Analysing the costs and benefits of immigration. Photo: Getty
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Yes, EU immigrants do have a positive impact on public finances

The academics behind a study that shows EU migrants make a net contribution to our economy on the positive impact of recent immigrants.

The impact of immigration on Britain’s tax and welfare system is perhaps the most important economic issue in the debate over the country’s relationship with the EU and its principle of free movement. There are claims that immigrants from Europe take advantage of the UK’s benefit and health system. This has led to political pressure to limit immigrants' access to benefits and public services and even restrict immigration from the European Economic Area countries.

But, despite the controversy surrounding this issue, evidence for how much immigrants take out of and contribute to the public purse in Britain is surprisingly sparse. Our new research published by the Royal Economic Society in the Economic Journal aims to fill this void.

Based on the UK Labour Force Survey and a multitude of government sources, we calculate the overall fiscal contribution of native Britons and immigrants. Our findings show that European immigrants to the UK have paid more in taxes than they received in benefits, helping to relieve the fiscal burden on UK-born workers and contributing to the financing of public services.

To do this, we assign individuals their share of cost for each item of government expenditure. We then identify their contribution to each source of government revenue. We distinguish between immigrants from the European Economic Area (EEA), and those from outside Europe. Additionally, we break down the EEA group into immigrants from the Eastern and Central European countries that joined the EU since 2004 (known as A10 countries), and immigrants from the rest of EEA.
 

Positive net contribution

Our findings show that immigrants to the UK who arrived since 2000, and for whom we observe their entire migration history, have made consistently positive fiscal contributions regardless of their area of origin. Between 2001 and 2011 recent immigrants from the A10 countries contributed to the fiscal system about 12 per cent more than they took out, with a net fiscal contribution of about £5bn.

At the same time the overall fiscal contributions of recent European immigrants from the rest of the EU totalled £15bn, with fiscal payments about 64 per cent higher than the value of public services they used. Immigrants from outside the EU countries made a net fiscal contribution of about £5.2bn, thus paying into the system about 3 per cent more than they took out.

In contrast, over the same period, native British people made an overall negative fiscal contribution of £616.5bn. The fiscal balance of overall immigration to the UK between 2001 and 2011 amounts therefore to a positive net contribution of about £25bn, over a period in which the UK has run an overall budget deficit.

Our analysis thus suggests that immigrants arriving since the early 2000s from Europe have made a net contribution to Britain’s public finances. This is a reality that contrasts starkly with the view often maintained in public debate that immigrants are a drain on the economy.
 

State benefits

This conclusion is further supported by our evidence on the degree to which immigrants receive tax credits and benefits compared with natives. Recent immigrants are 43 per cent (17 percentage points) less likely to receive state benefits or tax credits. These differences are partly attributable to the fact that immigrants are generally working-age men and coming to the UK to work. However, even when compared with natives of the same age, gender composition and education, recent immigrants are still 39 per cent less likely than natives to receive benefits.

Additionally, our research points at the strong educational background of immigrants. For instance, while the percentage of natives with a degree was 24 per cent in 2011, that of EEA and non-EEA immigrants was 35 per cent and 41 per cent, respectively. Similarly, about one in two British born individuals fall into the “low education” category (defined as those who left full-time education before 17), while only 21 per cent of EEA immigrants and 23 per cent of non-EEA immigrants do so.

Most immigrants arrive in the UK after completing their education abroad, and thus at a point in their lifetime where the discounted net value of their future net fiscal payments is positive. If the UK had to provide each immigrant with the level of education they have acquired in their home country (and use productively in the UK, as natives do), the costs would be substantial.

Our estimates indicate that recent immigrants endowed Britain with productive human capital between 2000 and 2011 that would have cost £6.8bn in spending on education. This aspect is often neglected in the debate about the costs and benefits of immigration.
 

Christian Dustmann is director at the Centre for Research and Analysis on Migration (CReAM) at University College London; Tommaso Frattini is assistant professor of economics at the University of Milan

Christian Dustmann receives funding from European Research Council (ERC). Tommaso Frattini does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations. This article was originally published on The Conversation. Read the original article.

 

The Conversation

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David Osland: “Corbyn is actually Labour’s only chance”

The veteran Labour activist on the release of his new pamphlet, How to Select or Reselect Your MP, which lays out the current Labour party rules for reselecting an MP.

Veteran left-wing Labour activist David Osland, a member of the national committee of the Labour Representation Committee and a former news editor of left magazine Tribune, has written a pamphlet intended for Labour members, explaining how the process of selecting Labour MPs works.

Published by Spokesman Books next week (advance copies are available at Nottingham’s Five Leaves bookshop), the short guide, entitled “How to Select or Reselect Your MP”, is entertaining and well-written, and its introduction, which goes into reasoning for selecting a new MP and some strategy, as well as its historical appendix, make it interesting reading even for those who are not members of the Labour party. Although I am a constituency Labour party secretary (writing here in an expressly personal capacity), I am still learning the Party’s complex rulebook; I passed this new guide to a local rules-boffin member, who is an avowed Owen Smith supporter, to evaluate whether its description of procedures is accurate. “It’s actually quite a useful pamphlet,” he said, although he had a few minor quibbles.

Osland, who calls himself a “strong, but not uncritical” Corbyn supporter, carefully admonishes readers not to embark on a campaign of mass deselections, but to get involved and active in their local branches, and to think carefully about Labour’s election fortunes; safe seats might be better candidates for a reselection campaign than Labour marginals. After a weak performance by Owen Smith in last night’s Glasgow debate and a call for Jeremy Corbyn to toughen up against opponents by ex Norwich MP Ian Gibson, an old ally, this pamphlet – named after a 1981 work by ex-Tribune editor Chris Mullin, who would later go on to be a junior minister under Blai – seems incredibly timely.

I spoke to Osland on the telephone yesterday.

Why did you decide to put this pamphlet together now?

I think it’s certainly an idea that’s circulating in the Labour left, after the experience with Corbyn as leader, and the reaction of the right. It’s a debate that people have hinted at; people like Rhea Wolfson have said that we need to be having a conversation about it, and I’d like to kickstart that conversation here.

For me personally it’s been a lifelong fascination – I was politically formed in the early Eighties, when mandatory reselection was Bennite orthodoxy and I’ve never personally altered my belief in that. I accept that the situation has changed, so what the Labour left is calling for at the moment, so I see this as a sensible contribution to the debate.

I wonder why selection and reselection are such an important focus? One could ask, isn’t it better to meet with sitting MPs and see if one can persuade them?

I’m not calling for the “deselect this person, deselect that person” rhetoric that you sometimes see on Twitter; you shouldn’t deselect an MP purely because they disagree with Corbyn, in a fair-minded way, but it’s fair to ask what are guys who are found to be be beating their wives or crossing picket lines doing sitting as our MPs? Where Labour MPs publicly have threatened to leave the party, as some have been doing, perhaps they don’t value their Labour involvement.

So to you it’s very much not a broad tool, but a tool to be used a specific way, such as when an MP has engaged in misconduct?

I think you do have to take it case by case. It would be silly to deselect the lot, as some people argue.

In terms of bringing the party to the left, or reforming party democracy, what role do you think reselection plays?

It’s a basic matter of accountability, isn’t it? People are standing as Labour candidates – they should have the confidence and backing of their constituency parties.

Do you think what it means to be a Labour member has changed since Corbyn?

Of course the Labour party has changed in the past year, as anyone who was around in the Blair, Brown, Miliband era will tell you. It’s a completely transformed party.

Will there be a strong reaction to the release of this pamphlet from Corbyn’s opponents?

Because the main aim is to set out the rules as they stand, I don’t see how there can be – if you want to use the rules, this is how to go about it. I explicitly spelled out that it’s a level playing field – if your Corbyn supporting MP doesn’t meet the expectations of the constituency party, then she or he is just as subject to a challenge.

What do you think of the new spate of suspensions and exclusions of some people who have just joined the party, and of other people, including Ronnie Draper, the General Secretary of the Bakers’ Union, who have been around for many years?

It’s clear that the Labour party machinery is playing hardball in this election, right from the start, with the freeze date and in the way they set up the registered supporters scheme, with the £25 buy in – they’re doing everything they can to influence this election unfairly. Whether they will succeed is an open question – they will if they can get away with it.

I’ve been seeing comments on social media from people who seem quite disheartened on the Corbyn side, who feel that there’s a chance that Smith might win through a war of attrition.

Looks like a Corbyn win to me, but the gerrymandering is so extensive that a Smith win isn’t ruled out.

You’ve been in the party for quite a few years, do you think there are echoes of past events, like the push for Bennite candidates and the takeover from Foot by Kinnock?

I was around last time – it was dirty and nasty at times. Despite the narrative being put out by the Labour right that it was all about Militant bully boys and intimidation by the left, my experience as a young Bennite in Tower Hamlets Labour Party, a very old traditional right wing Labour party, the intimidation was going the other way. It was an ugly time – physical threats, people shaping up to each other at meetings. It was nasty. Its nasty in a different way now, in a social media way. Can you compare the two? Some foul things happened in that time – perhaps worse in terms of physical intimidation – but you didn’t have the social media.

There are people who say the Labour Party is poised for a split – here in Plymouth (where we don’t have a Labour MP), I’m seeing comments from both sides that emphasise that after this leadership election we need to unite to fight the Tories. What do you think will happen?

I really hope a split can be avoided, but we’re a long way down the road towards a split. The sheer extent of the bad blood – the fact that the right have been openly talking about it – a number of newspaper articles about them lining up backing from wealthy donors, operating separately as a parliamentary group, then they pretend that butter wouldn’t melt in their mouths, and that they’re not talking about a split. Of course they are. Can we stop the kamikazes from doing what they’re plotting to do? I don’t know, I hope so.

How would we stop them?

We can’t, can we? If they have the financial backing, if they lose this leadership contest, there’s no doubt that some will try. I’m old enough to remember the launch of the SDP, let’s not rule it out happening again.

We’ve talked mostly about the membership. But is Corbynism a strategy to win elections?

With the new electoral registration rules already introduced, the coming boundary changes, and the loss of Scotland thanks to decades of New Labour neglect, it will be uphill struggle for Labour to win in 2020 or whenever the next election is, under any leadership.

I still think Corbyn is Labour’s best chance. Any form of continuity leadership from the past would see the Midlands and north fall to Ukip in the same way Scotland fell to the SNP. Corbyn is actually Labour’s only chance.

Margaret Corvid is a writer, activist and professional dominatrix living in the south west.