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/

Yes! That’s exactly the type of information that @Mouldemortdoesn’t seem to have read or considered. Technically, there is a fiscal gap identified in the numbers that the treasury measures because we are charging fewer people immigration fees to come to the U.K. and to work in jobs that are undersubscribed

BUT

1). The counterfactual (of perhaps someone who is underemployed working in that job, or care workers being paid more as a result is not modelled at all, so it looks as if someone coming in to work is +1 Job for the U.K. in the figures

AND

2. the person who comes in is only counted as a short term benefit and all the costs of providing for that person long term are not measured in official statistics long term at all.

As a result, I think it’s debatable whether even in the short term, less immigration of low paid workers truly costs us money (you can only measure what you count) but what figures there are suggests it is at best a temporal thing and it would be a saving in the long term. I’d happily pay £1 of tax now to get £100 of benefit in 30 years’ time. Wouldn’t anyone?!

@renovationchoas a lot of of them leave anyway. The Visa isn’t tied to the job or the sector. I agree, it’s perfectly normal for a work Visa to be tied to a job. Lots of countries do this.

I’d happily pay £1 of tax now to get £100 of benefit in 30 years’ time. Wouldn’t anyone?!

I wouldn't. I pay more than enough taxes, thank you very much. Before I agree to pay a penny more I want to see welfare system reformed. Until then I refuse - I retired much earlier than I originally planned and took all steps possible to protect my DC's inheritance.

@nearlylovemyusernamei’d prefer that, mostly because the welfare system contains ridiculous disincentives to work, but I’m also happy to do short term pain for long term gain, so that my kids get a Britain that is less dysfunctional.

@EmeraldRouletteyes, it’s totally ridiculous and very poor value for money. Try pitching this system in Australia and NZ or many EU countries and you’d be absolutely laughed at!

@renovationchoas every single adult immigrant who comes here to work costs less than every single British person doing the same job, because we have not paid the costs of education and child rearing. Unless you think low paid jobs are a social ill, and we would be better off without those jobs being done then immigrants pay more tax. And as the report says:

“One of the main reasons non-EEA migrants were consistently found to make a negative net fiscal contribution is that they were more likely to have dependent children, leading to higher spending on education and increased family benefit and tax credit payments. These static estimates do not account for the fact that the fiscal costs of educating migrant children may later be offset when those children reach adulthood, enter the labour market, and pay taxes.”

All people on low paid jobs follow the same profile, which is why saying an immigrant care worker is a net cost when a native worker costs more is ridiculous.

And raising future citizens is a benefit, not a cost,

The obvious solution - pay care workers more money does not occur to people because they would rather have a broken care system than nationalise it and spread the cost.

@Mouldemort

The governments own body, the OBR, has estimated that the Boriswave will cost nearly half a million each in state support by the time they are 80. If 2 million people stay, that is one trillion pounds over the next 40 or 50 years.

Perhaps you could tell us what taxes you would raise to pay this bill?

People on low pay overwhelmingly stay on low pay for most of their lives.

We don’t have to do this to ourselves. We do not owe these people a lifetime of benefits in return for 5 years of work.

It’s completely irrelevant if British citizens cost more than migrants (which I would certainly dispute, for reasons discussed previously in this thread).

We already have too many people chasing a dwindling supply of jobs, with very little idea what the future holds with regards to AI and automation.

I agree care workers should be paid a lot more, as I’ve previously said. This would encourage the large number of unemployed we already have in the country to take these jobs.

We shouldn’t be importing anyone who is not a net contributor.

@DogsDinner I have explained very clearly above why this theory is wrong and nothing you have said persuades me otherwise. The Tories were unselective in their immigration policy, for sure.

Care worker A is a British citizen, raised in Britain. Britain paid for their education and other associated costs.

Care worker B is raised abroad. None of those costs apply. They have no recourse to public funds for five years. If they want ILR, they will have to pay for it. If not, they will leave.

They are both paid the same. They are both required.

Which one costs more in tax?

Read the thread! We have already discussed that a lot of costs that should be attributed to the cost of immigration are not.

As I just said, it’s irrelevant anyway. Low paid British citizens are here, have a right to be here, and will be staying here. There is a balance between net recipients and net contributors.

If we add another 2 million net recipients, the country becomes poorer, the citizens become poorer. At a time when the government has just said they are down to their last 7 billion, and now that seems to have disappeared too.

I’ve read the thread and all OBR reports as well as the Migration Observatory one.

Please answer the very simple question I posed. They are filling required roles.

You are wasting your time debating with @Mouldemort , her mind is made up.
Most people agree with you though.

But @Mouldemortworker A will cost us that amount in costs whatever happens, even if they sit around unemployed. We can’t kick a citizen who doesn’t get a job out to work elsewhere, we can only try to incentivise them to work and not let people who might become a burden in. We need to ensure employment for all Worker As.

It’s clear that you started this thread without reading all the materials and it is evident that you don’t understand basic concepts like fixed costs (worker A) and variable costs (worker B).

They are filling required roles only until they receive ILR and get access to the same benefits as Brits.

There are millions of Brits refusing to fill these roles because they have access to benefits.

I do agree with you completely that these roles should be better paid, but simultaneously benefits must be slashed drastically so Brits are forced to take jobs which are currently filled by migrants. These Brits moving from welfare to employment will both pay tax and reduce government spend on welfare and by doing this will increase available funding for investment in social housing, defense etc.

Unemployment doesn't increase as a result of individual fecklessness, it changes as a result of economic conditions, and sanctions absolutely do not work in reducing unemployment. The number of able-bodied people who don't do child care choosing not to work is vanishingly small. All sanctions do is drive people into poverty.

You can help people into work by ending the claw back of benefits as people move back into work, and provide much better job centre support, but that costs a lot of money in the short term.

British people often avoid social care work because the sector suffers from chronically low pay, intense physical and emotional stress, and poor career prospects compared to alternative employment. Immigrants are willing to do this, with no expectation of benefits for many years.

Immigrants are willing to do this, with no expectation of benefits for many years.

For five years max. Until they get ILR.

As to reducing unemployment using sanctions?
I keep on linking this thread
To drop my hours to 22.5 even though I’m a single parent? | Mumsnet

The poster can work but chose to reduce her hours to get the same money from benefits rather than work. This illustrates the fundamental issue with our welfare system and needs to be fixed first. I don't blame this poster, but I do blame system, and you're very wrong if you think that the number of such cases in vanishingly small. Even if it small, it has to be precisely zero.
We must exhaust the pull on local labour, make unemployment count close to zero, only then allow immigration.

ETA: if you do this, there won't be a need for NMW - in order to survive the businesses will have to pay living wages appropriate for the area. But for this to happen the state must stop UC and the likes apart from time limited and linked to previous earnings support. And PIP assessments should be F2F and approved for sever cases only.

@nearlylovemyusername this is an argument to remove the effective 70% or higher cliff edge as benefits are clawed back. If people's benefits are withdrawn gradually, then they will be more likely to work more. Also, I think raising children is a benefit to society. Your plan is completely unfeasible. Any country with zero immigration is a dying country.

Increasing the minimum wage is the most effective way of reducing benefit. People will work poverty wages not to die. And cruelty to disabled people is repellent.

Agree 100%

It's absurd to import people into our country when we have a million NEETS and thousands of over 50s struggling to find work.

Some of the posts here seem to be saying foreign workers are cheaper to employ because we haven't had to pay for their schooling etc. But if we employ a load of foreign workers we then have to pay benefits to all the out of work British people. Do we really want to create an economic scrapheap of British people while importing more people from abroad? What are the implications for society, mental health etc, which are also bad for our economy?

I agree, benefits for able bodied people who choose not to work should be cut.

Also wages and conditions for jobs like care work should be improved so that British people can move into the roles that are needed instead of the current crazy situation where they are unemployeand we're importing people to do this very vital work.

Wages and conditions for care homes would have improved if immigration hadn't been used to keep them low. If the care homes couldn't recruit in the UK on the wages they were paying then wages would have had to increase, that's a free market in operation. The free market has been tampered with and so many are poorer for it.

Well if you employ Worker B you then have to pay dole money to Worker A. If you employ Worker A you don't have to pay dole money to Worker B.

So employing Worker A is obviously preferable. It also makes more sense for a whole load of non-financial reasons as having more people in the country puts a strain on all our services including our natural environment and our wildlife.

Agree 100%

That's why I find it so baffling that people on the left are so keen on immigration. What it mainly does is suppress wages, especially for the lowest paid. I think they just haven't thought it through properly.