Only a fiver now - but what long-term cost?
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Immigrants help UK PLC - whatever Labour says

Miliband is acquiescing in a rightward-shift in political rhetoric on immigration.

“We were wrong not to ensure there were maximum transitional controls when new countries joined the European Union in 2004,” Ed Miliband says. “We won’t make that mistake in future.”

Get it? Labour is saying sorry for its record on immigration. As with those notorious mugs, its motivation – to undermine Conservative and Ukip claims that it is weak on immigration – is obvious.

To Miliband, “the reason we were wrong is that working people were seeing dramatic changes in their communities that were not planned or properly prepared for.” The government was lamentably unprepared for immigration from the eight new members of the EU - it predicted net inflow of 13,000 a year, when over four times that number came. But consider this: had transition controls been imposed on new EU members in in 2004 Brits today would today face higher taxes, worse-funded public services, a higher national debt or, most likely, a toxic cocktail of all three.

Between 2001 and 2011, European arrivals contributed a net £20 billion to UK PLCAnd the crux: immigrants from the ten countries that joined the EU in 2004 – the same ones who Miliband expresses regret at Labour not imposing migration controls on – contributed a net of £5 billion to the economy. Really the figure is even higher - £10 billion, the report reckons - because the costs of armed forces, defence and government do not rise in proportion to a bigger population. So a larger population means more people to spread the costs around.

It has become conventional wisdom that not imposing transition controls was folly. And certainly more could have been done to improve infrastructure and public services in areas in which immigration was greatest. But this failure does not mean that allowing immigrants from new members of the EU was a mistake. Labour's decision to be one of three EU countries, along with Ireland and Sweden, that did not impose transition controls meant that the UK was ideally placed to attract the most skilled workers of the new EU members. And the notion that EU migration is singularly responsible for driving down working-class wages is nonsense: the squeeze on working-class ages is about decades of technological change and globalisation, not whether Poles did not have to wait seven years before being free to work in the UK. The National Institute of Economic and Social Research have found that the 2004 influx to Britain depressed real wages over the long run by 0.36 per cent. Clamping down on immigration is fool's gold that will not help the native British working-class; improving education and skills would. 

The unfashionable truth is that the UK now needs immigrants more than ever. An Office of Budget Responsibility report two years ago bluntly spelled out the choice facing the UK. All other things being equal, the OBR predicted that high net migration would result in public sector net debt at 73% of GDP by 2062-3. With zero net migration it would double, to 145%, compared to 79.1% today. This is because immigrants are hard-working – those who arrived since 2000 have been 43% less likely than natives to receive state benefits or tax credits – highly educated and are more likely to be of working age than the native British population. It is no coincidence that as the Conservatives have moved ever further away from their pledge to reduce net migration beyond 100,000 – the most recent annual figure for net migration was a cool 298,000 – so growth has returned to the economy, nor that the economy is doing best in the capital, where immigration is highest. You can have a “clampdown” on immigration or you can have economic growth – but no one has worked out how to have both.

Parts of Labour's immigration policy - especially the emphasis on increasing and strengtehning the minimum wage and an increase in border staff - are shrewd. But the failure to challenge myths about the impact of EU migrants ultimately means that Labour has acquiesced in a rightward shift on immigration. The party has bought into the notion that immigration is inherently a problem, regardless of its economic effects; taken to its logical conclusion, such thinking leads inexorably to Brexit.

Failing to challenge the status quo on immigration has seemed expedient. But Labour has stored up trouble for its next government: it will be compelled to act on immigration, even if economic damage is the result. Ukip could come second in close to one hundred Labour seats in the north, and would love nothing more than a Prime Minister Miliband over-promising but under-delivering on immigration.

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.

Photo: Getty
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Cabinet audit: what does the appointment of Liam Fox as International Trade Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for International Trade.

Only Nixon, it is said, could have gone to China. Only a politician with the impeccable Commie-bashing credentials of the 37th President had the political capital necessary to strike a deal with the People’s Republic of China.

Theresa May’s great hope is that only Liam Fox, the newly-installed Secretary of State for International Trade, has the Euro-bashing credentials to break the news to the Brexiteers that a deal between a post-Leave United Kingdom and China might be somewhat harder to negotiate than Vote Leave suggested.

The biggest item on the agenda: striking a deal that allows Britain to stay in the single market. Elsewhere, Fox should use his political capital with the Conservative right to wait longer to sign deals than a Remainer would have to, to avoid the United Kingdom being caught in a series of bad deals. 

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