Migration is now the most controversial issue in British politics, outstripping concern about unemployment or public services as a source of public anxiety. Yet the quality of the public conversation rarely does justice to the sensitivity of the issue. Too many politicians, particularly on the centre-right, are too willing to argue that migration is an economic bad, that we could do with less of it and that a failure to recognise this stark reality is a threat to social cohesion.
Last month we saw the publication of the report from the House of Lords economic affairs committee, which shed more heat than light and did little to improve the level of debate. The committee made four linked claims. First, that the high level of inward migration over the last decade has generated few economic benefits for the native population. Second, that migration has pushed down the wages of the lowest paid. Third, that the most disadvantaged young people find it harder to get on the job ladder because they are competing directly with more qualified migrants, especially those from central and eastern Europe. And fourth, that the only rational policy response is to impose a cap on the number of non-EU migrants coming to the UK.
Perhaps the biggest problem with the report is that it measures economic benefits only in terms of income per head. Yet the best case for migration is that it enables labour supply to be matched to labour demand and keeps the economy on a stable growth path. In other words, in the absence of inward migration, there would be more skills and labour shortages, a higher risk of wage inflation, higher interest rates and lower growth. Far from being a source of turbulence, inward migration has been a source of economic stability over the last decade.
Nor is there evidence to show sustained downward pressure on the earnings of the lowest paid. This is largely a consequence of the rises in the minimum wage, which has been increasing faster than average earnings for much of the period since 2001. It is curious that members of the previous Conservative government, who spent 18 years telling us that low wages are indispensable, have now unveiled a hitherto concealed regard for the condition of the working poor.
Youth unemployment has risen over the last three years, but this is more likely to be a product of cyclical factors than a direct consequence of migration. Long-term youth unemployment remains low and the percentage of young people not in employment, education or training (the so-called NEETs) remains at its long-run average – and is significantly lower than was the case during the long period of Conservative government. Of course, there is no cause for complacency. Youth unemployment has a devastating negative impact on life chances. But to blame migrants for the phenomenon is both wrong and likely to lead to bad policy choices.
The worst response would be to adopt the proposal of both the Lords and Tories for an annual cap on the number of non-EU migrants to be admitted to the UK. This assumes that there is some level of migration that is self-evidently right. Yet the policy ignores the unavoidable fact of demographic change and the need to respond to changing economic circumstances. The UK has an ageing population, and fewer young people entering the labour market. Migration is needed to match labour supply to demand so that the economy can continue to grow at its trend rate (around 2.5 per cent each year).
The government’s points system offers a much better prospectus. It is fair, transparent and flexible, whereas the Conservative policy would exclude foreign footballers from the Premier League and highly skilled clinicians from the NHS. Perhaps the Conservative party will come to its senses and realise that ‘vote Tory for more boring football, a declining health service and lower economic growth’ is not the most compelling election slogan.