With Ukip snapping at the Conservatives’ heels, it is not difficult to see why David Cameron has hit upon the idea of limiting the entitlement of EU migrants to working-age benefits in the UK, so that they can claim only for three months, not six, as before. But it is a little harder to work out how the Prime Minister and his party will benefit politically from the change. No sooner had Cameron made his announcement than two obvious questions arose: if this proposal is legal, why didn’t he do something like it earlier? And if it is possible to limit eligibility to benefits to three months is there any reason he can’t go further and prevent EU migrants claiming benefits in Britain at all?
This magazine has long been a keen supporter of open labour markets, but it is self-evident that they are incompatible with an open benefits system. The public purse already struggles to cope with paying benefits to British citizens. To make taxpayers in Britain liable to fund the unemployed from countries whose joint population is significantly in excess of our own is potentially ruinous. That not all eastern Europeans are likely to arrive in Britain to make claims is of little reassurance; the point is that they could, and that the number who will do so is very likely to be of a magnitude greater than official projections. Before the EU expansion in 2004, it might be remembered, Labour ministers predicted that 13,000 eastern Europeans would take advantage of the right to come and live and work in the UK during the first year of membership. In the event 91,000 arrived in the first six months, rising to half a million by 2008.
There is no definitive answer to the question of whether migration since 2004 has been of net fiscal benefit to Britain. The Institute for Public Policy Research (IPPR) calculated the taxes paid by migrants in 2004 at £41.2 billion a year and the money spent paying them benefits and providing them with other public services at £41.6 billion, suggesting a net loss to the Treasury of £400 million. MigrationWatch, which takes a sceptical approach, found fault with the methodology in that benefits and public services paid to children with one British and one foreign parent had not been counted. It recalculated the figures, counting half the cost of benefits paid to and public services provided to such children and came up with the figure that migrants are costing the Exchequer a net £5 billion a year.
But one thing is for sure: migrants would be more of a net benefit — or less of a burden, depending on how you look at it — if they were prevented from claiming benefits until they had been working and paying taxes in Britain for some time, perhaps two years.
The Prime Minister has vowed to renegotiate Britain’s relationship with the EU, which is proving something of an uphill struggle. Contained within his proposal is the assertion that on so many things Westminster has proved powerless against rules imposed from Strasbourg and Brussels. Yet while the government has pleaded national impotence on welfare, other nations —- many of which have more generous social security systems than we do — have found a way to limit migrant benefits without incurring the wrath of the European Commission or Court of Justice. They have done so because their welfare systems are more contributory in nature than is ours. The EU merely demands that a country’s welfare system treat EU migrants and natives in the same way. It does not, for example, rule out a law stating that nobody can claim unemployment benefit unless they have already been working and paying taxes in the local region for at least two years, a condition imposed in Madrid.
Rather than fighting the bureaucrats in Brussels, the government should use benefit tourism as an opportunity to tweak the whole British welfare state, ending instant qualification and making eligibility dependent on having been working here for a specified period. Such a change would go some way towards tackling the welfare ghettoes where generation after generation have been able to slip into a life on benefits without ever having known work.
The rules of the EU single market — one of the features of Europe most championed by Britain — do not force a generous welfare system on any member state. What it does, by insisting that EU migrants be treated the same as natives, is to exert downwards pressure on welfare all over Europe. The way to avoid welfare tourism is quite simple: make your benefits system less generous so that welfare tourists will have an incentive to go elsewhere. It is low taxes and light regulation which attract workers; generous benefit systems which attract welfare tourists. It would be a tragedy if public reaction against welfare tourism were allowed to undermine the case for a free labour market and lead to the closing of our borders, as Ukip would love to do once it had managed to extract this country from the EU.
David Cameron should ensure that our tax and benefits system is sending out the right message to would-be migrants: yes, we want you to find jobs here, but if it doesn’t work out we expect you to return home, not settle into a new life on British benefits.
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