HMRC refuses to release figures on the number of migrants claiming benefits
There is some debate about whether the prime minister’s performance at last week’s EU summit was a clever political triumph or a disaster. But from the perspective of immigration, Cameron only seems to have dug himself further into a hole.
He has been arguing for policy change that even if legal, would have little impact on levels of EU migration to the UK.
David Cameron went to Brussels with four demands, as the price for staying in the EU, and ahead of the referendum. These were cuts to red tape, asserting the rights of national parliaments over Brussels, as well as economic protection for non-Eurozone members. He also argued for a four-year ban on in-work benefits for non-British EU citizens employed in the UK. Here he met almost unanimous opposition.
The government has argued that in-work benefits, particularly tax credits are a pull factor, encouraging EU migrants to come to the UK to work. The government’s target of reducing net migration (immigration minus emigration) to the tens of thousands can only be met if this incentive is ended.
But there are many problems with a ban on in-work benefits for non-British EU migrants. First, it is illegal, as EU law forbids discrimination on the grounds of nationality. The proposal could be made legal by renegotiating the Treaty of Lisbon, for which there is little support.
Allowing the proposal to apply for all EU nationals, including British citizens, would also render it legal, but would affect hundreds of thousands of people living in the UK, including almost all young people leaving education. There would be uproar if school leavers and new graduates were banned from getting tax credits on the grounds that they had not ‘contributed’ for four years.
If the ban was based on four years’ residency, rather than nationality, it would still apply to many British citizens who return to the UK from overseas.
Second, only small proportions of EU migrants appear to be claiming tax credits, according to independent analysis. Drawing on existing HMRC data, Oxford University’s Migration Observatory suggest that about 14 per cent of recently-arrived EU migrants are claiming tax credits, compared with 11 per cent of British citizens.
While other figures are being traced around, an informed debate about in-work benefits is being hindered by HMRC, which, remarkably, refuses to release figures on the numbers of EU migrants working here and claiming benefits.
A third and more fundamental problem with a ban on in-work benefits is that it is unlikely to cut migration. It is job prospects that cause EU migrants to come to the UK, rather than in-work benefits. (Unemployment in Spain was 21.2 per cent in October 2015 and was 9.7 per cent in Poland, compared with 5.4 per cent in the UK).
Unless a person is working part-time and earning close to the minimum wage, any tax credit payment is likely to be small. Working Tax Credit tapers off after a person’s income exceeds £6,420 per year, and its average boost to income works out at about £1 per hour. With wages much lower in much of eastern and southern Europe than in Britain, and unemployment higher, withdrawing tax credits would be unlikely to reduce migration to the UK from the EU.
There have been hints that Cameron may try and turn his EU reform agenda towards further curbs on out-of-work benefits. Again there is little evidence to show large numbers of EU migrants getting these in the UK, either.
The government’s own research hows that proportionately fewer EU migrants are unemployed, compared with British citizens. Regulations on out-of-work benefits are tight, anyway, and stop EU migrants from getting unemployment benefit in the UK until they become ‘habitually resident.’
The proposed ban on in-work benefits supports the view that EU migrants make little or no contribution to the exchequer. But even a low-waged EU migrant will pay income tax, national insurance, VAT and council tax.
Whether trying to curb in-work or unemployment benefits, Cameron’s proposals are giving succour to myths about benefit tourism. The research and statistics that are available simply do not support the view that benefits are a significant pull factor for EU migrants.
Put simply, Cameron is peddling untruths, and also overstating his chances of success in changing EU policy. Both risk stoking Euro-scepticism.
In the run up to the referendum, immigration will remain centre stage in the EU debate in this country. An honest discussion is needed, informed by evidence. Unrealistic promises to deal with imaginary problems only plays into the hands of those who want Brexit.
Jill Rutter is a contributing editor to Left Foot Forward
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