Monday, October 22, 2007

Immigration Number Shocks

Blair's first cabinet: they changed Britain alright

Warning: this is another long post with a load of numbers.
Following Friday's soiree, I've had a riffle through the large collection of papers being submitted to the House of Lords enquiry into The Economic Impact of Immigration (see their website here).

Labour's own cross-departmental submission got a lot of coverage last week, with Home Office minister Liam Byrne still insisting that immigration has made us all better off (eg see the Grauniad's account here). The truth, as regular BOM readers will know, is that while immigration is estimated to have boosted overall GDP- by £6bn pa according to Byrne- it has done virtually nothing for per capita GDP: higher output is simply offset by having many more mouths to feed.

But the other submissions to the enquiry contain some new (to Tyler) and truly shocking stuff.

How many have come in?
  • At least 2.2m (net) over the last ten years, nearly 4% of the population

According to official ONS data (see here Table 2.1 and here T1.1 and T1.3), over the decade to mid-2006, the UK population increased by 2.4m to 60.6m (up 4.1%). Of that, the natural "home-grown" increase accounted for 0.9m, with 1.5m coming from net inward migration.

But as BOM readers will be acutely aware, many British citizens are leaving. In fact, over the last ten years a net 0.7m emigrated. This chart (taken from Prof Rowthorne's paper) gives the overall picture:

Which means that the net immigration of non-Brits was 2.2m, or 3.7% of the starting population. That is a staggering change in population mix during a single decade. It far exceeds the fabled arrival of the French Huguenots 300 years ago, who increased the population by less than 1% over a somewhat longer period.

And remember- these are just the official stats: there are unknown numbers of illegals here (we could probably all identify at least one), so real immigration levels almost certainly exceed the official count.

Where have they all come from?
  • About 1.5m have come the Third World, not Europe

Although much of the recent focus has been on arrivals from the new Eastern European EU members, according to the ONS, only about 150,000 came from those countries. Most of the 2.2m new immigrants were from elsewhere.

0.7m came from the New Commonwealth, mainly Africa and the Indian sub-continent. A further 0.3m came from the old Commonwealth (Australia, Canada, S Africa etc).

And a further 0.9m came from "elsewhere"- ie not Europe, not the Commonwealth, and not North America (net immigration from the US was roughly zero). Now, your guess is as good as mine where "elsewhere" is- the ONS doesn't spell it out- but it includes for example 0.1m from the Middle East. And we know there are now large numbers of Somalis here- some experts suggest up to 250,000.

0.7m from the New Commonwealth plus 0.9m from "elsewhere" equals 1.6m mainly from the Third World.

Where have they all gone?

  • 75% have gone to London and the South East

According to the submission from Migration Watch, between 1993 and 2005, 65% went to London, and a further 9% to the South East. So while there may be hundreds of Poles in Lincolnshire's potato fields, there are hundreds of thousands of migrant cleaners, waiters, and free newspaper pushers crowded into London.

Has it made us richer?

  • No: overall GDP per head has been little changed by immigration

The most widely quoted study is still the one published by the highly respected National Institute for Economic and Social Research (NIESR) last year (and see their Lords submssion here). They reckoned that immigration between 1997 and 2005 had raised GDP by 3.1%. But since it had increased the population by 3.8%, GDP per head had actually fallen.

Why might that be?

First, because many of these new immigrants take low-skilled jobs which produce less than the average UK worker. High productivity investment banking immigrants are very much the exception.

Second, they displace indigenous workers who join the dole queue (eg see this blog on the problems in Slough where hungry incomers from Eastern Europe consigned existing Pakistani immigrants to an 18% fall in their employment rate in three years).

Who are the winners and losers?

  • Winners include the immigrants, employers, and existing land/homeowners; losers include low-skilled workers and first-time home buyers

We may pity the poor immigrant, but by and large, immigrants come and stay because they gain.

Employers gain because the can hire labour more cheaply. Which is why their spokesmen like Digby Jones and the CBI favour mass immigration. And why the nanny and cleaner employing classes of West London are also in favour.

Existing land/homeowners gain because the increased demand for housing- especially in crowded areas like the South East- ramps up the value of their asset.

As for the losers, low-skilled indigenous workers lose bigtime as incomers bid down wages and take their jobs. True the government's own submission to the Lords enquiry says the opposite, asserting:

"There is no theoretical reason why immigration need either depress native wages or increase native unemployment."

But that is an outright lie. As the NIESR study reminds us, every economics undergraduate should know the Stolper-Samuelson theorem, one of the basic tenets of international trade theory:

"This suggests that when a number of different types of factor of production (capital, different types of labour) are used in the production process, an increase in the supply of one particular factor of production will in the short term reduce the price of that factor of production."

OK, enough economics textbooks, ed. And OK, under certain conditions, the increased supply of labour might induce a long-term increase in capital investment. But you get the despicable lying picture.

Home-buyers, especially first-timers, are also big losers. As the submission from Migration Watch says:

"In the period 1997-2005 the number of households in England is estimated to have increased by 1.563 million of which 592,000 (37.9%) are migrant households. Over the same period the housing stock has risen by 1.336 million. The rise in housing stock has therefore failed to keep up with the number of households formed – the shortage is nearly a quarter of a million homes. With net migration at half the levels experienced between 1997 and 2005 there would have been no shortfall between supply and demand – this shortfall accounted for much of the surge in house prices experienced in the period."

Does immigration help the public finances?

  • No: additional tax revenue has been offset by additional costs

The government likes to argue that the public finances benefit significantly because immigrants generally arrive in young adulthood, after they've already incurred the costs of getting educated. We therefore get a "free" tax-paying worker.

Commonsense says that's rubbish, especially given the number of children immigrants then tend to have here. The average native British woman has 1.6 children. The average immigrant woman has 2.2. And the average Pakistani woman in Britain has 4.7 children (eg see here).

The submission from Bob Rowthorne, Emeritus Professor of Economics at Cambridge, considers this whole question in detail, and concludes:

"Past immigration into the UK has not in aggregate led to a significant fiscal burden on the rest of society, nor has it provided a significant surplus. It has been broadly neutral."

And reading the detail of the government's own submission, you can see the only reason they can massage their own figures is by not counting the children of mixed immigrant marriages as a cost of immigration (see para 2.2.7).

Another gross distortion.

Where to from here?

  • Future immigration to add a further 10-15m by mid-century

Migration Watch provides the following eye-popping chart:

So without further immigration the population would fall to around 58m. But net immigration at around the current rate of 200,000 pa will lift the population to well over 70m.

A scary prospect, especially with 75% of those 10-15m immigrants likely to settle in the already overcrowded South East corner. Just for comparison, the much vaunted Thames Gateway was planned to add just 100,000 new homes, although that's now been jacked up to 160,000, and Yvette Cooper has recently been babbling incoherently about building 3 million by 2020.


Having waded through these various papers, I'm stunned. I had no idea the issues were quite as stark as this.

Of course, we're all completely used to the idea that the government lies to us, and routinely makes up stats to support its case. But this is serious. Unless they can somehow grip this problem, swamping won't be in it- we'll be standing on each other's shoulders.

And I'm left wondering what's really going on? Presumably they don't really believe that stuff about increasing GDP, or even the stuff about boosting the public finances. So why don't they act?

Or maybe they do believe it. After all, in 2003, Home Secretary Bonkers Bonkitt told us that there was "no obvious limit" to the number of immigrants, and that without them "growth would stall, economic flexibility and productivity would reduce".

Why do we let these arrogant fools rule us again?

PS There's a mass of useful immigration info from the 2001 Census here.


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