Should immigration fill our fertility gap?

The choices we make to shore up our population will mean profound social and economic change

Towering columns

In The Telegraph, Jeremy Warner gives an account of the UK’s plummeting birth rate, arguing Britain fails to operate a system of pro-family policies as France does.

[The UK birth rate] is actually relatively high by European standards – in Italy and Spain the rate is just 1.2 –  but in itself it is still quite a lot lower than would be needed to keep the population from falling in the longer term, and is significantly lower than France, where the rate is 1.83 births per woman.

France’s almost unique “code de la famille” – initiated before the last war in response to concern over a falling birth rate and consequent shrinkage in the numbers of economically active workers – explains quite a bit of this discrepancy. Legal rights to prolonged maternity and paternity leave are much stronger than here in Britain, while taxpayer funded family and stay at home allowances are far more generous. Free pre-school child care and big tax breaks for those with young families complete the picture of a system which is deliberately framed to encourage a more prolific birth rate.

These policies are not the only factor. More affordable housing may also play a part, even if you have to move outside the big cities and tourist areas to find it. Faced with the prospect of having to bring up your children in a broom cupboard, it is in any case no surprise that here in Britain, many young women are choosing not to have them in the first place. Bringing up a family has always been financially punishing for all but very high earners. But with rising lifestyle expectations, it today seems particularly punitive and unaffordable.

And on ConservativeHome, Guy Dampier says immigration is not the solution to the population pyramid some say it is:

One reason why Denmark has turned against immigration is that they have very good data on the economic benefits, and costs, of it. What they found is that while Danes and Western immigrants are of net benefit, many non-Western migrants actually cost more than they contributed (those from the Middle East, North Africa, Pakistan and Turkey cost the most). Overall, non-Western immigrants and their descendants cost 31 billion kroner, while Western immigrants and their descendants contributed seven billion kroner.

This is especially important because the best performing immigrants come from places like East Asia or other Western nations – precisely those with the lowest birth rates. Bringing in poorly-performing immigrants will only exacerbate the problems to which immigration is touted as a salve. For example, large numbers of British Bangladeshis – one of the youngest and fastest growing groups in the UK – are economically inactive, while those in work are often in low-skill sectors. At the same time they’re more likely to receive income-based benefits and occupy large amounts of social housing in our richest city at a time when many high-skilled graduates are priced out of London. Whatever the case for such immigration is, it isn’t the need to prop up our welfare state. If maximising the economic benefits is the main rationale for immigration, then we need to ask hard questions about the way the system currently operates. Why, for instance, did we allow 66,000 dependants of Nigerian students to come to this country in just one year? Or why do we make it so that migrants can not only move to Britain for work but also settle here, with all the attendant immediate and long-term costs?

…There are other costs too. More migrants means more stress on public infrastructure. Thus the failure of the British state to build any of it – schools, hospitals, transport links, and so on – to deal with the unprecedented immigration we’ve seen since 1997 has let to a worsening of quality of life for many people. Too much cheap labour also encourages business to reduce or even reverse the scale of adoption of things like robotics, which is one reason why British productivity remains in the doldrums; employers bank the saving on labour and the taxpayer picks up the tab. If immigration isn’t the answer, then the problem of the teetering demographic pyramid remains. Without enough high-skilled people having children, our civilisation will become increasingly fragile. And however nice it might sound in the abstract to roll back “over-consumption”, the real politics of stagnation, let alone de-growth, are likely to be very ugly indeed.

In The Times, James Kirkup says many of the biggest policy problems of our time do not require “new ideas”, but the political will to implement overdue changes:

But the big stuff needs no new ideas, only a will to implement some familiar solutions to old and growing problems. This is the think tank directors’ manifesto, the litany of measures ignored. Replace fuel duty with road pricing so that the more you drive the more you pay — and the Treasury makes up billions in lost tax revenue as drivers go electric. Base council tax bands on today’s property prices, not those of 1991: today’s fossilised local government finance system can lead to a London millionaire paying less than the owner of a modest Tyneside newbuild, and forces councils into sometimes ruinous financial speculation to make ends meet.

…Write new planning rules that make it much easier to build, especially green energy infrastructure: Ukraine proves that reducing UK dependence on global energy markets is a matter of national security — let the turbines and interconnectors rip. Set a timetable for increasing today’s inadequate contributions into workplace pensions, because only more private saving can spare future generations from an impoverished old age. Launch proper interventions on obesity and rebalance health spending away from acute hospitals and towards preventative and community health: a leaner, healthier population would need fewer hospitals. These are not novel ideas or grand visions but they would deliver a wealthier, fairer and, in time, happier country. But in how much time? Probably not in time for the next election.

Which is why I know politicians of all parties, some extremely senior, who privately support all these things but none who say so publicly. They calculate that voters won’t thank them for offering pain today, gain tomorrow. A minister recently told me about proposals for an innovative green energy project in his constituency, adding: “It’s just what the country needs but I’ll have to oppose it because my local Lib Dems are campaigning against it.”

…Has the public become more short-termist, less willing to accept inconvenience and discomfort? More demanding, in this age of referendums and social media, of being consulted, of having our voice heard on everything? Maybe, or maybe it just seems that way. If you’re constantly exposed to an electronic constituency mailbox, multiple social media feeds and polls, it’s easy to find people who demand a say, and a veto, on any policy. But so what? Look hard enough and you’ll always find someone to object to something, a reason to do nothing.

On his Substack, Rian Whitton says Britain needs drastically to accelerate its nuclear plans, and should enter into a preferential agreement with domestic manufacturer Rolls-Royce:

Then there are the small modular reactors (SMRs) being developed by Rolls-Royce. They are scaled-down light water reactors with 470 megawatts (MW) in capacity. They have already received some UK funding and are in the second stage of the GDA. The company has also established viable development sites through completing a site assessment with the Nuclear Decommissioning Authority (NDA). It is then strange that Rolls-Royce has to enter a competition with other SMR developers to receive major investments from the British government. A final investment decision is not planned until 2029. 

For context, GE-Hitachi is already approved to build its BWRX-300 reactor at Darlington in Ontario. The Korean conglomerate Doosan is forging components for the American SMR supplier Nuscale. China has built an SMR demonstrator and is completing a 100 MW light water reactor (the ACP100). Russia’s Rosatom has constructed a floating small nuclear power station and is hoping to export it. SMRs are nascent, but they are already here. By 2029, we will be well behind the curve on deployment.

It makes sense for the government to enter into a preferential relationship with a domestic manufacturer it has a golden share in. It already partners with Rolls-Royce for its naval nuclear propulsion systems. A smaller SMR competition could be retained for international developers but this would be supplementary. Rolls-Royce claims to be able to build the systems at around $6,000 per KW, or around £4,000 per KW. If it can achieve this, this would be a marked improvement on Hinkley C ($12,500 per KW). This seems unrealistic for the first systems, but the lower capital cost of SMRs makes betting on the technology less risky. Speed up the GDA for Rolls-Royce, support the domestic champion you are likely going to give the competition to anyway, and get moving in earnest now rather than in 2029.

In the Scottish Herald, Azeem Ibrahim reveals the poor evidence base behind puberty blockers and the harm they can cause, following a joint letter in the Wall Street Journal by 21 leading experts questioning their medical safety:

The experts minced no words – the belief is “not supported by evidence”. Rather than cherry-pick studies which fit the narrative, the experts used far deeper meta-studies which found evidence of mental health benefits to be of “low or very low certainty”. The risks for minors of puberty blockers and surgeries, including permanent sterility, regret, and lifelong dependence on repeat surgeries and medication are very real. Furthermore, the experts wrote that the claim that gender transition reduces suicides is contradicted by every systematic review. Even the Endocrine Society’s review found no reliable evidence that hormonal transition prevents suicide, yet they have no qualms promoting it.

…Blockers are dangerous and irreversible in their own right, but they also 'lock-in' children to even more devastating outcomes when they would likely have recovered from the dysphoria without intervention – if only doctors had let them. It is not reality that is causing most of these young people to commit suicide, is it collaborating with a mental disorder with body and mind-altering drugs. Doctors are supposed to advise treatment on the basis of evidence and fully inform their patients. The Tavistock Clinic scandal shows that even the most (formerly) prestigious institutions were letting children down. In court, the Government’s Gender Identity Service (GIDS) couldn’t even provide data on the outcomes and consequences of puberty blockers on the minors who were given them. Even if the children were old enough to consent, the consent wouldn’t have been informed.

…The fact that the GnRH drugs shut down large parts of the hypothalamus – the hormonal structure of the brain that regulates our perception of the world around us – should have given clinicians pause for thought before allowing them into the developing brains of children. Indeed, these same GnRH analogues are used for chemical castration. But ideology comes first and children come second. In many cases, the children affected are girls – now around 75% of them – and many also suffer from autism and other issues which are known to affect socialisation. There are strong correlations between such mental disorders and gender dysphoria.

In Aporia magazine, Eric Kaufmann says trimming the university system will not be a panacea for tackling the spread of woke ideology. Instead, conservatives need to contest the intellectual space in elite institutions:

What this means, in a nutshell, is that diverting more young people from low-value courses and last-chance universities to apprenticeships may help the economy, but will scarcely leave a ripple in the culture. There will be no reversal of the disastrous woke youthquake that has led to two-thirds of young people supporting Google’s firing of James Damore, a preponderant share viewing Winston Churchill and Thomas Jefferson as villains, and 74 percent of students saying that a professor who offends students should be reported to the administration. Pruning the lower branches of the higher education tree may save some money, but in order to shape the wider culture, conservatives need to find a way to the apex. One route is to create new institutions such as the University of Austin, which can try to ascend the prestige hierarchy. However, this may take time because university systems display self-fulfilling network effects, which mean the rich get richer and then remain so. The system has few of the characteristics required for markets to work, limiting space for the kind of creative destruction that has transformed the media. 

…Elite academics are instrumental in training the next generation, and as academia has become ever more politically homogeneous and intolerant, conservatives are losing the ladders of opportunity that might once have helped candidates for research institutes, news outlets and bureaucratic appointments. Even right-wing papers such as Britain’s Telegraph are mainly staffed by left-wing journalism graduates. Meanwhile, conservatives fail to find suitable candidates for government posts that are vital for reforming the bureaucracy. Dissenters are being squeezed from the system. 

The way forward is to abjure easy and satisfying libertarian reflexes like abolishing tenure or cutting funding to universities, grants and loan programmes. Instead, conservative governments need to work with sympathetic academics, political advisers and policy wonks who understand the system – to patiently reform it. That was key for our success with the UK’s Higher Education Freedom of Speech Bill. Education matters for intrinsic reasons, not just instrumental ones. If we give up on the world of ideas and theory-building, much less the Western tradition, we simply roll out the carpet for progressives to complete their cultural revolution.

Wonky thinking

The Institute for Fiscal Studies’s Tax and Public Finances: The Fundamentals summarises the state of tax and public spending in the UK, highlighting the tough choices any government will face in the immediate future:

The big-picture choices over how much to tax and spend will be difficult in large part because of poor economic growth and growing spending pressures. The public finances are easier to manage when economic growth is strong; it is easier for governments to improve services when the whole country is getting richer and it is easier to manage the stock of (nominal) debt when the economy grows faster than the rate of interest on government debt. But over the last decade, economic growth has been historically weak, and forecasts expect it to remain so. In most postwar years, UK governments could afford for revenue to fall below the level of non-interest spending and still see debt falling as a share of national income. No longer. High public sector debt, in conjunction with weak economic growth and high interest rates, means the next government would need to run a primary surplus simply to stop debt rising. That is, it would need to raise more in revenue than is spent on public services and benefits (excluding spending on debt interest). This will be a major constraint on fiscal policy at a time when there are major spending pressures. Many areas of public spending are already under strain after a decade of austerity, since the pandemic hit and in the face of high inflation; industrial action over pay awards is just one indication of this. Spending pressures will grow, most notably because the share of the population that is over the state pension age is about to start rising for the first time in 50 years. Spending would need to rise simply to provide the same health services and state pensions to an ageing population. The planned move to net zero, meanwhile, will bring further costs.

UK taxes are already high by historical UK standards, although not when compared with the rest of Western Europe. It is not inevitable that taxes will rise – UK voters have a choice. But the choice is harder than it has been for decades. Without tax rises, UK public service and benefits provision will not simply tread water, it will deteriorate. Unless levels of tax increase substantially, a reduction in the scope of the public services that the British state provides is likely inevitable. Unless something major changes – such as an acceleration in economic growth – it will not be possible to maintain public services and keep tax at current levels. The choices that face future governments are not enviable.

The choice over how much to raise in tax should – and no doubt will – be the subject of public debate. But it is no less important that we debate the choices over how revenue is raised. This is not simply a question of how much we get from different taxes (shown in Figure 1). Rather, it is a question of how those taxes are designed. The 10 key facts that we have highlighted (see the ‘Fundamental facts’ box) reflect that almost all taxes have major design flaws and significant scope for improvement. If the opportunity is taken, those improvements could go a long way to reducing the economic pain that a higher overall level of tax would entail. While there are specific choices and challenges for each tax, the problems caused by poor tax design fall into three broad types. First, various taxes distort the choices of people and firms in ways that are unjustified (in the sense that the distortions are not necessary to achieve government aims, such as redistribution). For example: high marginal tax rates caused by ‘humps’ in income tax reduce work incentives (by more than is necessary to achieve redistribution); preferential tax rates on business incomes discourage employment (relative to self-employment); large-scale carve-outs within VAT create heavy compliance burdens; corporation tax both discourages some profitable investments and subsidises some unprofitable ones; and stamp duty prevents some people from moving house to, for example, take a better job. Such distortions can mean that less work is done, investment is lower and/or resources are not being allocated to their most efficient uses. Ultimately, inefficient tax design is an unnecessary drag on productivity.

Second, many parts of the tax system are unfair. This is not a statement about vertical redistribution, about which there is reasonable disagreement. Parts of the tax system currently treat very similar people in very different ways that are hard to justify. Two people living in houses that are worth the same amount today can face very different council tax bills if their houses happen to have been worth different amounts in 1991 (the year on which council tax valuations in England and Scotland are based). And two people earning the same income by doing the same work can face very different tax bills if one is an employee and the other is selfemployed. Taxes are currently also reinforcing inequalities arising from the fact that different generations have experienced very different economic conditions. Notably, large capital gains on main homes – many of them the result of luck – have been central to a growing intergenerational divide in wealth and are completely untaxed.

Book of the week

We recommend Chip War: The Fight for the World’s Most Critical Technology by Chris Miller. The author describes how the US perfected chip design to defeat the Soviet Union, and how the race to control these vital components will define our future.

If Beijing succeeds, it will remake the global economy and reset the balance of military power. World War II was decided by steel and aluminium, and followed shortly thereafter by the Cold War, which was defined by atomic weapons. The rivalry between the United States and China may well be determined by computing power. Strategists in Beijing and Washington now realize that all advanced tech - from machine learning to missile systems, from automated vehicles to armed drones - requires cutting-edge chips, known more formally as semiconductors or integrated circuits. A tiny number of companies control their production…

…Political leaders in the U.S., Europe, and Japan hadn't thought much about semiconductors in decades. Like the rest of us, they thought "tech" meant search engines or social media, not silicon wafers. When Joe Biden and Angela Merkel asked why their country's car factories were shuttered, the answer was shrouded behind semiconductor supply chains of bewildering complexity. A typical chip might be designed with blueprints from the Japanese-owned, UK-based company called Arm, by a team of engineers in California and Israel, using design software from the United States. When a design is complete, it's sent to a facility in Taiwan, which buys ultra-pure silicon wafers and specialized gases from Japan. The design is carved into silicon using some of the world's most precise machinery, which can etch, deposit, and measure layers of materials a few atoms thick. These tools are produced primarily by five companies, one Dutch, one Japanese, and three Californian, without which advanced chips are basically impossible to make. Then the chip is packaged and tested, often in Southeast Asia, before being sent to China for assembly into a phone or computer.

If any one of the steps in the semiconductor production process is interrupted, the world's supply of new computing power is imperilled. In the age of AI, it's often said that data is the new oil. Yet the real limitation we face isn't the availability of data but of processing power. There's a finite number of semiconductors that can store and process data. Producing them is mind-bogglingly complex and horrendously expensive. Unlike oil, which can be bought from many countries, our production of computing power depends fundamentally on a series of choke points: tools, chemicals, and software that often are produced by a handful of companies - and sometimes only by one. No other facet of the economy is so dependent on so few firms. Chips from Taiwan provide 37 percent of the world's new computing power each year. Two Korean companies produce 44 percent of the world's memory chips. The Dutch company ASML builds 100 percent of the world's extreme ultraviolet lithography machines, without which cutting-edge chips are simply impossible to make. OPEC's 40 percent share of world oil production looks unimpressive by comparison.

The global network of companies that annually produces a trillion chips at nanometer scale is a triumph of efficiency. It's also a staggering vulnerability. The disruptions of the pandemic provide just a glimpse of what a single well-placed earthquake could do to the global economy. Taiwan sits atop a fault line that as recently as 1999 produced an earthquake measuring 7.3 on the Richter scale. Thankfully, this only knocked chip production offline for a couple of days. But it's only a matter of time before a stronger quake strikes Taiwan. A devastating quake could also hit Japan, an earthquake-prone country that produces 17 percent of the world's chips, or Silicon Valley, which today produces few chips but builds crucial chipmaking machinery in facilities sitting atop the San Andreas Fault. Yet the seismic shift that most imperils semiconductor supply today isn't the crash of tectonic plates but the clash of great powers. As China and the United States struggle for supremacy, both Washington and Beijing are fixated on controlling the future of computing -and, to a frightening degree, that future is dependent on a small island that Beijing considers a renegade province and America has committed to defend by force.

Quick links

Senior economists have warned the UK is heading for recession.

Asking prices for UK homes dropped at their fastest rate since 2018.

Work visas are up 35%, study visas 23%, family visas 110%, and visa extensions are up 52%, with 154,000 arrivals through humanitarian channels, according to new immigration statistics.

46% of 14-year-olds no longer live with both biological parents.

Scotland’s drug deaths have decreased, but it still has the highest rate in Europe.

Denmark has severely restricted youth gender transitions.

In the US, researchers said womb transplants for biological men would allow them to give birth “within ten years”.

The Government has announced 12,000 new free school places in disadvantaged areas.

Striking NHS consultants earn more than their European peers.

HS2 is projected to cost £396 million per mile.

The Business Secretary has asked the Treasury to provide funding for a UK advanced manufacturing plan.

Prospective investors in Arm, the UK chip designer, have raised concerns about exposure to China.

Chins has urged the “Brics” bloc of developing economies to become a rival to the G7.

Governments, experts and AI companies will meet at Bletchley Park in November to discuss safety and regulation of new technologies.

India, which has received £2.3 billion in UK aid in the last 5 years, has landed a spacecraft on the Moon - while Russia’s failed to land.

Over-85s have become £110,000 richer in the past decade, compared to £4,400 for 25-34s.

Birmingham’s Green Lane Mosque, which receives government money, explained how to stone a woman to death.