Tories plan to deny EU migrants out-of-work benefits under universal credit

http://www.theguardian.com/society/2014/nov/06/tories-deny-eu-migrants-benefits-universal-credit

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Ministers are preparing plans to bar jobseekers from the European Union from receiving all out-of-work benefits once the universal credit system is completely introduced.

This is now regarded within government as the most effective long-term way to reduce any attractiveness in the UK welfare system that would draw migrants from EU countries to Britain.

The proposal has the enthusiastic support of Iain Duncan Smith, the work and pensions secretary, and is likely to feature in any package drawn up by Downing Street to persuade sceptical voters that the UK can get control over EU migration and remain within the European Union.

David Cameron has promised to bring immigration under control and is expected to set out detailed measures in a speech before Christmas.

Duncan Smith would also like to see tighter controls over HM Revenue & Customs, the authority that is responsible for the administration of tax credits and is not subject to the same stringent controls to reduce fraud as the Department for Work and Pensions.

Although universal credit – a merger of as many as six separate benefits – is unlikely to apply to existing claimants until as late as 2018, it will apply to new claimants sooner.

The government is likely to argue that restricting access to universal credit is not in breach of EU rules since it is not a benefit primarily designed to facilitate access to the labour market. As a result, it is believed that access to its out-of-work benefits could be restricted without interfering with the free movement of labour, a central pillar of the European Union.

Angela Merkel, the German chancellor, has said this week through her aides that she would not tolerate restrictions on the free movement of labour since she regards it as one of the fundamental principles of the EU and therefore non-negotiable.

Migrant workers – not just those from the EU – cost British taxpayers £5bn a year in tax credits, it has been estimated, but the figures are controversial.

Under EU rules, any benefit that is designed to facilitate access to the labour market must be made available to everyone across the EU, or else there is discrimination.

But the government is set to argue that universal credit is about social security and is in essence an anti-poverty measure and anti-welfare-dependency measure. Some of its anti-welfare-dependency measures include a switch from weekly to monthly payments, as well as other measures to enable people to handle their own money and pay their own bills.

EU law clearly allows nation states to have more control over access to benefits defined as “social security”. For instance, housing benefit is not payable to to EU jobseekers since it does not affect access to labour markets.

The DWP also believes the child tax element of universal credit will not be exportable by EU migrants working in Britain: it would only be payable if the child in question lived in the UK.

Ministers have already said they would like to restrict access to child benefit even though it will remain outside universal credit. Ministers could either prevent the benefit being claimed for children that did not live in the UK or require that the benefit is paid at the equivalent rate paid in the migrant’s home country.

Ministers have already introduced time restrictions and qualification periods for access to the income-based jobseekers’ allowance. Recent studies estimate that migrants since 2000 have been 43% less likely to get state benefits or tax credits compared with the UK-born labour force, and 7% less likely to live in social housing.

These figures are borne out by the latest Department for Work and Pensions statistics, which show that only 113,000 out of the 4.2 million people claiming key out-of-work benefits in Britain are European migrants.