How ministers are scaremongering over "benefit tourism"

Just 7 per cent of foreign born nationals claim working age benefits, compared to 17 per cent of UK nationals.

Ahead of the end of transitional controls on Romanian and Bulgarian nationals at the end of this year, the government is preparing a crackdown on so-called "benefit tourism". Willliam Hague said yesterday that he wanted to end the "artificial, perverse incentives" to come to the UK and the BBC reports today that ministers will shortly announce "across the board" curbs. Given the political and media attention devoted to the issue, one might assume that almost no immigrant moves to the UK but to claim benefits. As so often, however, the data tells a different story. 

The DWP published research on the subject last year (the first time a government has done so) and found that those born abroad were significantly less likely to claim benefits than UK nationals. Of the 5.5 million people claiming working age benefits in February 2011, just 371,000 (6.4 per cent) were foreign nationals when they first arrived in the UK. That means only 6.6 per cent of those born abroad were receiving benefits, compared to 16.6 per cent of UK nationals. In addition, a random sample of 9,000 from the 371,000, only including those from outside the European Economic Area, found that 98 per cent had an immigration status consistent with claiming benefits legitimately.

It's important to note that the figures did not tell us the number of foreign nationals claiming benefits, rather they told us the number claiming benefits who were non-UK nationals when they first entered the labour market. But there is, of course, significant crossover between the two. The sample of 9,000 found that 54 per cent had become British citizens since moving to the UK and that a further 29 per cent had been granted indefinite leave to remain.

Significantly, the study offered no evidence of "benefit tourism". As Chris Grayling, the-then employment minister, conceded when it was published in January 2012, "We’ve yet to establish the full picture. It may be that there isn’t a problem right now." In the absence of further research, ministers' preoccupation with the issue has more to do with politics than policy. The media's coverage of the subject creates the false impression that large numbers of migrants are claiming benefits leading to unnecessary public anxiety. As Cameron's spokesman said today, "There's a widespread sense of concern. That's what the government is considering how best to respond to." By cracking down on the perceived problem of "benefit tourism", the government hopes to win over voters hostile towards immigration. But as the figures above suggest, were ministers to inform the public, rather than scare them, there might be less hostility to begin with. 

David Cameron delivers a speech on immigration at the Institute for Government. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.