UK
24/07/2013 10:54 BST | Updated 24/07/2013 10:59 BST

David Cameron's Attack On Immigration Is 'Anti-Growth' And 'Complete Nonsense', Say Business Groups

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Prime Minister David Cameron during a joint press conference with Italian Prime Minister Enrico Letta at 10 Downing Street, in central London.

David Cameron has come under fire from business groups and leading economists for suggesting that immigration was a “constant drain” on Britain’s public services.

It comes after Cameron agreed with an audience member at a Q&A yesterday at Bentley Motors in Crewe who asked why immigrants who were a “constant drain” were allowed into the country, while others “work hard”.

Cameron replied: ‘I basically agree with you…in the last decade we have had an immigration policy that’s completely lax. The pressure it puts on our public services and communities is too great.’

But the Prime Minister’s claim has provoked derision from business groups, which stressed the economic and fiscal benefits of net migration as a whole. John Wastnage, head of labour market policy at the British Chambers of Commerce, told the Huffington Post UK: “The whole of the government’s immigration policy is very damaging to the economy. Immigrants are more likely to work, use fewer services and claim less benefits. Our own research shows employers hire immigrants because of their skills, not because they cost less.”

“The coalition’s message on immigration is deeply anti-growth. It’s putting politics first and foremost and it’s a protectionist policy which we all know doesn’t work. The government should focus on improving the education and skills of British workers to help them compete with the best in the world.

Wastnage branded Cameron’s message “paradoxical” given the government’s stated ambition is to boost business exports around the world. “We should welcome those with skills and talent,” he said, adding: “As any A-Level economist will tell you, immigrants don’t reduce the availiability of jobs for the local population.”

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A spokesperson for the London First business group agreed, saying: "The UK needs migrants. They are needed to supplement our own workforce, we need those that have skills not found among the UK workforce and we need those that come to the UK to start businesses and create jobs and growth. Immigrants add value to the British economy.”

The PM was also attacked by the free-market Institute of Economic Affairs. The IEA's Dr Steve Davis told HuffPost UK that Cameron’s comments were “complete nonsense”.

"Why is it that immigrants are a drain and a cost when they consume services provided by the government but an opportunity when they consume services provided by the private sector? The economics are also simple. Immigrants are in general younger and less likely to be unemployed. Therefore they are overwhelmingly net contributors to the public purse through the taxes that they pay rather than a ‘drain’."

Cameron’s critics are bolstered by a recent analysis from the Office for Budgetary Responsibility, which concluded last week that migrants’ impact of is “is likely to be positive, because a greater proportion of migrants are of working age”.

The OBR suggests that migrants could contribute more than native Brits as they are “relatively more likely to arrive as adults, so the UK will receive the positive contribution from their work without having to pay for their education.

“It is also the case that upon arrival, if unemployed, they are not immediately entitled to - or are not eligible for unemployment benefits, and they will contribute to tax receipts as soonas they start working.”

The OBR also warned that an extra seven million migrants were needed over the next 50 years to balance the financial strains of an ageing population, equivalent to 140,000 migrants per year.

According to the OBR, a complete ban on immigrants would see borrowing rise to 174% of GDP, while a steady immigration flow would see it rise to just 99%.

Jonathan Portes, director of the National Institute for Economic and Social Research (NIESR) and former Cabinet Office chief economist, said: "The evidence, as well as common sense, tell us that immigrants on average contribute more to public services and the welfare state than they cost: they are typically young and healthy.

“The real drain on public services would occur if the government succeeds in its goal of substantially reducing immigration; the OBR analysis shows that, other things equal, this would lead to much higher debt and deficits than would otherwise be the case."

However, Cameron's remarks will play well with the public, polls shows that the voters are deeply hostile to immigration. According to a YouGov poll back in May, 57% of the public rank immigration as among their top three concerns, a three-year high.

The PM can also count on support from the anti-immigration lobby group, MigrationWatch, which claims that "there is no economic argument in favour of current levels of net migration."