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Tories and Labour both being dishonest about immigration

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The Chancellor made it quite evident in last week’s Spring Budget that he did not want to create an economy that was dependent on cheap labour from abroad.

“Our plan,” Jeremy Hunt said, “is for economic growth not sustained through migration, but one that raises wages and living standards for families. Not just higher GDP, but higher GDP per head”.

Sir Keir Starmer argued the Chancellor was saying one thing while doing another.

Discussing his own plans for boosting the economy, Starmer said “I don’t think that it should be done in the way the government has done it… their only plan for growth is migration.”

It was evident from the conversations that both sides support lowering immigration. However, neither side is prepared to discuss the possible expenses in an open manner.

The Office for Budget Responsibility (OBR) has updated its estimates, which indicate that growth will pick up speed over the next few years. Increased immigration is one factor contributing to this improvement, at least somewhat.

The Office for Budget Responsibility (OBR) has revised up its forecast of net migration to 350,000 on average over the next five years from 280,000.

While the fiscal watchdog said its forecasts were uncertain, the economic impacts look clear. As well as lifting growth, more immigration is also expected to reduce borrowing to the tune of £7.4bn by 2028-29.
Why? Historically migrants are more likely than the domestic population to be economically active, and therefore pay taxes, the OBR said.

The vast majority of migrants also face limitations on their ability to take out benefits, meaning government spending barely moves.

While it is true that higher levels of immigration puts pressure on already squeezed public services, in the short term, the economic benefits of immigration outweigh the costs.

But things might look a little bit more complicated over the longer term, as the OBR itself acknowledged.

“The fiscal impacts of migration are likely to become less beneficial over time, reflecting that after a minimum of five years, migrants can apply for indefinite leave to remain and therefore become eligible for welfare benefits,” it said.

However, what little research has been done in the UK points in the opposite direction.

Analysis from Oxford Economics shortly after the Brexit vote showed that the 2016 migrant cohort – including both EU and non-EU migrants – was likely to add a total of £26.9bn to the Treasury.

Put another way, the fiscal boost from migration in 2016 was the equivalent of adding 5p to all three income tax rates for one year.

Whether those conclusions still stand is difficult to assess as the composition of migration has changed substantially since Brexit. Students and dependants are less likely to be economically active, and they now make up a much larger proportion of migrants than before the UK left the European Union.

But there’s strong evidence suggesting that they too eventually join the workforce and start contributing to the economy.

“Migrants may come as students or dependants, but that doesn’t mean that they can’t work, and it turns out that a large proportion do,” Jonathan Portes, professor of economics and public policy at King’s College, noted.

For example, the OBR said that the rate at which migrants join the workforce after coming to the UK to study has increased from 30 per cent in 2019 to 48 per cent in the year to June.

This was largely a result of reintroducing the post-study work visa, which gave students the right to work in any job for two years after finishing studying.

In short, if the government – no matter its political stripe – tries to drastically slash immigration, it is in danger of cutting off one of the UK economy’s success stories.

Mzaad
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Dulal Ahmed Chowdhury

Dulal Ahmed Chowdhury is the Editor of The Daily Dazzling Dawn. Previously, he has been serving in important positions in all the famous national dailies of the Bangladesh since the nineties. He has played a commendable role in journalism by participating in various events at the national and international levels. United Nations Conference, World Climate Conference, SAARC Summit are notable among them.

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