Low-paid migration is a subsidy costing the whole country dear

Government is in thrall to ‘expert’ cost-benefit analysis. But it is this mindset that is ailing us

Among many faults in our democratic debate in Britain, the most tedious is the tendency, common among liberal technocrats, to refuse to even consider other perspectives. Unable to accept that those who disagree with them might have a legitimate view – based on different values, interests or analysis – they assert that their opponents are simply wrong: ignorant of the facts and the economic theories that they say explain our world.

At the most ridiculous end of the spectrum, there are supposedly neutral empiricists screaming into social media that their opponents are chancers and liars, hoping that the identification of a single error or disputable claim proves the bad faith of an entire body of argument. There are others who spend entire careers attempting to demonstrate through quantitative study that the public is more liberal than it really is.

Such behaviour would be bad enough if it did not relate to a broader habit of those in positions of power to ignore public opinion, suppress dissent, and deny the possibility that anything might ever be done differently. Inside government – and in the universities, regulators and quangos that make and deliver policy – this mentality is real.

The cause is an attachment to a utilitarianism that goes back to Jeremy Bentham, who proposed a “felicific calculus” to assess whether a decision brings about “the greatest happiness to the greatest number”. While Bentham was not a liberal, his approach lives on in modern economic theory, which seeks to aggregate individual interests and, after running extravagant models, tells us whether a course of action will, in aggregate, be beneficial or not.

It lives on, too, in the culture of government-by-impact-assessment, which leads officials and politicians into a utilitarian trap: decision-making based on partial assumptions, ignorance of real life, and a crude and often inaccurate calculation of net economic costs and benefits. If a policy is said to bring net benefits for society overall – however marginal, however imperfect the data – it may therefore be adopted, regardless of its cost to particular regions, institutions or groups of people. Anybody who loses out from a policy, the logic goes, can be compensated through other initiatives.

This is how officials and politicians have, over the years, convinced themselves of the unalloyed benefits of mass immigration, denied the consequences of the decline in industry, and refused to confront the terrible failures of our post-18 education and training.

In the past week, a debate has begun that sums up the problem perfectly. With our ageing society causing growing demand for social care, and the social care sector struggling to retain employees, in 2020 the Government chose to liberalise the visa rules.

Then the health and care visa was introduced as a “temporary measure” to bring in tens of thousands of workers. But last year, 144,000 health and care visas were issued, with 174,000 dependants allowed to come too. These dependants – mostly from India, Nigeria and Zimbabwe – faced no conditions based on skill or qualification, and enjoy an unrestricted right to work here.

The Government is now tightening the rules for health and care visas – blocking dependants and raising the salary threshold – yet the thresholds will remain close to the minimum wage.

This prompted the director of the Institute for Fiscal Studies, Paul Johnson, to argue, “if we don’t want to pay more for social care, we will continue to rely on immigrants”. While this may in crude terms be the choice – and a choice ministers made four years ago – a proper assessment should account for the true costs and benefits on each side.

Low-paid immigrants bring costs that are not adequately considered by government impact assessments. They need housing, drive on roads, use transport, have health needs, take school places, claim benefits and eventually receive the state pension – recently valued by an actuary at £250,000 per person. Low-paid immigrants and their dependants will, over their lifetimes, be net recipients of public funds. And this is before we consider the intangible costs and challenges of our increasingly radically diverse society.

The state – probably deliberately, for the truth will prove inconvenient – does not produce the necessary research to determine which profiles of migrant are fiscally positive or negative. But it is vital that we do understand these numbers, because low-paid immigration is being used as a hidden subsidy: employers cut costs by importing cheap foreign labour, while the taxpayer picks up the bill for the externalities. As Brian Bell, chair of the Migration Advisory Committee, said last week, the public sector is even guiltier of this than private business. “If you care about net migration,” he said, “pay social care workers properly.”

Racking up long-term costs to make short-term savings is, unfortunately, peak Treasury brain. Its own income tax data shows some nationalities, such as Bangladeshis, receive more in child benefit and tax credits than they pay in income tax and National Insurance. This does not even include the cost of education, housing, healthcare, pensions and other infrastructure and services.

Data from similar countries in Europe presents a fuller picture. In Denmark, official figures show that Danes and Europeans are net contributors, but migrants and their descendants from the Middle East, North Africa, Pakistan and Turkey are net recipients throughout their lives.

In Germany, half the migrants who arrived there in 2015 live on benefits. In Austria, more than 60 per cent of those living on benefits are migrants. A study at the University of Amsterdam, using Statistics Netherlands data, found Western immigration was broadly cost neutral, but the net costs of non-western immigration averaged around €27billion per year.

The evidence is clear, which is why it is ignored. Using low-paid foreign workers is an indirect subsidy, which is in the end costlier for the taxpayer than training and paying British workers to do the job. Thanks to the liberal technocrats, we are surviving today at the expense of tomorrow – and that must be brought to an end.

If a policy is said to bring net benefits for society overall it may be adopted, regardless of its costs to particular regions