Migrants 'contribute more taxes'

Migrant workers picking crops in Cambridgeshire last year

Immigrants are contributing proportionately more in tax than UK-born workers, says a think tank.

Figures from the Institute for Public Policy Research suggest immigrants are paying an increasing share of the nation's taxes.

The organisation said migrants were now paying some £41bn in taxes despite a perception they were a drain.

Critics of current levels of migration say the figures do not properly assess the cost to public services.

Ministers have previously argued that migrants contribute £2.5bn more to the economy than they take in benefits - a figure in a Home Office report.

However, the authors of that report stressed their analysis was tentative and only related to one particular year when public finances were buoyant.

Five-year figures

Researchers at the IPPR, dubbed Tony Blair's favourite think tank, used the same basic methods as the Home Office report to investigate what happened over five years.

When the budget is in the black, migrant workers put in more than UK-born workers - when the budget is in the red, they take out less than UK-born workers Danny Sriskandarajah, IPPR

The team took tax and spending figures and looked at how they matched up to what the official Labour Force Survey says about workers in Britain. They adjusted the results to iron out economic swings which take the national accounts in and out of the red.

The report found that while there were now more immigrant workers than five years ago, they were still paying disproportionately more tax than would be expected for their share of the population. Their share of taxes was growing more rapidly than the rest of the workforce.

Furthermore, in years when there had been a budget deficit and all of the population took out more than they put in, the share taken by foreign-born workers was less per head than that taken by UK-born workers. The researchers included public spending on children of immigrants in their calculations.

Danny Sriskandarajah, senior research fellow at the IPPR, said the report showed that migrants were contributing more per head than they were before.

"When the budget is in the black, migrant workers put in more than UK-born workers," he said. "When the budget is in the red, they take out less than UK-born workers.

"Our analysis suggests that the contribution of immigrants to public finances is growing, and is likely to continue to grow in the near future.

"These observations have some important implications for policy and research. Most importantly, they confirm that far from being a drain on the public purse, immigrants actually contribute more than their share fiscally.

"Immigrants are not a homogenous group," said Mr Sriskandarajah. "Some groups will make relatively large fiscal contributions and others relatively small or negative ones. Researchers need to explore this diversity further."

Counter arguments

Arguments over the benefits of migration divide economists. In April 2004, Professor Robert Rowthorn of Cambridge University produced a paper for Civitas, a right-leaning think tank, saying the poorest lose the most if they have to compete with low-skilled foreign workers.

Campaign group Migrationwatch UK recently produced its own figures on the economic contribution of migrants, drawing on Prof Rowthorn's study and others.

The organisation says fuller international studies indicate the benefit to the host community is in fact extremely small or neutral.

One Dutch study cited by Migrationwatch UK suggested the net gain in income was likely to be either small or even negative.

Sir Andrew Green, head of Migrationwatch UK, said not all immigrants came to work, such as the third given permission to live in Britain because their family or spouse was here.

He has also criticised Sir Digby Jones, director general of the Confederation of British Industry, who last week said he could not support the Conservatives' proposed cap on economic immigration, saying the business chief's figures were misleading.