Government Responds to House of Lords
Committee Report on
Economic Impact of Migration

By Charles Kelly

11 June 2008

The UK Government has today published a positive response to the House of Lords Committee's report on the economic impacts of migration.

The economic case for migration was “reinforced” as the Government has agreed with the Committee's recommendations, including the argument that Gross Domestic Product (GDP) per head should be the key test against which migration policy is judged.

Immigration has made a positive contribution to the GDP

Ministers acknowledged that since 1997 the UK has topped the G7 league table for growth in real GDP per head. In addition, the Government presented evidence showing that immigration has made a positive contribution to the GDP per capita of people born in the UK.

According to Government figures, new migration is estimated to have “added 0.5 per cent per annum to trend output growth between mid-2001 and mid-2006, by increasing the growth of the working age population, equivalent to £6bn in 2006 - a figure roughly equivalent to the size of the UK agriculture and fishing industry”.

The Home Office and independent research continues to find “no significant evidence of negative employment effects from migration”.

The Home Office announcement continues:

“Immigration has contributed to the success of the UK economy by helping to meet labour and skills shortages in the public and private sectors.

“Migration leads to an improved match between vacancies and available labour, and British workers may learn new skills from working alongside migrant workers.”

The evidence suggests that migrants on average make a stronger net fiscal contribution than those born in the UK.

The Government argues the new points system was far more effective than a cap on immigration because it covered more than twice as many people.

Speaking today Border and Immigration Minister Liam Byrne said:

"The simple truth is that if we want migration to benefit Britain we have to be very selective. That's why our points system will cover twice as many people as a cap.

"The bottom line is that our points system is wider in reach and faster to change than any other alternative. It has worked well in Australia for years and it will work well here.

"With powerful controls in place, migration can make Britain richer and that's what we're blunt about with the House of Lords today. The evidence is actually pretty clear. On average migrants are more likely to be in work, earn more and are therefore likely to be paying more tax, and are a lighter burden on public finances than those born in the UK.

"Our job now is to make sure migration does even more to profit Britain, economically and culturally. That is why when the points system started we set a zero cap on low skilled migration from outside Europe and made sure newcomers master English.

"But we should be candid that rapid change can and has created pressures, which is why Hazel Blears' cross-government plan published today is so welcome and why we propose asking newcomers to pay a little extra to pay for extra help where it is needed."

The full report is available at:

http://www.ukba.homeoffice.gov.uk/sitecontent/documents/aboutus/reports/economicimpactsmigration/

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