Patrick Wintour and Alan Travis Friday 28 November 2014
Prime minister to announce that EU membership is dependent on measure affecting more than 300,000 EU migrants in UK
David Cameron's proposal aims to make Britain a less attractive place to EU migrants. Photograph: Getty Images
David Cameron will deliver the most challenging speech of his premiership on Friday as he tries to restore his shattered credibility on immigration by saying Britain’s European Union membership is now dependent on nation states being able to withhold almost all benefits from EU migrants.
The measure would affect more than 300,000 EU migrants working in Britain and claiming tax credits. It is designed to reduce the disparities in take-home pay between that earned by EU migrants working in Britain and in their birthplace and is aimed squarely at the low-skilled end of the labour market.
The proposal, to make Britain a less attractive place, is an implicit acknowledgement that cutting back on EU migrants’ access to out-of-work benefits, the main thrust of coalition policy so far, is ineffective since migrants come to work rather than as “benefit tourists”.
Under the plan an EU migrant would need to work in Britain for as long as four years before being eligible for tax credits.
The proposal requiring a rewriting of the EU’s social security rules, and possibly treaties, is to be delivered in an address in the West Midlands and will in effect set out Cameron’s terms for recommending Britain continue its 41-year-old membership of the EU in a referendum scheduled for 2017.
But in his speech Cameron is not expected to call for the right to apply a temporary emergency brake on free movement of workers if a country is being overwhelmed by EU migrants. The absence will disappoint Euro sceptics who have become doubtful that fiscal disincentives will be enough, and will prompt the Ukip leader, Nigel Farage, to argue that Britain will only regain control of its borders if it leaves the EU.
The former prime minister John Major, in a speech in Berlin a fortnight ago, had suggested that applying a temporary brake was necessary, and it was thought he was trailing the plan on behalf of Cameron. But it appears Downing Street, assessing the diplomatic feasibility, has held back from endorsing a demand that would have struck at one of the fundamental principles of the EU.
The Conservatives have also been told that plans to put a brake on what the government has described as “destabilising flows of EU migrants” would be very hard to set out in law.
Senior figures including the new EU president, Jean-Claude Juncker, and the German chancellor, Angela Merkel, have said the principle of the free movement of workers is non-negotiable, but are likely to support a fundamental review of the right of EU migrants to be able to access other countries’ social security systems.
British diplomats and ministers have been touring European capitals trying to rally support for the proposals, and it has been notable that David Cameron, in a belated effort to build alliances, has in recent weeks been loth to criticise his long-term opponent Juncker.
The prime minister’s defining speech comes as immigration figures show net migration to Britain is now 16,000 a year higher than when the Tories came to power.
Net migration rose to 260,000 in the year to June – an increase of 78,000 on the previous year, making a mockery of Cameron’s critical 2010 election “no ifs, no buts” pledge to bring net migration down below 100,000 before the 2015 election.
The level of net immigration to Britain has been above 200,000 every year for a decade now and is an indication of rising labour mobility within Europe.
Cameron’s coalition partner Nick Clegg said: “This was a Conservative preoccupation. They made that promise. They have now broken that promise and they will have to suffer the embarrassment of having done so. I think that it does damage public confidence in the immigration system by over-promising and under-delivering in this way.”
The numbers show that putting aside the EU net migration figures, net migration from outside the EU to Britain has risen to 168,000. The government in theory has control over migration from outside the EU, but the figures suggest it has not been able to put bold enough measures in place to counter the lure of the UK’s buoyant economy.
Cameron is likely in his speech almost to make a virtue of the failure of his policy to argue that extraordinary counter measures are now required to give a clear right for EU nation states to decide whether and when EU migrants should be allowed to be paid in-work tax credits.
In advance of the Cameron speech both the Liberal Democrats and Labour have called for the right of EU migrants to claim tax credits to be curtailed.
A snapshot of the tax credit caseload in March 2014 found 318,000 families had a non UK EU national in receipt of tax credits, alongside a further 421,000 non EU nationals. About 16% of the total tax credit caseload comes from outside the UK.
The figures also show EU migrants are slightly more likely to claim in-work benefits than UK nationals. EU migrants make up 5.56% of the UK workforce, but families with at least one EU migrant make up 7.7% of in-work tax credit claims.
It is argued that withdrawal of tax credits, principally working tax credit and child tax credit, will dramatically cut the amount of income unskilled EU migrants receive, leaving them closer to the salary they would be paid in their native country.
The think-tank Open Europe has calculated that if tax credits were withdrawn a single earner on the minimum wage with no dependent children would see their income drop by £100 a week from £290.28 to £196, taking their pay close to the Spanish minimum wage.
The disincentive effect of withdrawing tax credits for an EU worker on the minimum wage in the UK but capable of earning the average wage in their home country would force Polish workers to take a 22% pay cut, while a Bulgarian would only earn a little more.
Open Europe has argued that in-work benefits should not be available until an EU migrant has worked in Britain and contributed to social security for between two to five years. It is argued continental welfare systems, unlike the UK are still dependent on the contributory principle.
David Cameron to tell EU: cut all tax credits to migrants | Politics | The Guardian
