Memorandum by Migration Watch UK
SUMMARY
1. There are two central questions:
(a) What is the impact of immigration on
our population and quality of life?
(b) Why do we need a higher population?
This paper suggests that the economic benefits
of mass immigration are small while the social costs are high.
NUMBER AND
CHARACTERISTICS OF
RECENT IMMIGRANTS
2. Net immigration is a recent phenomenon
as illustrated by the bar chart below:
NET INTERNATIONAL MIGRATION INTO ENGLAND
1964-2005
(Source: Parliamentary Written Answer
WA91—17.10.2005 and ONS International Migration Series MN32)
3. Immigration is highly concentrated in
the South East, especially in London. The following table gives
a regional breakdown of net international migration in the period
1993-2005i:
|
| Country/Region | Net immigration 1993-2005
| Percentage of total
|
|
| Scotland | -10,000
| -1% |
| Northern Ireland | -36,000
| -2% |
| Wales | 27,000
| 2% |
| South-East | 144,000
| 9% |
| London | 1,035,000
| 65% |
| Rest of England | 437,000
| 27% |
|
4. The Government Actuary Department's assumptions of
net international migration, used in their population projections,
have consistently been understated. They now assume that net immigration
will fall by about 30% and then stay flat at 145,000 a year. The
following graph shows how they have progressively raised their
assumption since 1996:
5. Based on these projections, international migration
will add nearly 6 million to the UK's population in the period
2004-2031 out of a total population increase of 7.2 millionii.
(So migration will contribute 83% of the population increase):
6. The source of net foreign migration in 2004 and 2005
combined was as follows:
(Source: ONS International Migration—Series
MN32 table 2.1a)
7. Migration flows from the "old" EU are relatively
small at 8% while Eastern Europe accounts for less than one fifth
of foreign immigration (but see para 8 below). Nearly two-thirds
of net foreign immigration into the UK is from New Commonwealth
or "Other Foreign" countries, mainly developing countries.
Migrants from the developing world are far more likely to settle
in the UK while the flow of migrants from the A8 countries is
likely to get back into balance once these countries' economies
"catch up" with the UK.
8. It may well be that A8 migrants are understated by
the International Passenger Survey. Many use the smaller ports
of entry which are given insufficient coverage in the IPS and
the survey asks about intentions which may well change. It may
be significant that, in the year from mid-2005 to mid-2006, net
migration from the A8 countries was recorded as just 58,000 but
in the same period 210,000 East Europeans registered to work in
the UKiii. Self-employed workers and dependants of all workers
are additional to this figure. Recent survey evidence suggests
that only 45% of Polish migrants expected to return to Poland
within 4 years.
ECONOMIC IMPACT
OF MIGRANTS
Impact on GDP
9. Various claims have been made by the government about
the impact of migration on GDP, for example:
1. Migrants make up 8% of the population but contribute
10% to GDPiv.
2. Migrants make up 8% of the working population but contribute
10% to GDPv.
3. Migrants add 15% to 20% to trend growth.
10. The first claim took no account of the fact that
the majority of migrants are young and their children are mainly
UK-born and are not counted in the migrant population. When UK-born
children are taken into account migrants add roughly the same
to the GDP as they add to population so that there is no increase
in GDP per head.
11. The second claim takes no account of the lower employment
rate of migrants. When this is taken into account their addition
to the working age population is roughly 10% or about the same
as their addition to GDP.
12. The third claim is based on a Treasury assumption
that immigrants add to production in the same proportion that
they add to the size of the work force. This gives an addition
of 15-20% to trend growth which, in turn is now assessed as 2.75%.
As a matter of arithmetic, that works out at an annual benefit
to the native population of about £14 per year or 28 pence
a week. (See Annex A for details).
13. Thus, using the Treasury's own assumptions, the average
addition to GDP per head is very small indeed. In contrast the
impact on population is very large—equivalent to a new Birmingham
every five years.
14. This result is in line with studies in the USA, Canada
and The Netherlands. Each found that the impact of immigration
on GDP per head was small. For instance, the Netherlands Bureau
for Economic Policy Analysis, part of the Ministry for Economic
Affairs, carried out a study which concluded that: "the overall
net gain in income of residents is likely to be small and may
even be negative".vi
FISCAL IMPACT
15. Studies by the Home Officevii and by the Institute
for Public Policy Research (IPPR)viii purported to show that:
— Migrants contributed £2.5 billion more in
taxes and national insurance contributions in 1999-2000 than they
received in benefits and public services.
— Migrants' net contribution (in taxes and NI contributions
compared to benefits and services received) was relatively higher
than the UK-born population.
16. The first claim considered a year when the public
finances were in surplus so that both migrants and the UK-born
made positive fiscal contributions.
17. The second claim turned on the treatment of UK-born
children of migrants. The costs of children were allocated according
to the birthplace of their parents but the costs of children of
mixed parentage were all allocated to the UK-born
population. Correcting for this (ie allocating the costs of these
children equally to the UK-born and foreign-born population) resulted
in:
— The £2.5 billion "surplus" being
changed into a deficit of about £100 million.
— The migrant population making a smaller net contribution
per head than the UK-born in 1999-2000 and a similar contribution
in 2003-04.
Overall therefore there is no fiscal benefit to the host
population.
IMPACT ON
INFRASTRUCTURE
18. Clearly the large growth in population resulting
from migration will require an expansion of infrastructure, for
example in transport and utility supplies. The most obvious impact,
however, has been (and will be) on housing.
19. In the period 1997-2005 the number of households
in England is estimated to have increased by 1.563 million of
which 592,000 (37.9%) are migrant householdsix. Over the same
period the housing stock has risen by 1.336 million. The rise
in housing stock has therefore failed to keep up with the number
of households formed—the shortage is nearly a quarter of
a million homes. With net migration at half the levels experienced
between 1997 and 2005 there would have been no shortfall between
supply and demand—this shortfall accounted for much of the
surge in house prices experienced in the period.
20. Household projections issued by the Department for
Communities and Local Government now project an annual growth
in households of 223,000 a year of which one third (73,000 a year)
are attributable to the assumed rate of net migration (see paragraph
4 above).
21. Immigration is therefore a major component of the
need to expand the house building programme and to expand onto
greenfield sites. It is also important to note that new households
formed by more people living alone and more people of pensioner
age do not add to population density so there will be little need
for additional infrastructure (shops, workplaces, transport etc).
Among the native population, the number of additional adults will
increase by less than 3 million (6%) between 2004 and 2031.
CONCLUSION
22. We conclude that the overall economic benefits of
immigration in terms of GDP per head and fiscal impact are largely
neutral.
23 September 2007
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