Should we welcome immigrants?

Immigration remains a big political issue, despite studies showing that newcomers bring an economy net benefits. Why? Simon Wilson reports.

How big an issue is immigration?

Politically speaking, it's getting bigger all the time. When YouGov asks "what are the most important issues facing the country" in its monthly poll, immigration is now consistently ranked second only to the economy. A Transatlantic Trends survey this summer found that Britons are more likely than other similar nations to see immigration as a problem. Yet these worries are not necessarily driven by personal experience.

Those most concerned about the issue tend to live in areas with relatively few immigrants. And when YouGov asks about the issues affecting "you and your family", immigration drops down the agenda to number four or five. This disparity could be because we tend to overestimate the number of immigrants. On average, people believe that they make up 31% of the UK population, when the actual figure is around half that.

So it's a myth that immigration is ballooning?

Not at all. Since the early 1990s the native population of Britain has been remarkably stable at about 52 million, and almost all the population growth since then has been down to an increase in newcomers.

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In some areas of the country the make-up of the population has shifted substantially. The 2011 Census showed that 37% of London residents were born outside Britain. There's no question that immigration is having a measurable effect on Britain so even if some perceptions are exaggerated, politicians can't dismiss the electorate's concerns.

What are the politicians doing in response?

Sounding tough. The Tories recently announced draconian proposals, such as obliging landlords and even doctors to check the immigration status of their tenants and patients. And while Ed Miliband, the proud son of migrants himself, frequently repeats his mantra that "Britain has benefited over many generations from the contributions of immigrants welcomed to our shores", his party is as keen as the Tories to show muscle on the issue.

Labour regularly accuses the Coalition of losing control of the UK's borders, has argued that low-skilled immigration is now too high, and now advocates even more extreme measures than the Tories in some instances such as not letting manufacturing employers operate foreigner-only shifts.

Do migrants benefit the UK?

Economically they don't seem to be doing much harm. Research by two academics at University College London (UCL)found that migrants to the UK since 1999 have paid £25bn more in tax than they've taken in benefits. The bulk of this net positive contribution (£22bn) is accounted for by Europeans, who contribute 34% more than they take; non-Europeans are net contributors by just 2%.

The UCL research also found that new arrivals since 1999 are better educated, 45% less likely than natives to receive benefits or tax credits, and 3% less likely to live in social housing. "Given this evidence, claims about benefit tourism' by European Economic Area (EEA) migrants seem to be disconnected from reality," conclude the authors.

What's the opposing view?

That surveys like the one from UCL include all kinds of highly paid French bankers, Italian fashion designers and German web-whizzes. It's not migration from the pre-2004 EU that most natives are worried about: it's mass immigration from poor countries in eastern Europe, and illegal immigration by non-skilled people from everywhere.

According to a Home Office report this month, illegal immigrants cost the UK taxpayer an estimated £4,250 each in the value of public services they use each year. That's a total cost of £3.1bn, based on an estimate of 750,000 for the number of illegal migrants.

Who benefits from migration?

As development economist Paul Collier points out in his recent book Exodus, it's clear who benefits most: the migrants. Their incomes rise and their productivity soars because they're typically "escaping from counties with dysfunctional social models". For poor countries, some emigration can be good the $400bn sent home each year by diasporas is four times all international aid put together but too much is damaging.

For rich countries, the economic effects have in the past been broadly neutral or positive, Collier argues but he points out that migration is prone to acceleration, since it creates diasporas that make further migration easier. That creates the conditions for "unabsorbed" diasporas, too much cultural heterogeneity and a decline in the social solidarity underpinning a welfare state. Collier sees immigration as a social and cultural issue, rather than primarily an economic one.

What should governments do?

One step might be to enforce the minimum wage, so that employers who routinely offer immigrants work at far below that wage hotels, restaurants, care homes, construction sites, cleaning firms, leaflet delivery outfits can no longer gain an advantage by doing so. Right now, "the minimum wage is immigration policy", reckons The Economist.

Paul Collier argues that countries such as Britain could peg the number of immigrants to how well previous arrivals have integrated. He would welcome more skilled migrants and students, but curb immigrants' rights to bring in family members.

As for illegal immigrants, he proposes to let them register as guest workers who pay taxes but don't receive benefits. The truth is, as Collier puts it, that mass migration is "a temporary response to an ugly phase in which prosperity has not yet globalised".

Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.   

Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.