Daniel Hannan, the Conservative MEP for South East England, writing in yesterday’s Sun has picked up on a story published in last weekend’s Sunday Times entitled ‘Benefits for Migrants Face Axe’ (£) which details plans reportedly being drawn up by Ministers to restrict in-work benefits for future EU migrants to the UK.
Mr Hannan praised the plans and claims that denying in-work benefits will ‘reduce overall numbers’ from the bloc by making ‘British jobs less attractive to EU workers.’
Mr Hannan writes: ‘If you come to the UK from, say, Romania, and top up your salary with tax credits and other in-work benefits, you are better off on the minimum wage here than on the average wage at home. Remove the top-ups and the work becomes a lot less lucrative.’
Data released by HMRC shows that in the financial year 2013/14 the UK paid out over £4 billion in working age benefits to EU migrants and this figure is likely to be above £5 billion this year. It therefore makes good sense to restrict benefits for new arrivals. After all, why should the taxpayer be subsiding cheap labour from abroad?
However, our analysis suggests that it would be wrong to think that benefit restrictions alone will reduce the rate of arrivals as Mr Hannan has suggested. In fact, the key to any future reduction lies in the introduction of work permits.
This is because most people who arrive in the UK from another EU country are either single or childless couples who are not entitled to in-work benefits to any significant degree, even if they occupy a low paid job.
Our analysis found that 75% of families headed by an EU migrant who arrived in the previous four years were made up of single people and couples without children.
A single childless worker occupying a full time job paying the national minimum wage is entitled to less than £10 a week in tax credits. Couples on the national minimum wage are not entitled to any tax credits at all.
For couples with children, if both parents are working 35 hours at the national minimum wage they will be entitled to around £4,000 in in-work benefits. Losing these benefits would still leave them with a net income of around £22,000 a year, which is roughly equivalent to average earnings in the Czech Republic. Therefore, even accounting for benefit restrictions, work in the UK remains lucrative to migrants from Eastern Europe.
For those without children then, benefit restrictions will make no difference and even for those who do have children even if their benefits are withdrawn they will continue to earn more in the UK for the same work because the standard of living in the UK is so much higher.
The only way in which immigration from the EU can be reduced is by introducing work permits which restrict those who can come to the UK for work based on factors such as pay and skill level of the job. We recommend that EU workers be incorporated into the existing system which limits migration for work to those offered graduate level work. We estimate that this could reduce net migration from the EU by around 100,000 a year.