The Migration Dividend Fund: sharing the benefits of immigration across the UK

Report

posted on 15th July 2019

Multi-billion pound Migration Dividend Fund would help communities at the sharp end of globalisation and help bring Britain back together

Major new report from Global Future

A multi-billion pound Migration Dividend Fund – focused away from big cities – could help bring Britain together and harness our full potential. The plan is backed by 69% of the population including a majority in every demographic – notably Leavers (67%), Remainers (70%) and Tory voters (58%).

  • A £4.7bn a year fund: Reflecting the contribution EU migrants make to the public finances, the Treasury could pay for the Fund by reversing planned cuts to corporation tax.
  • Focused on towns and small cities: The fund will support highly deprived areas that also suffer from poor infrastructure, investment and connectivity
  • Designed to build opportunity and boost life chances: Targeting support in six areas: improving skills; ensuring access to opportunity through childcare and early years support; revitalising public space; attracting investment; encouraging innovation; and improving transport links
  • Long-term not flash in the plan: Support should be guaranteed over a period long enough to make a difference. Ten years targeted funding would mean a transformative £120m per local area invested over a decade
  • Managed and administered by local people with government’s role restricted to coordination of national-led schemes and evaluation of local performance

The report details the increasing polarisation across the UK – especially between young urban centres and older communities outside our major cities. It argues that Britain is too unequal and spatial inequality is a serious problem. Public concern about immigration is often highest in the least affluent, least diverse areas. Yet cutting immigration will not solve the problems at the heart of that inequality. In fact, in many cases it could make things worse.

New polling, commissioned for the report shows:

  • 41% believe immigration has had a positive impact on the country, compared to 31% who believed the impact to be negative
  • Young people (under 25s) are twice as likely to feel positively towards immigration as over 75s, and more widely the level of support differs strongly according to personal characteristics including region and education
  • 33% think immigration has benefitted their local area, while 25% thought the impact was negative
  • The majority of respondents (51%) believe that “some parts of the country have benefited from immigration, but not where I live”
  • 71% believe that “the UK government prioritises London and other big cities over the rest of the country”, including two thirds within those big cities.
  • Using the financial benefits of migration to finance a Migration Dividend Fund, rather than a cut in corporation tax, is supported by 69% of the public, including majorities in every demographic

Pat McFadden, MP for Wolverhampton South East, who wrote the foreword to the report, said:

“Prosperity and opportunity in the UK are spread too unevenly.  Whilst some areas thrive and prosper, riding the wave of global change, others have felt the sharp end of globalisation and lost out from a long arc of economic restructuring.  

“Immigration brings a significant net economic benefit to the UK. Yet pointing out net economic benefits means little to people if they see few opportunities around them and the place in which they live feels neglected. This report proposes establishing a Migration Dividend Fund of around four and a half billion pounds a year – roughly equivalent to the estimated net economic benefit from immigration – and using that money to heal divisions, support regeneration and enhance opportunity in the communities that have lost out from economic change.”

Global Future Director Peter Starkings said:

“The problems of inequality, and the unequal distribution of the benefits of migration, do not stem from the European Union – and nor do the solutions lie there. Whether we leave or remain, responsibility lies with policymakers in the UK.

“The Migration Dividend Fund is designed to harness the benefits of immigration and ensure they are shared fairly around the UK – focusing on those towns and small cities suffering at the sharp end of economic change.”

The Migration Dividend Fund in detail

Two-speed Britain: Britain runs as a two-speed nation. In one lane, parts of our country thriving under globalisation are rich in opportunity, investment and political attention. In the other, another Britain is often characterised by ageing communities, quiet high streets, lack of opportunity, and inadequate investment both public and private. In recent years, those towns and small cities have begun to rise up the political agenda, but transformative policy is yet to follow.

Polarised Britain: This spatial inequality has contributed to an increasing polarisation in political attitudes, particularly stark when it comes to immigration, and most easily understood in the context of the Brexit referendum. Urban centres mostly voted for Remain, whilst smaller towns and coastal areas tended to vote to Leave. Opposition to immigration was a central part of the campaign, and a large motivator for many Leave voters. That opposition is often tied most closely to economic circumstances, not local levels of immigration.

Britain will continue to need immigration: The problems that contribute to a two-speed Britain are not caused by immigration, and in many cases lower immigration will make things worse. EEA migrants make a net contribution of £4.7 billion a year to UK public finances, and our NHS and care sector both heavily rely on migrant workers. Britain is ageing and without immigration there will be fewer of us paying tax to support older people and children, meaning more cuts or higher taxes.    

So Britain is too unequal and spatial inequality is a serious problem. Public concern about immigration is often highest in the least affluent, least diverse areas. Yet cutting immigration will not solve the problems at the heart of that inequality. In fact, in many cases it could make things worse.

These problems weren’t caused by foreign nationals, foreign governments or the EU. The causes lie within the UK, and so do the solutions.

Government should introduce a genuinely substantial fund to distribute investment to towns and small cities. A fund equivalent to the annual contribution of EEA migrants to the UK budget (£4.7bn a year) would allow the positive effects of migration to be rendered meaningful and visible for residents in these areas.

£4.7bn Migration Dividend Fund

The areas most in need of support are those communities which score poorly for deprivation and lack the civic and community assets to respond. Building on draft research by OCSI, commissioned by Local Trust, we propose targeting 400 wards initially with £120m each, with funding allocated according to decisions made locally, not in Whitehall. The fund would cover six crucial areas:

  • Improving skills
  • Ensuring access to opportunity
  • Revitalising public space
  • Attracting investment
  • Encouraging innovation
  • Creating transport links

Principles of the fund:

  • A £4.7bn a year fund: Reflecting the contribution EU migrants make to the public finances, the Treasury could pay for the Fund by reversing planned cuts to corporation tax.
  • Focused on towns and small cities: The fund will support highly deprived areas that also suffer from poor infrastructure, investment and connectivity
  • Designed to build opportunity and boost life chances: Targeting support in six areas: improving skills; ensuring access to opportunity through childcare and early years support; revitalising public space; attracting investment; encouraging innovation; and improving transport links
  • Long-term not flash in the plan: Support should be guaranteed over a period long enough to make a difference. Ten years targeted funding would mean a transformative £120m per local area invested over a decade
  • Managed and administered by local people with government’s role restricted to coordination of national-led schemes and evaluation of local performance

Though the investment may be repaid in part through tax returns, it could initially be funded through a reversal of the planned cut to Corporation Tax. The planned cut from 19% to 17% is estimated to cost £5.6 billion to the Exchequer in 2020-21, rising to £6.2 billion in 2021-22.

Communicating the fund

Ensuring the migration dividend is felt as a reality in towns and small cities, rather than viewed either as a myth or something that exclusively benefits major urban centres, is a crucial step in decreasing geographical polarisation.

The Migration Dividend Fund will change attitudes in two ways:

  • Redressing geographical inequality: Addressing people’s sense that British society has stopped working for them will give people and places a greater stake in the future.
  • Making benefits concrete: By supporting transformative, locally-led projects, the Migration Dividend Fund makes immigrants’ contributions feel real, in a way that billion-pound statistics do not.

 

Download the full report here.

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