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Monday, November 24, 2014

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.


Jesper said...

Lots of data but there is one area that I couldn't find much about:

A comparison of the difference between being unemployed in various countries and moving to (in this case) the UK and finding a minimum wage job.

The report seems to be resting on the assumption that employed people emigrate. Some do, most don't. Of course, that differs at different salary levels. People moving for well-paid positions are often (almost always) already in employment, people moving for minimum wage jobs aren't.

Average Englishman said...

A few observations:

From a BBC TV report over the weekend I saw Open Europe referred to as a 'Eurosceptic Think Tank'. I am not sure if this means that the BBC has not researched OE properly or their view is just so Europhile that OE's stance comes across as wildly Eurosceptic to their standard EUSSR-loving viewpoint; could be either or both I suspect.

Ken Clarke talks so much EUSSR loving tosh he cannot be taken seriously. The man would still have us joining the Euro for goodness sake. Like John Major (our hero of Exchange Rate Mechanism for the UK and bankrupt the lot of us fame), he refuses to accept the simple facts in front of everyone that the Euro doesn't work and that partly as a result of this the UK will be obliged under EUSSR 'freedom of movement' laws to welcome ever more economic refugees from the Eurozone as the economies of the worst hit of those countries continue to bleed people in need of a better place to live and indeed many of them, work.

I expect that OE's masterplan would have some effect upon the numbers entering the UK but I doubt that it would have anything like the type of major impact the majority of UK voters want.

As many have pointed out here in the past the immigration problem is not just about workers and benefits it is about the free mobvement of people, working or otherwise. And in any event, I want, nay demand, along with many, many other people, proper democratic control of my country's borders back within the authority of my elected government that will be accountable to me as a UK voter. So, sorry OE but tinkering with the benefits rules will not be anything like good enough.

Oh and for the record, I am not some sort of anti EU fanatic, just another one of a legion of ex Conservative voters whom Dave has to woo back to see his party's prospects recover in the polls. Dream on Dave, dream on.

Mally said...

Why don't we apply the maxim "What you put in you can get out?" But first you have to put in - or your parents had to put in to make the system of benefits equitable. It matters not whether it's a taxable system or a social system. No indigenous person whomsoever they may be will be sold on the idea that you can have support from a system in which no prior payment or contribution has been made by you or your parents. Unless, of course, your name is Ken Clarke. UK citizens would have to sign up to a reciprocal agreement. Making this global could cause complications unless the benefits were comparable to ours.

christhai said...

Open Europe still you put out the message that you are in some way "an honest Broker" for matters EU.

You are not. You are an EU organisation with a head office in Berlin.

The problem is NOT the benefits.

Benefits are the Distraction - and that is all.

The NUMBERS are the real Problem.

To try and limit the NUMBERS of Immigrants by telling everyone who is in the EU -

"You can go anywhere - work anywhere for as long as you like. The date of arrival or departure is YOUR choice."

THIS is the Problem.

The EU, run by Big Business want the benefit of the CHEAP labour.

They can turn up or down the heat for Migration by wrecking an economy here and there - something they are very good at.

Every country should leave the EU.

But the UK has the population will to leave.

It is the EU Controlled Parties of Labour, Conservative and the despicable Liberals who want to keep the people in the EU Prison.

Enough - out.

Denis Cooper said...

"free movement is a net benefit to the UK economy"

Nope, don't agree with that, not when everything is taken into account as it should be.

Anonymous said...

Same as above.

Jesper said...

Net benefit to the UK economy?
Some say that the economy has recovered from the crisis, on a net-basis that might be true, however, the recovery has been for the few and not for the many.

Is the net-benefit to the UK economy equally distributed?

If a majority sees a loss while the few benefit and the total (the gains of the few minus the loss of the many) is calculated to be a net-benefit, would it make sense for the majority to vote against?

Anonymous said...

Why is there a need for a change of EU legislation? Why can't the UK simply amend the laws to state that all persons (regardless of whether they are UK nationals returning home from abroad! UK nationals living in the UK, or other EU citizens) applying for in-work and out-of-work benefits need to have been physically present and resident in the UK for 3 or 5 years before being able to apply?