The claim
“What the EU is now trying to do is get us to provide benefits for those who come to this country with no intention to work and no other means of supporting themselves, with the sole purpose of accessing a more generous benefit system.”
Iain Duncan Smith, September 30 2011
The background
The threat of a legal challenge from the European Commission to Britain’s benefit rules has provoked a storm of anti-Brussels sentiment this week.
The EC says the UK is in breach of European law by insisting that citizens from other EU countries have to pass a tougher test to get hold of social security payouts than British citizens.
The government denies it is discriminating against our neighbours, says it resents this attempt to meddle in the UK’s affairs, and claims a change in the rules could cost the British taxpayer £2.5bn a year.
Two days before the Conservative party conference, Tory ministers seized on the opportunity for a unique double whammy – a chance to bash benefits cheats and meddling Eurocrats in the same breath.
The Work and Pensions Secretary, Iain Duncan Smith, sounded the charge in the Telegraph, saying the proposed changes “could mean the British taxpayer paying out over £2 billion extra a year in benefits to people who have no connection to our country and who have never paid in a penny in tax”.
Employment Minister Chris Grayling said: “It’s obviously right that we support those who work and pay their taxes here, but it’s clearly completely unacceptable that we should open our doors to benefit tourism.”
Critics have been equally outspoken, with the Child Poverty Action Group (CPAG) accusing the Government of being “irresponsible” and peddling “dangerous myth-making”.
The analysis
In 1994, the Conservative government decided that people who had recently arrive in Britain and wanted to claim benefits had to pass a habitual residence test.
Before being allowed to claim, immigrants were interviewed and asked a list of questions about their reasons for coming to the UK, their work status and history, how long they had been in Britain and their future intentions.
In 2004, when the addition of more countries to the EU was increasing fears of so-called “benefit tourism”, the rules were tightened up.
At whole host of awards like child benefit, child tax credit, state pension credit and unemployment support allowance were only paid to those with a “right to reside”.
UK nationals and, slightly bafflingly, people from the Republic of Ireland, are automatically granted that status.
But most people from elsewhere in the EU (except Ireland) have to be resident here for more than five years before they get access to the same benefits as a Briton, hence the EC’s accusation of discrimination.
Lawyers who work in the field say the discrimination is real and unfair.
Adam Weiss is the Assistant Director of the Advice on Individual Rights in Europe centre, who made the original complaint to the EC.
He says a single mother who wanted to start claiming benefits after living, working and paying taxes in the UK for three years probably would not get Income Support, whereas a British woman would – the only difference being one of nationality.
But is discrimination a price worth paying if it stops benefit tourists from flooding the country?
You might think from listening to ministers that, if the “right to reside” test is abolished, there will be nothing to hold back hordes of migrants heading for Dover in search of an easy life, courtesy of the taxpayer.
In fact, the habitual residence test would still be in place, and critics of the government say it is strong enough in itself to prevent benefit tourism.
Sarah Clarke, a solicitor who handles benefit cases for CPAG, said one of the key factors in whether you pass that test or not is how long you have been in the country before you make a claim.
In most cases, that means that you would have to be in this country for one to three months before you could expect to get any kind of handout.
So much for benefit “tourism”, if what that means is staying in the country for a short while and sponging off the state at the same time. Anyone who came here with that intention would find themselves with nothing to live on for months.
What about someone dreaming about a spending the rest of their life in the UK on benefits? Someone who might satisfy the habitual residence test in terms of their intention to live here, but has not intention of ever working for a living?
As Ms Clarke points out, the government has recently brought in a number of tough measures designed to weed out benefits shirkers.
Only a small number of economically inactive people, like single parents with very young children and the disabled, can now expect to collect regular benefit checks without being obliged to look for work.
She told FactCheck: “We have got quite strong deterrents in place already. You and I could not decide we just wanted to give up work and live on benefits for the rest of our lives.
“In our experience, the people we are advising are people who come looking for work or who have been working and – as could happen to anybody – they have fallen on hard times. I don’t think we ever get inquiries from people who have just pitched up wanting to claim benefits.
“I think that the internal rules are tough enough.”
She added: “UK nationals migrating to other member states also benefit from EU provisions if they need to claim benefit whilst they are in those other member states.
“In fact other EU countries may have more generous benefit systems than the UK does in some respects.”
On that last point it’s not at all clear that the UK has an outstandingly generous benefits system compared to other EU states.
Because the social security systems of different countries are so different, it’s difficult to compare like with like. The European Commission said it didn’t have up-to-date figures.
Some 2008 research by Forbes put Britain behind the Netherlands, Germany, Sweden, Luxembourg, Finland and Denmark based on comparing the average benefit payment measured by local purchasing power with average income.
In 2010 the American government produced some research that put the UK behind Ireland, Germany, Denmark and the Netherlands.
The verdict
So if benefit “tourism” is still out even if the European Commission gets its way, long-term sponging won’t an option thanks to the government’s own crackdown, and there are other more attractive destinations closer to home, it’s difficult to see why floods of work-shy immigrants will be queuing up to make Britain their home.
FactCheck asked the government for estimates of how big the problem of benefit tourism actually is, and whether it had got better or worse since the introduction of “right to reside” in 2004.
A DWP spokesman said the department had “no information available”.
We also asked where the headline figures of a potential annual cost to the taxpayer of up to £2.5bn came from, and we were told: “The £2.5bn is taken from our internal estimates – showing the worst case scenario. Essentially we have looked at a range of scenarios with the possible fiscal impact ranging from £650m to £2.5bn per annum.”
It later transpired that the figures were based on estimated changes in the economically inactive population, with analysts looking at possible increases of five, ten and 20 per cent to get that worst-case scenario figure.
As far as FactCheck understands – and we weren’t allowed to look at the methodology in detail – this appears to mean that it would cost the country £2.5bn if the ranks of the economically inactive (9.38 million according to the latest Office of National Statistics figures) swelled by 20 per cent.
That would mean a sudden influx of 1.87 million benefit migrants – more than three times the entire Polish-born population of the UK – would have to take place for the Government’s direst predictions to come true.
Given this dubious evidence base, Mr Duncan Smith’s comments are going to stay firmly down at the Fiction end of the FactCheck-o-meter for the time being.
By Patrick Worrall
