Welfare, migration and Britain’s membership of the EU – three areas of policy that are unlikely to prompt cool thinking. Throw them together, as in the question of which benefits EU migrants should be entitled to, and you have a recipe for opacity.
On Tuesday, a European Court of Justice ruling cleared a few things up. It could – could – make for more comprehensible policy in an area that has been full of confusion, empty rhetoric, and public anger. It will also encourage the prime minister to think he can go further in restricting access to some benefits for some EU nationals, a move he is reportedly considering. This is not because the ruling changed EU law but because it clarified the law, implying that, broadly, the approach successive UK governments have taken is legal.
The policy is complex so here is an effort to provide some context for an issue that will return as the election approaches. Here are the five things you need to know:
1. EU nationals are less likely to receive benefits than UK nationals.
The Department for Work and Pensions doesn’t keep a real-time record of benefit recipients by nationality (yup) but we can estimate the share of EU nationals (excluding Britons) who receive benefits in the UK. This is because the government does record the nationality of those who apply for a national insurance number, and then whether they apply for benefits within six months. We can then compare that number with the number of UK nationals who are in receipt of benefits. It isn’t perfect – but it’s a comparison that the government itself makes in its statistics.
In each case, we are looking at “out of work” benefits received by people of working age (16-64) – not state pensions and “in work” benefits such as tax credits. On this basis, as of February 2014, 15 per cent of working-age UK nationals claimed a benefit, according to DWP statistics, compared with 7 per cent of non-UK nationals.
Turning to EU nationals, there were 2.1m of working age in the UK in January-March 2014, according to the Office for National Statistics. DWP data state that as of February 2014, 131,000 EU nationals were in receipt of benefits within six months of signing up for a national insurance number. If we use that as a proxy for the total number on benefits, this suggests 6.3 per cent of EU nationals were on benefits.
Even if we assume that the data slightly underestimate the number of EU nationals on benefits, it’s clear that UK nationals are much more likely to be on benefits.
2. EU migrants pay more in taxes than they receive in benefits.
EU migrants are younger and more likely to be employed than UK nationals. Unsurprisingly, they are net contributors to the UK coffers, as a comprehensive study by Christian Dustmann and Tommaso Frattini published last week shows.
This is especially true of recent immigrants from eastern Europe. Using the Dustmann and Frattini figures, my colleague Martin Sandbu calculates that the average “A8″ immigrant (i.e. from Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia or Slovenia) boosted the public finances by about £10,000, whereas the average “native” cost the public finances £15,000.
The evidence suggests that “benefit tourism” is overblown and negligible. Official estimates of the costs of migrants travelling to the UK to use the National Health Service before returning home, for example, are in the tens of millions of pounds per year – less than 0.1 per cent of the annual health budget.
3. EU immigrants do not have immediate access to benefits.
The legality of migrants’ access to benefits is fiendishly complicated. Carl Gardner, a barrister, and writer and commentator on legal issues, tweeted this on Tuesday:
The interaction of EU free movement and social security law with UK benefits may well be the hardest area of law I’ve ever encountered.— Carl Gardner (@carlgardner) November 11, 2014
Ultimately, eligibility is a compromise: between the European Directives on free movement of workers and UK welfare law. Broadly speaking, ever since 2004, when the A8 countries acceded, the UK has tried to make it harder for EU nationals to obtain benefits and the European Commission has tried to make it easier. There is an ongoing legal battle between the commission and the UK government on this issue.
A crude interpretation of Tuesday’s ruling – based on the case of a Romanian citizen using the German welfare system – is therefore that it bodes well for the UK. As the European Court of Justice stated, the current European Directives should not allow EU nationals with no intention of working and no means of supporting themselves from using other member states’ welfare systems for their subsistence.
In practice, the issue of eligibility comes down to the “habitual residency test”: a protean criteria for who can get UK benefits, which benefits they can get, when, and for how long. One contentious aspect of this test is whether it should automatically grant access to benefits in the first three months even to those who don’t work; in 2006, the commission said it should, but the UK has never interpreted it that way, applying an additional test on top of the HRT – the “right to reside” criteria.
Instead, the UK has tended to grant the relevant benefits access to those who work, are actively looking for work, or who have enough money to support themselves, i.e. to those who are unlikely to access the full benefits in the first place. (I say “tended to”: these decisions are ultimately made by frontline staff.) The “actively looking for work” aspect has meant that some EU nationals have been able to access some benefits – but last year, the prime minister announced that access to certain benefits, including jobseeker’s allowance, would be proscribed in the first three months.
The ECJ has confirmed that member states do not have to provide “social assistance” to meet subsistence costs during the first three months of residence, in effect siding with the current policy – and direction of policy – of the UK government.
4. EU immigrants do not have unrestricted access to benefits.
In order to be eligible for benefits, EU nationals in the UK need to pass the habitual residency test, including the UK’s additional requirements about the “right to reside”. There is no statutory definition of the test; it is “notoriously opaque”, in the words of the House of Commons library, a muddle of UK case law and EU law.
Since there are no definitive criteria (no checklist) and the decisions are ultimately made by employees of local authorities and job centres, the questions asked of people as part of the HRT can vary. But in general, migrants have to report how long they have been in the country, show they intend to stay in the UK, and explain their reasons for coming. And in theory, EU nationals who want to claim benefits have to show they are self-employed, self-sufficient, students, or “working”.
But this being welfare and immigration, what is meant by the word “working” is broader than its dictionary definition would imply. It can include those who unemployed and looking for work, and those who are temporarily unable to work due to illness. It should not, though, include those who are inactive and who have no intention to work in the UK. Since March, the government has used a minimum earnings threshold to judge whether someone is or was “working” in the UK, but those earning less than the threshold can still in theory pass the test.
To complicate matters further, EU nationals can also obtain rights to benefits through “derivative” rights to reside, e.g. if they are the primary carer of a child.
Whereas the previous government tried to toughen up the criteria for passing the HRT in the first place, the coalition government has tried to also limit what passing the test means for access to benefits in the future. This year, for example, the government has changed the rules so that EU nationals need to show they have a “genuine prospect of finding work” to continue to receive jobseeker’s allowance and other linked benefits – after three months on that unemployment benefit.
5. Government policy is targeted at UK voters, not “benefit tourists”
The ECJ ruling means that the UK government will be more confident that it can reduce access to benefits by those who come to the UK only to live off the welfare state. However, this won’t raise much money because there aren’t many people who actually do that. Indeed, when the Treasury estimated the savings from the government’s changes this year, it put them at £60m in 2014-15 and £80m in 2015-16, roughly 0.1 per cent of the annual budget for working age benefits. (Ironically, the group who are often hit hardest by such changes are returning UK nationals.)
Ultimately, what the government wants through this policy is legitimacy, not more money. The rules around migrants and welfare are stupidly complicated, confusing staff, annoying the public, and frustrating claimants themselves. The government will now hope that thanks to the ECJ ruling it has the scope to limit more benefits to EU migrants who don’t work, appeasing an angry public without breaking the law.
Much of the frustration around immigration and welfare is because it is symbolic of how much of the public feels powerless. There is a vicious circle: there is public anger, in response the government makes a big promise, which it can’t deliver (e.g. because it’s a member of the EU), and that failure leads to more public anger and in turn more promises. So if the government feels it has more scope to set its own rules that should allow it to actually meet some of its promises.
But this won’t be the end of the rancour over migration and welfare. Why? Because EU nationals aren’t actually a burden on the welfare state. Whatever the anger over EU nationals’ access to benefits, it’s a proxy for something deeper. There is only so much policy can do to tackle myths – and benefit tourism is one of those.
Get alerts on Opinion when a new story is published