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."

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Extras
indybest
Arts and Entertainment
tv
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
art
Sport
Is this how Mario Balotelli will cruise into Liverpool?
football
News
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
i100
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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

Junior Quant Analyst - C++, Boost, Data Mining

£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Service Desk Analyst- (Desktop Support, Help desk)

£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Junior Quant Analyst (Machine Learning, SQL, Brokerage)

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

UNIX Application Support Analyst- Support, UNIX, London

£45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

Day In a Page

Air strikes? Talk of God? Obama is following the jihadists’ script

Air strikes? Talk of God? Obama is following the jihadists’ script

The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
Ebola outbreak: Billy Graham’s son declares righteous war on the virus

Billy Graham’s son declares righteous war on Ebola

A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

Not even Jeremy Clarkson is bigger than the BBC, says TV boss

Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

Nick Clegg the movie

Channel 4 to air Coalition drama showing Lib Dem leader's rise
Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

Philip Larkin: What will survive of him?

Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
Texas forensic astronomer finally pinpoints the exact birth of impressionism

Revealed (to the minute)

The precise time when impressionism was born
10 best men's skincare products

Face it: 10 best men's skincare products

Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed