Immigration remains a divisive issue in Britain – especially on the centre-right. At this year’s Conservative Party Conference, the Battle of the Think Tanks pitted the Centre for Policy Studies and the TaxPayers’ Alliance against the the Institute of Economic Affairs and my own Adam Smith Institute.
My arguments were quite simple – Britain faces a serious demographic crisis and depleted skills across the labour market. And immigration provides the answer to these problems.
Britain’s population growth over the next 25 years is projected to be slower than in the previous 25 years. The number of working age people in the UK has fallen from two thirds of the population in 2007 to just 63% today. And as productivity growth has languished at the bottom of the G7, and likewise capital investment (owing to heavy regulation and high taxation), immigration is required to fill demand.
However, immigrants have to live somewhere – so wouldn’t this worsen the housing crisis? Indeed, there is considerable evidence that for every increase in immigration as a percentage of total UK population, there is a corresponding 1% increase in local housing prices, depending on the abundance of housing in the local area. However, it should be noted that immigrants are necessary for the building of new houses, as evidenced by the recent addition of bricklayers, plasterers, roofers and carpenters to the Shortage Occupation List. In order to fix the housing crisis, which puts up everyone’s rents and prices, we need immigrants to come in and work in the construction industry. Labour market autarky is no longer feasible.
This is similarly the case for the health service. All visas have a £1,035 a year charge added to pay for the health-service, which is not deducted from National Insurance on their payslips. This has raised £1.54bn in the last year, which goes some way to paying for the costs they place on the service through usage – although, it should be noted that immigrants are less likely to use health services due to being younger and fitter.
Statistics show that almost one third of doctors and 20% of GPs are non-British. Indeed, the Migration Advisory Committee concluded that there is ‘no evidence that migration has reduced the quality of healthcare’. Likewise, there is no evidence that immigrants get preferential treatment in regards to social housing, and they are often more productive workers, thereby creating more tax revenue for public services and easing the burden on natives. It’s clear why Treasury economists recommend allowing in more immigrants than the public will often appear to tolerate.
There are valid concerns about cultural changes by immigrants, and there is no economic model in the world to account for these. Primarily, what causes most people to reject immigration is crime in areas that have not seen enough investment.
But, if we did have to concede to the opposition, how would we enjoy the economic benefits from a reduction in net migration? The ASI has recently recommended visa auctions, which would allow the government to set the limit on how many visas are auctioned and manipulate revenue in turn. By putting the 332,000 current work visas issued through an auction, we found that we could raise £59 billion in direct sale revenue and a compounding £27.4 billion in tax revenue, which equates to a potential 11p off income tax.
Smart solutions are required to solve the immigration question, and in the face of increasing hostility, it is more important than ever that immigration advocates continue to make its clear economic case.
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