The conventional wisdom on immigration is now shifting – and shifting fast – as I discussed on Talk TV yesterday morning in the interview above.
For many years, the consensus view that dominated Whitehall and academic debate was that high immigration helps to boost the UK’s GDP by providing a source of eager workers whom employers would struggle to find in Britain.
Yes, community relations may suffer for a while if the numbers are too high, or the population influxes are too concentrated on certain localities – but that’s a price worth paying, given the economic benefits.
Over recent years, though, the pace of immigration into the UK has risen very sharply indeed and that is now causing “serious problems” for public services, living standards and the UK’s budgetary stability, according to a senior official at the government’s fiscal watchdog.
David Miles, an executive at the Office for Budget Responsibility (OBR), said that the UK government should prioritise getting idle workers already in the UK back into employment, rather than inadvisedly relying on overseas workers to grow the economy.
Writing in an essay published by the Common Good Foundation, Professor Miles argues that it is wrongheaded to think that Britain can solve its economic problems by opening its doors to overseas workers.
“Immigration – which primarily involves those of working age who are many years away from retirement – both delays the impact of the ageing of the population and is the driver of population growth. Some conclude from this that a faster rise in the population ... will be beneficial in alleviating acute underlying fiscal pressures”, he said.
“But, even setting aside the fact that it is GDP per capita that matters for average standards of living – and growth in population does not obviously boost it – there are serious problems with the idea that faster population growth can consistently alleviate fiscal problems.”
One of the arguments frequently made in favour of high immigration is that it helps tackle the problem of an ageing population – because migrant workers tend to be youthful. Yet, according to Miles’ calculations, even if every single migrant arriving in Britain were aged 24, Britain would have to accept 20 million of them over the next 40 years in order to preserve the population balance as it currently is. And of course, as he says, “today’s young people are tomorrow’s old people”.
By the end of those 40 years, migrants who arrive today aged 24 will be close to retirement age, on the point of claiming pensions themselves, creating another population bulge like that of the baby boomers who are currently retiring and thus helping to swell Britain’s non-working age population. And, of course, not all migrant arrivals are aged 24 – and many bring multiple dependants, putting further pressure on overstretched schools, hospitals and housing.
What would be far more fiscally beneficial, says Miles, would be investing in getting many more of Britain’s working-age population back into work – adding his voice to those insisting it is deeply counter-productive to sign off growing numbers of people who claim to be too mentally unwell to work for a living.
Migrants may provide an extra worker, but getting someone who is out of work back into work is doubly advantageous from the fiscal perspective – providing an extra worker to boost output, but also reducing spending on benefits.
Deeply problematic
“The longer-term fiscal outlook for the UK is deeply problematic,” and current “trajectories for government debt will, at some point, become explosive and therefore unsustainable”, writes Miles – an alarmingly blunt statement from one of the OBR’s most senior officials.
“New people – either children born here or older people arriving as migrants – consume public services and do so to a greater extent at older ages when their likely contribution to taxes to fund spending on public services falls away”
“So, even if there is a gain in the fiscal position for a while, it fades. And to hold demographic structures steady, and halt the decline in the ratio of those above (an arbitrary) line between the elderly and the working age populations, requires an ever rising population”.
The OBR now calculates that each low-wage migrant – assuming they stay in Britain – will eventually cost the UK taxpayer £1.55 million, as the pensions and benefits they will be paid outweighs the taxes they pay during their lifetime. Even a migrant on the average UK wage will end up costing the state a net £405,000.
Official data shows that immigration has fuelled the two biggest population increases in peacetime over the last two years. The Office for National Statistics (ONS) says the population of England and Wales grew by more than 700,000 in the year to June 2024 to nearly 62 million. This was the second-biggest annual jump since records began in 1949 and only beaten by the 800,000 rise in the population during the year to June 2023. These increases both stemmed from record rises in net migration.
Miles said continuing these trends will pile a “substantial” burden on the public finances. The economics professor, who has also served on the Bank of England’s interest rate-setting Monetary Policy Committee, said that depending on an increasing population to expand the economy “could not be sustained”, as migrants themselves use schools, hospitals and other public services as they get older, have children and become eligible to claim benefits.
He also suggested that tackling worklessness among working-age Britons was more important than attracting the most highly paid migrants to the UK. Almost the entire rise in economic inactivity since Covid has been driven by people born in the UK, many of whom are also claiming sickness benefits that do not require them to look for work.
“The fiscal benefits of raising the incomes of those who are born in the UK and who might be on a trajectory of consistently below average wages are as great as the benefits of having more people come and stay in the UK with average or, especially, well above average earnings,” says Miles.
The benefits bill for people on sickness or disability benefits, currently around £55 billion a year, is officially forecast to rise to around £70 billion by 2029/30 – the scheduled end of this Parliament. Some estimates suggest it could reach nearly £100 billion over the same period if current trends continue unchecked.
“The fiscal benefits of helping people, especially young people who potentially have many years of work ahead of them, back into employment are substantial,” says Miles. “There is a great deal of evidence that mental health in particular is typically improved by being in work. And mental health problems have been a very significant factor behind the recent rise in illness-related inactivity.”
Small boats
In 1971 the UK population was 55.9 million, rising by 2.5 million or 4.5pc to 58.4 million over the following 25 years. The subsequent quarter century, from 1996 to 2021 saw a 9.2 million (15.7%) increase – then the fastest population rise in the UK’s recorded history. But now the country is experiencing even more rapid population growth, as the collection of essays in which Miles’ article appears makes clear, with the net average increase over the last few years running at more than 500,000 per annum, equivalent to a city the size of Sheffield each year – driven almost entirely by immigration.
The population has been repeatedly promised an immigration policy, by political parties of all stripes, focussed on admitting a limited number of highly-skilled or creative individuals – an outcome with which few would disagree. Instead, we have had virtually uncontrolled numbers of primarily lower-skilled individuals coming to the UK.
This may have benefitted the already better-off in our society – business-owners or those looking for domestic help. But the impact on much of the settled population has been far from positive, with a flatlining real median wage, increased pressure on public services and continuing housing shortages.
Into this mix of spiralling legal immigration, we have seen more recently of course a sharp rise in illegal migration too – not least via “small boats” crossing the English Channel. Some 40,000-50,000 have annually entered the UK in this way over recent years, with the numbers so far this year up some 49pc on the same period in 2024.
While a fraction of the legal migration numbers, these crossings – and the subsequent housing of illegal immigrants in local hotels – are now clearly causing very serious political unrest, with protests being held regularly up and down the country, creating an increasingly febrile atmosphere. As well as security and safety concerns, voters are increasingly railing against the cost of “migrant hotels” and other “asylum accommodation” as well – which the National Audit Office (NAO) recently predicted is expected to reach £15.3 billion over ten years, up from earlier officials forecasts of £4.5 billion.
During the decade to 1997, net UK immigration averaged around 30,000 a year. Over the next ten years to 2007, that annual figure surged to 150,000. From then until 2017, net migration rose sharply again, to some 220,000 per annum. But from 2017 until last year, the gates really have opened, with the UK importing 872,000 people in 2022 and another 860,000 the following year, and a net total of around 500,000 people annually over the last eight years – with the obvious implications for the UK’s already weak public finances and over-stretched public services, as outlined by the OBR’s David Miles.
“The facts have changed” on immigration as the saying goes – and, it would appear, the policymaking establishment, after years of denial, is now slowly starting to change its mind.
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