In the run up to the Chancellor’s spring statement today, much of the debate has focused what support will be made available to those on low income and those struggling most with the rising costs of living. Poverty campaigners have called to uprate benefits in line with inflation and to strengthen existing support.
In times of financial crisis, the social security safety net is vital in protecting low-income households from hardship, deprivation, and debt. But these crucial support structures, however inadequate, are not available to everyone who lives and works in the UK. Hundreds of thousands of households pay taxes – and many will see a tax hike in April – yet they are prevented from accessing most income-based benefits because of immigration restrictions called ‘No Recourse to Public Funds’ (NRPF). Regardless of low earnings or additional needs arising due to disability or illness, affected families have no access to most mainstream benefits like Universal Credit, Child Benefit, Housing Benefit, Personal Independence Payments, and other discretionary payments which are critical in helping households struggling with soaring prices.
Such restrictions apply to foreign nationals who are in the UK on any visa or who have limited leave to remain. The government does not produce figures on how many households are affected, but estimates suggest that almost 1.4 million individuals had a valid form of leave to remain in 2019, most of whom would have been subject to NRPF conditions.
The restrictions that accompany NRPF do not affect everyone equally. Households on low income or who face other disadvantages are disproportionately impacted. A limited number of households that face destitution or have care needs can access services from local authorities including housing and subsistence payments. The NRPF Network reported that last year, 68 local authorities supported 3,200 households at a combined cost of £57 million. Beyond destitution, evidence shows that NRPF restrictions also hinder integration and drive poverty and inequality. Yet so far, the costs associated with this policy remain unknown.
The Greater London Authority recently commissioned LSE researchers to provide a robust Social Cost Benefit Analysis of whether the gains outweigh the costs of removing the NRPF condition from some migrant households. The analysis focused on individuals and family members who hold visas or have limited leave remain in the UK, which allows them to live and work here; we excluded those whose status is irregular, and those on student and visitor visas. The sample included approximately 970,000 individuals making up some 362,000 households.
We considered two options in our modelling: removing NRPF conditions from households with children only (Option 1) or from all households (Option 2). Lifting NRPF conditions would not result in all such households receiving mainstream benefits; rather, it would bring parity so that they would be eligible under the same criteria as their peers. We estimated that while all households with children – 106,000 – would become eligible for Child Benefit, only 9,000 of these would become eligible for Universal Credit under Option 1 and around 21,000 under Option 2, though take-up may be lower.
We concluded that removing NRPF conditions in both options would produce gains in excess of the costs, both in the short term and over a ten-year period. We also found that the net gains would be considerably greater under Option 1. In line with HM Treasury requirements for this type of analysis, we observed that lifting NRPF conditions for those with limited leave to remain would result in a positive net present value of £428 million (Option 2) and £872 million (Option 1) respectively, analysed over a 10-year period.
The main costs of lifting conditions would be for Universal Credit and Child Benefit, while the biggest gains would come from enabling better housing stability and improvements to children’s education and development. Government and wider society recognise both of these policy issues as key drivers of health and wellbeing. Even short periods of poverty and insecurity can severely negatively affect children’s life chances. There would also be high gains from access to better-quality, less crowded, or more affordable housing, and from relief of problem debt. Unsuitable housing can have long-term effects on health, and the financial burden of high housing costs can push families into poverty. Problem debt has profound social, emotional and productivity impacts, as well as effects on physical and mental health.
Social cost-benefit analysis is one tool for policymakers and fits alongside wider societal, political, rights and equalities factors. Although there are some gaps and uncertainties resulting in part from the lack of data available, our analysis suggests that it would be cost-effective to lift NRPF conditions — especially for families with children. Living on low income has devastating and long-term effects on children’s education, health, wellbeing, and on their life chances as well as on their parents’ life chances. The gains would be of lifelong value not only to them but to the communities into which families will integrate and to society more widely.
