Sir Andrew Green: What does immigration mean for public debt?

Sir Andrew Green is Chairman of Migrationwatch UK

Today’s report by the Office of Budget Responsibility (OBR) has been presented by some as a boost for the immigration lobby.  Substantial immigration does reduce the public debt / GDP ratio – but only for a period.

The more fundamental story, however, is that the OBR have found no definitive evidence of any particular economic benefit from immigration.  They therefore had to assume that migrants have the same economic characteristics as natives.

Any benefit from higher immigration, therefore, derives primarily from the fact that they have a higher proportion of working age.  This is what helps to reduce the ratio of debt to GDP.  As the OBR recognised, however, migrants also get older and add to age-related expenditure.  So higher migration only delays some of the fiscal challenges of an ageing population rather than resolving them permanently.  If we go down this road ever higher levels of immigration will be required as the last lot grow older – a kind of giant Ponzi scheme which, in effect, passes the problem on to our grand children.

What do today’s findings mean in terms of immigration policy?  The OBR calculations were based on net migration of 140,000 compared to no migration at all.  We should consider this against the present level of migration which has averaged 250,000 a year over the past ten years.  The Coalition government have succeeded in getting this down to about 150,000 a year and aim to get it to below 100,000 by the end of this Parliament.  The fiscal impact of immigration policy, therefore, is not the difference between zero and 140,000.  The practical question is the difference in fiscal effect between 90,000 and 140,000 which is likely to be substantially less.

That is just the arithmetic.  In the real world we have to consider the implications of an extra 14 million people, two thirds as a result of immigration, who would have a very considerable impact on both our society and our environment.  This goes far beyond the parched territory of accountancy.   The question may come down to millions more immigrants which would only postpone the problem or a few percent reduction in annual government expenditure.   I suspect that the public would be unimpressed by a policy that amounted to kicking the can down the road.