The backgroundfactFiction3 FactCheck: do immigrants pay their way?

Way back in 2011 we tackled the issue of “benefits tourism” – the notion that immigrants were heading to Britain with no intention of working, intending only to access our benefits system.

We found little empirical evidence that the problem existed.

But ministers continued to sound the alarm. Last year Chris Grayling warned that Britain’s welfare state could be “a magnet for other parts of the world”.

Again, we found that the facts didn’t support his case.

We also shot down an MP who suggested that soaring demand in accident and emergency departments was partly down to increased immigration from eastern Europe.

In fact, the very research the politician used to try to prove his point showed that hospital admission rates among immigrants were half that of English-born people of the same age and sex.

Since then, more research has come out which suggests that while some migrant workers claim benefits, they tend to be givers, not takers.

The analysis

There is now a fairly large body of research on the fiscal impact of immigration, all of which says roughly the same thing: immigrants are generally net contributors to the British economy, paying more into the system in taxes than they take out by accessing public services.

In 2009 the Centre for Research and Analysis of Migration (CReAM) at University College London found that migrants from the A8 countries of central and eastern Europe who joined the EU in 2004 were 60 per cent less likely than native-born Brits to claim benefits, and 58 per cent less likely to live in council housing.

In every year since 2004 the A8 immigrants had paid in more than they had taken out. They were younger, better educated and less likely to claim state benefits, the researchers found.

The Office for Budget Responsibility agrees that “most recent evidence for the UK is supportive of the view that net inward migration has had a positive fiscal impact”, largely because migrants tend to be younger.

The OBR predicts that higher net migration would boost GDP and employment in the short to medium term, but warned that: “This effect would reverse over a longer time horizon, when those immigrants who remain in the UK reach old age.”

Earlier this year the OECD found that most advanced economies benefited slightly from immigration, despite what people living in those countries assumed (in the 2008 European Social Survey 44 per cent of people said immigrants receive more from the public coffers than they put in).

This was the key graph: when the blue columns are above the line, migrants are making a net contribution to the public finances. The beneficial effect in the UK was small but measurable

05 oecd FactCheck: do immigrants pay their way?

What’s new today?

The lastest study comes from CReAM again.

Now the researchers have looked at immigration from Europe and beyond between 1995 and 2012.

Taken as a whole, immigrants are less likely to claim benefits or tax credits, and about as likely to live in social housing.

But breaking down immigrants into those from the European Economic Area (EEA) and those from outside, and big differences emerge.

“Whereas EEA immigrants have made an overall positive fiscal contribution to the UK, the net fiscal balance of non-EEA immigrants is negative” the research concludes…”as it is for natives”.

That’s right: non-immigrants like FactCheck are a drain on the state. Oh dear.

And the researchers say they are probably underplaying all the positive effects of immigration, due to the difficulty of following what happens to the children of immigrants.

We think that the British-born descendants of immigrants tend to do better at school, so they may well make a relatively higher fiscal contribution than natives when they grow up, but it is impossible to quantify this effect so it has been left out of CReAM’s calculations.

Overall it’s a thumbs-up for immigrants, particularly for those from the EEA and for people who have come here since 2000.

Between 1995 and 2011 EEA immigrants paid in 4 per cent more than they took out, whereas native-born Brits only paid in 93 per cent of what they received.

Between 2001 and 2011 recent EEA immigrants contributed 34 per cent more than they took out, a net contribution of £22bn.

Government figures

The latest official findings from the Department of Work and Pensions chime with the thrust of this research too, although the figures are not directly comparable.

As at February 2013, 16.4 per cent of working-age UK nationals were claiming a working-age benefit compared to 6.7 per cent of non-UK nationals.

Of the 601,000 foreign nationals who registered for a national insurance number in 2011/12, 35,000 were claiming out-of-work benefits within six months.

That’s 5.9 per cent, down from 6.6 per cent the year before. Nearly nine out of 10 of the claims were for jobseekers’ allowance, which of course comes with strings attached: you have to sign on to prove you are looking for a job, and the payments can stop if you turn down work.

05 dwp FactCheck: do immigrants pay their way?

An ad hoc snapshot analysis carried out in February this year found that, of 5.5 million people claiming DWP working age benefits at the time, 397,000 (7 per cent) were non-UK nationals when they first got a National Insurance number.

That’s up from 371,000 (6.4 per cent) two years previously, but we there is a lot we don’t know about these people. We don’t know how many of these claimants have already paid for their “handouts” by paying into the system, how many are working part-time or, most importantly, how long they stay on the dole.

Until we know more, there is no evidence for the proposition that significant numbers of people come to the UK in search of a life on benefits.

By Patrick Worrall

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