Immigration and border control signs at Edinburgh airport. Photograph: Getty Images.
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Osborne's living wage will increase immigration - but he won't mind

The new £9 rate will give the UK one of the highest minimum wages in the OECD. 

The Tories, in theory, have a policy of reducing immigration to the UK. Despite net migration last year reaching 318,000, the Conservative manifesto reaffirmed the party's aim of limiting it to "tens of thousands". David Cameron's bid to impose a four-year ban on migrant benefits (as part of his EU renegotiation) is designed, in his words, to reduce "the incentives for lower paid, low skilled EU workers to come here in the first place." The disparity between the amount migrants can earn at home and the amount they can earn in the UK (including through in-work welfare) must be narrowed. 

But the defining measure of George Osborne's Budget - a "National Living Wage" - will only increase the incentives for foreigners to migrate. As the OBR noted, the planned rate of £9 by 2020 will move the UK from the middle of the global wage league table to the top. Just seven OECD countries will have a higher minimum wage relative to full-time median earnings. 

This isn't the only draw for migrants. As the Labour MP John Mann, who has called for curbs on the free movement of labour, tweeted: "Biggest winners in today's budget are low skilled Europeans thinking of coming here. Free childcare, pay no tax, higher pay. The UK dilemma." But given the the economic benefits of high immigration, Osborne, a liberal on this issue, may not mind. After achieving a majority despite Ukip winning 12.6 per cent of the vote, the Tories can no longer have to permanently appease Nigel Farage. 

George Eaton is political editor of the New Statesman.

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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.