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2014 10 NOV

More immigration – but managed much better. That’s what the UK needs

The intense debate over Britain’s immigration reforms is generating more heat than light. Vital questions of migration and border management have descended to the level of partisan squabbling and short-term fixes based on arbitrary numerical targets. This is counterproductive: it will undermine the growth and dynamism of the British economy and current policies such as caps on migrants will fail both to control population dynamics and to promote British jobs and economic growth.

A recent study by the Centre for Research and Analysis of Migration at University College London indicates that migrants added £20bn to the UK economy in the decade 2001 to 2011 and that migrants from the EU paid significantly more in taxes than they claimed in benefits or transfers for education, health or other expenditures. This is entirely consistent with previous studies, all of which have shown that the benefits of immigration outweigh its costs.

While economists are notorious for being unable to agree on most things, there is a growing consensus regarding the economic benefits of immigration. Indeed, there is no reputable evidence for the oft-cited fears that immigrants undermine job prospects or reduce wages, either for the UK or any other major economy. Studies on the short-term impact of immigration on wages tend to show it yields a positive or at worst no statistically significant impact.

For the UK, the longer-term benefits are undoubtedly even more significant than the strong revenue gains identified by Dustmann and Frattini in the UCL study, even though that was not the focus of their or other studies of immigration into the UK. The economic impact of immigration to the US has been studied in the greatest depth and shows that the dynamism provided by migrants is vital for growth and competitiveness. The US Federal Reserve Bank found that “immigrants expand the economy’s productive capacity by stimulating investment and promoting specialisation… This produces efficiency gains and boosts income per worker.” This in part is because immigrants tend to be “exceptional people” who strive to overcome adversity. The diversity they bring serves as a catalyst that spurs creativity and performance. This is as true in business as it is in academia, medicine, science, politics, arts, food, culture, entertainment and sports.

More than half the Silicon Valley startups and half the patents in the US are accredited to migrants and migrants and refugees are disproportionately represented in the Academy award and Nobel prize winners. Unskilled migrants meanwhile do jobs local workers will not do, such as arduous agricultural labour. By providing affordable child minding they allow a greater share of women to participate in the workforce.

However, while higher levels of immigration generate greater collective prosperity, the social and economic impacts of migration can produce short-run and local costs for the communities where they settle. Areas experiencing rapid and concentrated immigration need help to cope with the social and other costs of migrants and the migrants themselves may require help to ensure they integrate and become socially mobile or return home. The pressure high levels of migration may place on local services and the potential competition for local jobs needs to be recognised and measures put in place to ease the burdens.

The costs of migration may be immediate and local, while the benefits are often diffuse and are only fully realised in the medium and long term. Governments should focus their efforts on burden sharing and support for pressured local services. Simply limiting numbers undermines the short-term competitiveness and the long-term growth and dynamism, and also tends to result in a growing number of undocumented migrants, making everyone worse off in the longer term.

Having more migrants, but ensuring that they are paying taxes, are subject to minimum wage and health and safety rules, and to the criminal justice system, and visible to the law and social services, would do far more to protect British jobs and standards than current approaches. The debate is not about the evidence, but rather about how people feel, with perceptions and populist rhetoric crowding out reason.

A toxic combination of growing inequality and populist politicians who feed, and in turn are fed, by new social and old alarmist media has raised anxieties across the country. Immigrants have come to symbolise all that is bad with globalisation. There is a rising anxiety, fuelled by the financial crisis, climate change and other “foreign” threats, that we are no longer in charge of our destinies.

Properly managed immigration does not pose a threat to the UK. We could and should benefit from higher, but better managed, immigration. With businesses and universities complaining bitterly about the negative impact of current policies, a far less onerous non-EU visa regime is also required, not least for skilled workers and students, the most successful of whom should be allowed to stay after their studies, as is the case in Australia, Canada, the US and elsewhere.

What we need is an adult debate that looks at the UK and global evidence. But economic analysis is clearly not enough. Immigrants do pose a severe burden on particular communities at particular times. These communities need to be helped, with additional resources provided by central government, in the knowledge that the overall benefits to the UK outweigh the short-term and local costs to particular communities.

The debate should also include a discussion of the responsibilities that immigrants need to abide by to remain in our country, which include paying taxes, abiding by our laws and other obligations. But responsibilities come with rights, including equal treatment under the law and benefiting from the minimum wage and other employment rights.

Immigration is too important to be crushed under the weight of populist politics. For those concerned with the future of British jobs and the British economy, it is time to turn down the rhetoric and turn to what we like to think of as the British traits of fairness and reason. Whether the United Kingdom is able to meet the challenges of the coming decades will depend to a significant extent on its immigration policies. Migrants historically have made an essential contribution to Britain’s achievements and there is no reason to believe that their future contribution will be any less significant.


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