Shabana Mahmood wants to extend the qualifying period for gaining settled status, which gives access to benefits, from five years to 10 years. Photograph: Thomas Krych/Zuma Press Wire/ShutterstockView image in fullscreenShabana Mahmood wants to extend the qualifying period for gaining settled status, which gives access to benefits, from five years to 10 years. Photograph: Thomas Krych/Zuma Press Wire/ShutterstockMahmood’s migration reforms will deliver fraction of claimed savings, data suggestsExclusive: Analysis of government figures indicates public finances will gain £600m not £10bn if migrants’ access to benefits is reduced
Shabana Mahmood’s migration reforms are expected to deliver just £600m in savings – about 6% of the £10bn the home secretary claimed, according to the government’s own data.
Under the plans, most people would have to wait 10 years to qualify for settled status, rather than the existing five-year period, which the home secretary argued would save costs on public services.
But only a fraction of the figure the home secretary suggested would be saved by the changes, according to data from the Migration Advisory Committee (MAC) obtained via FOI.
Jonathan Portes, a professor of economics and public policy at King’s College London who obtained the data, said the savings were likely to be offset by costs of migrants leaving the UK and high earners being deterred from moving to the UK.
Last month Mahmood said that over the next five years 350,000 low-skilled workers and their dependants will qualify for settlement, giving them access to welfare, healthcare and social housing.
She said that, without the changes, there would be “a £10bn drain on our public finances and further strain on public services, like housing and healthcare, already under immense pressure.”
“We have never, in the history of this country, had so much low-skilled migration in so little time. We estimate, based on findings from the Migration Advisory Committee, that the lifetime cost to the taxpayer will be £10bn. That figure would be paid for by working people in this country,” she said.
The figure was based on the MAC’s lifetime estimates of fiscal impact. But Portes said that lifetime fiscal profile was strongly age-dependent and that net negative fiscal contributions often came later in life due to pensions and social care.
The newly released MAC data suggests migrants are net contributors for the first two decades after arrival, only turning negative after about 40 years.
Read moreThe data also shows that benefit expenditure is much smaller than tax contributions. Portes’ analysis of the data suggested the direct saving from delaying indefinite leave to remain (ILR) is about £2,000 per care worker and £4,000 per dependant over the full 10-year delay period.
Using Home Office estimates of the numbers of migrants approaching eligibility for settlement and their dependants, it suggests savings of approximately £600m over the 10-year period.
However, Portes said there were some caveats, as child benefit was not included in the data and there were different estimates of how many migrants would ultimately seek long-term settlement in the UK. Longer settlement times were also likely to lead to lower tax revenues as people remained in lower skilled work linked to visas rather than potentially progressing to higher salaries.
“The home secretary’s claim that her proposals are necessary to save £10 billion have now been thoroughly debunked by the government’s own data; in fact care workers and their dependants strengthen the public finances for at least the first two decades after arrival, and any savings from restricting their access to benefits are likely to be small compared to the costs that result from making the UK a less attractive destination for immigrants,” Portes said.
The Guardian revealed last month that Starmer was already looking at whether to exclude migrants working in the public sector from the changes, as well as those who are on the verge of being settled.
The figures have already been questioned by the Labour-aligned thinktank IPPR, which said the £10bn figure cannot be reached without the majority of care workers and their dependents leaving the UK entirely, rather than waiting longer for settlement as Mahmood proposes.
IPPR said that the departure of large numbers of skilled care workers would probably come with its own significant costs to the Treasury, which would outweigh the savings.
The main demand by Labour opponents of the proposals is that the government exempt people who have already arrived in the country, as suggested by the former deputy prime minister Angela Rayner and others. The Home Office is consulting on the changes, but they are not expected to be put to a parliamentary vote.
Read moreThe Labour MP Stella Creasy, one of the MPs opposed to the changes, said the claim of a £10bn saving from making care workers wait longer to settle in the UK was “impossible to sustain – it’s yet another example of why the home secretary cannot keep avoiding parliamentary scrutiny of her proposals and their consequences and bring them before MPs.”
The British Future thinktank director, Sunder Katwala, who collaborated on the research said: “These significant findings suggest any fiscal impacts of the draft reforms would be a small fraction of what the headline soundbites had suggested.
“The government now showing its own workings with its best estimates of potential fiscal gains and costs would give MPs an informed view of how the final proposals should change after the prime minister signalled his openness to compromise on fairness grounds.”
Max Wilkinson, the Liberal Democrat home affairs spokesperson said: “These figures expose the government’s £10bn claim as a fiscal fantasy that ignores the immense value care workers and their families bring to our communities and our economy.
Read more“By forcing those who care for our loved ones into a decade of uncertainty, ministers are not only choosing cruelty over common sense but are actively risking much-needed tax revenues that fund our public services.
“We need an immigration system that works for our economy and public services, rather than one that unfairly leaves people stuck in a state of permanent insecurity. The government must come clean by publishing the full figures on this.”
The Home Office said the £10bn figure was not intended to be potential savings but an illustration of the lifetime cost of the cohort of care workers and dependants currently due to become eligible for ILR. A Home Office spokesperson said: “The methodology behind our estimates is published, and the home secretary has been clear that the estimated lifetime cost for the cohort of care workers and their dependants in the absence of the earned settlement measures would be £10bn. “We will always welcome those that come to this country and contribute to our national life. But the privilege of living here forever should be earned, not automatic. “We must be honest about the scale and impact of hundreds of thousands of low-skilled migrants getting settlement and make no apologies for taking the necessary action to restore order.”
