If Cameron wants to reduce debt, he needs more immigrants

A high level of immigration helps to reduce government borrowing, says the OBR.

If David Cameron really wants to pay off "the nation's credit card", he might want to adopt a less restrictive immigration policy. One of the headline findings of today's Office for Budget Responsibility Fiscal sustainability report is that a high level of net migration helps to reduce government borrowing. It notes:

Higher net inward migration than in our central projection – closer to the levels we have seen in recent years, for example – would put downward pressure on borrowing and PSND, as net immigrants are more likely to be of working age than old age than the population in general.

As the graph above shows, while zero net migration would see the national debt rise to more than 160% of GDP by 2060-61, a policy of high migration would see it increase to little more than 40%. Yet Cameron, who has described deficit reduction as the "guiding task" of the coalition, seems determined to impose even more restrictions on immigration, recently suggesting that the UK could block Greek migrants from entering the country if Greece leaves the euro. Reducing net migration "from hundreds of thousands to tens of thousands", as Cameron aims to do, would significantly weaken the economy. But the PM, never one for detail, is unlikely to be swayed by the OBR.

David Cameron talks to UK border agency officials in their control room during a visit to Heathrow terminal 5. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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The big problem for the NHS? Local government cuts

Even a U-Turn on planned cuts to the service itself will still leave the NHS under heavy pressure. 

38Degrees has uncovered a series of grisly plans for the NHS over the coming years. Among the highlights: severe cuts to frontline services at the Midland Metropolitan Hospital, including but limited to the closure of its Accident and Emergency department. Elsewhere, one of three hospitals in Leicester, Leicestershire and Rutland are to be shuttered, while there will be cuts to acute services in Suffolk and North East Essex.

These cuts come despite an additional £8bn annual cash injection into the NHS, characterised as the bare minimum needed by Simon Stevens, the head of NHS England.

The cuts are outlined in draft sustainability and transformation plans (STP) that will be approved in October before kicking off a period of wider consultation.

The problem for the NHS is twofold: although its funding remains ringfenced, healthcare inflation means that in reality, the health service requires above-inflation increases to stand still. But the second, bigger problem aren’t cuts to the NHS but to the rest of government spending, particularly local government cuts.

That has seen more pressure on hospital beds as outpatients who require further non-emergency care have nowhere to go, increasing lifestyle problems as cash-strapped councils either close or increase prices at subsidised local authority gyms, build on green space to make the best out of Britain’s booming property market, and cut other corners to manage the growing backlog of devolved cuts.

All of which means even a bigger supply of cash for the NHS than the £8bn promised at the last election – even the bonanza pledged by Vote Leave in the referendum, in fact – will still find itself disappearing down the cracks left by cuts elsewhere. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.