Amid UK-EU Brexit Negotiations, Benefit 'Emergency Brake' To Hit Immigrants

The notion that U.K. benefits and social services are being drained of cash by a large influx of immigrants from the rest of the European Union has long been the key Conservative argument for Britain leaving the 28-country bloc and one that has stirred debate over the last three years. With the British government claiming 43 percent of all immigrants use benefits in the first years of their stay in the U.K., Prime Minister David Cameron appears to have a strong argument as he enters into formal negotiations, extending through Monday, with European Council President Donald Tusk that could dictate whether the U.K. leaves or stay in the EU.

The U.K. wants a four-year ban on immigrants claiming benefits once they enter the country. The mechanism, that may cause the EU to change its treaty, is being referred to as an “emergency brake,” which can be used only if the country in question can prove immigrants are placing excessive strain on welfare and social systems. A majority of countries would need to agree to the idea before it could be implemented.

What is still up for discussion is what justifies putting the brake on. The U.K. government believes it can pull the brake immediately after its referendum, possibly sometime this year or in early 2017.

However, the government’s data, which is taken from Her Majesty’s Revenue and Customs service, has proved to contain misleading information. The actual raw data shows 37 percent to 43 percent of immigrants, or 195,000 to 235,000 people, claim benefits, a Guardian investigation found last October. It also showed Britons who counted an immigrant as a partner were included in the immigrant welfare data, meaning the data could be off by as much as 7 percent.

Additional data from the Department of Work and Pensions show immigrants claiming working benefits amounted to 530 million pounds ($755 million), or 1.6 percent of the total working benefits in 2014, the most recent available data. In total, immigrants made up 2.5 percent of all benefits caseloads in the U.K. although the total cost of all immigrant benefit-seekers was not clear in the Guardian investigation.

Despite the relatively low immigrant costs for working benefits, Cameron and Chancellor of the Exchequer George Osborne are in the midst of implementing austerity measures that have cut expenses from almost every part of government spending, including benefits for single mothers, the disabled and the military.

Through those cuts the government contends it has spearheaded an economic revival in the last few years, which had seen unemployment fall from 8 percent in January 2013 to 5.5 percent this year and the country’s annual budget deficit fall from 153 billion pounds ($217 billion) in 2009 to a projected 43.1 billion pounds ($61.4 billion) this year. Despite this, business leaders in Europe are warning that leaving the EU would seriously hurt the country.

Henri de Castries, chief executive of Axa, told the Financial Times Sunday the U.K. was right in believing the EU was “dysfunctional” and needs change, but added there would be a seriously negative impact in London and around the rest of the country if the U.K. left.

“There is a school of thought in the U.K. that says that the Monday would not be very different from the Friday [after a vote to leave]. I disagree — I think it would be very different,” de Castries said.

While Cameron would prefer to remain part of the EU, he’s using public opinion and the weight of Euroskepticism inside his own party to leverage the four-year ban.

A U.K. poll conducted by YouGov indicated 42 percent of Britons wanted to leave the EU while 38 percent wanted to stay, a dip from 41 percent in December, Reuters reported Sunday.

British officials hope a deal can be reached before the Brussels summit Feb. 18-19, which could open a door to a referendum in June. But Cameron, who first promised a referendum in January 2013, has repeatedly said he is willing to wait until September or early 2017 to ensure the U.K. gets the best possible deal.