PRESS RELEASE : Osborne’s living wage to undercut Cameron’s plans to restrict EU migrant benefits

The press release issued by Vote Leave on 11 November 2015.

The Government has committed to reduce in-work benefits for EU nationals during their first four years in the UK. If implemented, the Government argues the UK would become a less attractive destination for those looking to improve their living standards. This policy is intended to reduce inward migration by reducing the ‘pull factors’ that encourage EU migrants to move to the UK.

Owing to a lack of joined up thinking in Government, however, the plan will be completely undercut by George Osborne’s new ‘living wage’. The UK will therefore remain an extremely attractive destination for EU migrants, regardless of whether the Government succeeds in its plan to limit the benefits.

If the Government is able to negotiate a way to restrict benefits for EU migrants, the living wage would still increase the take-home income of the lowest earning EU benefits claimants with no dependants by £57.99 per week or £3,015.48 a year by 2020 (when compared to forecasts for 2020 if the UK had not introduced the living wage). This almost entirely undercuts the reduction in take-home income for single earners with no dependants that the Government is proposing.

If the Government is not successful in negotiating a deal to limit benefit claims by EU migrants the pull factors will become even stronger than they are now. For a single earner with no dependants their take-home income would increase by £134.23 per week or £6,979.96 a year by 2020 (when compared against 2020 forecasts that don’t have the living wage). This is an increase of more than 60% compared to the results the Government hoped to achieve when it set out its plans to limit EU benefits.

Sir Jeremy Heywood – the UK’s most senior civil servant – has warned that David Cameron’s proposed restrictions to migrant benefits are likely to be illegal under EU law. This means they are very unlikely to survive a challenge in the European Court of Justice.

Following the Government’s own logic this suggests that the combination of the Government failing to achieve the four year restriction to benefits for EU migrants and the introduction of the living wage, will lead to the number of EU migrants rising rather than falling.

Commenting, Vote Leave Communications Director Paul Stephenson said:

“People are worried that high levels of immigration from Europe are putting our NHS, schools and housing supply under pressure. David Cameron wants to change that and make the UK less attractive to migrants by restricting the benefits they can claim here.

But George Osborne’s living wage will completely undercut David Cameron’s EU negotiation. It means that the UK will be just as attractive to many migrants as it is now. If, as the Cabinet Secretary has warned, Mr Cameron fails to achieve EU benefit restrictions, the situation will get even worse.

The living wage is a great thing for many workers in the UK but it looks like George Osborne did not consider what impact it would have on David Cameron’s plans to restrict EU immigration before he announced it. It is clear that the only way we can get back control over immigration is if we Vote Leave in the upcoming referendum.”