Labour turns its attention to restricting EU migrants' access to in-work benefits

Iain Duncan Smith's opposite number, Labour's Rachel Reeves, has written an interesting piece on EU migrants' access to welfare for the Mail Online, in which signals an important shift in Labour's policy.

Last week we noted that IDS had set out that he wanted to restrict EU migrants' access not simply to out-of-work benefits but also in-work benefits such as tax credits - something that our Research Director Stephen Booth and LSE Professor Damian Chalmers proposed in a recent Open Europe pamphlet.

Reeves sets out three proposals to reform the EU rules on access to welfare. Firstly:

"We believe that it is right to extend the period that EU jobseekers need to live and support themselves in the UK before claiming out-of-work benefits from three months to two years."

This had been hinted at by senior Labour figures before. But, for the first time, Labour have said they also want to address in-work benefits:

"We must also look at the role of in-work benefits. 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." 

"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."

As we have noted before, restricting access to this low-wage welfare supplement could reduce the incentive to migrate to the UK for the lowest paid jobs as the UK's system of in-work benefits can make a significant difference to the incomes of the lowest paid.

And thirdly, Reeves has said:

"We will work with European countries to end the absurdity of child benefit and child tax credits being claimed for children living in other countries."

This is near unanimous consensus among all the main parties on this point.

The change in stance on in-work benefits is significant and would have the biggest impact, and it is therefore interesting why this wasn't given top billing in the article?

Miliband vague on most EU issues but categorical on energy

Labour leader Ed Miliband addressed his party conference in Manchester this afternoon. While the focus was on ‘togetherness’, the NHS and his various encounters with members of the public with useful bits for his speech, there were a couple of mentions of the EU and related issues. On the topic he said:

“Let me say it plainly: Britain’s future lies inside not outside the European Union. And the way we reform the EU is by building alliances, not burning them. And it’s why all those who want to leave, including in the Conservative Party, are now a huge threat to the prosperity of our country.”

Miliband went on to add that he saw the need for EU reform in areas such as “the economy, migration and other big issues”. He also cited the UK’s failed opposition to Jean-Claude Juncker’s Commission Presidency as evidence that UK Prime Minister David Cameron cannot achieve reform in Europe, since all countries simply believe he is pandering to his party.

Ultimately the EU section was a side note to the main messages of his speech. Once again there was no detail about exactly which reforms Labour would pursue with regards to the EU, no mention of whether a referendum would be held or not and only vague talk of alliance building with no clear message of how this would be achieved other than by not being the Conservative Party. He also glossed over the fact that the Labour Party ostensibly supported the anti-Juncker push by the UK and that the negotiations over Juncker seem to have resulted in the UK securing a prime post in the new Commission – one many thought they would never get.

Interestingly, there was a bit more detail at one of Open Europe's fringe events with Shadow Europe Minister Gareth Thomas stating that he (and presumably his party) support a red card for national parliaments as well as a specialised European affairs committee to better scrutinise all EU legislation. Certainly commendable if they prove to be concrete Labour policy.

One final interesting point on substance from Miliband regarding energy:

“[We are] making a clear commitment to take the carbon out of our electricity by 2030.”

This is a pretty bold statement (although he did hint at something similar last year), which essentially says that all of the UK’s electricity consumption will be met by renewable sources in 2030. To put that into context current renewable share of electricity generation is around 16%, and is due to rise by to 30% by 2020 – that is if the UK meets its EU set targets (quite a big if at this point).

To achieve the current 2020 target, according to government impact assessment, the Renewables Directive costs £4.2bn per year over the course of a decade. Miliband’s target would essentially involve tripling the increase of renewables over the same timeframe up to 2030 – exactly how much would such a policy cost per year!? (We’d hazard a guess at…a lot). As the graph above from the National Grid shows, most forecasts expect the UK to still have a sizeable chunk of electricity generation from gas and coal, mostly due to the cost and complexity of overhauling the entire grid and the intermittent nature of renewables (note - we have an upcoming paper on these issues and more soon so stay tuned).

All of this also takes place in a context where carbon prices (via the EU ETS) and targets are set and negotiated at the EU level. Will Miliband unilaterally commit to such an approach when it seems likely few, if any, other EU members would sign up to it? We've highlighted before the potential conflict between Labour's energy policy and the EU. Again, more detail needed but at least here there are some interesting questions to chew over.

Labour finally wake up to the fact there is a European election next week

Do Ed Balls and Ed Miliband see eye-to-eye on the EU?

Anyone following Labour's election campaign up until now would be forgiven for thinking the party was fighting a general election as opposed to a European one - any references to Europe were hard to come by. However, Shadow Chancellor Ed Balls has emerged with a hard-hitting piece in yesterday's Evening Standard in which he argues that:

"Europe needs to work better to respond to public concerns, deliver better value for money for taxpayers and secure rising prosperity."

"First, we need the EU to be better focused on creating jobs and growth. An EU Commissioner focused on growth, and an independent audit of the impact of any new piece of EU legislation on growth, would be key to helping re-focusing the Union on this key task. And we need to drive forward the completion of the single market in digital, energy and services."

"Second, our reforms will help ensure that EU citizens seeking work here contribute to our economy and society. So we will extend the period of time that people from new member states have to wait before being able to come to the UK to look for work. We will work to stop the payment of benefits to those not resident in this country, consult on changing the rules on deporting someone who receives a custodial sentence shortly after arriving in the UK, and have called on the government to double the time that an EU migrant has to wait before being able to claim the basic Job Seekers Allowance."

 "And third, any agenda for change in Europe must also address people's concerns about how power is exercised at a European level. So we have called for national parliaments to have a greater role in EU decision making by being able to 'red-card' any new EU legislation before it comes into force; for serious reform of the EU Commission."

This commitment to reform is very welcome, even if this is merely a re-statement of existing Labour EU policy. It's worth noting that these reforms are not a million miles away from David Cameron's own priorities for EU reform - especially the further restrictions on EU migrants' access to benefits and the red card for national parliaments. Yet more evidence - as we've pointed out before - that tone and rhetoric aside, there is a surprising degree of consensus among the main parties when it comes to the substance of EU reform. 

As the New Statesman's George Eaton pointed out recently, there is a lot of frustration within Labour over how to deal with the EU question:

"Other shadow cabinet members complain of the party's failure to promote its commitment to reform the EU, which they regarded as a quid pro quo for Miliband's refusal to guarantee an in/out referendum under a Labour government."

It appears that Ed Balls is among the Labour heavy hitters keen to address this disparity.

Ed Miliband confuses with a new EU referendum lock he says is "unlikely" to be triggered

Ed Miliband will today set out the Labour Party's position on an EU referendum. Previewing his speech in today's FT, Miliband says:

"I am announcing that the next Labour government will legislate for a new lock: there would be no transfer of powers from the UK to the EU without a referendum on our continued membership of the EU."

So, unlike the existing 'referendum lock' put in place by the Coalition, it would not simply be a referendum on a specific transfer of power to the EU or treaty change but would mean that any proposed transfer of powers to the UK would trigger a straight In/Out vote.

It is not entirely clear whether Labour would therefore repeal the existing referendum lock and replace it with theirs. If not, we might be faced with the strange situation of two referendums - one on the specific treaty change and one on whether to remain in the EU altogether - with no guarantee that they would go in the same direction. If they do replace it, then we could be left with a much blunter instrument, where any transfer of power requires an In/Out referendum. Far from ideal if you wish to stay in the EU but also want to push for reform or dislike the transfer of power on offer.

Miliband himself notes that it is "unlikely" that his referendum lock will be triggered, emphasising that "there are no current proposals – from either the EU or any member state – for a further transfer of powers from Britain. Therefore it is unlikely there will be any such proposals in the next parliament." However, what would happen if, for example, the fiscal compact were to be incorporated into the EU treaties as is envisaged? This would not be a transfer of powers per se but would potentially alter the UK's relationship with the EU substantially.

In the rest of the article Miliband is keen to stress his reform credentials, saying that:

"I know the reputation of the EU is, with reason, at a low ebb. If Britain’s future in Europe is to be secured, Europe needs to work better for Britain. And Britain needs to work more effectively for change within the EU."

Labour has so far been rather vague about its proposals for reform. The Labour leader cites three main areas in his article. On economic competitiveness:

"Europe must do more to address common economic challenges by improving competitiveness, tackling youth unemployment and building an economy that better promotes prosperity."

On EU migration:

"A Labour government would work with our EU partners to lengthen the existing transitional arrangements for countries joining the EU so that their citizens have to wait longer before gaining rights to work here. There should be reforms to rules allowing people to claim child benefit or child tax credit when their children live abroad. And we should look at ways to make it easier to deport people who have recently arrived in this country when they commit crime."

On the democratic deficit:

"The agenda for change, however, must address people’s concerns about how power is exercised in the EU. This means giving back more control to national parliaments. And it means responding to concern that the EU is intent on an inexorable drive to an ever closer union. I am clear this is not Labour’s vision for Europe."

These proposals all sound very much like what David Cameron, and others, have been saying on EU reform.

But, on Labour's conditions for a referendum, it remains to be seen what political impact it will have. On the one hand, Miliband has raised the prospect of a vote (presumably in an attempt to avoid accusations of denying people a say). But, with the other, he is saying that the likelihood of his conditions ever being met is very small. What will the British electorate and other EU governments make of that?

Is Ed Miliband's "energy price freeze" compatible with the UK's EU commitments?

How will Ed Miliband's new Energy policies go down in the EU?

At our fringe event today at the Labour Party conference - that we organised together with IPPR (write-up to follow) - we sought to answer the question, how Labour should respond to a changing Europe. Well, here's a potentially interesting twist to that question.

Ed Miliband in his leader's speech earlier today promised to freeze energy prices for 20 months after 2015 if he is elected Prime Minister. Furthermore he also seemingly promised to reduce carbon emissions from the UK's energy sector to zero by 2030. Interesting ideas, both brave and potentially effective with the electorate (they can also count as real policy announcements). However, we wonder whether he has thought through the EU implications of all of this.

First, it's impossible to discuss energy policy without considering the EU dimension. Although UK governments - Labour and the Coalition - have no doubt added extra requirements, much of the cost of reducing CO2 and other emissions are now locked into legally binding EU agreements. Incidentally, Ed Miliband was Energy Minister from 2008-10 when many of these policies were being developed. Capping price increases while keeping the underlying policies will do nothing for long term energy affordability. Meeting the renewables target is costly and requires significant investment - this will not be forthcoming under a price freeze and the UK is already behind schedule in terms of meeting its target. UK energy companies may also find it impossible to stomach the cost of managing both policies at once.

The real question then is whether Miliband is also ready to go to Europe to renegotiate these policies to achieve affordable energy in the long-term?

Secondly, is it possible for the UK to unilaterally freeze prices in the UK while championing an integrated EU single market in energy? An integrated single market is one real way to help reduce prices - and is something that we believe Labour has rightly called for in the past.

Some have already questioned whether the move would be legal under EU competition law. We believe it might, just. Since there is currently no single market to break in energy but also because UK firms receive no competitive advantage from the move. Any imported energy would also face the same price cap since it is applied at the consumer level. Given the problems above though, tinkering along the edges of the plan seems likely (possibly to reduce the impact on UK energy firms) this could well create legal issues with the EU.

Thirdly, did Ed Miliband really mean to commit his party to reducing UK energy carbon emissions to Zero (its worth noting he made similar suggestions last year)? The EU's already ambitious targets are to cut carbon emissions by 85 - 90% by 2050, so bringing that forward to 2030 would add a huge cost to the UK's energy bill. We wonder whether he actually means 100% of UK electricity (note, not total "Energy") should be carbon free? That could technically be possible (just), but likely at an incredible cost, and require vast amounts of investment in both nuclear and renewables.

Perhaps we have been here before. When Tony Blair signed the UK up to a binding 15% of energy, it was thought by some he believed he was signing up to 15% of electricity. Former UK scientific adviser Sir David King for instance suggested that Blair and the other EU leaders did not understand what they were committing themselves to when agreeing the target:

"I think there was some degree of confusion at the heads of states meeting dealing with this. If they had said 20% renewables on the electricity grids across the European Union by 2020, we would have had a realistic target but by saying 20% of all energy, I actually wonder whether that wasn't a mistake."

It's an interesting idea - and credit to Ed Miliband for actually trying to address an issue that will be very important to people for years to come - but we would like to see more details.

But more fundamentally, it's also a reminder that, not matter how it tries, Labour won't be able to escape tough decisions on how to approach EU policy - in all its various shapes and forms.