UK Withdrawal from the EU and Potential Withdrawal from the Single Market

Lord Livermore Excerpts

Thursday 26th January 2017 Lords Chamber

[Lord Livermore (Lab)]

My Lords, I believe there is a strong and positive link between the two halves of this debate: EU citizens living and working in this country and a prosperous economy. Therefore, it is of great concern that the Government have chosen to make their national priority not growth, jobs and living standards but reducing immigration, regardless of the economic cost.

This perspective that the economic well-being of the nation matters less than the politics of control has driven the Prime Minister to set out the hardest possible interpretation of Brexit. Her argument is not that this will make Britain more prosperous, but that controlling immigration is so important it is worth pulling Britain out of the single market and the customs union to achieve. Therefore, as we scrutinise this decision, it must surely be right for us to consider what impact restricting the rights of European Union citizens to live and work in this country could have on our economy.

The economic benefits of immigration are clear. It increases growth, provides more tax revenue and helps pay for an ageing society. It creates new job opportunities, brings skills into our economy and makes us more competitive. There is substantial evidence that reducing immigration would damage our economy, and, by lowering tax receipts, put great strain on our public services. The recent Autumn Statement showed that we would need to borrow an additional £16 billion by 2020 to make up for the reduced tax take from falling migration, with a further cost of £8 billion every year thereafter. Yet, despite these arguments, the question of controlling immigration dominated the referendum campaign. Indeed, the Prime Minister believes it was so central to the outcome that we should withdraw from not just the European Union but the single market too, despite estimates that membership could be worth as much as 4% on GDP compared to WTO terms alone.

For this Government, the political priority of ending freedom of movement is more important than the economic benefits of the single market. However, by making immigration their national priority, they are creating huge expectations—expectations they are unlikely to meet for three reasons.

First, there are the numbers. Through constant reference to the burden on infrastructure and the impact on wages, the public have been led to believe that, when we end freedom of movement, not just immigration but the number of immigrants already here will fall. Yet what if—as we all hope they will—existing EU migrants are allowed to stay? What of new trade deals, where every potential new arrangement comes with the demand to open our labour market to that country’s citizens? What, too, of the Government’s record on controlling immigration from non-EU countries, the source of the majority of our immigration, over which we have always had control? The previous Home Secretary tried and failed to meet a target to reduce it and now non-EU net migration alone stands at double the Government’s target of 100,000 per year. The reality is that non-EU migration may have to increase to meet the ongoing demand for skilled and unskilled labour.

The second expectation concerns the cultural impact of immigration: the view that ending freedom of movement will prevent the nature of our communities from changing. Yet, where this happens, much of the impact arises as a result of immigration from outside the EU, which, we should be clear, will be completely unaffected by ending freedom of movement.

Finally, it remains the case that the greatest hostility to immigration is to be found in those parts of the country where there are fewest immigrants. Despite politicians of both main parties advocating immigration control in order to solve the problems of these areas, their problems will not be solved because their problems were not caused by immigration in the first place.

These huge gaps between expectations and reality create a great danger for our country. We risk damaging our economy by leaving the single market only to find that the political promise of control was itself a fiction, and we risk stoking fears about immigration that will never be adequately addressed simply by ending freedom of movement. In this gap between expectations and reality, the politics of extremism will lie in wait. We need urgently to change the terms of debate in this country and focus not on raising expectations that cannot be met but instead on solving the real problems that people face.