Amnesty would add £3 bn to GDP, £846 m to tax receipts, reveals LSE

An amnesty to estimated 618,000 illegal immigrants in Britain would not raise number ofimmigrants, but help spending on welfare and housing

17 June 2009: Crusaders for amnesty have received a boost. The London School of Economics believes an amnesty for an estimated 618,000 ­illegal immigrants in Britain will add £3 bn to the gross domestic product (GDP) and £846 m to tax receipts.

The study, published by the London assembly, makes it clear an amnesty will not lead to a rise in migration levels, but will raise spending on welfare services and housing.

Even as the Home Office says there will be no amnesty and those here illegally should go home, the report belies the fears that an amnesty can result in ­further large-scale illegal migration.

The findings, in form of a report commissioned by London mayor Boris Johnson, will apparently not to go down well with the Tory high command, whose policy of opposing an amnesty is in variance with that of the party’s most senior governing official.

The report comes within days of Migrationwatch, the anti-immigration lobby group, claiming an amnesty would cost the UK £1m for each newly legal migrant. It is likely to rake up a debate as unemployment is soaring in the UK and the workers at oil and gas plants, besides construction sites across the country, are indulging in a series of strikes over the use of cheap overseas labour. The far-right British National Party, with its anti-immigration policy, too has registered a two-seat victory in the elections.

The LSE findings are based on meticulous calculations. The report says out of about 618,000 illegal migrants in the UK, three-quarters live in London. About half of illegal migrants are unemployed and those working earn about a third less than legally employed counterparts. Regularising the situation for illegal migrants will lift their employment rate by 6 percentage points and their pay by 25 per cent; this would add £3bn to national GDP and £846m to tax receipts.

The study says amnesties and regularisation programmes have been common in several countries in recent years, including the US, France, Spain, Italy and Greece.

Welcoming the report, mayor Johnson says it shows an amnesty is “far from a financial burden”. “It has introduced some long overdue facts, hard evidence and academic rigour into a debate that has far too often been dominated by myth, anecdote and hearsay,” he says, adding effective border controls will halt future incomers.

Johnson had first called for an amnesty for long-term migrants in April last. His assertion, however, resulted in accusations of naivety from immigration minister Phil Woolas. He had claimed the mayor’s call for amnesty was "naive" and would lead to more trafficking of people.

London Assembly Chair Darren Johnson AM too has hailed the report, which according to him, “lends further economic weight to the argument in favour of regularising the status of hundreds of thousands of Londoners who are already making a significant contribution to the capital’s wealth.”

Darren Johnson asserts in the days of a recession ignoring the report will only amounts to negligence, as it talks of potential to add £3 billion per annum to UK GDP by introducing a limited and earned amnesty for the hard working migrants, who demonstrate a commitment to contributing fully to our society.

A spokesman for the Greater London Authority made it clear they believed there would be a net benefit, but it all depended on the type of amnesty introduced.

The LSE report also argues for extending the econ­omic benefits of an amnesty to people who have lived illegally in the UK for over five years and have not been in trouble with the police. The study says if a five-year residency plan is introduced, 67 per cent of illegal immigrants will be eligible to live in the UK.

At the same time, the LSE report also acknowledges some potentially heavy costs. Additional public services costs, including welfare services and housing can amount to about £1bn a year, while for administration it will be about £300m. Additional housing stock to cope with extra demand can cost up to £6.2bn.

Even as the report is out, the grant of amnesty remains a debatable issue. The government has the power to grant an amnesty, but is opposed to it, on the ground that it will en­courage more people to come to the country. Examples are quoted of Italy and Spain in support of the contension. On the other hand, the Liberal Democrats and many Labour MPs are in its favour.

A Home Office spokesperson, on the other hand, said the policy on an amnesty for illegal immigrants remains unchanged and is very clear – there will be no amnesty, those here illegally should go home.

"We have a proud tradition of offering sanctuary to those who truly need our help, but to grant an amnesty would create a significant pull factor to the UK and would undermine the asylum system as a whole."

Quick to react, Migrationwatch chairman Sir Andrew Green described the proposals as an “absurd waste of taxpayers’ money”; and added it would only turn the situation from bad to worse, besides further encouraging illegal immigration.

As per an estimate, the taxpayers could eventually be paying over £7 billion to fund an amnesty.

Sir Andrew also called for attention to Migrationwatch poll showing 70 per cent of Brits were opposed to an amnesty; and added the recent Euro elections ought to act as a lesson to the political class.

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