David Cameron signaled his support for the competence review to look at whether the free movement of people should be changed on The Andrew Marr Show on Sunday. You can watch the interview on BBC iPlayer if you're in the UK (the interview starts at 28.45, the European section starts at around 43.30).
The Home Secretary, Theresa May, first issued a call for the free movement of people to be looked at in order to control migration within the EU more. At the last election, the Conservatives promised to cap immigration and they've been criticised for ignoring the free movement of workers within the EU as the major source of immigration. Given the difficulties of the Tories in government, perhaps Cameron wants to repatriate Conservative voters from southern France and Spain!
Changing the free movement of people is a big ask. It's one of the fundamental freedoms of the single market (remember, the single market the Conservatives are supposed to be in favour of?), and the rights of free movement of EU citizens are already pretty much subject to a worker test (i.e. you have to be working or have worked in a Member State before you can claim benefits there). So it's not really a question of EU nationals "pulling their weight", but whether they should be allowed on the job market at all.
This really points to a shallowness in political thinking. The only form of regulation the Conservatives seem to believe in is regulating the movement of people! But the point of the single market is to have a more open and dynamic market where people can enjoy more goods, services, business and working opportunities. Tightening the screws on the movement of people within the EU is of little use if the aim is to protect British workers, because they will still be in a competitive European market, and businesses and capital can still move within the EU. It would be much better to improve the social side of the European Union to help drive social and economic standards up across the Member States to prevent a race to the bottom while allowing us to enjoy the benefits of the single market, including the free movement of people.
This just highlights the fact that the single market is a political project.
On the EU budget, Cameron said that the UK would veto any big increase. But he also indicated that a separate Eurozone budget may be required for fiscal transfers within the Eurozone, and that such a development would be welcome. It's a very interesting point, because a separate budget would mean that there would need to be a division in the European Parliament for it, and divisions within the EU institutions would raise further questions of diluting the UK's influence in the EU generally. And the official reason for the veto last year was that there weren't enough safeguards in the (not yet negotiated) Fiscal Compact to protect the UK's political influence in the single market! Cameron seems to be aiming for a kind of EEA membership within the EU: the perks of the single market plus the political influence without the obligations and financial responsibilities. He'll have a hard time walking that line.