First Thing: The UK economy is addicted to immigration. ‘Addicted’, because we can’t do without it. The UK economy has been predicated on immigration as a remedy for economic ills for two hundred years. At first cheap labour was imported from Ireland to build railways, ships, and to work in new factories. The ‘economic ills’ being addressed were those of both the availability and price of labour. The trend accelerated after WW2 when public sector wages were too low for labour demand to be satisfied: the Windrush generation’s first arrivals in 1948 established an important fact. People were prepared to emigrate from the Empire and former Colonies in substantial numbers – often in response to advertisements offering public sector employment, and they were prepared to take the lowest paid jobs on offer. EU membership and the enthusiastic government espousal of ‘freedom of movement’ caused a bifurcation in the trend: those seeking low-paid employment came in greater numbers (sometimes enabling aggressive expansion of industrial activities such as food processing), but these were now joined by a proportional upsurge of others with professional skills seeking far better financial rewards. London’s ‘silicon roundabout’ expansion has been enabled by this latter group.
The history is consistent and clear: the entire UK economic structure depends on these people, whether they are low-paid, pursuing traditional middle income trades like plumbing, or highly qualified higher earners propping up, say, the NHS and financial services.
The message is simple enough. Break the immigration process (whether through a fantasy version of Brexit, or through achievement of apparently unachievable government ‘targets’), and you break the UK economy. The political discomfort occasioned by this simple economic fact has engendered political silence on the matter.
Footnote: Recent figures show that as Brexit drives down immigration from the EU, non EU immigration increases to plug the gap. These are the classic mechanics of addiction: supply from one source declines, so the user looks elsewhere.
Second thing: immigration is an incomes policy. For several decades it has been political poison for UK governments to admit to having any kind of incomes policy. However, the perceived problems that an incomes policy seeks to address persist. This dilemma has been addressed in a number of ways. Downward pressure on public sector pay has been one response, but this is partial and relatively short-term – pay levels eventually have to be restored. A more effective solution is to increase the supply of labour, especially in those areas where shortage exists. Immigration, pure and simple, is a rapid response solution to labour shortages. As such, it acts as an under the radar incomes policy. Politicians of all stripes have been reluctant to admit to this.
Third thing: immigration is a tax-break. This is especially true for immigrants in higher pay categories. These members of the workforce typically require higher levels of pay and training. This is expensive. Recruiting trained, qualified labour from abroad means that the taxpayer bears a lower associated cost. Politicians are relatively happy to talk about this type of immigration as ‘helping the UK economy’ (and it certainly does), but they are reluctant to discuss its impact on government expenditure on education and training. This would invite criticism of government policy and lead voters to conclude that there is a policy in place to impair their own life-chances.
Fourth thing: how to avoid becoming part of the UK’s in-house third-world underclass. Politicians tend to be rather quiet about some of the side-effects of globalisation. Cheap imports of clothing and other goods have greatly diminished UK employment opportunities, while the availability of service industry employment is reduced by outsourcing (foreign call-centres, IT code-cutting in Chennai etc.). In an increasingly ‘connected’ digital world these trends are, in practical terms, irreversible. However, the implication of this is that UK pay rates are likely, for some at least, to head closer and closer to those for the same work in very low pay economies. The fate of a large number of UK voters is clear. They are heading for third-world economic status within a first-world economy. What should be the response of politicians to this phenomenon? If they are honest, I would argue that they need to come right out and make the situation clear (a prospect that no doubt terrifies them). It’s not as if there is no solution to this for those on the receiving end: education and training that offers a higher economic status. Politicians, from the top down, need to make the situation clear, crystal clear, to the potential victims; and then they need to make the funding available for the education and training needed.