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Welfare tourism is largely a myth

in | by Hugo Dixon

A widespread fear is that EU immigrants are taking our benefits. In fact, 24% of the public think immigrants, not necessarily from the EU, come here mainly to live off welfare.  The facts, though, don’t bear this out. European immigrants are half as likely as natives to receive state benefits or tax credits, according to a study by academics at University College London. Overall, those who arrived since 1999 paid £22 billion more in taxes than was spent on the public goods and services they received in 2001-2011. The native population, by contrast, paid £624 billion less in taxes than the value of the goods and services they received. In other words, EU immigrants were subsidising natives even during much of the time when we ran giant fiscal deficits. As our finances come more into balance, that subsidy will probably increase.

Even if one accepts that the lion’s share of EU immigrants come here to work, aren’t there a few “welfare tourists” that deliberately come here to take advantage of unemployment benefit, child benefit, the NHS and so forth? The answer is that there are very few of them. Why would people uproot themselves to cross Europe to come to a country where benefits aren’t that generous in the first place? If they really wanted to become welfare tourists, they would be better off going to Germany or Scandinavia.

The facts bear out this thesis. Only 0.2% of EU immigrants – that’s around 5,000 people in total – claim unemployment benefit without ever having worked in the UK. Many of these probably aren’t even welfare tourists per se, as they could have come here with the hope of finding a job and not succeeded. EU immigrants aren’t coming to the UK for child benefit or tax credits either. Only 2.1% and 1% claim child benefit or tax credits respectively within a year of arriving here. By comparison, one-fifth of the British working-age population claim these benefits.

So “welfare tourism” isn’t a big economic problem. But it is a political problem. The voters don’t see why foreigners should be able to get benefits until they have spent several years paying taxes. The coalition government started tightening up the rules. It banned housing benefit for EU jobseekers, and restricted other benefits, including Jobseeker’s Allowance.

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Cameron has now gone further. As part of his deal with the EU, the UK will no longer have to pay child benefit to migrants whose kids aren’t living in the UK at British rates. It will be able to pay a rate adjusted to the standard of living in the country where the children live which, for a Polish or Romanian kid, would be significantly less.

The UK will also be able to invoke an “emergency” brake letting it limit in-work benefits  – payments to top up low pay – to migrants until they are been living here for four years. EU citizens will not qualify for in-work benefits at all when they arrive. Thereafter, the amount they receive will rise gradually over time.

Although the prime minister has made a huge deal about in-work benefits on the theory that they are a pull factor that encourage EU citizens to come to Britain to work, there is little evidence that they are significant. Indeed, if such a brake had been in effect in March 2014, only 84,000 families would have been affected by it, according to government data divulged under a freedom of information request from The Guardian.

In other words, Cameron’s convoluted emergency brake probably won’t do much to stop EU migrants coming to Britain since the bulk of them aren’t coming here to live off benefits in the first place.

This is an excerpt from “The In/Out Question: Why Britain should stay in the EU and fight to make it better” by Hugo Dixon. 

Factchecking by Luke Lythgoe

This piece was updated on Feb. 26 to take account of Cameron’s deal with the EU