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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Why Theresa May can't end speculation of an early general election

Both Conservative and Labour MPs regard a contest next year as the solution to their problems. 

One of Theresa May’s first acts as a Conservative leadership candidate was to rule out an early general election. After a tumultuous 2015 contest and the EU referendum, her view was that the country required a period of stability (a view shared by voters). Many newly-elected Tory MPs, fearful of a Brexit-inspired Ukip or Liberal Democrat surge, supported her on this condition.

After entering Downing Street, May reaffirmed her stance. “The Prime Minister could not have been clearer,” a senior source told me. “There won’t be an early election.” Maintaining this pledge is an important part of May’s straight-talking image.

But though No.10 has wisely avoided publicly contemplating an election (unlike Gordon Brown), the question refuses to die. The Conservatives have a majority of just 12 - the smallest of any single-party government since 1974 - and, as David Cameron found, legislative defeats almost inevitably follow. May’s vow to lift the ban on new grammar schools looks to many like an unachievable task. Former education secretary Nicky Morgan and former business minister Anna Soubry are among the Tories leading the charge against the measure (which did not feature in the 2015 Conservative manifesto).  

To this problem, an early election appears to be the solution. The Tories retain a substantial opinion poll lead over Labour, the most divided opposition in recent history. An election victory would give May the mandate for new policies that she presently lacks.

“I don’t believe Theresa May wishes to hold an early election which there is evidence that the country doesn’t want and which, given the current state of the Labour Party, might be seen as opportunistic,” Nigel Lawson told today’s Times“If, however, the government were to find that it couldn’t get its legislation through the House of Commons, then a wholly new situation would arise.”

It is not only Conservatives who are keeping the possibility of an early election alive. Many Labour MPs are pleading for one in the belief that it would end Jeremy Corbyn’s leadership. An early contest would also pre-empt the boundary changes planned in 2018, which are forecast to cost the party 23 seats.

For Corbyn, the possibility of an election is a vital means of disciplining MPs. Allies also hope that the failed revolt against his leadership, which Labour members blame for the party’s unpopularity, would allow him to remain leader even if defeated.

Unlike her predecessors, May faces the obstacle of the Fixed-Term Parliaments Act (under which the next election will be on 7 May 2020). Yet it is not an insurmountable one. The legislation can be suspended with the backing of two-thirds of MPs, or through a vote of no confidence in the government. Alternatively, the act could simply be repealed or amended. Labour and the Liberal Democrats, who have demanded an early election, would struggle to resist May if she called their bluff.

To many, it simply looks like an offer too good to refuse. Which is why, however hard May swats this fly, it will keep coming back. 

George Eaton is political editor of the New Statesman.