DEBUG: blog_post
Migration Dividend Fund is a really bad idea
20 Sep, 2019

EU citizens are not a harm for which communities should be compensated

London4Europe Committee member and former Home Office and HM Treasury senior civil servant looks at proposals for a fund to channel the fiscal surplus generated by immigrants to deprived communities.


There used to be a Migration Impact Fund which channelled money to areas affected by immigration; that was scrapped by the 2010 Coalition. There have been several proposals for a return of the fund, including from some of London4Europe’s correspondents. Theresa May’s government created the “Controlling Immigration Fund”, but given its name few like the half of it that is supposed to help communities. In 2017 I published an article critical of any return of a migration impact fund. But the proposal keeps coming back, most recently in Global Future’s July 2019 proposal for a Migration Dividend Fund.

In this article I set out again the reasons why the Remain campaign and the political parties should not adopt a new Migration Impact Fund. Others have made similar arguments and Global Futures have responded to them.

For a subtle and balanced assessment of the issues, look at the Social Market Foundation’s 38-page report All Immigration is Local (Jonathan Thomas; January 2019) (I took part in a SMF round-table discussion of the issues).


Not the Rôle of the Remain campaign

Irrespective of the merits of such a fund it is not for the Remain campaign to advocate it, as say INFacts and its sister organisation Common Ground do.

That is because we will not form the next government. So we should not make promises that we will not be in a position to keep.

Moreover, we have to be careful not to set out an analysis that supports one political party’s version of the domestic problems facing Britain. If the Remain movement says that the Brexit vote was “really” a protest against Cameron’s austerity, not only are we wrong (all those Conservative Leave voters?), but we put off Remainers who do not support the party that shares that analysis. Fundamentally we fail to address Leave voters’ concerns about the EU.


Let’s not validate Leavers’ arguments

Leavers argue that immigrants are a drain on public services. The reverse is true. It is immigrants who pay our pensions. At the local level many services (schools, NHS) are funded by weighted capitation formulae. So immigrants bring public money into the local community. Nor do local workers lose out – any loss of earnings due to immigration is dwarfed by other factors.

But a fund linked to immigration or immigrants’ contributions would validate Leavers’ concerns.


Especially if we fail to resolve them

You do have to ask whether the reasons Leavers present for their hostility to immigration are their real reasons. We know that areas with the highest concern about immigration are often areas with low immigration – though often also areas with high recent increases in immigration.

People who are angry about the availability of Polish food in a supermarket or about a Polish shop on the High Street are not really worrying about economic effects. They are expressing an idea of what Britain should be like. So it is hard to believe that people who worry about immigration will be reassured by economic measures.


The Global Futures proposal is incoherent

The fund is to be called “Migration Dividend Fund”. Its size is to be determined by soft hypothecation of the net benefit that immigrants make to the Exchequer. Nonetheless, it is not to be spent in areas with high immigrant populations (or high changes in immigration). Instead it is to go to small towns and cities with high deprivation.

I am not saying that these places should not receive more public money. But the amount of money they receive should be determined by their needs/ opportunities relative to the benefits of other public spending, not by the accident of what the net contribution of immigrants is.

Fundamentally, since immigrants are not the cause of the problems of these towns we should not link immigration and the fund. It makes no more sense than spending there the proceeds of a fund equivalent to dentists’ income tax payments.

Global Futures is trying to make real to people who dislike immigration the economic benefits of immigration, as it were saying “we tell you that immigration is good for GDP. Now look at this project and you can see you how that turns into a benefit for your community”.

The justification for the policy is polling where people in poor regions would like money to spent in their area. Of course, everyone wants more public spending that benefits them. But that polling asked the wrong question. It should have asked “would you stop objecting to immigration if you saw the fiscal benefit more clearly?”.

Unless you think the objection to immigration is really economic rather than cultural, the answer would surely be No.


Using a fund to benefit areas of high immigration would be no better

Most proposals for a new Migration Impact Fund would channel spending to areas with high immigration/ change in immigration.

That would not work any better. Immigrants are not a problem for which a community needs to be compensated.

If the existing funding formulae are inadequately responsive they should be reformed. One cannot expect allocations to be 100% on the ideal: all funding formulae provide only an approximation of the best distribution of funds.


It is wrong to treat EU citizens instrumentally

More fundamentally, the policy is just wrong. EU citizens – the biggest net contributor to the Exchequer – are not here on sufferance.

Under freedom of movement they have as much right to move to Yorkshire as someone from Lancashire has. They do not have to prove their contribution (they may in law have to prove they have a job or adequate means).


Miscommunication is inevitable

Whatever the intentions of the proponents, I cannot see how such a fund can be established without in effect seeming to say “Yes, immigrants are a problem, but here is a cheque to compensate”.


So, what should we say?

The points to make are that freedom of movement is a reciprocal right. We have it too. We may go anywhere in the EU to work, study, retire. EU freedom of movement is like the freedom of movement we have within the UK.

Secondly, we should explain that immigrants assimilate. That is what reassures Leave voters.



A migration impact fund, no matter how it is structured, will reinforce Leavers’ idea that immigrants are a burden. Political parties should propose regional policy instruments based on need/ opportunity and not determined by irrelevant figures. The Remain movement should not back specific policies because we will not be in a position to deliver on them. Instead we should reassure those hostile to immigration by explaining how immigrants assimilate.




The London4Europe blogs page is edited by Nick Hopkinson, Vice-Chair. Articles on this page reflect the views of the author, not necessarily of London4Europe.