Migrants Add Value to the U.K. Economy, OBR Study Says

Migrants were likely to pay more in taxes that they cost in services because the U.K. did not have to fund their education or healthcare when they were children

Migrant workers earning average wages in the United Kingdom can expect to contribute £500,000 more in taxes than they would cost in public services at the time of retirement, research by the government’s spending watchdog has found.

These migrant workers will be net contributors to the state even if they remain in the U.K. and live to the age of 90, The Times reported citing a report by the Office of Budget Responsibility. This compares to a U.K. average worker whose net contribution would be about half the £500,000 figure, The Times said. The Office for National Statistics currently puts average U.K. weekly earnings at £689.

Migrants were more likely to contribute more in taxes that they cost in services over their lifetime because the U.K. did not have to pay for the cost of their education or healthcare when they were children, OBR found.

But low-paid migrant workers coming to Britain in their twenties cost the state more than they contribute in taxes, rising to £150,000 by the time they hit state pension age. OBR said the costs of building new homes and providing services for the growing population more than offset the tax payments from migrants who are earning half the U.K. average wage.

Net migration, the number of people coming to live in the U.K. for the long-term minus those emigrating, climbed to a record 764,000 in 2022, about three times the annual average before the pandemic. Net migration, fell 10 percent in 2023 to 685,000 but is still well above the level before the pandemic.

OBR concluded that because of Britain’s ageing population, continued long-term migration was necessary if the government wanted to reduce the long-term expected trend of rising debt as a percentage of gross domestic product, according to The Times. The findings were included in the OBR’s fiscal risks and sustainability report published Sept. 12.

OBR’s report found that migrant workers earning 30 per cent more than the average salary could expect to contribute a net £925,000 to the Treasury until state pension age. These people would still be a net benefit to the public finances even if they lived to 100.

In contrast, a low-wage migrant worker arriving at 25 and earning half the U.K. average becomes less fiscally beneficial than the average U.K. resident in their early 40s, according to OBR’s finding.

Its calculations included spending required to keep the public capital stock per person constant. These included facilities such as social housing, new hospitals, schools and surgeries required for an expanding population.

Figures for how many migrants are low-paid are not available, The Times said.

U.K. Prime Minister Sir Keir Starmer has promised to reduce “sky-high” migration figures but Labour has refused to put a target on numbers. He has previously warned that employers have become too reliant on overseas workers and should always have a choice of recruiting a British worker first.

The previous British government made significant changes to the U.K. visa system earlier this year, increasing the minimum salary required to be sponsored for a Skilled Worker visa to £38,700 from £26,200.

It also banned social care workers and most students from bringing in dependants on their visa and most recent figures show this has led to a significant reduction in the number of overseas students applying for U.K. courses.

Home Secretary Yvette Cooper has said she supports some further restrictions on visas introduced by the government, according to The Times.