EU renegotiation: Jean-Claude Juncker preparing migrant welfare curbs

European Commission's review of immigrant benefit rules is David Cameron's best chance of securing reform

Unemployed people waiting outside the job centre
Senior EU officials have indicated they share Britain's concern that free movement is underming national welfare systems Credit: Photo: ALAMY

David Cameron has been handed a significant window of opportunity to secure his flagship immigration reform as he prepares to set out his full list of demands to European Union leaders.

The European Commission is expected to announce within weeks plans for new restrictions on migrants’ access to benefits, a move that will be a boost to Mr Cameron's hopes of renegotiating Britain's relations with the EU.

Amid concerns in Brussels that public support for European migration rules is at risk, plans under consideration include longer waiting times before migrants can claim welfare, and banning the “export” of child benefits to offspring overseas.

Insiders say it offers Mr Cameron his best chance of achieving by far his most difficult demand - denying EU migrants in-work benefits for four years. He also wants to ensure parents only receive payments if their children live with them in Britain.

The Prime Minister has begun talks aimed at securing a better deal for Britain's EU membership, which will be put to voters at an "In/out" referendum before the end of 2017. This week, George Osborne will travel to Berlin to set out formally his demands for protections for the City of London against new regulations drawn up by countries in the Eurozone.

Next week, Mr Cameron is due to put all his key negotiating demands in writing to the EU for the first time. He has promised to send a letter to the President of the European Council, Donald Tusk, setting out in more detail what he wants Britain's new relationship with the EU to look like. Mr Cameron has previously called for new restrictions on European migrants' access to UK state benefits.

British sources welcomed the fact that Jean-Claude Juncker’s office is developing a new package of welfare reforms. The plans are also likely to include rules that will block employees from hiring migrant labourers more cheaply than local workers, said to be a cause of resentment in working-class communities.

Senior EU sources confirmed the closely-guarded review of “social security co-ordination” is being conducted with Mr Cameron’s demands squarely in mind.

The proposals will be presented to a gathering of EU work and pensions ministers in Brussels on December 7.

Crucially, that is ten days before a major pre-Christmas European Council summit at which the Prime Minister is expected to present his renegotiation demands in detail to his 27 counterparts.

Senior backbenchers are also furious that he has sacked three eurosceptic Tories from a key European body after they rebelled against the government's plans to ease "purdah" restrictions on the government's role during the referendum campaign.

Cheryl Gillan, Sir Edward Leigh and Christopher Chope were all taken off the parliamentary delegation to the Council of Europe last week.

One senior MP warned that the move was "spectacularly dim" and had left Conservative colleagues "cross" and "bemused". The senior source said: "The worry is that it indicates a level of spitefulness and pettiness that could come back during the referendum campaign."

EU officials have stressed the major obstacles to securing Britain’s demands. But the fact the EU’s leadership is willing to prise open a highly sensitive policy area is in itself a significant step forward for the UK effort. It serves as a counterpoint to complaints from national diplomats that the British renegotiation had effectively stalled.

At the centre of the review is regulation 883, the set of EU rules that govern migrants’ rights to welfare and which currently render illegal the British government’s proposals to strip EU migrants of welfare.

They state it is unlawful to discriminate between EU citizens in the benefits system, that welfare can be “exportable” and that periods of work done overseas can be recognised when calculating benefit entitlements.

Work has been underway for months, and the review was formally announced to MEPs in the commission’s Work Programme last week – the EU equivalent of the Queen’s Speech.

David Cameron and Jean Claude Juncker deep in discussion

Frans Timmermans, the EU first vice president and Mr Juncker’s right-hand man, told the Strasbourg assembly: “Free movement should not be a threat to social protection.”

A Tory source described it as Mr Cameron’s “big opportunity to clarify the rules”, while another figure said it will force the Commission to take a “hard look” at Britain’s demands.

At the moment the Treasury pays child benefit to 34,000 children living in other EU states at a cost of £30 million a year, a practice the Tories pledged in the 2015 manifesto to end.

Current waiting time rules allow EU nationals to claim Jobseekers’ Allowance after three months in Britain, while in-work benefits such as tax credits can be accessed straight away – something Mr Cameron claims acts as an artificial magnet for migrants.

A Whitehall source familiar with the talks said they expected “helpful” proposals on ending the “export” of child benefit.

Options being discussed in Brussels are said to include making the country where the child lives pay the benefit; or allowing Britain to pay the local rate of benefit to children living overseas – in most cases, a fraction of the British rate.

A review of waiting periods for migrants access to in-work benefits is understood to be on the table.

The major unanswered question, however, is how long such a waiting period may be – Mr Cameron is seeking four years, but many in Brussels think a matter of just months is more realistic.

Mr Cameron’s welfare proposals have been met with howls of protest in national capitals, with many European governments insisting a cut in the entitlements of their expatriates will be a “red line”.

But in recent months senior allies of Mr Juncker have signalled they understand the British concerns about the impact of free movement.

Marianne Thyssen, the EU’s employment commissioner who is leading the review, told a university seminar in Poland in April that many communities “feel overwhelmed by the sudden influx of large numbers of mobile EU workers and their families.”

She said the migrant welfare system must be “seen as being fair by citizens and political leaders” or support for free movement and indeed entire EU was at risk.

Ms Thyssen, a Belgian conservative, said there are “legitimate questions” about ending child benefit “export” and enforcing waiting times for migrant benefit claims, strengthening the link between paying into a system and receiving.

Vice-President for the Euro and Social Dialogue Valdis Dombrovskis delivers the College decisions during a press conference at the EU headquarters in Brussels

Earlier this month Valdis Dombrovskis, the Latvian commissioner for the euro, warned a meeting of Mr Juncker’s team of “the risk of brain drain” as university graduates leave eastern Europe for the West.

It was significant as it echoes a line of argument that British ministers have been pushing for months as they try to win the support of eastern Europe for the reforms.

Free movement must respect “the needs and concerns of the countries where they wish to work", Mr Dombrovskis said.

The package will be new EU legislation, not treaty change, and it will require the support of MEPs to pass it, many of whom have little time for Mr Cameron.

It is understood that Iain Duncan Smith, the Work and Pensions Secretary, and Priti Patel, the jobs minister, last month met MEPs on the European Parliament’s employment committee to test their appetite for British proposals.

The package is also expected to contain new rights for agency workers such as building site labourers who are sent by their employers to other EU countries. That is a major demand of left-wing MEPs and could prevent the package from being shot to pieces in the Strasbourg assembly.