My Lords, I am very pleased to introduce this debate. This is the last debate on a report of the Economic Affairs Committee that I shall have the privilege to introduce. I have had the honour of introducing in excess of 10 or 12 reports as chairman, starting with the report on climate change, which caused a certain stir. Most of our reports, whether noble Lords agreed with them or not, have usually made Members pause to think, if nothing else. The noble Lord, Lord Vallance, has been chairman of the committee for almost a year. The inquiry began while I was chairman and continued into the first few months of his term, but, at the request of the committee, I chaired work on the inquiry through to the end.
I thank my colleagues on the committee for their work on our report. As has been the case with all the reports of the committee under successive chairmen, this report is evidence-based and entirely non-political, and was agreed by all members of the committee. I stress this point because the report proved to be controversial in some quarters. I thank also our excellent specialist adviser to this inquiry, Dr Martin Ruhs of Oxford University, as well as the successive clerks to the committee and their small team. In particular, I should mention Robert Graham-Harrison, now retired, who was the clerk for this and many previous reports.
Immigration has, of course, become a major issue in British politics. Net immigration—that is, immigration minus emigration—rose sharply in the past decade to record levels. In 2006, net immigration was running at around 190,000 a year, almost the equivalent of the population of Milton Keynes. Against this backdrop of high immigration, the Government have argued that immigrants bring large economic benefits to the UK. In particular, they argue that immigrants boost economic growth, fill jobs that Britons cannot or will not do and pay more tax than those born in the UK. However, the committee found no evidence of these large economic benefits. We did find serious flaws in the Government's arguments and we concluded that, on average, the economic benefits of immigration were small and close to zero.
While it became clear that the Government had wildly overstated the economic benefits, I should stress that we did not find that Britain as a whole lost out from immigration or that particular groups of the resident population in the UK lost out significantly. We recognised, of course, the valuable contribution that many immigrants make to the economy. I should also make it clear that we looked only at the economic impact on Britain, not on the countries from which immigrants came, nor did we look at the social and cultural impacts of immigration.
The Government rejected our main conclusions. The Immigration Minister suggested in June that our report,
"combined conclusions that were over-spun with analysis that was under-done".
Thoughts of pots and kettles came immediately to mind; the Minister's words accurately described the Government's position, not our report. However, while the Government are loath to admit it, I am glad to say that they have in fact accepted some of our points.
Let us take in turn each of the Government's claims for large economic benefits. The first is that immigrants boost the economy. The Government point to the fact that immigrants boosted Britain's GDP by £6 billion in 2006. That sounds like a boon for Britain, but it is entirely irrelevant. Net immigration increases the population. More people working and spending naturally increases GDP but, in percentage terms, recent immigration has increased Britain's population roughly in step with the impact on GDP. The effect on GDP per head, the key measure of a country's standard of living, is therefore close to zero. It is remarkable that the Government got away for so long with basing their argument on GDP rather than on GDP per head.
This is not to say that every immigrant makes the same contribution. In general, the more highly skilled naturally contribute more to GDP than the less skilled. However, the object of our inquiry was to assess the overall economic impact of immigration. The Government's response to our point about GDP per capita was as revisionist as it was heartening. It was heartening because the Government now say that,
"GDP per capita growth must be the principal determinant of success".
That is a key point that we made in our report. The Government say that they have been "crystal clear" on this point. If that had long been the Government's position, they certainly did not tell many people about it. The first reference by the Government to GDP per head that I have been able to find was when the Minister appeared before the committee in January.
Until then, the Government had based their case for high net immigration on overall GDP. Even on the day that our report came out, the Minister continued to base his arguments on £6 billion of extra GDP. Moreover, the Government's written submission to the inquiry said that there was no quantitative evidence of the impact of immigration on GDP per head. If the Government had long focused on GDP per head, why had they not researched this?
We are glad that the Government have come, however belatedly, to see the light and to accept GDP per head as the key measure. They have now tried to produce estimates of the impact on GDP per head, which is claimed to be significant. However, we do not accept that. Let us take the example of wages. Economists at University College London found that from 1997 to 2005 immigration delivered a small gain in the wages of the better paid but caused the wages of the lowest paid to fall slightly, as many immigrants competed for relatively low-skilled jobs. On average, there was a small gain, but any loss—even a small one—for people earning little more than the minimum wage has to be taken seriously.
The second claim was that lots of immigrants are needed to fill the vacancies created by Britain's booming economy over the past 15 years. That is beguilingly simple but badly flawed. The Government apparently assume that, when immigrants fill some vacancies, the story of the economic impact ends there. However, that is simply not the case. Once immigrants fill some vacancies, they naturally spend some of their earnings. This increases demand for goods and services. Companies respond to this extra demand and seek to increase production. However, in order to increase production, companies need more staff, creating more vacancies, thus defeating the objective of reducing vacancies.
The total number of vacancies has remained at around 600,000 since 2001, despite high net immigration, and it recently rose to 680,000, despite record levels of immigration. Therefore, expecting high immigration to reduce vacancies is futile. The Government's response to our report did not explicitly disown the argument that immigration reduces total vacancies but it clearly showed some departure from the comments of former Prime Minister Tony Blair in 2004, when he said:
"There are half a million vacancies in our job market, and our strong and growing economy needs migration to fill these vacancies".
Then there is the argument that immigrants are needed for jobs that Britons refuse to do. On this, the Government omit a key point. It is true that many Britons refuse to do certain jobs, but only at the current pay rates. In many cases, higher wages—never popular with employers—could solve the "shortage" by attracting more people to do the jobs, yet, entirely unsurprisingly, not a single employer responding to the committee's inquiry mentioned the option of increasing wages. In other cases, other solutions, such as increased mechanisation, could also bypass the need for immigrant labour.
So far, employers have been allowed to get away with asserting that immigrant labour is essential. They will naturally argue for ways to keep down costs, including by using immigrant labour. However, in many cases, immigrant labour is not essential but, as I said, simply one alternative among others. In every case, the costs and benefits of each possible approach should be examined.
The third plank of the Government's argument is that immigrants' net tax payments—that is, taxes paid minus consumption of public services—are greater than those of UK-born citizens. To enable the government calculations to show that immigrants contribute more to the Exchequer, all the costs of health and education for the children of one migrant parent and one UK-born parent are attributed to the UK-born side of the balance sheet. Common sense suggests that such costs should be split 50:50 between the immigrants and the UK-born. Once that is done, the increased net payments to the Exchequer from immigrants disappear. In any case, even on the Government's preferred calculations, the fiscal impact is very small, relative to the size of the economy.
However, the data in this area, as in many other areas of immigration, are entirely inadequate. Much more work needs to be done on the fiscal costs and benefits of immigration. We are glad to note that the Government and, specifically, the Office for National Statistics are now taking much needed steps to improve the data. A key recommendation of the committee, taking into account the high level of net immigration, as well as the overall small economic benefits, was that the Government should have,
"an explicit and reasoned indicative target range for net immigration".
It was widely reported, and indeed implied in the Government's response, that we were proposing a cap. Let me be very clear: we were not. A cap suggests that the next immigrant after the cap has been reached will simply be turned away. An indicative range, on the other hand, would provide sensible flexibility. The Government would need to have, for the first time, a coherent immigration policy that would explain why immigration should be at a certain level. However, if circumstances changed and there were good reasons for exceeding the range, that could justifiably be done. The Government would simply have to explain why it was right to exceed the range. I hope that the Government will give further thought to this proposal.
In summary, the supposedly large economic benefits from high net immigration do not exist. Overall, there is a small benefit but some on lower incomes lose out slightly. To exaggerate the benefits with little supporting evidence and flawed economic arguments, as the Government have done, is unacceptable. I hope that they will now undertake a much more rigorous assessment of the economic impact of immigration. However, even before that is done, there are clear conclusions for immigration policy, to which the committee has drawn attention. The Government should act on these without delay. I beg to move.
My Lords, I strongly support what the noble Lord said and pay tribute to him for his excellent chairmanship of this committee and of the many others on which I have been privileged to serve. I want to make four points on this topic.
First, we obviously need a considerable amount of gross immigration into this country. People coming in bring in new blood and the movement improves international exchange. Of course, many noble Lords here are immigrants or, like myself, descended from immigrants. We are permanent immigrants, which is what the report is about, but, as a country, we also want temporary immigrants, such as students, who will carry back to their countries connections with Britain that are good for them and good for us.
In every year since the Second World War, there has been substantial gross immigration of this kind by people intending to stay in this country. The result has been that the proportion of the population born abroad has steadily risen and is now at around 12 per cent. This is a natural part of the process of globalisation. However, until 1997 this gross immigration had little impact on the total population of the country because it was balanced by an equivalent amount of gross emigration. The change since 1997 has been extremely dramatic. This type of permanent, long-term immigration has risen sharply to an average over the past 10 years of roughly half a million, while emigration has remained much lower at only just over 325,000 a year. If we take the difference, we have net immigration of about 150,000 a year over those 10 years, but rising during that period. Of course, that has a substantial impact on the size of the total population of the country
The Government Actuary's Department has to make assumptions for the future, so looking at the current levels of immigration, its principal projection is for net immigration of 190,000 a year for the indefinite future. That will have a major impact on the population, increasing it by about 18 million over the next 50 years. That is a major change and it was incumbent on our committee to consider the issues involved in a change in population of that order, created mainly by net immigration. It was important to look at how net immigration affects the economic variables which are relevant to the voters of this country. Without my speech sounding like an economics lecture, those are: real wages and profits, and what will happen to them; unemployment and labour shortages; and the housing market. Those are the three remaining topics I want to discuss.
In the short run positive net migration is likely to increase profits and decrease wages, but in the long run its effect is likely to be small on both. Which wages are affected will depend, as the noble Lord said, on the types of workers who come in. If the immigrants are highly skilled the effect will be beneficial to unskilled workers, but if they are less skilled it will increase competition for low-skilled jobs and will exert downward pressure on low wages. That is one reason why unskilled immigration is less popular in many working class communities than in Hampstead and Kensington. Unfortunately, there is remarkably little information on the skill structure of net immigration. We know about the national origins because we know that the number of immigrant workers currently in the UK increased between 1997 and 2007 by 3.8 million of whom 2.4 million came from Asia and Africa. On the issue of wage inequality there is another aspect to consider. If the immigrants are skilled, that can deter employers from training native-born workers, which is another mechanism that can work against the interests of already disadvantaged people in this country.
However, none of these effects is huge. They should certainly not be exaggerated, and were not in our report. One thing is clear: employers want immigration because net immigration is good for profits at least in the short run. However, that is not how employers put the argument. They have a different language for it. They say that immigration is necessary to reduce labour shortages, which brings me to the next topic—labour shortages and unemployment.
Immigration does not reduce labour shortages except in the very short run; nor, as is often alleged by critics of immigration, does it increase unemployment. In the medium term the economy has an equilibrium rate of unemployment and vacancies, which is independent of the size of the total workforce. If the labour force increases, the number of jobs increases in proportion. There is massive evidence for that. We can compare countries and see that the level of unemployment is completely unrelated to the rate of growth of the labour force. We can look at our own history. I went back to 1856 which shows that the population increased by many times and the number of jobs increased by exactly the same proportion. It is completely wrong to think that immigration affects the rate of unemployment or, linked to that, the rate of vacancies.
In the short term, if suddenly there was an inrush of immigrants, that would relax the labour shortages but that would be short lived because employers would recruit them. In due course, the economy would return to where it was with more employment and a bigger workforce, but the same rate of unemployment and level of labour shortages. As the noble Lord said, we have seen that happening over the past 10 years; the level of vacancies has simply not changed at all in spite of massive increases in immigration. Employers' broad claim that they need immigrants to fill labour shortages has no substance. They have genuinely held fears about what would happen if there was a reduction in net immigration, but those fears are misplaced. They say that if the rate of net immigration were reduced that would reduce the number of immigrants they could employ. We know that many industries are heavily reliant on immigrant labour, but that is a mathematical fallacy. There are a certain number of immigrants here already, and there will be a continued inflow. The gross stock of immigrants would continue to increase, so employers would employ more immigrants than before, but the rate of growth would be slower.
I have argued so far that we can have similar levels of wages, profits, unemployment and labour shortages at many levels of net immigration. Why should the Government take a view about the scale of net immigration? As the noble Lord said, we believe they do largely because of its impact on the size of the population, the housing market and the need for infrastructure following increases in population. The size of the population has a major influence on the decision-making of government. It is a real issue that applies particularly to the housing market. Experience shows that the supply of houses responds poorly to changes in demand, which is why house prices are so much higher relative to earnings than they used to be. Why is the supply so unresponsive? One reason is the planning system, which immediately shows how deeply we are into the area of political decisions, which are now being influenced very much by net immigration.
That brings me to the central point of the report, as I saw it. The size of the population is central to many political decisions; it is a matter of deep political importance. It touches on so many aspects of our lives that Governments cannot ignore it. Many countries have detailed population policies affecting, for example, the birth rate. I do not think that we want to have a policy influencing voters' choice of fertility, but it is reasonable to take a view on net immigration which is the main driver of population change today. We believe that when the Government set the rules on the potential immigrants' entitlement to come here, and, likewise, when the committee defines categories of labour shortage, they should be influenced by some governmental view about the overall scale of immigration within a broad range that is desirable. That is what our report argues.
My Lords, I, too, thank the noble Lord, Lord Wakeham, for his admirable chairmanship of our committee over the years. He is indeed a very hard act to follow.
Soon after the publication of our report, I recall hearing Trevor Phillips on the radio saying in so many words that the legacy of Enoch Powell is that it is no longer possible to have an impartial discussion of immigration as the participants tend to be more concerned with sounding out each other's prejudices than with the objective facts. The immediate reactions to our report, whether in the media or elsewhere, rather confirm that view, as they ranged from thinly disguised xenophobia to high moral dudgeon, with rather less than one would wish in between. This debate gives us the opportunity to stick to the facts as we know them.
I shall not rehearse the economic arguments that the noble Lords, Lord Wakeham and Lord Layard, have already expounded, except to note with approval the Government's conversion to our committee's view that the appropriate measure of the economic benefit of immigration is the impact on GDP per capita rather than on GDP itself, on prosperity rather than on the size of the economy. As to the precise measure of that impact over the past decade of exceptionally high levels of net immigration, all that we could reasonably conclude against the background of what the Government have acknowledged as inadequate data was that the effects were likely to be small in one direction or the other. Put in layman's language, the average immigrant to the UK is likely to end up making the same sort of contribution to the economy as the people who were here already. That is not an altogether startling conclusion; in fact, I found it rather reassuring.
Another lesson that sprung from our work on the report was that averages in this area can be misleading and veil significant differences. The average immigrant does not exist. In practice, there is a host of individuals with widely different attributes and aspirations. It is important to try to unpack that average and see what is there. First, it is clear that some immigrants are more likely to bring economic benefits to the UK than others. As has been mentioned already, highly skilled immigrants, particularly if their skills are complementary to those of the home population, are more likely to add to the party than the unskilled or dependents who may not be economically active. Perhaps I should declare an interest here; I chair an Indian-owned and managed specialist IT company based in London whose employees come in the former category of the highly skilled and who, in my view, make a positive contribution to GDP per capita, albeit a small one. The point I am making is that if—and I stress the "if"—you want the driver of your immigration policy to be its economic benefits, you clearly need to be selective. Selectivity seems to be what the Government's new points-based system is about and I shall return to that later.
The second bit of unpacking we have to do is to acknowledge that some immigrants are more equal than others. We have moral, as well as legal obligations to asylum seekers, for example, which offer them the undoubted right to come here. As you will see from the report, their numbers are small and of no real economic significance. Europeans, too, have reciprocal rights to come and go. Interestingly, the wave of immigrants from eastern European A8 countries, which was the centre of a lot of attention for a while, made up no more than 20 per cent of gross immigration even at its peak. Whether those people were true immigrants, or just itinerants, remains to be seen. The remainder, the non-European arrivals, make up some 70 per cent of the total and are subject to immigration controls—the same controls, whether they are from Africa, America, Asia or Australia, which is just as it should be.
The third bit of unpacking is to recognise that immigrants to the UK do not spread themselves evenly across the country. They concentrate in particular locations. Over the 15-year period to 2006, almost two-thirds located in London and the south-east and, indeed, in particular boroughs. This is perhaps the most important bit of unpacking to be done, and the evidence of some of the local authorities most affected was particularly relevant. The inescapable fact is that if you have large numbers of people arriving in a limited number of locations, the shoe will begin to pinch. Educational facilities, health facilities, housing and indeed job markets will all be affected. That is what has happened over recent years, and the local authorities' complaint is that, partly because of shortcomings in the data on immigration, they have not had the right resources in time to deal with it. Scale is important here, as the noble Lord, Lord Layard, said, and, looking to the future, the Government's principal projection of population growth between now and 2031 is about 10 million, almost half of which is directly attributable to net immigration. If, on past form, two-thirds of that half—some 3 million—were to locate in specific parts of London and the south-east, the scope for pinching shoes would be considerable, as it would be in other areas of concentration elsewhere in the country.
There are, broadly speaking, three responses you can make to net immigration on that scale: bury your head in the sand and deny that there is a problem; invest the resources to deal with it in time; or exercise a level of constraint over the numbers arriving from those immigrant groups over which you have some control. It seems from the recent statements by the new Minister for immigration that the Government may be moving swiftly from the first to the third of those options. That brings me, finally, to the new points-based system, to which I said I would return.
The five tiers of that system are, in effect, inlet valves for five different categories of immigrant and are no doubt intended to regulate the flows of immigrants into the UK to some purpose. We can see that happening already. For example, tier 3—the unskilled category—is to be suspended for the foreseeable future, thus ensuring that the only unskilled immigrants into the UK will be from Europe, together with some dependants and, perhaps, asylum seekers. What we do not know, yet, is the net impact of the expected numbers of immigrants coming in via the other tiers, which are all in operation. As I said earlier, scale matters here if you are going to plan to deal with a significant net increase in numbers in an orderly fashion. It matters particularly to local authorities and other public service providers at the sharp end, so it would seem sensible for Government to have a broad, quantified intention in mind when they operate the inlet valves of their new, much-vaunted system.
Let me reinforce what the noble Lord, Lord Wakeham, has said on this point. What our report recommended was that:
"The Government should have an explicit and reasoned indicative target range for net immigration, and adjust its immigration policies in line with that broad objective".
That was simply a call for a rough, quantitative explanation of what the Government were intending to achieve with their new system in terms of the net flow of immigrants, as they will no doubt operate those inlet valves with something in mind and not just at random. There is no excuse for confusing our recommendation with a call for a cap on gross immigration, which is a different kettle of fish altogether, and one which to my mind is neither necessary nor desirable.
Yet the Government's response to the recommendation seems to have confused net with gross and a reasoned indicative target range with an arbitrary cap. I quote paragraph 4.50 of the Government's reply to our report:
"We believe that an arbitrary cap on numbers picked out of thin air simply risks denying Britain access to skills and ideas as and when they are needed - thereby damaging the ability of the economy, the labour market and business to function in a flexible way".
I could not agree more, but it is of no real relevance to our report's recommendation. I wonder whether, today, the Minister would care to respond to the recommendation we made, rather than to a fabrication that we did not make.
My Lords, I welcome the report of the Select Committee on the economic impact of immigration, but that admission should not mean that it can be taken for granted that I agree with most of its conclusions.
The report deals with a small but significant aspect of key features of migration and its impact on the economy of the United Kingdom. The debate is important for two reasons. First, it gives us an opportunity to comment on the most emotive issue, which is immigration to the United Kingdom. Secondly, it gives us the opportunity to look at other aspects beyond economics that impinge on immigration policies.
What are the other aspects of immigration? We offer humanitarian protection to people suffering persecution, a point well made by my noble friend Lord Vallance. The 1951 UN convention on the status of refugees places that obligation on us. We offer the right to a family life; for example, the right to be united with one's family, which is enshrined in the human rights convention. In a highly globalised world, we encourage those with skills to come to the United Kingdom to help to build our economy. No one disputes that immigration policies must protect and promote our national interest. We must accept that such interests cannot remain static when substantial changes are taking place throughout the world.
To have a rational debate about immigration becomes difficult because the subject has been a political battleground since the first Commonwealth immigration Act was introduced in 1962. We know that the combined issues of race, religion, asylum and immigration have increased in importance during the past three general elections. The press coverage of immigration issues was greater in the latest election than it had been in the previous two. In UK media coverage of the 2005 election, those issues were the fourth highest theme recorded.
There are four reasons for that. First, there is the unending discussion about numbers, now focused on the others coming from eastern Europe and the media panics about bogus asylum seekers. Secondly, there is a worry about our national borders and our borders within what has been called "Fortress Europe". Thirdly, there are questions about our role in the international community: do we face towards Europe, the United States, or both? Lastly, we worry about what is our national identity, which a focus on immigration leads us to believe is insecure and therefore must be better defined. What is it and who can be members within this single identity?
It is right that in a free and democratic society, there is a sensible discussion and debate about such issues. It is for this reason that I say that I welcome the publication of the report. The media publicity concentrated on which indicators were appropriate in measuring the impacts on the labour market and the macro economy, but the Government reply published last June received scant mention in any of the newspapers. There remains a major disagreement between the Government and the Select Committee about GDP, which the Select Committee considers "irrelevant and misleading". The committee prefers GDP per capita. The Government subscribe to GDP per capita and conclude that since 1997, the UK has recorded the highest average annual growth rate in GDP per head among the G7 economies, and that migration has made a positive contribution to the strong recorded growth in GDP per head in the United Kingdom. The Government also indicated, and independent research continues to confirm, that they find no significant evidence of negative employment effects from immigration.
I am not an economist and I would not wish to be drawn into that argument, but I have no doubt that the disagreement between the Select Committee and the Home Office will run and run for a very long time. What no one can dispute is that our economy is part of a global system, and that international migration is a central feature of this system. There are potentially huge economic benefits in attracting the best talents. Just look at the City of London, which has the most diverse and international workforce. The consideration is how we protect and manage immigration when we are heading for a deep recession.
I do not dispute that a fair, effective and transparent policy must be at the centre of such considerations. We must never lose sight of the fact that many immigrants from all over the world have brought economic benefits to Britain. Last Tuesday, I was invited to a major function arranged by the Asian Media Marketing Group to make awards to Asian traders for their contribution to this country. The noble Lord, Lord Mandelson, spoke at the gathering and informed us that Asian businesses in this country contribute to the tune of more than £20 billion. That figure varies considerably from that cited by the noble Lord, Lord Wakeham. I do not want to get involved in the figures; all I know is that Asian businesses were wise enough not to buy a British bank with that money.
The benefits of migration have never been fully explained. There are four factors that we often miss out, to which I draw the House's attention. The first is the economic factor, which plays a major role in the process of migration. Let us not forget that these factors also determine the level of migration to this country. Going back to the early 1960s, when figures were first published by the Home Office, more migrants came to the United Kingdom during economic prosperity. During economic depression, fewer migrants entered this country. So the economy is a great leveller in the process of migration.
The second point, which I hope that the Minister will explain, is that census figures demonstrate that most migrants who entered in the 1950s and 1960s were economically active and women who entered at that time were of childbearing age. We are therefore talking of second and third generations of people born in this country. Where did we take note of that factor in our analysis? Do they fit into the overall, predominantly white population or do we still regard them as migrants after two or three generations? That point needs to be clarified when we talk about GDP.
Thirdly, migrants make a major contribution to supporting their communities back home. Research in various other countries has clearly demonstrated that the prosperity of many of our developing nations is built on the support that they receive from people who send money back home.
Finally, we must never forget the soft diplomacy of the democratic values that many of them take back home.
As the president of the Liberal Democrat Party, I travelled the length and breadth of this country during the previous two general elections. I was amazed that some political leaders would sing the praise of foreign migrant communities in areas in which they lived and settled; yet the same politicians in predominantly white suburbs would advance the total curtailment of immigration to this country. That is sheer hypocrisy. It is clear that economically driven migration has brought substantial benefits for growth and the economy.
Given our membership of the European Community, we cannot regulate the number or selection of nationals of the European Economic Area. Most EEA nationals have the automatic right to work in the UK. We praised the Poles when they came here in large numbers and provided the workforce in our construction industries. So large was the drain of Polish workers from Poland to the UK that the Polish Prime Minister contacted the Prime Minister of India to see whether he would encourage the migration of Indians to Poland to balance the workforce drain felt in his country.
Government statistics on the impact of demographic changes show that our society is ageing. Indeed, we simply have to look around. By 2050, almost 23 per cent of Britons—14.7 million—will be over 65. Some commentators suggest that by 2040, each person of working age will support twice as many pensioners as they do today. There will be a considerable impact on health, welfare and social services in this country. Whether we like it or not, attracting a migrant workforce is one of the options that we shall have to consider.
The current debate about the points system has not been very helpful. We need to monitor the impact of such measures. In the mean time, will the Minister say which of the following views will prevail? The chairman of the Home Affairs Select Committee, Mr Keith Vaz, said that it was totally untrue that Labour would seek to restrict foreign workers, as suggested by the Immigration Minister, Phil Woolas. We then have Mr Woolas saying that government policy should reflect the need for an upper limit on Britain's population. It would be very helpful to have the Government's formal position on these conflicting views.
My Lords, I thank the noble Lord, Lord Wakeham, for securing this pertinent debate. Given the current implementation of the Government's new five-tiered points system, it is indeed worth reflecting on what we want from our immigration policy.
As the leader of a London business organisation, I can tell noble Lords that immigration is critical to business. I start from the premise that business must be able to recruit the best people from wherever they are. Indeed, the competitiveness of London and the United Kingdom depends on it. However, the challenge is ensuring that as many of the best people as possible—the most suitably skilled and able—are found from within the UK. It is not the net immigration target range that will deliver this; equipping more UK residents with the right motivation and skills will reduce our reliance on immigration.
This is not British jobs for British workers. Our manufacturing sector was not well served by protectionism in the 1970s. British Leyland made cars that were less and less competitive in world markets. The skills challenge for the UK is not to limit immigration by regulation, but to ensure that British workers can compete with the best in the world in all fields. All else being equal, most employers would prefer to fill most jobs with locally based staff.
The report of the Economic Affairs Committee raises concerns, which I share with earlier speakers, over the issue of considering overall GDP as opposed to GDP per head of population. The total size of an economy is not an index of prosperity; increasing prosperity for each individual should be our goal. This is helped by maximising every individual's potential to contribute economically. We must improve employability, but business must also retain the ability to recruit internationally. Especially in these uncertain economic times, we must not handcuff business; we must support it. This is what will ensure prosperity for each individual in the long run.
Secondly, the report rightly draws attention to the absolute paucity and unreliability of migration data. I am wary of giving too much weight to the conclusion of this or any other report on the effects of immigration while the statistics on which it depends are so fragile, so I cannot accept uncritically the assertion that GDP per head is not benefited by immigration. Indeed, a recent report by Think London—London's inward investment agency—highlighted that the presence of staff from around the world actually boosted productivity in companies.
Every effort must be made to improve the statistical evidence. I know that a number of London boroughs have resorted to collecting their own immigration data to support their claims for central government funding, based on a suspicion, which I share, that current data are out of date and underestimate their immigrant populations. Conflicting sets of data are not helpful. We need one set of statistics that is well researched and trusted.
The same principle applies to the work of the Border and Immigration Agency at our major ports. I welcome the first ever service level agreement between the Home Office and Heathrow to shorten immigration queues at the UK's principal business airport. But a prerequisite to such an agreement is reliable and comparable data, which we do not yet have.
However, we are where we are. Coming into play is the Government's five-tiered points system, which will create a much more meritocratic and effective way of ensuring that immigration does not spiral, but that suitably, necessarily skilled immigrants will enter our workforce. The implementation of the system is critical. In a recent London First survey of its members, only 3 per cent believe that the Border and Immigration Agency is in a position to implement the new system.
International students, who are on tier 4, are a case in point. In 2005-06, these students in London contributed £1.5 billion to GDP and helped to support 44,000 jobs. However, specific practical issues—for example, the certification process for the sponsoring universities, compliance costs, management of students' cash deposits, incompatibilities between the Home Office and university IT systems, the fact that overseas university researchers are not covered by the system and the lack of overall management information—remain unresolved. We must take time to implement a system that works. The university sector puts forward a strong case for deferring implementation of tier 4 from spring to autumn 2009 to give time to address these issues.
This report asks the right questions and I agree with some of its conclusions. Undoubtedly, we must have better and more meaningful data if we are fully to understand the positive and negative implications that immigration has on our country. London is a leading world city and brings enormous benefit to the UK as a whole. Tourists come to the capital to experience the huge cultural diversity we have to offer. Whether it is the cuisine of our internationally experienced chefs or listening to a Havana band in a Cuban nightclub, we must play to our strengths. Other countries and cities have access to the world's best talent. So must we. Our challenge is to ensure that the best talent is found in, and keeps coming to, the UK.
Allowing British businesses to recruit globally does not open the doors to an unstoppable influx of immigrants if education and training systems equip British workers to compete. I should like UK workers to win on merit, not because we have changed the rules to prevent the best from competing at all. Finally, I look forward very much to hearing the right reverend Prelate the Bishop of Lincoln's first contribution to this House.
My Lords, first, I thank all noble Lords for their welcome to the House and for the careful way in which they ensure that new Members are able to find their way around the maze of corridors and the myriad of customs, conventions and standing orders that seem to govern the way we do business around here. I am grateful for the graciousness and patience of all noble Lords. I am particularly indebted to one of the attendants who, when I made my second visit to the House and my third trip across the Peers' Lobby in my shirt sleeves, accosted me and said, "My Lord Bishop, if you ever feel the need of a jacket, you will let me know, won't you?". That reminds me of Henry Thoreau's suggestion that we should always beware of any enterprises that require us to wear strange clothes.
In particular, I thank the noble Lord, Lord Wakeham, for this report and for the way in which he has introduced it. I am very conscious of the fact that maiden speeches should be non-controversial. I would love to be able to indulge myself and challenge some of the data, conclusions and assumptions in the report, particularly as they relate to the immigration trends and economic realities with which I am most familiar in those parts of Lincolnshire where industries are dependent on migrant labour and guest workers in order to conduct their agricultural and food processing businesses effectively. But I must restrain myself to being non-controversial.
Therefore, I offer the most non-controversial contribution to this debate; namely, that immigrants are people, human beings, each made in the image of God as much as any of us here. Towards the end of his magisterial account of immigration into Britain, entitled, Bloody Foreigners, Robert Winder concludes:
"It is unsettling that these groups are discussed as if they are things rather than people".
In other words, and in relation to this debate, immigrants are people rather than mere economic units. This is not in any way to imply that those noble Lords who have worked so hard on this report are anything other than highly sensitive to the human stories, passions and values that characterise immigrants as much as they do the rest of us. But I wonder whether the problem lies in asking colleagues to undertake a merely economic evaluation of any human activity, whether it is a pastime like potholing or painting, an occupation like banking or baking, or a vocation like teaching or nursing or, dare I say it, whether it is the activities of this House. When we seek to evaluate any human activity on purely economic grounds, we run the risk at least of dehumanising those whose humanity we share. Not everything that counts can be counted, not everything that matters can be measured, and not everything that is valuable can be valued at a price.
The report does what it says on the tin: it addresses the economic impact of immigration, and its authors are at pains to point out that quotation. The noble Lord, Lord Wakeham, reiterated it in his introduction by saying:
"Non-economic considerations such as impacts on cultural diversity and social cohesion are important, but these are outside the scope of this inquiry".
Yet even so, the disclaimer is difficult to sustain as the human face of immigration persists in breaking through. They have families, says the report, and possibly children. They live to grow old, says the report, and they like to socialise with their compatriots. All these are indications of their humanity, but because the remit of the report is restricted to economic considerations, whenever these human characteristics are mentioned, it seems to be in rather negative terms. Why is that? It is because the disclaimer has dictated in advance that for the purposes of this report, immigrants are economic units to be evaluated using a cost-benefit analysis, and that inevitably tends towards their humanity being seen as a problem to be solved rather than something to be celebrated.
We must take seriously, of course, the extent to which the humanity of the resident population is affected by the arrival, often in large numbers as in parts of the diocese of Lincoln, of men, women and children from other parts of the European Union as well as further afield. Sometimes the effects are disturbing, as the ebb and flow of human interaction creates friction, leading to antagonism and abuse both verbal and physical. Sometimes at the root of this is are deep-seated fears about jobs, housing and benefits, and it takes a prodigious amount of myth-busting to dispel those fears. I welcome the report as a contribution towards ensuring that reality rather than rhetoric drives the priorities of both national and local government when it comes to providing full, fair and appropriately targeted funding to communities so that they can flourish rather than flounder in the face of demographic change and increasing social diversity. All this underlines the importance of economic analysis and accurate statistical data, but my point is simply this: how easy it is for the humanity behind a statistic to be obscured when that statistic is pressed into the service of purely economic considerations.
Lincolnshire County Council has a well-developed strategy for welcoming new arrivals. It is based on recent research and a wide variation of data sets. It concludes:
"Despite the tensions outlined above, recent research suggests that 75% of the indigenous population did not mind migrant workers living locally. There appears to be a growing understanding that new cultures, fresh perspectives and hardworking people are a good thing for Lincolnshire".
This is all the more remarkable given the hysterical headlines that so often accompany newspaper coverage of immigration and its impact on our communities. A recently- published welcome to Lincolnshire booklet, available in all our key languages, has done a great deal to ensure that new arrivals know themselves to be valued for their all-round contribution and that, of course, inevitably leads to added value economically, as well as in other ways.
Way back in the mists of time my forebears came to these shores, possibly as Viking invaders but more likely as Anglo-Saxon settlers. They might or might not have left their mark on the economic landscape of this green and pleasant land. But I like to think that, over time, they experienced hospitality rather than hostility as their distinctive humanity was allowed to enrich the local population in ways that were more than merely economic.
Immigrants and émigrés are human beings. As befits a maiden speech, that is pretty non-controversial. But in a debate predicated on the bottom line being money rather than humanity, perhaps it needs saying.
My Lords, it is a pleasure and an honour to follow the maiden speech of the right reverend Prelate the Bishop of Lincoln. I note that he lists his favourite things as fish and chips, Bruckner, the Corrs, "EastEnders" and Lincolnshire poacher cheese; and lists among his dislikes meringues, reality TV, dogmatism and the Daily Mail. It is perhaps appropriate that he makes his maiden speech today. He tells us that his epitaph should be that "he meant well". I am sure that all noble Lords will agree that this afternoon "he did well". He is a renowned theologian and philosopher and I hope that he will make many more contributions to the House in the years to come.
We have heard six excellent speeches, a variety of points of view and some statistics have been quoted. In my personal life I have always been afraid to use statistics too much so I shall try to stay clear of them. I am a member of the Economic Affairs Committee and contributed to this report. I am aware of its contents and the exchanges initiated by my noble friend Lord Peston. Let me commend the excellent chairmanship of the committee by the noble Lord, Lord Wakeham. As he said, in his time we have produced many reports. He has been a great chairman
I have also read the critique by my noble friend Lord Peston. I agree with many of his points, although I might not have made them quite so forcefully. I have immense respect for his views. My argument is that because of media manipulation those parts of the report which have got into the public domain have acquired a completely different interpretation than the one intended by most members of the committee. I believe everyone on the committee was agreed on the contribution to the workplace and the economic benefits that the immigrant community has brought to this country. As a matter of fact, Britain has been a country of immigrants for a very long time. A debate like this will always happen in any country that has an immigrant population, and will become more intense because of the unfortunate economic situation we are in at the moment. However, my experience says that in the end the British people historically have recognised the benefits of immigration, which is why they have accepted immigrants as being of great value, not only to the economy but to social and political life.
The status Britain has enjoyed through history compared with its size and population is largely due to the fact that we welcome immigrants from all over the world and have recognised their value and contribution. In my experience, immigrants bring in fresh ideas, more vigour and a greater desire for success. That is natural because to be a success in a new country one has to work at least 25 per cent harder to be counted at par. I know this from my personal experience and 40 years of hard work here. There is no bigger example of that than the victory last week of Barack Obama as President of the United States. He was not elected because he was an immigrant but because he brought new hope to the people of the United States and to the world. I started my business in this country with a loan of £5,000. Today the company of which I am founder and chairman, the Caparo Group, which is managed by my sons, has a turnover of over £1 billion and employs more than 3,000 people in Britain and another 5,000 in the United States and India.
I shall get back to the report. The committee reached some of its conclusions based on the evidence of GDP per capita. Using that as a basis to assess the benefit of immigration, however, is fundamentally flawed. I shall give you an example. One immigrant arrives with his wife and two children. Using the GDP-per-capita model, his contribution to the economy is divided by four. But my contention is that after 10 years his children grow up and his wife finds work, and then you have four people contributing to the economy, an increase by a multiple of four—not to mention the benefits that children who have received a good education here will take forward. It is a fact that children of all nationalities who learn together are better equipped for the future.
I had that experience myself almost 60 years ago when I went to study at the Massachusetts Institute of Technology. I gained as much from my fellow students who came from many other countries and their approach to life as I did from my studies. You should not calculate the potential of the immigrant family based on one individual at a particular time. It is the same thing in business: when you make a capital investment your return on capital goes down in that year but eventually you will get a much bigger return, and that is why you continue to invest. Investment in immigrant communities has to be looked at on a more long-term basis and not a short-term one to suit some short-term results, otherwise we will be in the same situation as the financial community, which has also been looking for short-term results—and look where that has got us. Short-termism, in my view, is always dangerous.
If Britain did not have an immigrant community—I know this myself from running an industrial business—we would not have a labour force, the same productivity or an economy of the size we have today. We would have lower standards of living, higher inflation and very little influence in the world, which would reduce Britain to a second-rate country. If avoiding that scenario is not a huge benefit, I really do not know what is.
I do not think that there is anything wrong with the report, merely the way in which it has been interpreted. Immigration is too complex a subject to be looked at from the narrow viewpoint of GDP per capita. As I said, I shall not go into any of the statistics because enough has been said and written. The Government's response to the report has been robust and comprehensive, and I recommend it. In the past 25 years, this country has transformed its work ethic, and for that I congratulate the noble Baroness, Lady Thatcher, on her contribution in the 1980s as well as the employers and trade unions which took the lead from that and worked together in a renewal of the industrial scene of this country. I also congratulate my right honourable friend the Prime Minister on steering the British economy, during his time as Chancellor and as Prime Minister. For 12 years, Britain has enjoyed a much stronger economy than the other G8 countries and even in today's financial crunch is playing a great role on the world stage. The world is looking to my right honourable friend for leadership. He has played a great role in making sure that the work ethic in this country remains strong and that entrepreneurship is encouraged. I am a strong believer in Britain and in what this country can achieve. I am very proud to be British, proud of the country I come from and proud to be an immigrant.
Finally, I say that globalisation, which has benefited all of us, cannot be complete without the free movement of people.
My Lords, I will confine myself to two aspects of the report: the state of our migration statistics and the committee's central macro conclusion that the economic impact of immigration was extremely limited—near zero. Given the limit of the empirical evidence available to the committee, and the state of our migration statistics, I must say that I felt surprised that it felt able to come to such a firm, negative conclusion, and I remain unconvinced by it.
First, I have a more general point. Perhaps it was inevitable that the committee confined itself to the economic impacts of immigration—it is, after all, the Economic Affairs Committee. The trouble is that we all know that the non-economic issues are at least as important. One has only to think of all the social implications and impacts—social cohesion, diversity, cultural influences, and so forth—all, incidentally, with their own economic implications. We cannot forget that countless immigrants come here for totally non-economic reasons—I will resist the temptation to talk about my own past as an immigrant—but many of us would argue, myself included, that the non-economic benefits or losses are every bit as crucial in drawing up a balance sheet of pros and cons. To try to isolate the purely economic aspects, however dictated by the terms of reference of the committee, is bound to be unsatisfactory both for public consumption and for policy-making.
The trouble is that this key limitation of the report—self-imposed and probably inevitable—coupled with its conclusions on the little economic impact, encouraged that rather slanted reception in the media. There was massive coverage, much of it with headlines such as, "Migration has brought zero benefit", and "We must cap migration". Another, from the FT, was that, "Peers reject economic benefits of immigration". Perhaps that is not exactly what the committee wanted to convey, but it was an inevitable interpretation in the public arena. I quote the committee's central point and central conclusion at macro level:
"The overall conclusion from existing evidence is that immigration has very small impacts on GDP per capita, whether these impacts are positive or negative".
What is the relevance of GDP as a yardstick? The committee was of course right in arguing that using GDP, which is simply a growth indicator that does not take account of population change, is misleading. If GDP was to be used at all, ideally it had to be used per head of the resident population. I do not quarrel with that, but I do quarrel with using GDP at all. There are many flaws in it, but, in the interests of time, I shall confine myself to two. First, immigrants, as we all agree, fall into many different categories in regard to skill, age, sex and purpose in coming here—economic or non-economic. To lump them all into a single group is too blunt to be helpful. Secondly, and even more important, any economic impact is likely to be long term, perhaps very long term. That is much too complex to capture in analysis, and a focus on the short-term impacts on growth of a certain number of immigrants at this time, or even in this decade, is much too crude to be helpful.
So I end up having very little confidence in any conclusions based on GDP, even per head. The problem with that view, which I feel strongly, is that it applies as much to the committee's own conclusion as it does to any government interpretation. The committee's conclusion that there is very little impact is no more sustainable than the more ambitious interpretation by government. I noticed that the views of the academics who gave evidence, including a number of distinguished economists, and of other witnesses from the business world, for example, were not sufficiently of a single mind to justify the committee's final and crucial view, which has already been quoted, that,
"immigration has very small impacts on GDP per capita, whether these impacts are positive or negative".
In my view, this conclusion went beyond available empirical evidence.
What is uncontroversial is the rest of that same recommendation, that the Government should initiate research in this area in view of the paucity of evidence. There are so many areas in which research is needed that I do not have time to talk about them, but research on the impact of migration should take the wider view that I have encouraged—non-economic as well as economic—and involve not just government activity but also the academic community here and abroad.
Finally, I will say a word about immigration statistics. The committee was clearly and understandably hampered on this score. It stressed:
"There is a clear and urgent need to improve the data and information about gross and net migration flows to and from the UK, and about the size, geographical distribution and characteristics of the immigrant stock".
That was a leading recommendation with which I totally agree, as does everyone involved in official statistics.
At the same time, we must accept that this is a highly complex field for statisticians, perhaps the most complex of all the tasks facing them. The National Statistician, Karen Dunnell, explained all that in detail to the committee, but she also left no doubt about the determination in the statistical services to improve what is available. In my view there is only one satisfactory way of dealing with this, which is to establish a population register. That is a controversial matter, but several countries which have population registers benefit not only in the field of migration statistics but in population data generally. It is definitely the right way to go. Of course I am very aware of the arguments against, but there is a strong case. It would also have the advantage that we would no longer need censuses.
Meanwhile, there is much to be done. The formal arrangements that have now been introduced in Whitehall are encouraging. There is now a ministerial group and a programme board chaired by the National Statistician, both committed to progress on migration data. What matters, of course, are the details. The International Passenger Survey is being strengthened by using bigger samples and, I hope, will no longer be voluntary. The Labour Force Survey—the other main source—is also, I hope, being improved. There will be a redesigned new port survey. There will be new improved ways of estimating mid-year population figures and data on short-term immigration.
All that is encouraging, but I am most pleased about two things. First, there will be a focus on local authorities as a crucial source for better data. Secondly, there will be an increased dependence on administrative information. I stress to your Lordships that the future of improved population statistics, leaving aside the register idea, is through better administrative data, not through surveys, although surveys cannot be done without. A number of government departments which have been somewhat unhelpful in the past have relevant data sets covering and identifying migrants. The use and linkages of these sets and registers is the way of achieving better statistics. I know from my conversations with ONS that all that is now going to happen. Moreover, local authorities, many of which have also not been helpful in the past, will be urged, I hope increasingly, to help with using their administrative data with the same purpose in mind.
I find all that quite encouraging. Migration is now a top priority in the statistical system. The question is whether the Government will ensure adequate funding and collaboration from all relevant departments and local authorities. I am also encouraged by the fact that the new and very powerful statistics authority, which this House had a significant role in establishing, has now selected migration statistics as a priority for monitoring very early in 2009. As the authority reports to Parliament there will be another opportunity in both Houses, I hope, to judge progress.
My Lords, I join other noble Lords in congratulating the noble Lord, Lord Wakeham, on his chairmanship of the Economic Affairs Committee. As he knows, I was an ardent supporter of his appointment and was delighted when he agreed to accept this arduous task. However, he also knows that I dislike this report intensely. Indeed, I can tell your Lordships that I regard the report as the worst produced in this House in my 21 and a half years here; I would like to ensure that that is on the record.
I start with the report's title, The Economic Impact of Immigration. One would have expected that it would cover the long history of migration to this country, starting, say, with the notorious Aliens Act 1905, introduced because of the appearance of a fair number of Jewish people in east London at the start of the 20th century. We then get to the arrival of the workers from the West Indies in the 1950s and 1960s, and then the Ugandan and other Asians, leading to the Commonwealth Immigrants Act 1962, which curbed, inter alia, the rights of the citizens of the West Indies, India and Pakistan to settle here. That must be about the most racist piece of legislation ever to appear on the statute book.
More recently, we have had the workers coming from eastern Europe because of their countries' membership of the European Union, which has also given the Europhobes a pleasant outing. In fact, the xenophobes and racists have had their say in all these cases. I would have thought that, for that reason alone, if the Economic Affairs Committee really believed that this subject was a top priority, it would have proceeded with the utmost caution.
However, we have something quite different. There is no historical perspective at all. The emphasis is entirely on the period of power of the present Government. I say that advisedly to my noble friends who are members of the committee. In addition, to my amazement, we have a report in which the opinions of a xenophobic front group such as Migration Watch are given the same weight as those of the Institute for Public Policy Research—an outstanding research body—and the Government themselves. I find this lack of judgment on the part of the committee amazing.
On the economics, the report is simply a ragbag: a bit of this and a bit of that. At no point is a full set of assumptions laid out, either for the short-term quasi-static model or for a long-term dynamic model. I do not know whether I am the only person who has read all the oral evidence—I am a devotee of that sort of thing—but little, if any, of the questioning in the oral evidence is devoted to elucidating the witnesses' assumptions. On the dynamic side, that is especially important. There is a vital distinction between the workers who come from abroad and settle here permanently—according to the dictionary, that is the correct definition of "migrant"—and those who, sooner or later, go home or elsewhere. Eventually, those who settle become part of the resident population, so the distinction of whether the resident population gains or not becomes difficult in a dynamic context.
There is the additional fact that many of the workers who arrived recently from abroad themselves have an impact not on what is sometimes called the home population but on the workers who arrived from abroad a bit earlier than they did. There is also the difference in the propensity to save between workers from abroad and workers from the so-called resident population, which has important dynamic effects. Economic analysis in this area is immensely difficult, but one would have thought that the Economic Affairs Committee would, as a minimum, have made some attempt to get to grips with it.
If you make a set of assumptions, such as constant returns to scale and no technical progress, it is not in the least surprising that GDP per capita stays the same, because that is what you have just assumed. If you assume that there is technical progress but that it is unaffected by the immigrants coming in, again, by definition, they have no impact. If you then assume that there are further increases of a more dynamic kind, in the modern theories of growth, but that they are unconnected with what the immigrants are doing, again immigration has no effect. But you do not have to assume any of that. In fact, a very famous economist, Harry Johnson, pointed out when referring to a paper on immigration written nearly 50 years ago that the authors simply assumed that the answer begged the question, so that it was not surprising that they got the results that they did. My days as an economist are well gone, but I should have thought that a serious and unbiased Economic Affairs Committee would have recognised those sorts of considerations.
I am even more struck by the total lack of common sense on the part of the Economic Affairs Committee. I think that I am right in saying that it failed to take evidence from some easily accessible foreign entrepreneurs whose activities have clearly benefited our economy. The noble Lord, Lord Paul, sits on the Economic Affairs Committee, but there was no sign until today that anybody took any notice of his success here with steel production. As a Member of this House, the noble Lord, Lord Bilimoria, might well have been asked to tell us about beer production. The noble Lord, Lord Weidenfeld, had a considerable effect on publishing in his younger days. The noble Lord, Lord Stone, could have told us about the enormous impact that the immigrants who founded Marks & Spencer had on retailing. The Economic Affairs Committee is telling us that this country has not benefited from any of those coming here, whereas in my judgment common sense will tell you that almost the whole way we run our country depends on those sorts of people.
While I am on the subject of your Lordships' House, let me say that, as I look around the House, not so much today but at Question Time, I am struck by the mixture that I see in gender, colour, race, religion and so on. In the present context, a large percentage of us are either migrants or the children or grandchildren of migrants. Looking at your Lordships' House, I, at least, am biased enough to believe that this country is better off as a result of our being here.
I add en passant that although I do not wish to belittle Barack Obama's great achievement, our House had a leader of Afro-Caribbean origin five years earlier than the American achievement. Moreover, our leader was of the female gender, so we killed two birds with one stone, although I am not sure whether that is a good metaphor to use; at least we got two benefits from one appointment. I say to those noble Lords who consider that their real task is to criticise the Government that that appointment was immensely to the Government's credit.
My next point concerns something that is typical of what is wrong with the report. It is generally agreed that in most circumstances goods and services are best provided by the private sector in free markets. However, an important precondition is that those markets are competitive. If they are not, we need policies to try to make them so if we can. In the free markets that are now broadly espoused, entrepreneurs producing their own objectives will take decisions leading, via Adam Smith's "invisible hand", to the best outcomes. Those entrepreneurial decisions include the inputs of factors of production—broadly, raw materials, capital equipment and labour. It seems to be the case that the Economic Affairs Committee, although it would not like to be regarded as anti-free market, accepts all that except for one thing—labour from abroad. It is so opposed to such inward movement of labour that it argues the case—I found this the most startling bit of the whole report—for the entrepreneurs to move their businesses abroad rather than to import overseas labour. It is not simply a matter of the nonsense of so-called "British jobs for the British"; the EAC must actually be opposed to having overseas labour here. There is no other case for that whole section of what it says.
I have spent a lot of time following this report by looking through the main textbooks in economics, where I can find nothing to support the committee's view that entrepreneurs ought to go abroad. In addition, why does the committee not also announce that we must not have any machinery from abroad as long as, in theory, it could be produced in this country?
I am aware that I am running out of time. One subject that interests me is GDP per capita. The committee quotes Professor Borjas's 1995 paper on immigration generally. He makes a most intriguing comment, but then does not enlarge on it, when he refers to the criterion of GDP per capita of the native or resident population. He then adds, but does not clarify it:
"It is far from clear that immigration policy should pursue this objective".
I wondered what he could possibly mean. I am sorry to say that the Government have rushed into accepting this as well.
What I have to say slightly follows the remarks made by my old friend and teacher, the noble Lord, Lord Moser, but I have to tell your Lordships that there is a class of cases where, other things being equal, the absolute value of GDP is important. Those are the set of competitive circumstances in which a country might find itself. If we normalise for GDP per capita and all the other relevant variables except for size, a larger country with a larger population but with everything else the same is more likely to win a war than to lose it compared to a smaller country, is more likely to win Nobel prizes, because there is a fixed number of them, is more likely to win sporting events and so on. If all those things raise national morale and the national sense of well-being, larger is better than smaller. I mention that as a technical piece of economics for those interested in the subject.
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.
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 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 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 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.
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:
"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,
"immigrant children also create benefits for schools".
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.
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.
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.
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,
"GDP per capita increased by an average of 2.4 per cent per annum between 1997 and 2006", during which we had the,
"highest ... growth rate ... amongst the G7 economies".
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.
As regards the ageing population, the committee said that the present situation will not last for long because immigrants will get older. Of course they will, but it is helpful that at present we have young, working immigrants contributing to the economy, which enables some of us to draw our pensions. There is also evidence that some immigrants are now leaving because of the situation in the job market here. That is also believed to have a cushioning effect on our unemployment levels. If people who have arrived recently go back to, say, Poland, that prevents British unemployment rising as much as it might in the present difficult economic circumstances.
Earlier, I mentioned the British-Irish Inter-Parliamentary Body. Certainly, our conclusions agree with the committee that there is a need for more data, particularly so that the Government and local authorities can plan services better and meet needs. Another important conclusion is that some of the people who have come to this country are poorly protected in terms of their rights. We have evidence that trade unions in Wales do not always have easy access to the factories in which migrants work. They cannot therefore intervene to protect pay and conditions; for example, the national minimum wage, which should be the bottom line. Therefore, one of our conclusions, which I hope will be widely accepted, is that it is important for the Government to look at the rights of people to ensure that they are properly protected. In that way, there will not be an adverse effect on British workers because there would be more of a level playing field. It is desirable on both counts.
Furthermore, another of our conclusions is that in order for immigrants to make a proper contribution at work and socially in this country, it is important that they have access to English language teaching. It was clearly put to us that the lack of English language holds them back, and prevents them from exercising their rights, working effectively and having as good an access to the job market as they might.
I believe that the report is useful in that it has generated interest. I hope that this debate will receive some of the publicity that the report received initially. Of course, as a country we must act in British interests when we are dealing with immigration policy. I would argue that British interests have been well served by people coming to this country and contributing to it. To conclude, this country has given me fantastic opportunities. I only hope that other people can benefit from them as well as I have.
My Lords, on a point raised by my noble friend Lord Dubs, when we first took evidence on the economic impact of immigration back in 2007, it is worth recalling that the opinion polls reported that the subject of greatest concern to the British public was immigration. Today it may well be rivalled by the fear of recession, and the two issues taken together in these bleak and unsettling times surely make this debate all the more timely. Like my noble friend, I trust that our report will help to clarify some of the issues and at least sharpen the focus on other key areas of this sensitive subject.
One of the witnesses to our committee inquiry was Liam Byrne MP, Minister for immigration until the recent reshuffle, who claimed that his surveys show that almost all voters, 98.8 per cent, say it is important that politicians talk openly about the issues raised by immigration. Our committee sought to do that and to be constructive. Our chairman, the noble Lord, Lord Wakeham, is particularly to be congratulated on bringing together Members from all three parties as well as our Cross-Benchers and coming to what were unanimous conclusions. I will not repeat too many of the important points made by my committee colleagues, but I also welcome the emphasis put by the noble Baroness, Lady Valentine, and the noble Lord, Lord Best, on the need to improve the skills of our existing and potential workforce. Indeed, it was the subject of our previous committee report.
Our report was completed eight long months ago, but since then I am pleased to see that the Government have been moving purposefully to sort out some of the problems in this complex area of policy. For instance, in their response to the report the Government say that they are now,
"crystal clear that GDP per capita growth must be the principal determinant", in estimating the economic impact of immigration. This will be welcomed by those of us who expressed concern about the Government's previous economic justification. While I will gladly leave the economists to argue about the costs here and the benefits there, and heeding the caution of the noble Lord, Lord Moser, I still anticipate that consensus will emerge around the conclusion of our report that the economic effect of immigration on GDP per capita is not that significant either way, and perhaps even less so now when set against the vast sums of money being consumed by our deepening economic crisis.
On another related matter, one that has been mentioned only briefly, we had the good fortune to have on our committee and as a witness the noble Lord, Lord Turner, now chairman of the Financial Services Authority and recently the Government's guru on pensions. The received wisdom that young immigrants are necessary to ensure the pensions of ageing natives was dismissed by the noble Lord, Lord Turner, at his most magisterial, and is of course reflected in our findings. As a former Minister responsible for monitoring the delivery of public sector reform for Prime Minister Blair, I am acutely aware of the huge challenges faced by the Home Office in asylum and immigration policy. It is a daunting task in a globalising economy where the increasingly free flow of goods is matched by the movement of workers, tourists and students, and those just desperate for a better life. But I also recall with embarrassment the miscalculation in Whitehall of the number of migrants we might expect from the enlarged European Union. However, we probably all accept that population prediction is and will remain a notoriously inexact science. Thankfully, our communities have absorbed those hundreds of thousands of unexpected east Europeans with remarkably little rancour, and it is a credit to those hardworking Poles and others that they have been seen to make such a positive contribution to our economy. That has also been the experience of most immigrants from countries outside the European Union.
Our report highlights the valuable contribution those immigrants make to the UK. That is not in doubt and I applaud the points made by the noble Lord, Lord Dholakia, as indeed would the children and grandchildren of immigrants in my own family. However, after a decade of rising population growth largely driven by increased immigration, the issues are future scale and the costs incurred in expanding the social and physical infrastructure, particularly when times are hard. Sadly, we were hampered in our consideration of costs and benefits by the lack of statistical evidence in many relevant areas. At the local level we heard of the pressures on housing, education, health services and policing, particularly in certain areas of London and in southern and eastern England. I pay tribute to the constructive way in which local authorities have adapted budgets and coped.
Help from the centre seems to be on its way through an impressive number of government initiatives which have been launched or announced in the months since we reported. I look forward to hearing from the Minister more about the economic impact of these initiatives and a further rationale on initiatives such as the UK Borders Agency, which was created to increase our security against illegal immigration, and to hearing his views on the new points system and the economic impact it will have as it is introduced with its panel of independent economists to advise on labour market skills shortages. This initiative may be calculated to reduce the number of unskilled immigrants who are competing with native workers at the bottom of the labour market as unemployment rises during what we hope will be a limited recession. I shall be interested in the Minister's view on that.
We have an obligation—certainly on these Benches—to do all that we can to protect and support our poorest and most vulnerable communities in their search for work. Government action will be stepped up against employers who knowingly hire illegal workers, often exploiting them, as we heard from our trade union witnesses. For those communities under stress, there is now a Migration Impacts Forum which can monitor areas such as health, social care, employment and skills, housing and crime and disorder. I trust that this will help to improve the evidence base required by policy makers. The Minister may care to say more about that.
The new Minister for Immigration at the Home Office, Phil Woolas, knows the dangers to social cohesion better than most. As the MP for Oldham East and Saddleworth, he has seen violence in the streets and has a proud record of fighting racism all his political life. Like our committee, Mr Woolas has addressed the question of how best to find the appropriate balance between the number of people coming into and the number of people leaving Britain. As with our report, Mr Woolas has also been misrepresented as calling for a cap on immigration. This, apparently, is Conservative policy and the cap story was wrongly slapped on our heads too. Let me say in passing that, in all our months of deliberations, I failed to see any alternative political options that were thought through or specific enough to influence our conclusions.
As noble Lords have heard, our report concluded that the Government should have an explicit and reasoned indicative target range and adjust their immigration policies in line with that broad objective. Given the cost to the public purse of accommodating population increases of the kind predicted, that is common sense. I assume, therefore, that the Government, despite their negative response to parts of our report, will come to share our ambition and adopt our eminently reasonable recommendation.
My Lords, I begin by declaring two interests. I have been a member of the Migration Watch Advisory Council for several years, and I am also a member of the cross-party parliamentary group on balanced migration. As a member of the advisory council of Migration Watch, I deeply regret the characterisation by the noble Lord, Lord Peston, that it is a xenophobic body. I resent it deeply. I hope that he will rethink, because there is no cause for such an allegation.
My Lords, it is for the public to decide.
I welcome very warmly the Select Committee's report and congratulate the committee on its breadth and clarity. I have no doubt that it will prove a landmark in the public debate on a matter of real and widespread concern.
One of the report's conclusions is that the Government should,
"review its immigration policies and then explain, on the basis of firm evidence on the economic and other impacts, the reasons for and objectives of the policies".
The recommendation is to be welcomed, as is the objective, the achievement of which I hope the work of the cross-party group may be able to assist, in ways which I will briefly outline.
First, however, I emphasise that it is clear and incontrovertible that innumerable immigrants have made valuable contributions to our society and to our economy for a very long time, and indeed they continue to do so, a point most eloquently made by the noble Lord, Lord Paul, and other speakers. The issue is not the principle of immigration but its scale. It is certainly not about race, but about space.
Scale is at the heart of this debate. Net immigration has trebled since 1997; it is now running at nearly 200,000 per year. In one year that may not seem very much, but over time its impact on our population, if it continues on a similar scale, will be enormous. The latest official projections indicate that the population of the UK will increase by nearly 10 million in the next 25 years. Seventy per cent of that increase, or 7 million, will be due to immigration. That is equivalent to seven times the population of Birmingham.
Net immigration on such a scale clearly poses a challenge for our society to integrate and welcome the new arrivals. For example, there is great concern, as has been mentioned, about the pressure on housing. One new household in three is due to immigration. The present weight of immigration means that we could have to build a home every six minutes for the next 20 to 25 years to accommodate new immigrants—although I am reassured by the point made by the noble Lord, Lord Best, that there are positive ways to address that housing need.
Such issues must also be considered in any cost-benefit analysis of immigration on this unprecedented scale. The committee rightly stressed that the relevant measure is not GDP but GDP per head, a point that has been made in many of the speeches in this debate. The Government's response to the report on this matter put the figure at between 0.1 per cent and 0.15 per cent annually, which works out at between 42p and 62p per week per capita. That benefit can be seen as extremely small compared with many of the costs, not only in pressure on housing but in all aspects of our infrastructure, public services and environment, almost all of this in England.
It is therefore not surprising that there is widespread public concern: polls have shown that 75 per cent of the population believe that Britain is overcrowded and 81 per cent believe that the Government should substantially reduce net immigration. If any noble Lords would like details of the sources of these and many other corroborative statistics, I will be happy to provide them and to place copies of the reports in the Library.
It is high time that the widespread concerns were listened to by the main political parties. Failure to respond would be a boon to extremists who stand ready to exploit the resentments that are bound to arise as unemployment increases. Such social and personal problems represent the human aspect of such large-scale net immigration, both for British residents and for those newly arriving. The human scale was a point most appropriately emphasised by the right reverend Prelate the Bishop of Lincoln in his moving and enormously significant maiden speech.
It is because of these aspects that my colleagues in the cross-party parliamentary group recommend the concept of "balanced migration". By that, we mean that over time the rate of immigration should be brought down to approximately the level of emigration. The effect of such a policy would be to stabilise the population of the United Kingdom at about 65 million by mid-century. It would reduce pressure on our infrastructure, schools, transport, the National Health Service and our environment. It would reduce household formation by about one-third. It would encourage British industry and commerce to train British workers with more high-quality and appropriate vocational education. It would improve the prospects for integrating newcomers to our society. It would not affect the rights of asylum seekers to seek refuge in this country because they represent a small proportion—only about 3 per cent—of immigration. It would reduce the drain of talented people from developing countries, which need their skills more than we do. As someone who spends so much of my time working with the poor and disadvantaged in such countries, that is an issue about which I feel deep concern. I commend at least some consideration of the concept of balanced migration to Her Majesty's Government for serious consideration as a logical and constructive response to the admirable report from the Select Committee.
I conclude with a question that is central to this debate. The new Minister with responsibility for immigration has recently given an assurance on television that a population of 70 million for the UK is not on the horizon, despite the official projection that that level will be reached in 2028. Will the Minister please advise your Lordships' House of the level to which net immigration must be reduced if a population of 70 million in the United Kingdom is to be avoided?
My Lords, we should thank the noble Lord, Lord Wakeham, for having given us the opportunity for such a searching, hard-hitting and candid debate. As someone who is not always uncritical of the Government's immigration policy, I would also like to say how much I welcome their robust response, which contributed to the value of our considerations.
As my noble friend Lord Peston and others have so well pointed out, we live in a highly complex society, and the issues are equally complex and sensitive. The question that often enters my mind regarding immigration policy is whether the glass is half full or half empty. That is an interesting consideration, but what is far more important is to say that the situation is where it is and the way in which we conduct our debates, speak about the situation and formulate analysis—whether it be economic or social—and contribute that to the debate is terribly important. It is absolutely naive to suppose that you can bring out an important report on economic and social policy and think that it is somehow separate from the dynamics of making a success of immigration policy and—I, for one, am never afraid to use the term—the success of a multicultural society.
The recession and growing unemployment, which I am afraid will be with us, do not make the situation any easier. But I want to put this into a slightly wider context. If we are talking about economic analysis, what would be the costs of failing to have a successful immigration policy? What would be the social upheaval? What would be the alienation? How many more young people—perhaps not only young people—might sadly become possible recruits for extremists and the terrorism that so occupies us? If we are going to talk seriously about immigration policy, we have to keep our preoccupation with extremism and terrorism in our minds all the time because that is highly relevant to whether we contain the situation and win the battle for a decent society.
Like climate change, there is no way, in my view, in which this can be solved in a national context alone. Again, I do not find it altogether helpful to conduct analysis simply within the context of the United Kingdom. It seems to be remote from the realities. This was vividly brought home to me during my years as a member of the immigration policy committee of the Council of Europe and as chair of its refugee committee. We have been told repeatedly that we are living in the age of a globalised market and that market principles must be at the forefront of our minds all the time. I find difficulty with that concept for the society in which we live in this context. We encourage the free movement of capital; we encourage the free movement of goods; but there is no free movement of labour. That seems to be a gigantic flaw in the concept of a global market. In anything we approach in terms of economic analysis, it is just as well if we keep that consideration on board.
I do not see how, when you are advocating the free movement of capital and goods, you can possibly expect anything but an increase in the pressure to migrate. This is underlined by the results and the economic consequences of climate change and of conflict. Again, I simply do not see how you can make an economic analysis without examining the pressures leading to migration and what our responsibilities are in how we contribute to tackling those underlying issues.
This means that in all we do and say in public it is terribly important to maintain our respect for migrants, and to consider their integrity, sensitivity and feelings. In a remarkable maiden speech, the right reverend Prelate the Bishop of Lincoln got it absolutely on target when he said that we must all the time remember that these are not objects, but people, with all the aspirations, frustrations and feelings of any of us.
We are therefore operating in a context of considerable difficulties about our credibility and must try to be as consistent and fair as possible, but we must realise that nothing we do will remove the issues of credibility. We should try to look at it from the perspective of other people elsewhere in the world who face global warming, and the injustices and hardships of the global economic system. Who do they think is responsible for this situation? Who has generated most pollution and made the greatest contribution to climate change, with which they are grappling out there on islands that are disappearing, in floods that are increasing and beside crops that are not growing where they have always grown? We must keep that perspective in mind, otherwise we provoke the alienation and dangers that I mentioned a moment ago as going with it.
We must operate effectively not just within the European Union context. One should just go and see on the coasts of Italy or Spain, as I have done, the realities of what we are talking about. We have to tackle it within the context not just of the G7, but of the G20. If ever there was an issue that should be on the agenda of the UN Security Council, this is it. We talk about security always in a reactive frame of mind, because we do not think ahead about the policies that contribute to the difficulties which eventually come before the council.
On the report and its analysis, even within the limitations that I have expressed, there are few points that I would like to make. I do not find the arguments on employment issues clear or convincing, but what I do find clear, from my own subjective experience, is that in an age of full employment such as we have been through, the health service would not have operated as it has without immigrants. I am glad that the noble Lord, Lord Griffiths, who is not in his place at the moment, at least acknowledged that the report should have been fulsome in its tributes to what the immigrant population has contributed. It is extraordinary that this was not put firmly and clearly—what is political leadership about? Why was it not said? The nature of the analysis meant that it was more important that it should have been said, and said strikingly.
It is interesting, also, that there was no real examination of the productivity of the immigrant population. What is the productivity of labour from other parts of the world as compared with our native population? What about the denial of an opportunity to contribute to the economy because we forbid certain people who are de facto residents in this country to work? There is no mention of that. What about the glass ceilings—sometimes more brutal and explicit systems—that exist in so many walks of life which prevent members of the immigrant community reaching levels of operation that they are perfectly capable of reaching and making a still greater contribution to our society?
I am glad that the report deals with the inadequacy of social infrastructure, but we have to state clearly in our analysis whether this results from immigration or was true previously.
There is certainly an issue on which we have to focus: so often the weight of immigration falls on host communities that are least well equipped to fulfil that role. The education and hospitals are not as strong; the social provision as a whole is not as strong. If we are going to make a success of immigration policy—and there are great economic dimensions to all of this—we have to invest in making sure that that social infrastructure is adequate. I am glad that the report did at least examine that issue.
I am also glad that the report brought home the responsibilities of employers to operate not only legally in a minimalist way but in the spirit of the law. There was reference in the report to the expectations of immigrant labour being lower than the expectations of the traditional resident population. That is part of the global reality. We have taken for granted a standard of life that the overwhelming majority of the world's population does not begin to know anything about. Of course the expectations of those who come from elsewhere are not as demanding as those who have been brought up and conditioned by the advantage and privilege of which our society as a whole is a part.
There is reference to the impact on UK population size. But what is lacking is any analysis of what is happening to the world population size. It is another good illustration of what is happening to the world and its resources, and of how it is not very helpful to produce a report that does not look at the interrelationships and see the reality of the absolutely inescapable international interdependence of it all.
I become rather critical of my own Government when we come to the points-tiered system. We have funked some of the underlying issues, because we say that only those from outside the European economic area will have to prove that they have qualifications for some job which cannot be filled in this country. People from the European economic area can come here as of right. But—hang about—what is the reality of that? We bend our minds around the issues of world poverty and the needs of communities in the third world but we say that we will take into our society only their key professional people. We will tempt them and bribe them out because we happen to have gaps in provision from our own resources. In a joined-up analysis, if we thought about that we would have to see—I have no doubt that all sides of the House are sincere in their commitment to overseas development and the rest—what we are actually doing in terms of the human resources that are essential to that development. There are some interesting contradictions.
I may be accused of over-egging this, but I do not believe that I am. If an intelligent being on another planet were looking at the situation, they would say that this world is in a classic pre-revolutionary situation. The cost of trying to hang on to advantage, which is what is really happening in the developed world, is getting higher and higher. It is getting higher in security with the wars that have to be fought and the rest. If we are going to have proper consideration of these matters, we must invariably have them in the context of a wider agenda. In the discussions now going on about a revival of the strength of global institutions to meet the grave economic and financial crises that face the world, it is at least as important that we start to consider migration and the implications of how it is handled at the same level.
My Lords, I was not a member of this committee, so I thank noble Lords who were, and the committee staff, for their hard work. I try to read as many of our Select Committee papers as possible, because I value their information and insights. I had a special reason for reading this one because I, too, am an immigrant.
However, as I read this paper, like the noble Lord, Lord Dubs, I began to feel more and more dismayed by its tone. The noble Lord, Lord Griffiths, spoke of empirical evidence. The noble Lord, Lord Vallance, said that he is sticking to the facts. However, early in the paper, at paragraph 7, we are told that a recurring theme in the inquiry was a serious shortage of facts and reliable and complete empirical data. The paper says that this,
"makes it very difficult to assess the scale, characteristics and impacts of immigration".
This concern is repeated many times by witnesses. I join the noble Lord, Lord Moser, in his surprise that, in spite of this, the paper draws some pretty firm conclusions. As a result, one gets the feeling that the committee did not want to be bothered by the facts. It had already made up its mind that immigration did little for the economy.
The noble Lord, Lord Griffiths, also said that this report is not racist. While I am sure that it was not intentional, the impression given is that the politics of the committee are anti-immigration. If they want to, a reader can detect racist views in the paper, because its arguments only applied to those outside the European Union—immigrants from Asia, Africa or the Indian subcontinent. Like my noble friend Lord Peston, I think that this was rather unfortunate.
My noble friend Lord Layard said that immigration is political. He is right. This is a political paper because, as the right reverend Prelate reminded us, immigrants are people. The impression that this is a political paper is reinforced by the fact that it only looks at recent immigration. In fact, it looks at immigrant manual labour during the time of the present Labour Government. As many speakers have said, we have had immigration into this country for hundreds of years. What about the economic impact of immigration from earlier years? What about the effect of immigration by non-manual workers? As my noble friends Lord Paul and Lord Peston explained, they have certainly had an impact on the economy and it is a pity that the paper did not acknowledge this. They have had an impact not only the economy, but on many other aspects of life here that have been enriched by those who came from elsewhere, as the noble Lord, Lord Dholakia, reminded us.
My noble friend Lord Paul said that immigrants make a contribution to the economy because they are self-selecting. That may be true, but I believe that there is another important reason. They are innovative because they do not have the historical baggage of the resident population. This is how progress is made. Keynes tells us that the major barrier to developing new ideas is escaping from the old ones. Immigration certainly helps that escape.
That was why I was concerned when, in chapter 4 of the paper, the committee tells us how businesses should be run. During my business life, I was very careful not to do this because the real test of a business is not how it does things but how it satisfies its consumers. Surely this is the economic impact of a business. Somebody, often an immigrant, will always find a new way of doing things cheaper, better, quicker, safer, nicer, with less energy and waste, and with more variety. The analysis in paragraphs 117 and 118 hardly touches on the need for businesses to constantly raise their game, as the noble Baroness, Lady Valentine, pointed out. It is this which makes our economy competitive in the world—not simply holding down wages.
In paragraph 102, the committee says that,
"immigration that is in the best interest of individual employers is not always in the best interest of the economy as a whole".
I am not an economist—eminent economists are taking part in the debate—but it seems to me that that may be correct at a moment of time. But surely over time this economic opportunity becomes productive capacity, which in turn becomes a well paid job and eventually turns into wealth. Therefore, what starts as an economic opportunity eventually benefits the nation. I think that the noble Lord, Lord Layard, implied that in a roundabout way.
The paper explains that by joining the European Union we cannot control immigration because the right to work anywhere in the Union is one of the four freedoms. In fact, the freedom to travel and work anywhere within the EU is probably the freedom which the younger generation appreciates most. What business appreciates most is a free market where it can not only sell its goods and services but buy the goods and services that it needs, and this includes labour. Is this immigration, or itinerant labour, as the noble Lord, Lord Vallance, called it? To me, it is just the free movement of labour. Most of us believe that we benefit from our membership of the EU and that this free movement of labour—a sort of immigration—is part of that benefit. However, the paper seems to ignore this entirely. In chapter 3 it speaks of the danger of immigration lessening the need for skills training of the resident population. This is very short term. The pressure to compete in the EU means that we have to raise the skills and knowledge of our workforce. Just holding down wages does not make us competitive.
I am also concerned at the simplistic view expressed in chapter 4 that the cost of wages is the sole criterion that affects immigrant employment. The noble Lord, Lord Best, spoke of construction. I happen to know that it is not just a matter of labour cost as regards the bathrooms discussed in paragraph 121; it is also very much a matter of waste. A recent paper by your Lordships' Science and Technology Committee pointed out that the construction industry is responsible for nearly a third of the waste in this country, and that one way in which it is being cut in that industry is by carrying out as much work as possible in a factory rather than on a building site. That is the point about the bathrooms that I mentioned being constructed off-site. It is not a case of using cheap labour.
It is obvious that immigrants have an enormous impact on our economy. I am sure that the committee is right in paragraph 43 to call for an improvement in the data. It points out the danger that immigration might have an adverse impact on training and skills opportunities offered to other UK workers. It also points out that, in spite of the minimum wage regulations, some immigrant labour might be exploited and that the Government have to deal with this. It rightly points out that over the short term immigrants might cause pressures on health, housing and education. The noble Baroness, Lady Cox, is certain that they do. She is wrong because nothing in the paper proves that that is the case.
My Lords, it is always a pleasure to follow the noble Lord, Lord Haskel. I agree that immigration is valuable and has made a great contribution to this country. The noble Lord, Lord Wakeham, has, as usual, produced a very comprehensive and controversial report. I recall that the Royal Commission on House of Lords Reform produced a whole series of recommendations and that the House of Commons turned down the whole lot. Therefore, the noble Lord is used to controversy.
As the night watchman from the Back Benches, I wish to discuss an aspect that has not yet been mentioned. Earlier this month, the All-Party Group on Latin America, ably chaired by the noble Baroness, Lady Gibson of Market Rasen, held a meeting with the collected Latin American ambassadors, at their request, to discuss their immigration concerns. My comments are drawn almost entirely from that meeting. In June, the EU Parliament adopted a Motion on the procedures and rules for the return of third country nationals who are illegally in its territory. This ghastly proposal is known as the "return directive". The promoters claimed that it would encourage a voluntary return by setting clear standards. However, the United Nations Commission on Human Rights and Amnesty have pointed out that the directive does not provide proper protection for many vulnerable sections of the population. It is quite right.
The Latin American countries, which produce a large number of immigrants into this country, act frequently as a regional group with a single voice, and they have expressed their concerns and protested at a series of summit meetings between Latin America and the European Union, and at internal regional summit meetings. Precise figures of Latin Americans in the United Kingdom are hard to come by. One study suggests that there may be as many as 700,000 or even up to 1 million. To my mind, that seems a bit exaggerated, but I very much welcome the suggestion made in the Wakeham report that there should be some proper government statistics on who comes from where, because Latin Americans make a very valuable contribution. I declare an interest, because I have been associated for a long time with Latin America, and I spend much of my energies promoting its interests and its contribution to world affairs, which is not inconsiderable.
The largest numbers of immigrants from Latin America come from Brazil, followed by the Andean countries of Peru, Bolivia and Ecuador, which have sizeable indigenous populations, plus Colombia, which has suffered from a devastating internal civil conflict. Despite the supposed large numbers here, there are only some 300-odd in prisons in the United Kingdom, probably almost certainly concerned with drug offences, but I have no knowledge of the details.
Latin Americans are hardworking, educated and share the same Judeo-Christian traditions as Europeans. In that sense, I totally agree with the brilliant maiden speech made by the right reverend Prelate the Bishop of Lincoln. They are clearly here for economic reasons, they work hard, and many of them remit part of their earnings home to help alleviate the poverty that exists, particularly in the Andean countries. They are at the lower end of the scale of remuneration, and they do jobs that British citizens are unwilling to do.
There are also large numbers here on research scholarships, which provide a tremendous two-way benefit. Those who stay contribute enormously to our welfare, and those who return invariably rise to high office in their own countries. For those and other reasons, we should welcome Latin Americans, just as we should welcome other immigrants, as has been mentioned by a number of speakers, particularly the noble Lord, Lord Peston. I have not given notice to the Minister of this subject, and I therefore do not expect him to comment. I raise the issue in the hope that he will investigate and that either he or appropriate Ministers will explain the position directly to the Latin American ambassadors in London, who have serious concerns on behalf of their respective Governments.
My Lords, this has been a vigorous debate on a very delicate subject. The self-denying ordinance that the committee took to deal only with the facts has, to some extent, been unpicked. I note, incidentally, that five immigrants to this country have taken part in the debate.
The shortage of facts has been pointed out by several speakers. The statistics are not reliable and, therefore, the analysis has to be accompanied by some careful remarks about how it is difficult to state anything with much certainty. The selection of the timescale, the past 10 years, is arbitrary and open to question. I am sorry that the noble Lord, Lord Peston, did not broaden his attack to economics. Perhaps we will have to have that debate later. I increasingly feel that economics, as a German once said to me, is a blend of mathematics and theology, and that one gets certainty from mathematics and from a rather fundamentalist theology and applies it to deeply uncertain figures and deeply uncertain issues on which there are, as the right reverend Prelate rightly pointed out, immense issues of contested values.
The report was to some extent captured by Migration Watch, which seeks a cap on migration. I have no doubt that that partly shaped the press comments. I read Migration Watch's material and I am conscious of the issue—the threat that the whole of south-eastern England will be concreted over as population increases. As I hear that, I recognise that the Austrian and Dutch populists, whom I have met and had to deal with over the past 15 years, said in the early 1990s that the boat was full and that we could not cope with any more Bosnians, Croats and Serbs, let alone Turks and others. We have to be very careful about how we use that sort of issue.
The tone of the report laid itself open to such comments. I strongly support everything that the right reverend Prelate said about the need to recognise that we are not simply talking about economic units. I recall that a German friend said some years ago, "The problem with our guest worker programme in Germany was that we asked for guest workers, and what we got was people". That is why it is difficult to deal with immigration simply in economic terms.
We have seen a surge in the past five to 10 years, particularly in the past five years, and the question is how far we can extrapolate that trend, or how far we can expect the trend to continue. I recall those who argued at the height of the global economic boom that it was not like previous booms and that immigration trends would continue. More sceptical economists said that trends that could not continue would not continue. Large numbers of the Poles and Lithuanians who arrived in Ireland during the boom are already going home, and some of the descendents of Irish people who went to the United States and elsewhere, and went back to Ireland, are leaving it again. We can observe that some self-correcting mechanisms are underway.
I regret the lack of a more comparative dimension to the report. We all know from the history of Spanish, Italian and Greek migration that as those countries joined the European Union, there was a major surge from those countries into northern Europe and that then, as their economies picked up, people went back. That will clearly happen with regard to Poles, Slovaks and Estonians.
The underlying issues of the report are large. First, as the noble Lord, Lord Paul, remarked, there is the question of whether we can pick and choose on globalisation. Can we have entirely free markets in finance, foreign investment and other areas, but increasingly tighten our control of labour? The British conventional wisdom, far more than in any other country, is to accept full globalisation in financial markets, foreign investment, foreign takeovers and so on, but increasingly to resist the free movement of labour.
We do have a problem, because the UK is particularly attractive to migrants. We are English speaking, we are already diverse, and migrant communities are already here for others to join. We attract more immigrants from more countries than many comparable countries. However, as the noble Baroness, Lady Valentine, said, the immense attractions of London as one of the world's few global cities are part of what gives Britain a comparative advantage in a host of ways. It is a wonderful place for young people to work in, live in and enjoy. I often found, while teaching at the London School of Economics, that my students would say, "But I don't want to go back to Frankfurt. It's such a parochial city", but it could have been Helsinki, Zurich or anywhere else.
The evidence of the gains and losses that we have from mass gross immigration is not bad. Last night, I had a quick look at fellows of the Royal Society and discovered a pretty fair disproportion of foreign-born scientists. As the noble Lord, Lord Peston, will remember, 40 per cent of the staff at the London School of Economics are foreign-born. This is part of what Britain gains from being much more open to the movement of people than many other countries.
I found the treatment in the report of cross-border marriage unduly negative. What I now see happening anecdotally as a result of lots of extremely intelligent and attractive young Polish women working in this country is cross-border marriage between Brits and Poles. A month or two ago, I stood in the queue at Heathrow with a young British man who was on his way to Krakow to get married. How do we treat that? Is it a negative if his wife comes to live in this country afterwards? Many of my students at the LSE were involved in cross-border marriage. I sometimes thought that we were an international marriage market. That is part of what globalisation is about. Of course, there are problems with south Asian families in this country and arranged marriages that take place partly for immigration purposes, but that is a specific problem with which we also have to deal.
I also found the calculations on balanced migration a little inadequate. Again, I am very conscious that we see young people coming here to work and old people leaving to retire. When President Sarkozy came to talk to some of the 300,000 young French people who live in Britain, part of his message was, "I want to recreate a France in which people want to work and not just retire back to". We gain in some ways from having young people coming in and old people leaving, although someone concerned with British consular arrangements tells me that one of the biggest problems that our consulates in Spain now face is an increasing number of benefit fraud claims from British citizens in southern Spain.
Population density is an underlying issue, which was addressed by the noble Lord, Lord Best. The revival of living in city centres in Leeds, Manchester, Birmingham and London is one of the positive effects in Britain. Part of the current debate may have been affected by the Government's vast overestimation of how many more houses will need to be imposed by the centre on the regions. I think that that calculation will now be sharply revised as we discover how much spare housing has been built.
There are several issues relating to employment planning. We believe in the free market and are going back to picking winners. In employment, perhaps we know from the points-based system the people we want for different industries. However, I have some hesitation about that. In planning for the training of doctors, nurses and midwives, the National Health Service has not been entirely successful in recent years, but we have to recognise that, as migration is restricted, these sorts of calculations have to be made. Whether it is best to have a Migration Advisory Committee that consists entirely of labour market economists, I am not sure. Perhaps the odd bishop or two would help.
Then there is the problem of those who are not in education, employment or training—the pockets of native long-term unemployed and demotivated people around the country who do not pick up the employment opportunities available to them. We all know of occasions where bright young people from eastern Europe have come in and picked up jobs within a couple of miles of pockets of high unemployment—often second or third generation unemployment—in Britain. That is a different set of problems with which we have to deal through a whole host of economic and social issues. Nor do they join the Armed Forces. There are 3,000 Fijians—part of our current immigration—in our Army, together with a substantial number of Afro-Caribbeans and, of course, Gurkhas. They come partly because, through service, they become British citizens. That is also part of the balance of migration.
There is the real and sensitive issue of social cohesion, which, as the noble Lord, Lord Macdonald of Tradeston, said, is very much a top issue for people in some parts of northern England in particular where there is low employment and only low wages and where there are established second-generation Asian communities and established but on the whole high unemployment native communities. Both think that the other is getting more of an inadequate public supply of money and complain about that. But that is a different issue.
There is the issue of the cost of the public sector. Care homes would necessarily take more public and private money if we were to cut back on the number of Filipinos, black South African, and other people who work so hard for so little pay in that sector. The age of retirement is another issue that perhaps the committee would like to address further. The young and fit retired will have to become the young and fit part-time. I suspect that in the next 20 years people of my age will be looking after our parents when they are in their 90s or early 100s.
Lastly, there is the underlying issue, on which the committee touches, of immigration pressures from Africa and Asia. It is a long-term and very delicate issue. There are huge push factors—population pressures in the south, poverty, climate change, state collapse, war and civil conflict. There are lessons for British public policy here. Our response cannot be only national. We cannot build a fortress Britain. We have to co-operate with others. Migrants trying to get into Britain, as the noble Lord, Lord Judd, remarked, are coming through Libya, Morocco and Turkey. It makes an enormous amount of sense to work with other receiving countries in coping with that. That also means that we have to have a development policy which helps to deal with the push factors. Population growth is itself a major issue. We must pay attention to the rights of women in developing countries, which we all know to be key in reducing population growth. I regard as wicked the coalition between American right-wing fundamentalists, Islamic regimes and the Vatican that has blocked UN co-operation on limiting population growth.
On engagement in conflict prevention and state building, I wish that the Government would make more of an effort to justify what we do with our Armed Forces and our development budget in those self-interest terms. After all, the Somali population in London, the large number of Afghans who have come to Britain, the Iraqis and those from Kashmir have all come from conflict zones. Reducing the level of conflict where they come from also reduces the pressure to come here. Then there is the urgency of the global climate change agenda. If Bangladesh becomes flooded, the whole world, including Britain, will face the large issue of where those people will go. Climate change is again part of our response.
Many wider issues flow from the report, which the committee pulled back from examining. It would have been overwhelmed if it had examined them all, but I wish that it had noted that many of them were relevant to its more narrow study. Immigration is a highly sensitive issue for employment, wage levels, social cohesion and national identity. I expect that the balance of migration will shift with the decline of the pound and the recession, but the trend will bend. I hope that the House will continue to debate this topic dispassionately because it is one of great public anxiety.
My Lords, I thank the chairman of the committee, my noble friend Lord Wakeham, for bringing this important report by the Economic Affairs Committee to the attention of the House this afternoon. I do not think it was ever going to be non-controversial or produce a bland debate, and it has not. However, I think we have all taken a great deal of note of it.
It is barely six months since the report was completed, yet in that time we have seen dramatic changes to our economy and to the prospects of the current population, which includes immigrants, and those who might wish to come here. It is also worth stressing, as the noble Lord, Lord Vallance of Tummel, said, that the report was about immigration, managed or otherwise, and not asylum. They are two different matters and, if we are not careful, we get them muddled. My reading of this report was that it is about immigration.
We had some notable speeches this afternoon. I shall not try to refer to all of them, but I shall mention the maiden speech by the right reverend Prelate the Bishop of Lincoln. I am sorry he could not be controversial. It was correct for him to draw to our attention the human aspect of immigration. I long for him to be controversial in future, and we look forward to many sharper speeches.
I thank my noble friend Lord Griffiths of Fforestfach for his contribution not only to the debate but to the Select Committee that produced this report. He brought the debate back to the burden of the report and reminded the House that it is not about cultural and ethical issues related to immigration but the narrow subject—we can debate whether that narrowness was correct—of the economic impact of migration and whether it is beneficial. I do not know whether his two teachers thought that he did a good job, but it was encouraging to notice how the generations in this House affect each other.
Many noble Lords said that immigration has been an important part of life in Britain. Over the years, waves of immigrants provided the skills, hard work, economic benefit and cultural stimulation that created the British nation and its diversity. However, at a time when net migration has reached pretty well unprecedented levels in the United Kingdom, it is important to understand,
"whether additional immigration from elsewhere carries benefits or disadvantages".
We all understand that movement within the European Union is not immigration but the free movement of labour so, by and large, we are talking about immigration from outside the European economic area.
My noble friend Lord Griffiths said that the main impact of future immigration is on the growth of population. We have had lots of figures today, but I am going to give the House another lot, and mine are right. The Office for National Statistics predicts that the population will increase by 4.4 million to 65 million by 2016 and will reach 71 million—I think everybody is more or less agreed about this—by 2031. Immigration is expected to contribute some 47 per cent of that growth. With zero net immigration or balanced immigration, it is suggested that the growth by 2081 would be about 3.1 million on today's figures.
Any figures are suspect. The Governor of the Bank of England is quoted in the report as saying:
"We just do not know how big the population of the United Kingdom is".
Some of the reason for that must lie in the laxity of the Government in dealing with illegal migration. By their own estimates, the Government believe that there are 570,000 illegal immigrants in the United Kingdom at the moment, and it is clear that that number is going to rise. That demonstrates the manifest failure of control.
One of the most important things the report uncovered was the great confusion surrounding immigration, population, what contribution immigration makes and will make to the overall size of the population and the impact on employment, housing, education and social welfare if it is not controlled.
Several noble Lords referred to that, but the Minister for Immigration, Phil Woolas, however great his experience, did not help the situation when he was interviewed by the Times by saying that the Government were not going to allow the population to go up to 70 million—a pretty rash statement at any time. He then declared that any notion that there should be a cap to be a lot of nonsense; then he climbed all the way back down and said that he was not claiming that there would be a limit at all. However, he would not be the first member of the Government to seem to support virtually unlimited immigration. As noble Lords have said, the former Prime Minister, Tony Blair, justified virtually unlimited immigration by the fact that there were half a million vacancies in the job market and that strong economic growth needed migration to fill them. We may wonder whether that situation still obtains.
As other noble Lords have said, the overwhelming evidence found by the Economic Affairs Committee shows that it is flawed to believe that migration can fill those vacancies because it expands the economy, creating more vacancies—or, I add, it did until our recent catastrophic economic situation. The Government state that they are,
"committed to continually examining available labour market statistics to assess the extent to which immigration is having a deleterious impact on job opportunities for domestic labour".
An important omission from the report was an assessment of what would happen if the Government found that there was a deleterious impact. Have any measures been put in place to deal with that situation, should it arise? Is there any evidence to show that such measures are necessary, or are working?
The Government may cite the new points system as an attempt to take control of the situation. We do not argue that it has no merit. Indeed, the report endorses, and we agree,
"the use of a points-based system for regulating the immigration of highly skilled immigrants from outside", the European economic area. As shown in Australia, a points-based system can function effectively, but the success of the Australian system rests on the fact that it operates within a cap. In Britain, it will not. As my honourable friend Damian Green pointed out in the other place, that constitutes more of a mild improvement than a radical overhaul of the immigration system.
As the chairman, my noble friend Lord Wakeham, said, the committee came to the conclusion that it found,
"no evidence for the argument, made by the Government ... that net immigration ... generates significant economic benefits for the existing ... population".
Clearly that has been one of the more controversial aspects, because it has been addressed pretty frequently this afternoon. As my honourable friend Damian Green argued in debate in the other place, that has not stopped the Government basing their immigration policy for the past 10 years on the assumption that there is a benefit to this country.
My party has made clear that we believe that the benefits of immigration will be felt only if it is kept under control and people know that there is a limit, whether an arranged limit or a cap limit; there will be no sudden surges in immigration—we cannot say that about asylum—there is confidence in the authority being competent to deal with illegal immigration and enforcing removal, which is not very good at the moment; public services can cope with the numbers; and immigration policy aims to attract new people who will be of considerable benefit to our economy and wider society. The Government must also accept that the points-based system in place at the moment does not yet ensure these factors, because clearly it is not completely implemented.
It is refreshing to be able to look at both sides of the impact of immigration on our society and to be able to debate it rationally, one hopes without shouts of xenophobia and racism. If we cannot do that, we really cannot look clearly at our population and the future of our country. It is clear that the country, practically and culturally, benefits substantially in many ways from immigration, but that there are dark sides to unlimited numbers coming to this country on a permanent basis. Now that the economy is busting rather than booming, the attraction—particularly to those from the EEC countries who have come to work in, for example, the building trade, which has been referred to—may now be far less. Indeed, there are already reports of many people from eastern Europe and the Baltic states going away again, having come here on a rush of euphoria that there would be work for evermore. I am bound to say that I saw in the newspaper today that the same Baltic states citizens seem to be rushing into Newham to sign up to work on the Olympic site, so perhaps it is not completely over. I suppose it is also arguable that those from outside the EEC who might have wished to come here in our better days may well not see this country as such a joyful place to come in the future.
Our misfortunes have come about very rapidly and beyond the timescale of the report, but that does not deny the value and relevance of the report, which has plainly put the limitations of immigration into context, placed the onus of responsibility on the Government for what has happened on their watch, and raised many questions which the Government have addressed and will address in the future. It is important that this is done so that there is confidence in the immigration system and, most importantly, support and welcome for those who are here and for those who will be admitted in the future under the various schemes now in place. As many other speakers have said, they make a significant contribution to the life and well-being of this country.
My Lords, we have debated a crucial subject this afternoon—a subject which I am afraid often generates rather more heat than light. It is rather splendid, and shows how wonderful this Chamber can be, that we have debated it very rationally. It is unfortunate that very often in the past—in fact, for a number a decades—there have not been debates on this subject because it has descended into things that it should not have descended into.
The in some senses very detailed report produced by the committee has been very useful. It has flaws, a number of which have been pointed out by noble Lords this afternoon, not least my noble friend Lord Peston and the noble Lord, Lord Moser, but it has allowed us to have a robust and constructive debate. As we have heard quite clearly in the past few hours, immigration is a highly complex subject. Distilling the vast amount of data and statistics is extremely difficult, and we may not have been as good at doing that as we should have been, partly because there has been this nervousness about getting into a debate.
Noble Lords have spoken with great knowledge and experience, not least about how important the non-economic aspects of immigration are. The report focused on the economic, but it is difficult to disentangle these things. We have had a number of moving and important speeches and it is difficult to narrow them down. My noble friends Lord Paul and Lord Judd and the noble Lord, Lord Dholakia, spoke very well, but a number of people raised those issues. I thank all noble Lords for their contribution and the committee for its report, which is a useful part of this debate. In particular, I join others in thanking the noble Lord, Lord Wakeham, for his service to the Select Committee on Economic Affairs over a number of years. It will not be possible for me to address all the issues raised, but where I err in responding today, I am very happy to respond in writing should any noble Lords consider it necessary.
It is fair to say that the Government, the general public and, to a varying degree, noble Lords throughout the Chamber have all accepted that carefully controlled migration can and does bring economic and many other benefits to our country. The Government certainly believe that the benefits have been considerable. We agree with the committee that GDP per capita growth must be the principal determinant of the economic benefit of migration. It has already been said but is worth reiterating that, since 1997, the United Kingdom has recorded the highest average annual growth rate in GDP per head among the G7 economies. The evidence suggests that immigration has made a very positive contribution to this and not a small contribution.
We also believe that, as a number of noble Lords have pointed out, in a global economy with increasing labour mobility, an open economy such as that of the United Kingdom benefits from skilled migrants. To date there is no significant evidence of negative employment effects from recent immigration to the United Kingdom. The Government's view is that immigration has contributed to the success of the United Kingdom economy by helping to meet labour and skills shortages in the public and private sectors. Notwithstanding some figures that have been quoted, we believe that migration leads to an improved match between vacancies and available labour.
Having said all that, we also believe that it is crucial that we have robust systems in place so that it is possible to control who comes here and so that migrants abide by our laws and contribute to our society—indeed, become fully part of our society. Our population, including recent immigrants, demands nothing less than that. It is this need to strike a balance that underpins the Government's revolutionary ongoing overhaul of the immigration system. This is ever more important within the context of the current economic downturn.
Before going further and addressing specific points, it is important to understand in greater detail the magnitude of some of these reforms and how they have proved crucial in striking a balance that will maximise the benefit to the country. I should also like to refer to a point made by the noble Lord, Lord Dholakia. It is worth remembering that our immigration system is not exclusively for economic migration. It also offers humanitarian protection to people requiring sanctuary and fleeing persecution. It welcomes the loved ones of UK citizens and those with permission to be in the UK who want to be reunited with their families. It also attracts those with skills who can make a positive contribution to the United Kingdom through work and study. It is always important to remember those things.
Since April 2008 the Border and Immigration Agency, Customs at the border and UKvisas have all been brought together to form a strong single border force under the umbrella of the UK Border Agency. The number of people securing our borders is therefore at an all time high: about 25,000 staff, including 9,000 warranted customs and immigration officers operating in local communities, at the border and in more than 135 countries worldwide. This new force has been supported by the introduction of electronic fingerprinting for visa applications, ensuring that anyone applying for a visa now has their fingerprints taken before being granted permission to travel. That has already flagged up more than 4,500 attempts of people trying to swap identities. In addition, over the past five years our international network of airline liaison officers has prevented nearly 210,000 people boarding planes without proper documents, a figure which can be equated to approximately two jumbo jets a week. Such efforts to strengthen the country's borders will be enhanced still further by the introduction of electronic border controls and exit checks, which will count 99 per cent of non-EU nationals and 95 per cent of EEA nationals, excluding UK nationals, in and out of the UK by the end of 2010.
This month, we will issue the first compulsory ID cards for foreign nationals as the first stage of the national identity scheme. ID cards will help us to protect against identity fraud and illegal working. They will reduce the use of multiple identities, which are often used by people in organised crime. They will give some help in terms of multiple identities and terrorism. They will certainly help us to crack down on those who try to abuse positions of trust, and they will make it easier for people and individuals to prove they are who they say they are.
Of equal importance to the Government's commitment to exercise control is, as has been mentioned, the new Australian-style points-based system which enables criteria to be set for each of its tiers to ensure that those, and only those, whom the UK needs can come here to work and study. When fully implemented, this will provide controls over close to every three in five non-British migrants seeking to enter the United Kingdom; that is, work-related migrants, students and their dependants. Through this scheme we have already barred low-skilled workers from outside the EU and our estimates are that if tier 2 of the points system for skilled migrants had been in place last year, there would have been approximately 12 per cent fewer people in this category coming here to work through the equivalent work permit route.
It is precisely because the Government will now have the flexibility to raise or lower the bar depending on the needs of the UK—using the advice of the Migration Advisory Committee and the Migration Impacts Forum—that the points system is such a fundamental change to the infrastructure for controlling immigration. The House should be in no doubt of the Government's determination to use these levers where it is necessary.
Similarly, the Government will extend further the controls placed on migrants who want to stay in the UK, especially those seeking British citizenship, through measures planned within the draft Earned Citizenship Bill. Through this, there will no longer be an automatic right to stay in the United Kingdom after five years. Those who do come will need to work, play by the rules and speak English. Indeed, for those migrants and asylum seekers who are no longer entitled to stay or who choose to offend, the Government have renewed their commitment through the doubling of the enforcement budget to seek removal where appropriate. Last year, someone was removed every eight minutes, including more than 4,200 foreign criminals. Equally, for those employers who have chosen to employ illegal workers, fines totalling nearly £10 million have been issued. Such measures do and will provide protection to the many who are here legally and are contributing to the prosperity of the UK, while helping to prevent abuse by those who are not.
Notwithstanding these extensive reforms, a number of speakers today and indeed the committee through its comprehensive report have identified a number of areas where they consider that further improvement is necessary. As we have set out in our formal response, we have already acknowledged and acted to address a number of the issues—and in many cases doing so before they were even raised by the committee. For example, we have already put in place a £12 million radical programme of reform to improve migration statistics. A number of speakers, including the noble Lord, Lord Moser, and the noble Baroness, Lady Valentine, referred to this. We do not have accurate enough figures, but they are absolutely necessary because we cannot make sensible decisions without them. This investment is important and will ensure that the data on which local government funding is based are as good as possible.
Similarly, by 2010-11 we will be investing over £1 billion in the Train to Gain initiative to elevate the UK into the world's "premier league" for skills by 2020. That may well allay some of the concerns raised by the noble Baroness, Lady Valentine, about our own people in this country not having had the opportunities they possibly should have had. While I am sure that the House welcomes such investments, I am aware that the major concern among many noble Lords is the Government's central case that net migration— immigration minus emigration—generates significant economic benefits for the country. Some have argued that it is a case made without robust evidence and others that the use of GDP as a measurement of impact is "misleading and irrelevant". As we have already set out within our formal response, and as a number of speakers today have said eloquently in their contributions, we absolutely do not agree with these conclusions in the report.
I turn now to some of the specific points made in the debate. I congratulate the right reverend Prelate the Bishop of Lincoln on his maiden speech. It was one of great warmth and sincerity, and exemplified the compassion for which I know that he in his office has become known. I was a little worried because I saw in the Church Times that he has urged Synod members in the forthcoming debates not to,
"leave their brains outside the door lest they frighten the horses".
I wondered how what I say might be taken, but perhaps I may say that I agree entirely with his point that while we should debate the important issue of the effects of immigration in local communities such as Lincoln, we should never lose sight of the very welcome contribution that migrants have made to this land. I note that the right reverend Prelate also said that he thought he might have arrived as a Viking; the Vikings were probably less popular immigrants than those we are blessed with today.
The noble Lord, Lord Vallance, touched on the recommendation for a range, not a cap. I am sure that he would agree that the key to successful migration control is flexibility because of the difficulty of forecasting precisely the needs of the economy. It is very tricky to do. The points-based system provides both control and flexibility, ensuring that we allow into the UK only those whom we need. A target range, if strictly enforced, becomes a cap. If, on the other hand, we can constantly vary the range it becomes a more meaningful concept.
The noble Baroness, Lady Valentine, raised the issue of the concerns of the education sector with regard to the implementation of tier 4. We are working closely with Universities UK and other members of the Joint Education Taskforce to ensure smooth implementation of the new system.
The noble Lord, Lord Dholakia, asked about the discrepancy between what my honourable friends Phil Woolas and Keith Vaz said was government policy. The best thing to do is to consider the detailed debate of
The noble Baroness, Lady Cox, asked what level of net migration we would need to avoid a population of 70 million. Immigration is only one determinate of population growth. There are the issues of births and deaths and a raft of other things that are relevant; it is not as simple as having a net migration level. The ONS report is a projection, not a prediction. It is interesting that our projection in 1965 for 2000 was that we would have 75 million people in this country; we had 56 million. So we have to be extremely wary of projections and the factors that are pushing these figures.
The Government agree without equivocation with the committee's conclusion that migration policy must be informed by an understanding of the economic and social impacts and manage to deliver the best outcome for the UK and its communities. The noble Lord, Lord Layard, referred to this issue. The policy is absolutely right because this is a complex matter and the rationale underpins the programme of immigration reform, the establishment of the points-based system, to which I have referred, the Migration Advisory Committee, the Migration Impacts Forum and the Migration Impacts Fund, which will secure tens of millions of pounds to help services locally to deal with the short-term pressures of migration. That point was raised by the noble Lord, Lord Vallance.
"When it comes to protecting our border, enforcing the law, selecting what skills we need here and setting high expectations of those who come, the Government will continue to act in Britain's best interests on immigration".—[Hansard, Commons, 21/10/08; col. 199.]
The Government also believe that in a global economy, with increasing labour mobility, an open economy such as the UK benefits from skilled immigrants. Those who have recently come from new EU accession countries have been largely welcomed and have made an important contribution to the British economy.
Indeed, I have some knowledge of this—I declare an interest—because my relatively new son-in-law is Polish; he came here and married my daughter. I have been constantly amazed by how incredibly hard he works and with the amount of overtime he does; how he seems to pick up on faults that he sees in the benefits system; and how he rather too often phones up current affairs programmes, which I find slightly embarrassing. He contributes a huge amount. The noble Lord mentioned the work ethic—which is certainly there—and the noble Lord, Lord Wallace, mentioned cross-border marriages, of which I have some experience. Certainly the most current available research by the Department for Work and Pensions, published alongside the response to the committee's report, indicates that this has not been to the detriment of British workers. Again, that points out how important real statistics and real knowledge of them are.
However, as we go into an economic downturn, the Government accept that these newly established flexible and evidence-based controls and levers will be crucial in ensuring that Britain is able to respond to the impact of any changes in demand for migrants coming through the system in some sectors.
The House should be left in no doubt about the overall benefit that we feel the United Kingdom has had from its immigrant population. As my noble friend Lord Dubs said, it has actually been, even with the small difficulties we have had, a story of great success. Personally, I think that is a credit to our wonderful nation. But we are a small overcrowded island, and at times there are pressures on social services. We believe that immigration needs to be carefully controlled, and I assure your Lordships that we will use all the levers already mentioned to ensure the maximum benefit for British communities and British business.
We have had a valuable debate. I have certainly learnt a great deal, and I thank the committee for giving us this opportunity.
My Lords, I thank everyone who has taken part in this debate—particularly the right reverend Prelate, who we heard for the first time. His speech was excellent. In my time in the House we have had several distinguished Bishops from Lincoln, and it seems to me that they have managed to keep the standard up with our new Member. I am delighted about that.
I said in my opening remarks that this debate was likely to be controversial, and indeed it was. The only concession I will make to that is to say that if we had tackled a different subject, or we had tackled wider aspects of the subject that we did, or we had tackled it over a longer period than we did, we might have produced a different report. But we did not do that, for the simple reason that we consider that our position in this House is to give advice to the Government that we hope might have some effect on policy for the future. That is what I think Select Committees should do.
Having listened to the helpful reply from the Minister, I hope he does not mind if I say that he reminded me a little of an admiral putting up a massive smokescreen while the Government reorganise themselves with slightly different policies from the ones they had not so long ago. I am grateful to him for his contribution to the debate, as I am to everyone. Although the Government have today accepted only part of what we said, I have a feeling that by the time of the next election they will have accepted considerably more.