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Immigration: The Treasury view (but not the Business Department's)

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Martin Rosenbaum | 14:19 UK time, Thursday, 14 April 2011

David Cameron's speech today about immigration is mainly attracting headlines for his remarks about its social impact.

David Cameron

But he also spends some time discussing the potential economic consequences of reducing immigration. He concludes that through measures such as prioritising the admission of skilled workers with a job offer in the UK and raising the skill levels demanded, the government's cutbacks on immigration won't damage the UK economy.

The economic implications of different forms of migration is a complex topic, disputed by for example a free-market think tank arguing against immigration controls and a pressure group campaigning for tighter restrictions. And it's considered within the Home Office Impact Assessment for the current government policy.

If you're interested in this topic, you might like to see the Treasury's viewpoint. Under freedom of information I have obtained a copy of the Treasury's submission [5.51MB PDF] last year to the Migration Advisory Committee, a government advisory body which was examining the potential results of limits to economic migration into the UK.

The Treasury's analysis is of course subject to many caveats and uncertainties, but its broad argument is that cutting immigration of skilled workers would reduce the UK economy's potential for growth. It also states that migrants tend to make a positive contribution long-term to the UK's fiscal position.

In other words, this document shows the Treasury's unease about the economic impact of immigration curbs. Some of this is referred to in the detailed and extensive report which the Migration Advisory Committee produced. The Treasury's interest in policy is clearly primarily financial rather than social. This departmental angle is also shared by the Business Department.

Mr Cameron's speech today has been strongly attacked as "very unwise" by his cabinet colleague but party political rival, the Business Secretary Vince Cable. Mr Cable is concerned that stronger immigration controls could harm British companies and universities.

I also wanted to see the memorandum which his department, BIS, had sent to the MAC to help inform its investigation into limits on economic migration. However, while the Treasury sent me its submission (after I appealed against its initial refusal), the Department for Business, Innovation and Skills has refused to disclose the one it made.

BIS argued that releasing it would be against the public interest. It told me:

"We believe that if this information were to be made public, frankness and policy development would inevitably be inhibited and ministers would be prevented from taking decisions based on the fullest understanding of the issues involved."

Government departments often coordinate their responses to FOI requests. I was surprised by the discrepancy in this case, because it is unusual for one to reveal and another to keep secret a similar document.


  • Comment number 1.

    As a historian who has studied Allied propaganda during the Second World War at great length, I have come to recognize that half-truths could be much more damaging than lies. I was struck by the PM’s use of half-truths during his speech. He pointed to an educational fair in India which had a poster with a London bus and a statement about getting a free ride to the UK – as someone who has been involved in supervising top Indian students in a leading UK university, I have to point out that such posters refer to the offer of airline tickets to eligible candidates. Eligibility is generally gauged on the basis of academic record and English language competence, as well as well the ability of these student to pay fees bout 5 times the levels paid by UK students.

  • Comment number 2.

    I should also add that qualified students from India do not come for a free ride – they compete globally for scholarships university places and jobs, and many of them get offered jobs immediately after they complete their studies; they generate wealth by paying high taxes and create new links for Uk firms with Indian businesses (which the PM seems to be desperate for).

    So, instead of taking cheap shots, the PM and his team needs to tackle the real challenge – cracking down on bogus institutions in the UK that offer fake or worthless degrees for high fees in return for student visas. Misrepresenting a poster in an educational fair in the UK, where highly ranked UK universities advertise their courses detracts from the issue – would British science be as robust without the legions of bright PhD students and young post-doctoral candidates who have chosen to work in this country? May I remind the PM that an Indian immigrant has recently won a Nobel Prize for a well-known British institution in Cambridge? Esteem thus generated encourages the best international students to pay exorbitant fees to study in the UK, to the mutual benefit of the scholar and the university. Make no mistake, the UK competes with the USA for the best students from abroad – educational fairs in India are a part of that competitive process. I hope the PM – or rather, his researchers and speech writers – is aware of that.

  • Comment number 3.

    The Treasury states "that migrants tend to make a positive contribution long-term to the UK's fiscal position".

    How do they know this?

    If it's because of the taxes the migrant's pay as evidenced by their tax returns, then since tax returns require an address, why is it government has such a poor handle on how many migrants reside in the UK?

  • Comment number 4.

    I've just read a table from The Guardian, not an organisation you would think of as being anti-immigrant. I quote
    GDP in Q2 2004 - inflation adjusted £316bn estimated GDP per capita £5282
    GDP in Q2 2010 - inflation adjusred £329bn estimated GDP per capita £5290

    In other words GDP has grown by 4% in 6 years - the headline story - good news. (though how much of that was due to Gordon Brown's spending binge)
    GDP per capita has grown by ....nothing in 6 years - the hidden story - bad news.
    In other words people have not been getting better off, the growth is only due to population ie nett immigration. Is this the kind of growth we want?

  • Comment number 5.

    In England, we already have too much population for the available land.

  • Comment number 6.

    OK, so a US-born Harvard PhD in space research or a Canadian surgeon are not really desirable on these shores whereas unemployed cleaners from say rural Romania are welcome on full benefits. Is it just me or is there something pretty idiotic with UK politics and/or politicians?

  • Comment number 7.

    Come on, let us have some proof that universities actually benefit from overseas staff. No doubt there is a proportion of gifted academics but so many are here because they can raise (eg.Saudi) money and attract students from countries where they have connections. This might suit university finances, but has questionable academic and pedagogic value, especially when their skills at fund raising do not justify the academic and professional status bestowed upon them. So when Cable speaks of the benefit immigrants bring to our universities, ask him to be a little more specific.

  • Comment number 8.

    I heard a Tory MP trying to defend Cameron,s stance on immigration, on todays radio 5 live. She said a very chilling thing, she said " our people" can,t get jobs. this sent a shiver down my spine. It sounded like something from pre-war Germany. Cameron,s speech was typical electioneering but with a very risky, scary and naive content.

  • Comment number 9.

    This is what you get when you indulge in a bit of mud wrestling with the likes of the BNP in an election year. 'New' Labour's EU 'open door' policy will have to continue regardless and the rest of the world will be restricted by whatever kneejerk response is considered necessary for the garnering of votes.

  • Comment number 10.

    Every politician seems to have an opinion on whether we allow immigration or cap immigration. This opinion depends of course on whether they are in government or in opposition. What is always overlooked and ignored, is the opinion of the majority of the population; I cannot speak for the majority but I suspect that like I am , the majority are alarmed at the effect the burgeoning population is having on our institutions, public services , on crime rates and on national security. The oft proclaimed statement that we need the special skills immigrants bring, is of course , nonsense , in a country where thousands of new graduates are finding it impossible to find work. This raises another question however; are the resources poured into our universities being wasted, since they seem to be teaching skills to our young people which are of no use in the job market, or is it possible that the universities of Asia and Africa are imparting more valuable and appropriate skills to their students and hence they are in demand here. I suspect not, but policy it seems is always going to be dictated by the ultra politically correct and logic and the desires of the general population will be ignored.

  • Comment number 11.

    Isn't this a real hypocrisy? I cannot understand how a cap on highly skilled workers will work in the best interest of the UK economy. Baring in mind those who come to UK as skilled workers normally are having much better standard of speaking English and they integrate much better within the society as they understand the value of the society much better. How come an individual with doctorate degree who can bring more to the table is not allowed in and someone without any skills or even basic language would be welcome just because they come from somewhere in EU. If the government want to do anything good, I suggest first of all they have a border inspection when people leave the country to get to know properly how many people come in and how many leaves. Also to spend some good chunk of money in the education to build out the skills the country needs, such as Engineering & Medicine, and then start complaining of the number of migrants to the UK. When you get that balance right then you can talk about a cap on the number of immigrants coming in. To me it gets funny when someone who have been on benefits for a good chunk of their life(just simply because they have been lazy doing a job) would go and complains about the immigration.

  • Comment number 12.

    The important thing about Cameron's speech and indeed Cable's reply, is that for the first time in many years a sensible discussion on immigration and integration will be possible. This has been blocked by the BBC who have largely taken the view that criticism of immigration is primarily based on a racist agenda, just as it has been assumed that criticism of multiculturalism is of a racist origin. Even now, Cameron is being accused of stealing the BNP's policies.

    Cameron is not a briliant politician and has little grasp of social ethics, but others can enter the debate with serious intentions to avoid the scaremongering tactics so frequently employed. Calling for a slow down on immigration, opening up discussion on integration, is in no way similar to Europe in the 1930s. There is a real need to evaluate the extent to which our society can be a truly open society, maintaining tolerance whilst limiting the scope of intolerant cultures we have for too long placated. Perhaps one day we can affirm our British tradition of hostility to prejudice based on colour or ethnic background whilst endorsing a health tradition of political, social, ethical, and indeed, religious debate among the people who dwell within our boundaries.

  • Comment number 13.

    Cameron got this one spot on and those using the terms of "extremism" are being ridiculous.

  • Comment number 14.

    A statement like people not 'wanting' to integrate or learning to speak English, puts Britain back 30 years. This is one of those statements that once again give those who continue to harbour racist views a chance to vent their spleen on those who seemingly are taking their jobs - the jobs they don't do, don't want to do and cannot do.
    Do the British learn Spanish or Italian or Chinese when they live and work in those countries? Does this rule of speaking English apply to all Europeans or just to those from developing countries (from the subcontinent)?
    It takes years to integrate, sometimes a generation or two have to pass before that can happen. Even educated, English speaking foreigners in England, who have lived here for decades, still find it difficult to feel part of the fabric of society.

  • Comment number 15.

    What are these skilled jobs that can only be filled by immigrants? Can someone enlighten me? If we have to trawl the globe for these skilled people,then it begs the
    question,whats wrong with our education system?

    We hear the boast that we have the best universities in the world so we should be
    knee deep in skilled people,but it appears that we are not.Why not?

    Cameron has attempted to encourage debate on immigration and it should happen
    and any pathetic attempt by Miliband and his failed party to turn this into a racist
    issue should be treated with the contempt it deserves.Ditto the BBC.

    This country has always welcomed immigrants when the numbers arriving were
    manageable,but I believe that situation has ceased.No country can accomodate mass immigration on the scale that we have seen particularly over the last 13 years.

  • Comment number 16.

    What is Mr Cable scared of exactly? If the PM speaks the truth, or if anyone dares to mention that mass immigration from Asian and European countries is bad for the UK in terms of cultural and social impact, and yet others say no its a good thing, mixing everyone up like this. Why is it so good?
    I see pro EU and immigration supporters saying its so good for the country but not saying why other than economic stimuli. Is that all it is? Is our loss of national identity worth it financially? clearly post number 4 indicates otherwise.
    Therefore my own feeling is that what Mr Cable and other pro migration supporters are scared of is not a lack of social and national cohesion, that doesnt seem to bother them at all (my own MP included) and I get the feeling its all about the ££ and the tax revenue generated as a result of migrants being here, and that is all.
    The truth though is a lot harsher than Mr Camerons sound bite spin would have us believe and I feel its too little too late and is only touching on the tip of a much bigger issue that no one truly wants to address in case they get called every name under the sun by the PC brigade, the very same one that wants us to do away with Christmas and have winter festival instead. Its time someone in the UK stood up and called a spade a spade and not a teaspoon, unfortunately, it isnt Mr Cameron, and MR Cable is just looking out to his own interests.
    We dont 'owe' any of these EU countries or Asian countries or even Commonwealth ones a fast track through the migration system, and everyone should treated equally no matter what their origin is. Top of the tree should be the ability to speak the language fluently and to respect and wish to become part of the country without imposing their own culture or belief onto the communities they settle into. We cannot have people come here just for economic migration any more, look at the mess we are in, it has to stop and sorry to say this, but 'our people' should come first, unless there is absolutely no one else more qualified, in which case we have University education for what reason?

  • Comment number 17.

    Jacko's numbers on recent headline growth rates and per capita growth rates are deeply misleading given they span a period where the UK and most of the industralised world had the deepest recession since the war. Whomever was responsible for that, I don't think anybody has ever suggested it was down to the level of immigration to the UK. The phrase "lies, damned lies and statistics" irresistably comes to mind.

  • Comment number 18.

    This country is seriously over-populated and every additional immigrant has a cost. Even those with 'much needed skills' will add a cost to the infrastructure - they will all need water, food, transport, hospitals, housing etc.etc. Vince Cable and the treasury and others of that ilk need to consider this fact and stop bleating. If the country is short of skills we would do much better to educate those already here, to the point where the native born can at least have sufficient knowledge of their native tongue to enable them to spell 'bearing in mind' and not 'baring'. (See above).

  • Comment number 19.

    Population growth is becoming an absolute disaster. In this area they are concreting over the fields where we played as children. The process will not stop here. More fields are wanted every year. People are getting angry and desperate about it.

  • Comment number 20.

    I was reading nonvegetarian's post (as follows: OK, so a US-born Harvard PhD in space research or a Canadian surgeon are not really desirable on these shores whereas unemployed cleaners from say rural Romania are welcome on full benefits. Is it just me or is there something pretty idiotic with UK politics and/or politicians?) I would like to know if nonvegeterarian can tell me and everyone else where he/she gets this idea about "UNEMPLOYED CLEANERS ON FULL BENEFITS". Does he/she know that a migrant worker has to be resident in the UK for two years BEFORE he/she can claim a penny of public money. And many migrants may well be cleaners, but I doubt they are unemployed. They are too busy cleaning up after us (quite literally) on the minimum wage and, of course, paying their NI and taxes just like the rest of us. Please stop spreading this myth about lazy migrants resting on their laurels in the lap of luxury on full benefits. The Daily Mail does quite enough to fan the flames of that kind of drivel without others helping it along.

  • Comment number 21.

    Many immigrants who have entered the UK over the past 13 years have health problems, including serious mental health issues. Their families, allowed to join them under "human rights" (which only apply to foreigners and never to the English), have even worse health.

    The only reason that mass immigration was encouraged was to destroy any distinctive English culture.

    Mass immigration gives the appearance of increasing GDP, but per capita it decreases. The fact that the treasury does not understand this indicates the low quality of civil servants it employs (probably ony there because of "Equal Opportunities" - policies which discriminate against English people).

    Yeah, most English people are sick of mass immigration. We still are suffering from the Norman invasion let alone what followed (studies show that people of Norman descent are disproportionally represented in the higher social echelons).

  • Comment number 22.

    Look at ONS immigration statisitcs (Office of National Statisitcs). They provide a nice clear spreadsheet of net immigration stats from 1991-2009.

    Increase over that period is around 150,000 per year. Increase due to students, around 150,000 per year.

    Does that seem consistent with politicians rhetoric or media headlines? Nope, didnt think so.

    People need to think more for themselves and seek out proper unbiased information before forming knee-jerk and usually incorrect viewpoints.

  • Comment number 23.

    Whilst I agree that immigration in this country needs to be curtailed but Cameron's example of the free bus ride poster at a student fair in India is shockingly naive. I came from India 15 years ago to get an education. I could have gone anywhere. I had offers from many leading universities both in Europe and US. I almost would have preferred to go to Princeton but my parents wanted me to go somewhere where I had friends and family ..and since they were paying!! I didn't come from a poor background, after all my parents had to pay the costs of the fees and living in the UK. I graduated at the top of my class. I could have gone back home or anywhere else in the world but happened to be offered a good job with an investment bank in London. I stayed. In the last 10 years of my career I have been offered positions in Singapore, NY and Moscow to name a few places. I pay more tax and NI then most people earn in a year. I can honestly say I have never used the NHS, other than when forced to by the insurance company to get a GP referral, my kids are privately educated and I legally employ a housekeeper and a nanny for my kids (therefore creating jobs in the UK). Am I the kind of migrant David Cameron wants to prevent from coming to the UK?? He should think again because people like me can peddle their wares anywhere in the world and are usually welcomed with open arms …and given the recent tax decisions are very tempted to move in any case. The government seriously needs to think twice about which immigration they want to reduce ..bright kids with money in their pockets and an enthusiasm to learn attending student fairs really shouldn't be Cameron's target.

  • Comment number 24.

    ATS12 @ 23
    Unfortuately, reasoned, intelligent contributions like yours tend to fall on deaf ears. UK politicians and media are far more comfortable with images of dodgy foreigners stealing their way into our country to nick all the jobs that ordinary UK folks are just queueing up to take.

    Immigration needs to be properly understood first and then appropriate policies formed. In the UK that is going to be a long time coming.

  • Comment number 25.

    22 The GingerF

    You seem to be mixing up 2 sets of figures here - net immigration and total number of students.

    Accoriding to the ONS the total no. of immigrants was 567,000 in 2009 up from 320,000 in 1991. The number of students in this figure increased to 211,000 from 56,000 in 1991 and the majority of this increase occured in the last 3 years.

    On this basis the total no. of immigrants has increased by 247,000 and the student numbers by 145,000 - this still gives 100,000 additional immigrants for non-studying means.

    These figures are obviously the start and end measures rather than the average but as the student numbers first exceeded 160,000 in 2008 it shows that the average over 1991-2009 cannot be the 150,000 you claim.

  • Comment number 26.

    CockedDice 25

    Apologies if in my rush I have misrepresented a little - my main point is that it is student numbers that represent the vast majority of net inflow difference over last 20 years.

    Net inflow 1991 was 44k, 2009 198k. For students alone its was 43k 1991 and 188k 2009. All the other reasons are relatively small beer compared to this.

    We need to understand immigration in all its forms much much better before we rush headlong into knee jerk policy decisions based on red top headlines. My point is (and apologies again for mixing up numbers) is that even just a high level analysis of the numbers shows one area where investigations should at least be concentrated to begin with.

    It paints a potentially very different figure to the one of lots of illegal immigrants coming to the country to steal jobs.

  • Comment number 27.

    26. At 13:13pm 15th Apr 2011, TheGingerF wrote:
    CockedDice 25
    Apologies if in my rush I have misrepresented a little - my main point is that it is student numbers that represent the vast majority of net inflow difference over last 20 years.
    Why are you only looking at the number of students when they enter the country? Surely they are leaving a few years later; if not, they should not be classified as students.

  • Comment number 28.


    I agree, but ONS doesnt extend to those stats - it would help the debate enormously.

    I'm clearly not doing very well getting my main point across. The overall net immigration stats are dominated by student numbers - thats where the debate should centre just now. Are all the students valid, what benefits do the UK get, how may stay beyond their courses, etc etc.

    Instead headlines are all too often about job stealing illegals, which the stats seems to show is not the case.

  • Comment number 29.


    I think you more than mis-represented the figures a little - your argument was based on the false statement that the net immigration total was solely down to student numbers rather than those who stay here permanently.

    I see the net immigration figures as a red herring in this discussion. Although there is a valid debate about finite resources against an ever increasing population, this applies regardless of whether the reason for the increase is immigration or a rise in the birth rate.

    However, If 30 million Brits left the country next year and the number of immigrants equalled the same amount then the net figure would be zero but the impact on the make up of our country would be vast. This exaggerated example highlights the importance of considering the total number of immigrants rather than the lower net figure.

    It is perfectly reasonable for people to want to discuss how we can ensure that our society continues to operate under the liberal (with a small 'l'), broadly secular, basis that it has developed whilst respecting (but not pandering to) the cultures of countries our immigrants have left.

    In the same way that people should avoid 'all immigration is bad' arguments we can also do without knee jerk statements that the current immigration position is not something to be concerned about.

  • Comment number 30.


    Whoa, back up a little.

    The ONS stats definitely show that net immigration is around 150k higher (44k to 198k) in 2009 than 1991. It also shows that student numbers moved in the same way (43k to 188k). In the space of a blog post I perhaps rushed my message but I did not seek to deliberately misrepresent anything. Look at the numbers other than students - if the debate was on them then there just wouldnt be any debate or issue to be had.

    Net immigration is key to this discussion - we absolutely must look at people leaving the country and why in the same way as coming in. We are not talking millions each year here. In fact over that period in question 1991-2009 it is a little under 2.5million. Student numbers make up 1.7 million of this.

    Surely therefore the key to understanding the immigration issue is therefore what is driving the net student imbalance? if this hsows that we are not being tight enough in this area (dodgy courses, allowing false student migrants) then fine, look to sort it out. However this is not an area that has been properly discussed in any immigration debate over the last few years.

  • Comment number 31.

    Students by their very nature should be temporary migrants. It is therefore not appropriate to use them as the cover for the net migration figure.

    In 2009 567,000 immigrants entered the country and 368,000 people left - that is in total a 935,000 change in the demographics of the country. I accept that a proportion of those leaving will be previous immigrants returning home but it is a marked effect on the population.

    It is that speed of change that is the important factor and why people who live in areas with a high proportion of immigrants notice a much bigger change than the net figure of 150,000 would imply.

  • Comment number 32.


    "Students by their very nature should be temporary migrants. It is therefore not appropriate to use them as the cover for the net migration figure. "

    OK, then its not appropriate to include them at all - so instead of net immigration of 2.5million over 19 years it is 0.7million. For 2009 it is 10k instead of 200k.

    Note I agree with your point that net immigration also hides things - your rate of change impact is important. However thats not part of the debate just now is it, and student numbers rather than masking anything are being used by politics and media to make totally false points on immigration.

  • Comment number 33.

    Ginger F

    I think we fundmentally differ on the true issue with immigration regardless of the importance of students in the numbers. In my opinion you seem to be concentrating solely on the net immigration numbers i.e if the total number in is similar to the number going out then everything is fine.

    However, there are much more important issues about language barriers, opportunities for local unemployed, impact on local schools, hospitals, housing, etc. To me, these are the factors to consider regarding immigration.

  • Comment number 34.


    I agree your points, especially localised impacts where net immigration is to a large extent meaningless (because far more coming in than leaving). I stick to my point that there is a large, material student impact that needs to be considered far more carefully and without unnecessary red top headlines.

  • Comment number 35.

    Immigration will always be a tough issue, but surely establishing fifteen tiers of decision-making is soooo Coalition Government; you know make the red-tape so mind boggling that most common folk will need a pitchfork to chuck the garbage and find the relevant.
    The United Kingdom Home Office recently updated a series of TIER Series and PBS Dependent immigration forms, all of which went into effect on April 6. Apparently, the software company is, Inc. - the world's largest immigration software company. This is how the United Kingdom intends to sort Immigration chaff from the wheat.
    I give credit that the forms, updated by INSZoom's production, were available to INSZoom's corporate, immigration and university clients in the UK, United States, India and other nations, thus allegedly ensuring that standard business operations for the company's leading clients were not delayed.
    INSZoom's immigration software solutions are used by thousands of immigration professionals in the United Kingdom and throughout the world. Many of the world's leading corporations, such as Microsoft, Wipro Technologies and Cognizant, as well as the world's leading immigration law firms, use INSZoom's technology to manage all aspects of their clients' and employees' immigration and mobility cases.
    Forms updated this week include the following:
    • TIER1 (Entrepreneur): Application for an Initial Grant of Leave (Switching) or an Extension of Leave And Biometric Residence Permit Under Tier 1 (Entrepreneur) Main Applicant
    • TIER1 (Post-Study Work): Application For A Grant Of Leave And Biometric Residence Permit Under Tier 1 (Post-Study Work) -Main Applicant
    • TIER1 (Investor): Application For An Initial Grant Of Leave (Switching) Or An Extension Of Leave And Biometric Residence Permit Under Tier 1 (Investor) Main Applicant
    + at least thirteen others.
    If you thought Requests for Information under FOI were slow before, well...just wait...
    I know that I can't wait to see how this new system increases efficiency and effectiveness in the UK immigration decisions.

  • Comment number 36.

    History has taught us that, each time when a crisis strikes, people are trying to find scapegoats. Therefore, long crises tend lead to an anti-immigration sentiment, codified in a series of measures. This kinds of issues culminated in USA in the Immigration Quota Law of 1924 and a 1929 act. These laws I cited limited the annual number of immigrants to 150,000, to be distributed among peoples of various nationalities in proportion to the number of their compatriots already in the United States in 1920. One result of these restrictions was to reduce the appeal of nativist organizations; the Great Depression of the 1930s also caused a sharp drop in immigration . Now that the US is not doing well, some people tend to blame the immigrants for all kind of issues the debt crisis brought with them, forgetting the rules of free market and the fact that the economy tends to regulate by itself, not through a series of unnatural laws.


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