2 June 2016

Vote Leave’s anti-immigration system is deeply flawed


It’s official: Vote Leave has gone all UKIP. Having lost the economic argument, it is now focusing its campaign on immigration. Yesterday, leading Leave campaigners pledged that a post-Brexit Britain would curb EU migration in a specific way: “by the next general election, we will create a genuine Australian-style points based immigration system.” Nigel Farage was cock-a-hoop. “Pleased that Boris Johnson & Michael Gove now support same policy I’ve advocated for years,” the UKIP leader tweeted. Yet both the premise of Vote Leave’s anti-immigration position and its proposed solution are deeply flawed.

You may find it odd that Vote Leave has started making promises about future government policy. The EU referendum on 23 June isn’t a general election and the last time I checked Boris Johnson wasn’t prime minister. Indeed, one of the co-authors of Vote Leave’s immigration proposal, Gisela Stuart, is a Labour MP. But leaving aside such constitutional niceties, the substance of their position is wrong-headed.

Study after study confirms that EU migrants have an overwhelmingly positive effect on the British economy. They have a higher employment rate (78.2%) than people born in the UK (72.5%), those from Poland and other A8 accession economies especially so (81.9%). Their hard work neither deprives British workers of jobs nor depresses local wages, as a new study by the London School of Economics’ Centre for Economic Performance (CEP) shows. On the contrary, EU migrants tend to enhance the productivity of British workers, and hence their pay.

It’s not surprising that EU migrants don’t harm British workers. There isn’t a fixed number of jobs to go around. EU migrants don’t just fill jobs, they also create them: when they spend their wages and in complementary lines of work. Thus Polish builders create jobs for British building supervisors and British suppliers of building materials, among others. While EU migration has risen considerably in recent years, so has the employment rate of people who were born in the UK.

Gove, Johnson et al claim that EU migrants “place considerable pressure on the wages of low paid British workers”. They provide no evidence to substantiate this claim – because there isn’t any. On the contrary, the government’s new living wage will continue to raise pay substantially for those on the minimum wage throughout this Parliament.

Their assertion that EU migration “puts particular strain on public services” is also nonsense. Studies show that EU migrants are actually net contributors to public finances. Since EU migrants pay in more than they take out, they enable Britons to enjoy higher public spending and lower taxes than otherwise. Any pressures on public services are therefore due to the public sector’s failings, not theirs.

A recent study by researchers at Oxford University’s Blavatnik School of Government finds that NHS waiting times are, in fact, lower in areas where there are more migrants. Migrants are typically young and healthy, so make less use of the NHS than the typical Brit, while even older ones are less likely to see a doctor. And don’t forget that one in ten doctors in the UK is an EU migrant.

While Vote Leave’s diagnosis is flawed, their prescription is worse. It beggars belief that leading Conservative politicians who ostensibly believe in market solutions think that Soviet-style – sorry Australian-style – manpower planning is the right approach to immigration policy.

Just imagine if ministers in Whitehall proposed to use a points system to decide who could come work in London from around the country. The notion that they could second-guess the employment needs of the capital’s complex, dynamic economy made up of myriad smaller businesses would be roundly dismissed. But if such a system would clearly be a bonkers way of managing migration into the capital, why do Brexiteers think it would work well for migration into the country as a whole? Did Boris Johnson not read any Hayek with his Classics?

Governments are incapable of picking individual winners, let alone planning an entire economy’s ever-changing manpower needs. Ministers lack the information and incentives to select the “right” workers that Britain needs – as do any technocrats to whom they might delegate the decision. Their attempts to do so result in Byzantine rules that tie up the economy in red tape.

Australia’s immigration system is hardly exemplary. Its devilish bureaucratic complexity is a gift to the country’s many immigration lawyers and a bane for the economy as a whole. This complexity provides ample lobbying opportunities for big, politically connected businesses, while depriving start-ups and growing smaller businesses of the employees they need. So when Brexiteers claim that “Such a system can be much less bureaucratic and much simpler than the existing system for non-EU citizens”, I don’t know whether to laugh or to cry.

Indeed, Vote Leave betrays its economic illiteracy when it suggests that migrants should be selected on the basis of their skills. The area of fastest employment growth in Britain is care for the elderly. These are low-skill jobs that young Britons spurn. A skills-biased points system would deprive elderly Britons of proper care. And it would damage British businesses that rely on EU migrants to pick fruit, process food, clean offices and much else – and thus harm their customers too.

Vote Leave does have a point that Britain’s current immigration system discriminates against non-EU citizens, who face ever higher barriers to coming to work here. But given that Leave campaigners’ overarching aim is to bring down net migration to the “tens of thousands” a year – that is, by more than two-thirds – a post-Brexit immigration policy would involve tighter controls on both EU and non-EU migrants. That would be doubly damaging for the British economy. Curbs on EU migrants would also entail reciprocal restrictions on Britons moving to live, work and retire in the EU. And it would mean losing access to the EU single market, with which we do nearly half our trade. That’s a quadruple-whammy.

Make no mistake: voting Leave would not result in a liberal, global, outward-looking Britain. It’s a vote for pulling up the drawbridge, sabotaging the economy and letting UKIP in by the back door.

Philippe Legrain, who was economic adviser to the President of the European Commission from 2011 to 2014, is a visiting senior fellow at the London School of Economics’ European Institute and the author of European Spring: Why Our Economies and Politics Are in a Mess — and How to Put Them Right.