Immigrants should pay National Insurance upfront, says liberal think tank

30 January 2014

Migrants should be required to pay a £2,000 ‘National Insurance Advance’ upon first entering the UK, a new think tank report proposes.

In the second of three publications* aimed at setting a ‘liberal’ immigration agenda before the next general election, CentreForum argues that politicians must restore confidence in the immigration system without jettisoning key liberal principles such as freedom and tolerance.

As well as the National Insurance proposal, which would apply to non-EU economic migrants only, CentreForum’s report contains plans to extend the period before EU migrants can claim out of work benefits to 12 months. 

It also joins calls to scrap the Conservative party’s policy of reducing net migration to “the tens of thousands”, describing this target as “perverse” and “unfulfillable”. It instead recommends a broader migration and population change target that would be set at the beginning of every parliament.

Other recommendations in the report titled ‘Migration: a liberal challenge’ include a student loans style scheme for migrants to pay for English language classes and a plan to shift responsibility for asylum cases from the Home Office to the Ministry of Justice.

The report comes as the Immigration Bill returns to the House of Commons for a final round of voting this Thursday.

No contribution, no benefits

CentreForum’s National Insurance Advance is being offered in response to public concern that immigrants are accessing services and the benefits system without having first contributed. Under the proposal, £2,000 would be payable upon entry to the UK by non-EU economic migrants only and refunded once they had made sufficient tax contributions, or left the country without claiming welfare.

The report says that this proposal – together with lengthening the time it takes EU migrants to become eligible for benefits – would provide a clear contributory link and demonstrate that migrants are coming to the UK to work, not claim.**

Taking numbers seriously

The report acknowledges that politicians cannot ignore people’s angst over immigrant numbers. But it says that the net migration target, introduced by the Conservative side of the coalition government, is “unfulfillable” and “is perversely leading the government to clampdown on [students and highly skilled migrants] to whom the public is most well disposed and who provide the clearest economic benefits”.

CentreForum instead proposes that a broader migration and population change target should be set at the beginning of each parliament. Governments would then be required to set out how they intend to mitigate the impact of population change on housing and public services and be held to account for it.

The challenge for liberals

The report says that liberals need to stop blaming the current state of public opinion on some of the many glaring factual inaccuracies in the political debate on immigration, and start to engage properly with people’s concerns.

It warns, however, that moving towards a tougher stance on immigration would not only be bad for the economy but bad politics. Despite the Conservative party’s efforts to reduce migrant numbers, the proportion of the population who believe the Conservatives are best placed to deal with immigration has fallen from 47% at the 2010 election to 25% now, the report points out.

The challenge, it concludes, is “to devise a distinctive approach which addresses people’s concerns in a proportionate and realistic fashion and begins to restore confidence in the immigration system – while preserving the liberal principles of freedom and tolerance to the greatest extent possible.”

Alasdair Murray, report author, said:

“Politicians are engaged in an arms race around immigration policy which appears to have more to do with looking tough than genuinely addressing people's concerns with practical policy.”

“It is possible to restore confidence in the immigration system by making it more transparent, ending the perception that migrants can access the benefits system without first contributing and developing a target that reflects the real social and economic needs of the country.”

NOTES TO EDITORS

* The first in this three part series of publications 'The business case for immigration reform' was launched by CentreForum in December 2013. You can access that report here. The third in the series will focus on illegal immigration and asylum and is expected in June 2014.

** Extending the benefit entitlement period to one year would require a change in EU rules. The report urges the UK government to work with other EU member states to make this a priority for the European Commission due to take office in November. Ministers, including the Work and Pensions Secretary Iain Duncan-Smith and Deputy Prime Minister Nick Clegg, have already backed such a reform.

Taxing poverty is wrong — lift low earners out of National Insurance

16 January 2014 

Whoever wins the next general election can raise living standards by cutting National Insurance for low and middle income earners, a new report from CentreForum argues.

The think tank says that lifting people out of National Insurance is the most progressive form of direct tax cut, as it will provide the most help for low earners and ease living cost pressures for the "squeezed middle".

The report shuns Labour's plan to revive the 10p income tax band. And it says that future increases in the income tax personal allowance — the flagship policy of the Liberal Democrats in coalition with the Conservatives — should come second to National Insurance cuts.

By April, the coalition government will have raised the personal allowance from £6,475 to £10,000 in four years. But Lib Dems are now hinting it should be lifted further towards £12,500 — roughly the annual full time equivalent of the National Minimum Wage.

The report acknowledges that personal allowance increases are fairer, in distributional terms, than reducing the basic rate of income tax or Labour's 10p tax band proposal.

But it says more must be done to target the benefits of the policy on the low paid. It cautions that poorer households will see little benefit from future personal allowance increases because of corresponding reductions in Universal Credit.

Moreover, eligibility for workplace pension auto-enrolment is linked to the personal allowance threshold. This means further increases could harm low paid workers' pension saving, the report warns.

CentreForum also rejects the notion of linking the personal allowance to the National Minimum Wage, suggesting there are more appropriate thresholds that better relate to living standards. A sensible alternative, it says, would be to take the absolute poverty line — which is just over £10,000 — out of all income tax and National Insurance.* 

It argues that raising employee, employer and self-employed National Insurance thresholds to the same level as the income tax personal allowance, and then to the poverty line, would simplify the tax system and cost less than linking the personal allowance to the minimum wage.

Cutting employer National Insurance could even allow for an increase in the minimum wage of up to £600 a year, it adds.

Adam Corlett, Economics Researcher at CentreForum and report author, said:

"It's crucial to get these expensive tax cuts right, and they should be focused as far as possible on poorer workers. The policy case for favouring National Insurance cuts is clear and could take the absolute poverty line out of all direct tax."

* In 2014/15 the absolute poverty line for one adult will be around £10,050

NOTES TO EDITOR

The CentreForum report 'Making allowances: tax cuts for the squeezed middle' by Adam Corlett can be accessed via this link.

CentreForum calculates that raising all National Insurance thresholds to £10,000 will cost £8.8 billion a year. This is less expensive than raising the income tax personal allowance from £10,000 to the National Minimum Wage (currently £12,338) which will cost over £11 billion.

However, the National Insurance policy will carry a smaller price tag if specifically targeted at low income workers. CentreForum's proposal will cost around £2.5 billion (excluding employer National Insurance) as it involves increasing National Insurance rates so that the benefits are tapered away from higher earners.

People on low incomes — around 1.5 million of them — would gain from National Insurance cuts but not at all from further personal allowance increases or the introduction of a 10p band. (Note that raising the National Insurance thresholds would not affect state pension and other benefit entitlements.)

In contrast to the personal allowance of £10,000, National Insurance begins at just below £8,000 and one form of self-employed National Insurance starts at under £6,000. Those on incomes of up to £13,000 currently pay more in employee National Insurance than income tax.

Mental health stigma persists in Britain's workplaces, MP warns

29 December 2013

Paul Burstow MP, Chair of the CentreForum Mental Health Commission, urges action on "jobs gap" affecting people with mental health problems
New survey data adds weight to government findings on persistence of mental health stigma in the workplace

Workplace stigma remains a significant worry for people with mental health problems, new research shows.

Survey data collected by the CentreForum Mental Health Commission paints a troubling picture of mental health service users' experience of employment.

  • 63% of respondents said they had been treated unfairly in finding a job.
  • 65% said they were concerned about what people at work may think, say or do if their mental health condition became known.
  • 75% said they had stopped themselves from applying for work for fear of how potential employers might respond to their mental health condition.
  • 84% said they had stopped or delayed receiving professional care for a mental health problem over concern it would harm their chances when applying for jobs. Nearly half (49%) had done this a lot.
  • 61% reported they had stopped themselves applying for education or training courses.

These findings add weight to government research published in early December. The government's first 'mental health dashboard' stressed that stigma around mental health problems has yet to be booted out of the workplace, and the consequences are severe.

It found that the cost of mental health to business is just over £1,000 per employee, or almost £26 billion across the UK economy, each year. But it added that more effective management of mental health at work could save around 30% of these costs.

Paul Burstow MP, Chair of the CentreForum Mental Health Commission and former Care Services Minister, said:

"People living with severe and enduring mental illness get a raw deal. A 20 year gap in life expectancy is the result of NHS neglect of their physical health needs. Just as worrying is their experience of employment with many more people wanting to work than do. This jobs gap can be tackled with practical help."

In response to its survey findings, the CentreForum Mental Health Commission makes three cost neutral recommendations:

  • Central government departments and agencies should be required to meet the best employer practice in regards to mental health. They should be required to join the Time for Change campaign and the Mindful Employer scheme forthwith. Some have already signed up, but all should be compelled to do so.
  • Commitments already in place to require front line contractors to sign up to mental health schemes should be extended to all employers seeking to deliver contracted services tendered by government.
  • Government should place added pressure on local authorities to introduce similar requirements on existing and prospective employers within the formal tendering processes they adopt.

NOTES TO EDITOR

* CentreForum's Call for Evidence factsheet can be accessed here.

** Mindful Employer was developed by employers in Exeter and launched in 2004. It is run by Workways, a service of Devon Partnership NHS Trust. For more information, visit www.mindfulemployer.net

Immigration policy a nightmare for UK business, says think tank

23 December 2013

Current immigration policy is choking business growth for zero political gain, a new report from CentreForum warns.

In the first of three publications aimed at setting a 'liberal' immigration agenda for 2015, the think tank urges the next government to focus on the quality, not quantity, of skilled workers coming to Britain from outside the European Union.

The report joins calls to scrap the Conservative led policy of reducing net migration to "the tens of thousands each year". It says this policy is impossible to fulfil, aggravates distrust in the immigration system and makes it harder for businesses to employ the "brightest and the best". Migrant groups that the government finds it easiest to restrict are those that cause the public least concern, it adds.

In a bid to identify how non-EU migration can be better managed, CentreForum undertook research with business, trade associations and unions. Set out in the report are a number of ideas for cutting red tape, promoting jobs, exports and growth, and making the immigration system more customer friendly.

However, one of the main complaints respondents raised was the "permanent revolution" in immigration policy. The report therefore urges a moratorium on immigration changes, at least until after the 2015 election, so that the system can bed down and businesses can get used to current rules.

In addition, the report pushes for changes in the way immigration statistics are gathered to get a clearer picture of arrivals and departures. It says the use of the International Passenger Survey to estimate numbers of migrants is particularly hopeless, and the government must improve data collection to generate accurate and comprehensive migration statistics.

It argues that students and migrants on intra company transfers, who are not seeking indefinite leave to remain in the UK, should be removed from the figures.

Tom Papworth, report author and Associate Director, Economic Policy, at CentreForum said:

"The government's immigration policy is at odds with its ambition to grow the economy, create jobs and shrink the deficit. It needs to focus on quality, rather than quantity. It has a duty to collect accurate, reliable statistics. And it needs to reverse the poor customer service and bad policy design that is harming UK competitiveness."

"Having done so, the government needs to stop and allow businesses to catch their breath. The permanent revolution in immigration policy is a nightmare for businesses seeking to comply with the rules."

NOTES TO EDITOR

The report 'The business case for immigration reform' by Tom Papworth is available via this link.