Does the UK need higher levels of immigration to thrive?

Keir Starmer has said the UK must end its economic dependence on migrant labour, setting his party on a collision course with those who argue more immigration is needed to help grow the economy out of recession.

Addressing business leaders at the Confederation of British Industry (CBI) conference in Birmingham today, the Labour leader said that while “migration is part of our national story – always has been, always will be” the “days when low pay and cheap labour are part of the British way on growth must end”.

With the UK’s economic woes being at least partly attributed to labour shortages, the director-general of the CBI, Tony Danker, yesterday called for a new deal on immigration. Danker said that the UK doesn’t “have the people we need” and it was “unrealistic” to think labour shortages could be solved by automation. He called for fixed-term visas to fill labour shortages and urged the government to be “practical” about immigration.

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What did the newspapers say?

The Telegraph called Starmer’s speech a “significant intervention” and “an attempt to quash any suggestion that the Labour leader would emulate Sir Tony Blair’s looser approach to immigration if he reaches Downing Street”.

The Labour leader is beginning “to flesh out what Labour’s immigration policy will look like at the next election”, said The Times, as he tries “to distinguish between his leadership and the party’s previous support for freedom of movement”.

While neither main party wishes to revisit the debate around Brexit, it nevertheless remains a significant factor in Britain’s current economic predicament. Sky News reported that “Brexit stopped many foreign workers being able to easily work in the UK and companies are struggling to recruit – especially in industries such as hospitality which has relied heavily on European staff in recent years. Despite four quarterly falls this year, overall vacancies remain high at more than 1.2 million,” said the broadcaster.

Businesses may be calling for immigration rules to be relaxed so they can bring in more overseas workers, “a much bigger issue for the public finances is whether the Office for Budget Responsibility (OBR) updates assumptions on population growth that underpins its borrowing forecasts”, said the Financial Times.

In March, the OBR predicted that because of Brexit, net migration to the UK would settle at an annual rate of just 129,000, well below its historic average. However, data released since then suggests that immigration has rebounded from its post-pandemic slump to much higher levels than originally forecast.

“Higher immigration would not necessarily change GDP per capita,” said the FT, “but it could make a big difference to the OBR’s forecasts for the public finances” – perhaps by as much as £5bn a year.

“Delays and uncertainty in business immigration cases have a tangible impact on the economy,” argued Eduardo Reyes in The Law Society Gazette, but “the big uncertainty in immigration is, as always, around policy and political interference. Over time the application of immigration policy, experience shows, is never truly arms-length or independent”.

What next?

With both Starmer and Rishi Sunak distancing themselves from any serious relaxation of immigration rules, especially the return to freedom of movement through closer economic ties to the EU, the options for both parties are limited.

Sunak has dismissed reports he could pursue a “Swiss-style” Brexit deal and said public confidence in the immigration system must be restored before calls from business leaders for more work visas can be answered. He has vowed to expand visa schemes for entrepreneurs and “highly skilled people” as part of a plan for Britain to be a “beacon for the world’s best and brightest”.

While Starmer has promised to be “pragmatic” when dealing with labour shortages, he has reiterated Labour’s support for a points-based immigration system and said that any expansion in visa schemes will come with “new conditions for business”. These would include a plan for improving the skills and training of the domestic workforce and spending more on new technology to ensure they wean themselves off their reliance on migrants to fill vacancies.

While the message “echoes that adopted by successive Tory prime ministers”, including Johnson and now Sunak, reported The Telegraph, Starmer in contrast “has so far declined to call for the overall immigration figures to be brought down”.

“It’s not yet clear whether Labour’s plans would reduce immigration,” said The New Statesman but “for now, however, Labour is attacking the government both for the economic pain of Brexit and its failure to manage immigration. That’s a much more aggressive strategy than merely criticising the government over the technicalities of the Northern Ireland Protocol, and links directly to the issues that motivated people to vote for Brexit in the first place. It could well prove fruitful.”

With immigration once again returning to the top of the political agenda, how each party approaches the issue and ties it to a wider plan to get the economy back on track, could go a long way to deciding how they fare at the next election.