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Are the Tories set to ditch their immigration cap?

Coalition announces review of unworkable policy.

It looks as if the Tories may finally have realised that their plan to impose a cap on immigration from outside the EU is neither desirable nor workable.

Today's Financial Times reports that the policy is under review, amid new evidence that it will damage the British economy and provoke a cabinet revolt.

George Osborne's new budgetary watchdog, the Office for Budget Reponsibility (OBR), recently cut its forecast for "trend growth" from 2.75 per cent to 2 per cent from 2014 onwards, primarily because it fears Britain's labour force will not be large enough to sustain it. The conclusion was clear: we need more babies or more immigrants.

At the same time, the OBR warned that Cameron may fail to meet his long-standing promise to "reduce net migration to tens of thousands not hundreds of thousands", a level not seen since the days of the Major government.

Immigration fell significantly during the recession (see chart), but net migration of 163,000 in 2008 indicates that Cameron would need to cut immigration by at least 38 per cent to bring the total to less than 100,000. Privately, Tories speak of an even more unrealistic target of 50,000.

Net migration chart

Cameron's promise remains unfeasible for several reasons. For a start, the government cannot limit immigration from within the EU without restricting the free movement of labour and throwing the UK's continued membership into doubt.

Cameron's policy also ignores the 39,000 people who come to the UK on spousal visas after marrying British citizens abroad.

For now, it seems the cap will be "modified" rather than abandoned, but this is still a good time to have the argument all over again.

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