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.

European bogies under the bed aside, does Ken Clarke have a point?

UK Justice Secretary Ken Clarke has just been on the BBC's Today Programme, taking a major swipe at those calling for an in/out referendum. Asked if he accepted that voters were deeply eurosceptic, he said "The nation is a bit eurosceptic" (no kiddin'). But he went on to say,

"The idea that they are all demanding a referendum on the European Union would be regarded as ridiculous, it would be out of sight as a public priority. It is the demand of a few right-wing journalists and a few extreme nationalist politicians."  

He said a referendum would create "absolute confusion" and that he couldn't "think of anything sillier to do...it would settle nothing. Particularly it would settle nothing with the more frenzied eurosceptics who keep believing that European bogies are under the bed." 

Hmmm. Looks like Ken is continuing arguments from ten years ago - and he comes across as very patronising. But he does have a point though: an in / out referendum would actually settle very little - and probably raise more questions than answers. In the next two weeks, we'll publish a briefing looking at these very issues. In particular, we'll look at the tiny issue of what actually happens on Day 2 if Britain did choose to withdraw (i.e. the in / out debate beyond the 'don't bother me with the details' approach that too often comes with this question).

And it ain't easy. This is one you don't want to miss...

Where have all the europhiles gone?

(long time passing)

A few days late, but this is a brilliant piece from Mary Ann Sieghart - one of the heroes from the old no to the euro campaigns in the UK - writing in the Independent earlier in the week. Taking no prisoners, Mary Ann settles the score with the British politicans who once so passionately argued in favour of euro membership:

"Hello? Hello? Speak up at the back! Blair? Clarke? Mandelson? Heseltine? Clegg? Huhne? Surely one of you could put your hand up? Well done, Alexander! Thank you for accepting that you were wrong all along about Britain joining the euro. Perhaps you could have a word with the other boys afterwards?"

She goes through the various arguments that the pro-euro camp used, which turned out to be completely wrong, and the "myths" that it accused the other side of peddling (which we have catalouged here) that have turned out to be completely right.

Mary Ann notes,

"The euro-enthusiasts were always accusing the rest of us of being anti-European....But if anti-Europeans had been asked to design a system to sabotage the EU project, they could hardly have done better than the euro. For what could be more damaging than a doomed currency area in which the poorest nations are forced to accept austerity measures and bailouts and the richest ones are forced to stump up for them? Nearly three-quarters of Germans now say they have little confidence in the euro and two-thirds of them are opposed to bailing out Greece. Hardly a recipe for European amity.

Pro-euro campaigners were quick to stamp on what they called "myths" that were, inevitably, "peddled" by our side. There was the "myth" that monetary union would lead to fiscal and political union. This is now accepted as the only possible solution to the eurozone's woes. There was the "myth" that richer countries might have to bail out poorer ones. That was supposed to be forbidden by treaty, but it's happened. And there was the "myth" that an external shock might hit some countries harder than others, causing huge dislocation. Well, it's there for all to see."

She goes on,

Now is the time for a reckoning. Let us salute the heroes who managed to keep us out of the euro. James Goldsmith, in the last year of his life, forced the Conservatives to agree to a referendum before we joined. That forced Labour to promise one too. Without that obstacle, Blair would undoubtedly have signed us up. Then it was a question of making strong enough arguments to reassure the British people that they were right in their instinct that joining the euro would be a bad idea. All credit goes to Lords Leach and Owen, joint chairmen of the all-party "no" campaign.

But on a question this big, it surely behoves those who tried to push us into the euro to recant now. Blair has become a Catholic; he should understand about confession, repentance and conversion. Danny Alexander showed how it could be done last autumn when he admitted he had been mistaken. We are still waiting to hear from Lord Mandelson, Ken Clarke, Nick Clegg, Lord Heseltine, Lord Ashdown and Chris Huhne. They are as bad as those old Marxists who never conceded communism was wrong even after the collapse of the Soviet Union. We deserve an apology. How dared they sneer at us for being little Englanders or xenophobic when we could just see that the economics were so obviously wrong?

Good question.