Coffee House

ONS blunder lets ministers blame falling real incomes on immigration

1 August 2012

10:20 AM

1 August 2012

10:20 AM

Yesterday the ONS published a report showing average disposable incomes at their lowest level since 2003. This is difficult news for ministers: as Isabel pointed out, concerns about the cost of living – stagnant wages and rising prices – are one of the main reasons given by voters in recent polls for turning away from the Conservatives.

Imagine, then, how pleased ministers must have been when they saw that the ONS had thrown them a lifeline: the chance to blame it all on immigration. The ONS report discusses the effects of wages and prices, and then adds that ‘finally, sustained population growth led to incomes being spread across a greater number of people, and therefore further reduced the growth of actual income per head over the period’. Quick as a flash, the Immigration Minister Damian Green put out a statement saying that ONS have today confirmed that the population growth caused by Labour’s uncontrolled immigration has reduced incomes’.

Let us leave on one side Green’s substitution of ‘reduced the growth of incomes’ with ‘reduced incomes’, and his conflation of population growth with immigration (on which see here). The bigger problem is with the ONS’ claim that ‘population growth… reduced the growth of income per head’. There appears to be no evidence for this claim in the report, nor can I think of any evidence in anything the ONS has published previously. In the absence of any evidence, we can only conclude that the ONS has committed the elementary statistical fallacy of conflating ‘X rose and Y fell’ with ‘X caused Y to fall’.

What the data actually tells us, is that if we compare 2012 with 2003, the population is higher, and income per head is lower. This is consistent with population growth having reduced income per head; but it is also consistent with the opposite, that population growth increased income per head – but was outweighed by other factors.


Perhaps our statistician friends were confused by the rather different idea that, in a hypothetical scenario, if we assume a fixed level of national income, then increasing the population will reduce income per head. This is a claim which does not require any evidence: it is a matter of definition. But it is not the same thing, at all, as the empirical claim that the real world phenomenon of population growth – an actual phenomenon involving real factors like immigration, increased fertility, and increased longevity – has caused the real world phenomenon of falling real incomes. That is a claim which very definitely does require evidence.

Some readers will find this so obvious as to be hardly worth saying. But it seems that participants in the immigration debate do need continually reminding that to show that ‘X caused Y’ – that immigration caused youth unemployment, for example – you must first show that the two variables are genuinely rather than accidentally correlated (which involves testing the relationship, controlling for other variables, etc) and second, provide a plausible causal relationship to explain the correlation.

Consider one of the other elements of population growth in the last decade, namely, longevity. Studies have found a genuine correlation between longevity and income per head, over many decades and many countries: not the negative correlation you might expect if you spent too much time listening to the modern-day Malthusians (whose reaction to the Census seemed to imply that people living longer was an intolerable burden on society), but a positive one. Of course, only a fool would conclude from this that ‘rising longevity increased income per head’: it is far more plausible that the causation – if there is any – is the other way around.

In the case of immigration and income per head, various studies have attempted to establish a genuine correlation. For what it is worth, the most recent major international study suggests that there is a correlation: again, it is positive rather than negative. Various hypotheses have been put forward about a possible causal relationship. The opponents of immigration may find this study, and these hypotheses, unconvincing: they are entitled to that position. But they must accept that it is not enough simply to say that immigration rose and incomes fell over the same period, and therefore immigration reduced incomes. This is the kind of shoddy methodology I’d expect from pressure groups like MigrationWatch, but I would expect rather more of the Office for National Statistics – and indeed of a Minister of the Crown.

UPDATE, 16.00, 2 August: The ONS has published a correction to the stats here. I’ve raised it as an issue with Damian Green, asking him to withdraw the claim.

Matt Cavanagh is a visiting fellow at IPPR.

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Show comments
  • kayla

    This article is pure double-speak

  • Radford_NG

    1st Aug.c6.25pm BST. It’s basic market economics.If there is a glut of a product prices will go down.If there is an increased work-force wages will go down.The best thing to happen for the workers was the Black Death.This produced a labour shortage and the survivors were able to demand better terms.If their master wouldn’t accede they would take themselves off and find another Baron who had a better grasp of socio-economics…….This in spite of the Laws on serfdom.So that’s a triumph for the market.Such concepts still apply.

  • Sumit Rahman

    Matt, I think you are being a bit harsh on ONS here. All they are pointing out is that there are two ways a ratio (income per capita) can fall: the numerator can decrease, and the denominator can increase. Of course in a complex situation like this changes in income and population are both driven by several factors and some of these cancel each other out (e.g. rising population might lead to growth in incomes, leaving income per capita steady). All the ONS is saying is that rising population ‘makes’ the income per capita go down, in a purely mathematical (rather than economic) way.

    I agree the phrasing is such that it allows people to infer a possible real world causal connection. They’d have been better off saying that a rise in population, without any accompanying change in total income, would push the ratio down.

    • Daniel Maris

      This is Alice in Wonderland reasoning. Per capita GDP is all that matters to individuals. So it is not in any way a mathematical abstraction it is about whether people are richer or poorer in reality, not in between the laminated covers of a think tank report.

  • Sue

    My goodness, talk about trying to wriggle out of a fact that’s as plain on the nose on anyone’s face. Of course immigration has affected wages. Remember, supply & demand? When something is in plentiful supply, it is worth less. As it becomes rarer, it’s value increases. Ask anyone who has filled out a couple of hundred application forms for a job!

    • Matt Cavanagh

      Sue: there is robust evidence that immigration has exerted downward pressure on wages in some sectors and some areas. I am not aware of any evidence that it has reduced overall income per head. The difference between the two is (in my view) important. The latter is what the ONS report is about, and therefore what my article is about.

      • Daniel Maris

        It would be interesting if you would give some indication of what evidence in principle you would accept as demonstrating that mass immigration had depressed per capita income.
        Would such evidence including (in principle) proportionately increased expenditure on health, prison, education and welfare services in relation to immigrants and their descendants (compared to non-immigrants) count for instance as a depressive factor? What studies are you aware of that deal with these issues?

        • sarahsmith232

          university college london did a study that showed that immigration lowered wages for the young and the low skilled. they did another study which showed it increased wealth for high earners.
          there hasn’t been any studies which include welfare expenditure and the amount of taxes immigrants soak up.
          and there isn’t a study on earth that can tot up the depressing effects of witnessing your once attractive local area get turned into a 3rd world, kebab shop and pound shop strewn dump

          • Daniel Maris

            Thanks for that. I certainly am not expecting any reply from Mr. Cavanagh – he only asserts, never debates. As long as he can fit his five piece jigsaw together, toddler-like, he’s happy.
            There have been studies done on the psychological effects of multi-lingual immigration. Inability to communicate effectively in a common language apparently does lead to unhappiness.

            • sarahsmith232

              you know, my above post was wrong, in this country there hasn’t been any studies about how much immigrants soak up in taxes and how much they contribute, but there was in the U.S. They found that immigrants ARE a drain on the national purse. this was in the U.S! when everything was totalled up they did cost more than they contributed, there was a total net loss, not gain. can’t imagine it would the opposite here.

      • sarahsmith232

        what is supposed to be the point of the Labour party if not to represent the interests of the people working at the lower end of the income rate. the people affected are people on low incomes. the people who benefitted from immigration are teh already affluent.
        you’re a typical Oxbridge New Labour waste. you couldn’t care less about the working class. it’s the Conservatives that now represent the interests of the working poor, Labour abandoned the WC decades ago. you’re dead typical of them.

        • Daniel Maris

          It’s a paradox, because while the working class don’t benefit from mass immigration, the Labour Party does, given the way immigrants’ votes go overwhelmingly to Labour.
          But equally the Conservatives, allegedly the party of patriotism, is in reality are far more beholden to capitalist interests,that once again see short term benefits in mass immigration (in eroding labour solidarity and driving down wages).
          UKIP seem to be the only non-racist party who are serious about addressing mass immigration, but I don’t much like their economic policy myself. However, given mass immigration has now reached the level of a national emergency (and for me Damian Green’s comments were confirmation of this) it might be the only way of forcing this issue on to centre stage.

          • sarahsmith232

            please, please, please don’t vote Ukip at the next election! it was supposed to be the case that Ukip split the right-wing vote in 6 marginal constituencies at the last election, one of which was Ed Ball’s, this cost the Conservatives 6 MP’s. at the next election it is a given that Labour will get enough votes to enter into a coalition with the Lib Dem’s, they could have done it last time, remember G.Brown not leaving number10 and his desperate attempts to get a coalition with the Lib Dems then? every last vote is going to count next time round. if you#re as desperate for something to be done about immigration as i am and most of the rest of the country then please, please, please, no more Ukip voting!
            have a good night

  • Wilhelm

    Sweden, the city of Malmo is more islamic than Swedish. The city is 25 % muslim. Rape crime has tripled .

    I can it feel it in my bones that this multicultural experiment is not going to end happily.

    • tele_machus

      This is exactly the crap philosophy talked about above

    • tele_machus

      Wilhelm you should read the seminal interview in the Torygraph with Charles Moore last week. He spoke of … He condemned radical fundamentalists while confirming that Islam is indeed the religion of peace.
      You and your kind would do well to promote harmony among the vast majority of muslims who wish to live in harmony with us
      You may wish to question why we insult them by arranging the Olympics in Ramadan

      • Nicholas

        And you should have read it a bit more carefully and with less blinkered eyes.

        “The liberal Left were particularly credulous: ”How we Islamists laughed at their naivety. In college, HT could easily turn the Islamic Society into its front organisation, and students had no trouble carrying knives at all times. ”Hate speech’’ which, Nawaz writes, would have been jumped on if it had come from the BNP, was indulged because it came from people with brown skin. In Pakistan, teaching English via the British Council was a recognised means of livelihood for HT agitators. Our host culture was so abject that it effectively incited attacks upon itself.”

        The credulous liberal left? That’s people like you that is.

        • tele_machus

          We observe ans advise society on the Truth

          • Nicholas

            You people wouldn’t know the truth if it was written in neon letters 200 feet high. You live by dishonesty and manipulating words to mean what you want them to mean. Orwell had your lot pegged long ago and life is now imitating art. The only question is how and why the media let you get away with it when it’s so bleedin’ obvious to everyone else.

            I’ll never “heed” your garbage. I’ll gladly die “unreconstructed” and cursing the left with my last breath, praying that one day they’ll get their long overdue, long deserved comeuppance.

  • Daniel Maris

    Challenge to Matt Cavanagh – can he point to one study of the economic benefits of
    immigration that includes a debit entry for the 14 Femal Genital Mutilation clinics in the NHS? Because that’s one cost that no amount of statistical wheedling on his part can make vanish. It is clearly a cost associated with immigration but I have NEVER heard of it being accounted for in these so called analyses (in reality statistical polemics) he loves to quote.

    • toni

      Hmm. You’ve mentioned FGM and the alleged 14 NHS clinics set up to deal with it twice already, so it’s obviously a major concern for you.
      Tell you what, why don’t you tweet your complaints to a female MP…say Louise Mensch? She’s good at raising contraversial issues, and see what sort of response you get.

      • Daniel Maris

        It’s not a major concern to me. It’s a clear example of an additional cost of immigration that Mr. Cavanagh can’t weasel his way out of. Not that I expect a reply. He never responds to points raised in reply to his dubious articles.
        I am all in favour of the victims of FGM getting help.

  • Daniel Maris

    Because Mr Cavanagh knows he is losing the argument, we see that like some desperado being chased down, he throws anything he can find behind him to impede his pursuers.
    One thing he throws is this:
    “Some readers will find this so obvious as to be hardly worth saying. But it seems that participants in the immigration debate do need continually reminding that to show that ‘X caused Y’ – that immigration caused youth unemployment, for example – you must first show that the two variables are genuinely rather than accidentally correlated (which involves testing the relationship, controlling for other variables, etc) and second, provide a plausible causal relationship to explain the correlation.”
    Anyone who has studied statistical correlation or the philosophy of causality will know that what he is doing here is throwing up a barrier that is impossible to climb – fundamentally this is a matter of subjective judgement, but he knows that statisticians could happily debate this matter for a thousand years and not come to a conclusion, there being so many variables (in fact an infinite number, since those variables are themselves a matter of subjective judgement) on which these two variables turn.
    In the final analysis, this is a matter of common sense judgement. Why are employers so keen on immigration? Because migrants produce less for higher wages? Is that likely? I don’t think so.
    It is a reasonable conclusion, that mass immigration – particularly in a recession – can be causing unemployment among the home population (which includes earlier immigrants as well as people with a long history of residence in these islands).

  • Wilhelm

    But Peter Sutherland head of UN immigration is going against the UN’s own charter on genocide.
    Article II

    ”In the present Convention, genocide means any of the following acts committed with intent to destroy, in whole or in part, a national, ethnical, racial or religious group, as such
    Causing serious bodily or mental harm to members of the group;
    Deliberately inflicting on the group conditions of life calculated to bring about its physical. destruction in whole or in part. ”

  • Wilhelm

    Why does Britain need immigrants when there is 4 million people unemployed ?

    Spain has 5 million unemployed and no one in Spain says ”we need millions of dynamic , entrepreneurial, go getting African immigrants to help their economy ” do they ?

    And if African immigrants are so ” dynamic and entrepreneurial ” how come they’ve kept that talent hidden for the last 30,000 years ?

    Another example is Sweden, that nation was the richest, cleanest , safest to live in. What would Somalian, Congolese and muslims add to that society ? but crime, rape and violence,everyone knows it.

    There is a malevolence behind mass immigration and Peter Sutherland, ( Goldman Sachs banker and One Worlder ) head of immigration at the UN let the cat out the bag.

    ” The European Union should undermine national homogeneity.”

  • Allectus

    The economic benefits of mass immigration have been systematically exaggerated and the wider economic and social costs denied or downplayed by those with a vested interest – economic, political, (multi)cultural or demographic – in its continuance.

    It’s time we faced up to these costs and took appropriate counter-measures, such as:

    1) a blanket ban on immigration by unskilled workers or those whose skills are not in demand;

    2) holding periodic auctions of quotas of work, residence and study permits (with appropriate reserve prices), so that employers and universities are free to put their money where their mouth is and make an appropriate contribution to the taxpayer;

    3) the imposition of fees to recognise marriages of migrants to those with UK residency rights and for bringing each dependent relative to the UK, such fees being adequate to indemnify the taxpayer against future liabilities for education, housing, benefits, medical treatment and geriatric care, etc.;

    4) stem the tide of asylum seekers by repealing the Human Rights Act, withdrawing from the United Nations Convention Relating to the Rights of Refugees of 1951, the subsequent protocol of 1967, the ECHR, and the European Union, whose member states are bound by various internal agreements relating to the settlement of refugees;

    5) seize the assets of employers, landlords and relatives complicit in illegal immigration, imposing heavy fines for failing to report reasonable suspicions about illegal immigrants, and paying bounties to those, whether individuals or businesses, who give information leading to successful prosecutions or deportations.

    • ArchiePonsonby

      Now you’re talking!

  • Justathought

    Actually Matt the report concludes that there is a negative impact form immigration, which they refer to as “fictionalization”. Nor does the report analyze mass immigration on the scale to which you and your paymasters oversaw.

    What the report fails to do for example is to acknowledge 15% of the Muslim population of the EU now reside in the UK. The UK attracts more immigrants from Pakistan Bangladesh and India than any other country in the world. A higher percentage of them claim welfare benefits than compared to EU migrants and remain on benefits longer than any other ethnic group.

    • John

      Perhaps our forefathers should have considered that before we colonized them.

      • Nicholas

        When are you off to Rome to reclaim it then? Or Normandy?

        Pathetic argument from a typical lefty.

      • Donafugata

        John, are you a guardianista?
        This tired old shot is frequently seen on the Comment is ( occasionally) Free threads.
        Someone really should have warned Robert Clive of the consequences of setting up the East India Company, I’m sure he would have seen sense.

        Your argument also assumes that nothing good came of empire.

    • Donafugata

      I used to teach English to immigrants at the community college.
      A Somali woman student told me,
      “I have five children, I cannot be suicide bomber but I can take your money.”

      Apparently there is something called demographic jihad where Western civilisation can be destroyed in less dramatic ways and simply helping to drain it dry is seen as doing ones bit for world domination.

  • Wilhelm

    ” Immigration ” the correct word is ethnic cleansing, displacement and colonization.

    And the end result is the opening ceremony of the Olympics, a celebration of multiculturalism and miscegenation to the sound of rapper ” Dizzy Rascal.”

  • Eugene N

    For some people immigration is a ideology. For me – a sometime immigrant myself – it’s a tool. If it makes people’s lifes in the destination country easier, or the same, it should be encouraged. If not, not.

    Cavanagh says:
    “Some readers will find this so obvious as to be hardly worth saying. But it seems that participants in the immigration debate do need continually reminding that to show that ‘X caused Y’ – that immigration caused youth unemployment, for example – you must first show that the two variables are genuinely rather than accidentally correlated (which involves testing the relationship, controlling for other variables, etc) and second, provide a plausible causal relationship to explain the correlation.”

    It’s relatively easy to control in a recession, where investment and capital decrease. If the number of jobs falls by 1 million in a time period, and the number of immigrants coming to work are 200K in that time period, then there are now 1.2 million people out of work, not 1 million. It doesn’t matter in what order someone replaced someone else. Capital and investment are falling, 1 million people are laid off, another 200,000 are replaced or not considered for a job now done by an immigrant. This is harder to argue in a boom, but not a recession. Policy makers should be able, therefore, to restrict immigration in a recession.

    The other problem – largely ignored in these reports is housing. They may put it into general costs in this report, I dont know; but increases in rent in a recession – which we are seeing – would obviously reduce real disposable income for renters. Id like to see a study which worked out real median disposable income taking into account immigrations effect on house prices and rent, over the last ten years – i.e. compare the supposed gains in gross incomes dues to immigration – which most of us would be fairly dubious about as it makes labour the only commodity whose price increases as it gets less scarce – with the net income gains and losses due to housing shortages.

    • Daniel Maris

      I agree Eugene that this is a pragmatic matter, not one of ideology.
      Much immigration has definitely benefitted this country and personally speaking, I like the cosmopolitan atmosphere of London – I enjoy being among people from all over the world (though I accept a lot of people don’t like that).
      However, we have now reached a stage where – with something like 400-500,000 migrants a year (many with poor English language skills and who are just augmenting communities that are not friendly to our values) – this is approaching as Frank Field said, a national emergency. We are starting to see the effects of this emergency through the impact on for instance the primary school sector. In London the two storey huts are going up and primary schools look more like buidling sites than places for children to learn as part of a happy community.
      As you say, real median disposable income is what matters – and this is under huge pressure in the capital.

  • Nicholas

    Let’s just make two things clear Mr Cavanagh, 2003-2010 pro-immigration special advisor to the New Labour government which imposed mass immigration “to rub the right’s nose in diversity”, shall we?

    Firstly, anything you write on this subject is suspect because you are not impartial. Remember knife crime?

    Secondly, many of those “opponents of immigration” are not opposed to immigration per se, but to the scale and speed of it, combined with the imposition of multi-cultural policies that increase government expense (have you quantified the cost of interpretation, translation and multi-lingual publishing services?), increase demand for taxpayer funded resources and place a greater burden on an already creaking infrastructure – housing, transport, power, etc.

    Having hopefully made those two things clear, why is it that you feel comfortable asserting unproven correlations in that support your own arguments (re longevity for example) and yet criticise that tendency within arguments that do not support your position?

    And do you really have to exhibit the left-wing tendency to discredit the authors of arguments you disagree with (“shoddy methodology”) rather than just stating your counter argument and leaving it at that? And putting pressure on statisticians to release data prematurely – what sort of methodology is that?

    • HooksLaw

      Well said.
      Pathetic special pleading from a lefty given prominence by the Spectator.

    • tele_machus

      Yes Nicholas.
      Intellectual dishonesty from Cavanagh does the Truth a dis-service.
      We all accept that cross fertilisation of the barren inward looking English psyche has always been good for the growing dynamism of our culture.
      This in turn has led throughout the millenia to the success of our country in exporting our ideas, culture, language and services to the community of nations such that they now beat a track to our door and promote our growth
      Mass immigration led to the transformation of our language to anglo saxon then english which we exported round the globe. Now our economy is in no small part primed and resourced by the world coming back to us to soak the environment of that language and contribute to what growth we have seen over the last 2 decades before Osborne began to destroy it.
      This is but a small example but I encourage You, Cavanagh and others who subvert the truth to read the lessons of history

      • Halcyondaze2

        What planet is this IDIOT on? The above post beggars belief!

      • Nicholas

        It’s not me subverting the truth as well you know. It’s not my regime that for thirteen long, miserable years practiced deceit on the British people on a scale never seen before. The country changed beyond recognition after 1997. It’s obvious to anyone with eyes and half a brain. And I don’t mean in a good way.

        And when you write “We all accept . . . ” – no “we” don’t all accept. You do not speak for everyone but instead only represent that so-pleased-with-itself minority that crows about the issue of multi-culturalism being settled. Arrogance and delusion is not an alternative to a proper democratic mandate. Perhaps you could point to the referendum where the English were asked if they wanted their country to become a multi-cultural melting pot where the English have no more rights than the latest foreign arrival – in fact sometimes less. I know of no countries outside the lunatic asylum of the EU practicing that self-destructive folly. And as for the lessons of history – you clearly need some. To describe the English psyche as “barren and inward looking” after our long and illustrious history is not just deeply offensive but pig ignorant.

        • tele_machus

          Again you are correct in your analysis of change in 1997
          To a new era of prosperity and unprecedented health service improvements
          Terminated only when revanchist Bush squandered the assets of the west on Muslim Wars and fueling his own greedy bankers to the point where his banks imploded and took us with him
          Thank God Brown was there to save him and us

          • Nicholas

            RTFP instead of doing the usual leftist trick of re-writing it to mean what you want it to mean. Do you people ever apply any honesty to anything? Or is it all sham all the time?