Will Immigration Policies Affect Growth in the UK?

There’s a question buzzing around: can the government reduce immigration while also fostering economic growth? The recent Immigration White Paper seems to suggest an answer. It claims that the uptick in immigration has been detrimental to the UK’s productivity and GDP, a situation described as being detached from “advanced migration.”

This narrative has gained traction among right-leaning media and think tanks over the past couple of years and has even been echoed by Prime Minister Keir Starmer, who criticized the previous government for relying on “cheap foreign labor.” It sounds reasonable, but there’s a glaring inconsistency here. The government is well aware that this narrative doesn’t exactly align with the actual data.

If most recent immigrants were indeed low-skilled and low-waged, we would expect to see strong evidence supporting that claim. However, recent statistics from HMRC, which reflect what employers report in PAYE returns, tell a different story. Migrant workers, particularly those from the EU and beyond, generally earn slightly more than their UK counterparts. Notably, the largest groups of recent immigrants—Indians and Nigerians—are doing quite well financially. Data from HMRC demonstrates this, and it underscores the findings in the white paper.

Now, about those “dependents” the white paper raises concerns about. Despite being termed as such, many of these individuals are actively working. According to the Office for National Statistics, immigrants are increasingly successful in joining the workforce.

Therefore, it seems that immigrants—most of whom are likely of working age—are not only more likely to be employed but also tend to earn slightly higher wages. This leads to the conclusion that, mathematically speaking, their short-term impact is likely to increase, rather than decrease, per capita GDP, which is what the ONS indicates.

But what about the long-term view? Will a transition diminish the incentive to invest in skills and training, potentially hampering productivity? It’s challenging to substantiate this concern, but the white paper doesn’t provide a solid argument either. Existing evidence suggests that overall migration has a mildly positive impact on UK productivity, implying that issues related to national training and investment have less to do with immigration policies and more to do with longstanding systemic challenges.

On another note, some of the policies in the white paper appear to be a mix of good, bad, and pretty concerning. Most can agree that reducing reliance on migrant workers in the care sector—who often face exploitation—by improving wages and working conditions is a step in the right direction. But here’s the catch: jobs still need doing. The suggestion of a “fair wage contract” might address some challenges, but it’s merely a means to an end. Higher wages imply that funding has to come from somewhere—either from taxpayers or families needing care. Unsurprisingly, the Prime Minister didn’t directly confront this issue.

How about students? The university department insists that the reduction of graduate visa durations to 18 months won’t have a drastic impact. Still, adding fees for international students resembles imposing a tax on one of the UK’s most successful exports—its universities. It feels contradictory because while the government negotiates to minimize external tariffs, it essentially creates its own obstacles.

Lastly, there are some troubling aspects to what the white paper proposes, particularly regarding care workers and others who may not fit into the “highly skilled” category that includes roles like AI leaders. This strategy seems less about enriching the country and more about fostering a system that hinders those who might wish to settle and integrate into society, contributing to community cohesion and stability.

Public sentiment also reflects a desire for reduced immigration, but interestingly, there’s a positive view toward those working in the care and NHS sectors. Perhaps people are just less enthusiastic about bankers, and that’s a curious disparity. What’s lesser-known is that many believe the current settlement timeframe—often five years—is too long.

The UK has shown a commendable ability to integrate immigrants, surpassing most European nations, and both British citizens and immigrants generally favor integration. Enoch Powell once claimed that immigrants made white Britons “strangers in their country.” Present-day rhetoric seems to echo this notion, as if suggesting we’re isolating ourselves again. In reality, the population includes a tapestry of backgrounds—first, second, and third-generation immigrants, intertwined within the broader British identity. We’re not strangers here, but the policies proposed seem to push us toward more division rather than unity.