Let’s stop pretending all migration is the same
There are huge variations in economic contribution by different groups — the country needs a more selective approach
How do we judge whether migration policy is improving the quality of life for existing residents? One thing to consider is that migration means that the UK’s capital stock is divided between more people. Migrants may bring skills and their ability to work but they cannot bring a mile of motorway, a large piece of industrial machinery, a house or a GP surgery.
Across the world there is a strong correlation between the capital stock per worker and output per worker. In a super-productive, capital-intense Britain, drudge work would be automated and people freed up to get paid more by doing those things that only people can do. But the nature of these capital stocks is that they grow only slowly. In an ideal world our stock of stuff would grow much faster than the number of people. As a result there would be more stuff to go round, making us more productive. But having large amounts of migration means splitting or diluting that capital stock between more people.
In the 2021 census, 7.4 per cent of the population of England said they had arrived in the previous decade. Over that decade capital did not keep pace. We built 1.6 per cent more roads and 4 per cent more GP premises; opened 4.9 per cent more secondary schools; and the capital stock of machinery and equipment grew 4 per cent. So migration outpaced their growth.
The number of homes in England grew 8.5 per cent, only just greater than the growth of the population accounted for by migration, putting upward pressure on housing costs. Because people spend more on housing as they get richer, we need the amount of housing to significantly outpace population growth to make it more affordable. Yet in London the growth of the population accounted for by migration was faster than housing growth. Over the decade to 2021 the housing stock grew 10.7 per cent but 16.6 per cent of residents arrived from overseas, making that upward pressure even sharper in London.
Given that 67 per cent of private rented households in the capital are headed by someone born overseas, it is just stupid to say that migration is irrelevant to London’s housing challenges. Migrants are not “to blame” for the origin of these problems but the effect of migration in diluting the capital stock further and adding to our housing problem creates a challenge in exactly the areas of our economy where we have long-term problems.
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The downsides for existing residents in terms of housing pressure and capital dilution might be offset if those who come are big net fiscal contributors, paying lots more in tax than they get back in services. If Bill Gates walked into your pub and started buying everyone drinks, you would not complain that the pub suddenly got crowded.
Sensible countries such as Denmark, the Netherlands and Germany do a much better job than the UK of measuring the net tax contribution of different groups of migrants. In the UK the data is frustratingly patchy and limited.
Unhelpfully, the Office for National Statistics has only ever produced analysis by ethnicity rather than by whether people are migrants. In 2019 white people were large net taxpayers. Ethnic minorities were net recipients, but there was significant variation: Asian households were close to balance or small net taxpayers; black households were substantial net recipients.
This aligns with the finding from all the studies listed by the Oxford Migration Observatory that non-EU net migration has had a net fiscal cost overall but it is frustrating that this is the only official data. It lumps together migrants with British people from ethnic minorities and we can see from earnings statistics that within each ethnic group, those born in the UK unsurprisingly earn more than those who have migrated to the UK.
We can also see from other sources of data that there is huge variation between different groups of migrants. Via a Freedom of Information request to HM Revenue & Customs I have obtained new data on earnings by nationality. In general, citizens of richer countries earn more: people from western Europe and anglosphere countries are high earners. Citizens of poorer countries, such as Pakistan, Turkey and Bangladesh, generally earn less. That said, there are variations: Indian citizens earn much more than people from neighbouring countries.
There are also huge variations in rates of employment. Overall, working-age people (aged 20-64) who were born in the UK had a higher rate of employment than people who migrated to the UK. This should give pause to those who argue that all types of migration are always an economic benefit. More importantly, there is huge variation between different groups of migrants. For people born in countries such as Bangladesh and Somalia, the overall rate of employment is low and the rate of full-time employment is very low: in 2021 only 20 per cent and 23 per cent respectively of working-age people from those countries were working more than 30 hours a week, compared with 65 per cent and 71 per cent of those from Poland and New Zealand.
If we are to have a better debate about migration, the UK needs to do what other countries have done and get much better, more granular data on all these questions. We need to think more about the wider economic effects on the capital stock and housing and indeed wider considerations about quality of life.
A lot of commentary on migration still assumes that it leads to some sort of economic bonanza; a position that is increasingly untenable. It also treats migrants as homogeneous, when data reveals huge diversity. We should reduce migration by making it more selective and so aim to make Britain the grammar school of the western world.
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Neil O’Brien is Conservative MP for Harborough
Libby Purves is away
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