25 February 2016

The real price of closing the gates


I moved to London more than a year ago, but it took me only a month to know that I had found a new home. As a university student from the European Union, the prospect of studying and working in London didn’t seem a problem. I do not need a visa. I pay the same fees as British students. I can apply for jobs and National Insurance, and don’t have to provide a pile of immigration documents.

But this won’t last for long.

Speaking at the last Conservatives Conference last summer, Theresa May described in detail her position towards skilled immigration in Britain. Economic migration, the Home Secretary said, must be discouraged at all costs, whether it comes from overseas or Europe. It is particularly important, apparently, to break the link between universities and employers – clearly no benefit can come from a talented and motivated class of domestically-educated foreign students.

Quickly turning words into deeds, the Home office introduced a new threshold on earnings to regulate migration flows: in order for them to obtain a visa, international applicants have to demonstrate they earn more than £35k per year – with a few exceptions.

For now, this applies only for non-EU citizens; however, as the referendum approaches and Brexit seems more likely every day, thousands of European students and young professionals have started to fear they will no longer be able to live and work in Britain.

This is harmful for all involved. Britain is slamming the door on some of its most successful, creative and talented residents, and on future economic prosperity.

Every A-level economics student knows that training a worker is a cost that should be endured only if the institution that provides the training can benefit from higher returns to its investment – increased productivity and a skilled workforce. Forcing skilled workers to leave the country after money and resources are used to train them is equivalent to a shot in the country’s foot.

Under the current system, European students who start a career in Britain can cover the costs for their own education by paying taxes to the government, and eventually give to the public purse more than they have received. Were Britain to leave the EU, allowing May’s plans to be implemented in full, the government would lose the potential tax revenues of a substantive group of European students who have enjoyed low tuition fees and loans in the past few years, but will not be allowed to find employment straight after graduation.

What is the point of spending British public money to educate hundreds of thousands of students, only to politely but firmly show them the door after graduation? What is the vision, the logic behind such a ridiculous waste of national resources and international talent?

There is also a risk that restrictions on skilled migration will damage Britain’s universities. While EU students currently pay domestic fees, universities rely on the extortionate fees they charge rich non-EU students’ to fund the world-class facilities and teaching they flaunt. If the UK government makes British universities less attractive by denying international graduates the chance to work in the country, the funding gap could lead to the lowering of academic standards.

That is a pity. The UK is known worldwide for the quality and prestige of its institutions. In the past few decades, American universities have become serious competition, also by attracting and welcoming high numbers of international students. American universities have striven to attract the best and brightest from abroad, and as a result economic performance, employment and especially innovative technologies have flourished. Americans understand the value of a diverse, talented, and motivated workforce, by virtue of the very composition of the US demography. It is surprising that equally multicultural Britain doesn’t. Does Britain really want to give in to competitors on the other side of the pond?

Ms. May mentioned that international and European students who are not enrolled in a graduate scheme by the end of their degree represent a burden to the welfare system. This is ludicrous. Britain welfare provision to the unemployed is 19% lower than Germany and 12% lower than France – there is no reason to think of Britain as a preferred nation for “welfare tourism” by recent graduates. Moreover, it is virtually impossible for skilled non-EU migrants to receive unemployment benefits, while skilled EU nationals represent an infinitesimal portion of all the benefit claimants. It is time to face the hard truth: international and European students who come to Britain do so to study in the world’s best institutions, find a job, and generally contribute positively to the country’s economy.

May’s policies betray the commitment to free markets and liberalism that the Conservatives are supposed to represent. To advocate an immigration policy frightfully similar to protectionism would mean to bring the party back 60 years, and to erase the reputation of open, innovative and modern political group that Conservatives have earned in recent years. Granted, May’s policies reflect the discontent of certain social strata towards the alleged lack of opportunities for domestic workers, yet her rhetoric sounds too populistic, too close to certain more extreme right-wing voices to be credible. Surely the Conservative Party can do better than compete with UKIP for a handful of votes.

In the past 10 years, London has become the tech hub of Europe, and ranked first in the European Digital City Index. A wave of beneficial policies and financing of venture capital funds have allowed investment to blossom, and created favourable circumstances for the creation of thousands of innovative businesses and enterprises. If the United Kingdom has stayed in the top-ten countries for competitiveness in the past five years, it is in part thanks to the livelihood of the London start-ups and tech clusters, many of the innovators and entrepreneurs in the Silicon Roundabout area earn less than £35,000 a year as they invest in building their bussinesses. Many of these innovators are not British, and would risk deportation under May’s scheme.

Is the Home Office ready to bin Britain’s technological progress for the sake of achieving zero net migration? It seems so.

Just a few weeks ago, I received an email from the small tutoring agency I work for – let’s call it The Company. In the email, the founder announced that The Company’s deputy and Co-founder, a Canadian young women whom I shall refer to as Monica, had been denied her work visa to the UK, and her position had sadly become vacant.

This is outrageous. In the two years I have worked there, The Company has grown at a rate of 50-75 percent every year. It was founded by and employs young and motivated individuals: Britons, Europeans and foreigners alike, and aims to provide high-quality, flexible and friendly tuition to pupils from all backgrounds. In contrast to other tutoring agency, it provides regular support to the tutors, who often have a chance to meet, socialise and discuss teaching methods. The aim of The Company is to complement pupils’ education with innovative and engaging learning techniques that only the diversity and talent of its tutors make possible.

The Company embodies the newly-created “Londoner Dream”: it represents concretely the recent developments that have allowed small entrepreneurs to fund socially aware and dynamic businesses with relative ease. The Company and its founders constitute an example and a hope for British future economic prosperity, yet the Home Office doesn’t seem to recognise this. By denying visas to people like Monica, the British government is sending a clear signal to venture capitalists and entrepreneurs at home and abroad: that talent, passion, ideas and determination only matter if your passport doesn’t say otherwise.

The Conservative Party is facing a hard choice: to maintain its pledge to keep immigration numbers to a minimum, or to preserve its reputation as the party for business, innovation and economic growth. To me, the choice is obvious, and so it should be for the Home Secretary.

The party’s reputation is in fact not the only matter at stake: this decision determines the fate of the British economy. And the Conservatives can’t afford to jeopardise it.

Beatrice Faleri is Senior Editor of Perspectives at King’s College London.