If you’re looking for a liberal critique of David Cameron’s plan to crack down on “benefit tourism” by restricting payments to new migrants, don’t look to any of the main parties. The Lib Dems have welcomed the proposals as “sensible and reasonable”, while Labour is busy arguing that it came up with the idea first. Yvette Cooper said this morning: “After Labour proposed this change in March, the government said it was all fine and nothing needed to change. Yet now, rather than following a coherent plan, they are flailing around.” Neither party challenged the premise on which Cameron’s intervention was based.
With the other main voice in the debate, Nigel Farage, complaining that the UK is “still being far too generous”, it was left to EU Employment Commissioner Laszlo Andor to provide a dose of reality. As he told the Today programme, “The point is that the British public has not been told all the truth.” The truth being that “benefit tourism” is almost entirely a myth. As a recent EU study noted, “the majority of mobile EU citizens move to another Member State to work” and benefit tourism is neither “widespread nor systematic”. Another truth rarely mentioned by any party is that migrants contribute far more in taxes than they receive in benefits and services, and benefit the economy as a result.
An OECD study earlier this year showed that they make a net contribution of 1.02 per cent of GDP or £16.3bn to the UK, since they are younger and more economically active than the population in general. In addition, the DWP’s own research 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.
It’s for these reasons, among others, that, as the Office for Budget Responsibility has shown, we will need more, not fewer immigrants, if we are to cope with the challenge of an ageing population and the resultant increase in the national debt. Should Britain maintain net migration of around 140,000 a year (a level significantly higher than the government’s target of ‘tens of thousands’), debt will rise to 99 per cent of GDP by 2062-63. But should it reduce net migration to zero, debt will surge to 174 per cent. As the OBR concluded, “[There is] clear evidence that, since migrants tend to be more concentrated in the working-age group relatively to the rest of the population, immigration has a positive effect on the public sector’s debt…higher levels of net inward migration are projected to reduce public sector net debt as a share of GDP over the long term relative to the levels it would otherwise reach.”
One might expect a fiscal conservative like Cameron to act on such advice but, as so often in recent times, the PM is determined to put politics before policy. By refusing to challenge the terms on which the debate is conducted, Labour and the Lib Dems are doing the same.
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