Encourage migrants to stay to boost economy - report

Encourage migrants to stay to boost economy - report

* Allegra Stratton, political correspondent
* The Guardian,
* Tuesday August 26 2008

A thinktank close to the government has criticised current immigration policy, issuing a warning that the entrepreneurial spirit and inventive flair of migrant communities will be lost to the UK unless ministers change their thinking.

The Institute for Public Policy Research (IPPR) has found that employers and local economies benefit from the skills brought by migrants, but the full positive effects are not being realised since most migrants only stay in the UK for short periods.

The IPPR says that of more than one million migrants who came to the UK from the eight countries that joined the EU in May 2004, around half have now returned home. The thinktank says councils and the government need to try to reverse this.

The full report, which will be published next month, will suggest councils and businesses discuss with universities how to better harness the skills of their foreign students. It will also call for the accreditation of foreign qualifications, which enables migrants to be recognised in the UK, to be fast-tracked.

The IPPR's findings will shore up one element of the government's position - that migrants add value to the British economy. Ministers believe immigration added £6bn to the economy in 2006.

The researchers argue that any analysis of the economic value of migrants should also take into account how they expand the market for local firms through links to their countries of origin. Harvard research done in California shows that for every 1% increase in migrant population, Californian exports to their countries of origin increased by 0.5%.

The economic value of immigration was challenged by a House of Lords report in April which concluded that immigrants had "little or no impact" on the UK's economy, with a negative impact for the low-paid and an increase in house prices. The Lords, including two ex-chancellors, backed a limit on immigration levels, in line with the Tory party's position.

But Laura Chappell, research fellow at the IPPR, also raised concerns about the government's points-based system, which calibrates how much the UK needs the skills of a worker or student seeking to enter the country.

She said: "Under the new system, no low-skilled migrants will be allowed into the UK from outside the EU. That is a large amount of people who are being written off ... but who add a huge amount to the diversity of an area and local economy.

"We're also worried that the system is based on a short-term economic analysis of what migrants bring to a country ... A migrant may be entrepreneurial once they have arrived in this country - ie, they 'create' a skill. We just don't know."

The IPPR research draws on three studies conducted in the last few years in Germany and America, each showing that as the number of migrants in a community increased, so too did the number of inventions patented in that area.

A home office spokesman said: "Migrant labour is by no means the only solution to our tight labour market. The National Skills Strategy was launched to address the needs of our domestic labour force."

The Lib Dems welcomed the report, but said the government was not flexible enough to balance the benefits the IPPR report suggested with the extra pressures that can be placed on local services by extreme and concentrated immigration.