Immigration: The economic argument

Richard Edgar

Former Economics Editor

Limits will be lifted on immigrants from Romania and Bulgaria from January 1. Credit: Press Association

These were only two of the complaints about immigrants that I heard when asking locals on a street in North London this week. In a related report by my colleague, Penny Marshall, a man in Kent said: “You can’t keep increasing and increasing [immigration] when you don’t have the space, you don’t have the housing.”

Anecdotally, many people across the country certainly seem to be concerned about the influx of people to these islands and have the sense that they are taking jobs, filling up scarce housing and claiming benefits to which they’re not entitled.

These anxieties are building as January 1 approaches, when limits on immigrants from Romania and Bulgaria are lifted and they will have the same right to move freely throughout Europe as other members of the EU.

We commissioned a poll to find out exactly how worried people are – and the results are striking:

Q: Which of the following statements best describes your view about the overall current economic contribution of Eastern European immigrants in the UK to the national economy?

Eastern European immigrants to the UK receive more in welfare and public services than they contribute in taxes: 46%

Eastern European immigrants to the UK contribute about as much in taxes as they receive in welfare and public services: 16%

Eastern European immigrants to the UK contribute more in taxes than they receive in welfare and public services: 14%

Don't know: 23%

But these views, despite being widely held, are not right, according to Professor Christian Dustmann, an expert on the economics of migration at University College London. He spent a year building a picture of who recent immigrants from Europe are, the official data on the taxes they pay and, crucially, analysing what they take in welfare and consume in public services.

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Limits will be lifted on immigrants from Romania and Bulgaria from January 1. Credit: Press Association

In a paper, just published, (developing findings from another published in 2010 which focussed on Eastern Europeans and which had very similar results) he found that these recent immigrants contribute more than they consume. In fact, the contrast with native-born British people is stark.

Taking the crisis years, 2007 - 2011 when the British government was running up large budget deficits, for example, native British people cost the state about £1,900 per person per year. European immigrants in the UK, on the other hand, actually contributed to the exchequer once all their taxes and benefits and consumption of public services was put in the balance – to the tune of £2,610 per person per year.

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This is in part because people travelling to the UK tend to be younger, better educated and are more likely to be in work – paying taxes. They are 50% less likely than native British people to claim benefits and are less likely to live in social housing. The huge rise in our population over the past fifteen years, which has been driven almost entirely by immigrants (using the LFS measure) does mean more pressure on some public services but it means the cost of others, like our national defence and diplomatic corps, is spread among more taxpayers, reducing the burden per person.

Professor Dustmann believes the country is better, not worse off, as a result of recent immigration. Credit: Press Association

Professor Dustmann says no-one has been able convincingly to criticise the methodology or findings of his report and he feels that the widespread concerns about immigration are misplaced at the national level. He concedes that there will be many individual stories or experiences where a native-born person feels they have lost a job to a foreigner or examples of immigrants claiming benefits – but when you take recent immigrants as a group, the country is better, not worse off.