Europe: Britain's migration delusion

Right from the start, EU immigration was the glaringly obvious hole in David Cameron's pledge to "reduce net immigration into the UK from the hundreds to the tens of thousands”. The prime minister has closed down entire tiers of Britain's points-based visa system. He has reduced the numbers of international students dramatically: 2012 saw a large drop off in international registrations, despite appalled university administrations and liberal mouthpieces like The Economist. But what can he do about immigrants from the EU, who normally account for a little less than half the UK's annual intake?

Sweet nada, it seems. Unless, of course, he can somehow build an unlikely coalition of countries to rewrite the EU's rules on the free movement of people, or doesn't mind ending up before the European Courts of Justice for infringements. Wait: Britain already has. On 30^th May, the European Commission announced it would take the UK to court for requiring EU migrants to pass a 'right-to-reside' test to qualify for Jobseeker's Allowance (JSA) and Child Benefit. David Cameron had only just rattled off a speech in Ipswich a few weeks earlier promising to restrict EU nationals' access to social housing, the NHS and JSA after six months, steps which are intended to go further than the current arrangements now being challenged before the ECJ. The speech's central proposals largely came apart under scrutiny. Despite this, is a huge row looming between Britain and the rest of the EU over immigration?

Britain seems to have moved into an era where migration statistics – and expected arrivals from countries such as Bulgaria or Romania – shape the political agenda almost as much as Gross Domestic Product figures. Other parties criticise Cameron's immigration policies for a lack of efficacy, not for their wrong-headedness, while scraping the policy barrel themselves for ideas on how to limit EU migrants' access to Britain's social security net. Ed Miliband spoke recently of the need for 'procedural fairness' regarding the distribution of social housing to EU migrants or their eligibility for Child Benefit if used for children not resident in Britain. Even the nominally pro-European Liberal Democrats have quietly shelved any lenient-sounding rhetoric on immigration.

The UK's panic over immigration figures has endured for six years. Home secretaries have fallen because they could not say how many illegal immigrants there were in the country. (In January, a study commissioned for the Home Office finally had a go - 863,000.) The UK Border Agency was established, and then its abolition announced, earlier this year. Refugee backlogs have been cleared, only to accumulate again. But this is the first time that EU migration has taken centre stage in Britain's immigration debate since the UK opened its doors to migrants from Central and Eastern Europe in 2004.

So what follows is a brief guide to some of the main questions in a row that is sure to rage at least until the European parliamentary elections next year, the ECJ's final decision on the 'right-to-reside' in 2015 (there are actually a stack of such cases in the pipeline from all over Europe) and probably a great deal longer.

What rights do EU nationals have to come to Britain, how many are there now, and are they a burden?

EU nationals are free to move to Britain for up to three months after which they must be working, self-sufficient or studying to stay. There are just over 2 million living in the UK and this accounts for a little over half of the country's foreign-born population. They mainly hail from Poland, Lithuania, France, Germany and Italy, in that order. But, on average, these countries are decreasing sources of migration to Britain compared with a larger and increasing share from India, China and Pakistan. (Many Lithuanians have returned home in recent years, for example.) Arrivals from countries hit hard by the Eurozone crisis, such as Greece and Spain, have also increased sharply in recent years.

EU migrants cannot simply arrive in Britain, sign on to the dole and put themselves in the queue for a house. EU rules say they must be eligible for the same benefits as other Britons, but only after they have been  'habitually resident' for at least six months. Before then, their home country is responsible for their social security needs and any (say, medical) expenses related to their stay in the UK are reclaimable. Poland's social security ministry – for example – pays out millions every year to other EU countries' health services for care of Polish nationals. And Slovakia is also in trouble with the European Commission for ceasing to pay disability benefits to its own nationals after they move to another EU country.

Does Britain get the worst deal in the EU's free migration regime?

Far from it. That prize arguably goes to Spain, where migrants continue to arrive in large numbers despite the country's serious economic problems. Austria, Belgium, the Netherlands and Spain all have greater numbers of EU nationals living in their countries, and Germany had roughly the same number in 2011. Remember: the EU's free circulation of people regime is a two-way street. There are about the same number of British nationals, an estimated 2.2 million, living elsewhere in the EU (mainly France and Spain) as vice versa.  Furthermore, the UK's open labour market tends to attract the young, and therefore healthier, migrants who are less of a burden on its health service. Spain for example – home to almost 400,000 Britons, many of them retirees – complains that its medical system is under intense pressure because of the requirement to look after EU residents and tourists. The European Commission took Spain to court over the refusal of its hospitals to treat EU nationals for free on the same day as Britain's social security case was announced.

And while Poles sending Child Benefit payments home might offend a very British sense of fairness, be careful what you wish for: this arrangement is also cheaper for Britons. If the 500,000-odd Poles in the UK all move their children there, those children take up school places, hospital services, dental and childcare and become the source of tomorrow's immigration outcry. Better to pay for back-to-school stuff in Posnan and let the Polish government take care of the rest.

So what explains the apparent insanity of the Commission taking one of the most open EU countries to court over benefits for migrants? First, Britain's social security system is modest compared to some other EU countries but access to it is easier because it is based on need, rather than linked to a minimum amount of individual contributions per person. Second, unlike the National Health Service, few other health services in Europe are completely free at the point of use. Third, under EU law, migrants from the rest of the Union have to be treated the same as British nationals.

These three factors together explain why Britain is a relatively good deal for European migrants and why it has disputed access to benefits for some migrants claiming to be resident in the UK by using a secondary test known as 'the right-to-reside'. Economically inactive migrants can lose their free movement rights – and access to benefits – under this test, which is designed to see whether they still qualify as EU job seekers. Overall, EU migrants pay about 30 per cent more into Britain's public services than what they take out, so they are now effectively subsiding services to the native population. But the Commission – which at all times is focusing on ensuring a level playing field across the Union – is pushing back on a point of principle, since economically inactive UK nationals are not subjected to such a test when local authorities seek to force them off the dole.

What would make this a non-issue is if Britain were to change its fiscal system to make access to benefits more linked to individual contributions. However, this would be tantamount to a new deal for every taxpayer in Britain and therefore hugely politically sensitive and difficult. No government is likely to change the structure of the fiscal system unless EU migrants are actively bankrupting it, which they certainly are not. You can see a nice little video on how access to unemployment benefit works across the Union here.

Can Britain kick out economically inactive EU migrants?

Cameron's Ipswich speech hints that the government will cease paying unemployment benefit (at a basic rate of £71.70 per week) to EU migrants that seem to have no chance of employment after six months. (Remember: only 5 per cent claim out of work benefits compared to 17 per cent of the native born population.) But what about removing the economically inactive from Britain altogether? After all, EU free movement rules do say that workers must be employed or self-sufficient to stay.

Well, yes, but. First of all, EU nationals gain an undisputable right of permanent residency after five years living in the country and hence are entitled to retire in the UK and access state pensions. Secondly, multiple rulings of the European Court have upheld the rights of EU workers' dependents to live in Britain and access benefits on the same basis as natives, including if they are non-Europeans, or if their EU spouse has died or perhaps abandoned them. This is where EU rules on free movement become elastic because the ECJ has had to weigh their meaning against the fact that people's lives are messy. The Court is likely to take a dim view of Cameron's plans if they amount to discriminatory behaviour, so the prime minister is in effect pledging to remove benefits from any UK or EU national who remains economically inactive for longer than six months.

Moreover, it will be difficult to construct a test that proves that an EU migrant has no “genuine” chance of employment and should therefore be taken off the benefits register. Under EU rules, the number of years worked in a member-state has to be taken into account when accessing eligibility for benefits in another. So simply having no employment history in the UK will not suffice to take someone off the benefits register, although they would have to provide evidence of previous employment elsewhere.

But how about kicking out real welfare cheats, or EU nationals who commit a crime?

EU nationals can be expelled, but it must first be proven before an immigration tribunal that they pose a serious risk to the public. Welfare fraud involving EU nationals seems to be a more serious problem on the continent rather than the UK: In May 2013, the Dutch authorities uncovered a Bulgarian-Turkish organised crime ring which had been bussing Bulgarian villagers en masse to register for and collect benefits in the Netherlands. Anecdotal evidence suggests that similar fraud is also happening in Finland and Spain, albeit hardly as brazenly. But Britain's position as an island certainly benefits it in this respect: even a modestly priced Easyjet flight negates the prospect of mass welfare tourism to Albion.

In April, Germany invited Austria, Britain and the Netherlands to join it in asking the Commission to make it easier to permanently kick out serial social welfare fraudsters. Some benefit thieves simply re-apply for welfare assistance after being caught. EU countries are reluctant to hand out jail sentences for such offences and therefore cannot permanently ban them from their territories. This is more a theoretical problem than a real one, so the Commission has challenged the four governments to come up with the evidence that would justify re-opening the acrimoniously negotiated free movement rules. The Commission is due to report back to the EU as a whole at the end of the year on whether there is a serious problem. But even it did propose to re-open the rules, such talks are likely to drag on for years without getting anywhere: the Mediterranean countries, for example, would see the move as an attempt to lock their citizens out of the labour markets of Northern Europe.

EU countries are due to sit down in 2014 to discuss the future of free movement, as well as that of the Union's passport-free zone, the Schengen area. Until now, the focus of such talks has always been on the security aspects of free circulation and the need to boost police and judicial co-operation to catch criminals. The next few years are likely to see such cooperation becoming much more focused on prevention of tax evasion and welfare fraud. Previously insular national social security ministries and secretive national revenue collectors will need to develop more ambitious methods of co-operation and data exchange, perhaps in the form of a European social security card.

In the longer term, it seems likely that EU countries will need a ministerial forum to discuss how they manage their labour markets, including when and where certain restrictions might be a good idea. The lifting of labour market restrictions with Bulgaria and Romania in 2014 will keep this issue live, although the impact on the UK is likely to be limited. For example, the greater part of Romanian migrants head for North America. In Europe, their preferred destination is currently Germany, by a long shot.

Can the Tories live up to their pledge on migration?

Unlikely. Latest figures from the OECD record a net migration (inflows minus outflows) of around 215,000 for 2011 with a further decrease in the annual intake expected when the 2012 figures become available.  Even if all migration from EU countries were to evaporate tomorrow, Britain's annual net intake would still be nearer the 100,000 figure. Again, remember that the numbers of new arrivals to the UK from China and India are growing faster than intra-EU migration.

Of course, all of this ignores the fact that even The Daily Telegraph acknowledges that “because of immigration to the UK, British taxes are lower, spending is higher and the deficit is smaller.” And the reality is that Britain could hardly wish for better migrants than those it receives from its European hinterland: in the main they are young, well-educated, hard-working, more likely to move back home than non-Europeans, less likely to be on benefits, far less likely to need social housing and exhibit relatively few integration or security-related problems. French migrants in Kensington are not hurling Molotov cocktails at police à la recent riots in the suburbs of Stockholm.

Britain's anti-immigration lobby also ignores the reality that developments in the EU migration field sometimes distinctly favour the UK. Take the EU's common asylum system, usually thought of as an enemy by British eurosceptics. This is establishing an absorption ring around and far away from the UK by forcing countries that hitherto regarded refugee protection as the responsibility of rich Northern Europeans only. In 2012, for example, Romania's refugee claims jumped 166 per cent from the previous year. Why? Because Bucharest is now required by virtue of its EU membership, and subsequent legislation, to apply the Geneva Convention properly. This is a lot less likely to have happened otherwise.

Hugo Brady is a senior research fellow at the Centre for European Reform.