Memorandum by Professor David Coleman,
Oxford University
SUMMARY
1. General conclusion
This note acknowledges that expanded immigration
has brought short term benefits to some sections of the economy
and society, notably to immigrants and to their employers. But
it suggests that overall the effects of the new policy are counterproductive
and damaging to the national interest, especially in the long
term.
2. Effect of Immigration upon population,
on overall GDP and on individual welfare
Immigration only expands overall GDP roughly to
the extent that it expands the working-age population. But if
the well-being of the members of our society is the primary aim
of government, what matters is the effect upon GDP per head, roughly
equivalent to the real income of individuals, and on other broader
measures of individual welfare. The benefits of immigration to
the average individual are trivial in relation to average incomes
and may be slightly negative. But most arguments in favour of
immigration have cited its effects on the expansion of overall
GDP. That has, in the long run, some bearing upon the power of
governments and the relative might of nations but has little relation
to individual welfare.
3. The need to consider broader criteria
Conventional economic evaluations of the effects
of immigration are framed within narrow criteria of output, tax
and welfare transfers. They do not consider whether there may
be other economic and partly economic externalities arising from
immigration and from populations of recent immigrant origin. These
could include statistically disproportionate costs in education,
crime, security, health, race-relations and multicultural activities,
remittances and asylum. That apart, the higher population size
and density arising from immigration imposes congestion costs,
diverts investment to new infrastructure and housing, impinges
on space and amenity, and accelerates the output of waste and
greenhouse gas emissions. Those might prove to have costs sufficient
to tip the economic balance substantially against large-scale
migration into the UK. This paper provides some estimates of a
highly preliminary kind.
4. Looking beyond the conventional economy
Immigration is driving population growth and
changing the ethnic balance of the country. Projections are provided
showing the implications of current trends upon population and
ethnic composition to mid-century. Social cohesion, national identity
and solidarity and related issues do not usually come under the
heading of economics but unless the future is one of perfect integration
then they may well have to. The wider effects of immigration and
the population increase that it generates are likely to be much
more important than those conventionally measured by economics.
5. BACKGROUND
A new official policy was adopted at the beginning
of this century radically to expand immigration into the United
Kingdom in order to promote economic growth and satisfy the demands
of employers. The economic case rests upon four related but separate
arguments: beneficial effects upon the annual rate of increase
of overall GDP and fiscal balance, the satisfaction of employers'
demands for labour and alleviation of labour shortages, and the
corresponding damping of inflationary wage claims. In support
of this policy has been repeatedly claimed that migration is and
always was absolutely essential to the UK economy, which would
collapse without it. More general advantages are also cited; for
example the enhancement of the supposed cultural benefits of "diversity"
and the moderation of future problems of pensions and old-age
care arising from population ageing. This note questions these
supposed benefits and draws attention to some aspects of current
large-scale immigration which have not yet been put into the balance.
6. EFFECTS ON
GDP
Other submissions, for example from Professor
Rowthorn and other sources, will already have shown, on the basis
of the Government's own figures, that these inflated claims cannot
stand. There is little that I can add to those analyses of the
central economic issues. In general, the macroeconomic benefits
are simply what would have been expected from an expansion of
the size of population and workforce and even then are not impressive
in relation to overall GDP. The effects on the economic well-being
of the average citizen are trivial (Dustmann et al 2007)
and might even be slightly negative, being so small either way
that quite detailed differences in assumptions can swing the balance
in either direction, as an earlier paper has shown (Coleman and
Rowthorn 2004). Immigration and its effects, its winners and losers,
are highly heterogeneous. Employers of labour, especially low-productivity
employers seeking cheap labour, and their immigrant employees
are the most obvious beneficiaries. Others may lose.
7. A few additional points might be made,
however. Many of the arguments have concentrated on macroeconomic
indicators, as might be expected from the Treasury and the Bank
of England, rather than indicators of individual welfare. But
the macroeconomic indicators (GDP, inflation) only show the most
modest, or no, response to the very substantial increase migration
inflows of the last decade. There has been little change in overall
GDP trends in the years since immigration has accelerated, compared
with the previous period when a more restrictive (although still
relatively open) policy prevailed. (Figure 1). Overall GDP has
grown in a more or less linear fashion since the UK escaped from
the Exchange Control Mechanism in September 1992. Indeed the
trend follows approximately the same slope as that observed in
the early 1970s and most of the 1980s when net immigration was,
of course, negative and population growth much more modest than
today. It could be argued that the economy would have failed without
the accelerated immigration after 1997. Strictly speaking only
a counterfactual scenario of a UK economy with only the modest
net immigration of the early 1990s could provider a proper evaluation
of the effects of migration. None has been attempted. But it seems
ludicrous to suggest that without the recent rise in migration
then the economy would be in parlous state or that "immigration
is essential for UK prosperity". GDP, incomes and all the
rest were prospering well in the middle 1990s before the post
1997 acceleration of immigration. and the incoming government
endorsed the economic policies of the outgoing one.
8. The slope of GDP growth in Figure 1 is
approximately 2.5% per year. The Treasury insists, on the most
elementary (and partly wrong) assumptions about workforce participation,
that migration has elevated trend growth of GDP by 0.25% from
the underlying 2.5% to 2.75% (HM Treasury 2006, 2007). Record
migration, however, has not stopped the forecast being revised
downwards to 2% in the October 2007 pre-budget report, and to
less than 2% according to most City sources. Sometimes the published
Treasury justifications of the economic benefits of migration
give a slight impression of having come off the back of an envelope
or, in the case of those from the Bank of England, off the cuff
(eg King 2005).
9. The expected inflow from Eastern Europe
was initially cried down as trivial. The government endorsed an
amusing Home Office report which suggested that the net annual
inflow would be between 5,000-13,000 (Dustmann et al 2003;
Stone 2003). Thanks to the inadequacies of immigration statistics
we do not know what it is—the ONS estimate is clearly absurdly
low in relation to the cumulative gross inflow of well over half
a million registrations since 2004 (the biggest inflow in Britain's
history) and the LFS estimate of stock of over 450,000 in 2006.
Even that the startlingly higher immigration of recent years has
not provoked the economic acceleration that would have been expected
from it if recent claims were to be taken at face value.
Figure 1
UK GDP AT CONSTANT PRICES 1970-2006
10. In any case, the annual rate of overall
GDP growth is an unsatisfactory and inappropriate criterion. Overall
GDP and its growth are not in themselves rational aims of public
policy. In the Western world, overall GDP is strongly related
to population size and its growth is in part a function of population
growth. UK GDP is several times that of Switzerland, but our standard
of living is lower. What matters is the level, and the growth
rate, of GDP per head, a measure which removes the factor of population.
It approximates to income per head and thus is a measure of the
level, and increase, of material prosperity of the average resident.
In the Western developed world, the standard of living bears no
relation to population size or population growth. In fact in the
data in Figure 2 below there is a small negative correlation between
the two, although it completely lacks statistical significance.
Figure 2
RELATIONSHIP OF PER CAPITA GDP TO OVERALL
GDP
Source: Penn World Tables.
As will have been noted in other submissions,
when population is taken into consideration the benefit to the
average individual is trivial, well within the margins of error
and whether positive or negative at the mercy of specific assumptions.
11. THE TREND
IN PER
CAPITA GDP
Not surprisingly, therefore, growth in GDP per
head (Figure 3) inevitably highly variable, seems, on simple inspection,
untouched by the immigrant influx except perhaps somewhat downwards
in the last few years. It has fluctuated around an average of
2.1% over the last 50 years—somewhat less than overall GDP
as it omits the factor of population growth. The pre-budget report
for 2007 expects this fall to continue; workers' pay rises are
now at the lowest level for five years. These overall GDP and
per capita GDP trends are very blunt instruments for evaluating
claims for the "essential" economic contribution of
immigration. But at the least they indicate that no effect is
discernible at this scale except possibly downwards and that the
effects of migration must be very small compared with those of
conventional economic factors. That is exactly what would have
been expected from previous knowledge. They may take a different
view, of course, down at the Market Deeping Potato Picking Company.
But what is good for them may not be good for the United Kingdom.
Figure 3
TREND OF GDP PER HEAD CVM, SA PERCENT CHANGE
ON PREVIOUS YEAR
12. THE CONTRIBUTION
OF IMMIGRATION
TO POPULATION
GROWTH
Immigration has, however, an undoubted effect
upon population size and growth. It has propelled the recent increase
of the growth rate of the UK population—now about 0.6% per
year. Since the beginning of the century, net immigration has
accounted for about 65% of UK population growth. The increase
in the UK birth rate (TFR) from 2005 to 2006—from 1.79 to
1.85—has taken that down to 55%. However, just over half
the birth rate increase is due to an increase of births to immigrant
mothers, who now account for 24% of all births in England and
Wales, so the direct and indirect contribution of immigration
to population growth is somewhat higher According to the 2004-based
Principal Projection of Government Actuary's Department (GAD),
85% of population growth to mid-century is projected to arise
from the direct and indirect effects of immigration, that is to
the arrival of immigrants themselves and their children. In common
with all recent GAD projections, this employs assumptions about
long-term net immigration levels (145,000 per year) that are substantially
lower than the actual level as recorded and published by the Office
for National Statistics (ONS). On the GAD 2004-based assumptions,
UK population will increase by 9.3 million by 2051.
13. On 27 September 2007 it was announced
that the migration assumption behind the 2006-based projections
(to be released on 23 October) would be a more realistic 190,000,
together with a higher fertility assumption (TFR 1.84, not 1.74)
and improvements in forecast expectation of life. The first two
of those assumptions would imply a further increase to just under
75 million by mid century. Figure 4 compares a cohort-component
projection using the new assumptions on fertility and migration
(but not, because of shortage of time, the assumptions about improved
survival) compared with the GAD 2004-based projection. Incorporation
of the improved survival would increase the projected totals further.
Without any migration (that is, a "natural change" projection,
not a "zero net migration" one), on the same higher
fertility assumption the UK population would increase to 62 million
by 2026 and then return to its present level of just over 60 million
by 2051. Comparing the basic projection to the natural change
projection, 74% of the projected increase to 2026 would be due
to the direct and indirect effects of international migration.
14. AN ACCIDENTAL
15 MILLION
As far as public pronouncements are concerned,
HM Government shows no interest in the new population growth which
its migration policies have provoked. Indeed it seems to be unaware
of it. When quizzed on the matter, Home Office officials have
simply stated that population growth is not the concern of their
department (even though its policies lie behind it). But the impact
of an additional 15 million people would obviously be considerable:
economic, environmental, social and ethnic. Even if a formal population
policy is inappropriate or undesirable, then at least there should
be a requirement for policies to consider their impact on population.
In fact the obligation to provide environmental impact assessments
of policies already logically makes it a requirement. As it stands,
the absent-minded commitment into which we have drifted, to house
a further 15 million people—one million every five years—must
be the biggest unintended consequence of government policy of
almost any century. As it is by no means unavoidable, being almost
entirely dependent upon continued immigration, it might be thought
worthy of discussion. In official circles, there has been none.
Figure 4
15. There are no merits in the promotion
of population growth itself and many reasons to regret it especially
in a country as crowded as the United Kingdom. The characteristic
settlement patterns of immigrants magnify this effect as the majority
have settled in the South East, already the most densely-populated
area of the country. Neither increased population growth nor increased
overall GDP growth should be policy goals. China has recently
overtaken the UK in terms of overall GDP and India will follow
in due course. Both have populations over 1 billion, with over
300 million in China and 400 million in India still living in
abject poverty (mostly in the rural areas but also in the urban
slums) with what appear to be widening income gaps and increasing
problems of malnutrition. Neither is there any prospect of "catching
up" countries with larger overall GDPs by encouraging population
growth, or avoiding being overtaken by others with much larger
populations than ours, as Brazil may soon do. Larger GDP obviously
allow governments to spend more on (for example) defence, and
to assume a larger share of world and regional governance. To
that, the UK, and other Western countries, will have to adjust
as ingeniously as it can. When population growth eventually ceases,
as it probably will towards the end of this century, the world
demographic rank-order will be very different from what it is
now. So will the rank order of overall GDP. That is inevitable.
It is also certain that population growth must cease, in all countries.
That will eventually close off easy options for growth through
the expansion of customers, investors and workers and concentrate
attention on productivity and the efficient use of constant, or
even declining, sources of labour.
16. ETHNIC CHANGE
Official UK population projections to mid-century,
unlike those of some other countries, do not include an ethnic
or national-origin breakdown of the projected population. But
the effects upon the ethnic composition of the continuation of
immigration and emigration trends even at the level of 2001 would
be substantial (at 2006 levels they would be greater). A conventional
cohort-component projection is given in Figure 5, combining the
results of the separate projection of 12 ethnic groups. It takes
as its starting point the ethnic composition for the UK in 2001,
fertility patterns of ethnic groups as at 2001, assumed to be
diminishing over time, and mortality change in all groups as projected
nationally by the GAD in the 2004-based projections. The ethnic
composition of migration had to be estimated from information
on net inflows and current population according to birthplace,
country of origin and nationality and for the most part is similar
to that assumed in the short-range ethnic updates for England
published by ONS (Large 2006). The projections were presented
to the British Society for Population Studies Annual Conference
in 2007. The broad ethnic groups in Figure 5 are the amalgamation
of 12 conventional ethnic groups that were projected separately.
17. In summary, on those assumptions, the
British, Scottish and Irish population of the UK would decline
to 44 million (63%) by 2051, the white non-British would increase
to six million (8%) and the non-white population to 20 million
(29%). The projected overall total would be 70 million, just half
a million more that the GAD 2004-based projection of 69 million
and substantially higher than the GAD 2001-based projection of
64 million. The projection is most sensitive to the level of migration,
which is the most difficult component to project and can change
greatly over time. Here, the simple assumption adopted by the
GAD has been followed, of a continuation of the then current levels.
Without migration in or out, those totals would be 47 million,
two million and seven million respectively. These projections
do not include the post-2004 inflow from Eastern Europe. The terms
of reference of the committee to not embrace ethnic change, but
these revisions of ethnic distribution would be unlikely to be
without economic as well as social and political consequences,
although the latter would probably be much more significant than
the former. Some aspects of diversity cost money, and on current
trends there is going to be more of it.
Figure 5
PROJECTION OF ETHNIC COMPOSITION OF THE UK
POPULATION 2001-51, BROAD ETHNIC CATEGORIES
18. MACROECONOMIC
TARGETS VERSUS
INDIVIDUAL WELFARE
AND LONG-TERM
STRATEGY
Policy that justifies continued expansion of
the labour supply puts macroeconomic targets in front of the welfare
of individuals, especially the interests of the lower paid and
those without employment with weak incentives and weak bargaining
power. Importing labour to "contain inflationary pressures"
is just macroeconomic language for importing labour to "keep
down the wages of workers" thus making their incomes and
welfare less than otherwise it might be. Keeping labour abundant
so that its wages (and therefore its standard of living) and its
bargaining power are low is naturally in the interests of employers
and the owners of capital in search of the path of least resistance.
Not surprisingly the responses of employers analysed by the Institute
of Directors (2007), the British Chambers of Commerce (2007) and
by Home Office research (Dench et al 2006) mirror some
of those views. They also emphasise, however, the positive aspects
of immigrant labour in terms of work ethic and other qualitative
advantages especially in lower-skilled work. On the other hand,
migration is seen by some of those employers only as a short-term
solution to a long-term problem, and social problems could be
storing up if chronic domestic skills shortages are not addressed.
19. Lower wages than otherwise and unemployment
among the lower paid and less skilled are predictable results.
Profits at British companies are growing at their fastest pace
in nearly 13 years while wages of ordinary workers are rising
at their slowest pace since 2002. John Philpott, Chief Economist
at the Chartered Institute of Personnel and Development, has remarked:
"High levels of immigration were a significant reason for
subdued wage growth. Clearly immigration has been good for UK
plc but it is clear from these numbers that businesses rather
than workers are benefiting." (Guardian, 16 August
2007). Whole economy unit wage costs in the second quarter of
2007 were only 1.2% higher than the same quarter a year earlier,
down from an increase of 2.4% in the previous quarter. This is
due to a decrease in the growth rate of average wages and salaries
(ONS 2007, 27 September 2007) accompanied by a very small decline
in productivity.
20. As the OECD has commented (2007), in
the UK economy "employment rates among the least skilled
remain too low. A key challenge is to raise education performance
without significant further increases in expenditure, while a
related key challenge is to ensure strong incentives for the least
skilled to participate in the labour market and to progress in
work". Easy access to migrant labour for employers removes
one of the spurs to such reform. In the UK there are about 1.2
million young people not in employment, education or training
(NEET). At all working ages, 7.95 million people were not in employment
in July 2007. Among them are a serious over-representation of
existing immigrants and their children. Some of those out of work
will and cannot ever be in employment and many others are either
discouraged or show little incentive or aptitude for it. The task
of mobilising some of them is not easy and one can understand
why initially keen and disciplined overseas workers are preferred.
Eventually, however, keen immigrant labour assimilates to the
welfare and work ethic of the local population, a trend already
noted among Polish labourers (Sunday Times, 15 September).
Here is no point pretending, however, that improvement can entirely
be achieved through wage or other inducements. Welfare, the other
side of the equation, also needs to be reformed, perhaps on the
lines successfully adopted by President Clinton including the
last, crucial step—that is making unemployment benefit strictly
time-limited.
21. Discussions about the need of the market
for labour seem to place little faith in the ability of market
forces to adapt to any shortage of labour. It is assumed that
the system cannot adapting to a tighter labour market, and that
increasing labour supply is the only solution. In many cases that
must be true. But in the longer run the appropriate response to
"shortages" of labour in a modern economy is to increase
the wage to a market clearing level and make appropriate improvements
in efficiency and productivity by new investments and new techniques,
That is how modern knowledge-based economies must grow and compete.
When formerly abundant low-skill labour dries up, as in the California
vineyards in the 1980s, an adaptive economy out-sources or mechanises
(Martin 2003)—thus moving up the technological evolutionary
ladder. The strategic goal has often been proclaimed to be a high-wage,
high-output, high skill knowledge-based economy, with fewer extremes
of poverty and income. The East European influx in particular
inhibits that aim. The numbers of the low paid must have been
substantially augmented by the inflow from Eastern Europe. Of
those who have registered since 2004, over 80% earn less than
£5.99 per hour, that is about £12,000 per year.
22. It is not possible to live an independent
life on such an income. In due course more of the new entrants
will be entitled to welfare benefits and will need them unless
there is massive upwards social mobility. In a welfare society
there is no such thing as cheap labour, immigrant or otherwise.
If employers do not pay enough for independent living then the
welfare system—the taxpayer—will have to do so. Cheaper
services for consumers are often adduced as a benefit of abundant
low-wage labour. That is deluded. In a welfare economy the consumer
will eventually pay, although less noticeably, through the more
diffuse effect of higher taxes. Meanwhile the employer is subsidised.
23. It is surprising to find that a government
and its institutions should give such primacy to the demands of
employers and businessmen on labour supply, when it would not
do so in respect of, say, employment law, consumer standards,
environmental protection and so forth. Instead, to misquote the
late Reg Prentice, the principle seems to have been "Find
out what the employers want and give it to them".
24. UNCOSTED
EXTERNALITIES OF
IMMIGRATION
A number of important components are excluded
from the fiscal and other calculations that attempt to evaluate
the economic costs and benefits of immigration. Such calculations,
for example of the kind presented by Gott et al (2002,
p 29) and Sriskandarajah et al (2005), compare the tax
paid by immigrant (not the whole ethnic minority) populations
with the welfare benefits and rebates that they receive. Those
calculations employ relatively orthodox statistics reasonably
available from public sources, in conjunction with demographic
data on the size and age-structure of the populations concerned.
Other costs and potential benefits, outside the tax and welfare
accounts for which data are not so readily available, are not
included or are explicitly excluded. For example the earlier paper
explicitly assumed that costs per head of primary and secondary
education, and share of expenditure on health services provision
were equal, within each age-group, across all categories in the
UK population as a whole. This is understandable given the difficulties
of doing otherwise. The authors go on to acknowledge, however,
that rates of utilisation may be different for public education
and health and that providers might incur different costs for
migrants. No mention is made of crime, security or the costs of
the immigration, integration or the race-relations and equality
processes. In fact some data are available in some of these areas,
although to an excessive degree they refer to "ethnic minority"
not "immigrant" populations like so many UK sources.
It would be preferable to be able separate the non-UK born (ie
immigrant) component, although as with the demographic effects
of migration, it is logical to include in the costs and benefits
of migration the effects of immigrants themselves and those of
their descendants. The benefits enjoyed by illegal immigrants
and overstayers, and their tax contributions do not form any explicit
part of these calculations. Illegal immigrants were estimated
to number 430,000 as of April 2001 (Woodbridge 2005).
25. Some indication of cost can be determined
for some of these potential externalities, although usually only
in a partial or indirect way. In respect of others the appropriate
data are not collected at all and it is difficult to infer them
indirectly. Some are discussed below and listed in Table 2. They
comprise an unsystematic collection of topics for which at least
an outline indication can be made on the basis of a brief enquiry
made for the purpose of this note. Most refer to ethnic minority
populations rather than to their component born abroad. Attention
has been focused upon costs not benefits. There has been no time
to attempt to redress that imbalance. An attempt to do so must
be made in the interests of equity but it cannot be done here.
To this author, it is difficult to think of positive externalities
that have not already been included in the wide range of economic
benefits presented in the case for expanded immigration. There
must be some; one would surely include the benefit of a variety
of languages and cultural knowledge in UK enterprises oriented
to the export of goods and services to countries that send immigrants
to the UK.
26. For many of the items discussed below
it is questionable how much of the cost should be attributed to
immigrants or to their descendants, and how much to the indigenous
population. Immigration controls are necessary, for example, because
there is pressure to migrate but they also protect the population
and facilitate the economic and other benefits of migration. It
could be argued that much of the race relations and equal opportunities
apparatus is made necessary, and its expense therefore caused,
by the discrimination imposed on the non-native population. Furthermore,
that the expense of equal opportunities programmes serves to make
the best use of talent otherwise marginalised and therefore benefits
everyone. The categories below have all been included, however,
because all are contingent upon current and past migration, without
which they would not exist. The main purpose of presenting this
sample is to show that there are likely to be some uncounted costs
which may, on more thorough analysis, turn out to be substantial
and to show that much more detailed and consistent enquiry is
needed and is justified. Table 2 below includes no total; it would
not be appropriate. Estimates are highly preliminary. Some of
the categories listed may overlap and they vary greatly in the
degree to which it may be valid to include them.
27. MEDICAL COSTS
Medical costs are a particular bone of contention.
A number of surveys chart ethnic minority health and estimates
have been made of the comparative mortality of infant and adult
immigrants and adult members of the ethnic minority populations
(eg Griffiths and Brock 2004, ONS 2005). In general these show
that the health and mortality experience of immigrant or immigrant-origin
populations are very diverse, although put together they do not
differ greatly from that of the native population. Some (eg the
Chinese) appear to enjoy lower mortality than the native population,
a finding noted among non-European immigrants in other countries
as well. Bangladeshis, and Africans, and women in general do worse
than average. Information is not collected by the NHS on the country
of origin of those who use its services. So it is not known how
any immigrant or ethnic differentials translate into NHS costs,
whether heavier or lighter than average. Entitlement to treatment
is in theory meant to be established. It has been estimated on
a sample of 106 hospitals that NHS hospitals gave £50 million
worth of treatment to ineligible payments in 2005, of which £20
million would be unpaid (Daily Telegraph, 2 October 2006).
It is not known if the patients were non-EU immigrants or short-term
"health tourists", especially for childbirth, in which
case they would not strictly speaking be "immigrants"
at all whatever the damaging effect on the NHS.
28. Some specific ailments are more prevalent
among immigrant and some ethnic minority populations, for example
tuberculosis. The increase of new cases of TB, up 11% from 2004
to 8,113 in 2005, was all accounted for by cases from abroad.
The prevalence among the UK-born population remains stable. Sexually
transmitted disease, notably HIV/AIDS is much more prevalent
among immigrant and minority populations, especially African and
Caribbean. In 2005 63% of new HIV diagnoses (3,691) were from
ethnic minority males, of whom 3,064 (four fifths) were African
and 306 Caribbean (Health Protection Agency 2006). 63,500 persons
were known to be infected with AIDS/HIV in 2005. 22,014 from the
ethnic minority populations sought treatment, 70% of all requests.
That is a seven-fold increase since 1996 (2815). The prevalence
of HIV infection among African males was 3.6%, and 0.3% among
Caribbean males, 46 times and 3.7 times respectively the rate
of English heterosexuals. It was estimated that 64% of adult heterosexuals
with HIV had been born in Africa (14,000 women and 7,500 men)
with perhaps another 54,000 unaware of their infection. In 200-03
it was estimated that the cost of managing a patient with HIV
was £15,000 per patient per annum (Commons Select Committee
on Health 2003, para 146). On that basis, given the figures above,
the annual cost attributable to the immigrant-origin victims would
be £330 million, assuming that all those who sought treatment
received it. Early diagnosis of HIV, and best of all prevention,
would remove a scourge from the population and enable large sums
to be diverted to other health priorities.
29. EDUCATION
AND ENGLISH
LANGUAGE
Additional funds have been directed towards
schools with a large number of ethnic minority origin (initially
New Commonwealth) pupils since the provision of "Section
11 grant" by the Home Office in 1966. Elements of Section
11 grant devoted to helping (mostly) adult immigrants to learn
English are now managed by the Learning and Skills Council under
the English for Speakers of Other Languages scheme at a cost of
£280 million per year (for 580,000 students). For schools,
the Department for Children, Schools and Families is responsible
for Ethnic Minority Achievement grant of £169 million year.
More broadly, the cost of providing translation for all services
to immigrant and ethnic populations was reported to be £100
million annually in a speech by Ruth Kelly MP (Times, 11
June 2007).
30. RACE RELATIONS
AND RELATED
EQUAL OPPORTUNITIES
ACTIVITIES
The Commission for Racial Equality itself, now
absorbed within the Equal Opportunities Commission, had a budget
of £32.4 million in 2005 according to its annual Report
(CRE 2006). Equal opportunities activity in relation to race and
now religion is now pervasive throughout the public sector, in
education and increasingly in the private sector, following the
wide-ranging requirements of the 2000 Race Relations (Amendment)
Act. The cost of time and other resources relating to ethnic monitoring
and the enforcement of targets, and associated litigation, is
not known but in view of its scale is likely to be high. The intention
of the 2000 Act to embed race-related and other equal opportunities
activities as a mainstream component of the business of all public
bodies makes apportionment of costs difficult. But if a medium-sized
town of 150,000 inhabitants employs four personnel to cover all
aspects of equal opportunities, of whom 1.5 FTE is devoted to
race and diversity matters, then the total annual UK cost would
be about £32 million and another £7 million for higher
education, assuming one FTE per institution. That estimate assumes
an average salary cost of £33,000 to the employer per employee.
Similar estimates could be made for hospitals and hospital trusts,
police forces and other public bodies. There is also local authority
expenditure on capital projects for facilities and regeneration
wholly or partly for ethnic minority populations, for immigrants
or for asylum seekers, and grants to local support groups of various
kinds. In the past some elements of this could be identified through
specific components of the Urban Programme. But the "mainstreaming"
policy makes their identification more difficult.
31. SECURITY,
IMMIGRATION AND
ASYLUM
All counter-terrorism activity is directed against
Islamic groups and individuals of predominantly ethnic minority,
immigrant or asylum seeker origin. Of the MI5 budget of £200
million 87% or £174 million is devoted to counter-terrorism
(Times, 9 August 2006). There must also be considerable
costs from the same cause for the enhanced police presence and
other security staff at airports and elsewhere, the costs of screening
passengers and those entering public buildings. Those are unknown
(to the author) but not unknowable.
32. According to the 2007-08 Business Plan
of the recently—established Borders and Immigration Agency
(BIA), "border control" and "migration" account
for £350 million of the £1382 million projected budget,
part of which is paid by visa fees. It is not clear how much of
this should be attributed to immigration and immigrants. As Sriskandarajah
et al (2005) reasonably point out, the immigration control
system and the scrutiny of asylum claims are undertaken for the
benefit of the domestic population, to protect them against unwanted
inflows according to policies democratically arrived at, and to
facilitate to entry of immigrants whose presence may benefit the
country, and of returning UK citizens. They are, however, necessitated
by pressure to migrate to the UK and before 1905 scarcely existed.
A rational calculation might be to attribute the increase in the
costs (adjusted for inflation) of immigration control incurred
since the early 1990s, when net immigration was approximately
zero. Such data were not to hand at the time of writing but should
be relatively straightforward to obtain.
33. Asylum seekers count as international
migrants except for those who are refused and removed, or leave
of their own accord, within 12 months of their arrival. That is
why the majority of asylum claims in each year are included in
the Total International Migration estimates published annually
by the Office for National Statistics, following the UN definition
of an international migrant. That part of the cost of processing
and supporting asylum claimants due to those who are granted asylum
or indefinite leave to remain should be put in the balance of
costs of immigration. Such persons become part of the "regular"
population and are counted in the numerators and denominators
of all the calculations on labour force, tax and benefits etc
with which we are familiar. It is only appropriate that the costs
associated with their movement into the UK should also be included.
34. It is difficult to evaluate the costs
of the large numbers who are refused asylum, most of whom are
believed to remain in the UK. Around 2002-03, total costs of processing
and asylum support were over £2 billion. With the decline
of asylum claims that has now fallen considerably. The BIA 2007-08
budget allots £584 million to "asylum" and £337
million to "enforcement", much of which will relate
to attempts to remove failed asylum seekers. Asylum seekers are
also entitled to special welfare support while awaiting decisions.
On 17 March 2006, in response to a request under the Freedom of
Information Act, the costs of this National Asylum Support Service
were stated to be £1,008 million in 2003-04. The current
figure is not known to this author or whether it is in whole or
part included in any of the figures cited above.
35. CRIME
Ethnic minority populations, considered in a
very broad classification, have for a long time been statistically
over-represented at all stages of the criminal justice system
(Smith 1994, Home Office 2006). However, few figures have been
released concerning the immigrant population. Understandably,
strong feelings are aroused by this topic and opinions differ
sharply as to the cause. Many attribute this dismal statistical
conclusion to the depressed condition of the populations concerned,
their poor housing, unemployment, the discrimination and hostility
that they are claimed to experience, and institutional racism
and prejudice at all stages of the system including the identification
of suspects in victim surveys, and the more severe sentences handed
out to ethnic minority offenders (Hood 1992). Furthermore it is
correctly pointed out that the members of the ethnic minority
populations are more likely to be the victims of crime than are
whites. That is all contentious, but in any attempted explanation,
structural factors are taken into account especially the age-structures
of the populations concerned. Crime is a youth activity and the
ethnic minority populations have a youthful age-structure. That,
however, does not remove the statistical imbalance. This note
cannot discuss these issues of the unfairness or otherwise of
the conditions that might lead to offending and does not need
to. All that matters for the present purpose is that the data
show over-representation that is sufficiently strong and regularly
repeated so as clearly to reflect some degree of reality. It could
be argued that differences in age-structure should not be taken
into account. These are presented as an advantage when it comes
to (eg) workforce participation of immigrants and if statistically
accounted for then the claimed advantages relating to GDP would
be ironed flat.
36. The costs of crime attributable to immigration
fall into two broad categories: any disproportionate level of
crime committed by individual offenders of immigrant origin, and
the growth of organised crime, directed to particular market sectors,
run by gangs of relatively homogenous immigrant or ethnic origin:
robbery, prostitution, firearms and drugs rings run by Jamaican
"Yardies", Chinese "snakehead" immigrant traffickers,
Vietnamese cannabis growers, Romanian cash point and credit card
specialists, Turkish and Pakistani gangs competing for the heroin
trade, Albanian brothel suppliers, Russian mafia executives and
others. While widely reported in the press as major growth industries,
it is difficult to evaluate the costs involved to the economy.
This ethnic dimension appears to be particularly difficult to
deal with because such gangs operate outside the usual networks
of informers, information and local knowledge available to the
police. Some clue as to scale can be inferred from the 11,195
foreign prisoners in England and Wales at 31 December 2006; 14.3%
of the total (Written Parliamentary Answer, 14 March 2007).
37. An estimate of the costs of crime against
households and individuals—the only categories for which
data are available—might embrace elements of both. That
form of crime was estimated to have imposed a "current burden
cost" of £36.2 billion in 2003-04 (Dubourg et al
2005; Home Office Online Report 30/05). What proportion of
that is due to the ethnic over-representation in offending? A
very simple "pilot" calculation comparing the expected
and actual distribution of the costs suggest that the excess attributable
to the ethnic minority population (including immigrants and the
foreign prison population alluded to above) is £3.08 billion
(Table 1). That does not take any account of the distribution
of crimes of different types for which members of different groups
are arrested, prosecuted or imprisoned. (on which data are published),
nor of the detailed age-structure of the offender population (on
which data are not published) except that all data refer to the
population aged over 10 years.
Table 1
CALCULATIONS OF APPORTIONMENT OF COST OF
CRIMES AGAINST INDIVIDUALS AND HOUSEHOLDS BY ETHNIC GROUP OF OFFENDER
|
| Percent distribution according to ethnic group
|
| White
| Black | Asian
| Other | Not known
| Check |
|
2001
Population | 91.3
| 2.8 | 4.7
| 1.2 | 0.0
| 100.0 |
| Arrests | 84.3
| 8.8 | 4.9
| 1.4 | 0.6
| 100.0 |
| Youth Offences | 84.7
| 6.0 | 3.0
| 0.6 | 3.3
| 97.6 |
| Crown Court | 75.7
| 13.0 | 7.4
| 3.9 | *
| 100.0 |
| Prison Population | 76.8
| 13.5 | 5.4
| 0.9 | 0.7
| 97.3 |
|
| Note: *22% ethnic origin not stated.
|
Ethnic representation higher in crown court partly because of choices for trial in higher courts.
Ethnic prison population higher than prison receptions because sentences are longer.
|
Source: Home Office 2006 table A p viii.
|
APPORTIONMENT OF COSTS OF £36.2 BILLION (datum from
Dubourg et al 2005)
|
| Expected from: | White
| Black | Asian
| Other | Not known
| Check |
|
| Population | |
| | | |
|
| 2001 | 33.05
| 1.01 | 1.70
| 0.43 | 0.00
| 36.20 |
| Arrests | 30.52
| 3.19 | 1.77
| 0.51 | 0.22
| 36.20 |
| Youth Offences | 30.66
| 2.17 | 1.09
| 0.22 | 1.19
| 35.33 |
| Crown Court | 27.40
| 4.71 | 2.68
| 1.41 | |
36.20 |
| Prison | 27.80
| 4.89 | 1.95
| 0.33 | 0.25
| 35.22 |
|
EXCESS ATTRIBUTABLE TO ETHNIC OVER-REPRESENTATION (£
billion)
|
| Based on: | White
| Black | Asian
| Other |
|
| Arrests | -2.53
| 2.17 | 0.07
| 0.07 |
| Youth Offences | -2.39
| 1.16 | -0.62
| -0.22 |
| Crown Court | -5.65
| 3.69 | 0.98
| 0.98 |
| Prison | -5.25
| 3.87 | 0.25
| -0.11 |
| Mean Excess | -3.95
| 2.72 | 0.17
| 0.18 |
| Total Ethnic Excess | 3.08
| | | |
|
| Note: Small error suspected in HO table in the "prisons" column.
|
38. REMITTANCES
Remittances from rich to poor countries are always discussed
in terms of the expected benefits to the populations receiving
them. While their effects are not all benign, many commentators
agree that they are advantageous or even in the short run essential
(Kapur, 2004) although there are dissenting voices. It is difficult
to measure their magnitude, especially in the UK after 1979 following
the abolition of exchange control. But in general they comfortably
exceed the volume of official foreign aid. Their impact on the
country of origin is seldom discussed. Remittances may have some
negative effects on the balance of payments, although surely small
in relation to GDP. The remittances exported might return in the
form of goods or services imported by the country receiving the
remittances. But that is likely to be no more than a fraction
of the total dispersed. The ONS estimates the annual value of
remittances from the UK to the developing countries of origin
of immigrants to be about £3.5 billion. However this includes
more than workers' remittances. Household-based methods estimate
the true figure to be £1.4 billion—possibly an under-estimate—of
which £0.5 billion is moved through informal channels (Blackwell
and Seddon, 2004). The effect on the balance of payments, if any,
would be smaller than that, certainly so relative to national
GDP of £1.3 trillion. But this is an area that might warrant
further investigation.
Table 2
SOME POTENTIAL COSTS OF IMMIGRATION AND DIVERSITY
|
| £ million
|
|
Ethnic relations and support
Local Authority race relations
| 31.6 |
| estimate assumes 1.5 staff per LA
| |
| Higher Education race relations | 6.7
|
| estimate assumes 1 staff per institution
| |
| CRE | 32.4
|
| CRE Annual Report 2005
| |
| Ethnic Minority Achievement grant | 169.0
|
DfES. For schools, from Home Office Section 11 Grant. Administered by Learning and Skills Council
English for Speakers of Other Languages
| 280.0 |
| Learning and Skills Council
| |
| Translation | 100.0
|
Ruth Kelly MP, Times, 11 June 2007, re Commission on Integration and Cohesion "Our Shared Future"
Security, Immigration
Security (MI5) (from Home Office?)
| 174.0 |
| Times, 9 August 2006. Terrorism component only
| |
| National Asylum Support Service 2003-04 |
1,008.0 |
| Home Office via Freedom of Information Act FOI 2947, 17 March 2006
| |
| Asylum process 2007-08 | 584.0
|
| Borders and Immigration Agency Business plan 2007-08 p 45
| |
| Border control | 229.0
|
| Borders and Immigration Agency Business plan 2007-08 p 45
| |
| Enforcement action | 337.0
|
| Borders and Immigration Agency Business plan 2007-08p 45
| |
| Migration | 121.0
|
| Borders and Immigration Agency Business plan 2007-8 p 45
| |
Crime
Additional cost attributed to minority populations
| 3,080.0 |
Base data from HO (2006) and Dubourg et al (2005). Crimes against individuals and property only
Medical and related costs
Annual costs of management of minority HIV
| 330.0 |
| p/c cost cited in House of Commons Select Committee on Health 3rd Report
| |
| Remittances | 1,400.0
|
| A proportion of this could affect balance of payments. Data from Blackwell and Seddon (2004)
| |
|
| Note: These different estimates should not be added to make a total. They are preliminary and some categories may overlap with others.Please see relevant text, especially paragraph 26.
|
39. EMIGRATION
A final aspect of contemporary migration is the substantial
recent emigration of UK citizens. Some find this troubling, others
regard it as a natural consequence of globalisation (eg IPPR 2006).
While Britain is historically a "nation of emigration",
departure of UK citizens had fallen to modest levels after the
1960s except for a transient increase in the early 1980s. In the
last few years, net outflow of UK citizens has risen to about
100,000 per year, in almost mirror-image of the increased inflow
of foreign citizens. The flow is very diverse; pensioners to Spain,
some workers to Europe, but also many young people, and families,
following an earlier track to Australia, the US and elsewhere.
We do not yet have a clear idea why emigration has increased.
Research in the Netherlands, where the outflow is much higher
relative to population than it is here, many respondents cite
overcrowding, a deteriorating urban environment, and poor public
services (van Dalen et al 2006). These possibly difficult
areas have not yet been explored in the UK. Qualitative aspects
are not encouraging. The UK is the only major OECD country that
has lost almost as many tertiary-qualified people as it has gained
through the migration process (Dumont and Lemaitre 2005). That
somewhat nullifies the economic benefit derived from high-level
immigrants.
40. GENERAL CONCLUSION
Immigration and emigration for work, family, retirement,
study and other purposes, are normal processes for any civilised
open society trading at peace with its neighbours. Migration benefits
immigrants themselves, employers who have access to easy labour
and some consumers of services, especially those at the higher
end of the income distribution. In expanding (working) population
it inevitably expands overall GDP. But the net effect on average
individual economic welfare in the narrow sense is small at best.
Broader economic effects, not usually included in models based
on fiscal or GDP criteria, are potentially substantial and seem
on first inspection mostly to be negative. However this note has
not explored any equivalent uncounted economic benefits of immigration.
Easy access to labour may also have adverse strategic effects
upon education, training, employment and productivity.
41. If current levels of migration persist, however,
their most striking and permanent effects will be to increase
the population size of the country by 15 million by mid-century.
That would do no good to housing quality and other amenity, wildlife
and environment and would accelerate the UK contribution to global
warming. There would be concomitant permanent and progressive
changes in the ethnic composition of the population. These radical
and permanent transformations to the national life are on a different
scale to the small and often short-term benefits that the same
migration patterns bring to employers and consumers. None of that
is set in stone, however. Immigration can go down as well as up.
15 October 2007
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