Is 0.14% of the Population really more important than the Economy?

Red lines are the new thing.  Red lines make politicians sound resolute and assertive. This Red line however means the UK is prepared to risk its economy & spend billions to keep 90,000 people a year out of the country.

Theresa May has agreed with her cabinet that restricting immigration will be a red line in any negotiations with the EU, in a move that experts claim will end Britain’s membership of the single market.

So May and the government have put immigration at the very top of the priority list. Notice that “sovereignty”, the EU budget contribution or any of the other things brought up by Vote Leave aren’t red lines so these presumably are back on the table. Kwasi Kwarteng MP echoed this priority on Channel 4 news when he said “Freedom of Movement is a red line, I’m quite prepared to walk away from the Single Market” (though he appears to have changed his priorities somewhat).

kwasi
changing priorities of Kwasi Kwarteng MP

What I’m going to try to do here is to discard all the noise and propaganda and take this decision by May down to its essence, which is this:

This government is prepared to risk the economy and almost certainly lose billions of pounds in tax revenues in order to stop 90K people, 0.14% of the population, coming into the country every year.

This decision makes no economic sense and therefore can only be because this government has decided it is worth paying billions to keep these people out.

Strong statement? Well it comes down to 3 logical steps:

  • Why is it 90K people?
  • How much do these people cost the UK?
  • Why will it cost us Billions?

 

Firstly, why 90,000 people?  The figures for total population growth last year (EU, non-EU, births less deaths) are shown below.

EUpop
EU immigration reduction = 0.14% of UK population p/a

A 50% reduction in EU immigration (a fairly aggressive target) is 90K people per year, about 17% of total population growth and 0.14% of today’s UK population.  Why 50%?  Well clearly we will not eliminate EU immigration completely therefore lets assume it’s reduced by half.  It would take 7 years of constant reductions at this level to reduce the overall population by 1%.  There are no plans to repatriate anyone, in fact almost all Brexiters are pushing to guarantee the status of EU nationals.  Therefore, however many Europeans are here is irrelevant, this can only be about reducing the number coming in from now on.

 

So, how much do 90K people cost the state? Well the reality is they contribute to the UK, so they don’t “cost” anything, as shown in various studies. In any case the UK can refuse to support unemployed immigrants. Cameron also won the right to limit in work benefits for 4 years.  All of these points mean that the costs of  EU immigrants to the state are essentially zero.  It’s also the case that there is not a limited “job pool”, jobs create economic activity which creates new jobs etc.

However the Leave campaign dismissed these arguments and so let’s assume a “worst case” (and near impossible) scenario, namely the extreme where the 90K are all on out of work benefits (and claiming up to the £26K cap per household) OR they have displaced UK nationals in employment, in an average family size of 2 people, aged below 40 and with 1 in 4 being children and in education.

cost
Total possible UK cost per year = £1.4 Billion

The absolute maximum they could possibly cost the UK in the most extreme scenario is £1.4 Billion.  The reality is far closer to or even less than £0.

 

OK, but why will we lose billions?  Well we’ve had several months of Vote Leave pretending we could have it all, however now its reality and we’re down to hard choices.  There is only one red line, its not the Single market and therefore its not the economy.  The government will certainly hope to salvage as much of our previous relationship as possible but in the end they have made a choice.

That means 50% of our trade will be impacted, the only question is, how much will we lose and how long will it take to replace those losses with new trade elsewhere?

The City alone brought in £65 Billion in tax revenues in 2015.  A loss of 10% (through say the loss of financial passporting, a highly likely casualty ) would cost the UK government £6.5 Billion in tax revenue, or nearly 5X the total possible, most extreme case cost of those 90,000.

And that’s just the city.

It’s possible that the losses won’t be as high, however the point is, May is prepared to accept them and so is her government.

If the Conservatives are known for one thing it’s that they are trusted with the Economy, it was a constant refrain from Cameron, that everything flows from a strong one.

Yet here, for the first time, May and a Tory government are putting EU Immigration (not even all Immigration, just EU immigration) above the economy on the priority list.  There can be no doubt of this, she had to pick one, and that was her choice.

And we’re now back to that choice, with all the rhetoric stripped away.  Its 90K people per year, 1/6th of total population growth, 0.14% of total UK population.  These people cost between £0 and a theoretical £1.4B, and in reality they almost certainly contribute a net amount to the state .  At 0.14% per year additional population there will certainly be some impact on housing, jobs, wages and the NHS  but nothing that could not be managed by a competent government and again, it’s only 1/6 of total population growth anyway.  And by putting the single market lower down the priority list, and in particular exposing the City to difficulties, we stand to lose billions of pounds a year for several years with all the impacts that will have on the NHS, Schools and Services.

So here’s the final conclusion.  We can tell ourselves immigration is “unsustainable” and needs “reform”, that its putting pressures on public services whilst also saying we want to make things fairer for non EU immigrants.  We can tell ourselves any number of things.

But should we actually conclude that the UK as a nation just doesn’t want them, and that it is prepared to pay billions not to have them here?  And furthermore, that many politicians from all sides now appear to support this position, explicitly or implicitly?

Is this where the UK is now?

 

 

References

“The sector paid an estimated amount of total taxes in the region of £66.5bn, or 11.0% of total UK Government tax receipts (2014: 11.5%). This includes both taxes borne of £26.2bn and taxes collected of £40.3bn”

https://www.cityoflondon.gov.uk/business/economic-research-and-information/research-publications/Documents/Research-2015/Total-Tax-2015-OnlineFinal.pdf

 

“The half a million increase was driven by a record net migration figure of 335,000 to Britain and a 171,100 rise in “natural growth” – births minus deaths. The detailed figures confirm that the increase in immigration is swelling the ranks of twenty and thirtysomethings in Britain while the resident population is becoming more middle-aged.”

https://www.theguardian.com/world/2016/jun/23/uk-population-grew-half-million-net-migration-ons

 

“On 22 Jan 2014:Kwasi Kwarteng voted to support the that view that promoting jobs and growth in the EU, including by completing the EU Single Market, is the top priority.”

https://www.theyworkforyou.com/mp/24770/kwasi_kwarteng/spelthorne/divisions?policy=1065

costs nhs
Distribution of NHS costs

https://www.theguardian.com/society/2016/feb/01/ageing-britain-two-fifths-nhs-budget-spent-over-65s

 

“The average for all authorities across England is £4,550.54 per-pupil”

http://www.sec-ed.co.uk/news/how-much-per-pupil-funding-will-your-school-get

 

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32 thoughts on “Is 0.14% of the Population really more important than the Economy?

  1. Because the politicians are putting popularity over our national interest. Immigration over our economy. Saving at absolute most £1.4 billion to lose minimum of £5.6 billion. Who in the public sector thinks they will get a pay rise? Mps maybe? Who on benefits will lose out? Everyone. Which areas will keep the amount of subsidies they currently enjoy? None. Will the farmers manage to claw back the 50-60% of their income by raising prices? No. It is total nuts.

    Liked by 1 person

    1. Thanks Teresa – can I ask, do you think this is punchy enough? Is it short enough to get the message across? Want to make it tight and to the point. How does it flow? Also if you can check my figures I’d really appreciate it.

      Liked by 1 person

  2. Excellent points. Also, Spain already has regulations in place preventing EU nationals residing for more than 3 months in Spain unless they have a job, are self-employed or have sufficient means to support themselves and their families and private medical insurance (details on UK gov website). Last time I checked Spain were in the EU, so if UK also imposed those regs, immigration cost would be virtually zero.

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    1. Thanks – I saw someone saying once “yeah but those “studies” don’t include schools and NHS so they are worthless” – so I did some digging.

      The point I’m trying to make is “walk away from single market for 90K people? Are you all nuts??” – I hope this comes across

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      1. We already have a regulation stating you don’t get residence unless you are working, actively looking for work and doing so reasonably, etc. Without that, benefits can be withdrawn.
        Of course, TM would have had to publically enforce this for it to matter….

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      2. Mike, thanks for this. So is it fair to say that it’s entirely in our legal powers to refuse residence to people who are not in work or looking for work, but it’s a failure in our systems which prevents identification of these people (if they exist in great numbers, which I doubt). Therefore we are possibly exiting the EU because the UK is not able to effectively use the powers it already has?

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      3. Nog: “So is it fair to say that it’s entirely in our legal powers to refuse residence to people who are not in work or looking for work, but it’s a failure in our systems which prevents identification of these people (if they exist in great numbers, which I doubt).”

        Most continental countries have ID cards and compulsory residence registration, while the UK doesn’t (and there is very strong opposition to introducing these in the UK). Perhaps that’s the real issue — it is also why the UK has enough of a problem with illegal immigration that even the most Europhile of UK politicians rejected joining the Schengen zone.

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      4. I think there is definitely some legs in this, I might see if I can put together a “collaborative” blog for a few of us to work 0n – theme being “we can do a lot of stuff within the bounds of EU FoM in the UK, we just choose not to”

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    2. That’s not just Spain! That applies to every EU member state, including the UK. It’s what is written into the treaties. The UK government has those same rights and powers, it’s just that not many people realises they they do as the UK government rarely exercises them. It seems that many have voted to Leave in order to give the UK rights that it already has within the EU. It’s heartbreaking really.

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  3. Nog, I am a Remainer, but when working out figures we need to be v. careful – any small slip gives fuel to the “…therefore everything you say is wrong / suspect” argument.
    If we have migrants who work, they are taking up job positions.
    The Brexiter’s argument is that these jobs would have been taken by existing UK populace and so have a knock-on effect that someone else is forced into claiming benefits if they don’t get that job.
    That’s where the very real resentment comes from, and it’s not just xeonphobia.
    Clearly there are multiple, and complex issues going on (attitude to work, willingness to work at offered pay & conditions, etc., etc.) which changes the debate from immigration to enforcing fair working, etc. But the fact still remains that unless the immigration creates more additional jobs than it consumes, it looks like a net drain on the country.
    So when quoting figures you need to take that into account – ideally in the same sentence!

    Liked by 1 person

    1. Good point. I will amend with something like “worst case they are on benefits or they displace someone onto benefits”

      It’s tricky, I normally write very long blogs but I’m trying to make a very targeted point, and paint the extreme case. Will think on what you say, thanks.

      Like

    2. David, made this slight change to reflect your comments. May refine later this evening, basically saying there is not a limited job pool but lets assume either all migrants are on benefits or they have displaced UK nationals. The figures should more or less stay the same, its just someone else claiming benefits. Please let me know what you think.

      “So, how much do 90K people cost the state? Well the reality is they contribute to the UK, so they don’t “cost” anything, as shown in various studies. In any case the UK can refuse to support unemployed immigrants. Cameron also won the right to limit in work benefits for 4 years. All of these points mean that the costs of EU immigrants to the state are essentially zero. It’s also the case that there is not a limited “job pool”, jobs create economic activity which creates new jobs etc.

      However the Leave campaign dismissed these arguments and so let’s assume a “worst case” (and near impossible) scenario, namely the extreme where the 90K are all on out of work benefits (and claiming up to the £26K cap per household) OR they have displaced UK nationals in employment, in an average family size of 2 people, aged below 40 and with 1 in 4 being children and in education.”

      Like

  4. Quick note to say, the emergency brake deal is off the table as it had a clause in that required the Brexit vote to be for remain. This has not amused a number of our EU partners as they were interested in the brake too but are unable to make use of it now.

    Liked by 1 person

    1. Isn’t it a shame. 7 year emergency break and no migrant claiming benefits until paying taxes and NI for 4 years were dismissed as worthless deals. They were what leave wanted but they believed the nonsense purely because they didn’t like the Tories and knew to leave was to stick it to them. Obviously, some must have realised the significance but not many I’ll bet. Huge under reporting of these deals at the time. If only the govt had been more pro active with ads and fb posts even tv ads if possible who knows what would’ve happened. I’m disgusted by the lack of effort put in by most MPs. In NW it seemed if they campaigned like a GE, the area went remain. Despite being similar demographics to the ward next door.

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      1. The deal was politically more important than it was economically, the number of EU nationals claiming UK benefits is very small and much lower than similar groups of UK nationals.

        The deal seemed to be more about punishing low paid EU workers in the UK than supporting lower paid UK workers.

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  5. Anti-immigration organizations such as MigrationWatch seem in their rhetoric to concentrate on the UK’s overall population level rather than on the composition of that population.

    I suspect to them, the big prize with Brexit wouldn’t be reducing or eliminating immigration from the EU, but reopening freedom of movement with Australia, New Zealand and Canada — all of which are both English-speaking and thinly populated, and thus ideal places to send “excess” Britons to.

    Like

  6. I think you’re missing one important factor: that high profile politicians are, mostly, not very bright. May, clearly, isn’t the sharpest knife in a collection of blunt knives.

    It is a serious point that government ministers are, by and large, not mentally equipped to deal with the challenges they face. (I read only today that Mr Gove had an animus against giving school children careers advice, eg via the Connexions service which he axed.)

    Like

    1. Thanks Jeremy, and I honestly mean this. Call me naïve but I didn’t realise until perhaps 6 months ago that your statement was correct.

      I lost interest in politics for about 10-15 years and back in my 20s….well politicians were generally fairly bright. Now I realise that they are not and I think this stuff genuinely stumps them.

      How can I as a layperson know with a bit of reading that bilateral deals with Germany are illegal yet davis, an ex European minister, apparently didn’t have a clue?

      Like

      1. I think there is a difference between a politician affecting not to know, or understand, something and them actually not knowing or understanding it. Think of Boris Johnson and his red bus. Clearly the £350m claim painted on the side was simply impossible. (Incidentally, although Johnson is often described as clever, how stupid was it not to have a plan to at least talk about the day after he won?)

        The other aspect of high profile politicians worth taking into account is their capacity for self-aggrandisement. Indeed, until I have evidence to the contrary, I shall believe that each high profile politician makes this a higher priority than anything else. This often takes the form of covertly pursuing the interests of special interest groups (usually corporate businesses) to the exclusion of those of the electorate where the two are incompatible.

        You probably have to go back to Macmillan or Grimond if you want a reasonably decent politician.

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  7. Freedom of Movement with Canada, Australia & New Zealand has been historically outward. The prize for Brexit was in convincing the UK Asian population to vote for Brexit in the expectation that their families would henceforth get preference over EU nationals when it came to inward Migration. Put simply it was about persuading UK immigrant families & descendants to vote for what is an inherently racist agenda

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  8. Timjdfletcher, well said, you are absolutely correct. Now it’s about getting people to realise that our govt already has the power to do a lot of the things they wanted out for and making ‘regret’ the name of the day.

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  9. “…should we actually conclude that the UK as a nation just doesn’t want them, and that it is prepared to pay billions not to have them here?” – almost. Having examined all the arguments put forward for leaving the EU, the ONLY argument that 100% withstands close logical inspection is “I don’t like foreigners and I’m willing to pay any price in order to reduce their numbers by even a tiny amount”. That said, I believe that only a small minority (maybe 10-15% of the UK electorate) would still feel this way even if they genuinely understood the astronomical cost to the UK (both economic and geopolitical) of leaving, which most Brexiters clearly do not, preferring instead to believe the “pleasant fictions” peddled to them by the Leave campaigns, and the tabloid media.

    Like

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