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

[Mouldemort]

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/

@MeetMeOnTheCorner I don’t disagree, although I do think pensioners have been protected above others due to the sheer numbers of them. The outcry over means testing winter fuel was ridiculous.

I am very surprised that Burnham is talking about scrapping the triple lock

Yeah, my niece and nephew were born abroad to British parents. They are now all back in this country and would not be entitled to any nationality other than British!

@Mouldemort

I’d be happy to pay a bit more tax to fund it, given that it is a tax gap now that is also an investment in the future (low income migrants will cost us a lot over the longer term - the government’s own modelling acknowledges that)

We've lived through decades of austerity. Austerity, in the long term, is expensive. And that's the real short-termism.

Benefit expenditure as a percentage of GDP is the same as it was in 1999 (and when people say cut, they always mean benefits). Tax take is in the middle range of OECD countries. Poverty is expensive.

So, no, benefits have not ballooned. There is a £59bn gap of uncollected tax. Let's start there.

As an employer, what I want is good infrastructure, fair and rapid justice, a well educated, healthy population and a level playing field, so that bad employers don't get a competitive advantage,

The OBR figures take account of the tax take from immigrants - this is not news.

Low paid workers who pay little tax contribute to the economy in other ways - thousands and thousands of low paid workers support the NHS and the care system which would collapse without it. We could increase the tax take on low paid workers, but then they would be in poverty. These low costs are passed on to employers and customers, and the public sector, in lower wage costs.

So, the question still stands. How would you like to pay for the shortfall?

As I stated above - I want welfare system to be reformed so people are pushed into jobs that are currently filled by low skilled workers on visas. Released money should be directed into building of social housing so housing costs go down.
The example thread I linked above should not be possible - 18yo must not be allowed to claim benefits, they need to take whatever job in whatever part of the county rather than live on taxpayers money.
And then reduce tax and legal burden on employers so hiring picks up again.

And yes, low skilled foreigners do contribute to economy in other way then taxes, much more than idle Brits. But at present they become entitled to benefits in five years time and then there is no incentive for them to contribute. I'm all up for Shabana's change of ILR requirements

@Mouldemort

i don’t think our economy needs lots of people who work cash in hand in nail bars, or who work for 5 years in care, then get ILR and work in retail part time instead. The government’s own immigration minister has admitted that lots of people will leave care once they get ILR. It’s not sustainable.

@nearlylovemyusername There’s quite a lot of holes in your argument though. How can 18 year olds up sticks and move to where there are jobs? Have you not noticed that they will mostly be living in poorer areas and more work is in pricier areas? How do they pay rent in the wage an 18 year old can earn? It’s better to create the economic growth in all areas so employment is relatively local. Instead firms like Ineos move out and the government doesn’t wake up to the burdens it places on industry in terms of tax and high energy prices. We lean far too heavily towards state provision but nowhere near enough is done to support jobs. I definitely agree that employers need support to employ people by lowering their costs.

Housing is a problem. Many areas have land set aside for housing under development plans and policies. Then the actual planning permission takes years. It’s far too complex. Numerous public bodies get involved and the whole process crawls along. Plus many decent trades people left after Brexit causing a labour shortage and there’s a materials shortage too. Building homes takes a very very long time and no government gets near their targets. This one won’t either. Nor does government money build homes. Councils are not builders and haven’t been for decades. They are not in a position to actually build anything but housing associations can. But on what land? Using what expertise.

Well, that's an interesting aside. I'm not sure I like the implied contempt for low-waged workers.

How do you want to pay for the funding gap caused by reduced immigration?

@MeetMeOnTheCorner

How can 18 year olds up sticks and move to where there are jobs? Have you not noticed that they will mostly be living in poorer areas and more work is in pricier areas? How do they pay rent in the wage an 18 year old can earn?
They should do exactly the same what low skilled immigrants, the ones who move continents and find the jobs here. They need to go where jobs are and live in house shares if they can't find jobs locally. Our youth certainly prefer to live on benefits and this option should be removed from them.

It’s better to create the economic growth in all areas so employment is relatively local. Instead firms like Ineos move out and the government doesn’t wake up to the burdens it places on industry in terms of tax and high energy prices. We lean far too heavily towards state provision but nowhere near enough is done to support jobs. I definitely agree that employers need support to employ people by lowering their costs.
Absolutely! We need to create conditions which attracts businesses and job creators, and lowering taxes is one of the key steps to achieve it.

@Mouldemortit’s not implied contempt - it’s a reality that this type of immigration is not sustainable if you want to have improved public services, which depends on GDP PER CAPITA population growth. I’d prefer that we paid people in care more and made it a role that could be properly trained for from 16 at college when funding is available (one of the big barriers in care is that U.K. domestic carers will need someone to sponsor them through relevant qualifications after 18, so it is cheaper to hire from elsewhere and pay less wages for individual care businesses, but more expensive for society - it’s a misalignment that has nothing to do with how I feel about carers on an individual level. In fact, I think it is people who want to import carers from abroad and not fix the conditions or training that I think have contempt for care. I do have contempt for businesses that operate in the black economy though!

I’ve already answered your question though - I’d happily pay a small tax that makes up the tax gap, on the basis that we will have fewer people whose housing benefit and pension credit will need to be funded down the line and will get very expensive later, so it is a future saving. It’s a temporal thing, as government statistics tell us these low paid workers are very expensive later. The government’s own immigration modelling does not actually model the cost of migration over a lifetime, only the first 5 years. Taking people in and taking their immigration fees for 5 years, only for that benefit to society to unwind and be overtaken by costs in the next 30 years is a Ponzi scheme. Unfortunately for the government, the decision to extend ILR has meant the government actually have to model and discuss it - Shabana Mahmood has already admitted it will cost a lot of money to the taxpayer not to extend ILR for the Boriswave (which is why she said yesterday that it is about balancing fairness to the individual against fairness to society - the fairness to society is an admission that we are going to be paying for this).

The "government statistics tell us low paid workers are expensive later" is simply not true, because the contribution of low-paid workers isn't just the tax they pay, and a large proportion of their "costs" are children - new workers for the economic mill. Immigrants are less likely to claim benefits that native-born citizens.

As for how I would pay for this. I'd allow more immigration.

However, that's not happening, so I would:

Collect more of the £59bn of uncollected tax.

Cut the asylum management bill by allowing asylum seekers to apply at British consulates, and for those who have arrived irregularly let them work straight away while their cases are being heard.

Change estate tax so that it's based on the recipients wealth and income, and not the size of the estate.

@Mouldemort

Everything you have said is just wishful thinking. If you actually look into the economics of immigration using proper government statistics, the OBR evidence and of independent think tanks like the Migration Observatory. Every family worker brought in by a care worker costs an average of £115k over 30 years. Skilled migration of high earners is totally different and a net positive. When you read into it, you’ll realise that almost none of the costs of migration are priced into official GDP statistics - additional use of infrastructure and public services and increased resulting public spending and costs of retirement are all not priced into official statistics, because the government funds it all too difficult.

Change estate tax so that it's based on the recipients wealth and income, and not the size of the estate.

Yeah, sure - I work hard and earn so my parents estate will be taken to pay for benefits, incl immigrants. I sit on my arse with depression and bingo, I get my inheritance.
So glad you are not in charge of our taxes. Although to be fair, those who are at present aren't much better

Exactly.

And the problem is that UK isn't attractive for many high earning high flyers anymore. Our own high potentials and wealth creators are leaving.

Even this thread is typical - which taxes to raise or whom to import to pay for shortfall. We need to review the reason for shortfall and make it go away.

The OBR actually estimated that each low paid immigrant (and each dependent) would cost the country almost half a million pounds by the age of 80 (average life expectancy).

Over the next 5 years, we are possibly about to grant full access to state support to 1.6 million (could be more) mostly low paid immigrants. Does anyone think the country can actually afford this?

We have plenty of people to do these jobs already. I know this is anecdotal, but my experience is that competition is brutal for these jobs.

@DogsDinner

lots of nurses graduating from the U.K. without posts….terrible way to plan an economy

When it comes to care work, we should acknowledge that it can be a lot harder than other low paid work. But I think people would be happy to do it if the pay was substantially better.

I would suggest the government tops up the hourly rate to a level that attracts enough workers. It would certainly work out a lot cheaper than importing an immigrant and 2 dependents. Especially as they as they would likely just switch to other jobs as soon as they got ILR, as the government has acknowledged.

@renovationchoas

The nursing situation is appalling. Hospital departments were encouraged to set up contracts to only import nurses from abroad, often Philippines and Nigeria.

It has been acknowledged that we now have Nigerian nurses working in the NHS whose qualifications were faked. But apparently there’s nothing we can do about it.

Nor does British born. It's not the country, it's the culture. Those born abroad who are "like Brits" were born into British families/communities. Likewise, in the UK, we have British born people who don't speak English as they're in very restricted communities who show very little interest in integration.

I live in a minority ethnic area and it's polite and friendly.

It's the white British racists who oppose such people who are violent, brutish and a danger to women - not polite, kind and welcoming unlike my neighbours. I know who I think is more British.

@DogsDinner Of course there is! Ask for documented proof of qualifications. It’s a sackable offence to lie about qualifications and the nhs needs to wise up. Any other employer would have dealt with this.

If we can get this back on track.

It's not about your views on the criminal tendencies of asylum seekers, it's how you want to pay for the continuing decline in immigration.

If you don't have an answer to that, start your own thread.

You’re taking it as read that immigration will solve the problem. I think people have been trying to point out that immigration will only work for 5 years.

Boris imported many millions of low paid immigrants, apparently to suppress wages and inflation. Now we could be supporting them to the tune of half a million each for the next 50 years. Over 2 million people, possibly.

Now you want to do the same to support borrowing.

That will work for 5 years as well.

How do we get these immigrants who are not only net contributors now, but will be over their lifetime? The skilled worker visa is a joke, and was a travesty under Boris.

Governments don’t care. Short termism is their middle name.