Professor Alan Manning (Professor at LSE) — Written evidence (FAM0050)   

This is a response to your call for evidence and the further questions you asked after I gave evidence to the committee on 19th July.

There are two broad groups of family migrants. The first group are family members of someone who has, at a minimum indefinite leave to remain in the UK but may also be a citizen. The second group (often labelled ‘accompanying and joining’ in the immigration statistics) are the family members of migrants on other visas, typically work or study visas.

This response will, as far as possible, be about the first group though in some statistics it is not possible to distinguish between the two.

I do not discuss the separate issue of adult dependent relatives.  What I write here is about partners and dependent children though most family migrants are partners (with children born later).

Data Issues

Data issues are a long-standing problem when analyzing migration; too often one is ‘flying blind’ when making recommendations about migration policy.

There are often difficulties in accessing data which exists. For example, following the Committee’s request for evidence I put in a request (to ONS) on 28th July to analyze data from the Annual Population Survey (APS) and Labour Force Survey (LFS) to be able to provide some statistics that I thought would be useful to the enquiry.  As of writing I have not had the necessary permission so the statistics I do provide relate only to one quarter of the LFS in 2013 when the public use version of the Labour Force Survey contained the relevant question. It would have been better to have analysis of both more data and more recent data though I don’t believe any conclusions are likely to change greatly.

A wider data problem is that while the Home Office has very good administrative data that follows what happens to migrants who enter on a particular type of visa, this data has no information on what those migrants are doing e.g. whether they are in work or the type of jobs that they do.  The Migration Advisory Committee has a long-standing ambition to link visa data to HMRC data; its 2021 Annual Report[1] reported a result of a pilot exercize but I am unsure whether there has been further progress.

Family Migration in Context

In the first quarter of 2022, family migrants were under 5% of non-visitor visas issued (compared to 30% for study and work visas). However, family migrants are more important in overall immigration than might be inferred from this because they are much more likely to remain in the UK.  The Figure below compares the fraction of the 2012 cohort of family and skilled worker migrants who continue to have valid leave to remain after so many years.

Source: Own Analysis of Migrant Journey Statistics https://www.gov.uk/government/statistics/migrant-journey-2021-report

After 9 years about 90% of family migrants who came in 2012 have valid leave to remain in the UK compared to less than 20% of those who came on skilled worker visas.  This is not surprising; family migrants are often coming to build a new life.

One consequence of this is that family migrants are a much larger proportion of the stock of migrants than the new visa statistics would suggest.  The 2013 LFS asked migrants “what was the main reason for coming to the UK” for the most recent arrival.  This is self-reported and the reason may not correspond to the type of visa but the following table shows the proportions.

Main reason for coming to the UK (most recent arrival)

Percent

employment

28

Study

15

as a spouse/dependent of UK citizen

25

Spouse/dependent of someone coming to UK

16

seeking asylum

5

Visitor

3

Other

7

Source: Own Analysis of LFS 2013

The two family categories make up 40% of migrants in the UK in 2013. Those reporting coming as family of a UK citizen are very likely to be family migrants while those reporting being family of someone coming to the UK may be a mix of family migrants and those joining/accompanying.

The Fiscal Impact of Family Migration

There is an academic literature assessing whether migrants pay more or less in taxes than they receive in welfare benefits and public services.  This research considers the net fiscal position of migrants as compared to the UK-born (the ‘locals’). Often groups of migrants are considered e.g. EU vs non-EU, recent vs. more long-term migrants. To the best of my knowledge there is no study of the net fiscal contribution specifically of family migrants.

One issue with this literature is that it obscures the fact that there is far more variation in the net fiscal position within groups than between groups.  The main determinants of the net fiscal position of an individual are their age, their family structure and their economic position (whether they are in work and if so, how much they earn). Age matters because there is a lifecycle in the net fiscal contribution of people, whether locals or migrants.  It is negative while a child (no taxes paid but public services received notably education though this is an investment for the future), positive while of working age and again negative in old age.

And work/earnings matter because this affects the amount of taxes paid and welfare benefits received.  A simple rule of thumb is that for every extra £1 earned 50p goes to the government in the form of higher taxes and lower welfare payments.

To give some idea of how these factors affect the net fiscal contribution a 2018 MAC Report found that “For a young single adult, consumption of public services is low so a household income of just over £10,000 per year is sufficient to “break even” in the sense that taxes paid equal benefits and public services received. This “break-even” income rises to around £45,000 per year for a working couple with two dependent children”[2]. In the absence of an explicit study of the net fiscal contribution of family migrants, we can try to assess what it is likely to be by looking at the factors that influence it.

In terms of age, family (and other) migrants are much less likely to be of retirement age than the UK-born population. This will tend to make their net fiscal contribution more positive relative to the locals.  Some caution in interpreting this is needed; most family migrants are arriving as partners or children (this was also the case before the adult dependent relative rules were tightened) so tend to be quite young.  Most family migrants of retirement age today came to the UK decades ago when the level of family migration was lower.

The Table below shows the percentage of the working-age population in employment for the UK-born and different types of migrants.

Main reason for coming to the UK (most recent arrival)

Male

Female

Total

 

 

 

 

UK-born

76%

68%

72%

Migrant

Employment

89%

81%

85%

Study

63%

61%

62%

as a spouse/dependent of UK citizen

74%

51%

62%

Spouse/dependent of someone coming to UK

69%

51%

60%

seeking asylum

57%

32%

45%

Visitor

78%

61%

70%

Other

77%

66%

71%

 

 

 

 

Total

73%

59%

66%

Source: Own Analysis of LFS 2013

For men, family migrants have a slightly lower employment rate than average but for women the rate is much lower. One possible explanation is that family migrants are coming to start a family which often involves having children and women with dependent children are less likely to work.  Family migrants are more likely to have dependent children. Ethnicity is also important; 18% of family migrants are from Pakistan and 4% from Bangladesh reflecting the continued practice of trans-national marriages in these communities. UK-born women who report Pakistani/Bangladeshi ethnicity have low employment rates. Controlling for ethnicity the employment gaps between family and other migrants are greatly reduced.

For those who are in work, the following table reports average weekly earnings in 2013.

Main reason for coming to the UK (most recent arrival)

Male

Female

Total

 

 

 

 

UK-born

581

369

475

Migrant

Employment

617

462

540

Study

584

405

495

as a spouse/dependent of UK citizen

513

329

421

Spouse/dependent of someone coming to UK

529

367

448

seeking asylum

286

343

315

Visitor

470

485

477

Other

616

383

499

 

 

 

 

Total

524

393

459

 

Source: Own Analysis of LFS 2013

Family migrants (especially men) have below average earnings. This tends to reduce the net fiscal contribution.

It is hard to provide an overall assessment of the likely net fiscal impact of family migration.  But, given that the MAC report found (in line with other studies) that the overall net fiscal contribution of non-EEA migrants was negative, family migrants are more likely to be non-EEA  and the economic outcomes of family migrants seem somewhat worse than average, it is likely that the net contribution of family migrants on a current year basis is negative. Of course, the case for family migration is not based on its economic benefits but the right to family life.

Some qualification should also be given.  These exercizes treat the education of children as a fiscal cost (which it is in the current year) but it is also an investment for the future. Returns to education are not taken into account.

 

 

The Treatment of Children in Assessment of the Fiscal Impact of Immigration

In the type of exercizes described above, the foreign-born children of migrants are treated as migrants but different studies treat the UK-born children of migrants differently.  Some studies treat them as migrants on the grounds that they would not be in the UK if their parents had not migrated.  While this seems sensible, the problem is that when these individuals turn 18 they suddenly go from being treated as migrants to be treated as locals just when they become of working age and start to pay taxes if in work.  Other studies treat the UK-born children of migrants as locals; this will make the net fiscal contribution of migrants seem more positive though the effect is often small in practice.

There is an ideal way to assess the impact of migration on the public finances which, if implemented, would resolve these issues. To assess the net fiscal contribution of a particular type of immigration we need to assess the net fiscal contribution over entire lives of migrants, their children and their children’s children down the generations.  We simply do not have the data to do this.

The Net Fiscal Contribution and NHS Pay

The net fiscal contribution is always calculated for the current tax and welfare system and the current wage structure. If any of those things change then so would the assessed net fiscal contribution.  But just because they would change does not mean the changes would be large.

The Committee asked specifically about the likely impact of raising NHS pay on the assessment of the net fiscal contribution of migrants.  If NHS pay was raised this would mean that the government would have more tax revenue but also that the provision of health would be more expensive.  Whether this substantively affects the net fiscal position of family migrants depends on whether they are more or less likely than other groups to work in the NHS and more or less likely to consume health services.

The following Table shows whether family migrants are more likely to work in the NHS and their average earnings.

Main reason for coming to the UK (most recent arrival)

% working in NHS among all in employment

% working in NHS among working age population

Average weekly pay of workers in NHS

 

 

 

 

UK-born

6%

5%

510

Migrant

Employment

6%

5%

625

Study

10%

6%

698

as a spouse/dependent of UK citizen

7%

4%

459

Spouse/dependent of someone coming to UK

10%

6%

460

seeking asylum

7%

3%

570

Visitor

5%

3%

568

Other

5%

4%

699

 

 

 

 

Total

7%

4%

574

 

Source: Own Analysis of LFS 2013

Family migrants who are in employment (the first column) are slightly more likely to work in the NHS so would disproportionately benefit from an increase in NHS pay.  But this over-representation is reduced if one looks at the percentage of the working age population working in the NHS (the second column) because, as noted earlier, family migrants are less likely to be in employment. And the average pay among those working in the NHS is lowest for family migrants (the third column).  Taken together it is very unlikely that an increase in NHS pay would make any sizeable difference to the assessment of the taxes paid by migrants relative to other groups.

For a full assessment one would also need to take account of whether the increased cost of health provision from higher NHS high would increase the assessed costs of healthcare of family migrants more or less than other groups.

 

The Minimum Income Requirement

The Minimum Income Requirement (MIR) was introduced to ensure that those coming on family visas do not represent a burden on public finances. The MIR was originally based on estimates in a 2011 MAC report[3]. The Migration Observatory have a very helpful summary of the evidence available on the MIR[4]

When introduced the Home Office Impact assessment estimated there would be a reduction of 13,700-18,500 visa grants per annum (about 40% fall).  Yet this is not what happened as the graph below shows; the red line marks the change in 2012.

There were 2 quarters after the rise in MIR that had 30% lower applications but they then began to rise again. Looking at the graph it is hard to see any big effect. So, the impact seems smaller than both supporters and critics claimed.  As far as I am aware has never been an investigation into why the apparent impact was so much smaller than anticipated. This is typical of many immigration policies; there is rarely any assessment after the event of whether the policy achieved the intended objectives.

There are a number of pieces of data one would want to look at to begin to understand why.  We would like to know how many meet the MIR through the income or asset route.  And whether those meeting it through the income route (where currently 6 months work at the minimum wage would suffice if there are no children) sustain the level of earnings after being granted the visa.

It is quite possible that the MIR does not achieve its intended objective. It only looks at earnings of sponsor in recent past.  Perhaps the partner will earn if given a visa, and perhaps there will be earnings growth.  But perhaps they only have the level of income to meet the requirement and then falls back; if this was the case reported earnings would be concentrated at the minimum required level. Earnings of one person in the past six months may well be a very poor guide to future earnings of the whole household which is what is relevant for the net fiscal contribution in the long-term.

There are other oddities e.g. a home-owner is likely to be able to pass the asset test if they re-mortgage their house but not if they don’t even though their net wealth is the same in the cases. It is possible that like many parts of the immigration system the MIR has drastic consequences for some individuals while not achieving its objectives overall.

My view is that there should be a serious look at the MIR. Many other countries have some form of a MIR[5] but the option of its abolition should be seriously considered on the grounds that it is an interference with the rights to family life while being an ineffective tool for ensuring that family migrants have a positive net fiscal contribution even if that is thought a legitimate consideration.

 

Remittances

Remittances of migrants are incredibly important. The size of these remittances is very large[6]. According to the World Bank[7] remittances to low and middle-income countries were slightly larger than foreign direct investment in these countries in 2018, and five times larger than total development aid.  Data on bilateral remittances are available from the World Bank[8]

For the UK specifically 30% of migrants[9] send money back to their country of origin, overwhelmingly to family[10]We don’t have any evidence on whether family migrants specifically are more or likely to send remittances. There is perhaps some evidence that permanent migrants are less likely to send remittances than temporary because the intention to settle in the destination country means resources are needed to build a life there. And family migrants are, as we have seen, more likely to be permanent migrants.

 

September 2022


[1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1040877/2021_Annual_Report_combined_FINAL_v3.pdf

[2] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/741926/Final_EEA_report.PDF p74

[3] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/257244/family-migration-route.pdf

[4] https://migrationobservatory.ox.ac.uk/resources/reports/the-minimum-income-requirement-for-non-eea-family-members-in-the-uk-2/

[5] See the useful OECD report https://www.oecd.org/els/mig/IMO-2017-chap3.pdf

[6] See Yang, Dean. 2011. "Migrant Remittances." Journal of Economic Perspectives, 25 (3): 129-52. For an accessible summary on remittances.

[7] https://www.knomad.org/publication/migration-and-development-brief-31

[8] https://www.worldbank.org/en/topic/migrationremittancesdiasporaissues/brief/migration-remittances-data

[9] Source: Understanding Society

[10] https://migrationobservatory.ox.ac.uk/resources/briefings/migrant-remittances-to-and-from-the-uk/