I’m going to break off from the business of pulling apart Cameron’s vacuous and tendentious mini-manifesto on law and order for a moment…
…to pull apart Cameron’s vacuous and tendentious remarks on the subject of immigration.
Changing the subject, in this case, does not require too much in the way of a mental gear-shift, the common ground between the two issue being that both are ‘dog whistle’ issues for the Tory right, and more importantly, both are issues on which Cameron is being distinctly economical with the truth in his remarks in the hope of turning public ignorance and prejudice into votes.
So let’s begin with the facts – according to a report by accountants PriceWaterhouseCoopers published in April of this year – what has economic migration actually meant to Britain over the last three years, since the accession of eight Eastern European states in the EU in 2004 and at which time Britain was one of only three existing EU countries to allow free and unrestricted movement of labour from these states from the outset?
PwC’s research found that the new arrivals had pushed growth above its long-term trend and helped keep inflationary pressures and interest rates lower by increasing the supply of labour relative to demand.
Average earnings growth has been relatively subdued recently, at just under 4% excluding bonuses, and PwC said migrant workers had contributed to this. This finding supports the view of Professor David Blanchflower of the Bank of England’s monetary policy committee, who has voted to keep interest rates on hold on the basis of slack in the labour market.
The Treasury has also increasingly focused on the impact of migration, citing expected net migration as a key reason for raising its estimate of future economic growth to 2.75% from 2.5% in last December’s pre-budget report.
The PwC report found that although migrant workers had increased the supply of labour in the UK, there had not been any adverse effects on the employment prospects of British-born workers. “[Migrant] workers tend to be relatively productive and have filled important skills gaps in the UK labour market rather than just displacing UK-born workers,” said John Hawksworth, chief economist at PwC.
The public finances have also not suffered as a result of the influx of migrant workers, the study finds. Most migrants are aged between 18 and 34 years, with high employment rates compared with their UK equivalents, and therefore benefit payments are low. They also receive comparatively low wages despite their good education and skills levels. Younger workers have fewer dependants and so are unlikely to be an additional burden on public services, the report says.
Economic migration has:
a) pushed up economic growth, allowing the Treasury to revise its projections of future performance upwards by a quarter of a percent,
b) reduced labour costs, thereby helping to keep a lid on the inflation rate,
c) had no appreciable impact on the employment prospects of British workers – migrant workers have, for the most part, been filling gaps in the UK labour market rather than displacing British workers because they’re doing the jobs that British workers either don’t want or don’t have the skills to do, and
d) had no negative impact on the public finances. In fact migrant workers are net contributors to both the British economy and to the public purse. They pay their taxes, like everyone else. They contribute to the local economy in the area they live, by spending some of their earnings in local shops and on renting accommodation – and, of course, to the profitability of their employer. And they take less out the system than UK workers, because they have fewer rights in terms of access to welfare benefits, social housing and some other public services and have much less need of those services because, in general, they have fewer dependants and also tend to younger and therefore less likely to require the services of the NHS than Britain’s ageing population.
So far its win, win, win all the way.
And yet despite this, we still find the likes of Daily Mail running articles like this only a couple of weeks ago:
Benefits bill for eastern European migrants hits £125m
One in six Eastern Europeans is now claiming benefits
Benefit claims by Eastern Europeans have almost trebled in the past year, official figures show.
The cost of the payouts – to almost 112,000 migrants – is put at £125million a year.
The Home Office figures mean that one in six of an estimated 683,000 Eastern European incomers is living off the state to some extent.
A year ago, only 42,620 were claiming benefits.
Which, of course, do little more than help to expose the ignorance and reflexive xenophobia of their readers by spawning comments such as:
What a load of “new” Brown lies. Nulabour turn a blind eye and courage mass immigration and are happy to bribe newcomers, via benefits, with taxpayers money to vote them back in power at the next election. Sad that the numbers dependent on the state are so high and that so many people have their head in the sand and deny to themselves what is happening.
– Roy, Hertford
Roy clearly doesn’t understand that while EU citizens can vote in the UK in elections to the European Parliament and in local government elections they cannot vote in a UK general election unless they are citizens of UK, Cyprus, Malta or the Republic of Ireland, so UK governments have nothing at all to gain at the ballot box from European economic migration unless those migrants settle permanently and naturalise as British citizens.
I think the figure is more than that, when account is taken of the extended family! Send them home, and do it now! This country simply cannot afford these handouts. We can’t afford to give the pension money back to those it was stolen from!
– Rayb, Newcastle upon Tyne
Rayb misses two important points here. First, very few economic migrants from the EU arrive with their extended family in tow – in fact very few arrive with a family at all. Second, because the ‘National Insurance’ scheme in the UK is NOT a form of insurance but rather a tax on employment/earnings, a portion of the taxes paid by migrant workers nominally go towards the payment of state pensions of UK citizens – and the payment of welfare benefits, the costs of running the NHS, the state education system, defence…
The question of ‘What do migrant workers do for us?’ actually requires a response not dissimilar to that elicited by the question ‘What have the Romans ever done for us?’ in the Life of Brian.
Stories like these are horrifying. Sadly they are commonplace now and no one is surprised anymore. I’ve just got back to my office from a brief lunchtime visit to some local shops. To hear people talking you would think you were in downtown Warsaw or walking along Ali Bhutto Boulevard in Karachi.
– David, East Sussex
Thank you Mr I’m-Not Racist-But of East Sussex.
To help with the task at hand – hoodwinking its none-too-sceptical readers – the Mail also provides this graphic, which gives a breakdown of the numbers of EU migrants receiving benefits of some kind, together with some estimated costs:
From which we actually discover the following information:
Of those migrants receiving benefits of some kind, only 4% could be considered to be ‘dependent’ on them in terms of having no source of income from employment – that’s the 4,400 who receive Income Support, Jobseeker’s Allowance, Pension Credit or Homeless Payments – and that amounts to only 0.6% of the total number of migrant workers who have entered the UK from Eastern Europe over the last three years.
The vast bulk of these benefits payments are accounted or by Child Benefit (61.6%) and/or Tax Credits (34.5%) – child benefit is, of course, a universal, non-means tested benefit payable to all families with dependent children, while tax credits are payable only to those in, at least, part time low-paid tax employment. There is also some degree of overlap between these two benefits – families receiving Working Families Tax Credits, which are included in the overall figures for tax credits as a whole, will automatically receive child benefit and have, therefore, been counted twice in the headline figure of 111,908 given for the total number of claimants. Its also not clear whether the figures given for child benefit are based on the number of children for which this benefit is paid or for the number of families receiving the benefit – if it the former than the actual number of benefit claimants will, again, be lower than the headline figures as, in some cases, families may receive payments for more than one dependent child. Conversely, if its the latter, then the headline figures will be under-reporting the number of children for which the benefit is paid, and the Mail’s cost estimates will be less than the actual sums paid out.
In addition, the figures given are the aggregated figures for for all claimants over the last three years, and not annual figures or figures for current, active, claims. There is, therefore, no way of knowing from these figures exactly how many live claims there are at the moment. Current figures could be higher, as additional migrant workers qualify for benefits by virtue of having worked in the UK for 12 months, or they could be lower as claimants included in the above figures have since moved off benefits into employment (or off tax credits into better paid jobs) or have returned to their country of origin, as some have.
To put all this in its proper perspective there are currently:
11.8 million dependent children under the age of 16 in the UK, for whom child benefit is payable – of which the children of migrant workers make up 0.58% of all claimants.
4.95 million people of working age claiming a ‘key benefit’ (Jobseeker’s Allowance, Income Support, Incapacity Benefit, Severe Disablement Allowance and Disability Living Allowance), of which economic migrants from EU accession states make up 0.07%.
Source for both the above – National Statistics Online.
According to the latest figures from HMRC, there are currently around 3.63 million live claims for either of the government’s employment-related tax credits schemes, which means that if all the claims cited by the Mail were live at the moment, claims from these economic migrants would account for just 1% of all claims.
So much for the financial burden of economic migration.
Free movement of labour from EU accession states has, thus far, produced substantial economics benefits and very little by way of economic costs, and as long as this kind of migration stays broadly within current parameters; i.e. the general demographics remain favourable – we attract mainly younger workers without dependants who have either bankable, in-demand, skills or are prepared to take on low-paid jobs that British workers can’t or won’t touch – and general economic conditions remain favourable, which means that there is demand in the labour market for such workers, then there is no real argument for imposing artificial restrictions on such migration by way of fixed quotas – if given scope to do so without unnecessary interference, the market will determine the appropriate level of migration needed to meet Britain’s economic needs.
From a free-market perspective, the one potential ‘fly in the ointment’ in all this would be if an over-generous welfare benefits regime were to result in a significant increase in the number of economic migrants entering the UK with dependants, as a proportion of the total number of migrants, or who stick around claiming benefits while unemployed for too long should demand for migrant labour begin to fall.
In policy terms this translates into a requirement for:
a) a qualifying period on entry during which migrant workers are either ineligible to receive welfare benefits other than in cases of extreme hardship, or during which the rights are subject to strict limitations in terms of the type of benefits that may be available to them.
b) a right to certain key benefits on the basis that this is ‘earned’ by virtue of having completed a qualifying period during which they have been in gainful employment and, therefore, contributed to the UK economy, and
c) a reasonable limit on the right to such benefits should a migrant worker become unemployed. There is a balance to be struck here between allowing migrant workers who do become unemployed a reasonable amount of time to find alternative employment – remembering that a worker who has worked in the UK for some and picked up the language, etc. is generally better place to find work than one arriving ‘fresh off the boat’ – and not providing incentives to those who fail to find work to stick around for too long if the labour market cannot accommodate them.
The UK’s position in respect of migrants from the ‘A8’ accession states is set out by the Social Security (Habitual Residence) Amendment Regulations 2004, under which:
During the initial 12-month period of registered employment, an A8 worker is entitled to Child Benefit and in-work benefits such as tax credits. If they have a low income, they may also be entitled to Housing Benefit and Council Tax benefit.
The new regulations mean that from 1 May 2004 all EEA and Swiss nationals who are economically inactive will only have a right to reside in the UK if they have sufficient resources to avoid being an unreasonable burden on the State.
Non-means-tested benefits are unaffected by these changes (e.g. statutory sick pay, statutory maternity pay, maternity allowance, and Disability Living Allowance or Attendance Allowance). A8 nationals who are already in receipt of unemployment benefit in another member state can have it paid in the UK if they obtain Form E303 from their own country and meet the UK entitlement conditions. A8 nationals who are self-employed will be entitled to Incapacity Benefit provided they have paid sufficient National Insurance (NI) contributions.
That appears to cover most bases, although like any such system and set of rules, it will not be possible to envisage and allow for every possible human scenario that might arise out of economic migration, such that one can expect, as time progresses, the odd anomalous case to arise and expose loopholes in these regulations. Nevertheless, the necessary principles are in place to provide the kind of policy framework for managing economic migration outlined earlier.
There is currently no reasonable economic argument that can be levelled against current patterns of economic migration from Eastern Europe, nor will any such arguments hold water for as long as these migrants stay on the plus side of the balance sheet and contribute considerably more to the UK than they take out.
All of which explains why the Tories have hit upon the idea of migration creating ‘pressures’ on public services as a means of reopening the public debate around immigration in the hope exploiting public anxieties about immigration, which still very much stem, in the main, from rank ignorance and barely concealed xenophobia, in the hope that this will turn into gold at the ballot box.
The general conceit in Tory ranks is, perhaps, best illustrated by these remarks from Dizzy:
Cameron’s decision to frame the question of immigration around the idea of its potential impact on the public services makes the possibility of the instant knee-jerk charge of racism very difficult for Left to do. After all, if they just reject his comments out of hand they are effectively saying they don’t care about the quality of the public services, and they’re not going to do that now are they?
What Cameron has done is take the immigration question, quite rationally, into the Labour heartland and framed it entirely around their totemic policy areas and goals. Asking what the impact of too much immigration has on the service quality of hospitals, schools, and housing – whilst simultaneously stressing that the question is not about current immigrants but newcomers only – puts the Labour Party in a very difficult position to disagree.
I’ll say this for Dizzy, when he’s optimistic he really is optimistic, especially when he continues this part line with a direct swipe at Tom Watson:
Interesting, the Labour whip Tom Watson has decided he agrees with the Daily Mirror that Cameron’s comments on immigration represent a “lurch to the right”.
Given that David Cameron was pretty clear that the question of immigration was not about already existing immigrants – but new ones coming in on the basis of whether the public services could cope with it – one must presume that Watson doesn’t actually care about maintaining public service integrity and quality?
Ah, if only things were so simple… which they’re not.
That’s not to suggest that economic migration does not raise issues in terms of public service provision, as ONH Hawksworth, Chief Economist at PwC notes here:
But Mr Hawksworth said the extra pressures on transport and housing might offset this slightly and should be taken into account in the forthcoming government spending review.
“Public spending projections do not appear to have been revised up in the pre-budget report to reflect higher future assumed migration, which suggests that on a per capita basis the squeeze on public spending growth pencilled in for the next spending review period may be even tighter than earlier projected,” he said.
Mmm…. Extra pressures on transport and housing, eh? But no mention of public services generally, or of health and education, specifically; these being, after housing, the two public service areas that have seen the greatest amount of scaremongering, most prominently in letter sent to the then Home Secretary, John Reid, by Sandy-Bruce Lockhart, head of Local Government Association, which was reported with considerable relish by, yes, the Daily Mail.
Council tax will have to rise because of Labour’s failure to get a grip on immigration, town hall chiefs have warned.
They insisted there was no way local government could afford the public services that hundreds of thousands of immigrants from eastern Europe would demand.
Sandy Bruce-Lockhart, head of the Local Government Association, has written a scathing letter to Home Secretary John Reid, placing the blame squarely at the Government’s door.
In a devastating critique of Labour’s performance on immigration, he warns the crisis has created ‘severe problems’ that will lead to council tax rises, local job losses and cuts in services.
So the LGA, which represents local authorities, is behind Cameron all the way? Well, not exactly…
The LGA claims Labour’s inability to calculate the scale of the problem has left local authorities out of pocket.
Since local councils are paid according to the number of residents living in their areas, failure to calculate the number of immigrants can lead to critical shortfalls in funds.
He writes: ‘There are a number of local authorities for whom the current system of measuring the number of migrants in specific council areas is failing to ensure adequate funding to keep council services to local people maintained.
And there’s another four paragraphs all making the same basic point, which is ‘give us more money’.
The reason why the PwC report flags up transport and housing, but not other public services, is simply because the ‘pressures’ on public services that Tories would have people believe necessitate curbs on economic migration, and quotas determined by government and not by demand in the labour market, are for the most part transient, short-term pressures.
The actual problem here is simply that the public sector finance system, particular in relation to the funding of local services provided by the NHS and local authorities, is rather inefficient and slow to respond to rapid short-term demographic changes in population; and this is because the vast bulk of this funding come from, or has to be filtered through, central government before it can be allocated to local authorities or local NHS trusts and is, then, allocated using formulae in which things like size of population, demographic profile, numbers claiming benefits, etc. are used as part of the calculation.
In all, the time it takes both to collate the relevant statistic information – and for the revenues generated, in tax, from migrant labour – to work their way through the Treasury to the point whether both are adequately reflected in calculation of the amount of central government funding (i.e. revenue support grant) allocated to specific local authorities. This, as a fair estimate, is going to be anything from 18 months to 2 years, if central government sticks rigidly to its core formulae without taking into account supplementary information that may have come in after the official statistics were compiled and adjusting the figures accordingly, during which time some local authorities may experience increased demand for services without receiving a corresponding increase in funding.
This is the point that Bruce-Lockhart was making to John Reid a little over twelve months ago, and nothing in either the content or timing of this letter should come as any great surprise, provided one appreciates that June/July of each is around the time when all the horse-trading over the next round of public sector finance allocations, which are announced each October/November in the Chancellor’s autumn statement, begins in earnest. All that Bruce-Lockhart was doing, last year, was putting down the LGA’s marker to say to the Treasury that it would be looking for increased funding for a number of its member local authorities, to take into account increases in demand for some public services that hadn’t previously been planned for.
So far as the vast majority of public services are concerned, there should be – and generally are – few problems in coping with increased demand resulting from economic migration, just so long as the resources to increase service capacity to meet demand arrive in a reasonably prompt manner, not mention that the demographics of A8 migration tend to minimise demand on NHS services and in education, simply because those arriving from Eastern Europe in search of work are, on average, younger than the general UK population and have, with them, far fewer dependants than. again, would be the case across the general population of the UK.
Where one cannot escape easily from such pressures is in terms of housing – migrant workers, like everyone else, need somewhere to live – and transport, but this simply because to increase capacity in these areas to cope with demand requires significant capital investment in infrastructure, which take a relatively long time to bring on-stream, as opposed to increasing service capacity, i.e. hiring more teachers, doctors, nurses, etc. where as long as there’s enough spare capacity in the physical infrastructure to cope with demand, the major limiting factor is availability of resources.
That said, it also needs to be noted that in all but cases of extreme hardship or in relatively rare instances where workers do have dependants with them and where there are other mitigating circumstances, migrant workers do not generally accrue an entitlement to social housing, which is where most of the contention over immigration and housing has been in the last couple of years, but rely instead on the private-rented sector for accommodation. So, in the short-term we can expect to see rental costs rise where migration increases demand but, over time and provided that the market is not too inhibited in its ability to respond by over-regulation, then this demand will serve as an incentive to increase supply and things will even themselves out over time.
All of which neatly explains why, but for moving housing substantially up the list of government priorities since taking office, Gordon Brown and others in the Labour government – including government whips – are currently remarkably sanguine in their response to Cameron’s arguments on immigration, simply because Cameron’s position is already out of date by twelve months and is only going to become less and less credible over time as the economic benefits of recent migration work their way through the public sector finances and manifest themselves as increased funding for those local authorities that do have a significant population of A8 migrants. Cameron is, quite literally, twelve months late in arriving at the party, as is obvious when one note that where, last year, the LGA were issuing letters warning of the potentially dire consequences to public sector services arising out of the influx of migrant labour from accession states, this year they’ve not a dickie-bird to say directly on the subject other than, obliquely, in calling for “a share in the real terms growth that is available in public spending” and more capital funds for housing and transport in their submission to the Treasury in advance of this year’s Comprehensive Spending Revue.
The position that Dizzy thinks Cameron has ‘triangulated’ is already a year out of date and, with the government accumulating more and trend data, as each year passes, on which to base its estimates of both increased revenues from A8 economic migration and the demands for additional resources for public services that this will engender, it seems unlikely that a position such as that which prompted Sandy Bruce-Lockhart to put out the local government begging bowl last year, will be repeated this side of the next general election. Pressures in the housing market and in transport will take a little longer to bring under control, but this has already been addressed in broad policy terms by the government.
That said, if one looks at the detail then one quickly finds that Cameron’s policy is a complete sham, not simply because his central argument – pressure on public services – is not supported by the evidence, but because what little he does propose will have no bearing whatsoever on either current economic migration or, indeed, on such migration for the foreseeable future.
What Cameron cannot do, for starters, is introduce restrictions on migration from the A8 states who joined the EU in 2004 – Poland, Czech Republic, Latvia, Estonia, etc. – and even if he could, he could only introduce restrictions up to the end of 2008, five years being the maximum period from accession during which an EU member state may derogate from EU regulations on free movement of labour.
As for Bulgaria and Romania, the two newest accession states who joined the EU from 1 Jan 2007, Britain already has a derogation in place which puts strict limits on the numbers of low-skilled workers who can come to the UK from both countries and a full five derogation in place, running to the end of 2011.
Cameron, in addition, proposes to ‘push for “transitional periods” before people from future EU entrant nations could come and live and work in Britain’. Quite why he needs to do that when current EU regulations permit this for a period of five years from accession already – other than to try con Tory into thinking he actually has a policy – is open to question, but in any case a quick look over the EU’s enlargement website shows that, currently there are a total of seven ‘candidate’ and ‘potential candidate’ countries on the EU’s books of which there are three with candidate status – Croatia, the Former Yugoslav Republic of Macedonia and Turkey, and four potential candidates; Albania, Serbia, Montenegro and Bosnia and Herzegovina. Of these, only the Croatia bid for accession looks like to take place in the next 4-5 year, possibly around 2011/2, while the rest have any number of political matters to sort out before the can be considered for membership.
Cameron also proposes that “for those from outside the EU, a calculation should be made each year of what skills the country needed, the benefits migrants bring to Britain, and “the costs of pressures on public services” after which the Tories would place a limit on the number of migrants from non-EU countries who would be allowed into the UK – non of which would have any effect at all on economic migration from the European Union nor, indeed, on low-skilled workers from non-EU states, because the government have already cancelled the scheme which did allow low-skilled workers from non-EU states to come to the UK at the beginning of this year, precisely because the market for this kind of labour was already being filled by workers from EU accession states.
So what Cameron has actually announced here, under the cover of a public discourse dominated by talk of migration from the EU, over which he has only limited scope for manoeuvre and nothing new to offer, is that only new policy the Tories have on immigration is to impose restriction on migration from the ‘New Commonwealth’ – the Indian subcontinent, Africa and the Caribbean…
…but race and ethnicity doesn’t come into it – does it?
Dizzy’s suggestion that:
Cameron’s decision to frame the question of immigration around the idea of its potential impact on the public services makes the possibility of the instant knee-jerk charge of racism very difficult for Left to do.
…is true only to the extent that Cameron has avoided making the connection obvious, nevertheless if you dig into the detail it very quickly becomes apparent that the Tories proposals will have winner and losers and that the winners will be disproportionately White and European and the losers will be disproportionately Brown/Black and non-European, for all that their historical connections to the UK stretch back considerably further, through the Commonwealth and back to the British Empire, than do those arriving from current, and future, EU accession states.
All of which shows that even if the leader of political party is not themselves a racist, that does not necessarily preclude that party from coming up with an immigration policy whose effect will be, if put into practice, and whose primary appeal with, similarly, to those in the UK whose views on race and ethnicity Cameron would certainly prefer not to be associated with.
Overall, the best one can say here is that there are signs of progress in Tory thinking – after years of playing the race card and putting up proposals on immigration that were calculated to appear to racists, they’ve now succeeded in coming up a policy that will appeal to the ‘I’m not racist, but…’ crowd.
Progress is sometimes a very slow thing.