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I have two final comments. A much better economist than me is Jeffrey Sachs. In his recent book—he has no problems at all with the enormous benefits of skilled workers—he says categorically:

“Migration of low-skilled workers is a win for the source country, a win for the host country and a win for the migrant”.

He proceeds to set out his arguments. It is win, win and win. That is diametrically opposed to the view of the Economic Affairs Committee. His argument is to do with non-competing forms of service, complementarity and that sort of thing. Noble Lords can read his book and note that devastating comment.

I end on a more positive note. I congratulate the right reverend Prelate on his maiden speech, in which he referred to humanity. I was thinking of something slightly different. I have been reading a book on Robert Oppenheimer and Einstein. Robert Oppenheimer was the head of Los Alamos, which produced the atomic bomb, and head of the Institute for Advanced Study at Princeton. He was a brilliant physicist. The right reverend Prelate used the word “humanity”. Oppenheimer referred to something similar, namely ethical standards. He said that if we look only at ethical standards, we become utopians and rather ineffective, but if we look only at reality and never look at ethical standards, we create a way of life that is not worth living. That is my interpretation of what the right reverend Prelate said.

1.45 pm

Lord Best: My Lords, I was pleased to serve on the Economic Affairs Committee for this inquiry, and I, too, thank our advisers and our excellent clerk, Robert Graham-Harrison.

I came to these issues with a strongly positive attitude to immigration. This is partly because I hugely enjoy and appreciate the contribution of people from different countries and cultures here in this vibrant, cosmopolitan city: the entrepreneurial spirit, the artistic talent and the variety and diversity of ideas and heritages. My positive view of immigration also partly flows from the significance of new migrant labour in the two industries with which I have most contact. First, in housing, the construction industry makes

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substantial use of overseas workers who, in recent years, have come mostly from the A8 countries, particularly Poland. Secondly, the residential and domiciliary care sector has engaged large numbers of staff—care workers—from other countries. In relation to both groups, I have been hugely impressed by the energy, cheerfulness, honesty and reliability of the new migrants and, of course, by their willingness to work at wage levels that are unattractive to the established population, which keeps down the costs of providing services, not least the charges in care homes which can be a crippling burden for older residents.

Some of this value for money is attributable to extraneous factors; for example, an exchange rate, which, until recently, made the pound go further in the migrants’ home countries, and the low cost of living for a single person working here for a year or so, not a lifetime, who is prepared temporarily to share one room with several compatriots. However, some of the benefit of employing migrants comes from their work ethic and the values that they bring. I have, for example, found that care workers in the housing schemes provided by the housing association that I chair, Hanover Housing Association, are not only diligent and prepared to go the extra mile, but caring too, perhaps because of religious beliefs which stress the respect due to older people.

It came as mild shock, therefore, to be required by the discipline of the committee’s inquiry to think seriously about the economics of the relatively high levels of inward migration over recent years. All commentators, whatever the statistical disputes, agree that even though per capita incomes may or may not have grown very much as a result of immigration, the overall economic effect has not been negative to date. Of course, extra revenue from national taxation paid by new migrant workers needs to be recycled in part to fund local services, usually supplied by the local authority, which migrants use. That is a matter for sensible negotiation between central and local government.

However, two more deep-seated hazards emerged from our discussions and have given me pause for thought. First, the increase in population caused by net inward migration as well as by longer lives and births exceeding deaths makes demands on housing and infrastructure and raises concerns about congestion, overcrowding and the fear of builders “concreting over the south-east” to accommodate the extra people. It is quite true that we face overall demand for housing that far exceeds supply. This leads to considerable tensions, with those in local communities blaming each other for a problem that is caused not by discrimination or favouritism to immigrants but simply by there not being enough homes to go round. In fact, we know that the majority of new immigrants go into hard-to-let housing and the worst properties in the private rented sector, but extra population must still have a knock-on effect.

Housing shortages are set to get worse. Nevertheless, I do not believe that this is an insuperable problem, nor in itself grounds for changing immigration policy. Industry experts have recently concluded that it is within our capabilities to construct the homes that we need—some 3 million by 2020—even though the current

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recession may mean a couple of quiet years ahead. I contend that the required level of housebuilding does not require the sacrifice of great swathes of rural England. Pressures for out-of-town, greenfield development come not from new migrants but from the existing population, who, for some decades, have wanted to leave urban areas for the suburbs and beyond.

These market forces are not the result of “white flight”, with families leaving areas to which migrants have moved, as the urban exodus is just as powerful in the towns and cities where immigration is at very low levels—for example, Hull or Newcastle. If we place a high premium on the green belt and on greenfields elsewhere, it may be sensible to resist the trend to leave towns and conurbations and to do more to regenerate and enhance those urban areas. This need not be at the expense of building to intolerably high densities: Kensington and Chelsea is the London borough with the highest density—10 times the level of, say, the London Borough of Bromley—but is regarded as very desirable. I am not suggesting that we should build to the densities of Singapore, the country with the most successful economy in south-east Asia, but, if we did, we could house the entire population of the UK on the Isle of Wight. Once we turn the corner on the current recession, I believe that it will be possible for the UK to provide the housing and infrastructure to accommodate expected population growth, including from inward migration, without desecrating the countryside.

The second anxiety raised for me by the committee’s report may be more concerning. It is that the benefits I have felt as an employer or procurer of labour in the housing and care sectors may have come at the expense of employment levels for the resident population. If there is a plentiful supply of well motivated workers from other countries, why struggle to educate, train and engage hard-to-employ indigenous young people? Employers are hardly likely to take on an illiterate, inarticulate young English man when there are plenty of bright, keen migrant workers willing to work for relatively low wages. Yet the human, social and economic cost to the UK of failing to rescue the growing numbers of NEETs—those not in employment, education or training—could be incalculable. It is said that one in five young people may now fall into this horrible category. Because mobility of labour from EEA countries, soon to include Bulgaria and Romania, will continue, this issue may not be resolved by the Government’s latest plans for curbs on immigration; and if the recession bites worldwide, the UK may remain an attractive destination, despite our own economic difficulties.

However much benefit we derive from immigration, I can now recognise the hazards for the priority that this nation gives to the education, training and skills of our resident population. There is far more that the Government can do to square this circle: education for 14 to 17 year-olds that teaches practical skills and job readiness; further efforts to extend apprenticeships—a big concern for the Economic Affairs Committee; specifically in the construction industry, the linking of government contracts, as has been so well demonstrated by the Olympic Delivery Authority, to high-quality

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training for local people; and the incorporation of “local labour in construction” clauses in Section 106 agreements by local authorities, housing associations and other bodies involved in procurement. Painful though it will be for those of us who derive benefit from overseas workers at present, employers and procurers may need to be required to try harder to train and recruit local labour before taking the easier option of employing migrant workers from outside the EEA.

I, for one, am grateful to the committee for requiring me to think through the deeper implications of the economics of immigration, even if the final outcome produces some discomfort, and I hope that it stimulates others to do so too.

1.55 pm

Lord Griffiths of Fforestfach: My Lords, as a member of the Select Committee it is a great pleasure to pay tribute to the outstanding chairmanship of the noble Lord, Lord Wakeham, which brought back happy memories of those same skills being deployed when he held high office in the 1980s at No. 12 Downing Street.

Two of my former teachers have taken part in this debate. The noble Lord, Lord Peston, was my first teacher of economics, and I do not think I ever had such a withering attack on any essay that I might have written as he has given us. The noble Lord, Lord Moser, who is an extraordinarily distinguished social statistician, was maybe more delicate in his attack but nevertheless just as penetrating. I shall refer to some of the points they made as I have a different perspective.

First, it sounds obvious but it needs to be said that the nature of the inquiry was limited. I make the point in particular to the remarks in the maiden speech of the right reverend Prelate the Bishop of Lincoln. Immigration is an extraordinarily complex issue with many facets. The economics of immigration that we considered were: the impact on the living standards and real income of the existing population; the implication on the public finances; the implication on health education and housing, and so on. They are fiendishly complicated issues. Justifying the limited, even narrow nature of the report, in view of the complexity of the subject, is perfectly reasonable.

Our report was not about the cultural or social impact of immigration, let alone the ethical issues involved. They are all crucial to immigration policy, but we approached the subject as objectively as we could, and did so always on the basis of empirical evidence. I accept, as the noble Lords, Lord Peston and Lord Moser, said, that in certain areas the empirical evidence is limited. We have studiously avoided making it in any way overtly political. That is important for one reason. One can accept the conclusions and recommendations of our report and have very different views on what immigration policy should be. One could say that we need more net migration, to continue with existing net migration, or to reduce net migration. Our report does not of itself lead to any one of those conclusions.

It is important to point out, in view of some of the comments that have been made, that our report is not anti-immigration. It recognises that it brings benefits to the nation. Paragraph 186 states:



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“Significant gross immigration of highly skilled non-EU nationals may well be desirable. There may also be important dynamic gains from the exchange and movement of people”.

Paragraph 144 recognised that,

Dr Dobson, whom we referred to, from University College, London, said that many immigrant children study very hard, resulting in the quality of education for all children in the school being improved. We recognised evidence from the National Farmers’ Union that in some rural areas, village schools have been boosted by immigrant enrolment. It should be recognised that if net immigration were reduced to zero—emigration equals immigration—the immigrant share of the population in the foreseeable future would grow steadily.

In this connection, I fully accept what the noble Lord, Lord Moser, said about the press and headlines such as “We must cap immigration”—the report never suggested that we should do anything of the sort—“Mass immigration is destroying Britain”—if you read our report, it patently is not—and “Devastating demolition of the case for mass immigration”—frankly, it was nothing of the kind. If you read our report from cover to cover, as the noble Lord, Lord Peston, has done, there is no way that it advances a racist or xenophobic agenda. Having said that, I have one regret, which is that we should have been more explicit and fulsome in our praise of the contribution of immigrants to the UK economy, as has been mentioned.

However, I defend the central conclusion of our report. It has three positions. The first is that the principal measure of the economic case for immigration is its impact on GDP per capita. I am delighted that in their response the Government said:

“The Government has been crystal clear that GDP per capita growth must be the principal determinant of success. Indeed, the Minister of State for Borders and Immigration said to the Committee: ‘I personally do think that GDP per capita is the key thing to focus on’”.

Since GDP per capita is such an overall figure, the noble Lord, Lord Moser, raised important questions about how adequate it is for measuring various effects. I agree. The only thing that we were looking at was whether any measure was available for the existing population of the effect of net immigration in terms of real income. That is a legitimate reason for choosing GDP per capita. I agree with the noble Lord, Lord Peston, that there is a case for saying that the total size of GDP matters in the example he gave; however, I find that argument rather worrying. He used the example of war. When countries say that they simply want to have a large GDP, I get very nervous about the reasons that politicians might be interested in a large GDP per se, rather than per capita. The noble Lord, Lord Peston, laid it out clearly.

We all have anecdotal evidence of the benefits of immigration. I have been involved in the City for 40 years, and I agree totally with that. In the bank where I am at present, we have people from many nationalities with many languages, and I have no doubt that that has a positive impact. In making GDP per capita central to our report, we were asking whether there was any way to isolate the impact on the real income of the existing population.



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Our second conclusion was that from the available research evidence, which is limited, the impact on GDP is small, even negligible. Some of it is positive and some negative. That is important because if the impact of immigration on GDP had been substantial, whether positively or negatively, that would be an important conclusion. What we found—and what, incidentally and perhaps more interestingly, has been found in studies in other countries such as the USA, which has had huge immigration—was that the impact of immigration on GDP was small. I recognise that there are dynamic gains. We mention that dynamic gains could be important because of the effect of having a larger economy with a more diverse workforce with people from different backgrounds, cultures and experience; and the impact of migration on strengthening international networks, which will affect trade and investment. We were not unaware of that, but the problem is that it is hard to measure.

The third important conclusion of our report—this goes back to the speech of the noble Lord, Lord Layard, at the beginning of our debate—is, to me, the real point of this debate. That is the potential impact of current immigration on the size and composition of population in future. Under projected estimates by the Government for 2031, 70 per cent of future population growth depends on net immigration. If we look longer ahead to 2081, it is 100 per cent. That is important because the current population is 60.6 million. By 2031, it is estimated to be 71 million; by 2081, it is estimated to be 85 million, if net immigration proceeds at its current rate.

The crucial issue raised by our report is: what is government policy on future population growth? The noble Lord, Lord Turner, pointed out, and the noble Lord, Lord Layard, emphasised again that there are important implications of a higher population density for transport infrastructure, environmental damage and housing.

The economic case for positive net immigration is not strong. The impact on per capita GDP for the existing population is fairly small. The dynamic effects are difficult to estimate. As a member of the committee, I categorically reject the suggestion that in any of our discussions, and certainly in our report, there is any trace of racism or xenophobia. I abhor the fact that our report could be used as a protective cover for such arguments. Many of us in this House come from ethical and religious traditions that accept the responsibility of prosperous nations to poorer nations. We are totally opposed to discrimination in employment and we recognise that entry to this country may for many people be the best way to escape poverty and to educate their children.

In conclusion, therefore, the task for government policy is not easy. We must be open as a country to net immigration. We must recognise, however, its impact on future population. The points system that the Government have proposed is an advance on the past, but my crucial conclusion would be that we need a longer term framework within which to resolve the challenge posed by the growth of population, which is the key issue that faces the Government in addressing the report.



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2.08 pm

Lord Dubs: My Lords, I am grateful to the noble Lord, Lord Wakeham, for giving us an opportunity to debate the report. Whatever we say, immigration is an important issue, although I am bound to add that it has not been centre stage politically for some time and I should have thought that, on the whole, this country has managed its immigration pretty well. Of course there have been difficulties but, taken overall, it has not been a story of disaster; it has been much more a story of success.

I should declare an interest in that I am an immigrant. I should also mention that I am chair of a committee of the British-Irish Inter-Parliamentary Body, as it was then called, which has recently looked at the integration of newly arrived migrants into Wales, Northern Ireland and the Republic of Ireland. We did this because we could not cover the whole of the United Kingdom in the time, but some of the conclusions to which I shall refer are relevant to the economic basis of migration.

I understand that the Select Committee report was written in a different economic climate and that some of the conclusions will not apply quite so much in the present circumstances, but I am disappointed by it, especially by its tone. Whatever the intentions of its authors, the anti-immigration lobby had a field-day when it was published. It may have been misunderstood by the people on the anti-immigration side. They may be wrong, but they drew some comfort from its conclusions and I hope that the debate will go some way towards addressing that.

I am not an economist, but I am still sceptical about the economic basis of the report’s conclusions. Inevitably, I am influenced by the views of two such eminent economists as my noble friend Lord Peston and the noble Lord, Lord Moser. One must give them credit for the economic basis on which they have approached this, and indeed for the breadth of economic experience that underlies their conclusions. I am also influenced by the Government’s response to the report, which by and large I welcome. Again, one must give the Government credit; they have looked at this pretty carefully and have come to conclusions that differ in important respects from those of the report.

I have long believed that immigration has been of benefit to Britain in economic terms. We can talk about social terms on another day, but it has also been of benefit there. It is hard to relate the report’s conclusions to practical experience. I have talked to employers who have told me that they are grateful for immigrants; they could not keep their taxis or their businesses going without people who have migrated to Britain, particularly in recent years. It is difficult to believe that any of us could be in hospital without benefiting from the medical care and other hospital services that are provided by immigrants. Dare I suggest that if every immigrant left Britain tomorrow, this House could not function on Monday because so many of the staff who support the Palace of Westminster are immigrants? Those views, which I do not think can be challenged, are difficult to stack up against the report’s conclusions. I will come to that in a moment.



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I concede that, although there are firm economic benefits from immigration, there have been difficulties in certain areas. The benefits have been seen more widely across the economy, whereas some of the pressures of arrivals have been in particular communities and localities to which migrants have been attracted by the availability of work. The challenge to government is to ensure that the overall benefits to the country are used, in part at least, to help areas in which more migrants have arrived recently and which need help with educational provision, housing and so on.

This country’s attractiveness to immigrants has been a function of our economic success. Countries that are economic failures do not attract immigrants, almost by definition. If the job market is buoyant, there must be a need for labour. We have already seen reports in the newspapers of farmers in the fruit-picking sector who have not been able to collect the fruit due to the return of some of the recently arrived migrants. It has rotted, simply because there has not been the labour to pick it. I suppose the economic theory underlying the report will be, “Oh well, we can import the fruit instead”. Of course we can, but maybe that is not the best way forward. If we have in this country people who have come from elsewhere and who do these things, that is surely of benefit.

I have read the Government’s response to the report and have still not heard an answer to their conclusion that the,

during which we had the,

They also said that the contribution by immigrants to that was “0.15 per cent” per annum, which is “not an insignificant amount”, given the numbers about which we are talking. It is a positive contribution, even if some of your Lordships challenge the other conclusion that there has been a £6 billion gain to the economy over the period. I still believe that that is useful and helpful.

The main argument of the committee seems to be that if job vacancies are filled by migrants, they generate income, which demands more goods and services and, consequently, creates more job vacancies—I think that that is the way in which the noble Lord, Lord Wakeham, put his argument. But all successful economies have job vacancies. It is in the nature of a successful economy and does not mean that not filling some job vacancies is a good thing: it is not a good thing.

The Government’s response is clear when they quote the IPPR study that in 2003-04 immigrants contributed 10 per cent to Exchequer revenues and drew down 9.1 per cent of expenditure. I have no reason to doubt the IPPR figures because it is a reputable organisation. Does it not make sense that immigrants on the whole are of working age and will contribute more taxable income than they will be a burden—I do not like to use that word—and cost us more in expenditure? Quite a few of them have not brought children. They are not as ill as older people. Therefore, there is a benefit to the Exchequer.


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