Lens Blog

Psychological insight on current affairs


posted on 17th July 2019

On Monday 15 July, we launched our Migration Dividend Fund plan. In short, our report proposes a new fund using the enormous fiscal contributions of immigrants from the EU to combat Britain’s deep geographical inequality. A £4.7 billion annual fund would have a transformative effect, empowering local communities that haven’t seen the economic benefits of recent decades to tackle their local problems. And by changing migrants’ invaluable contributions from an abstract figure to a series of tangible, on-the-ground projects, it would reshape our national debate on immigration.

We’re really pleased about the reception it received – especially from a range of MPs from across politics who welcomed the plan. 

There were also those who objected to parts of the plan, and we welcome that constructive criticism too. We want to engage with some of the most significant points that have been raised. This post responds to a few.

Is there really a ‘migration dividend’?

One complaint, expressed by anti-immigration lobby Migration Watch, is that the report is based on a false premise because immigration is actually bad for the public finances. It’s not clear anyone at Migration Watch read much of the report: their Twitter critique starts by suggesting we want to give new resources to the government’s Controlling Migration Fund, whereas the report specifically criticises that fund and the narrative it embodies.

Nevertheless their point deserves to be addressed.

Some of this argument comes from a focus on less up-to-date research, rather than the 2018 analysis commissioned by the Migration Advisory Committee, which found the 4.7 billion windfall from EU immigration that we cite.

Migration Watch also argue that the negative fiscal impact of immigration from outside Europe outweighs the positive impact of EU immigration, making it misleading to talk of a ‘migration dividend’.

Our report focused on the effects of EU immigration because that is the type of migration which has been the overwhelming focus in recent years (it’s also the type of immigration affected by free movement, and thus central to the Brexit debate which continues to engulf British politics). 

Public debate has spent a lot of time on non-existent harms from European immigration. Our report (in line with the findings of the MAC) highlights the fact that these arguments are mistaken, and presents a new policy intended to make the benefits it’s brought in reality tangible across the country.

The figures themselves are also significantly more complex than Migration Watch suggest. It’s true that the Oxford Economics research commissioned by the MAC found a current fiscal deficit for non-EU migrants in the UK. However, this result is driven largely by the composition of the immigrant cohort: in particular, non-EU migrants are much more likely to be retired, and so paying significantly less income tax. Over their entire time in the UK, Oxford Economics estimate that each non-EU migrant makes a net positive contribution of £28,000, compared to a net contribution of zero for the UK-born. Previous research found that immigrants who’ve come to the UK since 1999 – which again avoids counting large numbers of retirees – make substantial net contributions to the public finances, irrespective of whether they came from within or outside the EU.

These nuances are difficult to capture in a headline number, but much of this research was discussed in the body of the report. Overall it is undeniable that immigration has had and continues to have a large positive impact on Britain’s public finances.

Does the Migration Dividend Fund imply immigrants are responsible for geographical inequality?

Our report itself – like our previous work – goes to great lengths to emphasise that immigrants have not caused the problems of spatial inequality in the UK, and that immigration has been hugely beneficial to the UK. Of course that doesn’t fully answer the question: the policy itself might, unintentionally, send the opposite message.

This is a concern expressed by the 3million among others on Twitter, and one we were very sensitive to during the research for this report. Our section on previous policy initiatives specifically criticises the last Labour government’s Migration Impacts Fund and the current Controlling Migration Fund, for precisely this reason. Both those policies explicitly connect the flow of funding to problems supposedly caused by immigration; a large chunk of the Controlling Migration Fund is reserved for immigration enforcement. That is an approach we firmly reject.

The Migration Dividend Fund is intended to create a different narrative altogether. There is a strong feeling in the country that government has failed to address the needs of towns and regional communities; our polling found 71% of the population feel politicians focus too much on major cities. At present, objection to that centralisation and neglect has helped foster an anti-immigration backlash. But that can change. More than half the population, and even 50% of Brexit Party voters, think that immigration has been good for some parts of the country but not their own. Whether or not that view is accurate – in most parts of the country, it isn’t – it clearly creates the potential for a new, positive narrative: not that immigration is responsible for regional inequality but that, through the Dividend Fund, it’s helping to fix a problem created by Westminster politicians.

When it comes to shaping public narratives, nothing is certain, and it will require both strong leadership and careful policy design to make sure the right message is sent. But there is evidence, which we discuss in the report, to suggest that the right policy can change attitudes in a positive direction. Across the EU, for example, regions receiving money from various EU funds to tackle inequality and promote regional development have not come to think of the EU as connected to poverty. Instead, they have become less Eurosceptic over time, particularly when the funds have created clear and tangible benefits. (You can find the academic studies cited on this page of our report.)

That has been less true in the UK, of course, where some regions that receive large amounts of EU funding voted strongly to leave in 2016. That gap is explained by the fact that awareness of EU projects is far lower in the UK than in other EU countries, which highlights the need for Migration Dividend Fund projects to be designed to make a real difference in local communities so that awareness is high.

If that can be achieved, we shouldn’t pessimistically assume that attitudes towards immigration and immigrants can’t be changed by a new fund. The evidence suggests there is every possibly they can be. The concern expressed by the 3million and others is a reasonable and important one, which certainly shouldn’t be dismissed out of hand. Equally, however, evidence from similar initiatives shows we shouldn’t rush to conclude that the MDF would create a negative rather than a positive narrative about immigration.

Fundamentally the policy seeks to better share the benefits of immigration – thus it celebrates in name and deed the positive impact of immigration – hence its name, the Migration Dividend Fund 

Why should migrants be singled out to pay for remedying Britain’s problems of inequality?
Another concern which has been voiced is that the Dividend Fund singles out migrants to pay for the cost of fixing problems that – as our report strongly affirms – they did not cause.

One important point here is that the MDF will certainly not be the only policy in place to tackle geographical inequality. EU structural funds play an important role at present; they will continue to do so if the UK remains in the EU, or be replaced by the government’s new Shared Prosperity Fund if we leave. Other place-based initiatives, like devolution deals and programmes run by Local Economic Partnerships, are also significant. And the importance of regular funding to local authorities, which has fallen dramatically since 2010, cannot be overstated. Taken together, these other funding streams should make clear that British society as a whole is working to combat regional inequality in the country.

Nonetheless, the key concept of the Migration Dividend Fund is to create a specific link between the fiscal contribution of EU citizens and a transformative agenda to fight geographical inequality. This connection is meant to shape and improve the debate on immigration in the UK, by making migration’s benefits clearer and less easily dissolved into large, abstract figures. It would work in a similar way to the link between National Insurance and pension and NHS funding: there is no formal hypothecation (which is extremely rare in the tax system), but the connection means that debates about NI contribution rates are tied to something concrete in public discussion, rather than broad arguments about the overall budget position. The policy is not an assertion that EU citizens must bear the burden of combating inequality. It is a deliberate choice to create a new narrative around the benefits of immigration and change the shape of public debate on this issue.

Of course establishing this connection is not a good idea if the narrative that results is damaging, rather than beneficial. But as argued above, we think there is substantial reason to believe a well-designed Migration Dividend Fund under strong political leadership could have a major positive impact on the debate about immigration in Britain.

Does this policy reinforce a divide between migrants and ‘native’ citizens? Why should migrants have to ‘pay their way’?

A number of comments on our report worried that the Migration Dividend Fund was inspired by, or would reinforce, the narrative that EU citizens have to ‘earn’ their right to live in the United Kingdom.

The first thing to say is that Global Future has been a strong supporter of the rights of European citizens living in Britain. We have monitored and written about problems with the settled status scheme. We wrote a submission to the parliamentary committee examining the Immigration Bill, calling for the settlement scheme to be transformed into a declaratory system and for physical proof of status to be given to EU citizens. These positions are not tied to the Migration Dividend Fund: working to fight regional inequality is important, but not a precondition for protecting people who are part of British society and should have an unquestioned right to stay and remain secure in their status.

The fund, by contrast, aims to shape the debate over continuing immigration to the UK. Our view is that EU immigration has clearly been hugely beneficial to Britain, and that freedom of movement should be retained. We strongly agree that, in an ideal world, the strong case for a liberal and welcoming approach to immigration would be widely recognised without the need for special policy to highlight it.

But this argument has not, so far, won the public debate. That’s due in part to the fact that the positive effects of migration have not been distributed equally across the country. In some places, notably London, there are more migrants and their importance to our NHS, schools, social care and society more broadly is undeniable. In others, the migrant population is much smaller and the benefits of immigration are something described in abstract by politicians rather than experienced directly on the ground.

The MDF is meant to help change that, by making sure that migration’s benefits are widely shared and tangible in all parts of the country. It doesn’t ask immigrants to contribute more than they already do or create any additional responsibilities, only takes a new approach to making sure those contributions can be recognised and celebrated.

Some people take the view that making arguments about the benefits of immigration is inherently ‘othering’, creating a divide between migrants and other citizens. That’s the position of many immigrant rights charities whose work has been essential to combating the overreach of this anti-immigrant government, and it’s one we understand. At Global Future, our view is that we shouldn’t allow public debate to be dominated by untruths by refusing to highlight the undeniable reality that immigration has been and will continue to be good for Britain. We hope that the Migration Dividend Fund is a policy that can contribute to improving the quality of our public debate, and increasing support for the kind of welcoming immigration policy Britain should be adopting.