Child Poverty and No Recourse to Public Funds

Debate between Olivia Blake and Danny Kruger

Wednesday 11th June 2025 Westminster Hall

[Danny Kruger]

I am sorry if I missed the hon. Ladies’ references to the pull factor, but I simply do not believe that the offer, or the lack of offer, of support has no effect on the demand for places in the UK. I think people will factor in those considerations when deciding whether to apply for a visa here. If we are offering additional public finances, that would make a more attractive offer.

I recognise the hon. Lady’s point about the labour market and the availability of people working in social care, although that is perhaps a topic for another day. The point was also made by the care providers in Swindon I spoke to this morning. They also said that this country could do so much better in supporting and training care workers who were brought up here.

Leaving aside the potential dynamic effect of ending the no recourse arrangements, I do not think the hon. Member for Sheffield Hallam sufficiently acknowledges the pressures on the system that are a consequence of high rates of migration. Studies suggest that around 1 million people are likely to get indefinite leave to remain—estimates vary between 750,000 and 1.25 million— which is 1 million people coming down the pipeline, as it were, and likely to have recourse to public funds.

Because of how the immigration system has worked in recent years, we are talking about people who are overwhelmingly on low wages and who come with dependants, notwithstanding the genuine contribution that many of them will make. Overall, on a pure analysis of the numbers, they and their families will represent a fiscal loss to the country over the time they are in the UK.

Even based on the very optimistic assumptions about lifetime earnings that the OBR uses, the 1 million or so people who are expected to get indefinite leave to remain in the coming years will have a net fiscal lifetime cost to the country of £234 billion. That is what we are looking at with the current system.

[Olivia Blake]

I thank the hon. Member for his contribution, but I want to push back a bit on his comments about what I was implying. There is a net contribution from migrants—we know that to be true—and it is not all about costs. If some of the things I outlined in my speech happened, there would be a benefit of £800 million to the economy. We have to consider it in the round.

[Danny Kruger]

I am grateful for that intervention, and I recognise the complexity of the subject we are discussing. The hon. Lady has cited evidence that contradicts mine. I need to look into the study she mentions, because my strong understanding is that, on the basis of the overall immigration we have welcomed in recent years—and, frankly, it is my party that is responsible for it—the net fiscal effect is negative.

Of course, there are many migrants who contribute economically, and there are many migrants who contribute even if they are not contributing economically; not everything is counted in pounds and pence. But if we are talking about the fiscal effects, I am confident in saying that, based on the number of people expected to achieve indefinite leave to remain, who the hon. Lady presumably wants to have recourse to public funds earlier, we are looking at a significant increase in the financial burden.

I want to acknowledge the point that the hon. Lady and other Members have made: the current system shunts costs around the system. The consequence of people living in poverty might be that the Department for Work and Pensions does not bear the cost, but other parts of the public system do—local authorities most of all. That is not an argument to say, “In that case, let the DWP provide the money,” because overall, we would be spending a lot more, and as I said, inviting more people to come if we did that. However, I acknowledge that it is not as if these costs are not borne at all; some of them are borne elsewhere.

I want to end by making a very obvious point. Our welfare system remains one based on contribution in principle and, to a certain degree, in practice, in so far as the national insurance system still exists. In the public mind, there is rightly an expectation that, for the sake of fairness and trust in the system, we should maintain an arrangement whereby welfare is funded by and is for the benefit of citizens of this country. There are, of course, many exceptions to that—other people make contributions, and other people are eligible for support—but that is the basis on which our system depends.

My strong view is that the proposal by the hon. Member for Sheffield Hallam, echoed by the hon. Member for Aberdeen North (Kirsty Blackman)—and I think the Liberal Democrat spokesperson, the hon. Member for Frome and East Somerset (Anna Sabine), made a similar point—effectively to scrap the no recourse to public funds arrangement would terminally undermine, weaken and eventually destroy the basis of our welfare system, which is that people pay in and receive.

To conclude, I look forward to the child poverty strategy. If we are serious about reducing child poverty, including for those children living in migrant families who are here now, we need to reduce the flow of low-wage families into the system in the first place, whether from abroad or through our own failure to support families in this country. That means extending the qualification period for ILR, which my party has suggested, and it is good that the Government are now considering following suit.

We should obviously be helping families with their finances through meaningful and effective reform of the welfare system. We should be supporting the community infrastructure that gives support to families and young people, and we should be creating well-paid jobs through an economic policy that stimulates growth—not taxing jobs out of existence, as the Government are sadly doing. Those are the best ways to support children in poverty.