In a recent interview with the Telegraph, Professor David Miles, member of the OBR’s irreproachable Budget Responsibility Committee, was insightful enough to recognise that migrants “grow older and have children”.
The ramifications of this discovery are significant and, as Professor Miles rightly points out, means that the fiscal benefits of mass migration are transient at best. Abhisit, a twenty-four-year-old male from Thailand, who arrives in Britain with an industrious work ethic, will eventually age and see his health decline. He’ll have children, maybe look to bring his elderly parents over, and find that in his 30s and 40s he is less keen to work a 60-hour week than he was when first awarded his visa.
The initial bump given to Britain’s fiscal position fades, and tax receipts are eventually swallowed by the expansion of public sector expenditure required to support Abhisit and his family.
This seems obvious to most of us in the country, but it has taken many within Whitehall far too long to cotton on to the fact. In a long lineup of failure, the OBR has a particular ineptitude for forecasting the net costs and benefits of migration.
Yet the quango’s forecasts continue to be held by many policy wonks and media mouths as akin to Moses’ stone tablets. It was this veneration which allowed the OBR to hamper Liz Truss and her economic plans, put the current Tory Chancellor in its back pocket, and effectively exert a veto over any plan for border control.
In reality, when it comes to declaring the benefits of migration, the OBR uses a potent combo of guesswork and gut instinct. Its most recent forecast, from November 2023, even admits from the outset that they simply “assume that migrants have the same labour market participation rate as the UK resident population”.
This is a startling admission. The participation rate of migrants is not some tangential concern. It is the key metric by which the economic benefit of migration should be judged. It tells us how many of the 1.1million people arriving each year actually plan to be economically active.
On this crucial issue the OBR is allowed to get away with speculation that would embarrass a midday punter at Ladbrokes. It later confesses that its guess is likely to be completely incorrect anyway and that, owing to the error-strewn nature of its dataset, the “average participation rate for all migrants is probably an overestimate.”
Conservative ministers are situated between a rock and a hard place. On the one hand, as former Home Secretary Suella Braverman can testify, those who wish to dramatically reduce net migration cannot do-so without the permission of the OBR. Yet, on the other, obedience to the OBR’s forecasts does a huge disservice to the country and entrenches supposition, not fact, at the heart of government decision making.
The proliferation of assumptions is not the only weakness with the OBR’s modelling, however. At the Centre for Migration Control we have calculated that, since 2019, the economic contribution of recent migrants have been overstated by £8billion owing to a pretty rudimental error in the formula being used.
As it stands, around a third of all recent migrants who work in Britain are doing so whilst on a student visa, which during term time limits them to 20 hours of paid employment per week. The remaining two thirds are drawn from other categories, primarily work and dependent visas, who have no such cap.
Despite the clear legal difference in the employment capacity of these two tiers of visa, the OBR lazily imputes that all recent migrants who are working, regardless of visa type, will do an average of 31 hours a week.
Does the OBR have a reason for inflating, by over 50%, the hours that are worked by foreign students every year? Is there some complex equation that allows it to gerrymander with the figures and tack on an additional 70million extra manhours a year – equivalent to around £2.9bn in output – to the British economy?
Diving deep into the annexes of the OBR’s model, we can see that there isn’t.
We can assume therefore one of two things: that upon entry to Britain, 200,000 foreign students instantly begin to flaunt their visa requirements by entering full-time employment.
Or, the second option, which is far more plausible, is that OBR forecasters have made a pretty glaring mistake and have failed to pick up on it because of an acute bout of confirmation bias.
Professor Miles has a background in economics, not biology, and should therefore be forgiven for his belated discovery that humans procreate and grow older. However, his recent admission that net migration is likely to do more harm than good does nothing to change the fact that his quango has done more than most to convert Britain into a low-wage, high-migration economy.
Robert Bates is the Director of Research at the Centre for Migration Control