What have immigrants contributed to the economy? Making sense of the headlines

Published: 6th Nov 2014

EU migrants have added £5 billion to the UK economy. Actually they've added £20 billion in a decade. Actually, migrants from outside the EU have cost us £115 billion over 20 years. Wait, actually they've cost us £118 billion. Or £120 billion, and that's over 17 years. Or was that referring to migrants overall?

Well done if you made sense of this week's headlines on how much migrants have cost the UK economy. Some appeared contradictory and others didn't say what 'kinds' of migrant they were referring to.

Yet all the headlines refer to the same report. What did it actually say and why is everybody drawing such different conclusions about it?

It's difficult to estimate fiscal contributions, and specific figures are unlikely to be precise

The report, published by the Centre for Research and Analysis of Migration, attempted (among other things) to estimate how much immigrants born abroad contribute to and draw from the UK coffers, and compares that to people born in the UK.

A lot of the research is based on assumptions, so small changes in those assumptions can create big changes in the answers. The report provides a number of alternative scenarios for what their figures might look like under different conditions.

Using such assumptions has been questioned in response to similar research in the past, and may well surface again following this week's report. We can't do justice to that particular debate here, although there is some acknowledgement that the latest research represents an improvement on previous estimates.

People who've arrived since 2000 have contributed more than they've taken away

Overall the research estimated that since 2000 (and up to 2011) the overall fiscal contributions of recent arrivals has been:

  • Immigrants from countries joining the EU in 2004 and 2007: +£5 billion
  • Immigrants from other European Economic Area (EEA) countries: +£15 billion
  • Immigrants from outside the EEA: +£5 billion

So some of the headlines added together the immigrants from within Europe, getting £20 billion worth of contributions.

That compares to large negative contributions of people born in the UK. Over the same period, they took out £617 billion more than they put in to the UK coffers.

Immigrants living in the UK between 1995 and 2011 took out more than they contributed

The researchers make this finding less prominent, which has drawn criticism. Their justification is that these findings don't tell us very much about the lifetime contributions of immigrants. They do however answer a more limited question, which we discuss below.

Between 1995 and 2011, the fiscal contributions were:

  • Immigrants from EEA countries: +£4 billion
  • Immigrants from outside the EEA: -£118 billion

That glaring negative contribution made it into many headlines. Some rounded it to £120 billion, others looked at all immigrants wherever they were from and got £114 billion overall, rounding to £115 billion.

Again, UK-born people have higher negative contributions - taking out £591 billion more than they put in in the same period.

Two very different groups of immigrants

So the main reason the figures in headlines differ is because the report looked at two very different groups of immigrants.

The first group comprises just those immigrants - whether from inside or outside the EEA - who've come to the UK since 2000, which is simple enough.

The second group is much broader. It doesn't matter when these people arrived in the UK, they just have to have been living here at some point between 1995 and 2011. So it could include anyone who arrived as far back as 1945 and was still in the UK 50 years later, as well as more recent immigrants.

The researchers say the contributions of the second group aren't very informative, because they might have been contributing to the UK for decades before 1995 and this won't be counted.

For instance, someone who came to the UK in 1945 to work and retired in 1995 may have paid huge amounts of tax in their working life, but then needs more healthcare and to draw on social benefits during their retirement. If you only viewed their contributions since 1995, they'd look like a large financial 'drain' on the state in spite of having given more than they took for the preceding 50 years.

And, of course, if that person had left the UK in 1994, their financial contributions - positive or negative - wouldn't show up at all.

So the findings for the second group do tell us about what immigrants living in the UK were estimated to have cost during that time - but it doesn't tell us about what immigrants contribute or cost in general - from when they arrive to when they leave the country (if they even do so).

None of the figures in the study suggest what the future contribution of immigrants might be.


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