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Saturday, 8 November 2014

How to Make Immigration Look Good

UK airport border controls


They've done it again. Here's the umpteenth attempt to portray immigration as economically useful for Britain, if undertaken by selecting only a particular group of immigrants for a carefully chosen period of time.

The media report that a new study by University College London (UCL) claims that immigrants to the UK from the 10 newest EU countries (those that joined the EU in 2004) have benefited the British economy. In the years to 2011, it says, they added £4.96 billion more in taxes than they took out in public services.

It turns out that this is not so much a new study as a revision of a previous one whose faults had been rightly criticised.

The original University College London’s study (conducted by Centre for Research and Analysis of Migration, CReAM for short), published in November 2013, was the most far-reaching study ever carried out on the impact of migration on taxpayers, covering 16 years from 1995 to 2011, based on official and government figures.

It concluded that immigrants from the EEA (European Economic Area) contribute 4% more in taxes than they take out in benefits. Non-Europeans immigrants, on the other hand, are a financial burden: they take in benefits and services £100 billion (or 14%) more than they put back.

CReAM also found that British-born people pay into the Exchequer 7% less than they receive from the state.

So, because that study includes both European and non-European immigrations, it calculated an overall net benefit of £25 billion to the UK from recent migrants, which it described as "a very sizeable fiscal contribution".

But, if you analyse further, you see that, as explained above, non-European immigration, far from contributing positively, is a huge economic burden for Britain. So there is no rational motive to support that type of immigration on financial grounds.

But there’s more. A more in-depth assessment of the fiscal effects of immigration to the UK published in March 2014 analyses the CReAM research. This study, by Migration Watch UK, found some serious faults in the CReAM paper.

Migration Watch experts found, for example, that its authors themselves, even using their over-optimistic calculations, had found a cost to the UK from migrants of £95 billion between 1995 and 2011, but they had buried the figure, which could only be found at the end of their paper but was not mentioned in their text.

Migration Watch also makes clear that the the CReAM study's authors, Dustmann and Frattini, have overstated revenues and understated expenditures for the migrants arriving after 2000. Among the extremely unrealistic assumptions made by CReAM is that even the most recent arrivals contribute as much as long-term migrants and the UK-born, whereas both their younger age and lower incomes make this highly unlikely.

When these over- and under-estimations are adjusted, the result is – assuming that Dustmann and Frattini were otherwise correct - an overall fiscal cost of migration to the UK of £148 billion (more than £22 million a day) during the 1995-2011 period.

Interestingly, the two academics did not reply to these criticisms but only made vague remarks about "derogatory language seemingly attempting to undermine our reputation".

This was the preamble, the story so far.

Now CReAM has published a revised version of its November 2013 original study discussed above. The authors claim they have made "robustness checks", taking into account some points raised by Migration Watch.

This new paper only concerns itself with immigrants from the so-called A10 (Accession Ten) countries, namely those that joined the EU in 2004: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. They have been making a postive contribution of almost £5 billion between 1995 and 2011.

The problem, according to Migration Watch chairman Sir Andrew Green, is cherry-picking. The overall effect of immigration resulting from this study – although not publicised in headlines - is now a fiscal cost of £114 billion as a best-case scenario and £159 billion at worst, therefore higher than the previous CReAM paper's calculation of £95 billion.

He said to the BBC:
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.
Anthony Reuben, head of statistics for BBC News, added:
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?
Sir Andrew Green also said:
This report confirms that immigration as a whole has cost up to £150 billion in the last 17 years. As for recent European migrants, even on their own figures - which we dispute - their contribution to the exchequer amounts to less than £1 a week per head of our population.
And, if even the BBC admits that "over the longer term, immigrants to the UK had been a burden on the state", it must mean that as far as immigration is concerned we'got to the end of the road.


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