Free movement: Why reforming rules on in-work benefits doesn't require treaty change

Following David Cameron's speech on immigration, much has been made of his comments that the package of measures he proposed to reform EU free movement would require treaty change.

In some cases, the speech was ambiguous about what exactly was being proposed. For example, did Cameron really say EU migrants will need a job offer before coming to the UK? This is important because it has legal implications regarding whether some, all, or none of the proposals require treaty change, changes to secondary EU legislation or simply changes to domestic law. Although, politics will of course also play a major part.

In addition, some have questioned whether the proposal, outlined by Professor Damian Chalmers and our Research Director Stephen Booth and adopted by Cameron, to limit EU migrants' access to in-work benefits for a certain period of years could be achieved without treaty change, as the authors claim.

Today we have published  Chalmers' and Booth's assessment of the legal implications of the measures proposed in the Prime Minister's speech and a restatement of the case for why access to in-work benefits can be restricted via amendments to EU legislation rather than a treaty change.

Safe to say much of this is legally complex, but below is a summary of a summary of a longer legal note by Professor Damian Chalmers, which you can read in full here.

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David Cameron's speech can be divided into four broad types of demand:

1. Four-year restriction on EU migrants’ access to in-work and child benefits

David Cameron mentioned two proposed reforms:

a) “once they are in work, they won’t get benefits or social housing from Britain unless they have been here for at least four years.”

This could be achieved via amendments to EU legislation: This is the most legally complex of the proposals but we argue that it does not require Treaty change for two reasons. Firstly, access to in-work benefits is currently granted in EU law by virtue of a piece of secondary legislation, rather than by the Treaty article on free movement of workers. Secondly, the Treaties grant considerable discretion to the EU legislature (the Council of Ministers and the European Parliament) to place restrictions on access to such benefits provided that the legislation facilitates free movement more generally (which the relevant Directive would continue to do), the restrictions are based on objective criteria and are not disproportionate to the objectives they pursue.

b) “If their child is living abroad, then there should be no child benefit or child tax credit at all no matter how long they have worked in the UK and no matter how much tax they have paid.”

Depending on what is sought this could be achieved under domestic law or amendments to EU legislation but if the objective is a hard and fast residence requirement this could be achieved via amendments to EU legislation rather than Treaty change.

2. Tighter restrictions on EU jobseekers

David Cameron mentioned two proposed reforms:

a) “We want EU jobseekers to have a job offer before they come here and to stop UK taxpayers having to support them if they don't.”

This depends on exactly what is proposed. If he meant that any EU citizen must have a job offer before they can come into the UK, this would certainly require Treaty change.

However, read in combination with the pledge to “stop UK taxpayers having to support them”, the proposal is better interpreted as suggesting that no social benefits will be granted to jobseekers. EU law already establishes that jobseekers are not entitled to social assistance and therefore such a reform would not require changes to EU legislation.

b) “We also want to restrict the time that jobseekers can legally stay in this country. So if an EU jobseeker has not found work within six months, they will be required to leave.”

In principle, the UK can already do this under its domestic law. EU law only grants a right of residence for more than three months to those who are employed, self-employed, and economically self-sufficient as well as their family members.

However, the ECJ has ruled that individuals cannot be expelled as long as they “can provide evidence that they are continuing to seek employment and that they have a genuine chance of being engaged”. While the onus is on the individual to prove this, clarifying what this condition means could be achieved by amending EU legislation. A hard and fast six month deadline would likely require Treaty change.

3. Abuse of free movement

David Cameron mentioned two proposed reforms:

a) “stronger powers to deport criminals and stop them coming back…and tougher and longer re-entry bans for all those who abuse free movement including beggars, rough sleepers, fraudsters and people who collude in sham marriages.”

Those deported at the time of conviction can be refused re-entry under existing EU law. Indeed, the German government has said it will use its domestic law to impose re-entry bans of five years for those who commit benefit fraud. The potential difficulty is for those EU citizens with family in the UK, who may be able to appeal deportation under the rights to family life guaranteed by the European Convention on Human Rights.

In the case of significant criminal offences where the individual has served a long prison term, the deportation may be several years after the offence, and it is open to the individual to argue that they are a reformed character. This poses difficulties as the individual threat to public policy must be a present threat. Albeit this requirement is currently imposed by an EU Directive, we believe that, if the provision were repealed, there is a strong chance that the ECJ would reinstate it as a Treaty requirement.

b) “We must also deal with the extraordinary situation where it's easier for an EU citizen to bring a non-EU spouse to Britain, than it is for a British citizen to do the same. At the moment, if a British citizen wants to bring, say, a South American partner to the UK, then we ask for proof that they meet an income threshold and can speak English. But EU law means we cannot apply these tests to EU migrants.”

This would likely require Treaty change: There are a number of judgments where the ECJ has stated that refusing to grant a non-EU national family member residence would violate the Treaty because it would discourage the EU citizen from exercising their rights to free movement.

Alternatively, it would be possible for new EU legislation to harmonise requirements on family reunification between EU citizens and non-EU nationals, so that the latter could only join the EU citizen in another member state if they meet certain requirements. However, this would entail harmonisation in an area (non-EU migration) where successive UK Governments have sought to limit the EU’s influence. Concern to prevent marriages to citizens from other member states being used as a vehicle for marriages of convenience can be addressed through tightening up existing EU legislation.

4. Tighter restrictions on migration from new EU member states

David Cameron proposed:

“So we will insist that when new countries are admitted to the EU in the future, free movement will not apply to those new members until their economies have converged much more closely with existing Member States.”

The UK could use its existing veto over new countries joining the EU to insist on these terms.

Six arguments Cameron can make to help reconcile Warsaw to his proposals for reforming EU free movement

Polish Europe Minister Rafał Trzaskowski's comments on Monday's Newsnight, where he said David Cameron’s plans to stop EU migrants from claiming benefits for the first four years after they arrive in Britain would be a "red line" for Warsaw, were widely cited in the UK media, much like Polish Ambassador Witold Sobkow's response to our initial report which heavily influenced Cameron's immigration speech.

As expected all along, Poland will be the biggest single obstacle to the changes.

Some of the reluctance is understandable. Following Poland's accession into the EU after having spent too long on the wrong side of Europe's historic dividing lines, Poles understandably do not want to accept anything that smacks of 'second class' status within the EU. While many Poles may privately think the proposals are reasonable, they also expect their government to stand up for the interests of Poles abroad, and any Polish government will find this hard to sell domestically, including a Law and Justice-led one (the issue has already lead to interesting discussions within the ECR group).

So how should Cameron deal with this? Here are six arguments he can make:

1. These reforms are the best way to let free movement stand: Cameron defended the principle of free movement in his speech and he did not pledge to impose an 'emergency brake' or quotas despite substantial domestic pressure, as to his credit Trzaskowski recognised. This reform package will allow the UK to stay signed up to free movement rules - a key Polish objective.

2. The UK cannot become a contribution-based system overnight: We hear this argument a lot out of Warsaw: "If the UK is concerned that its welfare model is too open, it can re-design it to bring it into line with those on the continent - tomorrow if it so wished. It can be done unilaterally and has nothing to do with the EU."

There are several problems with this position. Re-organising the UK's entire welfare system would be an absolutely massive undertaking - politically, economically and administratively. It would basically involve re-writing the UK's entire postwar settlement. This may or may not be desirable, but it simply won't happen any time soon, especially as a result of EU pressure. For one, the UK public won't have it.

Cameron could even bat the ball back in Warsaw's court by arguing that "It would be super-easy for you to adopt more ambitious emissions reductions. You just need to replace your dependence on coal with renewable energy, and you're in line with the rest of the EU. It can be done unilaterally and has nothing to do with the EU."

3. The UK shouldn't have to choose between keeping its welfare model and staying in the EU: The logical extension of the argument above is that only a French or Germany style insurance system is compatible with EU membership. Clearly, giving the EU an effective veto over such a sensitive area is not politically sustainable - in addition to being awfully discriminatory against the UK. Changing the rules around in-work benefits on the other hand is a pragmatic way to in effect bring the UK into line with continental systems without challenging the country's entire political order.

4. Poles and other EU migrants in the UK could be worse off under such a system: Ironically, if the UK were to adopt a continental model and scrap in-work benefits and tax credits for low-wage earners entirely, it would hit EU migrants in the UK much harder than the introduction of a temporary qualification period as it would permanently reduce their income. Is this really a more desirable outcome from the perspective of the Polish government and other opponents of Cameron's proposals?

5. Workers on low wages do not contribute significantly to the welfare pot: While the vast majority of EU migrants come to the UK to work and make a positive contribution to the UK economy, as our research showed, workers on low-wages pay very little in income tax and national contributions due to the UK's generous tax free allowance (£10,000 per year and rising) and national insurance contributions threshold (£153 per week). This means that far from funding their own benefits, these workers, especially if they have dependent children, can actually be a net burden on the public purse. Furthermore, despite their misleading name, tax credits in the UK are a cash benefit funded via general public spending and are not correlated to individuals' tax payments.

6. The principle enjoys widespread public support across the EU: The basic principle of establishing a link between contributions and right to access benefits enjoys wide-spread support in other EU member states as the YouGov polling below demonstrates:


Finally, tone is also vital. Cameron made a big mistake by singling out Poles earlier this year leading to the deterioration in relations as revealed in the leaked Wprost tapes, a mistake which he avoided making again in his immigration speech last week. The rules will apply to everyone from the rest of the EU and not one particular group or country. 

Did David Cameron really say EU migrants will need a job offer before coming to UK?

The dust has settled somewhat after Cameron’s much-anticipated immigration speech.

As we set out here, we welcomed the balance the Prime Minister struck and were particularly pleased that he co-opted our proposal to let the principle of free movement stand, while limiting access to in-work benefits until after a certain period working in the UK.

However, there is one particular passage that has caused some confusion, which is the following:

“…Second, we want EU jobseekers to have a job offer before they come here and to stop UK taxpayers having to support them if they don’t.”

This sounded like David Cameron wants to require EU migrants to have a job offer before they come to the UK. As some have pointed out this would definitely require a treaty change, since the ECJ has made it clear that the EU treaty articles on free movement must be interpreted as granting a right to move “freely within the territory of the other Member States and to stay there for the purposes of seeking employment.”

However, elsewhere in the speech, Cameron was much less categorical:

"So let’s be clear what all of these changes taken together will mean. EU migrants should have a job offer before they come here. UK taxpayers will not support them if they don’t. And once they are in work, they won’t get benefits or social housing from Britain unless they have been here for at least four years."

In combination with the "UK taxpayers will not support them" bit, the "should have a job offer" line is much more like an aspiration than a requirement. Indeed, this is the logic of the rest of the speech: Cameron would not have needed to pledge to ask unsuccessful jobseekers to leave after six months if they were to be denied entry in the first place.

Admittedly though, Cameron could have been much clearer on the specific point about the need for a job offer prior to entry. The ambiguity in his speech may risk creating false expectations.

We will publish a short briefing in the coming days looking at the various legal implications of the proposals set out in the speech.  David Cameron was clear that he thought the entire package would require treaty change. However, there are several elements to the speech and the proposals - changing the rules around in-work benefits only one. Here, we are of the view that ours and Professor Damian Chalmers' proposed changes to in-work benefits could be achieved via EU legislation rather than treaty change (we should point out that others disagree).

So stay tuned...

What impact will Cameron’s EU free movement changes actually have on the ground?

We’ve laid it out in our response today, but in an attempt to elucidate things we’ll go into a bit more detail in this post. In addition to the general 'fairness' discussion - making sure that there's a link between what people put in and what they take out - the debate is now centred on the practical impact of the proposals.

In a twitter discussion we had last week with Michael O’Connor and Jonathan Portes on the number of EU migrants effected by these sorts of curbs, they seem to claim that around 10% of "Eastern Europeans" will be affected. The conclusion they seem to draw is that the proposal won't make that much of a difference.

To reach that figure they seem to simply take the percentage of Eastern European's claiming benefits in 2013 - it does not seem to be based off the data over four years or compared over time to see if this snapshot is representative. The data available is unfortunately pretty bad, but there's enough data to look over time, rather than a single year.

 

As we have laid out in our response today, we think these measures will hit between 14% and 16% of total EU migrants - one in seven EU migrants. This is shown in the table above and taken from the average of the final four years percentages in the graph below.  As we have noted before, its obvious and logical that the longer migrants stay in the UK the more benefits they claim (as they have more children etc) - but from that it's hard to draw the conclusion that the impact is insignificant.

As a share of gross flows (shown in graph below) this will likely impact around 100,000 people over the four year period. This is based on flows from the four years before 2008 and 2014.

Is this a significant impact?  Depends on what you want to achieve. If you want to end free movement, it's not. If you want to put a cap on free movement, it's not enough either. That's not what we want, however - we think free movement should stand. That's the point.

If, however, you want to target the one area that seems to be of the most concern to the UK with respect to EU migration - the low-wage sector - then 100,000 over four years matters. This number will be largely at the low-wage end of the labour market - since these are the workers that claim significant amounts of in work benefits. In other words, as we've said all along, this is a targeted policy, intended to take away the de facto taxpayer-backed subsidy to perform low-paid jobs which does not exist in most other EU countries.

It's impossible to put a firm number on how many people will decide not to come due to this measure. We've provided plenty of figures showing how this would take away the incentive in many cases to move from a minimum or an average wage in some parts of Europe to a minimum wage in UK, using in-work benefits as effective top-up, in turn making the move financially attractive in the first place. In other cases the de facto income gap between the sending state and the UK will be massively reduced.

Taken together, and as anyone who has moved across borders will know, changes in the cost of living in the country of destination will feature in any decision to make the move in the first place. Perhaps not in a detailed spreadsheet kind of way, but it does clearly feature.

The volume dimension is one part of the the package - and it shouldn't be over-stated. However, it certainly shouldn't be under-stated either. Unless, of course, you want to end free movement. 

Cameron's speech: The response (so far) from around Europe

The big speech has been delivered - you can read our response here, but below we round up the reactions from around Europe - remember, the changes Cameron set out today based on Open Europe's research will require agreement from other EU leaders.

European Commission

A Commission spokesperson said after the speech that:

"These are UK ideas and they are part of the debate. They will have to be discussed without drama and should be discussed calmly and carefully."

This is a welcome shift from the dark days of Viviane Reding and Laszlo Andor.

Germany

No German politician has been brave enough to put their heads above the parapet yet but the German media headlines aren't exactly helpful:

Spiegel online goes with “Demands to Brussels: Cameron blackmails the EU”, ARD’s headline is “Cameron's demands: EU membership is only conditional”, Focus titles their article “With these demands Cameron blackmails the EU”.

This list could easily be continued -the actual substance of Cameron’s speech has been crowded out in most parts of the German media landscape. We suspect that might change though when it becomes clearer that Cameron may just have saved free movement. 

Poland

As we saw with the Polish Ambassador's response to our report on Monday, this is a delicate issue, with Warsaw ultra-sensitive to any measures that are seen as "discriminatory". Cameron wisely prepared the ground by discussing his speech with Polish PM Ewa Kopacz whose office today issued a statement which which argued that:

"Poland will not agree to changes undermining the principles of the EU's single market, specifically the free movement of people... which should as such be maintained in its current form."

This can be seen as a holding position - the Polish government is holding its cards to its chest although former Polish Europe Minister Mikolaj Dowgielewicz was more forthright, tweeting that:

"Cameron's plan will definitely not pass in its entirety at the ECJ. But this will already be after the UK elections. Weak response by the Commission." 

Czech Republic

The response by the Czech Europe Minister Tomas Prouza is the toughest we've seen so far - he suggested that Cameron wanted to tax people differently according to their nationality - even though tax credits is a cash subsidy and are not correlated to tax paid. He also tweeted a picture of Czech WWII pilots who fought in the RAF pointing out that they hadn't "worked" in the UK for over 4 years.

Most EU leaders seem to be holding fire though. Plenty of other reactions to come no doubt...

Why Cameron should stay clear of an 'emergency brake' on EU free movement

David Cameron's 'immigration speech' is expected to take place very soon.

As we have noted several times, one of the options that he potentially could go for is an "emergency brake" - the ability to impose temporary restrictions on the number of EU migrants who come to the UK.

We can see why this would be appealing politically - but we fear that if Cameron does announce something like this, without having a clear vision for how it would work exactly in practice, it could turn into another net immigration target. Sounding very good in an election manifesto - but ineffective in practice.

We've made this point a few times but to elaborate, here's why:

An emergency brake would be targeted at flows of new EU migrants not the existing stocks. UK Ministers have previously spoken about the need to manage “destabilising flows” – however, this remains a vague term that could mean many different things. Pinning down what would constitute a destabilising flow could prove incredibly tricky. For example, the graph below shows that current flows are not proportionately higher than previous flows and remain small as a share of the workforce (relevant for their impact on wages). In general, if the bar is too high, the mechanism will never be used. If too low, the brake would become a long-term rather than temporary measure – a de facto limit – and be tremendously hard to negotiate in Europe.

Source: ONS

It is very difficult to codify objective criteria for pulling an emergency brake – particularly any that apply to the UK’s current situation. The UK economy is booming, unemployment is falling, EU migrants have high employment rates and the UK takes less EU migrants per head than several other EU member states. All these most obvious criteria won't work for the UK. It's hard to claim to be the best performing economy in Europe and simultaneously claim to have a 'crisis' so bad that special treatment is required. It would also be impossible to predict all the future challenges migration could pose.

Source: Eurostat

Possibly the most compelling argument the UK could use at the current time is that certain local areas are facing high pressures on public services and housing supply. However, restricting EU migration to certain areas of the UK would be very difficult to administer in practice, while national restrictions would be a disproportionate response to local problems. The impact of migrants is also hard to discern in exact terms given other domestic policies regarding housing and local services.

What the UK would effectively be asking for is a ‘time out’ from EU migration – which is largely a result of understandable political pressures. However, this necessarily makes the criteria for pulling the ‘emergency brake’ politically arbitrary – and in turn tougher to negotiate in Europe. There's not a government in Europe, it now seems, that doesn't have a populist challenge. Should Spain be granted dispensation too?

It's also difficult to sell at home. There are precedents in EU law for restricting either free movement of persons or the other EU freedoms. So in that sense, an emergency brake wouldn't be completely out of character for the EU. All of the existing 'brakes', however, are policed by the European Commission and the European Court of Justice – would a domestic audience be happy with such an arrangement? Furthermore, at the very best the brake is likely to be temporary and may only delay flows rather than actually reduce them. It would have to be activated for a very long time in order for it to really reduce net flows in the long-term.

In addition, if ‘cost of living’ is to be cited as a reason for pulling the emergency brake, it means accepting that there is a ‘cost of living crisis’ – a move that would any UK Government would be politically loathed to make in public.

If someone can come up with a criteria for how to capture all the potential variables, then we're open to suggestions. But it would be foolish to announce such a big policy on such loose grounds. As we've argued repeatedly, writing the headline first, and the policy later, rarely works.

Will the new migration figures force the Tories to go one step further on free movement?

Where do migrants to the UK come from the EU or non EU?

David Cameron's hopes of getting back on the front foot on migration have been dealt a blow this morning - ONS figures show that immigration is up, and specifically immigration from the EU is up as well.

These figures are important for two reasons, firstly the timing - these figures come ahead of a much anticipated speech David Cameron is about to deliver on the whole subject. Secondly, the numbers when compared to two targets, firstly the Conservatives' 2010 manifesto migration target of "tens of thousands a year not hundreds of thousands." Secondly, the comparison to migration flows under Labour. Here are some of the headline figures:

• Total net long-term migration estimated to be 260,000 in the year ending June 2014 up from 182,000 in the previous 12 months.
• Total gross immigration of 583,000 in the year ending June 2014, a statistically significant increase from 502,000 in the previous 12 months.
• EU immigration up 45,000 and non-EU up 30,000.
• 32,000 Romanians and Bulgarians came to the UK up 11,000 and EU15 migration also up 10,000.
• Estimated employment of EU nationals resident in the UK was 16% higher in July to September 2014 compared to the same quarter in 2013.

Interestingly, while immigration is also up from the new EU member states, the longer term trend driving EU migration is that from the EU15.

So how will all this play out? Well as you can see from the ONS graph below EU migration is not the largest component in total UK migration. That non-EU migration also went up for the first time in a while is politically significant.

However, EU migration is a large portion. The fact it is not showing any sign of decreasing will fuel trust issues over both the EU and migration.

Politically, perhaps the most significant aspect here is that net migration to the UK is now higher than when Labour left office (but lower than the peak during the Labour government). Ukip and some media are already jumping on this. Ahead of the speech, there’s one key question:

Has the Tory leadership already ‘priced in’ today’s figures, or has this made a cap of some sort more likely? 

Cross-party consensus developing in favour of OE's proposals for free movement reforms

Deputy Prime Minister Nick Clegg has today said he wants EU migrants to be blocked from accessing the new Universal Credit – which includes income-based jobseeker’s allowance, employment and support allowance, income support, child tax credit, working tax credit and housing benefit – until they have worked in Britain for six months: the benefit would then only be payable for a maximum of six months.

This echoes Open Europe’s proposal that EU migrants should only have access to these benefits after a certain residence period, but that the principle of free movement should stand.

Mr Clegg has also suggested that he wants to permanently restrict the access of migrants to in-work benefits like tax credits, saying they should only be paid to people working the equivalent of a 35-hour week on the minimum wage: a threshold of £227 instead of the current £153.

Writing in the FT, he argues that:

As we streamline our welfare system by combining a range of benefits in a single Universal Credit, we should make sure that only migrants who have worked and contributed can receive the support. New jobseekers should not be eligible. Applying the same principle – that support should be reserved for migrants who are paying something into the pot – we should look at increasing the earnings threshold for in-work benefits such as tax credits. EU migrants could, for example, be required to work the equivalent of full-time hours on the minimum wage in order to qualify.

Meanwhile, Iain Duncan Smith has told MPs that  EU jobseekers will not be able to claim Universal Credit and that access to in-work benefits "will be negotiated" within the EU.

There are two interesting things about this. First, following OE's first pamphlet on this a month ago, there now appears to be cross-party consensus on the need to re-write the rules around in-work benefits - minus Ken "party like its 1992" Clarke, of course.

Secondly, this is a blessing and a curse for Cameron. The former because it boosts the chances of getting stuff done in Europe. The latter, because he does need to differentiate himself somehow from the others and he needs to announce something "new"in his forthcoming speech.

Open Europe report on reforming EU free movement: Make it fair to keep it free

Open Europe this morning published in full the already much cited report on how Cameron can win on EU migration without sacrificing free movement – trailed on the front page of Sunday Times yesterday and featured on BBC News at Ten and the Today Programme, amongst others.

The basic idea is that instead of putting an outright cap on the number of EU migrants who can come here, David Cameron should look elsewhere: Let free movement and its benefits stand, but bring back control over who can access in-work benefits in the UK, restricting EU migrants’ access to tax credits and social housing for an initial period.

It would reduce pressures on both UK wages and local services. At present tax credits provide a big boost to low income wages – sometimes doubling a workers wage. Under OE’s proposal, in some cases, without access to in-work benefits EU migrants’ take home pay would therefore drop below that which they would receive in their home states, meaning that the move would no longer make financial sense. It would also redefine EU free movement to mean the movement of “workers” – not access to benefits – as originally intended. We have a lot of figures to back up our argument that tax credits contribute to the income pull factor to come to the UK – and an annex which elaborates at length about into the Spanish, Bulgarian and Polish income tax, insurance and welfare systems (all done in-house, mind you, Cyrillic alphabet and everything).

A few quick points: First, we clearly note the trade-off: free movement is a net benefit to the UK economy and this would be a way to save it. On Today this morning, John Humphreys tried to frame the debate as us against Ken Clarke, “being on opposite ends of the debate”. The opposite end of the debate would be those who want to end free movement. Our proposal is a pragmatic one which aims to strike the right balance between an open economy and democratic control.

Secondly, Clarke’s substantive point of criticism was that the proposals would be “totally discriminatory”. Why should an EU migrant working in the UK get less, in benefits and tax credits, than a UK worker doing the same job?

• As we argued on Today, the UK’s system is much less contribution-based than most other EU countries. The UK can choose to either move to a full contribution-based system, or change EU rules to better accommodate for 28 different social and welfare systems.
• The UK’s tax credits are effectively social policy – not tax policy. There is no direct link between how much tax you pay and how much you get back in tax credits. They were designed to help UK workers back into work – it is not discrimination to say that these benefits, designed to help make work pay for UK workers, should not be open to the entire EU workforce from the outset. Free movement was never meant to be mutual and unrestricted to other countries’ full social policies.
• If our proposal is discriminatory, taking the argument to its logical conclusion, should we extend tax credits to migrants from outside the EU as well from day one? We look forward to hearing Ken Clarke or others making that particular argument.

This is a fair proposal to try and square the principle of free movement with differing social welfare systems across the EU, and the fact that the UK’s system is far more open than other systems - this proposal will help to reinstate some trust in free movement.

Responding to our report on Today, the Polish ambassador to the UK, Witold Sobkow said that the report has a “sound analytical basis” but argued that migrants don’t make a sophisticated spreadsheet analysis of income differentials before moving to the UK. That may or may not be the case but they will consider in broad terms how much better off they – and in many cases their families – will be by moving to the UK as migration is not a decision most people make lightly.

It stands to reason that state support will be part of that equation even if the exact level of things like housing benefit is very hard to pin down before moving. As our analysis shows, under our proposals, it would no longer make financial sense for someone to move from the average Polish wage to earn the UK minimum wage due to the withdrawal of the right to immediate in-work benefits – it stands to reason that this will impact on potential migrants’ decisions. But without, of course, taking away the basic right to come here to work.

Labour turns its attention to restricting EU migrants' access to in-work benefits

Iain Duncan Smith's opposite number, Labour's Rachel Reeves, has written an interesting piece on EU migrants' access to welfare for the Mail Online, in which signals an important shift in Labour's policy.

Last week we noted that IDS had set out that he wanted to restrict EU migrants' access not simply to out-of-work benefits but also in-work benefits such as tax credits - something that our Research Director Stephen Booth and LSE Professor Damian Chalmers proposed in a recent Open Europe pamphlet.

Reeves sets out three proposals to reform the EU rules on access to welfare. Firstly:

"We believe that it is right to extend the period that EU jobseekers need to live and support themselves in the UK before claiming out-of-work benefits from three months to two years."

This had been hinted at by senior Labour figures before. But, for the first time, Labour have said they also want to address in-work benefits:

"We must also look at the role of in-work benefits. It is far too easy for employers in Britain to undercut wages and working conditions by recruiting temporary workers from elsewhere in Europe on very low pay and with no job security, knowing that the benefit system will top up their income." 

"So while some have said that we cannot negotiate changes to benefits paid to people in work, I am determined to look at how we can deliver reform in this area too."

As we have noted before, restricting access to this low-wage welfare supplement could reduce the incentive to migrate to the UK for the lowest paid jobs as the UK's system of in-work benefits can make a significant difference to the incomes of the lowest paid.

And thirdly, Reeves has said:

"We will work with European countries to end the absurdity of child benefit and child tax credits being claimed for children living in other countries."

This is near unanimous consensus among all the main parties on this point.

The change in stance on in-work benefits is significant and would have the biggest impact, and it is therefore interesting why this wasn't given top billing in the article?

IDS sets out broad strokes of reforms to EU free movement

The Telegraph has an interesting transcript of an Iain Duncan Smith interview with LBC Radio, which outlines the Government's current thinking on EU migration and which might signal the types of reforms that David Cameron is weighing up before delivering his promised speech on immigration in the aftermath of the Rochester and Strood by-election.

Here's what the Work and Pensions Secretary said, following this week's European Court of Justice ruling on access to benefits:

"This is about people who want to enter a country and have no prospects of work and are not intending to work, so that is stopping and shutting the door to them as we have done." 

Essentially, IDS says that the ECJ's ruling runs with the grain of the domestic changes the UK has already made to restrict access to out-of-work benefits. But he is clear that he wants to go further:

"The next problem is people who come to work, and then can claim full tax credits even though they have made no contribution. And that is the point I am making... countries shouldn’t have to do that. They shouldn’t have to support people who are coming over here, who have made no contribution." 

This is very much along the lines of what our Research Director Stephen Booth and Professor Damian Chalmers proposed in their pamphlet on EU migration and national welfare systems - a re-write of EU legislation to enable national governments to restrict access to non-contributory benefits for up to three years.

And, thirdly, IDS suggests that:

"And the third area which you talked about…is that the issue around freedom of movement isn’t that you don’t want to stop freedom of movement, but what you want to be able to say is: ‘sometimes there are limits that communities can absorb people and the pressure on public services and housing and stuff like that’." 

"European rules need to take recognition of the pressure that puts on local communities, and that’s really part of the negotiation."

This last point is perhaps the most interesting as it suggests that the option of some form of 'emergency brake' on EU migration is still under consideration.

As we have said before, there are many ways in which such a mechanism could operate, and it might just be negotiable, although this would be a much taller ask than reforming the rules around access to welfare.

What are the implications of today's ECJ ruling on EU migrants' access to benefits?

As we've said on many occasions, it is not only the UK that is having problems reconciling EU free movement with maintaining control over national welfare systems; Germany has recently tightened up its own domestic rules recently and the country also faced a legal challenge from a Romanian woman living in the country who claimed the right to receive German unemployment benefits - a case which was referred all the way up to the ECJ.

Essentially, the Dano case concerns the interpretation of existing rules around EU free movement and the extent to which EU migrants have a right to equal treatment with nationals of the host member state with regards to access to benefits,

The Court has finally issued its verdict today, ruling that:

"The [2004 free movement] directive thus seeks to prevent economically inactive Union citizens from using the host Member State’s welfare system to fund their means of subsistence. A Member State must therefore have the possibility of refusing to grant social benefits to economically inactive Union citizens who exercise their right to freedom of movement solely in order to obtain another Member State’s social assistance although they do not have sufficient resources to claim a right of residence." 

It is also interesting that the Court has confirmed that certain non-contributory benefits are outside the scope of EU rules which guarantee equal treatment and non-discrimination. The UK and other national governments can therefore use this precedent to defend their restrictions on EU migrants’ access to non-contributory benefits (i.e. the ‘right to reside’ test which could be subject to an ECJ legal challenge).

It also states clearly that ‘special non-contributory benefits’ are a national competence – much of the dispute between the UK and Commission over the ‘right to reside’ test relates to the categorisation of certain UK benefits. This could be useful to the government but it is also true that the UK's case still rests on how the benefits they restrict are defined (i.e. do they fall under the label of 'special non-contributory benefits'), and whether the Commission and the ECJ agree, which we still don’t know yet.

In short – this is likely to be a helpful precedent for the UK and potentially a sign that the Commission/ECJ are prepared to back down over the ‘right to reside’ issue. But more fundamental changes on in-work benefits, which are increasingly important issues in this debate and particularly for the UK, will require changes to EU law - here we set out how this could be done while keeping the principle of free movement itself intact.

Germany's Bundestag votes in favour of stricter benefits rules for EU migrants

The German Bundestag today approved changes to the country’s Immigration Act which are meant to prevent the abuse of EU free movement. This is not yet a done deal as the Bundesrat - the German upper house - needs to approve the changes, and the grand coalition doesn't have an automatic majority there.

Re-capping our previous blogs on this, here are the key proposals - none of them will involve changes to EU law, according to the German government:

Six month maximum stay for EU job-seekers: Jobless EU migrants seeking work in Germany, who don't have sufficient means of supporting themselves (including health insurance) and have limited job opportunities, will be forced to prove after six months that they have a "reasonable chance" of being employed. Otherwise, they will be forced to leave. Exactly how this will work in practice is unclear. This is very similar to what the UK Government already is doing.

Five year re-entry bans: EU migrants abusing EU free movement (by forging documents or being in a fake marriage, for example) will face a re-entry ban of five years. 

Linking child benefit payments to national tax ID numbers: to avoid duplication of payments to EU migrants - which will only apply to EU migrants, not German citizens (which raises a number of questions and which may well be challenged at the ECJ, depending on the outcome of some pending ECJ rulings). 

€225m (€200m of this was already agreed) in financial assistance to help local authorities to deal with migration (€140m would come out of the European Social Fund). 

Interestingly the report that served as basis for the draft law also has a section on “possible further measures on the European level” which notes that:

“Also in other [EU] member states…the issue is debated, in parts very controversially. In this respect the question arises….if and in how far considerations for further steps on the European level or together with European regulations are necessary and reasonable. The Committee will deliver an opinion on this in its final report.”

There are two separate cases referred from German social courts to the ECJ to keep an eye on. The first ruling - relating to the access to benefits for “economically inactive” EU migrants - will be delivered on 11 November and Angela Merkel stressed already that she "spoke with David Cameron and we are both anxious to receive the verdict and we will interpret it together."