Is Brexit now unavoidable? Just possibly not (2)
Events are moving so swiftly that it’s difficult to write anything that won’t be overtaken a few hours later. The defenestration of Boris Johnson and the candidature to succeed Cameron of Michael Gove (who will be seen as a traitor by the Boris fan club, presumably), coupled with Theresa May’s impressive and dignified speech opening her campaign, with both Gove and May saying that if elected they would not want an early general election to confer a proper mandate on them, all have potentially important implications. One is the distinct possibility that the new prime minister may be a Remainer after all, although she didn’t display much enthusiasm for that campaign at the time, no doubt to keep her options open.
Michael Gove
I still think it more likely than not that when the time comes the new prime minister and the Tory party at large will see advantage in a general election, perhaps early in 2017. They would have two powerful motives for this: one, to secure unchallengeable democratic legitimacy for the new administration and for whatever it eventually settles for in future relations with the EU: and two, to destroy the Labour party, at any rate if Jeremy Corbyn is still leader of the party at the time, probably causing it to split formally, and thus to secure a full further five years in office without having to worry about another election until 2022 or later. The Fixed Term Parliament Act is very easily satisfied, or by-passed, or if necessary repealed, by a governing party with an overall majority; in addition it’s notoriously difficult for any opposition party, however dismal its electoral prospects, to be seen to oppose an early general election, which would be rightly interpreted as an admission of impending defeat.
So the Labour party needs to be ready for an election at any time from (say) October onwards. That in turn makes it imperative to pile yet more pressure on Mr Corbyn to step down very soon indeed, and not to contest the resulting leadership election. If the National Executive Committee of the party has the power to reform the asinine electoral system of the party so as to exclude present and future £3 ‘supporters’ from voting, that would make very good sense, despite the resulting screams of outrage that would be audible as far away as St Petersburg. But that horse has already bolted, I fear.
Both Theresa May and Gove rule out, implicitly or explicitly, any manoeuvre designed to keep Britain in the EU despite the verdict of the referendum. Nevertheless one learned law professor émeritus (hat-tip: Professor Geoff Berridge) has suggested that a challenge by judicial review of any move to trigger Article 50 of the Lisbon Treaty, or of an irrevocable move by the UK government to leave the EU, might succeed, on the grounds that the motive for calling the referendum was about management of the Tory party, not the interests of the country; and/or on grounds of the narrowness of the majority for Leave in the referendum. Both these arguments seem to me far-fetched. I don’t see any UK court looking behind the decision to hold the referendum to assess the motives of the prime minister in making it, still less challenging the motives of both houses of parliament in legislating for it. If the courts claim the power to strike down acts of parliament on grounds of motivation of the governing party being to gain party advantage rather than to promote the interests of the country, parliament might as well pack up and go home — and no UK court has the power to strike down an act of parliament anyway. To attempt to invalidate the result of the referendum on the grounds that the Leave majority was relatively narrow would similarly stretch the asserted jurisdiction of the courts well beyond breaking-point. If parliament had intended to impose a minimum majority, say two-thirds of those voting, for Leave to become the valid result, it would (and undoubtedly should) have done so. It’s not for the courts to substitute the political preferences of unelected judges for those of the elected House of Commons and it seems to me inconceivable that they would dream for a single second of doing so. But then I’m not a lawyer.
A variant of the judicial review proposal is that parliament and the government should simply ignore the referendum, keeping calm and carrying on as if nothing had happened. The justification for this would be that the referendum had not been legally “binding” and that those voting to Leave had been deliberately misled by demonstrable lies and unfulfillable promises, and that neither parliament nor government could properly press on with a Brexit that would inflict such dreadful damage on ordinary people’s lives and on the country’s interests on the basis of a mere four percentage point difference between the Leavers and the Remainers. This too seems to me both untenable and undemocratic. If the government had reserved to itself and to parliament the right to substitute its own judgement for that of a simple majority of the people voting in a referendum, it would have had a clear obligation to say so from the outset, and indeed to make that clear in the referendum legislation. All major party leaders had committed themselves publicly to accept the result of the referendum, whichever way it went. The referendum was not legally binding but it was unarguably politically (and I would say morally) binding. On a lower and more pragmatic level, for the government to try to ignore it and refuse to act on it would provoke a gigantic protest movement in the areas of strong anti-EU and anti-Establishment feeling which would hugely exacerbate the bitter rift in our society already widened by the referendum, and would almost certainly lead to riots on a catastrophic scale. I have no doubt that it should and will be ruled out.
A more subtle argument for ignoring or reversing the referendum result, put forward by some commentators, a handful of MPs and some media commentators, is that the referendum is not and cannot be binding on the sovereign parliament, and that MPs, the majority of whom oppose Brexit, cannot constitutionally be required to vote for the innumerable measures required to extricate the UK from the EU against their own judgement and consciences. If however parliament were to reject the legislation needed to give effect to Brexit in UK law, while the government’s negotiations with the rest of the EU (or rEU) under Article 50 concluded with Britain formally ceasing to be a member under EU and international law, the resulting deadlock would cause chaos in the fields of law, politics, business and commerce. The only way out of such an impossible situation would be a general election in which MPs willing to vote through the legislation required to validate the new reality could be expected to be in a majority. In practice, if such a situation seemed to loom, enough MPs with tender consciences about facing reality would almost certainly feel compelled to abstain from voting, to allow the inevitable legislation to be passed.
This leaves only one plausible scenario that could lead to a reversal of the referendum’s verdict. This is if a reversal were to be supported by a convincing majority of the electorate in a further public consultation, probably by a general election or less likely in a second referendum, before Britain was irrevocably committed to leaving the EU. The only possible justification for holding such a second consultation would be if there was new material information available to the public that had not been available on 23 June: and that, if it had been available then, might have caused a significant number of people to vote differently. The obvious kind of new relevant information would be knowledge of the terms on which the UK would be required to leave the EU and in particular the terms of the UK’s future relations with the EU as imposed on us by the rest of the Union – especially those concerning our future membership of the single market or access to it, and those concerning the freedom of movement of people. There is a powerful case for asking the people of the country to choose whether to accept or to reject those terms before a final decision is taken to go ahead on the basis of them.
A series of questions arise from this hypothesis. Is triggering Article 50 of the Lisbon treaty irrevocable? — or could our notification under it be revoked following a rejection of the terms negotiated under it by the British people? If it’s irrevocable, could we collect enough information about the EU’s bottom line in informal discussions with our EU partners and the EU institutions (as expressly envisaged in an official document of the European parliament) before we trigger Article 50? The rEU will certainly lose no time in agreeing among themselves and with the Commission and other EU bodies on their negotiating position and their red lines. It’s hard to believe that none of this will leak or that we shall not be able to lay hands on the key documents with a little help from our friends, before we pull the Article 50 trigger. This should form the basis for a consultation with the people by means of a general election, in which the Conservative and Labour (and other parties’) manifestos would promise to reject the terms on offer and not to notify the EU of an intention to leave it if a majority of the votes were cast for parties taking that position. Whatever promises are being made now to act “as instructed by the people” on 23 June, the terms on offer are likely to be so harsh and unpalatable that they will defensibly justify a change of mind by reasonable parties and people, including many who voted to leave on 23 June.
We need urgent answers to both those questions before our ship goes down. And we can’t afford to wait for those answers until we have a new prime minister some time in September or October. This all needs to be argued out in the open and soon. The rest of the EU needs to be persuaded that it’s in Europe’s interests as well as Britain’s to allow us to remain in the Union, provided that that outcome has the clear endorsement of a majority of the UK people: and that accordingly it is not in anyone’s interests to deny us the opportunity to put the inevitable terms of our exit and future relations to a further consultation with the British people before any irrevocable decision is taken to drive us out.
Brian
“no UK court has the power to strike down an act of parliament anyway”
I agree with your analysis of the political possibilities, but it is not quite right that a UK court has no power to strike down at least parts of an Act, so far as inconsistent with EU law – see R (Factortame Ltd) v Secretary of State for Transport, about which there is quite a good commentary at https://en.wikipedia.org/wiki/R_(Factortame_Ltd)_v_Secretary_of_State_for_Transport .
I thought the case was wrongly decided at the time, and still do so, but the best view now is that the only way to make an Act safe from striking down is to explicitly state on the face of the enactment that it is intended to contravene EU law and to that extent the European Communities Act 1972 is amended or overridden. But that would of course invite infringement proceedings by the the Commission and the beginning of infraction proceedings in the European Court.
You are right though that there is no prospect of an Act being struck down on any other grounds, such as improper motive on the part of the Minister in charge of the Bill. I also agree that there is no practical prospect of a court striking down an article 50 notification.
a) I think that the whole referendum was a most unwise political decision and was made only because of internal divisions with the Conservative Party.
b) to impose a referendum that could be decided by a simple majority was another act of political stupidity since most sensible democratic systems would require some form of super-majority before making major changes
https://www.project-syndicate.org/commentary/brexit-democratic-failure-for-uk-by-kenneth-rogoff-2016-06
c) the referendum result is NOT legally binding on Parliament or government and ALL legal opinion is in agreement on this
d) the EU has made it crystal clear that there will be no negotiations until Article 50 is triggered
e) Once Art 50 is triggered then the UK is on its way out – Art 50 looks like a “one way street” to the exit – (I am not 100% sure about that since why couldn’t the “divorcing” partners just decide to drop the whole thing and kiss and make up?).
f) if Art 50 is a one way street then it would be pointless putting whatever terms were agreed to a general election since we are out of the EU anyway
g) the possibility of Scotland demanding a 2nd independence referendum was obvious to pretty much anyone and, although not much discussed, the possibility of problems with Northern Ireland was also obvious
h) there is widespread belief that the people were misled during the campaign BUT they did not have to be since there was a mass of accurate and responsible material available including that published by government as required by the Referendum Act – (much of this material is available via the posts on my blog)
i) there is no chance of a court holding that anyone acted in bad faith in holding the referendum or anything done during the campaign.
j) the UK has NOT made a “decision” in accordance with its constitutional requirements since Parliament has not (yet) formally endorsed the result of the referendum.
k) I believe that an Act of Parliament is required to authorise Ministers to issue any Article 50 notice. There is a lot of legal debate over whether prerogative powers in foreign affairs simply permit Ministers to issue the notice. I say that this is NOT a matter solely of foreign affairs since it goes to the heart of the UNION of Great Britain and Northern Ireland. In any event, who wants a lot of legal argument (lawyers apart) on a matter of this magnitude? Who wants the courts involved in any of this?
l) hence, for me, the answer lies in Parliament asserting its proper role – preventing the issue of any Article 50 notice without specific Parliamentary consent (at least of the Commons) – allowing a time for reflection and holding a second referendum in 2017 but requiring at least a 60% vote in favour of Brexit.
Will this happen? Sadly, probably not.
ObiterJ puts it all very well.
Dear Brian,
I recently came across your blog, although we met many years ago in Lagos during your tenure at High Commissioner. At the time I was working on a Department of Health/Home Office funded programme – managed by Save the Children – on drug trafficking and child trafficking between the UK, Nigeria and the broader West Africa region. Tom Harris, was my principal contact in the High Commission at the time. After Nigeria I went off the Balkans and subsequently joined DFID as an adviser (1998-2003) covering Eastern Europe and the Western Balkans. Since 2004 I work as a long-term consultant on the economics of social policy for the World Bank and the European Commission.
I want to take the opportunity to comment on your most recent entry about triggering Article 50 and the need to lose no time fro the UK to reach agreement between the Commission and other EU bodies on their negotiating position and their red lines. Freedom of movement is likely to be a key point of contention for both parties, and it will be interesting to see how much flexibility each side is willing, and able, to exercise.
To my mind, at the heart of the EU-UK rupture lies a bigger tension which was captured by Milton Friedman (1978), who was one of the first to argue that there is a fundamental tension between what he called “free immigration to jobs” and “free immigration to welfare”. Gary Freeman (1986), the political sociologist, made a similar point in ‘Migration and the political economy of the welfare state’, which concluded that “ultimately, national welfare states cannot coexist with the free movement of labour”. The implication of these arguments is that states can have large-scale labour immigration or an inclusive welfare state – but not both.
However, under the ‘free movement’ rules of the European Union, EU workers have both the right to freely migrate and work in any EU member state and the right to full and equal access to that country’s welfare state. No one has really addressed the question of whether the experience of the EU shows that the alleged tension between large-scale labour immigration and inclusive welfare states does not exist or, if it exists, that it can be overcome. My own, albeit tentative conclusion, is by the European Commission continuing to insist on both unrestricted migration and equal access to national welfare states for EU workers has undermined the political sustainability of ‘free movement’ because it does not take adequate account of important differences in the labour markets and welfare states across EU member states.
The UK was the only country in the EU that proposed (in 2013) to introduce restrictions on EU nationals’ access to the British labour market. The European Commission, at the time, insisted on maintaining the status quo, and the proposal that was subsequently withdrawn in 2014.
In the new member states that joined the EU in 2004 and 2007, the effect of freedom of movement has had adverse effects on the the structure of their labour markets and the financial sustainability of pensions and health insurance systems due to reduced contributions to these systems. These effects are accentuated by rapidly ageing populations and high dependency ratios in all the new member states. Poland is a case in point. In a recent paper (April 2016) I wrote for the World Bank on ageing and long term care in Europe, North America and Asia Pacific, I concluded that Poland is facing a triple challenge of a shrinking population, an increasingly older population, and a more dependent population.
Perhaps there is room for optimism that freedom of movement might not, after all, be one of the red lines.
Regards
Laurie Joshua
Brian writes: Thank you all for these very helpful comments. I agree with Pete that “ObiterJ puts it all very well”. I do wish we could have from someone or some authority a clear answer to ObiterJ’s (and my) question whether an Article 50 notification is irrevocable, something that could assume immense significance in the future, and I note that ObiterJ leaves the question open. I am attracted by his idea that constitutionally an Article 50 notification by HMG would require the prior assent by Act of parliament, but I wonder how long parliament could defer a decision whether to authorise a notification without seriously aggravating the anger and frustration expressed in their votes by the Leavers in the country, perhaps to the point of disturbances and riots. And I wonder how much enthusiasm the majority of MPs would feel for deliberate delay with a view to a second referendum: I suspect many of them are frightened of the wrath of their constituents if they are seen to be trying to “frustrate the will of the people”. But the possibility is well worth floating. Almost anything would be better than actually expelling ourselves from our continent’s Union.
I am grateful too to Chris Vine for putting me right on an important point of law, although I agree with him that the point in question is unlikely to arise in the context of decisions to put the referendum result into effect.
I very much appreciate Laurie Joshua’s thoughtful comment, based on long experience in a conspicuously varied and valuable career. But I have difficulty in accepting the idea that there is an inherent conflict between a welfare state and high levels of immigration, especially if Milton Friedman is partially responsible for it. There is surely a wide consensus based on good evidence that immigrants contribute more to the economy on average than natives, for obvious reasons, and that on average they consume less in social services than natives. Their economic contribution tends to create more jobs, not reduce the number of jobs in the economy (which is anyway not a fixed number), and the taxes they pay are more than enough to fund the additional houses, schools, hospitals and other services that they need. It’s obvious to anyone with their eyes open that the NHS would collapse without immigrants, from hospital consultants to cleaners and cooks. The same applies to the transport system and the care sectors and many other parts of the economy. As the native population ages, we need more immigrants to keep those beyond retirement age. Fewer than half of all our immigrants come from the EU: more than half come from elsewhere and there is nothing except economic reality to stop our government from ‘controlling’ (a cowardly euphemism for ‘reducing’) their numbers as much or as little as it likes. Why has it not done so, despite the present government’s avowed populist desire to get the numbers down?
In Britain as in other advanced western countries periods of rapid economic growth have tended to coincide with high levels of immigration. Countries like the US and Australia whose populations are almost entirely of immigrant stock are among the richest in the world, and well able to afford generous social services even if as a matter of choice the Americans opt not to provide them on the same scale as those in western Europe. Whatever Milton Friedman might have said, it’s not our social services or the relative generosity of our welfare state (at least until the post-Thatcher Tories got their hands on it) that attract large numbers of immigrants into our country: it’s the availability of well paid jobs, the security and prosperity, and the language, along with the ease of travel all over Europe (until last week’s catastrophic referendum) that suck in the immigrants. Unscrupulous British employers may be tempted to employ immigrants at extortionately low wages and in scandalous conditions, in preference to more expensive and often uppity natives, but the remedy for that is rigorous enforcement of our minimum wage legislation and of our working conditions legislation. More vigilance by the relevant trade unions would also help. In many such cases immigrants do work that natives are unwilling to do, until the immigrants rise through the system and are replaced by new waves of immigrants in their turn. If our impending self-expulsion from the EU precipitates the expected UK recession, with a rise in unemployment and a fall in both investment and wage levels, we can expect the flow of immigrants to begin to dry up – which may well further aggravate our economic plight.
So I would need more evidence to persuade me of any incompatibility between high immigration and the welfare state. The welfare state is indeed facing an existential threat to its future, but it’s not a threat from immigration, but rather from Conservative ideologues who believe in shrinking the state, and from the ultra-rich property-owning and managerial élite who cream off a disproportionate share of the wealth created by the economy, including by immigrants, but who are unwilling to pay their share of the government revenues needed to maintain a civilised welfare state. There are plenty of things that could and should be done to remedy this state of affairs. The problem is that our present government is not willing to do them, with last week’s dramatic consequences to show for that failure.
I’m not however qualified to comment on the very different situation in Poland. Countries of high emigration (as distinct from refugees) such as the Philippines and Goa can be shown to benefit significantly from remittances to families with members working abroad, and emigration encourages the provision of local training facilities for those seeking skills and qualifications to enable them to work abroad, facilities which raise local standards and benefit those who stay at home as well as those who emigrate. If Poland is not benefiting from such factors, increasing prosperity will ultimately wind down the incentives for Poles to go abroad in large numbers to work. When that happens, Britain will be among the losers.
I think that Obiter J puts it very well, too, and also agree with your response to Laurie Joshua – as far as it goes. The trouble is (a) that you seem not to take account of the less visible costs of high immigration; for example, those imposed on GP practices, schools, the police and so on by poor or non-existent command of English (b) the high concentration of immigrants in places like Boston and Peterborough, with its inevitable, highly visible and – particularly to older people – disturbing impact on their character, and (c) the fact that while, on a national scale, immigration is certainly a good thing, it is not seen as such by very many people. I am afraid that, if we are somehow to remain in the EU, above all for the political reasons that induced Macmillan to launch us in that direction at the beginning of the 1960s (he thought the economic arguments finely balanced), we shall have to get significant concessions on freedom of movement. Surely this is the way to prevent serious civil disturbance in the event that Parliament exercises its undoubted right to have the last word on our relationship with the EU. I am pleased but not surprised to see that there are signs in Europe that the fear of continental disintegration is causing high-level thought to be given to a fundamental re-thinking of the European project, which is overdue because the federalists have got ahead of themselves: we need a confederal, not federal, Europe. This will obviously take a long time but debate on it could provide the short-term political cover for a negotiation disguised as a ‘discussion’ in which the British government is able to secure concessions on freedom of movement. I think we are more likely to get a shift in the public mood back to the EU by being able to show better terms for continued membership (Cameron’s feebly executed strategy) than by those threatening a ‘harsh and unpalatable’ fate consequent upon departure, which would just be dismissed by Leave’s attack dogs in the media as more ‘scaremongering’. Meanwhile, therefore, in case triggering Art 50 should prove irrevocable, we should play for time, among other things by engaging in legal guerrilla warfare.
Many thanks for your comments.
Article 50 – Is it irreversible? There isn’t much to guide us. We know that there wasn’t an “exit process” in the European treaties until the Lisbon Treaty and then Article 50 appeared. It didn’t seem to attract much comment at the time and, as our own Court of Appeal noted recently, there is nothing in the “travaux preparatoires” to guide us.
Article 50 begins with the point that the member state has decided to leave. HOW it makes that decision is a matter of national and not EU law. This much is crystal clear.
The article seems then to have been drafted on the footing that a state which makes such a vital decision is not going to backtrack on it and will leave. Those drafting the article don’t appear to have considered that the parties to divorce negotiations might decide to call the whole thing off!
Article 50(5) only deals with states that have withdrawn and then apply to rejoin. In that case Article 49 applies. (There is NO way UK would get back in on terms anywhere near as favourable as the ones we had – out of Eurozone etc).
POLITICALLY I see nothing to prevent the divorcing parties deciding to call everything off BUT enough of the divorce analogy. A STATE such as the UK should never give notice to quit any international body unless it seriously means to see it through no matter what.
It is therefore incumbent on our politicians to weigh up all the factors (including the non-binding referendum result). They must consider everything – damage to the economy, damage to the UK as a Union of four nations and so on.
Do not give Art 50 notice unless you mean it.
I have two quick thoughts on Laurie Joshua’s thoughtful post.
First, to the extent that there is a tension between free movement of people and high levels of welfare provision, one solution is to encourage convergence in welfare provision among the states participating in free movement. That will reduce the likelihood that people actually do move to arbitrage welfare, and it will reduce the perception that they are doing so.
(There is an analogy here with a common currency, which is, in my view, hard to sustain without sufficient mechanisms for fiscal transfers across the common currency area.)
Second, some welfare systems are typically at least partly contributory. In this case, the same “system” can be in operation, but migrants from elsewhere may not be eligible if they have not previously contributed to the system. So you should not be able (and indeed you cannot) move to the UK from elsewhere in Europe to receive a UK state pension. The big downside of this is that it can mean that people in the same country, in a similar position in terms of income and needs, may receive very different levels of benefits, creating problems for social cohesion and fairness.
Brian writes: The latest comments are once again stimulating and informative, and I am grateful for them. I have some reactions that may be worth recording.
I agree with some, but not all, of Geoff Berridge’s comments on the immigration dilemma – in effect a plea for willingness to contemplate greater government control over the kinds and numbers of immigrants, including those from the EU. Taking his points in order:
Our EU partners and their leaders are absolutely right to insist that free movement of people (including labour) as well as of capital is an essential part of a single market and a European union. We take for granted the free movement of people within the United Kingdom, despite the problems that it sometimes throws up, for example when the magnet of thriving London attracts more people than it can currently house (everyone agrees that the solution is to build more houses, not to prevent some people moving to London). We should look forward to the day when we similarly take it for granted that Europeans can move freely around their own continent. This will gradually become acceptable and welcome when prosperity is more equally shared around the countries of Europe, a process to which the EU is already contributing and to which it should contribute more. The comment here by Owen Barder is pertinent and illuminating (I would say that, though, wouldn’t I?).
ObiterJ’s further remarks about the important question whether the activation of negotiations under Article 50 of the Lisbon treaty is irrevocable, or whether it is open to the party seeking a divorce to call the whole thing off right up to the moment before the divorce is made absolute, are again extremely helpful. It seems to me, in the light of what he says, absolutely imperative that there should be an authoritative ruling, presumably by a court, on this point, as soon as possible and certainly before a new UK government takes the plunge and triggers Article 50. Politicians advocating an Article 50 trigger followed by negotiations to define the terms of our future trade and other relationship with the EU, and then a referendum to ask the British people whether they approve of those terms “before any final agreement is signed”, with the implication that if the Brits reject the terms negotiated, we could call the whole thing off and continue our membership of the EU on the same terms as hitherto, need to beware. There are elements in the EU that would argue that once a country activates Article 50, there is no going back; that the EU could not recognise any attempt by the UK to revoke its Article 50 notification and would ignore any referendum on the terms negotiated under it; and that if the UK failed to sign up within two years to the terms agreed with the rest of the EU, it would simply cease to be an EU member state two years after its Article 50 notification under section 3 of that Article (“The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period” [my emphasis]). This would give us the worst of all possible worlds: no agreement on the terms of withdrawal or of future relations, and ignominious expulsion from the Union and all its benefits. No government should even think of triggering Article 50 without first securing a universally accepted clarification of this key point: is an Article 50 notification irrevocable, or not?
Brian,
My piece was based on the fact that in February 2016 the UK and the EU agreed a set of proposals on freedom of movement which focused on restricting newly arriving EU/EEA citizens’ access to in-work benefits if the UK voted to remain in the EU. In the wake of the referendum result, the EU withdrew this and other proposals. Thus freedom of movement will be centre stage in any new type of relationship the UK has with the EU: this relationship could be a Norway like option that entails many of the costs (including freedom of movement and access to welfare) of being in the single market; or it could be a complete break with the EU which rules out freedom of movement and access to welfare.
As Owen highlights, the characteristics of the taxation system and the social benefit system, especially the extent to which access to welfare benefits requires a prior contribution, play a key role in shaping the the fiscal effects of migration of workers and their families from Eastern Europe into the UK. Welfare benefits can be broadly classified into contributory and non-contributory benefits. Contributory benefits are benefits that are only paid if the beneficiary (and their employer) has made a prior contribution. Non-contributory benefits are paid regardless of whether the beneficiary has made prior contributions or not. Within non-contributory benefits, it is common to further distinguish between means-tested benefits (which target the poor as they are paid only if the beneficiary’s income is less than a certain threshold) and non-means tested benefits that can include universal benefits for all residents and categorical benefits for specific groups of the population.
The precise mix between contributory and non-contributory benefits provided by the national benefits system affects the impacts of labour immigration on public finance and the social policies of the host country in at least three ways. First, in welfare systems – like the UK- characterised by a high share of non-contributory benefits (such as in-work tax credits, housing benefit, child benefits), low-skilled labour immigration will be associated with greater net fiscal costs (or smaller net fiscal benefits), at least in the short term, than in welfare systems that include more contributory benefits – such as those that prevail in continental Europe. In the UK (see ONS 2014), around 20 per cent of EEA arrivals receive in-work benefits. This is because new migrant workers (or any citizen who takes up employment and enters the welfare system for the first time) is able to access non-contributory benefits immediately and without having to make a specific social contribution toward funding that benefit. In contrast, EU migrants only become eligible to access contributory benefits after a qualifying period and while making specific contributions to the social insurance systems (health, unemployment, disability, pensions, long term care etc) . So, the difference between taxes paid and benefits received by low-skilled migrant workers will be more favourable under more contributory systems.
Getting to grips with these details and developing innovative approaches will be important in setting the tone and content of our future relationship with the EU; doing so in manner that satisfies a majority of the population will be essential.
Laurie
Brian writes: Thank you, Laurie, for this further useful contribution. One striking thing about this is the role of in-work benefits, which essentially reflect the unwillingness (or in some cases inability) of employers to pay their workers enough to live on at a reasonably acceptable standard of living. It is the fact that the state is forced to subsidise these employers which imposes the cost on the taxpayer, rather than anything that low-paid in-work immigrants can be held responsible for.
Another point for the immigration cost-benefit analysis is of course that for every EU immigrant to whom we pay welfare benefits there’s a UK citizen living and working (or, in some places, more likely retired) in another EU country, receiving its welfare benefits and saving us their equivalent cost. There’s an element of swings and roundabouts here.
But it will be a great pity if the continuing debate on immigration continues to focus obsessively on the issue of the cost of the welfare benefits received by EU immigrants, who consume on average fewer such benefits than a corresponding cohort of natives, and who on average make a bigger net contribution to the economy than the corresponding natives. The great majority of immigrants come here to work, which benefits all of us, not to receive our welfare benefits, and to suggest otherwise, even by implication, only aggravates the demonisation of these welcome guests in our country. But the overall costs and benefits obviously need to take account of welfare benefits and they are a perfectly legitimate topic for discussion.
After reading and listening to parts of the debate in the House of Lords on 5 and 6 July on the outcome of the EU Referendum, and looking at the text of Article 50 of the Lisbon Treaty, it is not clear to me whether it is permissible to submit a notification of our decision to withdraw from the EU made conditional on the negotiated arrangements being approved either by our Parliament and/or in a second referendum.
If no such condition is attached, and no agreement can be reached, after two years of the notification of our decision to withdraw the Treaties would presumably simply cease to apply to the UK and we would be out on our own. That is, the notification would be irrevocable, unless we attached conditions. But would the EU then be willing to negotiate? I have no idea.
Thanks, Derek, for these comments, which reinforce the points I have made in my original post above and again, with ObiterJ, in further comments. There is evidently no authoritative ruling on the key question: can a formal Article 50 notification, once given, be retracted if the leaving state is unable to agree with the rest of the EU on acceptable terms for its future relations with the Union, and decides that the least bad option is to remain a full member on the original terms, probably after a further consultation by a second referendum or an election? We really need to know the answer to this crucial question and we are surely entitled to ask for a definitive ruling from whichever EU institution is competent to hand one down. If the answer is that a notification, once given under Article 50, can’t in any circumstances be retracted within the two-year time limit, we really are in a chicken-and-egg situation. We are forced to commit ourselves to withdrawal, without knowing what terms are going to be imposed on us, and with no possibility to retract our notification of withdrawal even if the terms imposed on us turn out to be impossibly harsh. If we try to extend the negotiation of the terms beyond the two-year anniversary of our Art. 50 notification, without the consent to an extension of every single one of the other 27 member states, we simply cease to belong to the EU on the second anniversary, with no agreement on terms. Our relationship with the EU is then exactly the same as that of Madagascar or Yemen – or even worse if either of those estimable countries has a trade agreement with the EU.
I have seen a reference somewhere to a ruling by a French legal body of some kind according to which an Art. 50 notification can be retracted, but obviously what’s needed is a ruling by an authoritative EU body. Why on earth has our government, such as it now is, not asked for one?
A narrow majority of the UK electorate has voted to leave the EU without the faintest idea of the terms on which we may be permitted to do so. Some Tory chump in the house of lords has reprimanded the admirable Baroness [Oona] King for saying this, on the grounds that it’s ‘patronising’. But the reality is that no-one on earth knows what the terms of our withdrawal and future relationship will be, because the UK side has not yet decided what to ask for and the EU side has not yet decided what to offer us. I would hope that a reasonable court would hold that natural justice requires us to be given an opportunity to consult our voters about the terms, when they have been negotiated, before the die is cast and we’re definitively out. That would mean a negotiation after our Art. 50 notification, finalisation of a draft withdrawal agreement, submission of the draft agreement to the British people, and either signature of the agreement by the British government or withdrawal of our Art. 50 notification and continued UK membership of the EU. Is the EU really willing to rule out that sequence on the basis of an unclear article of the Lisbon treaty? I think we should be told.