Migrants’ boost to economy overestimated, claims think tank

The Office for Budget Responsibility (OBR) has been accused of exaggerating the tax contribution of future migrants to the tune of £6 billion.

The Centre for Migration Control think tank claimed that the watchdog had “vastly overstated” the tax take by overestimating how much skilled migrants earn.

Set up by George Osborne in 2010, the OBR provides independent forecasts to accompany the Government’s major fiscal events.

It has assumed a central role in British politics because its projections influence how much the Treasury has at its disposal for extra spending or tax cuts.

Recently, a number of Conservative MPs have accused it of giving excess weight to the economic benefit of liberal immigration policies, with net migration hitting a record of 745,000 in 2022.

In its forecast produced for the Budget at the start of this month, the OBR said that it has assumed that “new migrants have the same employment, consumption, and residential patterns as residents, and as such pay similar levels of wider taxation”.

However, the CMC disputes this assumption. Using data from the Office for National Statistics, the think tank said that in 2023 the average occupation salary for a resident skilled worker was £37,614, whereas the average salary for a skilled migrant worker was £31,431.

It said this reflected the fact that a higher proportion of skilled worker migrants are in lower paid professions such as “care worker and home care worker” roles.

The CMC said that the difference between the average salaries of resident and skilled migrant workers meant that the OBR had overstated the average amount of income tax and national insurance paid by migrants by £1,855.

Projecting forward their analysis over the OBR’s forecast to 2028-29, the CMC estimated that the watchdog had overstated salaries for migrants on skilled work visas by £20.5 billion and their tax contribution by £6 billion.

Sir Jacob Rees-Mogg, the former business secretary, said: “The OBR is an unelected quango with far too much control over government policy.

“It believes that mass migration has been an untrammelled boon for the economy.

“Yet if you look at the recent decline in GDP per capita it shows that the open-door project has failed to deliver anything but declining wages and living standards.”

He added: “Now is the time that the pseudo forecasts of the OBR were treated with the circumspection they deserve, rather than treating them as Holy Writ.”

‘Myth that economy needs mass immigration’

Marco Longhi, the Tory MP for Dudley North, said: “The fact that the OBR continues to over-inflate the value of open borders, believing that they’re a huge benefit to the economy, is a sad indictment of its forecasting capabilities.

“I hope that today’s findings go some way to dispelling the myth that the British economy cannot cope without net migration of hundreds of thousands each year.”

The OBR declined to comment on the CMC’s analysis.

Writing for The Telegraph last month, David Miles, an executive member of the OBR, said that getting more people back to work was a surer way of boosting GDP.

“It is much less clear that persistently high levels of net immigration to boost the labour force can generate sustained fiscal improvements,” he said.