Opposition parties have accused the government of not being transparent about the number of Britons who would be affected by policies aimed at restricting EU migrants’ access to tax credits.

Thousands of British adults and children could lose out on the benefits because they are part of families with a parent from elsewhere in the EU, although the prime minister has not yet made clear how the curbs will work.



HM Revenue and Customs (HMRC)‘s definition of migrant families includes those in which one partner is a British national. This significantly inflates the figure of 740,000 “non-UK” families claiming tax credits that the Treasury uses to formulate policy and in its discussions about restricting foreigners’ access to the UK benefits system.

HMRC has repeatedly refused to say how many of the 740,000 families fall into this category.

David Cameron’s goal of restricting EU migrants’ in-work benefits is a central plank of his plan to renegotiate Britain’s status in the union ahead of an in/out EU referendum.

Tim Farron, the Lib Dem leader, said the Tories were “clearly cooking the books”. Labour’s Owen Smith, the shadow work and pensions secretary, said: “It now appears that the people being counted as ‘foreigners’ by the government may well turn out to be couples where one partner is a British citizen, calling into question Iain Duncan Smith’s previous allegations that tax credits are being targeted from overseas.”

The Guardian understands that the government has been aware of the anomalies in its statistics for at least a year.

Ever since Cameron announced plans in November 2014 to stop EU migrants from claiming in-work benefits until they have been in the UK for four years, the government has been exploring how to work the prime minister’s objective into a policy.

One problem is that any arrangement for migrants alone would probably be a breach of EU law, according to government lawyers. Any attempt to restrict freedom of movement within the EU, one of the union’s founding and fundamental principles, would face strong opposition from many governments – including Germany – making any such approach a non-starter.

Philip Hammond, the foreign secretary, has already told his Conservative colleagues that limiting free movement within the EU is unachievable.

To get around this, one option the government had discussed is the introduction of a four-year residency test. Such a policy, however, would affect about 50,000 18 to 22-year-old British nationals, because it would have to apply to both UK and EU nationals. It would also affect British adults and children caught up in HMRC’s definition of non-UK migrant families.

It is unclear whether the government even knows how many EU nationals receiving tax credits have resided in Britain for less than four years.

Asked for a figure, the Treasury and the Department for Work and Pensions told the Guardian that they neither confirm nor deny that they held such information. HMRC admitted that it did hold relevant information, but it refused to release it under the Freedom of Information Act.

Any estimate that includes British nationals could prove politically difficult to sell.

One source familiar with the government’s thinking said that by including British nationals in the classification of non-UK families, the statistics were “significantly inflating” the impression of the number of migrants claiming tax credits.

“The Tories are clearly cooking the books to stir anti-migrant fear to justify robbing 3 million people of their tax credits,” Farron said. “Demonising migrants and people happily married to anyone born outside the UK is nothing short of disgraceful.”

A Treasury spokesperson declined to comment on the implications of the government’s definition of a migrant family, but said: “The government has been clear that Britain needs to reform and renegotiate its relationship with the European Union, and that one of the areas where we want change is welfare in order to reduce the incentives which have led to mass immigration from Europe.

“Talks are now under way with other countries on the technical and legal options for delivering these reforms, and we are not giving a running commentary on those discussions.”

The prime minister has said he will put the changes he wants to see ahead of an in/out referendum in November in writing.