A highly topical top story this week is a new UCL study showing that, far from being a drain on Britain’s finances, EU migrants pay out far more in taxes than they receive in state benefits. The key line from the report is that the UK gained a net contribution of £20bn from European migrants in 2000-11. But the Mail and the Telegraph have taken the line from the study that non-EU migrants have cost the UK £120bn in 1995-2011. However, this should be put into context with the fact that UK nationals cost the country £591bn in the same time period.
This research highlights an important, and, in these Ukip-tinged times, often unheard, argument that migrants from the European Union benefit UK GDP rather than being a drain on our resources. However, the perception persists – particularly from those who support Ukip’s campaign to “take control of our borders” by taking Britain out of the EU – that migrants are “benefit tourists” and, in the words of Calais’ mayor, see Britain as “El Dorado” due to its welfare hand-outs.
There are two questions here:
– How generous is the UK compared to its European neighbours, in terms of benefits and housing?
– How likely is it that immigrants come to the UK for benefits?
Let’s start with the first one.
Most experts I’ve spoken to have been reluctant to make such comparisons, as the systems are so varied and there are huge structural differences between EU member states.
However, it appears that the UK is not a great deal more generous than other comparable EU member states.
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. However, it is also true that a higher share of welfare spending in France and Germany is linked to previous earnings via individual and employer contributions than in the UK, where the state shoulders a higher share.
According to a 2012 European Commission report into welfare spending in EU states, the UK is no El Dorado. 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”. It analyses the UK in comparison to other states thus:
In Anglo-Saxon countries [Ireland, the UK, Malta, Cyprus], unemployment insurance benefits are relatively modest, while unemployment assistance is a relevant means-tested instrument to provide income protection to the unemployed . . . To counter benefit dependency, monitoring of job-search activity is strict whilst active labour market policies play a less important role.
And when put into the context of its “homogenous group” – ie. states that are most comparable to the UK within the EU – it is still thought of as less generous: “Luxembourg, Sweden and the UK tend to have less generous benefits when compared to their own group averages than when compared to the EU average”.
The government has recently introduced harsher rules for what EU migrants can receive in benefits. These include jobseekers from the European Economic Area (EEA) – predominantly migrants from EU states – having to wait three months before they can claim 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.
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.
So it doesn’t sound like the UK is notably generous – and it certainly cannot be painted as an El Dorado. Also important to note is that rules are even stricter for non-EU migrants.
And how likely is it that EU migrants travelling to the UK are doing so for the benefits?
Migrants are overwhelmingly coming to the UK either to study or to work, rather than being “benefit tourists”. And they are successfully gaining 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 largest number of migrants (228,000) in the year ending March 2014 came to the UK for work purposes. According to Oxford University’s 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.
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. Also, from the Annual Population Survey we know that over 6m of the approximate number of 7.8m foreign-born people in the UK are of working age.
Plus, 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), from 2012 Eurostat statistics, suggesting a key reason for migration to the UK is to find work.