Immigration is good for UK plc but we must set realistic targets

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Immigration is good for UK plc but we must set realistic targets

On the topic of immigration, a survey of IoD members reveals an encouraging attitude towards migration – but also a desire for more credible controls, writes James Sproule

Immigration is one of those issues where it is hard to please some people and impossible to please others. This is partly a result of so many issues being thrown into the debate that understanding what is going on is difficult.

A bit of circumspection seems in order. (A declaration of interest: I immigrated to the UK in 1986 when I joined the Royal Navy.)

The first thing to be done is to draw apart the issue of migration with that of refugees. How politicians deal with the humanitarian crisis in the Mediterranean is important, but it is separate to concerns about migration.

Immigration is concerned with whom we wish to allow into the UK to work. The number of any immigrants in turn has two components: immigration from the EU and from the rest of the world.To appease concern, the government has set an annual target of no more than 100,000 net new migrants.

Controlling immigration from the EU is politically difficult. A challenge facing David Cameron is to find a way of controlling numbers, while not violating the principle of free movement of people. He has struck upon the obvious idea of restricting benefits to any recent arrivals.

Such an approach chimes with other EU states where benefits are tied to contributions. The difficulty is that benefits are not really what these immigrants are seeking. Yorkshire created more jobs in 2014 than France. It is the opportunities which are a natural part of a successful economy that are the attraction. We hardly want to change the former and we are not going to be changing the latter.

If the number of EU immigrants can’t be controlled, the only way to hit the government’s target figure is to crack down on immigration from outside the EU. The government has set a cap of 20,700 net non-EU immigrants a year, and focused these on shortage categories. The problem is that the cap is so tight that many businesses are finding it difficult to get people with the skills they need.

We surveyed IoD members’ views. By two to one, they thought the impact of immigrants was positive. Opinions on setting a target were evenly divided, but they wanted a realistic target and only 5.5 per cent sought a firm cap on migration.

They also agreed immigrants had to contribute before they could draw benefits and there was strong support for a points system focused on particular skills.

But there was an appreciation that a more open immigration policy presented a challenge for low-skilled people, as well as placed pressure on public services. Still, on balance these were prices worth paying for the benefits to growth and the wider economy that new immigrants brought.

So what should be done? Exempt students from any cap. The UK has a competitive advantage in higher education. At the moment a student can come here to study, but they cannot, even for a limited period, work here after they finish their studies. Other countries have not imposed this restriction and thus their higher education offers are often more attractive to international students. We have to compete.

More generally, appreciate the existing target was flawed. Any figure which depends on people leaving as much as arriving leaves too much to chance. There is also the difficulty of controlling EU migration. A new credible target, one that can be met, is a first step in regaining trust.

James Sproule is the IoD’s chief economist and director of policy

@jamesrsproule

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About author

James Sproule

James Sproule

James Sproule has been Chief Economist and Director of Policy for the Institute of Directors since January 2014. Prior to joining the IoD James led Accenture’s UK Research and Global Capital Markets Research. He started his financial career as a merchant bank economist working with both Bankers Trust, Deutsche Bank and Dresdner Kleinwort, and eventually helped to found the boutique bank Augusta and Company.

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