Brexit and the Labour Market (Economic Affairs Committee Report)

Lord Horam Excerpts

Thursday 8th February 2018 Lords Chamber

[Lord Horam (Con)]

My Lords, I too congratulate the Economic Affairs Committee on another good report. It is crisp, logical and even eminently readable. It is, therefore, rather the reverse of most government papers we have had in recent times, which have been remarkable for their impenetrability. In the case of Brexit, that may have been deliberate, for all I know.

The report starts by reviewing the immigration statistics. My noble friend Lord Forsyth expressed his surprise at the difficulties and problems here. Those of us who have followed this area of information are not at all surprised. It has been obvious for years that the collection of immigration statistics has been extremely faulty. That is why many of us have been extremely grateful for the efforts of the noble Lord, Lord Green of Deddington, who I am glad to see in his place. Migration Watch, which he started, was, for a long time, ahead of the Government in having a feel for what was actually happening in the area of immigration and emigration.

I am strongly in favour of a firm control of immigration policy, as I think are most British people. My main reason for being in favour of control of immigration is the quality of life in this country. My colleague the noble Lord, Lord Hodgson of Astley Abbotts, produced an excellent document recently entitled Britain’s Demographic Challenge, which I recommend to anyone who has not read it. In it he points out that England already is twice as heavily populated per acre of land as Germany and four times as heavily populated as France. On the current Office for National Statistics evidence projections, we will have 9.7 million more people by 2039 than we have now, raising the population to 74-75 million people. This will predominantly, I expect, come in London and the south-east and will affect the quality of life in our part of the world.

As an economist I hate to admit that quality of life is about not only economics but a whole range of other things and I am pleased that in recent months people have begun to question the validity of the gross domestic product as a measure of our standard of living. It has many elements other than the purely economic, and the press of numbers in the south-east of England, in particular, is a real problem.

Immigration undoubtedly causes problems of social cohesion. I was born and brought up in a northern textile town and over many years in my lifetime I have seen that work out in ways which are bad for the collective feeling in such towns.

When considering immigration we should not think only of ourselves in the United Kingdom. For example, I remember from a parliamentary trip to Botswana at the height of the AIDS problem in southern Africa the terrible issues there. I went to some of the hospitals and community centres which were trying to deal with this and hand out drugs to the affected people and found that there was a shortage of nurses. I asked where these nurses were and was told that they were in England in the NHS—they could not keep them in Botswana. Recently I talked to a Jamaican politician who said, “How do you seriously expect us to build a modern country when over half our graduates disappear to America or Europe on graduation? How do you do it?” We have to look at migration on a big scale and from the point of view of other people in the world and not only through self-interest, which we too often do.

People in the UK were reasonably content with the immigration situation when it was in the tens of thousands. During the 1970s, 1980s, 1990s and most of my lifetime it was in the tens of thousands, and sometimes it was almost negligible. However, after the Labour Government came in in 1997 it climbed to six-figure levels and, in some cases, to big six-figure levels, and that alarmed people. Politically, it is one of the ironies of our time that it was precisely that level of immigration which fuelled the leave vote in the referendum, and then the Labour leaders at that time bemoaned the consequences of that. Frankly, it is a question of the biter bit.

Economically, as the report pointed out, the effect on business of having a large number of intelligent and sensible people available to deploy in its workforce was that we neglected the skills of our own people—a point made not only in this report but, presciently, in the economic affairs report in 2008 which predicted precisely that this was happening and would continue to happen. We have lost out in terms of automation, innovation and skills, as well as seeing an effect on wages. I therefore welcome the Government’s industrial strategy which focuses precisely on the areas of skills, automation, innovation and so forth, and I hope that they can get a cross-party consensus because they will certainly need it.

The curious aspect of all this is that we are exiting from the European Union and thus in effect doubling up on the economic challenge that this country faces. We would have to do a lot of this stuff anyway, but Brexit will make it even more important that we get it right. As the report rightly says, companies will have to adapt their business models to a new situation in which there will not be quite so much immigrant labour, and that will take time. My noble friend Lord Forsyth himself said that the implementation period or transition period—whatever you like to call it—will take quite a time, and indeed may take even longer than two years for some industries. That may well be the case and I certainly think that it will take at least two years to bring about the sort of effect that we need.

None the less, I think that we can get out of the situation we are confronting. In our debate on the industrial strategy some weeks ago, my noble friend Lord Willetts made the point that we have cracked this problem in a number of areas. The automotive industry is a hugely successful renaissance sector in this country now while not only finance but services more widely are doing very well. Britain has led in the mobile phone industry and telephony more generally. Medical research and the life sciences are an area of great promise and success for the UK. I would add to that we need a big export drive. There was a slogan after the Second World War: “Export or Die”. It is not quite that, but by heavens it is going to be important as we face a trade deficit of considerable proportions and which may get worse in the immediate aftermath of Brexit. I remain optimistic but we need to get our act together, and this report shows us how we have to do it in relation to the labour market.