New EU migrants add £5bn to UK, report says

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Immigrants from the 10 countries that joined the EU in 2004 contributed more to the UK than they took out in benefits, according to a new study.

They added £4.96bn more in taxes in the years to 2011 than they took out in public services, the report produced by University College London (UCL) found.

Immigration Minister James Brokenshire said it was too narrowly focused.

"It [the report] has not properly addressed the issues of the pressures of public services," he said. "There's things that I think rightly concern the public on access to schools, hospitals, roads, housing."

'Positive picture'

UCL's report, The Fiscal Effects of Immigration to the UK, was published by the Royal Economic Society in the Economic Journal.

The countries that joined the EU in 2004 - known as the Accession Ten, or A10 - were Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.

Media caption,
People in Northampton have mixed views on the contribution made by migrants to the UK

The analysis included migrants' share of all public services costs, covering those that increase when the population increases, such as health and education, and those that stay fixed, such as the armed forces and defence.

If the fixed costs are excluded, the net benefit of immigration from these countries would more than double to £10.5bn.

The study also said immigrants from the wider European Economic Area - the European Union plus Norway, Iceland and Liechtenstein - had made a positive financial contribution to the UK.

It found that:

  • EEA immigrants had made a fiscal contribution of £4.4bn between 1995 and 2011, non-EEA immigrants had made a negative net contribution of £118bn, and British people had made a negative net contribution of £591bn
  • More recently, between 2001 and 2011, European arrivals contributed £20bn and those from outside Europe £5bn
  • Immigrants who arrived since 2000 were 43% less likely than British people to receive state benefits or tax credits, and 7% less likely to live in social housing
  • They were better educated, with 62% of those from the first 15 EU countries and 25% from the A10 countries having a degree, compared with 24% in the UK

Prof Christian Dustmann, co-author of the study, said: "A key concern in the public debate on migration is whether immigrants contribute their fair share to the tax and welfare systems.

"Our new analysis draws a positive picture of the overall fiscal contribution made by recent immigrant cohorts, particularly of immigrants arriving from the EU."

Media caption,
UCL's Prof Christian Dustmann and Migration Watch UK's Sir Andrew Green debate the economic contribution made by immigrants to the UK

He said EU migrants, in particular, made "the most substantial contributions" because of their "higher average labour market participation compared with natives and their lower receipt of welfare benefits".

Migration Watch chairman Sir Andrew Green said: "If you take all EU migration including those who arrived before 2001 what you find is this - you find by the end of the period they are making a negative contribution and increasingly so.

"And the reason is that if you take a group of people while they're young fit and healthy they're not going to be very expensive, but if you take them over a longer period they will be."

Media caption,
James Brokenshire: "Levels of net migration at the moment are... not sustainable"

BBC economic editor Robert Peston said Prof Dustmann and his co-author Tommaso Frattini had "exploded" the idea that the majority of immigrants were benefit and public-service tourists - but, as Migration Watch had highlighted, they had also shown that, over the longer term, immigrants to the UK had been a burden on the state.

BBC home affairs correspondent Danny Shaw, meanwhile, said the report built on a study carried out by the same authors published a year ago which came to broadly the same conclusions.

Then, as now, the analysis of the data provoked a "storm" of criticism from Migration Watch - leading the think tank to release its own study in March.

Mr Brokenshire said the latest report had taken "a very narrow focus".

He said: "We do need a sustainable immigration system bringing it down from the hundreds of thousands to the tens of thousands because it is those pressures that we see."

Anthony Reuben, head of statistics, BBC News

Image source, PA

If we are only interested in tax and benefits, the perfect person for the economy would arrive the day after they finish education, work for 40 years, not have children and then leave the day after they retire.

It is no surprise, then, that the relatively young, already educated migrants from EU accession countries are closer to that model than people who have arrived in Britain longer ago, or indeed the population in general.

The big question that this research does not address is what happens to those migrants in the future; in particular, will they stay in the country after they retire?

And also, what effect if any have they had on the amount of in-work benefits and out-of-work benefits paid to the rest of the population?

Political debate

Shadow immigration minister David Hanson said: "This report shows that immigration since 2001 has contributed to the public finances as well as to the economy.

"However, the impact of different kinds of immigration varies and the system needs to be fair - so we need stronger border controls to tackle illegal immigration and stronger action against employers who use immigration to undercut local wages and jobs, but we should welcome international university students who bring in billions."

Media caption,
Shadow immigration minister David Hanson: "There are benefits to the UK from migration but there are also things that need to be managed"

UK Independence Party spokesman Steven Woolfe said that while it was clear immigration could be economically advantageous, the study did not show "what wealth our own people could have generated if they weren't ‎subjected to wage-reducing, employment-displacing mass immigration from the EU".

Green MEP for London, Jean Lambert, said: "UCL tells us what we already knew - that, overall, migrants contribute positively to our economy.

"Can we now see a response from government that acknowledges that and which helps local authorities adapt effectively to changes in their population and promotes a sense of community?"

Katerina Davies, who has as worked and paid taxes in the UK since she moved from the Czech Republic in 2007, said more should be done to help integrate migrants into communities.

She said: "Integration is the best way forward if there is a problem with cultural differences. I think if you come to a country and decide to live there you should accept their culture; obviously keep your own identity but accept the law and the culture you're moving to."

Prime Minister David Cameron has vowed to renegotiate the terms of the UK's membership of the EU, before holding a referendum in 2017 on whether to leave, if he is re-elected in six month's time.

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