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9 July 2015

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. 

By George Eaton

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. 

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