Do immigrants pay more in taxes than they claim in benefits and services?

Published: 5th Nov 2013

Last month's announcement of the government's proposed reforms to the immigration system was followed by a heated debate about the cost of providing benefits to EU nationals.

With this in mind, you might have thought a report which claims to go "substantially beyond" previous studies in investigating the costs and benefits that immigrants bring to the UK might provide some much needed clarity. However, looking at this morning's headlines, this isn't necessarily the case.

The Guardian and the BBC reported that the study showed that "migrants contribute £25bn to UK economy", while the Daily Mail reported on:

"How migrants from outside Europe leave a £100 billion hole in the public purse: Amount taken in benefits and services is 14% higher than money put back."

So can both headlines really be supported by the same report? In short, yes.

The study in question was published by the Centre for Research and Analysis on Migration at University College London. Using the Labour Force Survey and other government data, the researchers tracked immigrants arriving in the UK since the early 2000s and their impact upon public services, both in terms of contributions made through tax and the costs associated with providing them access to welfare and services.

Overall, the team found that:

"The net fiscal balance of overall immigration to the UK between 2001 and 2011 amounts... to a positive net contribution of about 25 billion GBP."

However, this positive contribution wasn't uniform across all migrant groups. While immigrants from the EEA (European Economic Area) paid 34% more in tax than they took out, those arriving from elsewhere "made a negative fiscal contribution overall," which was the finding picked up by the Daily Mail.

The difference might owe much to the demographic structure of the two groups: the reporters note that those arriving from outside the EEA were more likely than EEA nationals to have children who would go on to use educational services provided by the state.

As the OBR has previously noted, migrants in general tend to arrive on these shores when they're already of working age and they often leave before they retire, meaning they cost the state less in schooling and retirement benefits. This might also help to put another of the report's findings in context: that UK-born citizens paid for only 89% of the benefits and services they received through taxes, costing the state £624 billion between 2001 and 2011.


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