immigration policy – thinking liberal

Lower immigration means paying more for public services

“A sensible politcal debate” is surely an oxymoron. Politics is a battle of personal ambitions in which popular prejudices provide the most useable ammunition. If you catch two politicians having a sensible debate, it is away from public attention, about an issue with no real salience. Immigration is an issue of high political salience – and always has been, so we shouldn’t wonder that so little of what is said by politicians makes any sense in the round. But in the end effective policy needs to be based on reality, and a sensible debate is needed to tease that out. Immigration is a case in point.

Immigration is currently moving up the political agenda. This is in spite of the fact that the leaders of none of the major political parties would rather talk about other things, and opinion polling shows that it is relatively low on the list of public concerns. That is because a group of conservative politicians see it as an opportunity to create mischief and further their political careers. The proximate cause are statistics that show immigration at record levels – though these statistics are highly unreliable as data collection is weak. The numbers have been driven up Ukrainian and Hong Kong refugees, the need for universities (and the country at large) to extract money from foreign students, and widespread labour shortages. Each of these causes seems to be understood by most of the public. So what’s the fuss?

There seem to be two main, mutually supporting strands raised by conservative politicians (with Labour leaders happy to echo them in their bid to show their conservative side): cultural and economic. Immigrants are usually culturally distinct (we can argue whether this is true of Australians…) – with different languages, religions and customs, and often maintain distinct communities. This is blamed for corroding traditional British culture. There is more than a tinge of racism here, though it is notable that many of the the leading public conservatives are themselves from ethnic minorities, and these ideas resonate with settled ethnic minority communities. There is plenty of irony here. Immigrants are keeping the churches full and often have conservative social values. One leading conservative politician claimed that immigration was leading to the declining number of people professing to be Christian, when the opposite is true. Of course this person (Nigel Farage) was seeking to exploit the trope that Western countries were being taken over by Muslims. It is easy for cosmopolitan liberals to laugh at all this, so many are the inconsistencies, but the message resonates well with older and less-educated people. There is a real conflict here between the cosmopolitans, typical of larger and more successful cities, and nativists, typical of more rural areas (though my own rural abode of Sussex is pretty cosmopolitan, it needs to be said) and smaller towns. If you take the Brexit referendum as an indictor of how the two outlooks divide (and it is more complicated than that) – then the country is split fairly much 50/50. It currently helps that, apart from the Ukrainains perhaps, the bulk of existing migrants tack onto communities that are already well established here – Indian, Chinese and Nigerian in particular.

Because of the clash of cultural attitudes, and the need to draw support from both sides, perhaps, most politicians choose to make their main arguments on immigration in terms of economics. It is said that excessive immigration is causing public services to be overstretched, exacerbating housing shortages pushing up property and rental costs, and pushing natives out of decent jobs, or at least pushing the level of pay down. The public services argument is the least serious. Public services are often amongst the most dependent on immigrant labour, and would be under even more strain if immigration was reduced. But a local influx can cause problems, and the system can be slower than it should be to adapt.

The argument on housing is more convincing. Pretty much everybody agrees that the supply of housing is failing to keep up with supply – though new housing developments seem to be popping up everywhere I travel to. After that vested interests take over, and it is very hard to get an objective take on things. One group of people blames restrictive planning laws which stop new homes being built, especially on rural and green belt land. The other side says that this would simply give developers carte-blanche to build lots of poor quality houses in ecologically vulnerable beauty spots, together with some high-end properties to act as stores of financial value for footloose foreigners. Clearly high levels of immigration make the problem worse – but the middle ground between developers’ search for an easy profit and nimbies trying to protect the value of their existing properties is largely uninhabited – and draws little serious, well-funded research. Economists tend to side unthinkingly with the developer lobby. Politicians may talk as if they are in the middle ground, but lack well thought-out policies that might do any good, and I’m practice end up at one of the extremes. Arguments over immigration just add grist to the mill. It is very hard to understand the implications of immigration strategies for housing without having a clearer idea of about housing strategy. But it clearly doesn’t help.

What about immigration and jobs? Recently changes as a result of Brexit caused a shortage of lorry drivers. Their pay shot up as a result; training schemes were upgraded, and more locals are now taking up the work. This is exactly how conservatives arguing for lower immigration say things should work. Using immigrant labour is an easy shortcut – but we would be better off we raised pay and brought more locals in to do the jobs. This is the vision conjured up by the Tory former leader Boris Johnson at the last election. But there’s a problem. This should mean that public sector wages need to be raised to help draw more people into the workforce. And yet the government wants to do the opposite: to use inflation to reduce real levels of public pay, and use the resulting surplus to fund tax cuts. They do this in the name of reducing inflation – but offer no long term solution to the problem of public sector pay. In fact a rebalancing of the economy in favour lower paid jobs will surely result in a degree of of inflation. It may also require taxes to be raised. The issues are quite complicated here, but a limited supply of labour creates something of a zero-sum game. Raising wages for the lower-paid is going to hurt somewhere.

Politicians sometimes talk about the need to improve training so that more locals can do jobs where we currently need immigrant labour. This clearly won’t work for things like fruit-picking, but is more convincing for doctors, nurses and social care workers. The problem here, as Stephen Bush of the FT points out, is that skilled labour is mobile, and the freshly trained workers will simply gravitate to where the best paid jobs are – which are often not in the UK. It is putting the cart before the horse. As the case with lorry drivers shows, if you fix the pay issue first, training is a much easier problem to solve.

The big, unspoken issue lying behind the fuss, is the country’s demographic development, with retired people taking up an increasing share of the population, while at the same time driving up demand for public services. Immigration is the obvious answer to this problem, though not in the long term, as the immigrants themselves will retire. If immigration is not the answer, then what is? Politicians place hope on increased productivity – but for a number of reasons this will not cut the mustard. The areas where productivity needs to advance to make the sort of impact required – in health care and social care services – seem to be those with the fewest practical proposals. Indeed, health and safety worries tend to push them in the opposite direction. Big investments in hi-tech factories may be a very good idea, but they will make little difference to economic growth overall, and impact the labour market even less.

The idea that the country should limit immigration is a perfectly respectable one. But it has a cost – we must pay more for critical services that are subject to labour shortages. That will involve a rebalancing of the economy and some painful economic adjustments. It would help if more people would talk about what this, exactly, means.

Brexit: the capitalist advocates have been proved wrong

The third anniversary of Britain leaving the European Union caused of a spate of comment in the media a couple of weeks ago. For me it was a moment of great sadness, but I’m trying to move on – though I still wish political destruction on every politician that advocated it. But it is as good a moment as any to reflect on what has happened.

Opinion surveys show that people who voted to stay in still think they were right to do so. They think that the arguments made in favour of staying in have been borne out. Some of those who voted to leave feel they made the wrong choice, though. But mostly they don’t – they think that it is too early to tell, or that the opportunities have been mis-handled, or they are actually happy with they way things have unfolded. What unites most from both sides is a sense of gloom, and a lack of confidence in the government. Another thing that seems to unite both sides is a wish not to reopen the debate.

In terms of the economic statistics it is very hard to isolate any economic effect of the change, especially when the Covid pandemic, the war in Ukraine, and the escalation of energy prices is confuses the picture. There is abundant anecdotal evidence that smaller British businesses have given up exporting to the European Union, or indeed to anywhere. But the aggregate trade statistics don’t paint such a clear picture. Investment has fallen since the referendum result: Brexit is an obvious culprit but it would be hard to prove it.

But if we step away from the economic statistics, some things are becoming clearer about Brexit. It isn’t too early to look at how the reality is working out against the vision. There never was a single vision, though. I can see three main ones: the globalist case, the isolationist case and the socialist case. The globalist case is the closest to the one the government espouses. This regarded the EU as a barrier to trade and free enterprise, for two main reasons. Firstly it entailed a substantial regulatory burden, covering not just products, but the way they were made (for example labour and environmental standards), and this raised costs. And second the EU raised barriers to trade with countries outside the union, which included rapidly growing markets in Asia in particular. Britain could be a country of free-wheeling (or even buccaneering) enterprise. Sometimes this was called “Singapore on Thames” – apparently by people who had little idea what of Singapore actually is – though doubtless an authoritarian, technocratic one-party state with a taste for intrusion into private life actually appealed to many of them.

It is becoming clearer by the day that this idea is nonsense. British people draw comfort from regulation, and every attempt to lighten the burden is met by howls of protest. And it is far from clear that changing regulation will have an economically beneficial effect in more than a few limited areas. Indeed it seems to many that life outside the EU involves more red tape, not less – for imports and exports, travel and immigration. Meanwhile almost all trade deals so far struck with countries outside the EU are little different from what the country had inside. The exceptions are Australia and New Zealand, which will have little impact, and probably not much that is positive for British businesses (but maybe better for British consumers). Doing deals with China, India and America – the big prizes, has proved much harder than envisioned. Brexit supporters are now talking darkly of a conspiracy of Remain-supporting establishment types undermining progress – but a lot of the trouble comes from their on side (especially so far s reactions with India and China are concerned). But the logic never was very convincing. The kindest suggestion is that it is 20 years too late – perhaps there would have been more to play for when globalisation was going full throttle, rather than in its current gentle retreat.

But it is unlikely the most people who voted for Brexit shared this vision. They were drawn to an idea of Britain that was less integrated with the world around it, not more. This was focused on one idea in particular: “control over our borders” – limitations to immigration, rather than the free movement within the union. Supporters of this idea, like Nigel Farage of Ukip and the Brexit Party, did not point to any other countries as a model: Britain was one of a kind. Perhaps some people thought of Australia, a fiercely independent Anglo-Saxon heritage nation, with strict immigration rules. Suggesting an “Australian-style points system” to manage immigration received widespread approval, even though few people understood it or its implications. Another model might be Japan. Japan is an island that trades with its giant continental neighbour, China, but emphatically maintains its distance politically. It limits immigration, and, whisper it, prides itself on ethnic homogeneity (unlike modern Australia). It is also a highly successful country, that scores well on many indicators of quality of life. Economic growth in the last thirty years has been anaemic, but that only invites the question of what economic growth is for.

How is Britain doing under this isolationist vision? Free movement of people between Britain and Europe is now gone; many people from other European countries have left, and immigration from there is is now a trickle. All immigration is now subject to bureaucratic controls. If labour shortages have resulted, then this may simply be a first step towards giving local workers more opportunities. On this vision, things are going much better. There are three problems, though. One is an influx of refugees and others arriving in small boats on the Kent coast. I don’t think anybody had expected this to be so much harder to manage outside the union than within it; but the country can’t simply deport people back to France as it could before. This has turned into a major headache, especially for the authorities in Kent, and there are no convincing solutions that don’t involve doing a deal with the EU, which would involve accepting many more refugees legally, and undoing one of the perceived benefits of Brexit to isolationists. It is possible to take a bigger view of this: even allowing for this influx the country is taking fewer refugees than before. Unfortunately for the government, people supporting the isolationist view tend not to get such things in perspective. It is undoubtedly disorderly – though chicken feed to what Italy or Greece have to deal with.

A second issue is that, notwithstanding the hurdles, immigration has not reduced overall. Instead of people arriving from the EU, they are coming in from elsewhere. Fortunately for the government, the public seems much less stressed by this than by the boats. It is a relatively orderly flow of people after all, and by and large they are going into better-paid (or “high-skilled”) jobs that the economy needs, or paying extortionate student fees. But it does complicate the scorecard. The government can’t claim reduced immigration as a Brexit achievement. Indeed, every idea for reducing numbers, like cutting back on foreign students, looks like self-harm.

The third problem is that real wages are in steep decline, as inflation runs ahead of increases in pay. And the government is aiding and abetting this by putting maximum pressure on public sector pay. Brexit was supposed to increase wages by stopping low-skilled immigration. Perhaps supporters of the isolationist case, often retired, aren’t so bothered. But it is a long way from the case made for Brexit at the time of the referendum.

All this is indicative of a hole in the heart of the isolationist case. Australia has abundant natural resources it can exploit (or pillage, if you prefer – sustainability is not high on the Aussie agenda); Japan has a manufacturing industry that is still world-beating. There are world-beating bits of the British economy, but not enough. Nostalgia won’t bring back Britain’s once world-class manufacturing industry. Coal, oil and gas are in steep decline, if not dead. And some of the successful bits of the economy, like global financial services, benefit few, in the wrong parts the country, and have a distinctly dark side (the country was very popular with Russian oligarchs for a reason). The country has been running a current account deficit for over two decades, and, notwithstanding the depreciation of sterling, it isn’t getting any better. This turns out to be more sustainable than many economists thought – in the sense that it does not seem to be leading to the sort of financial instability that other deficit countries (like Argentina or Turkey) have suffered. But it does seem to be affecting the country’s terms of trade – though it is statistically hard to pin this down. According to one calculation the country’s real effective exchange rate is 83% of what it was in 2005 (i.e a fall of 17%). British people can buy less foreign goods and services with each hour’s earnings than used to be the case. There isn’t enough high-productivity, export-generating industry in the country. This problem has its roots in the relative industrial decline of the 1950s to 1970s, and the hollowing out of the the manufacturing economy under Margaret Thatcher. This largely pre-dates membership of the EU, and arguably was made worse by it. But somehow it was easier to cover the cracks within the Union.

The third case for Brexit I mentioned is the socialist one. This case has not yet been tested. According to this the EU is a capitalist-designed, anti-democratic system that prevents governments for taking their economies in a socialist direction. Not all (or even most) socialists followed held this view – hoping to reform the union from within – but its logic is solid enough. Holders of this view are fiercely defensive of national sovereignty – their aim being to take democratic control of the country, and drive through radical reform from there. Their economic reform ideas are not particularly popular (though perhaps not that unpopular either), but their ideas about national sovereignty are widely shared. Ironically, since the main advocates of Brexit were at the more aggressive end of capitalism, it is perhaps socialist policies that present the main national opportunities after Brexit. These will not fix the country’s export problem – export industries, other than mining or drilling perhaps, tend to need capitalist leadership succeed. But it may set in train a fairer distribution of income and wealth. I suspect that there is a hybrid of modern socialist and liberal ideas that could lead to a thriving society – and perhaps it is easier to pursue that path outside the EU, though I doubt it would make all that much difference. Other European citizens would be at least as interested in such ideas as the British are. Alas there are too few people anywhere who are pushing in that direction.

No easy answers to Britain’s migrant mess

A political crisis is playing out on the coast of England not far from my Sussex home. Almost daily, flimsy boats carrying migrants attempt to cross the Channel to reach the Kent and Sussex coast; they are often picked up by Border Force or RNLI boats. The numbers are growing rapidly, with not even the autumnal weather putting them off. And these crossings have turned to human tragedy, with 27 migrants dying off the French coast last week when their boat capsized.

The political crisis arises because Conservative Party supporters feel that this situation is intolerable; they had voted for Brexit to keep migrants out, but they seem to be flooding in, with the government apparently helpless. Many of these supporters would rather the travellers drown pour encourager les autres; Conservative politicians, realising that such views are unacceptable in the mainstream, instead rail against the people smugglers profiting from the traffic, and the allegedly unhelpful French. Left and liberal politicians meanwhile suggest that safer alternatives be provided for the migrants, but mainly enjoy the schadenfreude of pointing out that Brexit has made this particular problem harder to deal with. Workable solutions are not offered.

To a large extent the government’s problem is one of success. It has implemented harsh policies to keep out those migrants it deems to be undesirable, meaning most refugees and anybody who is not highly educated, preferably at a British university. They have taken full advantage of Brexit to do this, and the overall flow has been reduced substantially. The country takes in many fewer refugees than comparable other European countries. Earlier efforts to cooperate with the French, predating Brexit, have stemmed the flow of migrants smuggled on lorries. The refugees and their people-smuggling agents have few alternatives to the use of boats. Unfortunately the trade is so lucrative that it has expanded – and it has proved very hard to police. Unlike Poland and Belarus, Britain can’t simply put up a fence patrolled by soldiers to keep them out.

Why are they coming? After all they are passing through countries, not least France, that many Britons feel are desirable places to live. But like in Britain, these refugees, many of who are Muslim, evoke a lot of public hostility, so their governments aren’t exactly welcoming. Many of the migrants want to join family or former neighbours already settled in Britain. There is also a suggestion that Britain has a rather lax attitude to things like identity papers that makes it easier for illegal migrants to get on. Most of the migrants seem to be genuine refugees from the world’s growing number of troublespots – Afghanistan in particular. A suggestion by some that they are mostly “economic migrants” from countries that are simply poor no longer seems to be true, though I don’t entirely trust my sources on this. At the bottom of this, Britain is indeed a highly desirable place to live, and one where migrants with the sort of get up and go needed to make the hazardous journey can do well. Racism and Islamophobia are rife, but I don’t think they are worse than anywhere else in Europe – and indeed attitudes are probably more liberal than in most.

What is to be done? Shrugging and letting it carry on is unattractive. The country could probably absorb the arrivals easily enough, but the trade is lucrative and expanding. Many more will doubtless die – and also the continued acceptance of the migrants makes the state look ineffective. Most of the migrants seem to be scooped up by the authorities (unlike the lorry-smuggling trade) and then have to be processed, rather than simply disappear into their communities, placing a strain on the civic authorities. Pushing the boats back (as apparently the Greeks do to boats from Turkey) looks unworkable. The Channel is too broad and its waters too unsafe, especially in the craft that the migrants use. The traffickers have no incentive to give them more seaworthy boats. Beyond that the authorities’ main idea is to remove them from British shores as fast as they can. This, it is argued, will “break the business model” of the smugglers by reducing the chances of a successful journey. This could be to offshore processing centres – Australia has used such a policy with some success – and then back to their home countries. The legal obstacles to such a policy are in the process of being dismantled by new legislation. But where to process? It is not an attractive prospect for the host nation, and British dependencies are too small and too far away (the Falklands has been suggested). And how to send people back to a war zone?

Or the migrants could simply be sent back to France (or Belgium, also used by the smugglers). That requires their agreement, though, and they have no incentive to cooperate. After Brexit the country has many fewer pathways to achieving a solution along these lines. Some form of quid pro quo would be needed, and that would mean accepting a greater number of refugees one way or another. Meanwhile the idea of beefing up the border patrols on the continental side of the water and arresting the traffickers seems to have little chance of doing much to stop such a lucrative trade.

Another idea from conservative types is to make life harder for refugees and illegal immigrants in the UK. This was tried out a number of years ago with a policy called “hostile environment”. Alas such policies in the hands of bureaucrats and enforcement agencies usually end up by punishing the wrong people – those that came in long ago, when paperwork was laxer, and who are now fully integrated. Such people are easier to find. That was the “Windrush Scandal” that proved to be politically very damaging. Besides the idea of Brexit was to celebrate Britain’s tradition of freedom and lack of bureaucratic interference in daily life – and not t turn us just another Euro-state regulated by busybodies.

So what do liberals suggest? Increase the flow of refugees through safe, legal routes. The idea seems to be that doing so would reduce the incentive for migrants to take such a risky route and pay the smugglers. But, of course, it cannot reduce the overall flow of migrants. Indeed it would surely increase it – reducing the cost of migration would increase the flow. There would also be an incentive for other countries to send their awkward refugees on to the UK. Another liberal idea is to try and head of the trouble that is causing people to flee with more aid. But the failure of Western military interventions, and the concomitant rise of countries starting or provoking wars makes this a pretty hopeless task.

So what to do? There is no good answer, but the best way forward surely requires multiple approaches. It starts with more generous policies for accepting refugees through safe, legal routes. It is ridiculous that the country has not done more to accept more Afghans, for example, as there was clear political cover for this in response to Taliban victory. This would give Britain a stronger bargaining position when trying to hammer out solutions with our European neighbours to get tougher on the smugglers and reduce the number of successful crossings.

And that is probably as good as it gets. The people trade is like the one in illegal drugs – too hard to stop, but one that multiple channels can alleviate.

How will Britain’s economic chaos pan out?

Britain is suffering mounting economic chaos as supply chains break down. The government shrugs – these are just teething problems, the Prime Minister, Boris Johnson, suggests, as Britain finds a new normal as a high-wage high-productivity economy. Is this the nonsense it seems to be at first sight?

It doesn’t help that reporting on the emerging problems is very superficial – simply the regurgitation of statements put out by interested parties with no attempt being made get to the bottom of things. The government chooses to dissemble rather than inform. The current petrol crisis, running into its second week here in Sussex, even if it is easing elsewhere, is a case in point.

The government blames it on consumers – or a surge in demand caused by “panic-buying”. After the first few days this was clearly nonsense. People were running out of petrol. Such evidence as we had from the queues outside petrol stations, admittedly anecdotal, was that most people had delayed filling up, and were now desperate. And yet nobody seems interested in trying to understand what was really happening. The government kept on repeating the tangential but irrelevant fact (if it is the case) that there was plenty of petrol at the depots, followed by the non-sequitur that if people simply behaved normally the situation would right itself quickly. This morning the BBC Today programme interviewed a forecourt manager in Kent – and suddenly things started to make a bit more sense. Instead of the normal four fuel deliveries in the last week he had received just two. The current situation had come about because supply problems over the summer meant that forecourt stocks had run low, so that the slightest blip was enough to knock the whole system out of kilter. He didn’t say, but it was easy to infer, that a continuing shortage of deliveries meant that the system couldn’t right itself. This is fundamentally a problem of supply, not demand. The government’s tactic of increasing the number of tanker drivers, including by the use of the army, starts to make sense. It wasn’t simply a confidence-building measure, as ministers seemed to be suggesting, but an attempt to fix a broken system.

And what is happening to motor fuel is being repeated across many other sectors. A lethal combination of a hard Brexit, restrictive immigration rules and the covid-19 pandemic is delivering a series of critical labour shortages. The most notable is that for heavy goods vehicle (HGV) drivers, which is behind the fuel crisis. But it is far from just this – there is an emerging crisis on the slaughtering of pigs, for example. Problems emerged in the summer, or before; businesses did what they could to manage, but at the cost of resilience; as difficulties arise, the system breaks down. A small uptick in motor fuel demand broke the distribution system and it requires an influx of additional resources to fix it; the large, seasonal uptick called Christmas is approaching, covering all manner of goods (though hopefully not motor fuel). Muddling through could easily tip into breakdown in many parts of the economy.

The government’s problems are both in ideology and competence. Ideologically the government wants to move to a different sort of economy, less reliant on cheap, imported labour. Its leaders also believe in the problem-solving capabilities of free markets and private enterprise, and the need for government to step back. They fully expected teething problems following Brexit and the roll back of immigration, but they expected that businesses would adapt and solve these problems without the need for government intervention. So they shrugged off the early warning signs. And for the most part ministers lacked the competence to see how problems could become unmanageable, and what the best interventions might be. It doesn’t help that the public appears unwilling to hold the government to account, and seems happy to accept that “stuff happens” and that it is all somebody else’s fault. So we have strategy but no tactics.

Does this strategy make sense? I always felt that the strongest case for Brexit was what I called “the hair shirt” one – that Britain had it too easy in the EU, and was relying on cheap imports of both goods and labour. Brexit could force the country to raise its game, and move to higher productivity. Living standards would fall in the short-term, but the result would be more sustainable. What other countries have succeeded in reaching this high-wage high-productivity model? Not the US, where high levels of inequality make cheap labour plentiful in many places, and where the currency can be kept at a high level to make imports cheaper. The most obvious examples of the are in Scandinavia, and Denmark and Sweden in particular. These are obviously not such good exemplars for Conservatives, as they have achieved this within the European Union. Switzerland may be a more a congenial example, though it has opted for a higher level of European integration than Britain has. However there are also the examples of Canada, Australia and New Zealand – which are doubtless more acceptable. Japan, perhaps, is another case. But all these countries have built their success on strong exports, in agriculture, manufacturing and mining. Britain no longer has the potential for agriculture or mining exports on the scale needed; its manufacturing has been hollowed out. There may be alternatives, perhaps based on the country’s world-class university sector. Various aspects of health technology seem to me to be the most promising – especially since the centralised structure of the NHS provides opportunities for data mining (if that’s the right word). There could be a path through to the sort of wealthier and more equal society that the government seeks, or says it does.

But it is hard to see how the country can get there without serious investment, led by government. The education system is an obvious case in point. Universities look to be in relatively good health, so long as the supply of foreign students can be maintained, which means allowing successful graduates to stay in the country if they wish. The obvious gap is in technical education, to fulfil the many mid-level jobs that a high-productivity economy needs, as well as making the best use of the country’s Human Resources. Clusters of technical excellence also need to be developed across the country – this is best led regionally by empowering regional and local government. I also think that a better-resourced health service is required, both to supply the quality of service a country of Britain’s income level should expect, and to be the anchor for an expanding private health economy, developing new treatments and technologies that can be applied worldwide. These investments would need to be financed. If a government had the courage of its convictions, it would do a lot of this through borrowing – as the investment should yield a bigger money economy to tax in future. But doubtless more tax income would be needed too.

And yet the government has no such clarity. Rishi Sunack, the Chancellor of the Exchequer, talks of fiscal prudence and even future tax cuts. Unless he means to do the opposite of what he says (a possibility that this government is quite capable of), this is a bad place to start. A period of cuts to areas that need more money is beckoning. Meanwhile the government urges businesses to overcome labour shortages by raising wages. This at a time when one of the government’s key policies is a public sector pay freeze. Wage rises may be a good thing, but they are also liable to lead to price rises for the goods that people buy – a process that could lead to intolerable pressure through the economy. It is all very well to hope for higher productivity, but this is hardly feasible in many of the areas under stress – such as HGV drivers.

Where is this heading? The government has already been forced to “temporarily” relax immigration rules for HGV drivers and some others. Much more of this is likely – the government will try to tackle the shortages of “low-skilled” workers though temporary immigration visas. This is a strategy that many countries have followed, and it rarely goes well. It either fails because the jobs aren’t attractive enough, or more likely, it will simply draw in an underclass of highly exploitable workers from poorer countries, which could form the basis of poorly-integrated immigrant communities of the future, as the idea of “temporary” gets ever more stretched. To its credit, the government is clearly alive to the dangers, but it may find it has little choice. Another safety valve for the economy is increasing imports – though this won’t reduce the dependence on HGVs – as the country proves too small to sustain productive supply chains by itself, it can make use of those from abroad. That can be financed by the sale of ever more assets such as property and businesses to foreigners – perhaps the real meaning of “Global Britain”. This will be no more appealing to patriots.

And meanwhile in one part of the country an interesting economic experiment is taking place. Northern Ireland has one foot in the EU single market, and an open border with the Union. This has created supply chain problems with the mainland and empty supermarket shelves. But they didn’t suffer from petrol shortages (or not to the same critical extent). As the province’s supply chains become more integrated with the Irish Republic, and thence the wider EU, perhaps it will find things easier than its compatriots over the water.

I shouldn’t underestimate the resilience of Britain’s economy. Perhaps the stresses will indeed push the country towards a more modern economy – electric cars certainly look more appealing now. But for once I’m not optimistic.

Immigration remains the top issue in British politics

As the left chatters away about the Labour leadership contest, and the economic and diplomatic implications of a Jeremy Corbyn leadership, the real stuff of politics in Britain goes on. And there is no doubting the top issue: immigration.

Immigration has, as in many developed countries, become a lightning-rod issue for general discontent. Grumpy conservatives, especially those of lower middle class and working class standing and white origin, have decided that it is at the seat of most ills. They see a world changing around them, with middle ranking jobs disappearing, house prices and rents escalating beyond reach, public services under stress, and strange terrorist threats at home and on holiday beaches. The racist attitudes that could be taken for granted in my youth linger too, albeit in “I’m not racist but…” form. “We’re full up” is what people tell each other, and this all seems to be plain common sense. That immigration continues is simply evidence that Britain’s ruling elite is not up to the job.

Meanwhile a refugee crisis strikes Europe. The utter collapse of once-stable Syria is the most important cause. But the dire situation in Libya, Somalia, Eritrea and even Nigeria all contribute to numbers of escapees who are prepared to risk their lives in pursuit of something better. This keeps the flow of desperate people in the news, and stokes up a sense of threat. Sadly, instead of, or perhaps alongside, compassion, many people seem to think “I don’t want these people turning up in my street”. And now net migration to the UK is at record – something that has little to do with the refugee crisis, and much more to do with the relative success of the British economy. A number of right-wing newspapers are happy to keep the pot boiling, drawing connections where there aren’t any and generally playing on a sense of crisis and discontent. It is difficult not to see this as a malign intervention by media oligarchs with an agenda of their own: but this stuff clearly sells newspapers.

Mainstream politicians know full well that how firmly held these views are amongst the public at large, and feel obliged by the process of democracy to do some something. The trouble is that doing anything substantive is likely to damage other things that the public hold dear – such as the economy or public services.

Ordinarily a bit tokenism, followed by some ducking an weaving would be all that is called for. A prosperous growing economy would help distract people, and, in the classic public way, many people don’t really want to go further than have a good whinge.

But behind all this is an issue of real importance: Britain’s membership of the European Union. And behind that lurks another issue: whether or not the United Kingdom survives, or whether the kingdoms of England and Scotland go their separate ways. The government is committed to a referendum on Britain’s membership of the EU in 2016 or 2017. Superficially things are going quite well for those that want Britain to stay in the EU. The polls that once showed solid majorities for exit have now switched the other way.

But Britain’s exit campaigners are a determined bunch. For many it is the most important issue in current politics; for them there is no ill that does not have Britain’s membership of the EU at its heart. It plays the same role as Communism did in my youth: something that provides unity and coherence to an otherwise disparate movement. Large parts of the Conservative Party think this way, perhaps most of its grassroots membership; and they are being harried by the insurgent Ukip. They know that support for the EU is lukewarm, and there is one issue that could turn it: immigration.

Free movement of people lies at the heart of the EU treaties, something that many Britons have taken advantage of with alacrity. Not that that affects the public debate: Britons abroad are benign “expats”, while those coming to this country from other places are malign “migrants”. Many other EU citizens are as sceptical about free movement as Britons are, but securing a treaty change, even if desirable, is not feasible in the next two years. Treaty changes require ratification by all member states, a process that often requires a referendum. Each treaty change has become more difficult than the last; there is now no prospect of securing this. And without treaty change the main features of free movement will remain in place – something that is thoroughly good for the EU economies, including Britain’s, but of no help to those who want to present a “reformed” EU to the electorate.

And so the antis are keeping immigration up on the agenda. The refugee crisis helps: even though this has no bearing on Britain’s membership question, it serves to raise public unease. And slowly but surely the anti-EU campaigners are drawing a connection between EU membership and high immigration. The most conspicuous recent example came from the Home Secretary, Theresa May, no less. She suggested that EU migration be limited to those already with jobs to move too. This is half-baked, but that’s not the point. It is something an EU renegotiation cannot deliver, and this will help stoke discontent.

But leaving the EU would be a disaster for Britain. It would mire the country’s political leadership in many years of painful negotiation, and would give the Scottish independence movement a sound reason to rerun the independence referendum, and an excellent reason for Scots voters to vote for independence. Regardless of whether the Britain would be better off or not outside the EU in the long run, years of negotiation and uncertainty will damage investment, and no doubt slow down other areas of economic and political reform.

So what to do? Moderate Conservatives, led by the Prime Minister David Cameron, are trying to accommodate the anti-immigration movement, both in tightening rules, and in negotiations with the EU. This simply looks ineffectual – as well as damaging as the country’s demographic crisis slowly begins to bight, as well as the need for the country’s education sector to bring in foreign, fee-paying customers.

Labour have tried to find a middle ground too; this is an issue that bothers its working class core vote, now being picked off by Ukip. It has declared that its laissez-faire approach in the 2000s was a mistake. But it wasn’t, and this is intellectually dishonest. Amid such contortions it is difficult to sound convincing.

Nick Clegg, former leader of the Liberal Democrats, also tried to stake a middle ground. He wanted to combine clear and well-enforced rules on migration with a generally liberal attitude. The public wasn’t listening, though, and it sounded too much like liberal fence-sitting.

Which leaves liberals, left and right, in a bit of a bind. For now standing up for the principles of free movement and diversity is the only honest thing to do. But alongside the fictional problems that flow from this are quite a few genuine ones, that need real solutions. And anti-immigrant feeling is a sign of a deeper discontent, which liberals must address.

I think it has a lot to do with the hollowing out of society, as big institutions, from public ones like the NHS, to national commercial chains, take control. This provides the sort of rootless milieu in which outsiders seem much more of a threat to people’s security. It allows organisations that thrive on cheap, disempowered labour, often recruited abroad, to thrive.

But reversing that trend is a huge task. it means looking again at the standard language of economic growth and productivity. It is a cause that this blogger is increasingly devoting himself to.

David Cameron pitches for the political centre on immigration and EU. How depressing

The Conservative leader and British Prime Minister David Cameron’s grasp of the dark political arts is not gone. Last Friday he gave a long-awaited speech setting out his proposals on managing immigration from other EU countries better. It received generally favourable coverage. And, before anybody had a chance to think through what he had said, the story was muscled out by a series of announcements about public spending commitments, in advance of tomorrow’s Autumn Statement by the Chancellor of the Exchequer. If this goes according to plan, Mr Cameron has redefined the political centre ground at a stroke. Will he succeed?

In the preceding weeks, not coincidentally while the Conservatives were trying to fight off a by-lection challenge from Ukip, various suggestions had been floated about what the speech might say. The most eye-catching was some sort of quota system for accepting intra-EU migrants. This drew much criticism from other EU leaders. In the event this idea was dropped. Instead Mr Cameron proposed to limit their access to benefits and tax credits, including those for both those in work, and those out of work. Migrants would not be entitled to these benefits unless they had been resident for a full four years.

In terms of pure politics this was astute. More moderate commentators were relieved that the quota idea, and its immediate confrontation with other EU leaders, was buried. Limiting access to benefits, on the other hand, sounds a bit like what the opposition Labour Party, and even the Liberal Democrat coalition partners, were suggesting. But the time limit and scope was much greater than anything these parties proposed – pleasing the more hawkish commentators, especially in the right-wing press, who are the main attack-dogs in British politics. Sensibly he left the matter of access to free health services under the NHS untouched. Many older Britons have retired to Spain, where they get access to that country’s health services for free; indeed Britain seems to be exporting oldsters almost as fast as it importing youngsters – something the government will not wish to discourage.

And so Mr Cameron will try to present himself as the voice of sweet reason and moderation as the General Election approaches. On the one hand we have the liberals and the left, who are ignoring the British public’s anxieties over immigration. On the other we have the swivel-eyed loons of the Ukip, who demand must more drastic measures, including departure from the EU, which would do severe harm to the country’s economic prospects. Mr Cameron does the faintly plaintive, sweet moderation act pretty well. He praised the contribution of immigrants in his speech, and simply suggested that the country had been having a little too much of a good thing.

And the bulk of the British public may well agree. Mr Cameron’s suggestion that we renegotiate our EU treaties and put the result to an in-out referendum sounded similarly sensible and centrist. That the political centre seems to be drifting so far towards muddled populism might alarm liberals like me, but this is reality.

But there are problems. The most immediate is whether his own fractious Conservative Party will buy it. Many party workers, and a lot of MPs, actually agree with Ukip about immigration and the EU. Mr Cameron’s policy may sound like a cop out to them. If they start to get vocal, the Tories will look divided, and their credibility will fade. There were mutterings over the weekend, but we will have to wait and see on that. His party did allow Mr Cameron a free hand before the 2010 to define it as more moderate than it really was. If they have any sense they will do so this time. If the British public has any sense they won’t fall for it.

The political class are obsessed with the General Election due in May 2015. Any dates after this only matter in terms of manoeuvres designed to secure an advantage at that point. And in that light, divisions within the Tory party are Mr Cameron’s main threat on the issue. It is looking beyond that date that the real un-wisdom of Mr Cameron’s stance starts to emerge.

The first point is that it still leaves a problem with the EU renegotiation. While there is some scope to limit access to benefits under current EU treaties (by moving towards a contributory principle), changes of this nature will apparently need treaty changes. Mr Cameron had calculated that the EU would need treaty changes anyway to secure the struggling Eurozone – so adding in a few goodies for his benefit would not be too onerous. But the EU’s leaders are heading in a different direction. With anti-EU populists on the rise across the continent, leaders want to avoid any treaty change, since these are likely to be held hostage to referendum results. Unfortunately voting No to a treaty change has not proved fatal to any EU country so far – it has simply improved negotiating leverage. Going through this process just to save Mr Cameron’s bacon may well be too much. This takes the country a further step towards the EU exit, something that Mr Cameron seems to want to avoid.

The second point is that this plan does not actually address any major economic stress point. Access to Britain’s benefit system does not seem to be a major draw for intra-EU migrants – though it may be a stronger incentive for migrants from outside the EU. The British public will not notice a diminution of EU migrant numbers. The policy is designed to address tabloid exaggerations, not reality. The tabloids will simply move on to some other nonsense. All that pain for no real gain.

Still practical solutions to the country’s problems count for little in the current political debate. The populist right blame the EU and immigrants for the country’s problems. The left blames some combination of bankers, capitalists, greedy rich people or deluded neoliberals. We may suspect that our problems lie deeper – with demographics, globalisation and the development of technology. We may also suspect that the proffered solutions of left and right will make things worse not better. But no politician, campaign group or tabloid journalist seems to care. That is the real scandal of Britain’s political class.

Immigration and Britain: there is not one problem and there is not one solution

Immigration is now the top issue in British politics, though laughably some nativists still claim that politicians refuse to talk about it. Polls show that it has been one of the biggest issues of public concern for many years – indeed, some suggest that the level of concern is independent of actual levels of immigration. Now that the economy is dropping as a political issue, in spite of Labour’s attempt to stoke up anxiety, immigration is challenged only by the NHS in public concern. But to what extent is the public worry about immigration a fantasy, a displacement of anxiety about other changes in our society, and how much does it reflect real stress?

The answer to that matters, or it should. Let us put to one side the Conservative Prime Minister David Cameron’s reason for wanting to limit freedom of movement in the EU: that the British people are his boss. In other words he doesn’t care whether the fear is based on substance, he just listens to what people tell him. We can imagine Winston Churchill in 1940 consulting opinion polls as to whether to sue for peace with Hitler or fight on alone. Leaders should lead, not follow. If the anxiety over immigration is fantasy, our politicians should publicly challenge it; if it is based on real stress, steps should be taken to manage that stress.

Unfortunately the quality of debate is very poor. The anti camp are more interested in fanning the flames than examining the real issues, for example by stoking fears that the country will be “swamped”. And yet the migration liberals seem to talk past them and stick to generalities: that migration is generally a good thing in a modern society. And even some who attempt to see both sides, like this article from John Harris in the Guardian, are often unsatisfactory. In spite of the article’s encouraging title “Don’t dismiss public fears about migration as mere bigotry” it turns out that it is largely based on the author’s experience in the East Anglian town of Wisbech, which does little to explain feelings elsewhere in the country. And he swallows at face value Labour’s apology over letting in EU migrants from new members in the early 2000s: this is far from a self-evident policy mistake, even in hindsight.

A welcome breath of fresh air is this article from this week’s Economist. This comes from an unmistakably liberal standpoint, but in the best traditions of that newspaper, it is a balanced survey of the evidence – so much better than that paper’s overage of British educational policy. This brings out how much anti-immigration feeling is a sort of displacement of other anxieties, personal and societal, stoked up by the country’s “raucous” press. A telling fact is that anti-immigrant feeling is often highest in communities relatively unaffected by immigration, such as the site of Ukip’s recent landslide by election victory, Clacton.

But there are real pressures too. The starkest are in East Anglian and Lincolnshire agricultural communities (like Wisbech). Here unscrupulous gangmasters ship in thousands of workers form abroad to work in the fields for a pittance. They destroy job prospects for the less-skilled locals; crammed into to houses in ordinary residential areas they overload local services and undermine neighbourliness. They are a lawless other, a truly ugly phenomenon, with the workers themselves as much victims as the blighted communities. Then there are northern and midland towns where Pakistani and other Asian communities have not integrated. In Birmingham conservative Muslims have tried to take over state schools to run them on a decidedly illiberal principles. Confused youngsters may be radicalised and converted to terrorist activities. Such British icons as poppy day, to commemorate the sacrifices of the armed forces, may be viewed with hostility. And there are many other such problems: Somali children failing to take to British education; Albanian and Kosovar crime syndicates; rich foreigners buying up London luxury flats; and so on.

But what is so striking is how diverse these problems are. Each of the solutions advocated by anti-immigrants would only deal with a small part of the problem. Leave the EU? Well that might help with the EU agricultural workers in East Anglia – but there would also be collateral damage to the farming industry. It wouldn’t help with second and third generation Pakistani residents. A points system for immigrants so that only those with needed skills or money can come in? We already have this for non-EU migrants, and it is far from clear that the collateral damage to businesses and universities is worth any benefits. And it doesn’t help with those London flats.

Surely what is needed is not so much these drastic, strategic national solutions, but a number tactical, local solutions – and some international ones too. We need to crack down on the gangmasters and the sort of exploitation that they perpetrate; that does not require EU treaty changes. We need better engagement with and among longer-standing immigrant communities – including better teaching about Islam in our schools. This may mean bypassing the paternalistic “community leaders” in many cases. Serious action is needed to root out prejudice in our police forces. The paternalistic Labour one-party states that predominate in so many of the country’s urban local authorities needs to be replaced by something more pluralist and democratic. And so it goes on.

But liberals must also confront two strategic problems: housing and the welfare state. A common complaint is that the number of immigrants is putting pressure on limited housing resources, which is depriving poorer people (of all races, it might be added) of access to decent housing. Immigration is by no means the only reason why housing is under pressure – but there must be some substance to this. An obvious answer is to build more houses – but that will often mean blotting out nice bits of green countryside, especially in urban greenbelts. My personal view is that the rising population is driven by demographics – younger immigrants are being sucked in as older people leave the workforce to retire. As such limiting numbers of immigrants will create worse pressures elsewhere. So we badly need a decent housing strategy. But I also think that a lot of the pressure on green land comes from our dysfunctional private sector developers, exploiting English fantasies of the sort of home they want to make quick profits. In fact dense, urban housing is much more sustainable in the long-term, even if it is expensive in the short term. Also it would be good to revive local economies that are currently weak, for example in many northern cities, and where housing pressure is much lower. But some loss of greenbelt is inevitable. This isn’t easy, but we need to put more of the political class’s creative energies into this, learning from past failures.

Welfare is more awkward. Unlike most of our European neighbours, Britain does not operate insurance-based welfare. We run according a more socialist ideal based on need. This is exemplified best by the NHS – but similar thinking runs through the whole system. With an insurance system, even if state-run, it is much easier to control access, and reduce access to recent immigrants. We don’t really know how much our open access to welfare encourages poorer migrants. But it is the poorer migrants that create most of the difficult issues. There may be much mythology in the idea of welfare tourism – but there is also plenty of anecdotal evidence that our welfare system attracts migrants to Britain rather than France, say. Should we start to move towards the insurance model? This is what Labour are suggesting by re-establishing a “contributory principle”. I have to say that I worry about this. It’s a neat way to keep new, unskilled migrants away without burdensome immigration systems – but I suspect there would be a lot of collateral damage to longer-term residents. We have taken our welfare state in that direction for a reason – and it is an attractive idea. There may be other reasons to move towards and insurance model (which, after all was the idea of the original Beveridge system) in times when tax revenues do not flow so freely. I don’t have a view on this – but like housing it needs to be a central area of political discourse.

And my conclusion? High levels of immigration are a fact of life for Britain. Crude regulation, or drastic measures like leaving the EU, will create more problems than they solve. But there are some real pressures that our political class should address. And there are many problems, not one.