David Cameron wants to toughen welfare rules for EU migrants. Photo: Getty
Show Hide image

What are EU migrants entitled to in terms of benefits and housing, and when?

David Cameron wants to delay benefits to EU migrants for four years, Labour for two years. What are they currently entitled to, when, and how much do they claim?

Upon arriving in this country, what can EU migrants receive in terms of benefits, and when?

The government has recently introduced harsher rules for what EU migrants can receive. These include jobseekers from the European Economic Area (EEA) – predominantly migrants from EU states – having to wait three months before they can claim for Jobseekers’ Allowance. This is the same for accessing child benefit and child tax credits.

To stay longer than three months, they have to be in work, actively seeking work, or have a genuine chance of being hired. Either that, or they have to prove that they have the resources to remain without being a burden on public services.

EU migrants cannot automatically claim benefits after three months. They have to pass a “habitual residence test” under EU law. This covers the individual’s status regarding their duration of stay, activity, income if they are students, family status, and housing situation. Even if they pass this, they can then only claim Jobseekers’ Allowance for six months – after that, only those with a job offer or proof they are likely to find work are allowed to continue claiming.

On top of the tests required under EU law, the UK applies an additional test: the “right to reside”. This limits certain benefits. The European Commission sees this as an unfair extra hurdle and has referred the UK to the EU’s Court of Justice on the matter.


How many of them are housed by the state?

There are similar levels of UK nationals and foreign-born individuals living in social housing: 17 per cent and 18 per cent, respectively. It is not the case that immigrants receive preferential treatment on council housing lists.

The immigrant population is almost three times as likely to be in the private rental sector than their UK-born neighbours: 38 per cent compared to 14 per cent.

From April this year, new EEA migrant jobseekers have no longer been allowed housing benefit.

The housing minister Brandon Lewis commented:

Foreign nationals coming to the UK should be under no illusion that they will get free housing if they fall on hard times. They will find no stepping stones to a social home, because we’ve changed the rules so local people have priority.


Can they bring family over?

Yes, providing their family members are EU citizens. They will be subject to the same scrutiny as outlined above.


How many migrants are in employment?

The latest DWP figures from 2014 show that there are 1.73m EU nationals working in the UK, equal to 5.7 per cent of all people in work. There are 1.19m non-EU nationals working in the UK, which is 3.9 per cent.

The employment rate for non-UK born workers is 70 per cent, compared to the 73.2 per cent of UK born workers. The employment rate for EU nationals living in the UK is 79 per cent. This is according to the latest figures, from the April-June 2014 Labour Force Survey.

The UK is the only EU country to have a lower unemployment rate for migrants than nationals (7.5 per cent to 7.9 per cent respectively), suggesting a key reason for migration to the UK is to find work.

Since the early 2000s, the presence of foreign-born workers has grown fastest in relatively low-skilled jobs.


How many of them claim benefits?

Less than 5 per cent of EU migrants are claiming Jobseekers’ Allowance, while less than 10 per cent are claiming other DWP working-age benefits.

On top of this, the think tank Class found that of those who claim Jobseekers’ Allowance, 91.5 per cent are UK nationals. Additionally, among unemployed migrants, only 1 per cent claim unemployment benefits, compared to the 4 per cent of unemployed UK nationals who are claimants.

Rather than being “benefit tourists”, migrants to the UK make a net contribution, as they pay more in taxes than they take out in benefits. A UCL study this month found that the UK gains £20bn from European migrants. And a study by the OECD last year found that migrants make a net contribution of over £2000 per head.


Sources: Spokespeople at the Home Office, the Department for Work and Pensions, and the Department for Communities and Local Government; European Commission report, 2012 http://ec.europa.eu/economy_finance/publications/economic_paper/2012/pdf...4_en.pdf; the Migration Observatory at the University of Oxford; the Migration Matters Trust; the Office of National Statistics; the Refugee Council; Turn2Us; the BBC; British Future; Class report Why immigration is good for all of us http://classonline.org.uk/docs/why_immigration_is_good_for_all_of_us.pdf; House of Commons Library: Asylum Statistics, 5 August 2014 file:///Users/anooshchakelian/Downloads/SN01403%20(1).pdf; Eurostat statistics; OECD International Migration Outlook 2013 http://www.keepeek.com/Digital-Asset-Management/oecd/social-issues-migration-health/international-migration-outlook-2013_migr_outlook-2013-en#page1

Anoosh Chakelian is deputy web editor at the New Statesman.

Show Hide image

Stability is essential to solve the pension problem

The new chancellor must ensure we have a period of stability for pension policymaking in order for everyone to acclimatise to a new era of personal responsibility in retirement, says 

There was a time when retirement seemed to take care of itself. It was normal to work, retire and then receive the state pension plus a company final salary pension, often a fairly generous figure, which also paid out to a spouse or partner on death.

That normality simply doesn’t exist for most people in 2016. There is much less certainty on what retirement looks like. The genesis of these experiences also starts much earlier. As final salary schemes fall out of favour, the UK is reaching a tipping point where savings in ‘defined contribution’ pension schemes become the most prevalent form of traditional retirement saving.

Saving for a ‘pension’ can mean a multitude of different things and the way your savings are organised can make a big difference to whether or not you are able to do what you planned in your later life – and also how your money is treated once you die.

George Osborne established a place for himself in the canon of personal savings policy through the introduction of ‘freedom and choice’ in pensions in 2015. This changed the rules dramatically, and gave pension income a level of public interest it had never seen before. Effectively the policymakers changed the rules, left the ring and took the ropes with them as we entered a new era of personal responsibility in retirement.

But what difference has that made? Have people changed their plans as a result, and what does 'normal' for retirement income look like now?

Old Mutual Wealth has just released. with YouGov, its third detailed survey of how people in the UK are planning their income needs in retirement. What is becoming clear is that 'normal' looks nothing like it did before. People have adjusted and are operating according to a new normal.

In the new normal, people are reliant on multiple sources of income in retirement, including actively using their home, as more people anticipate downsizing to provide some income. 24 per cent of future retirees have said they would consider releasing value from their home in one way or another.

In the new normal, working beyond your state pension age is no longer seen as drudgery. With increasing longevity, the appeal of keeping busy with work has grown. Almost one-third of future retirees are expecting work to provide some of their income in retirement, with just under half suggesting one of the reasons for doing so would be to maintain social interaction.

The new normal means less binary decision-making. Each choice an individual makes along the way becomes critical, and the answers themselves are less obvious. How do you best invest your savings? Where is the best place for a rainy day fund? How do you want to take income in the future and what happens to your assets when you die?

 An abundance of choices to provide answers to the above questions is good, but too much choice can paralyse decision-making. The new normal requires a plan earlier in life.

All the while, policymakers have continued to give people plenty of things to think about. In the past 12 months alone, the previous chancellor deliberated over whether – and how – to cut pension tax relief for higher earners. The ‘pensions-ISA’ system was mooted as the culmination of a project to hand savers complete control over their retirement savings, while also providing a welcome boost to Treasury coffers in the short term.

During her time as pensions minister, Baroness Altmann voiced her support for the current system of taxing pension income, rather than contributions, indicating a split between the DWP and HM Treasury on the matter. Baroness Altmann’s replacement at the DWP is Richard Harrington. It remains to be seen how much influence he will have and on what side of the camp he sits regarding taxing pensions.

Meanwhile, Philip Hammond has entered the Treasury while our new Prime Minister calls for greater unity. Following a tumultuous time for pensions, a change in tone towards greater unity and cross-department collaboration would be very welcome.

In order for everyone to acclimatise properly to the new normal, the new chancellor should commit to a return to a longer-term, strategic approach to pensions policymaking, enabling all parties, from regulators and providers to customers, to make decisions with confidence that the landscape will not continue to shift as fundamentally as it has in recent times.

Steven Levin is CEO of investment platforms at Old Mutual Wealth.

To view all of Old Mutual Wealth’s retirement reports, visit: www.oldmutualwealth.co.uk/ products-and-investments/ pensions/pensions2015/