Scandal unveils lack of government transparency and forces cabinet to resign

On 15 January, two months before the March elections, Prime Minister Mark Rutte announced the resignation of his cabinet in response to the fallout from the long-running childcare allowance scandal. This scandal has received increasing attention over the last months, but its origins can be traced back to 2013, when the abuse of the Dutch welfare systems by Bulgarian fraudsters was discovered.

Scammers had travelled to the Netherlands, working here and claiming welfare benefits. At the time, such benefits were paid out before the case was properly reviewed. However, by the time this review could take place and the claims turned out to be fraudulent, the scammers had already returned to Bulgaria and the money could not be recouped. The minister of finance at the time, Frans Weekers, argued in Parliament for sharper anti-fraud measures to counter this practice. Parliament, shocked by the fraud, approved of stricter measures. A task force was set up by the tax authority (Belastingdienst) to investigate possible fraudulent claims for welfare allowances.

This increased vigilance also applied to the childcare allowance (kinderopvangtoeslag). This allowance offers lower-income families, in which both parents work, the possibility to get a percentage of the costs of daycare for their children refunded. The fraud screening of the task force for this specific allowance was, as has become evident through an investigation by a parliamentary inquiry committee, not only excessively stringent, but even selective in its accusations of fraud. More than 27,000 parents were labeled as fraudsters after they had requested childcare allowance. The allowances were stopped, and the parents had to pay back in full all welfare payments they had received. In some cases, these debts amounted to more than € 100,000. In many cases, the reasons for being labelled fraudulent were small errors, such as submitting the wrong income or wrong number of hours the child visited a childcare provider. Any administrative inconsistency in the case file, and the parents were immediately blacklisted. Even a single missing signature or a spelling error could have elicit an excessive response.

In other cases, childcare providers would apply in the name of parents, as was allowed by law. If the administration on the part of the daycare was imperfect, all of the families using this daycare would be blacklisted. Thus, parents were being charged with fraud by the tax authority, without having ever interacted with it directly.

Many families, struck by these massive bills without warning, tried to prove their innocence. This was to little avail, however, as the tax authority stubbornly dismissed their cases as fraudulent and their appeals as more lies. The parents were not even told why they had been labelled as fraudsters, and therefore could not rectify any mistakes they may have made. Even worse is that the courts followed the same policy, since they were bound by the law – which after all had been approved by Parliament –, which made it legal to see any inconsistency as fraud. Thus, the courts had no leeway to apply any kind of clemency and appeals were dismissed out of hand.

In 2017, the first stories begin to come into the limelight. Reiner van Zutphen, the national ombudsman – an official fighting on behalf of citizens when they have a conflict with the state – took notice of the excessively stringent methods of the tax authority. This in turn received media attention, and in the haze of journalism it was discovered that parents who were trying to fight the accusations of the tax authority were being actively opposed. Officials working for the tax authority who voiced their concerns were also discovered to have been silenced or downright sacked. In 2018, two Members of the Parliament, Renske Leijten of the Socialist Party (SP) and Pieter Omtzigt of the Christian Democrats (CDA), raised the issue for the first time in the House. The issue had gained enough ground by this point to warrant further investigation. With the support of the two MPs, several affected parents, as well as journalists, ordered the tax authority to show them their case files, which they had never even been allowed to see until then. However, as the NOS, among other news outlets, showed on 11 December 2019, these case files consisted exclusively of blacked-out pages. On 18 December 2019, Menno Snel, the state secretary in charge of the tax authority, resigned.

In the summer of 2020, it was discovered that the investigations of the tax authority into fraudulent actively had been heavily influenced by ethnic background. Applicants from migrant backgrounds were more likely to be targeted for excessive investigation. The selection was largely motivated by name: people with ‘foreign-sounding’ names were actively being targeted. In November 2020, a committee led by Chris van Dam undertook an extensive deposition process to produce a comprehensive report on the affair. Depositions were taken from all state officials who were involved, including Prime Minister Mark Rutte. The committee’s report was presented on 17 December 2020, under the title ‘unprecedented injustice’ (Ongekend Onrecht). The report placed the blame squarely on the tax authority, but also pointed to the government in general, citing its failure to protect the citizens. The depositions had shown that many high officials had been aware of the problem, but none had been able to act, as the law in was in favour of strict anti-fraud measures. No one had felt responsible to change the law or to implement it in a more clement way, especially since the tax authority falls under two separate departments, Social Affairs as well as Finance.

In response to the findings of this report, on 15 January 2021 the Dutch cabinet Rutte-III tendered its resignation to the king, thus becoming ‘demissionary’. Rutte named the lack of transparency in communications by the tax authority, and the fact that the system allowed this injustice to go untreated for so long, as the primary reasons for his resignation. At the end of the day, he said, the cabinet must accept responsibility for the actions of the branches of government under its tenure, and therefore it saw no alternative but to resign.

The question remains, however, what the resignation actually provides to the injured parents. The resignation is a symbolic admission of guilt, thereby essentially justifying the claims of the parents who have been trying to prove their innocence for years. However, the resignation as such serves little purpose for those whose lives were affected. The cabinet had already decided in December to remit the debts, and to gift € 30,000 to all the unjustly accused families. However, a review would first have to take place in order to verify whose childcare welfare allowance was stopped unjustly. Parents who were vindicated would receive a letter allowing them to claim the money, but so far no one has actually received the promised sum.

However, this situation has brought about new problems. Specifically, because the situation was ignored for so many years, many parents have built up substantial further debts in order cover living expenses, for example. They are heavily indebted to other organisations and businesses. Because money owed to the government always takes precedence, when these debts were remitted, these other organisations became entitled to claim the outstanding debts. The government has urged these organisations to remit the debts of these families as well, but this plead has fallen on deaf ears.

What does the resignation of the government cabinet actually imply for the country? Important to know in this context is that the moniker of demissionary was going to be applied to the cabinet Rutte-III anyway, once the polls closed after the election in March. This term basically means that the cabinet has resigned, but is still functioning in its everyday capacity of running the country in a caretaker capacity. This means that it can continue to take care of ongoing business, in this case, most importantly, tackling the Covid-19 situation. Prime Minister Rutte has claimed that in regards to the management of the Covid-19 virus, nothing has changed, and decisions will continue to be made to mitigate the impact. The only restriction on the cabinet is that it can no longer introduce important new legislation. The move, while clearly symbolic, also has a political effect, as Guus Dietvorst, writing for NOS, claimed. As the cabinet has already resigned, Parliament can no longer threaten to sack the government. Nevertheless, individual members of government can still be dismissed at the House’s discretion.

Perhaps the most important effect of the whole scandal is that it unveiled a serious underlying problem with the current form of governmental administration. Since the ruling VVD’s majority in the Senate was lost in the May 2019 election, any laws drafted by the Parliament and the cabinet have to be reviewed for acceptance or rejection by a Senate that is not aligned with the coalition government. This has meant that in order to get anything done, some backroom dealing has been necessary. This, however, seems to have become the default way of getting things done. This, in turn, has led to a lack of communication between the branches of government, as many of the processes by which laws came into being were never recorded. Even before this, the tax authority seems to have made it a habit of not recording its decisions on paper: many parents’ files proved to be incomplete and crucial documents had been ‘lost’. This general lack of transparency seems to have caught up with the cabinet, and was cited as one of the primary reasons for their resignation. Prime Minister Rutte has declared greater transparency a main target for the future, but it remains to be seen whether he will be able to implement this urgent change.

Written by Maurits Seijger