What should the government do about immigration?

With the growing popularity of UKIP and the news that potentially 1 million Bulgarians could be moving to the UK in the near future, the debate over immigration has reemerged. Recent figures show that estimated net migration in the year to December 2011 was 216,000 – down from 252,000 in 2010. As far as the government is concerned, this does represent a move in the right direction as they intend to reduce net migration to under 100,000 by the end of the Parliament. The immigration minister has proclaimed that the latest figures show that the government’s policy, and efforts to reduce net migration are effective. However, I believe that although the UK might need to reduce migration, the government is going about it in the wrong way; ruining the long run potential of the economy, and missing the ability to solve a few other problems at the same time.

Currently, the government is perusing an immigration cap, as a means to meet their net migration goal. With no way to reduce the level of people moving to the UK from the EU, they are having to reduce the amount of non-EU immigrants. There are numerous problems with this policy; both economic and cultural. First of all, the UK is incredibly proud of its mixed culture and heritage. This was seen with London being the first city to host the Olympics which has a permanent resident from each country that participated in the games. With 204 countries taking part, that’s a lot of different cultures that have helped make our country the way it is. If an immigration cap was created, it will in the future reduce this cultural mix.

In addition, the economic potential of our economy will be harmed. We’ll stop people from entering the country who will actually benefit the country. The numbers of skilled migrants who come to the UK to work hard, pay taxes and help businesses grow will be reduced. For the most part, a lot of the people who come to the country from outside the EU help the country. The City, the financial capital of the world, relies on the best talent to sustain it’s position, under intense pressure from Wall Street and Hong Kong, who both want to gain that title. Therefore, any policy that will reduce the opportunities for companies in the whole of the UK, not just the City, will harm the country, as they are unable to hire people due to a bureaucratic mess. This is seen with the National Institute of Economic and Social Research predicting that the government’s current immigration policy will reduce the UK’s output by £2 to 4 billion per year by the end of the Parliament.

It is also impractical to claim that any reduction in net migration in the current economic climate is a “victory.” This is because naturally, with the UK in recession, we will see more people leaving the country, as they seek other opportunities elsewhere, as well as less people coming to the UK to seek the benefits of our economy. This is particularly important because when the UK economy returns to growth, we will probably see levels of immigration increase; especially from countries in the EU; which is something we cannot control. As seen in the past few years, people from Eastern Europe and other areas come to our country for jobs. At the moment immigration levels are reduced as the economy isn’t thriving, but as soon as it returns to growth we will probably see another influx of immigrants from the EU. Likewise, we’ll see less people moving away from the UK, potentially going back to their home countries. We cannot aim for a target and hope to achieve it, while we don’t have complete control of our borders, even if a target isn’t a good idea in the first place. This is partly one of the reasons why UKIP has seen growing support over the past few months, especially from former Labour party supporters and this would have no doubt proved attractive to Cameron when he decided upon offering a referendum, hoping to gain some of that support.

There is another way to tackle this type of immigration, with people mainly here for low-end jobs – potentially cash in hand – contributing little to our economy and taking advantage of our public services, including the NHS. For example, a few years ago, a fruit farm in the South of England needed 300 temporary workers for three months of work, harvesting the fresh fruit over the summer months. The job paid more than the minimum wage and the owner tried to recruit locally. However, only five British people applied. Three of them didn’t turn up for an interview, one of them turned down the job when they found out their benefits would stop and the final British applicant gave up the job after a week, simply because it was hard work. This meant that the 300 people to fill the jobs came from abroad, from the EU. These people wouldn’t have come if the jobs had been taken as they were simply coming to take advantage of the situation. Therefore, there is a solution, which at the same time can help to solve our benefits crisis, where 340,000 households have never had a job. It would be a good idea to get one of these people to take one of these jobs. You don’t need any qualifications to do things like picking fruit, and although it might be hard work, all work is hard work, and people shouldn’t be living off the state. While 85% of new hires might currently be British, it is particularly the low-end that we need to target, with this being the area that many people actually have in mind when they complain about immigration.

As it stands, the top 50% are being made to pay for the bottom 50% and in the long run that is simply unaffordable and also untenable. People need to have ambition to get jobs, as this could lead to something else, while also being proud of themselves for making their own living and not living off other people. Therefore, this solution will help to solve our benefits culture and also reduce the tide of people coming in from the EU. This would help solve any net migration problems at the source, while not having any of the disadvantages of a quota. People who also will contribute to our economy and country will also not be put off by this system.

The current government is clearly interested in immigration, meaning that they are willing to make the right changes. They have the opportunity to make the correct changes that could really set this country up for success in the future. In the short term, it could also help us get out of our current economic stagnation.

Right now, the economy is failing to grow mainly because of a lack of demand. However, most economists agree that in the medium to long term, economic growth is mainly determined by the supply side. Deregulating the labour market would help to restore the UK’s competitiveness, with many companies complaining that it is too expensive and too difficult to hire and fire employees.

A quota would only make these things more difficult and although the reforms over the last few decades have helped our economy to already be flexible and well-functioning by international standards, we can always improve. Germany has benefitted in the past few years from an even more efficient and reformed Labour force, something the UK could also take advantage of. We don’t need full-scale reform, but we should still try and improve in every area that we can; with the biggest opportunity for this being immigration policy.

Well functioning markets – like that of the UK’s – are effective at managing immigration themselves. When there is a need for workers, as in the case of the fruit farm, we will see people moving to the UK. Deregulation in the labour market will mean that firms can move quicker, able to react to changing markets easier and thus bring benefits to us all in terms of higher tax revenue and a positive impact on our countries finances.

The government also claims that the “UK is open for business,” using the Olympics to sell the country to the world. Therefore, they need to do whatever they can to help companies get access to the UK, which might include bringing in some of the companies foreign managers to help run operations or establish a British division. Deregulated labour markets could be part of this push and could be key between countries picking the UK or other countries in the EU.

This could also be part of the government’s push for growth, as an alternative to spending. We have little room for manoeuvre to boost government spending, with growing debt and deficit meaning that we simply cannot afford it.  Entrepreneurs and business leaders need to be attracted to the UK and this is one way to do it. Cameron and Osborne have promised to make difficult trade offs in pursuit of growth and U-turning on immigration policy would be a great place to start.

The debate for what to do with immigration is always going to be a big issue, with the government trying to tackle it with an immigration cap. However, without full control of our borders, this is simply ineffective and will inadvertently harm the country economically and culturally. Instead, we need to cut the red tape, helping to boost the supply side of the economy, bringing both short term and long term benefits. In addition, we can get the help net migration by getting low-end jobs filled by the unemployed, bringing down the amount of EU workers coming into the country, and helping to fix our lack of ambition and benefits culture at the same time, which is simply unaffordable.

The rest of the economy will be unaffected by these employment measures and with the boost of deregulation, the City will continue to be the financial capital of the world. The rest of the country will flourish and we’ll all see the benefits; returning to growth and also helping to reduce our deficit and debt.

Overall, it is clear that immigration is a real problem. UK public services such as the NHS are already under severe strain and there is growing discontent amongst the public with regards to the topic. The current government has tried to solve this by implementing an immigration cap, but without full control of the borders, it is simply a bad idea that is likely to harm the country. When people complain about immigration, they likely mean low-skilled workers, while an immigration cap is likely to stop the highly-skilled workers from entering our country. Instead, the government should consider looking at the root causes, pushing unemployed British people to take low-paid jobs, helping to solve the benefits crisis at the same time. While they’re at it, they should reform the labour market so that the UK can maintain it’s position in the world, helping to boost economic growth in the process.