Rishi Sunak can’t catch a break. Barely was the ink dry on last week’s autumn statement than the news came out of record migration figures. The previous week, a bigger than expected fall in inflation was followed within hours by the supreme court ruling against the government’s plan to process asylum seekers in Rwanda.
No question, migration ranks alongside the record level of tax and the dismal state of the economy as one of the three big economic challenges facing the prime minister. The way the opinion polls are looking they will soon be problems Keir Starmer will inherit.
True economic liberals wonder what all the fuss is about as far as migration is concerned. For them, free movement of labour is of a piece with free movement of capital and free movement of goods: an essential component of a globalised economy in which the barriers to growth are removed.
That’s the theory, anyway. In practice, the 2008 global financial crisis exposed the dangers of allowing unfettered movements of money. Frictionless trade and long, integrated supply chains were all the rage until their vulnerabilities were laid bare by the Covid pandemic and its aftermath.
It was only a matter of time before a backlash began against migration, and now there are signs of it across the west: in Ireland, the Netherlands, Germany, Sweden, the US and France. In Britain, most voters accept that some inward migration is inevitable, even desirable, but they want it to be managed by the government. The Conservatives are indeed committed to do that but in the four years since Sunak was elected on a manifesto that promised to reduce the number of people coming to the UK, net migration has increased by about threefold to a record 745,000 in 2022.
If migration is not now top of the public’s list of concerns, then that’s in part because there are more pressing problems – such as the cost of living – to worry about. The YouGov tracker poll shows that 60% of voters think immigration is too high, little changed on the 57% just before the 2019 election. Only 7% of people think it is too low.
Some of the recent increase has been due to one-off factors – such as the granting of special visas to people from Hong Kong, Ukraine and Afghanistan – but even so the 2022 total was equivalent to two-and-a-half times the highest level reached before the Brexit referendum. Legal migration dwarfs the number of asylum seekers coming across the English Channel in small boats, and comes at a time when there is a chronic shortage of homes, sky high rents and only a temporary pause in the longstanding tendency for house prices to rise.
Unless there is a massive – and improbable – surge in housebuilding, these economic problems will be exacerbated by boosting the population by almost the size of Leeds in a single year. Yet, Jeremy Hunt’s tax plans are predicated on post-election cuts in day-to-day spending for Whitehall departments and less generous public investment. High levels of net migration require investment in infrastructure that neither the Conservatives nor Labour offer.
That said, there are upsides for the prime minister from the record levels of migration. Many of the new arrivals are plugging staffing shortages in the NHS and social care. Without workers from India, Nigeria and Zimbabwe, waiting lists would be even longer.
The same applies to employment levels which, even after record net migration in 2022, have yet to recover to pre-Covid levels. Labour shortages would be even more acute without the boost provided by foreign-born workers.
Finally, there’s growth. Hunt made a big deal in his autumn statement about how the economy would expand in 2023, thus meeting one of the five pledges Sunak made at the start of the year. But without net migration, the economy would be shrinking not growing. The Office for Budget Responsibility expects the economy – as measured by gross domestic product (GDP) – to grow by 0.6% in 2023. GDP a head – a better measure of living standards – will decline by 0.3%.
In truth, there are push and pull factors behind the movements of people from country to country and from continent to continent. The main push factor is the desire to escape poverty, with access to modern media highlighting for poor people in Africa and Asia the much higher standards of living available in rich countries. The climate crisis – if left unaddressed – will only intensify the pressure.
The west’s response has tended to involve erecting physical barriers to stop people arriving. It might be better advised to focus on the reasons why people leave home in the first place. That would mean making good on promises to help poor countries grow their economies, providing the financial resources urgently needed for global heating adaptation and mitigation, reducing trade barriers, and increasing aid rather than cutting it.
The pull factors involve falling birthrates and ageing populations across much of the developed world. Immigration prevents populations from shrinking and provides people willing to fill labour market vacancies. In Britain’s case, it has also locked the economy into a low-productivity trap because the availability of cheap overseas labour has acted as a disincentive to businesses to invest in new kit.
Kicking this habit would involve much higher investment in the NHS and social care, a comprehensive industrial strategy designed to boost skills, action to help adults with numeracy and literacy, and tailored programmes to increase the number of people seeking to make the transition from welfare to work. Since 2010 successive Tory governments have promised to reduce immigration but the economy has become addicted to it. Ending this dependency is not going to be easy. Cold turkey never is.
