Jonathan Portes
The UK public policy landscape is littered with disasters. From record NHS waiting lists to the de facto legalisation of petty crime and serious sexual assault, to the environmental damage created by the privatised water and sewerage companies. With immigration figures on Thursday likely to show that net migration in 2022 was the highest level on record, it’s tempting for politicians and commentators to add immigration to this list – although many have already done so on the basis of what, charitably, are wild, uninformed guesstimates. For Labour, immigration levels play into the narrative that 13 years of Tory rule have broken the country. For the ethno-nationalist right inside and outside government, well represented at the National Conservative conference last week, the idea that our culture and national identity are threatened by an influx of mostly dark-skinned foreigners is foundational.
The truth is very different. In fact, the migration statistics reflect something that is rare indeed in the UK right now – a successful policy implemented efficiently and effectively and, even rarer, the crystallisation of a genuine “Brexit opportunity”. First, those figures. Some of the rise is temporary, driven by special visas for those coming from Hong Kong and Ukraine. The relatively low profile of these schemes is itself a success, reflecting the fact that, despite the rhetoric around those crossing the Channel, in the rare cases when the UK does open “safe and legal routes” for refugees, it works well. The impact of rising international student numbers on net migration will also reverse over time, since most will depart after finishing their studies. But what about the new, post-Brexit migration system? On the one hand, the numbers of those coming to work and study have risen; on the other, businesses, especially those in the food and hospitality sector, continue to complain about labour shortages.
Some of this is normal. Anti-immigration politicians and lobby groups, and the Home Office, always complain the numbers are too high, while business, and other government departments such as the Treasury and the Department for Health, always want a more liberal system. But these longstanding conflicts have been brought into sharp relief by two things. First, the current state of the labour market, with labour demand high after the pandemic, and domestic labour supply constrained by the rise in ill health and early retirement. And the end of free movement was always going to reduce the flexibility of the UK labour market. Second, Brexit. The government has been forced to make policy choices around which occupations and sectors should be open to migrant workers. And this in turn has heightened the political saliency of these choices and the associated lobbying. So the complaints from both sides represent, in a political and democratic sense, success: a feature, not a bug. This is also true of the economics. The vast majority of economists, including me, thought Brexit would make the UK considerably less open to both trade and migration with the EU, but somewhat more so to the rest of the world. We were right. We also thought that the downsides of the former would outweigh the upside of the latter. We were wrong.
In fact, the new post-Brexit migration system has achieved its key objectives. By ending free movement, it has reduced the flow of relatively lower skilled and lower paid workers to some sectors. But by liberalising migration flows from the rest of the world, it has substantially increased those coming to work in the NHS, the care sector, and high-skilled and high-paid roles in information and communications technology, finance and professional services. It’s too early to say what the overall balance sheet will look like – but as well as alleviating workforce pressures on the NHS and social care sectors, the rise in skilled worker inflows, alongside the rise in international students, is likely to have increased not just GDP but GDP per capita, benefiting the UK economy and public finances. And, most of all, public opinion appears to be intensely relaxed about rising inflows when the economic case is clear. It’s not all good news. So far, at least, there’s little to suggest that ending free movement has pushed up wages in the sectors most affected; indeed, wages in hospitality have fallen relative to other sectors. And it’s strikingly hypocritical for the government to tell employers in that sector to recruit Britons, while in the care sector, where it has far greater control over wages and conditions, it’s encouraging employers to pay migrants a pittance.
So what should the government – or the next one – do about immigration? As little as possible. There are some useful tweaks that could be made to the system. But where there are serious systemic problems, as with social care, the lack of good quality training in some sectors, or the excessive dependence of some of our universities on lucrative international students at the expense of loss-making Britons, the solutions are almost entirely outside the immigration system. We’ve had the biggest shake-up to immigration rules in half a century, and, broadly, it’s working. Let’s breathe a sigh of relief and let it bed in. Meanwhile, there are plenty of more urgent things to worry about.
