Does the UK subsidise the upbringing of foreigners' children?
4th Feb 2013
"Migrants handed £1m a week for children back home as thousands of British families are stripped of THEIR child benefit"
The Daily Mail, 4 February 2012
As part of the ongoing debate on whether immigrants contribute more to the economy than they receive in state support, the Daily Mail is not the first newspaper to report the fact that foreigners are entitled to claim Child Benefit for their children resident abroad.
Back in October, Full Fact looked into the Daily Star's claim that the UK pays out £36 million in Child Benefit for children living elsewhere in the EU. Within the last week the Metro also ran a version of the story.
The UK government is obliged under EC Regulation 883/2004 to protect the social security rights of nationals of all member states of the European Economic Area (EEA).
Meanwhile, families where one parent earns more than £60,000 have lost their right to claim Child Benefit and those earning between £50,000 and £60,000 are seeing a reduction in their payments.
According to the Daily Mail, the children of EEA nationals cost the Treasury £55 million per year, approximately equivalent to £1 million per week.
Bona fide or back of the envelope?
The source of the statistic is a Parliamentary Question posed by Keith Vaz MP, who recently asked the Chancellor of the Exchequer "what estimate he has made of the number of migrants residing in the UK who claim benefits on behalf of children living abroad".
On this subject Mr Vaz follows the lead of Priti Patel MP, who put a similar question to the Treasury a few months ago (which in turn prompted our previous factcheck on this subject). However, Mr Vaz also requested a breakdown of how the claim count varies from country to country.
Ms Patel's question produced headlines that told of the UK government spending £36m a year on foreigners' children. But this doesn't equate to £1 million per week.
So does this mean the bill has increased since autumn last year?
The short answer is no. In fact, while the number of Child Benefit Awards for children abroad has increased slightly (from 23,855 to 24,082 families in receipt), the number of children covered by the award has decreased marginally (from 40,251 to 40,171). According to these figures, the bill to the UK taxpayer is £36.6 million per year.
The Daily Mail acknowledges this figure. So how do we account for the extra £18.4 million that makes up the total £55 million bill?
This is where we need to factor in Child Tax Credit. A parent can claim Child Tax Credit regardless of whether or not they're in work. Unlike Child Benefit, which is a separate payment, the amount you receive for your child or children depends on your income.
Here the Daily Mail has taken its lead from Migration Watch, a non-political organisation that "is concerned about the present scale of immigration into the UK". It calculated that if Child Tax Credit has been paid out for 6,838 children (from the parliamentary question), and the average annual rate of Child Tax Credit for 2013/14 is £2,720 per child, then the cost is £18.6 million each year.
Of course, if we're using 2012 figures for the number of claimants, we should apply the 2012 Child Tax Credit rate which is slightly less, at £2,690. The annual bill on this costing is slightly lower at £18.4 million, although it's in the same region.
However, it's worth noting that the Treasury does not calculate the cost of EU nationals claiming Child Benefit as:
"not all such awards are made at full UK rates"
Similarly, HMRC points out that the sum a parent receives in Child Tax Credit will vary depending on a number of factors.
More importantly, while we might try to estimate the amount of money that these parents claim from the state, we don't know how much they contribute to the economy through taxes and National Insurance contributions. Therefore it's tricky to make a specific claim about the net "costs" these individuals are imposing.
After last week's rumours that the government is to launch a 'Broken Britain' poster campaign to dissuade Bulgarians and Romanians from migrating to the UK, the issue of EU immigration is generating a debate of fiery intensity.
It's been pointed out that the UK is one of a minority of EEA countries that allows parents to claim benefits for their children even if they're resident in another country - a subject to which Full Fact will be returning.
In the meantime, the headline figures, while not inaccurate, are certainly broad-brush.