David Cameron plans to slash EU migration by imposing an annual cap on the number of national insurance numbers given to low-skilled immigrants from Europe.
Under plans being drawn up in Downing Street, new arrivals would get a national insurance number only for a limited period, to prevent them from coming to Britain to work and claim tax credits indefinitely.
Cabinet sources have told The Sunday Times that the national insurance cap will be a centrepiece of the prime minister’s planned speech announcing a tougher immigration policy designed to win back voters from Ukip.
Cameron will use the speech to outline the “red line” he will draw on immigration when he renegotiates Britain’s relationship with Brussels ahead of a referendum in 2017.
The level of the cap will be set to ensure that net migration to the UK falls below 100,000 a year, a Tory target that has been repeatedly missed. Net migration was 243,000 in the year to March.
The plans will spark concerns that withdrawing national insurance numbers could drive migrants into the black economy.
They would also be illegal under EU law, because they violate the principle of free movement of people. But Cameron thinks he can agree a deal because he will signal that he is prepared to leave the EU if he does not achieve what he wants.
A senior Conservative said: “The latest thinking in No 10 is that you would have an annual cap on the national insurance numbers issued to long-term low-skilled European immigrants.
“There would be a quota system to have time-limited national insurance numbers. The prime minister is now in the place where he wants to reduce the numbers coming in, not just the pull factors.”
A second senior source confirmed the plan “is one of the things being discussed”.
Currently migrants who have the right to study or work in the UK — including all EU arrivals — can apply for a national insurance number.
Cameron’s decision to draw a red line on immigration came after Nick Boles, the business minister, who is close to the prime minister, sent an email to his inner circle on September 1.
Boles warned that Cameron simply announcing he was prepared to leave the EU would not be enough, and urged him to say he would campaign to stay only if he got reforms that would “substantially” cut immigration from the EU.
The prime minister has not decided whether he should unveil the policy before the Rochester and Strood by-election on November 20, when the Tories will try to wrest the seat back from the Ukip defector Mark Reckless.
Some aides think moving early would “look panicky”. But another Cameron confidant said: “If you’ve got something that can persuade people to vote for you in a key election, you would be mad not to use it.”
Details of the plans came as MPs warned that Cameron would face a “nuclear disaster” if Ukip won in Rochester. A former frontbencher said: “It will be the start of a great meltdown, like the China syndrome. Anything could happen.”
Douglas Carswell, the earlier Tory defector, said yesterday that he expected defections from Tories and Labour if Reckless won. He said MPs from the two main parties were “thinking about their future” and that “silent, reflective doubt” would become “something far more kinetic and animated and urgent”.
In a fresh challenge to Cameron, Tory MPs lined up to warn him they would back a second European referendum unless he ditches plans to rejoin the European arrest warrant.
Theresa May, the home secretary, has opted out of more than 100 EU directives on justice and home affairs but, on advice from the police and security services, plans to opt back in to 35 of them, including the arrest warrant.
Up to 100 Conservative MPs oppose the plan, because they think the warrant makes it too easy for Britons to be extradited abroad. They have a legal opinion from Jonathan Fisher QC, which concludes that opting in to the arrest warrant would mean a referendum, because powers are being handed over to Brussels — a trigger enshrined in law in 2011.
Jacob Rees-Mogg said a referendum demand would be at the heart of a judicial review he plans to seek if May opts back into the warrant. He said: “The judicial review would be about whether the referendum lock was engaged. I have counsel’s opinion which says it would. The EU Act 2011 protects the country from joining a European public prosecutor. If we do that, it requires a referendum. This is a big transfer of powers to the EU.”
Fellow Tory Nick de Bois said: “The European arrest warrant would expose us to a European public prosecutor’s office, which is something parliament has rejected. If we go down this path it is subject to a referendum.”
The former frontbencher David Davis warned that Cameron’s promises to get tough on immigration would be undermined if he signed up to the arrest warrant. “What we do on the arrest warrant will be a clear demonstration in deeds, not words, of our view of intrusive EU legislation,” he said. “It’s exactly the sort of major, irreversible power grab by the EU that we have vowed to resist and David Cameron has previously argued against.”
MPs have been emboldened after Michael Gove, the chief whip, asked senior backbenchers last week how they would react if the arrest warrant was ditched — a move that No 10 and May denied was being considered.