Repeal of the main retained EU law relating to free movement etc

Part of Immigration and Social Security Co-ordination (EU Withdrawal) Bill – in a Public Bill Committee at 10:00 am on 26th February 2019.

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Photo of Alison McGovern Alison McGovern Chair, Speaker's Advisory Committee on Works of Art, Chair, Speaker's Advisory Committee on Works of Art 10:00 am, 26th February 2019

I thank the hon. Gentleman for his intervention. It is entirely possible that people do not know all the ins and outs and details of the immigration system—I would not expect them to; it is quite complicated. Having stood in three general elections in a swing marginal seat, I suggest that anyone who thinks they can be involved in British politics and not get involved in conversations about immigration is kidding themselves. We must accept that immigration is an issue, and that people will seize on anecdotes and their own personal experience. That is not illegitimate either—people rely on their lived experiences, but when it comes to decisions that we take, it is a mistake to rely on anecdote and we must consider the actual evidence for what immigration has done in our labour market.

In 2015, one Bank of England study found that immigration had had a very small effect on the wages of those at the lower end of the earnings distribution, but that that effect was not significant. Often that study is seized on as evidence that immigration has somehow had this huge impact on people’s earning potential, but I simply ask people to compare that with what we know has happened to wages since the financial crash of 2008. Compared with the trend of 2% annual growth in real wages from 1980 to the early 2000s, which was pretty regular, between 2008 and 2014 people’s real wages fell significantly, with a shortfall of about 20% in what they would otherwise have expected had that real wage growth continued.

If we consider groups in our society, apart from pensioner households, no one is better off than they would have been in 2008. The significance of that impact while we have been in the European Union demonstrates that what has happened is a change in Government policy and the decisions that have been made to support people’s incomes. Real wages have been weakened by rising inflation since the 2016 referendum, which has had a huge impact. Depreciation will lead to rising costs. In the end, when considering people’s earnings potential, what matters is not the nominal figure of the amount they have coming in, but what they can buy with it.

I would say to people who worry about the impact of immigration on wages that we should definitely consider it. It is true that most of the studies that have investigated this matter have found that, at the local level, there is no statistically significant impact of immigration on the earnings of those in that local economy. However, if that is considered so important that it ignores the impact of prices and what has happened since the referendum, that is not being serious about dealing with poverty in this country. We need to understand that if we tell people that we will make the average British person better off by restricting immigration, we are offering a false promise.