Tag Archives: UK Productivity

On Immigration into UK. It’s (not so) complicated…

I don’t think there is much doubt that the primary emotional driver behind the Leave campaign is that of immigration. Namely, a strong feeling among many British citizens that there are just too many immigrants in Britain now and that the flow should at least be reduced substantially.

Of course there are other drivers too: about the alleged ‘undemocratic’ nature of the EU, its alleged inefficiency and financial profligacy, its alleged ‘red tape’ regulatory regime over which we Britons are alleged to have little or no control, its alleged control over our justice system. All of these could be argued. For instance, there are some sectors of the business community (particularly some SMEs and swashbuckling entrepreneurs) which just hate regulation of any sort. But I don’t wish to talk about any of this now because these issues, none of them, or in combination, provide the sheer emotional charge behind the Leave agenda.

So let’s look at immigration.

We’re in the here-and-now, so best not to rabbit on about Britain being a ‘nation of immigrants’. Rather better to start with the fact that we have an order of net immigration from outside the EU which is similar to that of the net numbers from within the EU.   Net migration from within the EU and from outside the EU were both running at around 185,000 per year in 2015. Thus, despite the EU ordained requirement that the UK accept ‘free movement of labour’ to and from the EU, we have been perfectly free to cut non-EU immigration very substantially if the UK government had wished to do so. And despite David Cameron’s stupid promise to cut immigration to the tens of thousands, his government has done absolutely nothing to start any process of restricting non-EU immigration.

The reason the promise was stupid and the reason nothing has been done about non-EU net migration into the UK is that our economy has needed the immigrants, irrespective of source. The evidence for this is that, despite the total volume of immigration, the rate of unemployment in this country continues to decline. Within this, the level of employment among UK-born citizens continues to rise. See here. Both are now at near-record levels. This fuels our economic growth, such as it is.  Why this has not led to near record growth is another matter, to do with piss-poor UK business and state investment levels.

But the evidence of the need for immigration is also clear from the sheer numbers of immigrants gainfully employed in our social services, health services, construction and commercial sectors, without whom all these sectors would be in an even more woeful state than they are currently. Their state would be woeful because the UK-born population is ageing itself into retirement and ill health and our youngsters are simply not breeding enough to make up for this.

Were it not for the immigrants there is no doubt that some sectors would have invested more significantly in IT/Robotics/Automation to replace the greying UK population – but it has proved cheaper and more convenient to avoid doing this by simply employing more human bodies, irrespective of origin. I have argued in previous posts why business investment is so low in the UK (most especially the UK), but the problem is not only business – the state sector could also have been investing more, likewise argued in previous posts.

But since we are where we are, we need the immigrants who have come and are coming to fill the job vacancies we have in the UK. Without them our economy would decline and our social and health services would be in an even worse state.

But what about the over-demand (‘pressure’) on our social-service, education and health sectors?

This is simply the increased demand we should expect from an increasing population. Provision should have been made for it.

Indeed, up to 2010, until the coalition government abolished it, there had been a poor, underfunded, Migration Impact Fund (MIF) which had been half-heartedly designed to deal with precisely this issue. But of course that would have required government investment in the housing, health, social services and educational sectors expected to be negatively impacted in demand terms by a growing population. Not that a young, healthy immigrant inflow would be making significantly greater demand on social services and health (except probably GPs). But surely they would on eduction and housing needs. We can see the dilemma the UK government is in: its policy of austerity forbids it from borrowing more or taxing more so it can spend more, even on investments that would provide significant medium- and long-term economic returns for the state.

So, when it comes to immigration and the increased pressure it puts on housing, the GP health service (less so hospitals), and education in particular, the government is fighting the Leave campaign with one hand tied behind its back.

Which is most unfortunate, as otherwise it could easily have taken the steam out of the part of the anti-immigration movement which is not wholly motivated by a dislike of foreigners.

Meanwhile, Labour has been quite hopeless in its misguided and half-hearted emphasis primarily on the protection of workers rights, etc, in its fight against Leave.

Even if the Remain campaign wins, the referendum (delightfully referred to in the FT as the ‘neverendum’) has been a wholly unnecessary, wholly disruptive and damaging event. And a cockup from beginning to end.