Playing the numbers game

11 Apr 08
PETER RIDDELL | Immigration is the most sensitive issue in British politics: the hardest to handle and potentially the most explosive electorally.

Immigration is the most sensitive issue in British politics: the hardest to handle and potentially the most explosive electorally.

That is why the recent report from the House of Lords select committee on economic affairs was so significant. The distinguished peers cannot be dismissed as racists or bigots — even though some members regretted the subsequent headlines.

The report — on the impact of immigration — challenged the government’s claims that inflows of foreign workers are benefiting the economy. The committee argued that the gains had been overstated in terms of income per head for the resident population, in relieving job and skill shortages, in the boost to public finances and as a solution to the ‘pensions time bomb’.

Prime Minister Gordon Brown talks of a substantial £6bn gain to the economy from migrants, but the pluses are less clear cut when you look at national income per head. Similarly, the fiscal gain is probably pretty small overall.

Like so many of the figures, it is subject both to a large margin of error and to inadequacies in the data. There is a big distinction between the short and the long term: any immediate gains might disappear as migrants have families and grow older.

The reality is that there is a complicated pattern of winners and losers. Businesses on the whole gain: from being able to employ migrants at lower wages, and also by filling vacancies with trained and skilled workers. The consumer also benefits from lower prices.

But any relief in filling vacancies in, say, London from an inflow of Polish builders and plumbers, is largely a short-term answer, though nonetheless important in easing shortages in the Southeast.

Moreover, existing workers, including an earlier group of migrants

, can lose out and there might be less pressure to improve productivity and upgrade the skills of the workforce already here. This can make worse the problems of social exclusion.

The report highlights the problems for public services, particularly in some parts of the country such as the Southeast. Large inflows not only aggravate housing shortages but, if current rates of immigration persist, could result in house prices in 10 years’ time being more than 10% higher than with zero net immigration.

As the Local Government Association has been pointing out, there are also substantial net costs, made worse by the inadequacy of immigration statistics, for councils’ social and education services, as well as for the health service.

Apart from providing more money where it is needed, there is less agreement on what to do. Even those who sympathise with the Lords’ analysis questioned some of its recommendations. Its proposal of a cap on net immigration is flawed since it can apply only to non-European Union immigration (around a fifth of the total), because there is free movement of labour within the EU.

The government’s policy is to introduce an Australian-style points-based system that would allow only highly skilled workers into Britain.

However, the real challenge that the Lords report poses is to the broader political arguments used to justify high levels of immigration. It is fundamentally a cultural question, about both a growing population — up from 61 million now to 71 million by 2031 on the current net immigration of 190,000 a year — and a more heterogeneous one. That is already true in London, a global city in every sense, but migrants are spreading throughout the country.

This is obviously very sensitive since it raises questions of identity and race. Mentions of immigration tend to be code for other concerns, but are nonetheless potent for that. According to Ipsos Mori polls, immigration and race have consistently been in voters’ four most important issues facing Britain. References to immigration have climbed from the upper 20s to more than 40% in recent years.

However, the nature of the concern has shifted. Three or four years ago, immigration was often raised at a time of high political and public concern over asylum seekers, who were widely seen as being in Britain unfairly and taking up social benefits. But, now, the number of asylum applicants has dropped sharply and there is more concern about migrants from eastern and central Europe.

The worry here is the opposite of the earlier one about asylum. It is not that they are seen as scroungers, but rather as too hard-working in taking the jobs of native-born people. This is linked to local worries about pressures on local services.

On a national scale, this is not yet an election decider. But, locally, the British National Party is a real challenger to Labour in many rundown areas where migrants are seen as a threat to the interests of the indigenous population. The BNP could do well in pockets around the country on May 1 and could even win a seat on the London Assembly.

If that happened, it would bring immigration back to the top of the political agenda. The government has to broaden the debate beyond the straight economic benefits if it is to keep on top of the arguments.

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