David Cameron to tell EU: cut all tax credits to migrants Prime minister to announce that EU membership is dependent on measure affecting more than 300,000 EU migrants in UK / Guardian.

David Cameron to tell EU: cut all tax credits to migrants

Prime minister to announce that EU membership is dependent on measure affecting more than 300,000 EU migrants in UK

Patrick Wintour and Alan Travis

The Guardian, Friday 28 November 2014 / http://www.theguardian.com/politics/2014/nov/27/david-cameron-european-union-immigration

Migrants from the European Union will have to work in Britain for a minimum of four years before they can claim benefits, David Cameron will propose on Friday in a major speech setting out a vision of how the EU can control the free movement of workers – and how he is willing to leave the union if he does not get his way.

In an attempt to restore his shattered credibility on immigration, the prime minister will say that Britain’s EU membership is now dependent on nation states being able to withhold almost all benefits from EU migrants.

The proposal – which would affect more than 300,000 EU migrants working in Britain and claiming tax credits – is designed to reduce the disparities in takehome 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 plan 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”. The proposal, which would require 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.

Insisting his proposals are not outlandish and deserve to be heard, Cameron will promise: “I will negotiate a cut to EU migration and make welfare reform an absolute requirement in renegotiation.”

Significantly, Cameron has held back from calling for an emergency brake to give nation states power to block EU migrants if there is an unexpectedly large surge of migrants.

His proposals are therefore predicated on a cut in potential income for EU migrants being sufficient to slow the numbers of poorer EU migrants coming to the UK.

But the prime minister will make it clear he is willing to leave the EU if his points are not addressed, though that is not his purpose.

He will say: “We have real concerns. Our concerns are not outlandish or unreasonable. We deserve to be heard, and we must be heard. Here is an issue which matters to the British people, and to our future in the European Union. The British people will not understand – frankly I will not understand – if a sensible way through cannot be found, which will help settle this country’s place in the EU once and for all.”

He will add: “If I succeed, I will, as I have said, campaign to keep this country in a reformed EU. If our concerns fall on deaf ears and we cannot put our relationship with the EU on a better footing, then of course I rule nothing out. But I am confident that, with goodwill and understanding, we can and will succeed.”

Seeking to reflect the growth of popular support for Ukip, he will say: “People have understandably become frustrated. It boils down to one word: control.

“People want government to have control over the numbers of people coming here and the circumstances in which they come, both from around the world and from within the European Union …And yet in recent years, it has become clear that successive governments have lacked control. People want grip. I get that … They don’t want limitless immigration and they don’t want no immigration. They want controlled immigration. And they are right”.The Conservatives claim Cameron’s package will deliver the toughest system on welfare for EU migrants anywhere in Europe. The key reforms will mean that in future EU workers will:

• not get in work benefits until they have been in the UK for four years;

• not get social housing until they have been here for four years; and

• not get child benefits and tax credits for children living elsewhere in Europe no matter how long they have paid taxes in the UK.

EU jobseekers will not be supported by UK taxpayers, and be removed if they are not in a job within six months.

The proposals also include measures previously announced, including abolishing the system in which EU migrants can bring family members from outside the EU without any restrictions. There will also be tougher and longer re-entry bans for rough sleepers, beggars and fraudsters, and stronger arrangements for deporting EU criminals and stopping them coming back. There will also be no access to the labour market for nationals of new member states joining the EU until their economies have converged more closely with current members.

The prime minister will say that these changes should apply to the whole of the EU, but should that not prove possible, he would negotiate them in a UK-only settlement.

In his speech, Cameron will insist he is not seeking to challenge a central premise of the EU – the free movement of workers within the EU.

He will say: “Britain supports the principle of freedom of movement of workers. Accepting the principle of free movement of workers is a key to being part of the single market. So we do not want to destroy that principle or turn it on its head. But freedom of movement has never been an unqualified right, and we now need to allow it to operate on a more sustainable basis in the light of the experience of recent years.

“My objective is simple: to make our immigration system fairer and reduce the current exceptionally high level of migration from within the EU into the UK.

“We intend to cut migration from within Europe by dealing with abuse; restricting the ability of migrants to stay here without a job; and reducing the incentives for lower paid, lower skilled workers to come here in the first place.

“We want to create the toughest system in the EU for dealing with abuse of free movement. 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 … EU jobseekers who don’t pay in will no longer get anything out. And those who do come will no longer be able to stay if they can’t find work.”

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 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 thinktank 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.