December 2017
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Are EU migrant workers bankrupting us?

Lots of numbers

Today’s blog is going to be really, really boring. It’s full of figures and we British seem allergic to figures, even simple arithmetic. But given that it’s the budget tomorrow, surely I can be forgiven for throwing in my modest contribution to the deliberations of the ‘experts’?

You might find it surprising: employment in Britain is at an all-time high and unemployment is at a record low. And, of course, we’ve got at least 2.1 million Europeans fleeing the economic disasters in their own countries to work in Britain also contributing to our economy. So you might be tempted to think that public spending, especially on benefits, should be falling. But it keeps rising:

You might even think that taxes collected by HMRC from the ever-increasing number of workers would be at record levels. You could be forgiven for imagining that, with record numbers in work, the Government would be taking in more in tax than it spends and so wouldn’t need to keep borrowing money. But we still have a deficit so our debt is still increasing.

Buried in a recent HMRC report on tax and NI paid and benefits claimed by nationals from various countries in 2015 were some startling figures.

Put simply the UK total tax take from income tax (£156bn) and NI (£108bn) was roughly £264bn. The amount of tax credits and child benefit paid out was about £43bn, giving a net tax take of £221bn.

With a total population of ~65m that results in an average net tax and NI per person of £3,400 and for the actual working population of 31.8m an average net tax and NI take per worker of ~£7,000.

According to the ONS and HMRC’s reports there were a total of 1.81m EU10 (8 East European countries plus Cyprus and Malta) nationals living in the UK in 2015 and of those 1.353m were registered for NI.

Their total net tax and NI contribution after tax credits and child benefit is deducted was £2.911bn giving an average net tax+NI per East European citizen in the UK of ~£1,600 and an average per East European citizen working in the UK of £2,150.

So we have been expanding the population of a group (East European workers) paying £1,600 which is just over a third of the average net tax and NI in terms of total population (£3,400). As for payments per worker, at £2,150 they are ‘contributing’ less than a third in terms of working population (£7,000). Ooops!

Furthermore, with low income and spending, the tax take from East European workers from other sources such as VAT or council taxi is also correspondingly lower. In fact, with UK public spending approaching £800bn+, any worker contributing less than £11,000 in total taxes and less than around £7,000 in income and NI is probably using more in public services than they’re contributing to our country – they have a negative effect on our economy.

GDP looks good as numbers of workers swell. That makes the Government look good. But we would be much better off if, instead of relying on lower-paid EU workers, our businesses invested in automation to produce more with the existing number of workers. This is why you’ll keep hearing economists blethering on about the “UK’s productivity problem”. A country can only become wealthier if it produces more from each worker, not by importing millions more lower-paid workers. Moreover future liabilities in healthcare, pensions etc are rising sharply in line with increasing population.

In a modern globalised economy, importing an army of lower-paid workers might be the natural reaction to labour cost pressure from developing economies. But the end result, if we continue on this path, is that we can no longer afford the kind of infrastructure, services and benefits we have enjoyed so far on a steadily reducing net tax base per capita and per worker. Pretty soon we are going to have to face this and either raise tax considerably and/or cut expenditure drastically.

So, when our politicians bleat on about how we need immigration to help grow our economy, this is total and utter bollox. What we need is more business investment to produce more with a stable population.

Cow objects to Halal slaughter

And here, if you managed to survive the first part of today’s blog, is a very short video of a cow apparently reluctant to allow some highly civilised gentlemen from the world’s most advanced religion to slit its throat:

5 comments to Are EU migrant workers bankrupting us?

  • Julia Green

    Best daily news there is in Britain, the rest are lying to us…mostly by omission. THIS is the BBC’s crime.

  • chris

    I have often wondered whether the real effect of immigration is just (unskilled) worker substitution. In other words, to what extent, does cheaper imported labour replace indigenous workers. In a society which has a host of welfare benefits such as free healthcare, unemployment benefit, child benefit, free education etc it makes no sense to use immigration to enlarge the unproductive part of the population. Even if the substituted worker contributed a higher share of the country’s expenditure, this strategy must result in a double loss. Less tax take and more paid out for the replaced persons family welfare.

    In higher skill jobs importing workers is often more related to skill shortages within the indigenous population. However, the combined effect is to de-skill the indigenous workers. The end game is not a productive and wealthy society. As you say, the end result is impoverishment because, gradually, income diminishes and no one will have the wealth to buy manufactured goods and support the State we now take for granted.

  • Stillreading

    I see it all first hand where I live. Fields peopled with Eastern European immigrants (probably in the UK temporarily, but that’s not the point) cutting cabbages, stripping sprouts, gathering up spuds, planting and harvesting lettuces, while the young and fit indigenous idle, who can’t be bothered to roll from their beds before mid-morning and consider agricultural work beneath their dignity, live on benefits. Furthermore, these foreign workers occupy accommodation which could otherwise be available for working families, and they also inevitably increase the demand on local GPs and hospitals. You cannot, though, escape the fact that when you talk to the employers, they say unambiguously that the foreigners work diligently and get through far more in any given time than would members of our home-born currently unemployed, but perfectly fit potential work force.

  • Barry Richards

    No mention of the immigration from outside the EU. Shameful.
    The eastern Europeans come here to better their lives, not to live off of us. We need more workers to replace an ageing population and do the jobs the British young do not want to do. Leaving the EU will damage Britain far more in the short term than the immigration from there. Why can’t people see that. Pound, economy, inflation, trade, manufacturing. It’s the elephant in the room. I hope we still live in a democracy with free speech but fake news and misinformation seem to be winning.

  • David Craig

    Dear Mr Richards,I have to use the figures that are available. Surely even you can understand that our Government would never publish such information on migrants from outside that Eu as that would be admitting that Third-World migration probably costs us between £30bn and £60bn a year. In fact, if we hadn’t had any Third-World migration, we wouldn’t have any debt or any interest payments and would therefore have another £45bn a year to spend on public services.

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