Use EU immigration dividend to fund poorest parts of Britain with £4.7bn a year, ministers urged

The government should set aside the economic benefits from EU immigration in a special fund worth almost £5bn a year to help disadvantaged parts of the country which feel left behind in a “two-speed Britain”, a new report recommends.

The report by the think tank Global Future found that concerns over migration and inequality were key factors driving the Leave vote in the 2016 referendum, but warned that Brexit was unlikely to resolve them.

Instead, the government could ensure that all parts of the country share in the boost to the economy resulting from immigration by setting up a Migration Dividend Fund to support local investment in skills, innovation, access to opportunity, childcare, transport links and the revitalisation of public spaces.

The proposed £4.7bn annual value of the fund matches the net contribution made to UK public finances each year by European Economic Area migrants, and would be funded by halting the cut in corporation tax from 19 per cent to 17 per cent due to take effect next year.

Peter Starkings, director of Global Future, said: “The problems of inequality, and the unequal distribution of the benefits of migration, do not stem from the European Union – and nor do the solutions lie there. Whether we leave or remain, responsibility lies with policymakers in the UK.

“The Migration Dividend Fund is designed to harness the benefits of immigration and ensure they are shared fairly around the UK – focusing on those towns and small cities suffering at the sharp end of economic change.”

The report proposes targeting funds at 400 ward areas across the UK identified as being deprived, but also lacking the community assets such as transport links and proximity to sources of work which give local people opportunities to get on.

Initially operating for 10 years, the fund would channel £120m into each of the wards, expected to be largely made up of disadvantaged parts of towns and small cities such as Blackpool, Wolverhampton or Wigan, and would be administered by local people.

It would aim to offset the disparity between Remain-voting big cities like London which are thriving in the globalised economy and Leave-voting towns and coastal areas characterised by ageing populations, lack of opportunity and inadequate investment.

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Despite the opposition to immigration which played a role in the vote to leave the EU, the report warned that Britain would continue to need immigration after Brexit, while a reduction in migrant numbers could make problems worse, particularly in the delivery of public services such as health and social care.

Polling for Global Future found 69 per cent support for the migration dividend proposal, including 67 per cent of Leave voters and 70 per cent of Remainers.

The poll found that 41 per cent of those questioned felt that migration has a positive effect on the economy, against 31 per cent who saw it as negative. Under-25s were twice as likely to feel positively towards immigration as over-75s.

But a majority (51 per cent) agreed that “some parts of the country have benefited from immigration, but not where I live”, while almost three-quarters (71 per cent) said that “the UK government prioritises London and other big cities over the rest of the country”.

Labour MP Pat McFadden, who is backing the report, said: “Prosperity and opportunity in the UK are spread too unevenly. While some areas thrive and prosper, riding the wave of global change, others have felt the sharp end of globalisation and lost out from a long arc of economic restructuring.

“Immigration brings a significant net economic benefit to the UK. Yet pointing out net economic benefits means little to people if they see few opportunities around them and the place in which they live feels neglected.”