Offshore detention centers: Great for politics but not the fiscal budget
Two years after the UK and Rwanda signed the Migration and Economic Development Partnership, on April 23rd 2024, UK’s parliament passed The Safety of Rwanda Act bringing the UK one step closer to sending asylum seekers arriving via boats to Rwanda. Incumbent PM Rishi Sunak who is campaigning under the slogan of “Stop the Boats” has promised to start the removals “only if [I’m re-] elected[1]” in the July 4th national elections.
Modeled after Australia’s offshore detention laws, the Rwanda Plan penalizes the most vulnerable asylum seeker by effectively barring them for gaining asylum in the UK. Once deported to Rwanda the asylum seeker can apply for asylum in Rwanda, to another safe-third country or remain in the detention center. As per the UN and the ECtHR the Rwanda plan breaches UKs international human rights obligations[2] and as per a human rights advocate, Mr. Doyle, forcing an individual seeking asylum on a plane bound to a third destination against their will is tantamount to human trafficking[3].
Since the failed attempt in 2022 which cost the taxpayers an estimated £500,000[4], the Rwanda plan has been mired in legal battles with the newly passed bill already facing legal challenges from FDA union[5]. Unfortunately, The Safety of Rwanda Act now obliges the UK courts to consider Rwanda as a safe country[6], a key defense in the court’s battles thus far. Fortunately, if the Keir Starmer wins the election the plan is expected to be scrapped and more efforts are to be made to improve claim processing times. Thereby reducing the number of individuals dependent on the government.
For the UK voter that has struggled with stagnating wages, high inflation, declining GDP growth rate and degrading government services, the real question should be: Is the Rwanda plan fiscally prudent? Does it really free government budget to improve services for them? Is it fiscally prudent to process the cases in the UK itself? Lastly, are the asylum seekers detrimental to the UK economy? First let’s understand the costs.
Money promised to Rwanda: Under the scheme the UK will pay Rwanda via the EITF a total of £370 million as set up costs[7], of which £240 million has already been paid[8]. If the number of individuals relocated is over 300, then UK will pay additional set up costs of £120 million and £20,000 per additional individual[9]. Once the relocations start, over and above the set-up costs, the UK will pay Rwanda £151,000 per individual relocated to cover the asylum processing and operational costs, and an additional £10,000 for departure facilitation if the individual decides to leave Rwanda once relocated[10]. Till date no relocations have started but as per a NAO report the UK has already paid £20 million as an advance payment against future operational costs[11].
Additional Costs like housing, policing, processing, transport, and legal fees for UK based processes are estimated at £28 million with an additional £12+ million needed to train personal in the UK.[12]. Lastly in hope to kick start the relocations, the UK government offers any individual asylum seeker £3000 to voluntarily relocate to Rwanda[13].
In comparison per the Impact Assessment report, housing and processing an individual asylum application in the UK will cost the taxpayer an estimated £106,000, a £63,000 savings over relocation to Rwanda[14].
Evaluating data from Australia paints a similar picture. Costs to run offshore detention centers in Naru and PNG are disproportionally higher than processing claims in country. As per the Refugee Council of Australia, offshore detention centers cost the government an estimated AUD 1million per year and thus far the government has spent a total of AUD 12million on offshore detention centers[15]. Even though the offshore detention center costs have drastically reduced since the 2012 high, the current reduced costs do not capture the aid packages that Australia provides to third party governments that are willing to accept relocations[16].
In comparison housing and processing asylum claims in country has shown to be overall more cost effective across all 4 categories: hotel accommodation, onshore detention centers, community care and bridge visa. Evaluating this data shows that per individual annual costs reduced from an estimated AUD 700k for hotel accommodation to AUD 4k when the claimant was allowed to work under the bridge visa scheme while their claim was being processed[17]. Clear evidence that allowing the individual to earn a living reduces the burden on the host country. Giving rise to the next question: Does this take away jobs from the locals?
EU based study found that irregular migrants work to support themselves and because they lack work authorization, they are willing to work in low-paying sectors such as meatpacking industries, agriculture, construction, and domestic work[18]. Sectors that are facing sustained labour shortages across the EU. [Read my last blog for more data on EU’s labour shortages.] Thus, filling existing labour force gaps and working in jobs that the local population does not want. The other benefit is that the earned wages are spent in the host country to cover basic needs. A positive for countries dealing with population decline.
As per 2023 IMF data the UK economy is expected to see a decline in GDP growth[19]. Although there are multiple factors contributing to the negative growth estimates, per the British Chamber of Commerce labour shortages are creating a drag on the UK economy[20]. 9.7% of UK based companies faced labour / skill shortages[21] with hospitality, healthcare and agriculture sectors being the most affected[22]. Sectors (similar to the EU) that rely on migrant labour and sectors that don’t attract the local population due to low wages.
As such there is potential to create a win-win situation for both the UK and the asylum seeker. On one hand the UK saves billions by not implementing the Rwanda plan and solves low wage labour shortages by allowing the asylum seeker to work and cover their respective costs. While on the other hand the asylum process is more humane for the asylum seeker. Thus, as illegal migrants and asylum seekers once again become the face of political campaigns let us hope that UK voters will reject the politics of hate on July 4th. And more importantly let us hope that the new government looks beyond hate and considers win-win policy pathways.
[1] https://www.bbc.com/news/explainers-61782866
[2] https://www.npr.org/2024/04/22/1246368505/uk-rwanda-sunak-deportation-bill-migrants
[4] https://www.bbc.com/news/uk-61806383
[5] https://www.bbc.com/news/uk-politics-68934480
[8] https://committees.parliament.uk/publications/45116/documents/223695/default/
[9] https://www.bbc.com/news/uk-politics-68440653
[13] https://www.bbc.com/news/uk-politics-68550404
[14]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1165397/Illegal_Migration_Bill_IA_-_LM_Signed-final.pdf
[15] https://www.refugeecouncil.org.au/operation-sovereign-borders-offshore-detention-statistics/7/
[16] https://www.refugeecouncil.org.au/operation-sovereign-borders-offshore-detention-statistics/7/
[17] https://www.refugeecouncil.org.au/operation-sovereign-borders-offshore-detention-statistics/7/
[18] https://www.nature.com/articles/s41599-023-01885-7#citeas
[19] https://www.bbc.com/news/business-64661791
[20] https://www.britishchambers.org.uk/news/2023/02/labour-shortage-a-huge-drag-on-economic-growth/
[21] https://www.statista.com/statistics/1369216/uk-worker-shortages-by-sector/
[22] https://www.statista.com/statistics/1369216/uk-worker-shortages-by-sector/
