When the disgraced, defeated, defenestrated Conservative Party puts a brave face on for its conference in Birmingham at the end of the month, you will hear much about how migration is a terrible thing.
It doesn’t matter that some of the party’s leaders are the children or grandchildren of migrants, or that studies have shown that migrants make a positive contribution to the British economy. It’s just that when the Tories talk tough on migration their core constituency likes it, and when they are perceived to have let too many people into the country, they lose votes from that core constituency. Therefore migration must be bad.
All four of the remaining candidates in the party’s dismal leadership contest are determined to drastically reduce net migration. Robert Jenrick and Tom Tugendhat have pledged to cap it in the tens of thousands. James Cleverly wants to reduce it by 300,000. Their ideas include scrapping all graduate visas and banning foreign care workers from bringing their families to Britain with them. These would cause deeper crises in sectors that are already struggling badly.
That is typical of the Tory approach. For decades, the party has spent much time talking tough and making bad policy about migrants, and precious little time considering whether letting more people into the country to work might actually be good for the economy. But now those on the right claim to have found evidence to support what it feels in its bones: that migration is bad, full stop.
That this evidence comes from the Office for Budget Responsibility (OBR) is deeply ironic. This, remember, is an organisation the Tories founded but now hate with a vengeance, what with it telling them their economic fantasies are just fantasies and helping to bring down Liz Truss (largely because she failed to ask for its advice).
Yet the right now say the OBR is worthy of being listened to because it has provided one small piece of data that seems to vindicate their feelings about migration.
In its new long-term report into the viability of the British economy, the OBR showed that unless we get far better growth the national debt is going to treble in the next 50 years or so, as an ageing workforce, low productivity, climate change and a shrinking birth rate will stymie our long-term prospects.
Within the paper is a chapter on immigration, which outlined several assumptions and scenarios on which the OBR had based its calculations. One of those findings was that unskilled immigrants tend to cost the British state more than they add to the economy. In fact, an unskilled immigrant “arriving at 25 and earning half the UK average (wage) becomes less fiscally beneficial than the average UK resident in their early 40s”.
The right wing commentariat even worked out that the cost was £150,000 on average, and so they are now trying to convince us all that every immigrant is costing us £150,000 and is therefore a drain on Britain. This is a very weak peg on which to hang a whole policy – in fact, the peg is non-existent.
For a start, the OBR makes clear that without immigration the British population will start to decline by 2035, with the elderly forming an increasing percentage of it. It assumes we will therefore have to welcome 315,000 immigrants a year because our growth depends on it.
It is also clear that many UK residents who are born and bred here also end up costing more than they put in. As children they have to be educated and cared for. They then pay taxes and earn money, but after they retire, they become a drain on the state and start costing more than they ever contributed, on average, at the age of 80.
On the other hand, the average immigrant comes to the UK with an education and skills that have cost us not a penny. They have to pay us for a visa and healthcare (approximately £12,500 a year). They are not eligible for benefits for five years, and very often retire to their home country, therefore never being a drain on the state.
In fact, they start becoming net contributors to the state in their second year in the country, and this persists over their lifetime. UK residents don’t manage to pay off the cost of their education and other childhood benefits until they are 40.
As the OBR puts it: “Due to the differences in taxes paid over the working life, a higher-wage migrant worker is more fiscally beneficial than the average UK resident over their lifetime.” In fact, the average immigrant would “be a net benefit to the public finances even if they lived to 107 years old”.
Also, as work by the Migration Observatory at Oxford University found: “The data suggest that non-EU-origin employees’ median earnings have progressed somewhat faster over time. For example, while it took 2015 non-EU entrants around six years to reach the overall median wage, 2021 entrants had already exceeded it after two years.”
So low-paid migrants don’t stay low-paid for ever and are getting better paid faster than they used to be. The situation is therefore improving, not getting worse.
In short, migration pays. We make a big profit on people coming here.
The OBR calculated earlier this year that depending on their skills and employment levels, migrants will add between 1% and 2.2% to the size of the economy by 2029. Or around a whole year’s growth, in a good year, within five years. Strange that the right didn’t find those figures or publicise them.
If you want to improve that even more you might want to attract more skilled immigrants, and fewer low-skilled ones, or use the skills of immigrants properly – many are vastly over-qualified for the work they end up doing. But the Tories when in power tried to do the opposite, with a very high minimum wage level for skilled immigrants (£38,700), and by making it more difficult for foreign students to study in the UK. A strange set of policies if you are trying to encourage highly skilled workers.
Even worse, they are now doubling down. Jenrick even says he would like to have it reach “net zero”.
Maybe the far right of the Tory Party and its cheerleaders would like to explain where the extra 2.2% of growth is going to come from if they do that? Let alone who is going to work in the NHS and social care?
In short, the Tories’ plan could do half as much damage again to the British economy as Brexit has. That disaster is costing us more than 4% of GDP; strangling immigration could cost up to another 2.2% of GDP, in just five years. I think that’s what they call a double whammy.
