Migration Policy and the Economy

Charlie Elphicke Excerpts

Wednesday 29th November 2017 Westminster Hall

[Mr Mark Harper (Forest of Dean) (Con)]

I beg to move,

That this House has considered the effect of the Government’s migration policy on the economy.

It is a pleasure to serve under your chairmanship, Mr Hosie, and to see the Minister in her place. We had a crossing of paths in Gloucestershire when she stood as our police and crime commissioner candidate in 2012. She was not successful on that occasion, but Gloucestershire’s loss is very much the House’s and the Home Office’s gain. It is also a pleasure to see the hon. Member for Manchester, Gorton (Afzal Khan) here to speak for the Opposition. I will be happy to take interventions from hon. Members and listen to their contributions.

To summarise what I plan to say, my proposition is that migration can be good for Britain if it makes all of us richer, not just the people who have come here to work. It can benefit the public finances and help with the budget deficit, but only if the people coming have sufficient skills and earn a sufficiently high salary. After we have left the European Union, we should treat people who come to Britain from the European Union in the same way as people from elsewhere in the world. Anything else would be indefensible. The system should be based on people’s skills and what they can contribute to the country, not where they are from. That will also make a tremendous difference to our efforts to strike trade deals around the world. That is the nub of my argument; I will now set it out in more detail.

I will talk primarily about migrants who come here to work or to look for work; I will not cover people who come here seeking refugee status, for family reunion or as students, although I will touch briefly on students towards the close of my remarks. I want to be clear that migrants who come to Britain with the right skills are to be welcomed: they come here, they do valuable jobs and they can benefit our economy as well as themselves. However, we should also consider our primary responsibility to the people who elect us to this place and ensure that our migration system benefits not only the people who come here, but the people who are here already.

When we debate the performance of the economy, the measure that we most commonly look at is the growth of GDP—the size of the economy—which has been positive since the Conservatives came to power soon after the economic crash, but we should also look closely at GDP per head, which is the size of the economy adjusted for the fact that there are more people in Britain. Perhaps that is something the Minister can pass on to colleagues in the Treasury. Of course not all population growth is to do with migration, but according to the Migration Observatory, just over half the population increase between 1992 and 2015 was due to migration. That is quite a significant amount. The rest was to do with things such as the ageing population. GDP growth per head in the time that we have been in office is about 0.75% per year lower than GDP growth, and over a considerable period that makes a significant difference to how well off we are. We need to ensure that the people coming here contribute to the extent that they are not just making themselves better off, but increasing GDP per head. It is important to make British citizens better off as well.

I want to flag up how migration relates to the conversation we are having about productivity performance, which has been somewhat disappointing since the financial crash. The Chancellor spent a fair bit of time on that in last week’s Budget, which we voted on last night. I do not want to overstate my case, because the academic research shows that there is no single cause of what some of the academic literature calls the “productivity puzzle”. A lot of bright, smart people—far brighter and smarter than me—are not entirely certain what is at the root of it, but I posit that at least one aspect of productivity is to do with migration.

If we say to businesses that there is effectively an unlimited supply of all different sorts of labour that can come from the European Union and that can be hired relatively cheaply, it does not make much sense for those employers to invest significant capital sums in their business for the latest technology and labour-saving innovations that could help their existing workforce to become and stay more productive. If we were to say to employees that after an appropriate adjustment period that unlimited supply of labour from across the European Union will no longer be available, employers would look at investing capital into their businesses and at different and smarter ways to do things that would improve the productivity of their existing workforce. That would make Britain more competitive and deliver the only sustainable way to drive up wages in the public and private sectors: increasing productivity.

[Charlie Elphicke (Dover) (Ind)]

Will my right hon. Friend give way?

[James Cartlidge (South Suffolk) (Con)]

Will my right hon. Friend give way?

[Mr Harper]

I give way first to my hon. Friend the Member for Dover (Charlie Elphicke).

[Charlie Elphicke]

My right hon. Friend is making a powerful argument. Is not the nub of his case that importing cheap labour from overseas disincentivises businesses from investing not just in kit, but in improving the skills of their employees and our workforce?

[Mr Harper]

My hon. Friend makes a good point. This is a big issue in his constituency of Dover, one of the gateway parts of our country.

It is perfectly right for us to look at what people can pay; we have rules in Britain about paying the national living wage. However, research done by the Bank of England in its staff working paper, “The impact of immigration on occupational wages: evidence from Britain”, concludes that although there is not an impact at the higher end of the skills spectrum,

“in the semi/unskilled services sector…a 10 percentage point rise in the proportion of immigrants is associated with a 2 percent reduction in pay.”

I do not want to overstate it, but there is certainly some evidence that at the bottom end of the labour market, there is an impact on pay. It is also a question of the availability of labour and saying to employers that they need to think about smarter ways of working, not just assume that they can access an unlimited supply of labour.

--- Later in debate ---

[Mr Harper]

That may be true, but if the hon. Lady will allow me, I will say more later about what business thinks and about the opportunities that will arise if we make the change I propose. Then, if she does not think I have covered her point, of course she should feel free to intervene.

[Charlie Elphicke]

My right hon. Friend is being generous in giving way. Will he address ensuring that we can end free movement when we leave the European Union and get the right balance with work permits?

[Mr Harper]

Yes, I will come to that.

It is worth saying that Britain’s unemployment rate of 4.3% is relatively low, compared with 7.5% in the EU as a whole and 8.9% in the euro area. Some countries in Europe have unemployment rates of more than 20%. Our record is very positive, and businesses have created 3 million new jobs since this Government have been in power. I am always careful to say that businesses have created the jobs, because it does not happen automatically. Although we can help to create the conditions, it is businessmen and businesswomen who actually take the risks and start the businesses. In this country there are still 1.4 million unemployed people, as well as a number of people not in the labour market, to whom we should give opportunities. I think that addresses my hon. Friend’s point.

When we leave the EU in March 2019, we will leave the single market and the customs union, and freedom of movement will end. The Government were absolutely right to make a generous offer to EU nationals already in Britain who came here before we triggered article 50. We were not able to make that offer unilaterally, because we had to ensure that we protected the 1 million British citizens elsewhere in the EU, since the British Government’s first responsibility is to defend the interests of British citizens, wherever they may be in the world. In the Chamber today, we will debate an Opposition day motion from the Scottish National party that we should unilaterally make an offer to EU nationals, casting aside the essential interests of British citizens elsewhere in the world.