The government has lost the economic argument around immigration

It now straddles two contradictory claims.

Gus O'Donnell, the former head of the civil service, has written in an article in the Times that the government is "shooting itself in the foot" with its desire to lower immigration.

He writes (£):

A big barrier to growth is an immigration policy that deprives the UK of skilled workers in certain disciplines. Lord Heseltine, while at pains to avoid criticising the Government, clearly sympathises with the difficulties that businesses face in recruiting these workers.

O'Donnell's criticism piles on the pressure the government is facing to justify its immigration policy in economic, as well as just populist, terms. As he mentioned, Heseltine's review, No stone unturned (pdf), also tactfully steers a course rather different to that currently being pursued by the Home Office.

Heseltine writes:

It goes almost without saying that the ideal solution is a well-managed immigration system that is open and welcoming to those who can address our skills gaps and add value to the economy, yet is unattractive to those who do not have and would not get permission to be here. This is easier said than done at a time of tough manpower constraints in the public sector.

While it "almost goes without saying", that is not actually the government's own strategy. The Conservatives are locked into a damaging attempt to bring net migration in under an arbitrary cap; and worse, they have no power to affect the biggest single contributor to that number, which is intra-EU migration.

As a result, the party is forced to attack the small sliver of migration they can have an effect on. But unskilled, non-EU migration had already been extremely constrained by the previous government, so to limit immigration any further, skilled migration came under fire. Even with new strict measures on visas, the government is losing the fight miserably. Its target is net migration of 100,000 people; the latest figures show that number is 216,000.

Politically the government is failing. It has set itself a challenge which it will not – cannot – meet. That alone would be a reason for abandoning the aim now, nobly accepting defeat, even if that figure weren't one which no sane government ought to try to achieve.

Last week's Economist leader laid out the problem the economy faces as a result of this policy in stark terms:

The country has, in effect, installed a “keep out” sign over the white cliffs of Dover. Even as Mr Cameron defends the City of London as a global financial centre, and takes planeloads of business folk on foreign trips, his government ratchets up measures that would turn an entrepôt into a fortress. In the past two years the Tories have made it much harder for students and foreign workers and family members to enter and settle in the country. Britain is not only losing the war for global talent, it is scarcely competing. More people now leave to take up job offers in other countries than come the other way.

In fact, even the nascent pro-immigration voices on the right don't take the argument far enough. While many of them are content to make the argument that immigration represents a favourable trade-off between unemployment and growth, few take the extra step of point out that immigration can help with both employment and growth. This argument involves tackling head-on the pervasive "lump of labour" fallacy – the idea that there are a fixed number of jobs, and if a foreigner gets one, then a Briton can't.

Forbes blogger Adam Ozimek writes about Silicon Valley, where a similar argument is taking place after a technology journalist, Robert X Cringley, has criticised skilled-migration visas:

Imagine the worst case scenario in Cringely’s mind occurs, and a foreign worker takes a job at a 30% discount, and a native worker who could have had the job has to settle for a lower paying job. To understand the impact on U.S. workers you have to look beyond this worker who has had his job “stolen”, and must look at what economists call the general equilibrium effect. Here are other things that happen: the H1-B worker buys or rents a home, and a landlord of home seller benefits, overall, new houses will be built, meaning construction workers benefit. The H1-B worker shops at a grocery store, which employs workers, and sells goods made by farmers who also employ workers. See how this goes?

The economic case for limiting migration is thoroughly lost. At best, the government is now facing the risk that this argument filters into the popular perception; at worst, it is in the position of encouraging a popular attitude which is simply incorrect.

Placards at a protest against the decision to strip London Met university of its ability to sponsor international study. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The DUP scored £1bn for just ten votes – so why be optimistic about our EU deal?

By March 2019, we’re supposed to have renegotiated 40 years of laws and treaties with 27 ­countries.

If Theresa May’s government negotiates with the European Union as well as it negotiated with the Democratic Unionist Party, it’s time to cross your fingers and desperately hope you have a secret ­Italian grandfather. After all, you’ll be wanting another passport when all this is over.

The Northern Irish party has played an absolute blinder, securing not only £1bn in extra funding for the region, but ensuring that the cash is handed over even if the power-sharing agreement or its Westminster confidence-and-supply arrangement fails.

At one point during the negotiations, the DUP turned their phones off for 36 hours. (Who in Westminster knew it was physically possible for a human being to do this?) Soon after, needling briefings emerged in the media that they were also talking to Labour and the Lib Dems. In the end, they’ve secured a deal where they support the government and get the Short money available only to opposition parties. I’m surprised Arlene Foster didn’t ask for a few of the nicer chairs in Downing Street on her way out.

How did this happen? When I talked to Sam McBride of the Belfast News Letter for a BBC radio programme days before the pact was announced, he pointed out that the DUP are far more used to this kind of rough and tumble than the Conservatives. Northern Irish politics is defined by deal-making, and the DUP need no reminder of what can happen to minnows in a multiparty system if they don’t convince their voters of their effectiveness.

On 8 June, the DUP and Sinn Fein squeezed out Northern Ireland’s smaller parties, such as the SDLP and the Alliance, from the region’s Westminster seats. (McBride also speculated on the possibility of trouble ahead for Sinn Fein, which ran its campaign on the premise that “abstentionism works”. What happens if an unpopular Commons vote passes that could have been defeated by its seven MPs?)

The DUP’s involvement in passing government bills, and the price the party has extracted for doing so, are truly transformative to British politics – not least for the public discussion about austerity. That turns out to be, as we suspected all along, a political rather than an economic choice. As such, it becomes much harder to defend.

Even worse for the government, southern Europe is no longer a basket case it can point to when it wants to scare us away from borrowing more. The structural problems of the eurozone haven’t gone away, but they have receded to the point where domestic voters won’t see them as a cautionary tale.

It is notable that the Conservatives barely bothered to defend their economic record during the election campaign, preferring to focus on Jeremy Corbyn’s spending plans. In doing so, they forgot that many of those who voted Leave last year – and who were confidently expected to “come home” to the Conservatives – did so because they wanted £350m a week for the NHS. The Tories dropped the Cameron-era argument of a “long-term economic plan” that necessitated short-term sacrifices. They assumed that austerity was the New Normal.

However, the £1bn the government has just found down the back of the sofa debunks that, and makes Conservative spending decisions for the rest of the parliament fraught. With such a slim majority, even a small backbench rebellion – certainly no bigger than the one that was brewing over tax-credit cuts until George Osborne relen­ted – could derail the Budget.

One of the worst points of Theresa May’s election campaign was on the BBC ­Question Time special, when she struggled to tell a nurse why her pay had risen so little since 2009. “There isn’t a magic money tree that we can shake that suddenly provides for everything that people want,” the Prime Minister admonished. Except, of course, there is a magic money tree, and May has just given it a damn good shake and scrumped all the cash-apples that fell from it.

That short-term gain will store up long-term pain, if the opposition parties are canny enough to exploit it. In the 2015 election, the claim that the SNP would demand bungs from Ed Miliband to prop up his government was a powerful argument to voters in England and Wales that they should vote Conservative. Why should their hospitals and schools be left to moulder while the streets of Paisley were paved in gold?

The attack also worked because it was a proxy for concerns about Miliband’s weakness as a leader. Well, it’s hard to think of a prime minister in a weaker position than May is right now. The next election campaign will make brutal use of this.

Northern Ireland might deserve a greater wodge of redistribution than the Barnett formula already delivers – it has lower life expectancy, wages and productivity than the British average – but the squalid way the money has been delivered will haunt the Tories. It also endangers one of the Conservatives’ crucial offers to their base: that they are the custodians of “sound money” and “living within our means”.

Labour, however, has not yet quite calibrated its response to the DUP’s new-found influence. Its early attacks focused on the party’s social conservatism, pointing out that it is resolutely anti-abortion and has repeatedly blocked the extension of equal marriage through “petitions of concern” at Stormont.

This tub-thumping might have fired up Labour’s socially progressive supporters in the rest of the UK, but it alienated some in Northern Ireland who resent their politicians being seen as fundamentalist yokels. (Only they get to call the DUP that: not Londoners who, until three weeks ago, thought Arlene Foster was the judge who got sacked from Strictly Come Dancing.)

And remember: all this was to get just ten MPs onside. By March 2019, we’re supposed to have renegotiated 40 years of legislation and treaties with 27 other European ­countries. Ha. Hahaha. Hahaha.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 29 June 2017 issue of the New Statesman, The Brexit plague

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