Economic impact of our European migration miscalculation only just becoming apparent

Richard Austin is a frustrated man. The councillor in Boston, Lincolnshire, says his town needs funding to deal with changes to its population.

“We are desperate for better infrastructure,” he says. “There are terrible traffic jams. We need roads. We have been calling for a bypass for years ... we don’t have enough doctors.”

Part of Boston’s issue is a surge in foreign nationals. The town has been a major recipient of migrants since eastern European nations joined the EU in 2004.

At the time bosses were crying out for more workers, and their arrival aided production. “It allowed the area to continue to do well in terms of its core businesses - agriculture, horticulture, food production and manufacturing,” says Simon Beardsley, chief executive at Lincolnshire’s Chamber of Commerce.

These are often hard physical jobs, he notes, with low pay by British standards but decent by comparison to workers’ home countries.

The result is that almost one-third of Boston’s population are EU citizens, according to a Telegraph analysis of applications under the Settlement Scheme.

Estimated shares (%) of EU nationals living in UK local authorities, based on settlement scheme applications

This is just one of several datasets indicating the Government has long underestimated the number of Europeans in the country.

Around 6m have applied for settled status, well above the 3.5m to 4.1m anticipated by an earlier Home Office analysis.

Previous immigration figures were based on surveys of passengers arriving and leaving the UK, contributing to a model known as Long Term International Migration (LTIM).

A new technique, called Rapid, is based on actual tax and benefits data instead. It reveals that in many years of the last decade the number of EU migrants was more than, or close to, double previous estimates.

The wide discrepancy between estimated and actual figures means public services risk being run based on unrealistic expectations of demand.

The Office for National Statistics (ONS) now believes inflows from the EU were “potentially understated by around 90,000 people per year in the nine years up to 2019-20”.

Outflows were also understated, while migration from outside the EU was overstated - leaving an overall extra net inflow estimated at around 400,000.

Migrant boost to the economy

The impact of the miscalculation is only just emerging. When it comes to the economy overall, businesses boomed pre-pandemic on the back of migration.

“The additional supply of labour has been particularly welcome in sectors suffering labour shortages such as social care, hospitality and food processing, who simply do not attract enough UK applicants,” says Gerwyn Davies at the Chartered Institute of Personnel and Development.

Tony Wilson at the Institute for Employment Studies says that overall there “isn’t much evidence migrant workers have held down wages or led to higher unemployment”, with most job creation in the past decade in higher-paying roles.

Madeleine Sumption at the University of Oxford’s Migration Observatory says the overall effects on the economy are generally positive: “The labour market is dynamic, and employers create jobs if people are there to take them.”

Higher numbers also shifted the structure of some parts of the economy. The soft fruit industry is bigger because of migration, as picking is a labour-intensive activity, for example, she says.

A bigger population can also help with the national finances, which face strains from short-term issues such as Covid and the longer-term ageing of the population: “A bigger population dilutes the debt among more people,” says Sumption.

Read the full story in The Telegraph