Brexit and migration

Posted by RDN under Economic affairs / Politics & campaigns on 27 June 2016

There is a nasty – or tasty – little secret about migration, tax, and welfare which I have never heard mentioned in mainstream debate, but it needs to be. That is: single, young migrants in employment are probably an economic benefit, taking one thing with another, but when they go on to make families, most of them are almost certainly not. In short, freedom of movement for work is mostly good; freedom of settlement or citizenship, not so much. 

 

Especially now, we need to be clearer about distinctions between migration for work (or labour migration) and migration for settlement.  The numbers of the former migrants probably need to be quite large and of the latter settlers, quite small. By the way, we need also (and in the context of other debates) to be clearer about the distinction between economic migrants, refugees, and asylum seekers.

I don’t think Brexiteers of the UKIPpy sort will get their heart’s desire. I imagine that the country will need its fruit and veg to be picked and its software and financial industries to thrive, and its elderly tended, and immigrants will prove very handy and even plain necessary for all that.

Much Bremain argument has said that immigrant labour is an economic plus. That might well be true. But is mass long-term settlement? Most British households are net beneficiaries of the welfare state: they pay in less over their lifetimes than they get out. [See below for research leads on this.] In the case of migrants, the right bit of Brexitish “taking control” might be to welcome many migrant workers but to hold out the prospect of permanent residence and citizenship only to those who demonstrate that their family income is quite high and likely to stay so for long enough for them to become net contributors.

If the above looks suspiciously illiberal, let’s remind ourselves that the countries whence the migrants came will get richer, and are probably more spacious, than England. The very merits the English find in these migrants will be valuable when they go home.

It is obvious that beyond welfare, widely defined, there is an infrastructure problem. This country is and will likely remain chronically averse to building roads, railways, airports and houses. We strain to accommodate a static, affluent, divorce-prone population and adding to it requires at the very least a tax-base which is full of net contributors, not the other thing.

By the way, the idea that most people are net consumers of tax is witheld from the British public because no-one dare be rude to the masses. It is easier to pretend that the welfare state is an insurance system, as it was initially – if perhaps disingenuously – proclaimed to be by its progenitors.


Research leads
I am not happy that I have nailed the numbers here. I think I understand that a household needs to be comfortably into the 4th quintile of gross income before it contributes more in tax than it benefits. So, £40,000 looks like the very minimum household income that would qualify a household as being a net contributor. But I have not yet found a nice disaggregation of household vs personal income. I think I understand that only 1:6 taxpayers (persons not households) are in the £32,000-plus income bracket that puts them in the “higher tax rate”. But beyond my slight confusion, I am left confident that there would be a way of doing the math and it could all lead to describing the income that a migrant would need to demonstrate before settling in the UK.

4.4m or 1 in 6 taxpayers are in the c£32,000+ “higher tax” band (2014) [not including 1 pc paying “top” rate]
http://www.telegraph.co.uk/news/politics/conservative/10686789/The-40p-tax-rate-should-be-scrapped.html
https://www.citizensadvice.org.uk/tax/income-tax-how-much-should-you-pay/income-tax-rates/

The effects of taxes and benefits on household income: 2012/13 [net tax/benefit data]
http://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/2014-06-26

Household disposable income and inequality: financial year ending 2015
https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyearending2015

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