Recent polling shows that voters now see immigration as the most important issue facing the country, having recently overtaken health and the economy. The government is very conscious of this public concern, and in May the Immigration White Paper proposed a substantial reduction in net migration, but without specifying a target number (wisely in view of the history of broken promises). So, what is the real picture, and what might be the effect of a major reduction?
How many are there?
In the four years after Brexit net migration into the UK quadrupled to a peak of 906,000. By summer 2024 it had fallen back to 728,000, but that was still more than three times its pre-Brexit number.
Polling shows that most people have a dramatically skewed picture of the issue. Most believe that the majority of arrivals come via irregular ‘small boat’ crossings, although in reality these represent a tiny proportion of arrivals. Almost all of these make asylum claims, and two thirds of them are granted a right to stay.
By contrast, 95% of arrivals come legally with visas issued by the government. Furthermore, when asked about the specific groups who make up the vast majority of arrivals – doctors, social care staff, construction workers or fee-paying students – most people say they are in favour of immigration.
A struggling labour market
For decades, immigration has been used to fill gaps in the UK labour market. It is cheaper for employers and government to import people already qualified at someone else’s expense, than to invest in domestic education and training. And up to now, there has always been a strong demand from people who want to come to a country seen as a desirable place to live and work.
Like all developed countries, the UK is an ageing society. People are living much longer, and despite the rise in the state pension age, the proportion of the population in retirement is rising. The chart below, based on current government projections, shows the likely size of the population based on different assumptions about the level of net immigration. It shows clearly that, without immigration, the size of the population will be falling by 2031, and most of that fall will be in the number of working age people. So, to pay the pensions of retirees at current levels, either working age adults must become more productive or we must import more workers.
Since the economic crash of 2008, the UK labour market has experienced two major shocks. First, Brexit led to the departure of 330,000 workers (1% of the workforce), causing major labour shortages in construction, hospitality, agriculture, and health and social care. Then Covid led many people, especially older workers, to leave the workforce, from choice or on health grounds, never to return. Since 2020, the number of people economically inactive increased by 850,000, two thirds of them aged 50-64. As a result, between 2017 and 2022, skills shortages doubled.
And not only are there too few workers, many of the people available are poorly qualified, with 13% lacking ‘essential employment skills’.
Benefits of immigration
Immigration can help overcome some of these problems, especially in the short term, while domestic reforms to education, training and technology take effect. Immigrant workers are generally better educated, and being younger and healthier, place fewer demands on public services.
Immigrants are more likely to be in employment than non-immigrants, and within two years of arrival the average non-EU migrant is earning more than the UK average. Where international students stay on after graduation, they bring higher skills to the labour market. And immigrants form a large proportion of the richest 1% of the population.
The number of jobs in the UK is not fixed, and new businesses created by migrants create new jobs: 40% of the UK’s fastest growing startup businesses have at least one immigrant founder.
Although economic theory would suggest that labour shortages push up wages, this does not appear to be the case, because skills problems are already making firms less efficient and less profitable. Three quarters of UK businesses already believe that lack of skills is affecting their productivity.
Reducing net migration
Nevertheless, there is strong public pressure to reduce the number of immigrants, and previous governments have made some rash promises to do this. So, what might be the impact?
The Office of Budget Responsibility estimates that halving net migration would cause a 1.5% drop in GDP, or around £30–40 billion in lost output, equivalent to the current defence budget. Halving numbers would cause particular problems in four sectors.
Reducing net migration means a smaller working age population. Fewer workers means less tax revenue for the government, and so less available to pay for the services needed by an ageing and increasingly unhealthy population. Migrants currently contribute £20 billion in taxes, and the government’s Migration Advisory Committee calculates that a Skilled Worker migrant pays £16,300 pa more in tax than they take in public services – more than a UK born worker.
Government concerns
The government hopes that its policy initiatives will, over time, raise the skill levels of the UK workforce, generating growth and reducing dependence on immigration. But such strategies take time – years in some occupations – and money, which is in short supply.
In the meantime, three-quarters of businesses believe that lack of skills is harming competitiveness. They say that reducing immigration would reduce production, increase prices, delay investment and lead them to move operations offshore.
The White Paper is concerned about four specific trends:
- a shift towards lower skilled immigrants, which goes against government aspirations for a higher skilled economy
- a shift in international student numbers towards lower ranked institutions, which are sometimes suspected of using student visas as a backdoor for economic migrants
- an increase in the proportion of dependents arriving, which potentially increases demands on welfare services
- an increase in the ‘stay rate’ of people on fixed term visas, especially graduates who have completed their course.
All of these are reasonable concerns, and policies are being put in place to tackle them. But they are unlikely to make a significant difference to the numbers, and there are good reasons not to want to achieve that.
Conclusion
The UK has a very long history of using immigration to compensate for internal economic weaknesses. The government aims to address some of these, but it will take longer than the life of this Parliament. And it is clear that a major reduction in immigration would be severely damaging on many fronts.
When people are offered a trade-off between reducing immigration and maintaining numbers of immigrants in order to avoid the economic effects on GDP and on pensions, a majority opt for the latter. They don’t want fewer doctors, or construction workers. The key problem is the trivial, but symbolic, one of irregular migration. If the government can convince people that it has control over immigration, it has some chance of reducing its political salience as an issue, and allowing a rational approach to planned migration to establish and be accepted.
But against a tide of hostile and often misleading campaigning, it will remain an uphill task.
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