The shadow work and pensions secretary, Rachel Reeves, has said for the first time that Labour would clamp down on in-work tax credits claimed by EU migrants, and that “the UK social security system was never designed for the levels of migration we are now seeing”.
Reeves said the proposal had the support of European social democrats, and that she would not give up the fight with Brussels on the issue.
She put the cost of paying in-work tax credits to about 252,000 EU migrant households at £1.6bn a year.
Reeves also said Labour would extend the period for which EU migrants are debarred from claiming out-of-work benefits from three months to two years, a move that might deter some coming to the country even if they had a job offer.
Along with the shadow chancellor, Ed Balls, Reeves is a shadow cabinet voice representing a northern seat and believes the party has to do more to recognise key Labour voters’ concerns about immigration and welfare.
The Conservatives are known to be looking at how in-work credits for EU migrants could be reduced, but the issue is made more complex because many such payments will be merged with universal credit by 2017-18.
On the basis of the Labour proposal, it is hard to see how many EU migrants, certainly those on short-term contracts, will be able to claim universal credit, if indeed the major welfare reform is introduced.
Reeves made her proposal in the MailOnline, one of the papers that has campaigned hardest against migrants’ perceived abuse of the welfare system. In a keynote speech last week, Ed Miliband said he would not pander to a rightwing Eurosceptic agenda.
In her MailOnline article Reeves states: “The Tories look increasingly like they are desperately attempting to out-Ukip Ukip.
“I will never pander to those who would deny the positive contribution that immigrants have always made to our country or the economic benefits we gain from our membership of the EU … but I also believe that we have to listen to the real concerns that people have about how immigration is being managed.”
She insisted her proposed reforms would be achievable inside a reformed EU. She wrote: “We don’t need to walk away from Europe to put the principles of work and contribution at the heart of our system. We can deliver these changes through negotiation and reform and we will.”
She did not say exactly how she would deprive EU migrants of in-work tax credits, but wrote she was determined to find a mechanism.
“It is far too easy for employers in Britain to undercut wages and working conditions by recruiting temporary workers from elsewhere in Europe on very low pay and with no job security, knowing that the benefit system will top up their income,” she wrote.
“There are 252,000 working households from the EU now receiving tax credits, including 12% of all single, childless people receiving working tax credit.
“Our country’s social security system was never intended to subsidise and perpetuate low-paid and insecure work. The European single market should not be about a race to the bottom on working conditions.
“So while some have said that we cannot negotiate changes to benefits paid to people in work, I am determined to look at how we can deliver reform in this area too.”
Reeves also confirmed that Labour would end “the absurdity of child benefit and child tax credits being claimed for children living in other countries”. She said David Cameron appeared to have given up the fight on the issue.
Nick Clegg, the Liberal Democrat leader, has also vowed to act on what he regards as an anomaly. He has suggested EU claimants should only receive the level of benefit paid by their country.
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