This is a case of doing the right thing – in a limited way – for the wrong reason. Concerns about immigration continue to gather strength, and the government is keen to address them. A poll by Survation in late 2013 found that 67 per cent think the coalition’s desire to reduce net migration to 100,000 a year does not go far enough. Over a quarter feel immigration in the last decade has brought no positive benefit to the UK.
But contrary to popular belief, migrants have brought net benefits to our economy and are net contributors. Christian Dustmann and Tomasso Frattini of the Centre for Research and Analysis of Migration found last year that recent European migrants, on average, made a net contribution of £2,610 to the public finances each year between 2007 and 2011.
The dynamism of many immigrants also makes a valuable contribution to UK life. Cinzia Rienzo of the National Institute of Economic and Social Research found that increased migration is associated with small but significant productivity gains in the wider economy. The free movement of labour within the EU has contributed to greater economic efficiency and prosperity (just as the relative immobility of some UK workers, for reasons like the state of the housing market, is a problem for all of us).
The welfare reforms themselves, however, should not be dismissed. It should be any government’s aim to reduce dependency – but for everyone, not just migrants. The Autumn Statement estimated that £180bn will be spent on benefits in 2013-14, with a further £28.8bn on tax credits. The importance of welfare reform, however, goes beyond pressure on the public finances. The main lesson we should take from programmes like Channel Four’s Benefits Street is that our current system has resulted in some recipients becoming trapped in a miserable state of bare survival and dependency.
Putting large numbers of people in a position where they depend on government subsidy for essentials like housing is both a desperately sad waste and a recipe for long-term disaster. If the aim of the government’s welfare changes is to prevent migrants from becoming a long-term charge on the state, it should come as a warning that research by former HMRC official Michael O’Connor found that migrants are less likely to claim out-of-work benefits like incapacity benefit or Jobseeker’s Allowance than native Brits (even if migrants may be more likely to claim working tax credits).
Britain’s welfare system desperately needs reform to reflect the principles of contribution and reciprocity. Supply-side reform to make the cost of essentials like housing affordable without subsidy is also vital. We should not do so to deal with an over-hyped immigration problem, however, but should apply those principles to address a domestic problem that is all too real.
Steve Davies is education director at the Institute of Economic Affairs.