9 December 2015

A comment by an economist at the Office for Budget Responsibility (OBR), Sir Stephen Nickell, to the Treasury Select Committee yesterday has attracted a lot of attention around the issue of migrants’ access to in work benefits. However, the actual extent and context of the comments have again been very poorly covered and reported, as such it is worth reviewing what Nickell actually said.

Nickell was giving evidence to the Committee on the unrelated issue of the spending review, but was asked about the plan to curb EU migrant’s access to in-work benefits for four years. His initial response was that the OBR had not done any work on the issue and it was outside his remit. When pushed for his personal view he said,

Changing the benefit rules for EU migration so that they become more difficult to obtain – you are asking me what impact that is likely to have. In my opinion: not much.

When asked to expand, importantly he said,

I have no idea because I have not investigated it…to go further and start trying to analyse the actual consequences is not within our remit.

Most of the reports just include the “not much” part not “I have no idea” part. It’s important to note that this is just his personal gut feeling not the OBR’s view (as the Sun headline proclaimed for instance) and that he has not researched the issue in detail and had no evidence to back up his feeling.

I understand the pressure to provide the Committee with an answer but lobbing this unsubstantiated view into such a sensitive debate seems to have done far more harm than good. He also further caveated his comments highlighting the basic principle underpinning the policy has some validity saying,

[There is] quite a lot of evidence that the differential in job opportunities, the differential in pay, is a significant factor in migration flows…around the world.

There is a fair debate to be had about the impact which the proposed policy might have on the numbers of EU migrants. We looked at this issue almost a year ago now and found that it could impact 15% of EU migrants, around 100,000 over the four years. As we said at the time, this might satisfy some or classify as a substantial impact to some and not to others. It also does not include the potential benefit of being able to target these in-work benefits on UK workers to help get them back into work, as they were originally intended to do. Furthermore, it is also likely targeted at the area where many people are concerned in terms of the low-wage/low skilled sector.

In any case, the debate should focus on discussion around the figures not off the cuff remarks. Committee Chair Andrew Tyrie has rightly asked Nickell to “substantiate” his remarks in writing, hopefully his response will be a better contribution to the debate.

In that sense it seems particularly perverse that these poorly reported comments look to have led the Daily Mail to officially back Brexit. Again, there are plenty of reasons to back Brexit, this personal opinion (not the OBR view) without supporting evidence does not seem to be one of them.