Is Britain addicted to immigration? I argued so in my Telegraph column yesterday and Radio 4’s Today programme held a discussion about it this morning and asked me on (22 mins in, here). You can say that that immigration has worked wonders for the economy – without it, we’d have a pathetic 2 per cent more people in work than in 1997. As things stand, our workforce has expanded by 11 per cent. We’d actually notice the number British people emigrating (the exodus has doubled to 400 a day under Cameron) so the ever-growing growing debt pile would be shouldered by a shrinking workforce. David Cameron would have no jobs rise to boast about: three-quarters of the rise in employment under the coalition has been due to immigration. Kick out the newcomers, and the British economy looks pretty sick.
So you can argue, as Oxford’s Frances Cairncross did in our discussion, this is great: thank God for the immigrants. Growing our economy, shouldering our debt – even driving her to the studio. He used to be a hospital porter, she said: if young Brits don’t want to do all these jobs, then someone has to!
I see it differently. Why didn’t Ms Cairncross have a Brit driving her to the studio? There are 9,900 on benefits in Oxford and 1,400 of them under the age of 25. John Humphrys, presenting, put to me a widely-held view: that the problem was one of attitude. That some Brits just don’t want to work.
This is what I call the ‘lazy Brit’ fallacy. The idea that we need immigrants because our own people too busy watching daytime TV. But if welfare pays more than work, why work? Worse, if the low-paid do more work, welfare is taken away from them so quickly that they can end up keeping just 15p in every extra £1 they earn (details here). Who would work at an 85pc tax rate? I mentioned this figure on the radio, breaking my own rule not to send people back to sleep with statistics because, to me, it is the most scandalous figure in Britain.
An 85pc tax on the low-paid says about Britain says that we, as a country, are deciding not to use the talents and skills of our low-paid. If it were not for mass immigration, we’d really notice this. The economy would not grow. Employers would be furious. We would have been forced, as a country, to fix welfare 13 years ago. Instead, we are using immigrants to grow the economy instead. Even the Poles think this is madness. Here is a Polish recruitment agent, Iwona Dilinskas, is quoted. If she was British, she says:-
“I’d probably not want to work more than 16 hours a week. What for? If I work 16 hours or less, they pay 80pc of my rent [as housing benefit]. And all my council tax. I get working tax credit, child tax credit, child benefit. So, to be honest – why work?”
Why indeed? So that’s why the immigrants come. And this endless supply of good, industrious, well-educated workers means that tackling Britain’s welfare problem is seen more as an act of charity than an economic imperative. Iain Duncan Smith has the solution: Universal Credit, a revolutionary new way of welfare which makes sure that workers will keep a fixed share of the extra income they earn. But so little money has been put behind it that UC is aiming – aiming! – to have an effective tax rate on the poor to 65pc. Better than 85pc, but still pretty bad. The point of Universal Credit would mean it can be cut to (say) 30pc – but at some expense. But this aspect is universally ignored in Britain, such is the poor quality of the debate. Last week, the Daily Mirror splashed on an assertion that the poor pay 36pc in tax: if only! As their readers know, the real tax burden is far higher – and is crushing the life out of many communities.
The problem is that these immigrants can be used to cover up the problems we should be dealing with. And it leaves policymakers seeing mass immigration as a wonderdrug. Got a debt problem? Then the Office for Budget Responsibility prescribes net immigration of 140,000 for 50 years. Here’s the graph it printed last week:-
The OBR envisages net immigration of 140,000 a year That’s absorbing a city the size of Exeter every year, for half a century – with all the extra housing, schools and health that would involve. Technically, the OBR figures stack up. But we’re in a pretty desperate state if we can’t think of any other ways to handle the debt problem.
The OBR graph, above, shows the lazy thinking: if in doubt, rely on immigrants. I’d like to see the OBR repeating the study done for The Spectator by Hoover Institution’s Prof Eric Hanushek. It asks how much bigger the UK economy would be if our state schools taught the poor as well as they do the rich. In my view, the biggest economic opportunity in Britain is not shale gas but school reform. And the Adonis/Gove Academy programme shows we can do it.
The OBR may want to apply its vast resources into asking how Britain would look if the poor faced marginal tax rates of a mere 30pc, not 85pc or 65pc. Would we still need 140,000 immigrants a year if we had, say, one million on out-of-work benefits rather than six million?
And one final graph the OBR did not print. Frances Cairncross claimed (to Humphrys’ amusement) that Britain was “a fast-growing country”. Britain is certainly absorbing immigrants like a fast-growing country: 1,100 arrive a day. They find jobs. But unemployment is stuck at 8pc and youth unemployment at a scandalous 20pc. I imagine that Frances said the economy is recovering because GDP is rising.
But if we look at GDP per head, how would George Osborne’s recovery look relative to other recoveries where we did not rely on immigration? Michael Saunders from Citi recently ran the figures (pdf). Those of a nervous disposition should look away now:-
As David Cameron will know, urging mass immigration as a solution to the debt problem (or any problem) is a counsel of despair. There is so much more he can do with – and for – the population Britain already has.
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