London: The response to the UK Independence Party’s (UKIP) surge has reached panic stage. Just as British business and academia chorused the economic benefits of Union in the final stages of the Scottish referendum campaign, their refrain now is of the economic benefits of immigration. A letter from 10 CEOs in the Financial Times pronounced that immig-ration from Eastern Europe is valuable. The previous week econ-omists estimated that immigrants from eastern Europe had contributed £20 billion net in taxes.
But UKIP supporters are no longer overawed by businessmen and dons. UKIP supporters are from the less advantaged classes. Hence: ignore them. This would be an error. Instead, we should try honesty.
On the need for foreign workers, too much has gone wrong in British business for chief executives to have retained the respectful attention of an admiring populace. British business finds it cheaper to hire Hungarians than to train British youth. Similarly, the city finds it cheaper to hire tax-privileged non-doms.
As for tax, the £20 billion short-term gain brandished in the headlines is less indicative of the fiscal consequences than the longer-term £114 billion fiscal loss from overall immigration. Even these numbers are misleading.
The impact should be estimated from the perspective of the life cycle. This discussion of jobs and tax diverts attention from important issues. In truth, the economic effects are trivial. The important effects are long-term and social. They work predominantly through population size.
The issue of population size is, I think, relatively straightforward. England is the most crowded country in Europe. So there is a strong case for stabilising the population. What this implies for immigration depends upon what we do on child benefits. Benefits, though modest from the perspective of those accustomed to English levels of income, can seem munificent to people from poorer societies, and may delay the adjustment to current norms of family size. So there is a case for revising child benefit, perhaps capping it at two children while protecting provision for existing larger families.
Diversity is a more complicated issue. Social science can tell us that some diversity is better than none, and that there can be too much diversity as well as too little. But at some point adverse effects set in: diversity undermines cooperation. A common narrative among the bien-pensant is that discomfort is reduced by exposure: host populations are supposedly more accepting in high-immigrant localities. This is an example of picking studies to suit values. The weight of the evidence unfortunately suggests the opposite: rapid immigration is unlikely to reduce concerns.
So we should probably aim to stabilise immigration at around the present level. The speed of integration depends on policies. It would help if “English” ceased to be an ethnic identifier and became the accepted identity of everyone reared in England, just as the SNP promotes an inclusive definition of “Scottish”. As the referendum revealed, “British” is too weak an identity to induce allegiance.
What are the implications of such immigration targets for Britain in Europe? Chancellor Merkel has said that rather than abandon the principle of free movement of workers, she would accept British exit. John Major has responded that insistence on free movement would raise the risk of Britain leaving to 50 per cent.
In understanding how this game might play out, we should consider what drives the “European Project”.
At root it is old men’s fears and dreams. Of course, this does not resonate in Britain: we won the war. The old men’s fears are ridiculous, but no less potent. This is why European integration has been festooned with symbolic dreams of statehood: a common currency, free movement of labour, a Parliament, a President. All of these symbols are often detrimental to the real business of Europe, which is cooperation.
The common currency, for example, is inadvertently dismantling the economies of southern Europe. Free movement of workers is inadvertently dismantling Romania’s rural health system as its doctors flock to Paris. A European Parliament is inadvertently a gift to populist nationalism. Fortunately, Britain has avoided the worst effects: we are in neither the eurozone nor Schengen. What can reasonably be predicted is that, as the old men die and the consequences become yet more inconvenient, the symbols of statehood will gradually be sidelined by the mundane but important process of negotiating mutual benefit. Time is on our side.
Sir Paul Collier is a professor at the Blavatnik School of Government, Oxford University. He is the author of Exodus: Immigration and Multiculturalism.
By arrangement with the Spectator
