What does the government claim it wants to do?
Proposed changes to European Union migrants’ benefits are some of the most talked-about and most controversial of David Cameron’s much-touted EU reforms. The government’s proposals seek to address public concerns about EU migration through limiting both the in-work and out-of-work benefits that EU migrants are entitled to.
The cornerstone of the proposal is to introduce a four-year ban on access to benefits for EU migrants. This is a shift from the current requirements, which allow EU migrants to reside in the United Kingdom for up to three months. Those that stay longer are expected to be employed, be actively seeking employment and stand a reasonable chance of being employed, or to have their own financial means so as not to be a burden on the state.
Cameron’s reforms also address in-work benefits such as tax credits, child benefits and the right to seek access to social housing, among others. This would mean that EU migrants who are in employment and are paying taxes to the UK government would not be able to access social security benefits for the first four years of their residency in Britain.
What does this really mean?
The proposals may not appear to be particularly ambitious but Cameron has a serious diplomatic challenge ahead of him if he is to secure these reforms.
EU treaties enshrine four fundamental freedoms, including the freedom of movement, which forbids discrimination on the grounds of nationality in working conditions and pay. Many member states have made clear that compromising the principle of free movement is a red line that they would not be prepared to negotiate on. Cameron must therefore conclusively argue that in-work benefits and tax credits are excluded from the treaties’ definition and therefore do not breach the principle of free movement. The government’s previously floated policy of an emergency brake to cap the number of EU migrants was allegedly dropped because it had little chance of passing through the scrutiny.
The negotiation’s success will depend on Cameron’s ability to convince key allies to back his agenda. Denmark has already expressed its support and it is thought that key member states such as Germany could also be persuaded. The eastern bloc will be more difficult and will push other member states’ goodwill to the limit, particularly Poland and Romania who have many low-wage workers employed in the UK.
What would achieving this mean for the UK?
The government hopes that reforming the benefits system will address public concerns about immigrants’ access to welfare payments. This seems unlikely.
Successive studies have shown that EU migrants pay in more to the exchequer than they take out, are less likely to claim unemployment benefits and are less likely to claim tax credits or live in social housing than a UK citizen. The financial implications of the reforms are therefore marginal, with taxpayers only saving an estimated 0.3 per cent of public expenditure.
Since the current system does not grant EU migrants an immediate right to claim unemployment benefits and EU immigrants are already more likely to be in employment than UK citizens the changes are also unlikely to affect the number of EU citizens moving to or from the UK.
With both the cost associated with and number of EU migrants left largely unchanged the proposals seem heavy on rhetoric and light on impact. The negligible economic, political or social gains are unlikely to match the high diplomatic priced paid to secure the reforms.
What would achieving this mean for the EU?
There is already widespread variation in social security systems and the rights that EU migrants have to access them across different EU countries. The government is only seeking to reform how the benefits system works in the UK so there will be no immediate implications for social security benefits in other member states.
However, the precedent set by the reforms Cameron is able to achieve will set the parameters for future regulations within each individual country. One of the most significant aspects would be to further enshrine that the principle of free movement does not mean freedom to claim. This has already been legally established by a recent ruling by the European Court of Justice, which made clear that member states have no legal obligation to grant basic benefits to EU migrants if they have no intention of finding employment.
Philip Hammond has also argued that a further benefit of the reforms would be to curb so-called ‘brain-drain’ from other member states, whereby highly skilled workers pursue economic opportunities elsewhere. This continues to be an issue for some member states, though there is insufficient evidence to suggest that the proposed reforms will have much impact on it.
What should Labour do about it?
After so much heat in the immigration debate these reforms offer little light. While it remains palpably clear that immigration is a crucial sticking point for a significant portion of the electorate, Cameron’s proposals show little prospect of reconciling the issues with a viable solution.
Most significantly, Cameron’s reforms fail to respond adequately to one of the fundamental concerns about migration: how resources and public services are distributed. Labour must seek to address and allay fears about immigration where the government has failed.
EU migration will remain a crucial battleground throughout the referendum that will inevitably play a central role in the ‘out’ campaign’s strategy. The Labour movement should respond with its greatest asset: localism.
Any form of migration inevitably shifts the demographics and dynamics of any given area. It is our responsibility to host local conversations about the impact of EU immigration on local communities.
This means shouting loudly about the benefits that EU migration has brought to our economy, culture and society but it also means an honest conversation about how public services could be run better. From ensuring strict enforcement of the minimum wage to allowing local councils to allocate resources according to their community’s changing needs, these are issues that Labour can lead on and win.
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Rachel Franklin is a member of the executive of Labour Movement for Europe. She tweets @RachelAFranklin
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