The City of London is an immigration success story, but most of those who have entered the country since we ‘took back control’ of our borders will never pay enough tax to cover the cost of the public services and welfare they consume, representing a net fiscal cost of £8,200 for every UK household, says Emma Revell
London is proud to be home to some, I may even go as far as to say most, of Britain’s most productive and most successful migrants. While 16 per cent of the UK’s population was foreign-born at the time of the last census, research from The Entrepreneurs Network in 2024 found that 39 per cent of our 100 fastest-growing companies have a foreign-born founder.
Whether you’re looking at our financial institutions, cutting-edge tech start-ups or medical research and development, there are highly motivated and well-remunerated migrants making significant contributions to our economy.
Many migrants working in the capital’s various business sectors, or in research labs in cities like Oxford and Cambridge, will have come on elite routes such as the Global Talent, Investor and High Potential Individual visas. These routes are designed to bring the best entrepreneurial and scientific talent to the UK – people who will be major contributors to economic growth and the public finances.
The majority of Britain’s recent migration mix however have arrived via other routes, and many of those for purposes other than work – students and family, or refugees and asylum seekers.
Figures show that around 3.8m people were issued long-term visas between January 2021 and June 2024. Yet only around 17 per cent of visas went to actual workers on work visas. Bankers and finance experts made up just 2.7 per cent of these workers; legal professionals less than 0.7 per cent; biologists, chemists and physicists only 0.5 per cent.
Bankers and finance experts made up just 2.7 per cent of those issued with long-term visas
Instead, very many of these workers – around 150,000 or 30 per cent of the total – were (generally low-paid) social carers. Moreover, very many brought family – on the health and care route, each worker brought an average of 1.4 dependants with them.
The debate about migration often stops there, focused on arrivals. What is given significantly less attention is the impact of record numbers of migrants remaining in the UK over the long-term.
Many migrants in the post-2021 wave – around 2m – will soon become eligible to apply for Indefinite Leave to Remain (ILR) which, if successful, entitles them to free NHS access, social housing and Universal Credit. After 10 years of paying National Insurance, they will become entitled to the state pension.
Working on a central scenario of 801,000 and using the Office for Budget Responsibility’s assumptions about migrant earnings, we have estimated that the lifetime net fiscal cost will be £234bn – equivalent to a bill of £8,200 for every UK household, spread out over several decades
The make-up of this migration cohort means that they will likely represent a long-term cost to the taxpayer, never earning enough to pay enough tax to cover the cost of the public services they will use over their lifetimes. Indeed, new research from our team at the Centre for Policy Studies has calculated that of the 2m migrants potentially eligible, between 742,000 and 1,224,000 are likely to be granted ILR in the coming years.
Working on a central scenario of 801,000 and using the Office for Budget Responsibility’s assumptions about migrant earnings, we have estimated that the lifetime net fiscal cost will be £234bn – equivalent to a bill of £8,200 for every UK household, spread out over several decades.
If our numbers are on the low end, the cost will be considerably more.
Turning a blind eye benefits no-one
Refusing to acknowledge the flaws in the current system benefits no-one. It is painfully clear that Britain currently offers too little to innovative, high-productivity migrants, especially when compared to our global competitors, yet simultaneously has an immigration system skewed towards the lower-skilled, lower-wage worker – and their dependents – but which fails to take into account the long-term fiscal impact on the economy. The Conservatives may have slightly tightened things up during their last months in office but it was too little too late in the eyes of the voters and the system still skews too far towards lower-wage jobs.
Wilfully turning a blind eye as record numbers look likely to gain the right to remain in Britain long-term is also not an option. The public have been very clear they wish to see migration brought under control. Politicians should give serious consideration to an immediate pause in ILR applications in order to give us the time to properly tailor an immigration system which really works for business, the economy, and the country.
Emma Revell is external affairs director at the Centre for Policy Studies