Our addiction to immigration
Inward net migration in excess 600,000 not only lacks democratic consent - it distorts our economy and public services, too
We think conservatives need to talk more and get better at sharing ideas. So here we share the best newspaper columns, policy reports and books that will stimulate thinking and promote new ways of doing things.
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Towering columns
In The Telegraph, Nick Timothy says there is no public mandate for current immigration levels, and little recognition of the socio-economic costs:
There is much sophistry about what the public thinks. On the Right, pro-immigration politicians claim people want “control” – something that was impossible during the days of EU free movement rules – but are relaxed about the numbers. On the Left, campaigners cite polls that show people are “pragmatic” about each particular visa route – while ignoring polls that show opposition to the aggregate numbers. Both are wrong: 57 per cent believe the existing inflow is too high, before the true extent of immigration is confirmed this week.
Those who express their opposition to these record numbers are inevitably painted as extremists and racists, and immigration liberals of all stripes insist that any reduction in the numbers will destroy the economy. But it was those same liberals who built a higher education system that seemingly can only survive by selling long-term immigration, while failing to provide British nationals with the technical skills we need. It was those same liberals who made the NHS and social care system apparently reliant on foreign workers.
Maintaining that reliance comes at a significant cost. Immigration is likely behind at least half of all new housing demand in England. It may well require hundreds of thousands of additional school places, and creates pressures on maternity services and for more social housing. And it may reduce investment in technology and the skills of already-resident workers. Some analysts believe that a significant share of the slump in productivity growth between the crash and the pandemic can be attributed to immigration.
On ConservativeHome, Professor Eric Kaufmann welcomes the Higher Education (Freedom of Speech) Bill:
Government can be vital for protecting human liberty. How can this be? Society is made up of the state, institutions and citizens. Courts are needed when government oversteps, but what happens when institutions turn illiberal?
When institutions or private actors violate the liberty of citizens, as is the case with universities which punish staff and students for legal speech, a democratically-elected government should prevent them from doing so. The idea that the government can protect liberty draws on the Hobbesian tradition of liberalism, which argues that the state has a role in limiting private violence in order to guarantee human freedom.
It is rare to see effective legislative pushbacks against wokeness. Few administrators have the mettle to stand up to progressive activists claiming to speak on behalf of historically marginalized groups while intoning that ‘speech is violence’. Now university leaders, no matter how supine, can simply point to the law and tell the activists there is nothing they can do for them. This is a far more realistic solution than praying for that rare breed, the brave administrator, to emerge.
At UnHerd, Dominic Sandbrook looks back at the under-appreciated achievements of Tory PM Stanley Baldwin, 100 years after he assumed office:
To some of his better-remembered contemporaries, Baldwin’s success was utterly baffling. Churchill, when playing chess, would gesture at his opponent’s pawns with the words: “Bring out your Baldwins.” Orwell said that he was “simply a hole in the air”. They were both wrong. Voters in the Twenties and Thirties understandably shrank from the reckless, belligerent adventurism that had sacrificed so many lives at Gallipoli. Most voters were more like Bilbo Baggins, the very personification of Baldwin’s England, who made his first appearance during the great man’s final months in office. “We are plain quiet folk and have no use for adventures. Nasty disturbing uncomfortable things! Make you late for dinner!”
As for being a hole in the air, that too was all part of the performance. Baldwin’s appeals to unflashy common sense were a brilliant way of presenting the Conservatives as the sensible, unthreatening, alternative to Labour’s supposed crypto-Bolshevism. And in reality, he was a much more nervous, restless figure than people realised. Colleagues watching him on the front bench noticed how he would twitch and fidget with nerves, exhibiting tics you can still detect on YouTube today. His oddest quirk was his habit of picking up books, lifting them to his face and sniffing them, which has never been properly explained. Some strange Harrovian fetish?
A century on, then, Baldwin ought to be much better known. To academic historians like his biographer Stuart Ball, his accomplishments are obvious. In an age of seething political turbulence, he turned the Tories into the dominant party of government, enlisting working-class and middle-class voters beneath the banners of common sense. His affable, consensual style meant Britain entered the late Thirties as a relatively contented, cohesive country — especially when compared with future allies such as France and the United States, let alone Germany and Italy. There will always be questions about the pace of rearmament. But Baldwin’s contribution to victory was arguably deeper and more important. Thanks to him, Britain entered the war united — perhaps the greatest asset of all.
In the Financial Times, Sarah O’Connor says public policy should aim for more than simply “compensating the losers” of the AI revolution:
A new policy in Sweden is an interesting example of an alternative approach: the country has created what is effectively a furlough-type scheme for life-long learning. Under an agreement between employers, unions and government, workers can take time off to train in something new, while being paid 80 per cent of their salary (up to a limit).
This isn’t waiting until people are made redundant then offering them a cheap course so you can tick the “retraining” box in the “compensating losers” handbook (which didn’t go so well in the deindustrialised areas of many developed countries in recent decades). Instead, the idea is to be proactive — to help workers stay ahead of changes in the world of work, and to help employers by raising the skills base of the workforce. It is still early days and there are some dangers, for example that it displaces employer-provided training.
But Swedish unions hope it will “make our members safer in the labour market and more resistant to destructive forces that are always at work in a small open economy,” says Fredrik Söderqvist, an economist for the LO — the Swedish trade union confederation. “This sort of highlights a basic tenet of the Swedish model — security in the labour market is supposed to bring security in the individual job — not the other way around.”
On his Substack, Rian Chad Whitton queries the viability of a UK semiconductor industry:
Only an industrial policy that answered these problems could be successful, and the modern British state has given up trying to solve them. The country’s political economy of cheap borrowing to finance chronic current account deficits was nearly turned upside down when Liz Truss tried to issue some peripheral tax cuts. Fixing energy costs is beyond such a fragile system.
The strategy is at least honest, in that it ignores all pretences that the UK can build modern fabrication facilities. This is a limited strategy aimed at juicing R&D, funding certain types of compound semiconductors, and greasing the wheels of ‘international cooperation’ and ‘skills’. It is, to all intents and purposes, a surrender.
Could it have been anything else? Possibly not. Professor Richard Jones is one of the foremost authorities on British technology policy. His analysis of the British semiconductor space settled on tinkering with procurement to get supercomputers to use British-designed accelerators, and getting government control of the semiconductor architecture designer ARM. The former is not emphasized and the latter is not considered. Buying ARM would show intent, and the investment could be recouped. But it would require concentration and long-term planning. There is reasonable scepticism that such a company could flourish under government control. Ultimately, even for well-informed people, the prospects of the UK semiconductor industry are limited.
In City AM, Adam Hawksbee argues that levelling up devolved government should go hand-in-hand. The Levelling Up Bill is a good start, but there is much more to be done:
Evidence from the last sixty years of regeneration policy suggests this is what works. A report from my think tank, Onward, examined policies all the way back to Harold Wilson’s Urban Aid programme and found a core recipe for success. Deliver funding down to the lowest possible level, invest in institutions to steward progress, and then step back – operating more like a partner and less like a parent.
Metro mayors are the most obvious example of this approach. The Osborne/Gove double act means that more than half of England’s population is now covered by a devolution deal, with arrangements in the West Midlands and Greater Manchester creating a route to financial autonomy. There has also been progress at a more local level. The recent consultation on dormant assets suggested a new endowment for a community wealth fund. And the community ownership fund is supporting a welcome wave of assets being transferred to local charities and neighbourhood associations including football stadiums, cinemas, pubs, and corner shops.
But there are too many missed opportunities. The Levelling Up White Paper promised to create “community covenants” – hyper-local organisations that could attract funding and coordinate regeneration in left-behind neighbourhoods. Little has been heard of them since. And while capital investment has poured into areas through the towns fund, future high streets fund, and levelling up fund, nothing has been created with the kind of institutional legacy the coalfields project exemplifies. Instead, capacity funding has been absorbed by councils and consultancies with nothing left for communities themselves.
Wonky thinking
At the National Conservatism conference, Juliet Samuel argued that Conservatives must stop focusing on the size of the state and accept that our challenges differ from those Thatcher faced:
This is greatly disturbing to a generation of Conservatives raised upon a diet of Thatcherisms about the inviolability of free trade and the failures of the state. So instead of action, confusion reigns. The reflexes of the 80s are too ingrained, and MPs find themselves unable to adapt. They are still focusing on worrying about what the state should or shouldn’t do, and not on how it can do things effectively. And so Britain is now almost alone in doing nothing of any scale to help our high-tech, strategic industries thrive. If this continues, the long term effects will be disastrous. Let me give you an example, and it is one I wrote about last week – I apologise to those who may have read about it already, but I think it is the most powerful example I have come across.
Near Huntingdon in Cambridgeshire, there is a small, British company called Paragraf, a high-tech producer of semiconductors that was spun out of Cambridge University a few years ago. Paragraf employs 112 people on two sites. In the world of semiconductors, it is a minnow. But it is the only company in the world that has so far worked out how to produce semiconductors – that’s the little computer chips that run everything from missiles to washing machines – using graphene. This means its chips are more sensitive and more energy efficient than almost any other semiconductors in the world.
To give you an idea of how much importance other countries attach to this, Beijing recently established a state fund worth $80 billion to try and do what Paragraf is doing. The US is putting more than $50 billion into domestic semiconductor production. The EU’s package is worth over E40 billion. By contrast, over here the UK Infrastructure Bank, a newly established state-owned bank whose stated aim is to foster British industry, has just refused Paragraf’s application for an investment worth in the tens of millions of pounds. This immediately raises Paragraf’s cost of capital, at a time when its Chinese rivals are being flooded with cash. Indeed, the UK’s planned support for the whole semiconductor industry – to be announced soon we hope it’s been years in the making for some reason and keeps being delayed – is worth just £1 billion (this came out on 18th May and was as underwhelming as feared).
That’s not all. Paragraf is also trying to expand by hiring more staff. But when it finds a physicist or engineer it wants to hire, it has to wait up to nine months for the government to process their visa. The company wants to scale up production. But the local council won’t force the grid to pay for a proper electricity substation to connect to its warehouse. So Paragraf has had to wait half a year and pay £1 million of its own money just to get power into the building.
Why is this happening? Because the Conservatives have forgotten that fostering national growth isn’t just about getting the state out of the way. It is also about making the state work effectively. Pleas for an industrial strategy to improve national security and prosperity fall on deaf ears, ears attuned only to a way of looking at the world that made sense forty years ago. They seem to be completely unable to distinguish between an industrial strategy to help new, cutting-edge, strategic firms and the old National Coal Board. They have a dogmatic aversion to anything the state does.
At the Institute for Government, Giles Wilkes says Rishi Sunak must use the little time remaining to this Government to adopt a robust industrial strategy:
But Sunak should take seriously the criticisms of Clark, Cable and Mandelson. Too much time is wasted on the semantics of industrial strategy; often it is allowed to be defined by its antagonists, who portray it as an impossible attempt to second-guess millions of market signals. The truth is that every government has a strategy, either consciously or not, through act or through omission. Government actions influence the economy in many ways. Sometimes it is pointless to try to design these actions with some economic goal in mind but, at others, the scale of structural change is too significant for it to be treated blithely. Now is such a time, in particular because of the gigantic investments and regulatory acts that will characterise the transition to net zero. That its major trading partners think so forces the UK’s hand too. The UK will need to develop new capabilities and skills for this transition, identify where it stands to benefit from taking a leading role, and recognise gaps in its capacity. Hoping that market signals alone will prove sufficient would indicate too much faith in the “oversimplified market efficiency” that Jake Sullivan attacks.
This is not to say that Britain needs to ape Europe or the US. Both are more protectionist than the prime minister would find comfortable, trying to wrestle existing market activity to their shores rather than identify new opportunities. A strategy still needs the kind of tough examination that Sunak is known for deploying behind doors. Its fiscal limitations are not the only ones with which it must grapple. The UK’s long neglect of the policy has left its skills hollowed out, and it is reasonable to question the government’s ability to deliver effective interventions wherever it wants to. There is difficult but promising work to be done melding the agenda with the push for more devolution.
No doubt government strategists will sigh at all the work needed to support an industrial strategy and ask what political upside it promises. The answer is probably none. Whatever you imagine people marching in the street about, or slamming doors in the faces of canvassers, it is seldom your lack of a policy document for domiciling supply chains. But governments cannot govern as if electoral salience is their only compass or stop thinking of the long term when their immediate future – and perhaps survival – feels more pressing. The waning Labour administration passed the Climate Change Act in 2008 with just two years to go; Theresa May signed Net Zero into law with less than two months left in Number 10. It is time for a less apologetic approach.
Book of the Week
We recommend Professor Ha-Joon Chang’s Twenty-three Things They Don’t Tell you about Capitalism. Chang defends capitalism as the best system of economic organisation while arguing there is no such thing as a truly free market - especially in the case of labour markets.
The wage gaps between rich and poor countries exist not mainly because of differences in individual productivity but mainly because of immigration control. If there were free migration, most workers in rich countries could be, and would be, replaced by workers from poor countries. In other words, wages are largely politically determined. The other side of the coin is that poor countries are poor not because of their poor people, many of whom can out-compete their counterparts in rich countries, but because of their rich people, most of whom cannot do the same. This does not, however, mean that the rich in the rich countries can pat their own backs for their individual brilliance.
Their high productivities are possible only because of the historically inherited collective institutions on which they stand. We should reject the myth that we all get paid according to our individual worth, if we are to build a truly just society.
A bus driver in New Delhi gets paid around 18 rupees an hour. His equivalent in Stockholm gets paid around 130 kronas, which was, as of summer 2009, around 870 rupees. In other words, the Swedish driver gets paid nearly fifty times that of his Indian equivalent…
Free-market economics tells us that, if something is more expensive than another comparable product, it must be because it is better. In other words, in free markets, products (including labour services)get paid what they deserve. So, if a Swedish driver - let's call him Sven - is paid fifty times more than an Indian driver - let's call him Ram - it must be because Sven is fifty times more productive as a bus driver than Ram is.
…[But] our story of bus drivers reveals the existence of the proverbial elephant in the room. It shows that the living standards of the huge majority of people in rich countries critically depend on the existence of the most draconian control over their labour markets - immigration control. Despite this, immigration control is invisible to many and deliberately ignored by others, when they talk about the virtues of the free market. I have already argued that there is really no such thing as a free market, but the example of immigration control reveals the sheer extent of market regulation that we have in supposedly free-market economies but fail to see.
Quick links
Net migration rose to 606,000 last year, according to the Government’s new methodology.
There were 75,492 asylum claims last year, the highest in two decades.
Government borrowing rose to £25.6 billion in April to cover spending liabilities.
The UK will not enter recession this year and is no longer the weakest performing economy in the G7, but inflation will continue.
Ministers will restrict the ability of foreign students to bring dependants after family arrivals rose from 16,000 to 136,000.
The Shadow Chancellor called for a new Joe Biden-style economic strategy prioritising security.
Rents rose to a record high last month, with renters in the capital facing 5% increases.
Jaguar Land Rover is expected to choose the UK over Spain for a major battery plant.
The UK is set to lose a high-value solar power investment due to poor government incentives.
The most strike-hit group of schools in London has lost 300,000 hours of learning.
54% of apprenticeship and training providers require improvement.
The chief of OpenAI has threatened to pull ChatGPT out of the EU market in response to Brussels regulation.