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Executive summary

vii:
migration is likely to enhance economic growth and the welfare of both natives and migrants; and restrictions on migration are likely to have economic costs.

viii:
Migrants are highly concentrated - and increasingly so - in London, reflecting the size of the London labour market and the well-documented unmet labour demand in London.

There is little evidence that native workers are harmed by migration. There is considerable support for the view that migrants create new businesses and jobs and fill labour market gaps, improving productivity and reducing inflationary pressures. Continued skill shortages in some areas and sectors suggests that legal migration is, at present, insufficient to meet demand across a range of skill levels.

Migrants bring diverse skills, experience and know-how to the UK, and help to regenerate run-down areas;

Migration also has implications for the countries of origin. The migration of skilled workers, for example doctors or nurses, might in some circumstances have a negative impact on development and poverty reduction in poor countries,

Migrants bring a widening of consumer choice for the host population and significant cultural and academic contributions.

They do not disproportionately claim benefits,

Migration is important in helping to address skill shortages at all skill levels,

Rising illegal migration reflects a number of factors including unmet demand in the labour market (particularly, but not only) at the lower end,

Introduction:

1.3:    While migration is an integral part of globalisation, many discussions of globalisation focus exclusively on trade, investment and capital flows, and ignore the movement of people.

The economic theory of migration

2.1 Even very large differences in economic returns (measured by wages) are not sufficient to induce migration in most people. Factors other than the economic - including personal ties, cultural affinities, etc. - are also very important in the decision whether or not to migrate.

Does migration promote economic welfare?

2.6        migration is most likely to occur precisely when it is most likely to be welfare-enhancing. Countries which are abundant in labour will have lower wages than countries which are abundant in capital; workers will, if labour is mobile, have an incentive to migrate from the former to the latter, improving resource allocation overall.

Key trends

3.1 Britain is a country of immigration and of emigration. It has always been relatively open, and the British population is now, as it always has been, the result of successive influxes of migrants and the racial and cultural intermixture of those migrants with those who were already there.

3.2 It is also reasonably clear, if difficult to quantify, that Britain has benefited considerably, in both economic and cultural terms, as a result.

3.13 asylum seekers and illegal entrants and overstayers (and, to some extent, even family reunion migration) are influenced by economic forces as well as political ones. Research shows that where asylum seekers are in a position to choose, their choice of destination is driven primarily by accessibility, and by political factors, cultural, family and personal ties, and perceived economic opportunity.

trying to eliminate migration through immigration control policy alone is likely to be very difficult

Current immigration system

5.4             It should not be forgotten that more than 80 million people entered the UK in 1998, primarily British citizens returning and visitors, nearly double the figure of a decade ago. Of these, only 0.5 per cent were migrants.

The economic and social outcomes of migration

6.5           Migrants are not the same as ethnic minorities. The majority of migrants are white, and the majority of ethnic minorities are not migrants as they were born in the UK.

6.8             there is no principal source country of migration to the UK. The largest single identifiable group is UK nationals (mostly returning emigrants, though some are born abroad).

6.30       The "lump of labour" fallacy - that there are only a fixed number of jobs to go round - has been thoroughly discredited,

6.31    if migration of workers in a particular sector is restricted - say the IT sector - then it will not primarily be the case that the supply of, and wages of, native British IT workers will increase. The IT industry will simply shrink

6.32 Economy-wide skills shortages are significant, though they remain below the levels seen in the late 1980s. The fact that many migrants are concentrated in the industries and sectors where there are particular labour or skill shortages is clear both anecdotally and from the available data:

6.32       Health: 31 per cent of doctors and 13 per cent of nurses are non-UK born; in London 23 per cent and 47 per cent respectively. Half the expansion of the NHS over the last decade - that is, 8,000 of the additional 16,000 staff - had qualified abroad. A Royal College of Nursing survey reported 78 per cent of hospitals with medium to high recruitment difficulties.

A growing number of London education authorities are recruiting staff directly from abroad to address staff shortages in schools.

Higher education: In 1995-96, the Higher Education Statistics Agency showed that non-British nationals made up 12.5 per cent of academic and research staff,

IT: The increase in demand for specialist IT skills has been spectacular, and is expected to continue. Projections suggest that the IT services industry alone will need to recruit another 540,000 people between 1998 and 2009.

An estimated 70 per cent of catering jobs in London are filled by migrants

6.33  In health and education, wages are constrained by policy, and there are relatively clear procedures for recognising foreign credentials. Migration in these sectors, therefore, benefits the public sector - and hence the general public, as taxpayers and consumers of public services.

In relatively low paid and insecure sectors like catering and domestic services, unskilled natives are simply unwilling or unable, through lack of the most basic work-related skills (or a lack of mobility), to take the large number of available jobs. The effect of migration in these sectors is again to benefit firms, but it is not likely that natives are significantly disadvantaged: if migrants do not fill these jobs, they simply go unfilled or uncreated in the first place.

6.33 In all three cases there is a net economic benefit to the UK from filling the gaps through migration. The result of migration is to reduce inflationary pressures and increase the efficiency of firms.

6.35 London is the UK's largest labour market, accounting for around 15 per cent of all jobs. In addition, the well-documented unmet labour demand in London will attract migrants

6.42 I t is not clear that migration has, in practice, increased congestion and over crowding in London. The population of London has increased at the same rate as the UK population overall over the last 20 years, at a time when other major cities in the UK have been shrinking, causing problems of under-use, neglect and decay. That migration has helped to prevent this counter-urbanisation in London, and helped to regenerate otherwise run-down areas, suggests that the impact of migration can be both subtle and ambiguous.

6.44   the UK experiences substantial outflows of emigrants each year, in part reflecting the temporary nature of some of the migration to the UK, in part reflecting emigration of UK nationals. The more these emigrants keep in touch the more likely this emigration (in particular where it is of skilled workers) is to be beneficial to the UK. They will form networks, trade and investment links, and potentially return with improved skills etc. in due course.

Fiscal effects

6.47 The broader fiscal impact of migration is likely to be positive, because of migrants' favourable age distribution (a greater proportion of migrants are of working age),

the fiscal impact is likely to be more beneficial to the extent that migrants are working as opposed to not working, working legally rather than illegally,

6.49 Broadly speaking, over the life cycle, natives are a net fiscal burden while they are in compulsory (state-financed) education; net fiscal contributors when they are in employment; and net burdens again when they are unemployed, retired and when they require expensive medical services.

6.50   an initial analysis for the UK suggests that migrants contribute more in taxes and National Insurance than they consume in benefits and other public services.

We estimate that the foreign-born population contributes around 10 per cent more to Government revenues than they receive in Government expenditure, equivalent to perhaps £2.6 billion in 1998/99

Put another way, if there were no foreign-born people in the UK, taxes (or borrowing) would have to rise, or expenditure would have to be cut, by £2.6 billion (the equivalent of about 1 pence on the basic rate of income tax).

6.51   However, this analysis is reasonably clear that, on average and overall, migrants are not a burden on the public purse.

6.52 The foreign-born population claims the majority of social security benefits at or about the same rate as natives, according to LFS data. Migrants are more likely to be in receipt of unemployment and housing benefits, but less likely to be receiving sickness or disability benefits, or a state pension.

6.55 Migrants' experience of social exclusion cannot be measured. However, as for natives, lack of employment is a key cause of wider social exclusion. The data show that migrants do not disproportionately claim benefits.

6.57 Total sales in ethnic food in 1994 were valued at about £736 million, representing an extraordinary change in British eating habits. In 1996, there were 10,000 curry houses in Britain with 60,000 to 70,000 employees and a turnover of £1.5 billion - more than the steel, coal and shipbuilding industries put together. The market in ethnic food for home cooking was in 1996 worth £129 million a year.

6.62 Failure to integrate migrants into UK society and to allow them access to public services can lead to their being socially excluded in other respects, which can, in turn, cause personal and social problems. In part, social exclusion can be the result of entry and settlement controls designed to deter entry. Access to employment, health, housing and welfare services is determined by immigration status, as most of those subject to immigration restrictions are required to live without recourse to public funds (with the exception of emergency health care).

6.66        The long term impact of good or poor reception arrangements on subsequent social exclusion is therefore significant. A Home Office consultation paper has recognised the need to assist in the transfer from asylum to settled status: "There is a weight of evidence that refugees find difficulties in making the transition from support to independence and fulfiling their potential for development and contributions to society. _ there is a need to invest early in integration to promote a quick move from dependency to self-value and sufficiency through work and inclusion in community and society".

Where might policy be reviewed?            

7.10 Illegal migration has occurred for a number of reasons. In part because there is unmet demand in the labour market (particularly, but not only) at the lower end, and in part because of other exogenous pressures (including civil war, and economic, social and political instability). While improving control is a necessary condition for addressing this problem, it is unlikely to be sufficient. We need to examine the interaction of legal and illegal migration and its impact on different areas of the labour market.

7.11 The current entry control system is not sufficiently joined up with other areas of Government policy, and post-entry policies do not address social and economic objectives. In addition, there are a number of areas where policy could enhance migrants' economic and social contribution, in line with the Government's overall objectives, but is failing to do so :

Migrant settlement is a two-way process, depending both on the willingness and ability of the migrant to adapt and integrate, and on the extent to which the host society provides access to economic, social and political life. Significantly, neither the debate on social exclusion, nor the indexes used to measure it, have hitherto embraced migrants as a category to be considered.

It is often implied that there is a trade-off between economic growth and social stability, with more of one implying less of another. In fact, the analysis reported in Chapter 6 suggests that the two often go hand in hand: an economically beneficial migration policy will also have positive social impact, and vice versa.

7.14 Migration policy should be seen as a continuum, running from entry through to settlement and to social and economic integration. At the moment, most migrants cease to be regarded as an appropriate subject for policy once they pass entry control.

Exceptions are where they either break the rules, in which case they are subject to enforcement action,

7.15 Post-entry migration policy has a potentially powerful role in influencing migrants' economic and social outcomes and their economic and social impacts on natives. Thus there appears considerable scope for more substantive and co-ordinated post-entry policies designed to ensure that migration does indeed achieve the Government's economic and social objectives.

7.18 All of this research and analysis will make an important contribution to our understanding of migration and migrants' experiences and impacts in the UK. It will assist in identifying whether there are areas where policy should be reviewed, helping to inform the characteristics, criteria and design of any future policy development in this area.