George Osborne at the Conservative conference in Manchester last year. Photograph: Getty Images.
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Does Osborne's Budget herald a raid on pensioner benefits?

The Chancellor may have provided the Tories with the protective cover they need to limit universal pensioner benefits.

George Osborne's Budget was aimed squarely at winning over the pensioner voters who have deserted the Conservatives for UKIP and who are so crucial to the party's chances of victory (they vote more than any other age group). But could yesterday's giveaway be the prelude to a raid? While the Tories have pledged to maintain the triple-lock on the state pension (so that it rises in line with inflation, earnings, or 2.5%, whichever is highest) throughout the next parliament and have excluded it from the new cap on welfare spending, they have yet to make a similar commitment to protect other benefits for the over-65s. 

In 2010, under pressure from Labour, David Cameron vowed to ring-fence universal pensioner benefits such as Winter Fuel Payments, free bus passes and free TV licences (a promise he has kept), but many Tories (most notably Iain Duncan Smith) have urged him to avoid repeating this pledge. They argue that protecting these perks for all, including the wealthy, is indefensible when the deficit is still so large (at £108bn) and spending on the young and other groups is being cut so hard. 

With both Labour and the Lib Dems now arguing for some degree of means-testing, the path is clear for the Conservatives to revise their stance without fear of reprisal. It is significant that, unlike the state pension, all pensioner benefits have been included in the welfare cap, creating the possibility of them being cut in order to stick to the new limit. Osborne's Budget may well have been aimed at providing the Tories with the protective cover they need to execute a U-turn. 

George Eaton is political editor of the New Statesman.

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The Brexit effect: The fall in EU migration spells trouble for the UK

The 84,000 fall in net migration to 248,000 will harm an economy that is dependent on immigration.

The UK may not have left the EU yet but Europeans are already leaving it. New figures from the ONS show that 117,000 EU citizens emigrated in 2016 (up 31,000 from 2015) - the highest level for six years. The exodus was most marked among eastern Europeans, with a fall in immigration from the EU8 countries to 48,000 (down 25,000) and a rise in emigration to 43,000 (up 16,000).

As a result, net migration has fallen to 248,000 (down 84,000), the lowest level since 2014. That's still nearly more than double the Conservatives' target of "tens of thousands a year" (reaffirmed in their election manifesto) but the trend is unmistakable. The number of international students, who Theresa May has refused to exclude from the target (despite cabinet pleas), fell by 32,000 to 136,000. And all this before the government has imposed new controls on free movement.

The causes of the UK's unattractiveness are not hard to discern. The pound’s depreciation (which makes British wages less competitive), the spectre of Brexit (May has refused to guarantee EU citizens the right to remain) and a rise in hate crimes and xenophobia are likely to be the main deterrents. Ministers may publicly welcome the figures but many privately acknowledge that they come at a price. The OBR recently forecast that lower migration would cost £6bn a year by 2020-21. As well as reflecting weaker growth, reduced immigration is likely to reinforce it. Migrants pay far more in tax than they claim in benefits, with a net contribution of £7bn a year. An OBR study found that with zero net migration, public sector debt would rise to 145 per cent of GDP by 2062-63, while with high net migration it would fall to 73 per cent.

Brexit has in fact forced ministers to increasingly acknowledge an uncomfortable truth: Britain needs immigrants. Those who boasted during the referendum of their desire to reduce the number of newcomers have been forced to qualify their remarks. Brexit secretary David Davis, for instance, recently conceded that immigration woud not invariably fall after the UK leaves the EU. "I cannot imagine that the policy will be anything other than that which is in the national interest, which means that from time to time we’ll need more, from time to time we’ll need less migrants."

Though Davis insisted that the government would eventually meet its "tens of thousands" target (a level not seen since 1997), he added: "The simple truth is that we have to manage this problem. You’ve got industry dependent on migrants. You’ve got social welfare, the national health service. You have to make sure they continue to work."

As my colleague Julia Rampen has charted, Davis's colleagues have inserted similar caveats. Andrea Leadsom, the Environment Secretary, who warned during the referendum that EU immigration could “overwhelm” Britain, has told farmers that she recognises “how important seasonal labour from the EU is to the everyday running of your businesses”. Others, such as the Health Secretary, Jeremy Hunt, the Business Secretary, Greg Clark, and the Communities Secretary, Sajid Javid, have issued similar guarantees to employers. Brexit is fuelling immigration nimbyism: “Fewer migrants, please, but not in my sector.”

Alongside the new immigration figures, GDP growth in the first quarter of 2017 was revised down to 0.2 per cent - the weakest performance since Q4 2012. In recent history, there has only been one reliable means of reducing net migration: a recession. Newcomers from the EU halved after the 2008 crash. Should the UK suffer the downturn that historic trends predict, it will need immigrants more than ever. Both the government and voters may only miss migrants when they're gone.

George Eaton is political editor of the New Statesman.

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