Policy Research in Macroeconomics

Examining Fortress Britain

The heated debate that presently surrounds the issue of immigration in rich migrant-receiving countries overlaps with many disagreeable practices and attitudes – xenophobia, racism, exploitation, injustice and greed to mention but a few. This is profoundly damaging to social cohesion and global cooperation, but it also incorporates a long term economic incoherence that is truly astounding, and in many countries (the UK included) creates policies that make economic nonsense even in the short and mid-term.

Immigration policies in the UK are especially irrational in this regard, and appear designed simply to reflect and generate popular misconceptions for the sake of party political advantage, with immigration painted as a damaging factor in the country’s economy. In fact, in straight fiscal terms, the majority of available studies for the UK over the past decade have all concluded that immigrants’ contribution to government revenue was higher than their share of government expenditure.

There can, of course, be problems associated with social provision at grassroots level, but these could be managed by proper distribution of the extra government resources generated by migration as a whole.

The latest figures from the Office of Budget Responsibility’s Fiscal Sustainability Report 2013  confirm that this positive impact is set to continue. Their analysis shows that overall migration has a positive impact on the sustainability of the public finances over a 50 year horizon. The report found that allowing more than 140,000 immigrants into Britain a year, equivalent to 6million people over the whole period, would help increase the overall number of people who are in work and improve public finances. It suggested that with an annual flow of 140,000 migrants from 2016 the public sector net debt to GDP ratio would reach 99% by 2063 but that would soar to 174% if there was a complete block on immigration.

Debt migration chart

The positive contribution made by eastern European migrants

As for the A8 countries (the eight countries with low per capita incomes that joined the EU during the 2004 enlargement) about which there has recently been such a political furore, a study by University College London that looked at the fiscal impact of migration from the A8 accession states, found that these eastern European migrants contributed 37% more in taxes than the cost of the public services they consumed. At the same time a report by the Centre for Economics and Business Research claimed that Migrant entrepreneurs make a “breathtaking” contribution to the UK economy and are critical to the creation of one in seven UK firms. It further contended that coalition plans to curb EU immigration could cost the UK economy £60 billion and send national debt soaring.

Undocumented migrants play a large part in our workforce, and the government’s flat rejection of calls to ‘regularise’ these immigrants appears to be particularly perverse. A study undertaken for the GLA by the LSE concluded that regularisation could add approximately £3 billion to the economy, while The National Audit Office further estimated that the deportation of all illegal immigrants would cost the UK £4.7 billion. Even as things stand, irregular migrants are thought to contribute considerably more to the UK economy through their labour, spending and taxes than they take out in terms of benefits, and even the London Mayor, Boris Johnson, has advocated a policy of ‘earned regularisation on economic grounds.’ But instead the Home Secretary proclaims that her intention is to create a ‘really hostile environment’ for undocumented immigrants. This unwelcoming ambience will undoubtedly have long term repercussions, but the fact that many vital sectors of the economy (including the NHS, agriculture, and the social care sector, where our dependency ratio is steadily rising) are critically dependent on immigrant labour for their very survival seems to be disregarded.

UK Visa policy

The extreme complication and increasing cost of UK visas is similarly a cause for dismay. The House of Lords Committee on Soft power has just published a 155 page report, Power and Persuasion in the Modern World, in which almost every one of their witnesses testified that the government’s new visa policies are harming the assets that build the UK’s soft power, such as film, music and legal services. The 12-member committee also quoted figures showing that almost £1 in every £6 spent in Britain by overseas residents came from those who required a visitor’s visa. They said the government’s rhetoric was potentially discouraging people from coming to the UK, and called for a change of tone, while in his evidence to the committee, the editor of the Economist John Micklethwait declared that the increased visa restrictions and costs were economically suicidal. “It is possibly one of the most bananas policies we could humanly have,” he said. ‘…completely useless in terms of recruiting people.’ (See here also in similar vein). In addition new policies were deterring student applications. Since the largest single group of migrants coming to the UK in recent years has been international students (a government research report published in 2011 estimated that overseas students were worth £5 billion per year to the UK and that this could rise to £16.9 billion by 2025), this decrease will inevitably incur a considerable financial loss (“Estimating the Value to the UK of Education Exports”, Department for Business, Innovation and Skills, June 2011).

The UK’s “tied visas”

Despite all this evidence, government rhetoric in Britain has become ever more inflammatory, and policies are becoming increasingly restrictive. The last ten years has seen a body of legislation enacted that has made it ever more difficult for immigrants to enter and remain in the country. Among other laws, a UK Borders Act was passed in 2007, introducing greater powers of control, including compulsory biometric documents for non-EU citizens, and a point-based system (PBS) for non-EEA migrants was introduced in 2008.

This new regulatory policy was originally made up of five Tiers and set more stringent academic and financial requirements and tougher labour market tests for immigrants. It was soon further tightened, with the points requirement rising, and Tier 3 indefinitely suspended in order to exclude the low-skilled workers to whom the category applies. Shortly afterwards, the UK Borders Citizenship and Immigration Act of 2010 strengthened border controls yet again and changed the rules on naturalisation in order to ‘ ensure that newcomers to the United Kingdom earn the right to stay.’

In April 2012, (and against the recommendations of parliament, nongovernmental organizations, and UN experts), the UK abolished the right of migrant domestic workers to change employer once they are in Britain. As Human Rights Watch points out, these ‘tied visas’ result in workers who are victimised becoming trapped, with more migrant workers facing greater levels of forced labour and physical and psychological abuse.

The attack on human rights

Furthering such human rights concerns, a new Act, the Legal Aid, Sentencing and Punishment of Offenders Act (Laspo) came into force in April 2013, with the aim of cutting the civil legal aid budget by a quarter (£320m) within a year. As a bill, this legislation was defeated 14 times in the House of Lords, and was described by the Labour peer Lord Bach as ‘a rotten bill [that] demeans our justice system and therefore our country. [It takes] away from the poor their access to justice.”

For the first time, it removes legal aid for family, housing, debt, welfare rights and employment law cases and all immigration cases apart from asylum. This includes those based on Article 8 of the European Convention on Human Rights (the right to respect for private and family life) where restrictions have already been stringently and in many instances, prohibitively tightened.

Key measures in the UK Government’s new Immigration Bill, currently entering its last stages in the House of Commons, have been widely condemned by all those concerned with migrants’ rights and welfare (see, for example,  the Migrants’ Rights Network’s briefing paper for the House of Lords), including many members of the House of Lords. Clauses instituting immigration checks by private landlords, banks, building societies and the DVLA have been criticised as unworkable and socially divisive. Although in theory they are designed to be universally applied, in practice it appears clear that only migrants and ethnic minority British people will be targeted, leading to discrimination.

As far as accommodation goes, many landlords will be unprepared to go through this process, making it extremely difficult for foreign nationals to rent. Moreover, since there are presently over 4 million private lettings in the country, and no central register of landlords, monitoring the checks will be virtually impossible. The Bill will also introduce a number of changes to the appeals and removals system which will have a substantial impact on many migrants in the UK who will find themselves unable to challenge immigration decisions. This will remove the right of appeal for the majority of immigration applications.

The wider macroeconomic debate

However, not only are current immigration policies and the aggressive discourse that surrounds them economically disadvantageous, they are harmful on many levels. On the one hand, intemperate rhetoric, misinformation, and tunnel vision do immeasurable damage to social cohesion within the host economies concerned. On the other, they have profound international repercussions. Our world is becoming increasingly interdependent, and fortress mentalities and nationalistic jingoism are counter-productive to the point of being suicidal. Not only are our economies intertwined; we cannot solve any of the often life-threatening problems that now confront us – climate change, environmental degradation, global poverty, international crime, security issues, energy provision or the spread of disease, for example – without a shift towards co-operation on a global scale. And a xenophobic attitude to immigration most certainly does not facilitate this kind of readjustment.

To the contrary, since migration is intrinsically an international phenomenon, any productive debate on the issue must be situated within the wider circumstances that surround it. Questions related to immigration policy cannot be resolved by using a vocabulary that overlooks all the conditions – economic, environmental, political, and historic – in other parts of the world. There have always been, and will always be global movements of people, but at any one time the ‘push’ and ‘pull’ factors that drive the size and direction of any particular migratory flow will depend on external circumstances over which the migrants themselves typically have very little – or no – control.

For instance, the poverty arising from decades of exploitative economic policies, devastating climate change, and more recently the pre-emptive wars in Iraq and Afghanistan, and a financial crisis for which Western nations are very largely responsible, are today the main drivers of migratory flows. At the same time technical advances, especially in communications and transport, have made mobility a more realistic option, while disparities in wealth, demography, opportunity, income and employment have become more visible to people all over the planet.

As a result global migration flows will inevitably increase. New figures released in September last year by the UN Department of Economic and Social Affairs (UN-DESA) show that 232 million people, or 3.2 per cent of the world’s population, live abroad worldwide, compared with 175 million in 2000 and 154 million in 1990, with Asia seeing the largest increase of international migrants over the past decade, and the United States remaining the most popular destination. The International Organisation for Migration’s World Migration Report for 2013 tells us that only 40% of migrants move from South to North and just over a fifth (22%) migrate from North to North, but with inequality steadily rising, draconian immigration controls are not going to make this migratory pressure disappear.

The only things that would decrease the push factors are poverty reduction and greater global equality, but the present economic system is not designed to achieve this end. Rather, a global economy that enables free movement of goods and services and of capital, while restricting the movement of people, can only be exploitative, favouring and enhancing the power and wealth of global and national elites, and increasing already huge disparities.

At the moment the richest 10% of the global population have 66.5% of the world’s income while the poorest 40% have 2.1%, while inequalities of wealth, which drive these income inequalities, are even more extreme. According to a recent Oxfam report , the richest 85 people across the globe share a combined wealth of £1 trillion, as much as the poorest 3.5 billion of the world’s population, with the majority of humanity living below $4-5 per day, the level of at which poverty significantly reduces life expectancy

If we want to slow down the movement of peoples, we must change the focus of our immigration policies and move to reform this atrocious system. As the Cairo Declaration put it, ‘the long-term manageability of international migration hinges on making the option to remain in one’s country a viable one for all people.’

2 Responses

  1. Susanna,
    Congratulations on your heroic stand against “xenophobia” and “racism” in your opening comments. There must be ten thousand other articles out there making the same insinuation, namely that anyone not too enthusiastic about immigration is a xenophobe or racist. Trouble is (and as regards xenophobia) that there isn’t actually a scrap of evidence that those concerned about excess immigration actually hate the French, Germans, Indians or anyone else, is there?

    As to racism (defined in dictionaries as the belief that one race is superior to another) is there a scrap of evidence that those who want better control of immigration believe in that superiority?

    I could accuse the pro-immigration brigade of being pedophiles, fraudsters, psychotics, etc etc. But I don’t want to sink to your level.

  2. I read these articles with despair, I really do. Why is it that there are sacred cows in the UK progressive debate that cannot be addressed rationally no matter what??
    Nobody ever suggested *stopping* immigration. It is a non-sequitur to suggest that. What anybody rational is suggesting is that EU style *unlimited* immigration has to end. For the fairly obvious reason that we haven’t got the space to accommodate everybody, never mind feed them and supply sufficient power for their needs.

    Already at the low end people are getting rammed into smaller and smaller accommodation, and needing more and more people within that accommodation to work full time to pay for it. We’re going back to the 15 a room tenements of the Victorian period – something we spent the first half of the 20th century trying to get rid of.

    They have sensible visa requirements at the borders of Canada, Australia and New Zealand. It’s perfectly normal and perfectly sensible to protect the country from a rush of economic migrants.

    It’s also fairly obvious that making labour scarce for businesses forces them to innovate and drive productivity forward. Putting the strain on the public systems so that we can have 8 individuals strapped to the back of a planting machine doing back-breaking repetitive work is straight out of a Dickens novel. It is not something we should be encouraging.

    Using monetary scare arguments – particularly when you know very well that the ‘public debt’ is just a measure of the level of savings in an economy and can be at whatever level it needs to be without causing the UK any problems at all – plays right into the hands of those who wish to continue skimming cash and keeping the UK’s productivity low.

    Nothing that ordinary people want comes from this sort of argument. It denies the very reality on the ground and refuses to accept it. Therefore they will support those who appear to address the very real concerns of those who were born here.

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