19 February 2016

The first point to make is that the data on this issue is quite poor and also incredibly varied; meaning data from different sources are not always comparable. As such it is hard to create a singular picture, but there is a general picture which can be teased out.

What does the data published by the government on this issue say?

In his speech at Chatham House Prime Minister David Cameron said “around 40 percent of all recent European Economic Area migrants are supported by the UK benefits system”. He has reiterated this point a number of times, though confusingly he has also misspoken in the House of Commons on this issue.

The government has published two specific bits of data on this issue, one from the Department for Work and Pensions (DWP) and the other recently in answer to a Freedom of Information request.

The DWP release states that 37% to 45% of EEA migrants “who were resident in the UK having arrived in the preceding 4 years were in households claiming either an in-work or out-of-work benefit or tax credit.” This is where Cameron’s reference to “around 40%” comes from.

This includes both out-of-work and in-work benefits. As such, the relevant figure for in-work benefits needs to be calculated. Based on a four-year snapshot between 2009 and 2013, the DWP notes that “Around 66 per cent were claims where either a main claimant or their partner (if in a couple) was recorded as being in work.” Therefore you take 66% of 41% (the mid-range of the 37% – 45% above), giving 27% of migrants who have arrived in the last four years claiming in-work benefits. This is about as official as you can get in terms of a Government estimate of the proportion of EEA migrants claiming in-work benefits who would be effected by the ’emergency brake’. In terms of absolute figures, based on the total DWP figure of 525,000 EEA migrants arriving over the preceding four years (excluding students but including dependent children and partners), the Government thinks around 142,000 are claiming in-work benefits. These figures also refer to individuals living in households making such claims.

The recent FOI release includes slightly different figures, but this is because they measure slightly different things. It states that (emphasis ours), “the number of households that claimed tax credits in 2013 to 2014 with at least one EEA migrant who has arrived in the UK or been issued a National Insurance number during the previous four years was 84,000”. It adds that, “the number of EEA migrants in households claiming tax credits in 2013 to 2014 who had arrived in the UK or been issued a National Insurance number during the previous four years was 111,000.”

It is not obvious that these figures contradict each other. The relevant figures to compare are the 111,000 individual EEA migrants claiming tax credits with the 142,000 EEA migrants claiming all types of in-work benefits. The 111,000 figure only refers to migrants claiming tax credits, while the 142,000 figure refers to those claiming all in-work benefits and also includes partners and children as noted above. As such one would expect the latter figure to be slightly higher.

Furthermore, the FOI says nothing about out-of-work benefits, therefore one cannot compare these figures like-for-like with the original 40% claim.

How does this fit with Open Europe’s original analysis of the issue?

Back in December 2014 – which now seems a lifetime ago in EU renegotiation terms – we published our own breakdown of how many people might be impacted by changes on EU migrants’ access to in-work benefits which can be found here and here. Based on data from the Labour Force Survey (which as noted above is not ideal, since the sample sizes get quite small on issues as specific as these) it looked as if around 15% of EU migrants, or around 100,000 people, had claimed in-work benefits after arriving in the previous four years.

This data refers to individuals and does not include children or partners. The proportions do include students, hence why they are lower than the figures suggested by the Government data above.

Broadly, the data we presented at the outset of this exercise is in line with the data published by the Government. The relevant figures to compare are our estimate of circa 100,000 EU migrants claiming in-work benefits with the 142,000 EEA migrants (including partners and children) and/or the 111,000 EEA migrants claiming tax credits. Clearly, these data refer to slightly different things in terms of who is making the claims (EU or EEA, including or excluding partners and children) or what they are claiming (just tax credits or all in work benefits) but they are in the same ballpark.

Where does this leave us?

Based on the limited data published, we now have a broad picture of the number of EU or EEA migrants claiming in-work benefits. The range presented is somewhere between 100,000 and 142,000 (though this is itself a range, so it could be up to 156,000 if we take the upper bound), when including partners and children. In terms of proportion this could be anywhere between 15% and 30% of total EU/EEA migrants, with the higher end only applying if students are excluded and dependents included in the calculations.

The Government’s logic here is that, when considering who will be impacted by changes to welfare access, it makes sense to exclude those who could not claim these benefits in the first place (students and retirees for example), and include dependents who are supported by those who can claim benefits.

However, due to gaps in the data we cannot conclusively say exactly how many EU migrants are (also) claiming out-of-work benefits. Based on the DWP data, between 12.5% and 15% of EEA migrants had claimed out of work benefits at some point over the preceding four years (again this also includes dependents and excludes students). This is broadly supported, or at least not disproved, by Eurostat  data  on the employment rate (series lfsq_ergan) which shows during the period 2009 – 2013 the average employment rate of EU citizens in the UK was around 78%. However, it should also be noted that EU migrants are less likely to be unemployed than UK nationals. We hope the government will publish more data to verify this assessment and the 40% figure.

This is relevant since, the ‘emergency brake’ would not simply apply to in-work benefits such as tax credits, but also to housing and family benefits. This, combined with the introduction of universal credit, will significantly limit the benefits which EU migrants can claim. Therefore, simply citing the in-work benefits claimants underestimates the number of people the benefit restriction would affect. Furthermore, the line between in and out of work benefits is not always hard and fast, especially if we are discussing households’ claims rather than just individuals.

This makes it difficult to pin down the exact overall number of people likely to be affected by the new EU rules on migration, but the Government (via the DWP data) suggests it is between 195,000 and 235,000 out of a total of 525,000 (again, including dependents and excluding students) with the caveats above applying.

Does this amount to a significant impact? As we said at the outset of this whole process, it depends what you are trying to achieve. For those who want to end free movement or think it should be capped outright then nothing which could be done inside the EU would ever leave them satisfied. But if you want to try to address the UK public’s concerns around the fairness of free movement (by introducing a contributory welfare principle) and address the perverse incentives the system currently creates to move to the UK to work in the low-wage/low-skilled sector (where migrants are most likely to claim in-work benefits) then the policy is likely to have an impact. Of course, it’s impossible to put a firm number on how many people will change their mind due to these reforms, not least as its unclear how such changes fit with other policies such as the shift to the ‘living wage’.

On the other side of the ledger, for those voters considering voting to exit due to concerns over immigration, the Leave campaigns need to explain how Brexit could reduce immigration while maintaining the same access to EU markets that Britain is used to.