Bring in migrants to cut billions from deficit, says Osborne's watchdog - UK Politics - UK - The Independent

Bring in migrants to cut billions from deficit, says Osborne's watchdog

OBR figures sound alarm on plans for drastic limits to immigration

Higher levels of immigration over the next 50 years would spare taxpayers from the need to endure much greater austerity, the Government's fiscal watchdog has said.

The ageing population will put growing financial pressure on future taxpayers and governments, and Britain will need to undergo an extra £17bn of spending cuts and tax rises to bring down the national debt to 40 per cent of gross domestic product by 2062, the Office for Budget Responsibility said.

This is on top of the £120bn fiscal consolidation the Chancellor, George Osborne, is pushing through as he seeks to close the budget deficit. But higher levels of immigration would help the economy to grow faster and ease the pressure to cut spending, according to the OBR.

Boosting immigration would prove controversial, however, because the Coalition has pledged to reduce the annual figure to the "tens of thousands" of people by the end of this parliament in 2015, down from the current official level of 260,000 a year.

The Treasury is already warning other departments that a "very tough" government spending review will be needed before the 2015 election – and the OBR's verdict provides Mr Osborne with ammunition. The OBR's analysis was based on the assumption that annual net migration over the following five decades will fall to 140,000.

It also showed that if annual immigration were to remain at present levels of 260,000 the economy would grow more quickly. The OBR said that higher immigration would raise the annual growth rate over the next five decades from 2.4 per cent to 2.7 per cent. Under these circumstances the size of the fiscal consolidation needed to bring down the public debt to 40 per cent of GDP would be three times smaller, at just £4.6bn.

Even the OBR's central projection, which sees net inward migration falling to 140,000 per year, would prove contentious if enacted because of the Coalition's pledge to dramatically reduce immigration.

The Government is struggling to meet its target of just "tens of thousands" of immigrants coming to the UK each year, and some ministers want to see foreign students taken out of the figures on the grounds that few of them remain in the UK permanently. The move would be controversial as it would be seen as an attempt to "move the goalposts" so the Government can hit its target.

The economic benefits of migration highlighted by the OBR could make it harder for the Conservatives to justify their tough approach on the issue. Private polling for the Tories suggests that the three issues of most concern to voters are the economy, immigration and welfare. Tory strategists plan to exploit immigration in the run-up to the next election as the two Coalition parties diverge.

The OBR's analysis showed that with annual immigration of 260,000 the UK's population, presently 62.3 million, would reach 85.8 million by 2060, and the working age population (16-65) would be 50.3 million. If annual migrant flows were 140,000, the British population would reach 77.2 million and the working age population would be 44.5 million. With zero migration the population would rise to 64.1 million and the working age population would fall to 35 million.

The OBR also forecast that if net inward migration were cut to zero over the next five decades, the scale of the public austerity facing Britain would need to be three times larger, at £46bn. If all migration ended tomorrow, the UK's average annual growth rate would fall to 2 per cent and the national debt would spiral to 120 per cent of GDP by the middle of the century.

The OBR said: "Higher net migration than in our central projection – closer to the levels we have seen in recent years, for example – would put downward pressure on borrowing and PSND [public sector net debt], as net immigrants are more likely to be of working age than the population in general." The OBR said that an ageing population would put pressure on state finances through increasing health spending, higher state pension costs and rising social care bills.

Case study: 'Immigrants have more drive to be successful'

Mumtaz Khan Akbar arrived in Britain from his home in Kashmir in 1972, aged just 12.

In 1979 with capital of just £1,500 and with the guiding help of his mother, he opened a tiny Asian delicatessen measuring just 12sq m bearing his name. Today he employs more than 350 people and is at the head of a company turning over £25m a year.

Now one of the richest men in Yorkshire, with a personal fortune estimated at £25m, Mr Akbar owns three factories manufacturing ready meals and condiments.

He puts his success down to hard work and determination to succeed. He said: "What I found is that many immigrants have more drive to be successful. You want to be an entrepreneur so you want to do business because you came from a country where there were not many opportunities.

"In Britain there is equal opportunity for everybody and that is what is so great about it."

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
peopleThe report and photo dedicated to the actress’s decolletage has, unsurprisingly, provoked anger
Property
Home body: Badger stays safe indoors
property
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
The programme sees four specialists creating what they believe are three perfect couples, based on scientific matchmaking. The couples will not meet until they walk down the aisle together
tvUK wedding show jilted
Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
You've been framed: Henri Matisse's colourful cut-outs at Tate Modern
artWhat makes a smash-hit art show
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
Sport
Mikel Arteta pictured during Borussia Dortmund vs Arsenal
champions league
Voices
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Arts and Entertainment
Robin Thicke and Pharell Williams in the video of the song, which has been accused of justifying rape
music...and he had 'almost no part' in writing it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SEN Teaching Assistant Runcorn

£50 per day: Randstad Education Cheshire: SEN Teaching Assistant EBD , Septemb...

SEN Teaching Assistant

£50 per day: Randstad Education Cheshire: SEN Teaching Assistant We are curr...

HR Manager - Kent - £45,000

£40000 - £45000 per annum: Ashdown Group: HR Manager / Training Manager (L&D /...

Senior QA Engineer - Agile, SCRUM

£35000 - £50000 per annum + benefits: Ashdown Group: Senior QA Engineer (Agil...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week