Why an immigration amnesty could benefit British workers

An amnesty for illegal immigrants can help boost their income, reducing socio-economic disparities.

One of the most depressing things about contemporary British politics is the extent to which one of the key arguments of the anti-immigrant right, that immigration increases unemployment among British-born workers, has gone unchallenged. Indeed, two years ago this capitulation reached its nadir with Gordon Brown's infamous slogan of "British jobs for British workers". This is a pity, because economists who have studied this area increasingly believe that the relationship between immigration and native-born unemployment is not straightforward. Also, there is evidence that restrictive immigration policies may make things worse for unskilled workers, not better.

Indeed a study by Harvard academics George Borjas and Lawrence Katz, found that immigration had a two-stage effect on wages and employment. Although unanticipated surges in immigration were found to depress wages in the short run, these lower wages then encouraged firms to increase investment, causing wages to rebound and unemployment to fall. Indeed, the post-war British and American labour markets have been able to deal with changes that were far more disruptive and wide-ranging than immigration, such as the simultaneous decline of manufacturing and rise of the service sector, the revolution in information technology and the breakdown of traditional gender roles.

Opponents of immigration also like to quote factoids that imply that immigrants are draining public services. For instance, Migration Watch claim that "there are more than 300 primary schools in which over 70 per cent have English as a second language; this is nearly a half million children". However, since new arrivals tend to be younger than the average Briton, and many return home during periods of unemployment, they consistently make a net contribution to the public finances. In some cases this can be substantial, with the Institute of Fiscal Studies finding that immigrants from countries that joined the EU in 2004 used £9.7bn worth of public services but paid £13.6bn in taxes between 2005/6 and 2008/9.

Paradoxically, some of the arguments made by the anti-immigration lobby inadvertently make the case for a relaxation of controls, rather than further crackdowns. Although the tendency of illegal migrants to cluster in low-paid and casual sectors of the economy contributes to increased inequality, this mostly occurs because short-sighted immigration controls restrict their opportunities to gain more productive employment. Just as the development community has gradually become aware of the importance of property rights in reducing the size of the black market in emerging economies, some far-sighted policymakers are beginning to realize that regularizing the status of illegal immigrants in the developed world may allow them to begin the process of joining the middle class.

Indeed, there is conclusive evidence that granting amnesty to illegal immigrants enables them to boost their income, reducing socio-economic disparities. As part of the last attempt at immigration reform 25 years ago, the United States granted amnesty to nearly 3 million immigrants. A study carried out last November by the American Immigration Council found that whereas their homeownership rates and skills levels lagged those of equivalent ages who had been born in the United States, this gap had almost completely disappeared by 2006. Indeed, many of those who came to the United States in their late 20s and early 30s without the equivalent of a secondary education had improved their levels of qualifications, suggesting that they had invested time and money in remedial education.

Therefore progressives need to be less apologetic about their support for immigration and more ready to confront those who use crocodile tears for working families to mask old-fashioned bigotry. Ed Miliband was correct to say in his inaugural speech as leader that, "we did not do enough to address concerns about some of the consequences of globalisation, including migration". However, addressing concerns means explaining the benefits of an open labour market and enabling illegal immigrants to work legally, not pandering to the fears and prejudices of Daily Mail leader writers or xenophobic think tanks.

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We still have time to change our minds on Brexit

The British people will soon find they have been misled. 

On the radio on 29 March 2017, another "independence day" for rejoicing Brexiteers, former SNP leader Alex Salmond and former Ukip leader Nigel Farage battled hard over the ramifications of Brexit. Here are two people who could be responsible for the break-up of the United Kingdom. Farage said it was a day we were getting our country back.

Yet let alone getting our country back, we could be losing our country. And what is so frustrating is that not only have we always had our country by being part of the European Union, but we have had the best of both worlds.

It is Philip Hammond who said: “We cannot cherry pick, we cannot have our cake and eat it too”. The irony is that we have had our cake and eaten it, too.

We are not in Schengen, we are not in the euro and we make the laws that affect our daily lives in Westminster – not in Europe – be it our taxes, be it our planning laws, be it business rates, be it tax credits, be it benefits or welfare, be it healthcare. We measure our roads in miles because we choose to and we pour our beer in pints because we choose to. We have not been part of any move towards further integration and an EU super-state, let alone the EU army.

Since the formation of the EU, Britain has had the highest cumulative GDP growth of any country in the EU – 62 per cent, compared with Germany at 35 per cent. We have done well out of being part of the EU. What we have embarked on in the form of Brexit is utter folly.

The triggering of Article 50 now is a self-imposed deadline by the Prime Minister for purely political reasons. She wants to fix the two-year process to end by March 2019 well in time to go into the election in 2020, with the negotiations completed.

There is nothing more or less to this timing. People need to wake up to this. Why else would she trigger Article 50 before the French and German elections, when we know Europe’s attention will be elsewhere?

We are going to waste six months of those two years, all because Prime Minister Theresa May hopes the negotiations are complete before her term comes to an end. I can guarantee that the British people will soon become aware of this plot. The Emperor has no clothes.

Reading through the letter that has been delivered to the EU and listening to the Prime Minister’s statement in Parliament today amounted to reading and listening to pure platitudes and, quite frankly, hot air. It recalls the meaningless phrase, "Brexit means Brexit".

What the letter and the statement very clearly outlined is how complex the negotiations are going to be over the next two years. In fact, they admit that it is unlikely that they are going to be able to conclude negotiations within the two-year period set aside.

That is not the only way in which the British people have been misled. The Conservative party manifesto clearly stated that staying in the single market was a priority. Now the Prime Minister has very clearly stated in her Lancaster House speech, and in Parliament on 29 March that we are not going to be staying in the single market.

Had the British people been told this by the Leave campaign, I can guarantee many people would not have voted to leave.

Had British businesses been consulted, British businesses unanimously – small, medium and large – would have said they appreciate and benefit from the single market, the free movement of goods and services, the movement of people, the three million people from the EU that work in the UK, who we need. We have an unemployment rate of under 5 per cent – what would we do without these 3m people?

Furthermore, this country is one of the leaders in the world in financial services, which benefits from being able to operate freely in the European Union and our businesses benefit from that as a result. We benefit from exporting, tariff-free, to every EU country. That is now in jeopardy as well.

The Prime Minister’s letter to the EU talks with bravado about our demands for a fair negotiation, when we in Britain are in the very weakest position to negotiate. We are just one country up against 27 countries, the European Commission and the European Council and the European Parliament. India, the US and the rest of the world do not want us to leave the European Union.

The Prime Minister’s letter of notice already talks of transitional deals beyond the two years. No country, no business and no economy likes uncertainty for such a prolonged period. This letter not just prolongs but accentuates the uncertainty that the UK is going to face in the coming years.

Britain is one of the three largest recipients of inward investment in the world and our economy depends on inward investment. Since the referendum, the pound has fallen 20 per cent. That is a clear signal from the world, saying, "We do not like this uncertainty and we do not like Brexit."

Though the Prime Minister said there is it no turning back, if we come to our senses we will not leave the EU. Article 50 is revocable. At any time from today we can decide we want to stay on.

That is for the benefit of the British economy, for keeping the United Kingdom "United", and for Europe as a whole – let alone the global economy.

Lord Bilimoria is the founder and chairman of Cobra Beer, Chancellor of the University of Birmingham and the founding Chairman of the UK-India Business Council.