Migrant benefit reform: Doing the right thing for all of the wrong reasons
21 January 2014 12:48am
YESTERDAY saw the government announce the latest in a line of restrictions on the benefits immigrants can claim. New jobless EU migrants will be denied access to housing benefit from April, and will only be able to claim Jobseeker’s Allowance for six months unless they have a “genuine” chance of work. This comes on top of a three-month ban on new EU migrants being able to claim out-of-work benefits.
This is a case of doing the right thing – in a limited way – for the wrong reason. Concerns about immigration continue to gather strength, and the government is keen to address them. A poll by Survation in late 2013 found that 67 per cent think the coalition’s desire to reduce net migration to 100,000 a year does not go far enough. Over a quarter feel immigration in the last decade has brought no positive benefit to the UK.
But contrary to popular belief, migrants have brought net benefits to our economy and are net contributors. Christian Dustmann and Tomasso Frattini of the Centre for Research and Analysis of Migration found last year that recent European migrants, on average, made a net contribution of £2,610 to the public finances each year between 2007 and 2011.
The dynamism of many immigrants also makes a valuable contribution to UK life. Cinzia Rienzo of the National Institute of Economic and Social Research found that increased migration is associated with small but significant productivity gains in the wider economy. The free movement of labour within the EU has contributed to greater economic efficiency and prosperity (just as the relative immobility of some UK workers, for reasons like the state of the housing market, is a problem for all of us).
The welfare reforms themselves, however, should not be dismissed. It should be any government’s aim to reduce dependency – but for everyone, not just migrants. The Autumn Statement estimated that £180bn will be spent on benefits in 2013-14, with a further £28.8bn on tax credits. The importance of welfare reform, however, goes beyond pressure on the public finances. The main lesson we should take from programmes like Channel Four’s Benefits Street is that our current system has resulted in some recipients becoming trapped in a miserable state of bare survival and dependency.
Putting large numbers of people in a position where they depend on government subsidy for essentials like housing is both a desperately sad waste and a recipe for long-term disaster. If the aim of the government’s welfare changes is to prevent migrants from becoming a long-term charge on the state, it should come as a warning that research by former HMRC official Michael O’Connor found that migrants are less likely to claim out-of-work benefits like incapacity benefit or Jobseeker’s Allowance than native Brits (even if migrants may be more likely to claim working tax credits).
Britain’s welfare system desperately needs reform to reflect the principles of contribution and reciprocity. Supply-side reform to make the cost of essentials like housing affordable without subsidy is also vital. We should not do so to deal with an over-hyped immigration problem, however, but should apply those principles to address a domestic problem that is all too real.
Steve Davies is education director at the Institute of Economic Affairs.
In other news
This year's Eurovision Song Contest will feature an addition to the normal line up – for the first time ever, [Read more]
Tonight is the 60th Eurovision Song Contest, and once again we're in for an evening of cheesy music and crazy [Read more]
The Eurovision Song Contest is getting more and more expensive, despite Europe's decline into austerity. [Read more]
There were delays of up to 30 minutes to trains in and out of Kings Cross Station, after the station was re-opened [Read more]
When a 20-year-old footballer publicly declares he wants to leave a club and his agent hurls insults at one of [Read more]
The outbreak of bird flu in the US is leading to an unprecedented situation for companies reliant on eggs – [Read more]
Germany's finance ministry has denied reports it was considering offering Greece its own parallel currency. [Read more]
Chancellor George Osborne was given a boost today, as higher tax receipts helped shrink the deficit by more than [Read more]
Beleaguered spread-betting firm Plus500 today suspended trading in its shares on London's junior market, following [Read more]
The news that card and electronic transactions have overtaken cash as the UK’s preferred method of payment is [Read more]
Despite the crippling effect of election uncertainty, offers received in April were up 15 per cent on last year [Read more]
Former secretary of state for communities and local government Eric Pickles is to be knighted, 10 Downing Street [Read more]
Network Rail engineers have destroyed the Abbey Wood station as part of the Crossrail development that is expected [Read more]
The Championship looks set to once again be named the fourth most-watched league in Europe, following a seven [Read more]
The Costa Coffee owner said Brittain was "the standout candidate from a very strong field". [Read more]
Sugary foods may be taxed to cover the costs of treating obesity, a government minister has said.
European governments must increase efforts to adopt structural reform if “lasting stability and prosperity” [Read more]