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Original poster

Lower migration and the tax gap: raise taxes or ease restrictions?

260 replies

Mouldemort · 28/09/2026 12:50

James Cleverly introduced some serious restrictions on immigration, which Labour have upheld. Mahmood is going to introduce further restrictions. This has had the effect of reducing immigration substantially and forecast immigration (yes, even taking account the new method of counting.)

Immigrants, especially new immigrants, are disproportionate contributors to the UK's tax take, because they tend to be high earners and have no recourse to public funds. The low earners (who have mainly been blocked) are the bedrock of social care. The decrease in immigration has been more that the Chancellor planned for, so that leaves a substantial tax gap - at least £4bn and possibly £6.5bn annually.

Note this is from the Times, not a bastion of leftist thought.

So the question is, what do we do about this? Are you willing to pay higher taxes to pay for the shortfall? Should we lift restrictions on immigration to keep taxes lower?

Rejoining the single market or at least the customs union might help, but the same people who oppose higher taxes also oppose immigration and a closer connection the the EU

"Falling migration numbers could cost the chancellor as much as £7bn in fiscal headroom as he writes his first budget, The Times has been told. Government insiders believe that John Healey, who already faced an uphill battle to balance the books next month, is likely to have an even bigger challenge after immigration significantly undershot projections from the Office for Budget Responsibility (OBR). The Institute for Fiscal Studies think tank estimated last month that the success of Shabana Mahmood’s reforms, which have seen net migration cut to the low hundreds of thousands, could cost Healey some £4bn. Labour sources familiar with the budget process, however, said that the figure was now closer to £6.5bn. The OBR’s migration forecasts have been consistently higher than real numbers in recent years. Treasury officials, who have long expected Mahmood’s reforms to cause a hit to headroom, described the number as “pure speculation” but did not deny that Healey would have to contend with a larger funding gap than expected because of falling migration"

"At the same time, the OBR also observed that a ‘low migration’ scenario would – even after taking account of reduced pressures on public spending – push up borrowing by about £14 billion per year in 2028-29, considerably more than the cost of a 2p cut in National Insurance contributions, and raise the debt to GDP ratio – the government’s key fiscal target – by about 2.5%, or about £75 billion"

"In the short term, the biggest impact will be on social care, already struggling with workforce pressures and years of underfunding. Over the last two years, only a very large influx of migrant workers – 70,000 new starters in the last year – has saved the sector from an even deeper crisis. If the fall in visas issued is sustained, and there is not a large infusion of taxpayer funds, prospects are bleak."

https://www.thetimes.com/uk/politics/article/falling-migration-john-healey-headroom-zsw9rdcnr

https://ukandeu.ac.uk/immigration-is-falling-but-the-economic-cost-may-be-high/

Verifying Device

https://www.thetimes.com/uk/politics/article/falling-migration-john-healey-headroom-zsw9rdcnr

OP posts:
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RedTagAlan · 28/09/2026 15:18

Hedgerowmanager · 28/09/2026 15:07

Cut welfare.

Show quote history

But most of the money paid in welfare goes back into the economy. And that economy pays tax.

Consider something like bread. Zero VAT. But the farmers, the drivers, the bakers, all pay tax. So a chunk of that goes back to government.

So lets change the system where the rich get richer. That does not mean they buy more bread. But now the poor can't afford bread. Bread sales go down, bread price goes up, because economy of scale.

Cut benefits, and tax revenues go down.

senua · 28/09/2026 15:12

To quote the OP "In the short term ...
The answer is: stop thinking in the short term.

Hedgerowmanager · 28/09/2026 15:07

Mouldemort · 28/09/2026 15:05

You've avoided the question. How would you like us to pay for the net shortfall to the Treasury?

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Cut welfare.

Original poster
Mouldemort · 28/09/2026 15:05

Badbadbunny · 28/09/2026 14:49

Nothing wrong with immigrants who are highly qualified/skilled and WILL be relatively high earners and doing high quality work.

The problems are the ones who aren't, i.e. non working family members/spouses, their generally above average number of dependent children, dependent elderly relatives, and the sheer number "working" in the black economy paying no taxes etc.

We need to get the balance right, have proper controls, etc. We need the "doctors and engineers", not the shirkers and food delivery cyclists!

You've avoided the question. How would you like us to pay for the net shortfall to the Treasury?

OP posts:
MrsBennetsPoorNervesAreBack · 28/09/2026 15:03

Pineneedlesincarpet · 28/09/2026 14:55

Get those people not in work into work that can work. There are 1.2 million of them. AI will mean we will have a lot more people unemployed over the next few years. We shouldn't be importing people who will need to rely on taxpayers. I feel this argument has already been had and won in the country?

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Has the argument actually been had and won? I'm not convinced that it has.

What exactly are you proposing needs to happen to get all of these people back into work and contributing at a level which will replace the lost tax revenue?

RedTagAlan · 28/09/2026 15:02

To quote the OP " "In the short term, the biggest impact will be on social care, already struggling with workforce pressures and years of underfunding."

I think there is another factor in here, and reform will make it even worse. Privatization.

We have ended up with loads of private companies, all competing on cost. This drives down the wages of people working in this sector, to the point where they need government benefits to survive. And the companies, who are being paid for by the taxpayer for services, all have shareholders, who are taking a cut.

We should be bringing public services back into public ownership, not farming them out to the lowest bidder, who then takes a chunk of the money.

To me, it's like the government pay an agency to do something. The agency charges 20 quid an hour. Pays the worker 10 quid and keeps 10. Meanwhile, the worker can't live on a tenner, so the government pay them an
extra fiver in benefits.

Cut out the agency, and the guv could pay 15 to the worker, and save a fiver cos they are not paying the agency.

Over simple I know. But hey.

Pineneedlesincarpet · 28/09/2026 14:55

MrsBennetsPoorNervesAreBack · 28/09/2026 14:42

Your response seems to be saying that you think the benefits of lower immigration are worth any cost. You are entitled to hold that opinion. However, you have not responded directly to the OP's question about what you think we should do about the lost revenue.

Would you support raising taxes to cover the shortfall? More borrowing? Or something else?

Show quote history

Get those people not in work into work that can work. There are 1.2 million of them. AI will mean we will have a lot more people unemployed over the next few years. We shouldn't be importing people who will need to rely on taxpayers. I feel this argument has already been had and won in the country?

Badbadbunny · 28/09/2026 14:49

Nothing wrong with immigrants who are highly qualified/skilled and WILL be relatively high earners and doing high quality work.

The problems are the ones who aren't, i.e. non working family members/spouses, their generally above average number of dependent children, dependent elderly relatives, and the sheer number "working" in the black economy paying no taxes etc.

We need to get the balance right, have proper controls, etc. We need the "doctors and engineers", not the shirkers and food delivery cyclists!

MrsBennetsPoorNervesAreBack · 28/09/2026 14:42

DogsDinner · 28/09/2026 14:32

Immigration is making us poorer in so many ways. We certainly don’t need more of it.

Yes, governments love it because it increases GDP. It doesn’t increase GDP per capita though, which is the only thing that would make us better off. We then have an extra 13 million people in the country, all using the same limited resources.

Governments also love it because, as you say, for the first 5 years, legal immigrants are very limited in what they can claim from the state. So the costs are kicked down the road to the next party to be voted in.

The care worker visa was an absolute disaster, rife with fraud and corruption. We imported approximately £300k people, some close to retirement age, who will now cost the country anything from 10 billion to 60 billion, unless labour’s proposed reforms come to pass.

At least having imported all these people at a great cost, we no longer have any unfilled vacancies, right?

That is just the financial cost. We are already way past what this island can comfortably support. Unless we want to eventually concrete over every inch of it, we have to call a halt at some point. Immigration is still extremely high by any standards. It is no longer a million extra people a year though, that is true.

I would choose quality of life over GDP every time.

Your response seems to be saying that you think the benefits of lower immigration are worth any cost. You are entitled to hold that opinion. However, you have not responded directly to the OP's question about what you think we should do about the lost revenue.

Would you support raising taxes to cover the shortfall? More borrowing? Or something else?

DogsDinner · 28/09/2026 14:32

Immigration is making us poorer in so many ways. We certainly don’t need more of it.

Yes, governments love it because it increases GDP. It doesn’t increase GDP per capita though, which is the only thing that would make us better off. We then have an extra 13 million people in the country, all using the same limited resources.

Governments also love it because, as you say, for the first 5 years, legal immigrants are very limited in what they can claim from the state. So the costs are kicked down the road to the next party to be voted in.

The care worker visa was an absolute disaster, rife with fraud and corruption. We imported approximately £300k people, some close to retirement age, who will now cost the country anything from 10 billion to 60 billion, unless labour’s proposed reforms come to pass.

At least having imported all these people at a great cost, we no longer have any unfilled vacancies, right?

That is just the financial cost. We are already way past what this island can comfortably support. Unless we want to eventually concrete over every inch of it, we have to call a halt at some point. Immigration is still extremely high by any standards. It is no longer a million extra people a year though, that is true.

I would choose quality of life over GDP every time.