"Benefits tourism" is largely a myth. Photo: Getty
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Why cracking down on "benefits tourism" won't get David Cameron very far

Central to the Prime Minister's plan to "toughen" his stance on immigration is to curb welfare to migrants. But "benefits tourism" is a myth.

We must anchor the debate in fact not prejudice.

This is what David Cameron said in his speech about immigration this morning. He also emphasised that "the great majority of those who come here from Europe come to work, work hard and pay their taxes".

However, these two points haven't stopped the Prime Minister's central policy proposal when it comes to immigration being to curb and delay benefits for EU migrants. Cameron's idea, to stop EU migrants from claiming in-work benefits, such as tax credits, and getting access to social housing for four years, is an even tougher version of Labour's proposal to delay such benefits for two years.

Both parties seem to be in a welfare-restricting arms race on immigration, because this is the only possible approach; controlling the borders by restricting freedom of movement would be impossible as long as Britain remains an EU member.

However, cracking down on "benefits tourism" won't get the PM, nor his opposition, very far. This is because the phenomenon is largely a myth.

Firstly, as Cameron himself pointed out, EU migrants come to the UK overwhelmingly to work or study. The largest number of migrants (228,000) in the year ending March 2014 came to the UK for work purposes. According to the Migration Observatory, the increase in EU migrants for work purposes is likely to be linked to employment opportunities created by the UK’s recent economic growth, which is relatively stronger than its fellow developed EU economies.

And they are successfully finding employment. According to the latest ONS figures, estimated employment of EU citizens was 17 per cent higher in April to June 2014 compared to the same period last year. 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. 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. It is also notable how low the number of EU migrants claiming out-of-work benefits is here: 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.

Also significant is that the UK ranks nowhere near highest in terms of total social security spending per head. It spends less than France and Germany on this per inhabitant. For example, in 2011, the UK spent €7,350.66 per inhabitant, the 15th highest of the member states, below France and Germany. And according to a 2012 European Commission report into welfare spending in EU states, the UK is not hugely "generous", as Cameron describes it. The report identifies Belgium, Denmark, Portugal, Spain, Finland and the Netherlands as “relatively generous”, comparing them to “the UK, Malta, Slovakia, Estonia, Poland and Romania” where “benefit conditions are relatively tight”.

There may be individual cases of migrants coming to the UK because they are attracted by the benefits they could receive, but this is not a significant phenomenon, and certainly doesn't amount to the hordes of visitors arriving on a jolly as the term "benefits tourism" suggests.

Focusing on restricting welfare even further won't help the Prime Minister in his ambitions to "control" immigration levels. This is because what he is trying to crack down on does not really exist. It is also an illogical approach, because EU migrants choose to come to the UK over other EU member states mainly due to our relatively healthy economy and the fact that we offer more job opportunities than our European counterparts. This means Cameron having to play down the significance of the apparent recovery of which his party is so vehemently trying to take ownership. 

Anoosh Chakelian is deputy web editor at the New Statesman.

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.