The true cost of 'welfare tourism'

Blog posts

11 Feb 2016

Rachel MarangozovRachel Marangozov, Senior Research Fellow

‘Welfare tourism’ has hardly been out of the headlines, in one way or another, in recent days with David Cameron using the issue to demand a four-year ban on EU migrants’ access to in-work benefits and social housing. This issue forms one of the Prime Minister’s four key demands as he seeks to renegotiate the terms of the UK’s membership of the EU, so you would think such a key demand would be based on robust evidence.

Think again.

The myth of welfare tourism

The argument that EU migrants are a burden to our welfare system is unfounded. Recent IES analysis has found that overall, EU migrants [1] are less likely to claim benefits than UK nationals, with 34 per cent of EU migrants receiving some form of benefits (in-work and out-of-work) compared to 40 per cent of UK nationals [2]. Only a very small proportion of EU migrants in the UK claim the state pension (less than 0.1%, compared to 10% of UK national aged 18-69), and larger proportions of UK nationals claim unemployment benefits, income support and disability or sickness-related benefits than EU migrants. Of those EU migrants that did claim these benefits, this was because of a change in their circumstances, such as redundancy or the onset of a work-limiting health condition, rather than any desire to exploit the benefits system. UK nationals are also more likely to use social housing (15%) than EU migrants (13%) and the healthcare and education-related expenditure per capita for EU migrants is lower than for UK nationals.

However, a larger share of EU migrants claim tax credits (19%) and child benefit (28%) compared with UK nationals (12% and 18%, respectively), and that is part of the reason why David Cameron is looking to restrict access to these particular benefit for four years. But can these statistics be explained by ‘welfare tourism’? Do swathes of EU migrants come to the UK just to claim these benefits? The clear answer is ‘no’. IES analysis shows that higher numbers of EU migrants claim tax credits and child benefit because of their socio-demographic characteristics and labour market prospects. EU migrants are, on average, considerably younger than the UK population, have more dependent children below the age of four and have higher employment rates, predominantly in low-skilled occupations. The wider economic literature also shows that welfare systems generally don’t drive immigration and certainly does not drive EU immigration to the UK. Instead of welfare protection, wage differentials and demand for labour seem to have played a bigger role in driving recent EU migration.

As for the cost of EU migrants’ drawing on tax credits and child benefit, this has to be considered alongside the contribution they are making to the economy by being in work (even low-paid work), as well as the fact that EU migrants are more likely to make a positive net fiscal impact on public finances in the short and long term.

The bigger picture is that EU migrants’ contribution to the overall welfare bill is negligible; as of February 2015, only 2.2 per cent of the total number of people claiming benefits were EU nationals. IES’ findings are in line with a swathe of other research which also shows that EU migrants are less likely to claim benefits than UK nationals, not least because of their high levels of education and employment.[3] According to the most recent study on this, the ‘vast majority’ of EU migrants moving to another EU state do so to work or to look for work and are more likely – because they are younger – to be in employment than the nationals of the host country. It also showed that in most countries, immigrants are not more intensive users of welfare than nationals and this concurs with earlier evidence which also found that mobile EU citizens have not relied on social services due to their high levels of employment.

Even the Government has conceded that it has no quantitative evidence for its recent claims of ‘welfare tourism’, when asked by the European Commission to provide more evidence on the issue, and their claim that 43 per cent of EU migrants were claiming benefits has already been widely discredited, not least by UK Statistics Authority.

Costs to EU migrants

Indeed, our study found that often the only ‘cost’ incurred under the narrative of ‘welfare tourism’ is to EU migrants themselves, some of whom pay a high price in several ways:

Firstly, the gap between evidence and public perception/political rhetoric on welfare tourism serves to further marginalise and exclude vulnerable EU citizens who are destitute and/or unemployed.By portraying EU migrants as exploitative, the issue of those in genuine need is easy to ignore.Many destitute EU citizens we spoke to were not aware of their rights and entitlements with regards to social assistance and benefits because most of them had worked in the UK, and had come to the UK to work. This meant that by the time they accessed support, they were already in dire circumstances, sleeping rough, in need of food banks and charitable hand outs. 

Secondly, the portrayal of EU migrants as welfare tourists ignores the fact that many migrants in low-paid, low-skilled work are open to exploitation and poor living conditions as a result of weak labour market regulation in the UK.[4] In some sectors, there is little opportunity for migrants to progress in the workplace, despite possessing relatively high levels of education and skills, and in many low-paid, low-skilled sectors, employers of migrant workers are non-unionised. Language barriers often present obstacles to accessing Jobcentre Plus support and advice and extensive cuts to ESOL provision have left migrants open to further exploitation.

Thirdly, the pervasive discourse of welfare tourism means that there is little political will or public appetite to improve the integration of EU migrants, whether that be in the labour market or in their local community. The Migration Impacts Fund, set up to help the integration of migrants in local communities and the transitional impacts of migration on public services, was scrapped in 2010, leaving many local areas bereft of funding. In a similar way, EU structural funds often overlook EU citizens by only supporting the integration of third country nationals or the social inclusion for vulnerable groups (EU citizens often fall between these two policy objectives). The European Social Fund has supported integration programmes but has often limited the scope of service provision. As it is, the integration of EU migrants often falls to voluntary organisations, many of which are already being squeezed as a result of wider austerity measures in the public sector.

Lastly, unsubstantiated claims of welfare tourism serve only to further silence the voice and perspective of EU migrants themselves and further obstruct informative debate in this area. Migrants become either ‘villains or victims’ in public debates and EU migrants are no exception: if they aren’t in work, they are often portrayed as benefit tourists, and if they are in work, they are often accused of stealing jobs from British workers and holding down pay.

Costs to UK citizens and the wider UK economy

Finally, it is worth considering the costs to UK citizens themselves and to the wider economy. Restricting EU migrants’ access to benefits in the UK could lead other member states to impose their own restrictions to welfare assistance for the one million or so Brits who live and work on the Continent. The potential illegality of curbing in-work benefits also could have drawbacks for UK citizens if it means they too would be subject to a four-year ban, or a residency test.

There are also clear risks to the wider economy. At a time of austerity and widespread public concern over immigration, it is all too easy to blame EU migrants for pressure on the welfare system. However, these claims risk damaging our economic recovery because they raise serious questions about whether the UK is ‘open for business’, whether it welcomes EU migrants as part of a diverse workforce that contributes to innovation and growth, and whether it has a future in the European Union.

Read the IES research in these reports, published by Eurofound:

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[1] Defined in IES’ research as migrants from EU10 countries. EU10 countries refer both to the eight Central European countries that joined the EU in 2004 (EU8) and to Romania and Bulgaria, who joined in 2007 (EU2).

[2] Analysis is based on UK Labour Force Survey and Annual Population Survey data up to 2013. 

[3] For example, see: Dustman C, Frattini T, Preston I P (2008), The effect of immigration along the distribution of wages, CReAM Discussion Paper No. 03/08, Centre for Research and Analysis of Migration, Department of Economics, University of London; Nickell S, Salaheen J (2008), The impact of immigration on occupational wages: Evidence from Britain, Working Paper No. 08-6, Federal Reserve Bank of Boston; Manacorda M, Manning A, Wadsworth J (2006), The impact of immigration on the structure of male wages: theory and evidence from Britain, CEPDP, 754, Centre for Economic Performance, London School of Economics and Political Science; Drinkwater S, Robinson C (2013), ‘Welfare participation by immigrants in the UK’, International Journal of Manpower, Vol. 34, No. 2.

[4] 2013 Home Office report in on conditions for immigrants found widespread ‘poor quality, overcrowded accommodation, inflated rents… exploitation by unscrupulous landlords… and a growing number of beds in sheds.’ Poppleton S, Hitchcock K, Lymperopoulou K, Simmons J, Gillespie  R (2013), Social and Public Service Impacts of International Migration at the Local Level, Research Report 72, Home Office

Any views expressed are those of the author and not necessarily those of the Institute as a whole.