Theresa May on Immigration Reform

Theresa May addressed immigration reform in her speech to the Conservative party conference on 06 October 2015. The home secretary said that high numbers of immigrants were not in the national interest.

However, her immigration speech was called “dangerous and factually wrong” in The Telegraph which is looking at whether her statements were actually true:

1) Immigration is forcing thousands out of work

There are currently 31 million people employed in the UK. Of these, 27.8 million are UK nationals, 3.1 million are non-UK nationals. The number of UK nationals in employment has increased as the economy has recovered after the financial crash. Employment levels correlate more closely with how the overall economy is doing than with immigration levels.

If anything, thousands of people found jobs as the economy started to perform better.

Even a report published last year by the Home Office, May’s own department, found little evidence to suggest “that migration has caused statistically significant displacement of UK natives from the labour market in periods when the economy is strong”. This contradicts her speech on immigration reform.

2) Mass migration leads to the wages of some low-paid workers being undercut

For immigration reform, according to a study by the London School of Economics, there is “little evidence of a strong correlation between changes in wages of the UK-born (either all or just the less skilled) and changes in local area immigrant share over this period”.

Wage growth data broken down by industry also suggests that it follows similar patterns to the wider UK economy, including in lower-paid sectors, such as retail, construction and hospitality. If there were an impact on pay from migrants willing to work for lower wages then this is where it should be most noticeable.

3) The net economic and fiscal effect of high immigration is close to zero

May’s boldest claim is that “while there are benefits of selective and controlled immigration, at best the net economic and fiscal effect of high immigration is close to zero”.

The statement is based on a report by the Organisation for Economic Cooperation and Development. The report, published in 2013 and using data from 2007-09, does state that the net fiscal effect of migration in the UK is negligible.

However, there are important details in the data that suggest May’s presentation of this statistic on its own is misleading.

First, across OECD countries, the UK occupies the 11th position in regards to the fiscal impact of migration – that is the difference between the taxes and other contributions migrants make to public finances and the costs of the public benefits and services they receive. If the balance is positive then migrants are effectively paying in more than they take out. The UK figure (+0.46%) is higher than the OECD average (+0.35%).

Second, different studies provide varying figures. There is a significant difference in the figures once the numbers are broken down by more recent migration, and when migration from within the EU is compared with migration from other countries.

Because May is stressing the need to cut migration flows into the UK, it would probably be most relevant to focus on the impact that recent immigration, especially from other EU countries, has had on Britain.

Most studies show a positive fiscal impact in terms of more recent migrants; even more so when it comes to people coming to the UK from within the EU.

The reason for this is partly because people coming from the EU are less likely than UK nationals to claim most key benefits. According to the ONS, 4.5% of the UK’s population is comprised of EU nationals. Therefore her speech on immigration reform should be looked at once again.

Looking specifically at benefit claimants’ data, 92.6% of all those receiving benefits are UK nationals compared with only 2.5% being EU nationals.

The proportions are the same when it comes to out-of-work benefits: in 2014, 92.3% of those who claimed these benefits, such as jobseekers’ allowance, were UK nationals, while 2.7% were EU nationals. Moreover, the proportion of EU nationals claiming unemployment benefits in the UK matches that of British nationals on unemployment elsewhere in Europe.

The proportions are slightly higher for tax credits: 84.1% of all recipients in 2014 were UK families, compared with 6.8% being EU families. The balance is similar for in-work tax credits: 83% to 8.1%.

And migrants from the EU are also more likely to be in work: the employment rate among EU nationals is 79.4% compared with 73.5% for UK nationals. Among non-UK, non-EU nationals it is 61.8%.

In fact because of the net contribution migrants make to the economy, the longer-term impact of immigration is that it will have a positive effect on reducing the national debt, according to the Office for Budget Responsibility.

 

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