to take just under 30% of the vote. This can, for a large part, be attributed to the strong support for the governments approach to address the coronavirus pandemic. Others have suggested that taking responsibility is seen as a positive quality in Dutch political culture and is valued by voters.

Time to reflect

Although the electoral consequences remain limited, it would be a mistake not to look at the underlying issues that the affair brought to light. Perhaps the toughest nut to crack is the general approach towards fraud detection. Nearly all parties in parliament have had to reconcile with the fact that they have supported tough anti-fraud measures at some point during the past decade and that the anti-fraud programme did not exist in a vacuum.

Politically, there was strong support for a tough approach to benefits fraud and this led to a situation where victims were, in Rutte’s words, “crushed under the wheels of the state”. Individuals being crushed by the system is something that should leave no liberal untouched. All the more because it concerned vulnerable citizens, who were in need for the benefits in the first place.

A good step to prevent that from happening again would be a reform of the benefit systems and the tax code. The current benefits system was introduced in 2005 and has in the meantime developed into a complicated patchwork of highly specific measures. The increasing complexity of the system creates a higher risk of unintended consequences, such as false allegations of fraud. This calls for a revision of the benefits system and the tax code to simplify the system. Ironically, both Liberal parties have called for these reforms for a long time and may now finally find broader support. 

In addition, it should be further emphasised in all areas of government that the discriminatory treatment of citizens based on ethnic origin or dual nationalities is an absolute no-go. The legal inequality for the affected citizens is something that cannot be justified under any circumstances and that directly impacts the rule of law.

The Liberal parties in the Netherlands have done the right thing to resign over the child benefits scandal. Now it is time for them to do the right thing to make sure this cannot happen again in the future.

Jeroen Dobber is European Affairs Manager and Head of the FNF Security Hub at the Friedrich Naumann Foundation for Freedom’s office in Brussels.