Cameron pulls back from EU brink

December 1, 2014

By Hugo Dixon

Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.

David Cameron has pulled back from the brink. A month ago, the UK prime minister was close to advocating quotas on migrants from the European Union. Such a policy would have been undeliverable. It would have meant flouting one of the EU’s core principles – the free movement of people.

If Cameron had made such a pledge and failed to deliver it, he would have had to campaign to pull Britain out of the EU in the referendum he wants to hold by the end of 2017. The people could have followed the prime minister’s lead, and the British economy would have been badly damaged, if only because business would have lost full access to the bloc’s single market.

All this, of course, would have been contingent on Cameron winning next May’s general election. Without that, he won’t be in a position to hold his promised In/Out plebiscite.

In the end, the prime minister blinked. Germany’s Angela Merkel and other leaders pleaded with him not to call for quotas. So did some top British business leaders.

When Cameron made his speech on Nov. 28, the focus was on stopping migrants getting access to benefits, not quotas. The policy looks deliverable.

The prime minister made a good speech. He stressed the advantages that Britain got from immigration: “We are Great Britain because of immigration, not in spite of it.”

He spoke of earlier generations of Jews, West Indians and Asians who came to Britain to work – as well as Polish and Czech pilots who fought alongside the UK in World War Two. He acknowledged that the current generation of immigrants, both from inside the EU and further afield, played a vital role in everything from the National Health Service to the City of London.

Cameron’s harder line on immigration is the result of the pressure he feels from both eurosceptics in his own Conservative party and the growing strength of the UK Independence Party, which wants Britain to leave the EU.

This is mainly because he promised to cut annual net migration – the number of those coming into the country minus those leaving – to the tens of thousands but failed to deliver. In the year to June, the figure was 260,000, up 43 percent on the previous year.

The centrepiece of Cameron’s new policy is to deny EU migrants “in-work” benefits unless they have been living in the UK for four years. He believes these benefits – mainly to top up low pay, help with rearing children and subsidise rent – are a major reason unskilled workers from the rest of the EU are attracted to Britain, which generates lots of new jobs. For somebody on the minimum wage with two children, they amount to £700 a month.

Removing this subsidy to low-paid workers – along with other measures such as scrapping migrants’ ability to get unemployment benefit as soon as they arrive in the country – will have some impact on the numbers coming to Britain. But it is not clear that it will have a big effect. In-work benefits were not available in 2004 for eastern European migrants, and they still came in large numbers.

The big-picture political point is that Cameron has set out his policy, and it is now too late for him to toughen it up by switching back to quotas before the election. After the election, he will have little incentive to play the populist card. So whether it works or not, this is now his policy.

The central question is whether he can deliver a programme that depends on negotiations with his EU colleagues. This is not something he can impose unilaterally. Denying to EU citizens benefits available to natives is discriminatory and contrary to the bloc’s laws.

Cameron seems to think he needs to change the EU treaties in order to go ahead. The snag is that this is a laborious process, requiring the unanimous agreement of the 28 member states. Any one of them could throw a spanner in the works or demand some special treatment in return for its support.

It would, therefore, be better to proceed by merely changing EU law. Some experts such as Damian Chalmers, professor of EU law at the London School of Economics, think that would be sufficient. It would also require only a qualified majority of member countries – accounting for 65 percent of the EU’s total population.

The UK stands a good chance of jumping that hurdle, not least because many other member states – including Germany, Spain and Italy – face pressure from their own people to curb migrants’ benefits. Although some countries from eastern Europe may not like the policy, they would find it hard to block such a vote. Cameron has also hinted that he may campaign to quit the EU if he doesn’t get his way.

It is a pity that the prime minister has invested so much political capital in this issue. There are so many other economically more important issues on the EU agenda, such as completing the single market in services, negotiating a free trade deal with the United States or creating a capital markets union. That said, everyone can breathe a sigh of relief that he hasn’t jumped over the brink.

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