Westminster blog

Some weeks ago, we ran a story on how David Cameron’s immigration cap would stunt economic growth and cost the exchequer around £9bn a year, at least according to the Office of Budget Responsibility economic model.

At that point the OBR had yet to take account of the new coalition policies. So for our piece, we had assumed Cameron would actually achieve his aim of bringing net immigration down to the level of the 1990s, when the average was close to 60,000.

Well, the OBR has now officially taken account of the coalition’s immigration policies. Their verdict makes surprising reading.

Their considered view is that Cameron will have no impact on net immigration. All the announcements since June have not made a jot of difference.

This is the key passage explaining the old assumption and the new policies:

The interim OBR’s June Budget estimates of trend growth estimates were based on an average net inward migration assumption of 140,000 per annum….

Since June, the Government has announced a limit of 21,700 for non-EU migrantscoming into the UK under the skilled and highly skilled routes from April 2011, areduction of 6,300 on 2009.

And here is their view of the impact the new policies will have:

At this stage, we judge that there is insufficient reason to change our average net migration assumption of 140,000 per year from 2010, which remains well below the net inflows of 198,000 seen in 2009.

Our assumption that average levels of net migration will be weaker in forthcoming years reflects our judgement that the removal of restrictions on inward migration by other EU countries and relatively weaker economic activityare likely to reduce the average level of net inflows relative to the recent past.

In summary, the new policies provide “insufficient reason” to adjust their migration forecasts. The OBR are predicting that Cameron will fail to reduce net migration into the tens of thousands — a pledge made in the Queen’s speech.

And to rub salt into the wound, they say that any success in bringing down migration will be down to factors (such as German immigration policy) that are completely outside Cameron’s control.

UPDATE:

Here’s the response from Damian Green, immigration minister:

“The report by the Office for Budget Responsibility is assuming a reduction in net migration to 140,000 for 2011-12, a drop of around 60,000 from current levels. The impact of the Government’s limit on economic migration is accounted for within this reduction; however it takes no account of future proposals to limit immigration via the student or family routes.

“The Government last week announced its limit on economic migration from outside Europe for the next financial year. This is just one part of a package of measures across all the immigration routes we intend to impose to deliver on our aim to reduce net migration to the tens of thousands within this Parliament.”