The migrants and the money

Migrants contribute £25bn to UK economy

Migrants coming to the UK since the year 2000 have been less likely to receive benefits or use social housing than people already living in the country, according to a study that argues the new arrivals have made a net contribution of £25bn to public finances.

People from European Economic Area countries have been the most likely to make a positive contribution, paying about 34% more in taxes than they received in benefits over the 10 years from 2001 to 2011, according to the findings from University College London's migration research unit. Other immigrants paid about 2% more than they received.

Recent immigrants were 45% less likely to receive state benefits or tax credits than people native to the UK and 3% less likely to live in social housing, says the report written by Professor Christian Dustmann and Dr Tommaso Frattini.

But going back further to 1995, the study found that non-EEA immigrants arriving between that year and 2011 had claimed more in benefits than they paid in taxes, mainly because they had more children than people already living in Britain.

The academics also found that recent immigrants from the EEA – the EU plus Norway, Iceland and Liechtenstein – participated more in the labour market. Their study was based predominantly on official reports including the British Labour Force Survey as well as tax data and public expenditure statistics. The EEA immigrants were also more likely to have a university degree than British people.

Dustmann said: "Our research shows that in contrast with most other European countries, the UK attracts highly educated and skilled immigrants from within the EEA as well as from outside. What’s more, immigrants who arrived since 2000 have made a very sizeable net fiscal contribution and therefore helped to reduce the fiscal burden on UK-born workers.

"Our study also suggests that over the last decade or so the UK has benefitted fiscally from immigrants from EEA countries, who have put in considerably more in taxes and contributions than they received in benefits and transfers.

"Given this evidence, claims about 'benefit tourism' by EEA immigrants seem to be disconnected from reality."

Meanwhile a discussion paper published online by Professor John Salt and Dr Janet Dobson, also from UCL's migration research unit, argued the government's target to cut net migration to the UK to the tens of thousands by 2015 is "neither a useful tool nor a measure of policy effectiveness". The pair looked at progress towards the target since the coalition government was formed in 2010.

In its most recent figures the Office for National Statistics (ONS) revealed a net flow of 176,000 migrants into the UK in the year to December 2012, up from 153,000 in the year to September 2012, ending five consecutive quarters of decline.