I’m inside so shut the door

I was saddened to read comments today by the Indian-born entrepreneur Sir Gulam Noon.

According to the Daily Mail, the “controversial Labour donor” has called for a ten year ban on immigration to the United Kingdom so as to give time for the current immigrant population to settle in and integrate and to make sure that there are enough jobs to go around.

In his modestly titled autobiography, Noon, with a View: Courage and Integrity, the so called ‘Curry King’ writes “Bluntly, I think we are self-sufficient now. We should wait for five or ten years, until all the newcomers have been properly integrated and assimilated into the country. Until then we should just shut the door.”

This is a shame, as Noon is a perfect example the benefits of immigration to the UK economy and society. Arriving in 1966 with just £50 in his pocket, he has since made a fortune of £65m, employed thousands of people and satisfied many thousand more customers. He has contributed hugely to the economy and (through taxation) to the funding of public services. A few more Noons (Labour donations notwithstanding) would be welcome.

However, it a sad example of double-standards, he would now seek to deny that opportunity to other would-be immigrants and entrepreneurs.

His thinking is clearly flawed, resting on common errors such as the idea that the UK is ‘full’ (we in fact have far lower population density that the Netherlands, Belgium or Taiwan and approximately the same as Germany) or that there are only so many jobs to go round.

He also cites the rise of the British National(ist) Party as an example of the dangers of “disturb[ing] the balance and upset[ing] the … host community”, as though those fascist thugs represented mainstream opinion. Sadly, his comments are more likely to play into their hands – I can already imagine them reproducing his words on their literature.

The truth is that the quantity of work available in an economy adjusts with demand, so that the more people one admits the more work is needed. Of course it would be harmful to the economy if immigrants did not work, but the suggestion that immigrants arrive to take advantage of our welfare state and live I life of idleness is simply not born out by evidence. Many immigrants pay several thousands of pounds to reach the UK, which they would hardly do just for the privilege of living off £60 a week.

There is a regrettable tendency among some immigrants to wish to close the door after them, stemming the competition from the next wave of immigration. It seems that Sir Gulam has decided to throw his lot in with those who oppose immigration even though he is himself a prime example of how it benefits the UK . It is both ignorant and hypocritical.

British jobs for British workers?

The Government are wiping statistical egg off their faces again.

Up until this week, we were being told that only 0.8 million foreign migrants had come to work in the UK, while the labour market had grown by 2.7m new jobs. Now the Government has had to revise both figures, admitting that in fact 1.1m new migrants had entered Britain, while only 2.1m new jobs had been created. Far from creating "British jobs for British workers," it appears that Gordon Brown has been creating British jobs for foreign workers.

Except that it's all tosh, of course.

For one thing, Gordon Brown has created only about a couple of hundred thousand new jobs, largely by employing new civil servants, nurses and other public sector employees. Most of the 2.1m new jobs were created in spite of Labour efforts rather than because of them. They are private sector jobs, and a good job too.

But what of Brown's supposed crackdown on migrant labour? Does it matter that 52% of the new jobs have gone to migrants? And who is to blame?

The crackdown on migrant labour is boneheaded Labour nonsense and should be treated with disdain. A real policy of creating "British jobs for British workers" would be illegal under European law, and even if one would rather be out of the European Union it remains an ignorant and self-defeating policy. 1.1m workers are 1.1m workers, whether they come from Portsmouth, Poland or Peru. As long as they work hard they are creating value for the whole community; as long as they earn and spend they are creating jobs for other - mostly British - people; and as long as they are paying taxes they are contributing to the schools and hospitals that we all use.

That these "British jobs" could have gone to "British workers" is of course true, but it is not as though British workers could not have filled them. There are 1.65m unemployed in the UK, and one has to wonder why so many remain unemployed if we have had to import 1.1m workers from abroad to fill the vacancies. The explanation comes from debunking three myths:

1. Jobs are not created by ministers and civil servants. They are created by businesses that can see a way of turning labour into profit. If they can hire a person and generate more capital than they need pay in wages, it is worth their creating a job. Those jobs were potentially there as long as people were willing to work at that price. It is the availability of foreign labour prepared to work at those prices that created those jobs.
2. Britain's unemployed were more than welcome to apply for those jobs. Many may have done so; many more did not. There have been numerous managers interviewed for TV and the papers who have stated that they have offered jobs in areas of high unemployment for years and local people have not applied.
3. We would not have created 2.1m jobs if 1.1m foreigners had not come here to work. As noted above, they spend their wages in our shops, require us to hire our teachers and use products made by our manufacturers. A significant part of those 2.1m jobs are feedback; many of those 2.1m exist because othes within that 2.1m (including within the 1.1m) exist;

The simple truth is that as long as we pay people not to work, we will need to import foreign labour to do the jobs that British people are unwilling to take on. On any day in the UK there are approximately two thirds of a million job vacancies. The problem in the UK is not too many foreign workers; it is too many British people who are not willing to take the jobs that are available.

An amusing conversation

Tom and a colleague are chatting by the kettle. Tom’s colleague is complaining that she has just received a parking ticket.

Colleague: I was only there for 10 minutes.

Tom: The problem is, there’s just so many of them these days. You can’t get away with it even for a moment.

Colleague: The vultures!

Tom: Admit it – we’d be in gridlock without them.

Colleague: They’re just revenue raisers for the Council.

Tom: Maybe we should retrain them all as plumbers.

Colleague: We can’t even get a plumber round my way.

Tom: You want to find a nice Pole to do the job.

Colleague: I’d rather give the money to an English person. [As an afterthought] If they were better at the job.

Tom: Ah, but that’s the thing, you see. The Poles are excellently well trained. They’ve still got decent vocational education over there, unlike here. Polish workers are very skilled.

Colleague: Yeah, but they charge half as much as our workers.

Tom: So you get a quality plumber for half price, and they get a better income than they’d get in Poland. Sounds like a win-win to me.

Colleague: But I hear they’ve got a skills shortage over there. Nobody’s left to do the jobs.

Tom: But that’s okay, ‘cos they’re getting loads of money in remittances, as the Polish plumber sends money home to the family.

Colleague: Yeah, but they’re not getting enough taxes because all the work is being done over here and the money comes in but nobody pays tax on it.

Tom: Perhaps, but they don’t need so many public services if they have the money to provide for themselves.

Colleague: That’s Tory talk! I thought you were a Liberal.

Tom: That is liberal. Just a different kind of liberal.

So the battle goes on.

Frank Field comments on Margaret Hodge and housing

Another night, another period of disturbed sleep. Today, rather than keep me awake until 4am, my body decided to wake me up at 4am. Well, it’s novel, at least.

It also means I get to see Hard Talk, one of the more interesting and more rarely seen programmes on the BBC. For those not aware of it, it is one of the only programmes I know of where a prominent individual is interviewed one-on-one for half an hour (or probably longer, as it seems to be edited).

Last night it was the turn of Frank Field, a rare commodity in the country in that he is both a Labour MP and also quite bright. Actually, that’s too mealy mouthed: as a Tory friend once noted, he’s probably forgotten more about pensions and welfare than most of us will ever know. The BBC have not published tonight’s interview on their website yet, sadly, but his 2004 outing is available.

The reason for interviewing Field is undoubtedly his recent report for Reform, the first in a series of six. This promises to be an interesting series, as Field was Minister for Welfare Reform in the first Blair government. Charged with 'thinking the unthinkable' about social security reform, he made the mistake of thinking he could also ‘say the unsayable’ rather than nodding politely and saying “Yes, Gordon”. A year after his appointment he resigned in frustration.

In what was generally an interesting interview, I was most struck by his support for Margaret Hodge’s comments about social housing. Hodge has been widely criticised for “perpetuat[ing] the myth that social homes are given to new immigrants coming to the UK at the expense of the indigenous population” and even for using the word ‘indigenous’ to distinguish between recent immigrants and people born in the UK. The latter comment is harsh; she was undoubtedly fishing for words in a mine-infested sea – had she used ‘native’ she would have been both correct and crucified. Immigration is now inseparable from race, and the debate suffers from the same tortuous linguistic manoeuvring that spawned the mocking expression “politically correct.”

It seems to me that there is a simple question of fact that underpins this debate, and which to my knowledge has never been satisfactorily answered, which is whether there is any truth in the suggestion that immigrants receive preference in the allocation of Social Housing. It should be fairly easy to check the rules and procedures applied by councils on the one hand, and conduct a statistical survey on the other. If Margaret Hodge is correct, then immigrants do receive preference, but only because their need is greater. Social Housing is a socialist concept, and each receives according to his need. If so, one can fairly easily imagine that a newly-arrived family might have greater need than a family that is already in situ, and which must have some accommodation, no matter how unsatisfactory.

Hodge’s suggestion was that the allocation of Social Housing should be guided by “different rules based on, for instance, length of residence, citizenship or national insurance contributions...” Frank Field’s comment on this was interesting. He asked whether anybody had ever asked recent immigrants how they would construct housing policy. Noting that in some areas it was members of the Bangladeshi community, which had originally immigrated to the UK forty years ago, that were now complaining that they were being displaced, he wondered whether they would not in fact favour a system that rewarded residency, citizenship and the existing community. If they planed to settle, they might favour a system that would in the future reward their commitment to the community. If they have played by the rules, goes the thinking, they deserve their fair share, their turn.

It’s not entirely daft, but in Labour circles it certainly suggests that he did not stop ‘thinking the unthinkable’ after he lost his ministerial salary.

Not being a socialist myself, I see this as a simple resource allocation problem, and I think I know who is causing it. Immigration is creating a demand for housing, as is longevity and shrinking household sizes. Overly restrictive planning regulations make it impossible to meet that demand; we are building about half the number of houses we need each year, which makes existing and new housing expensive (as you may have noticed). Successive socialist and dirigiste governments have responded by trying to manage and manipulate the housing market. The system is typical of the era in which it was conceived: government builds houses and then rations them, distributing them based on political rather than economic criteria. The result has been disastrous, and not only aesthetically. It is ironic that battles are (sometimes literally) fought over access to social housing that is often seen as dilapidated and blighted by crime and communal degradation.

I would therefore disagree with those who argue that the solution to the question raised by Hodge is more social housing. Social housing is the problem. The solution is liberalisation.

Planning regulations must be radically overhauled to allow for more extensive and more innovative house-building. A land value tax must be introduced to encourage landlords to fill vacant properties and develop sites. Meanwhile, government must move to a system of subsidising tenants rather than landlords. Instead of supporting “Social Landlords” and turning local councils into property developers, the entire system should be focussed on housing benefit. This would free individuals to make their own choices about housing, and remove the social stigma that often accrues to council tenants.

As for the immigration issue, a demand-side policy would have two benefits. Firstly, it would reduce the pressure on scarce resources: while government money is not unlimited, it is more responsive to changing needs than the stock of publicly owned housing. Secondly, it would remove the most obvious mark of who is enjoying the State’s largesse. Between them, these two outcomes would reduce the tensions that have resulted from our system of state-allocated housing. It would instead give power and choice to the people, by putting the money in their hands.

But that really would be unthinkable.

EXCLUSIVE: Mervyn DID draft a letter to Gordon!

It's amazing what one finds in the rubbish bins behind Threadneedle Street!

Obviously the person who drafted this letter realised they didn't quite need it after all:


Dear Gordon,

As you may have noticed, inflation appears to be spiralling out of control. The consumer price index (CPI) is now at its highest since 1995, while the retail price index (RPI) is at its highest since 1991. I imagine it must be pretty embarrassing, presiding over an economic record worse than that of the Major administration, which Labour have been criticised so vocally over the past decade.

I feel duty bound to provide an explanation for this rising inflationary tide. I attribute it to a number of key factors, none of which are beyond the wit of man to cure.

1. House prices

House prices have spiralled over the past decade. This has a direct impact on RPI and has also facilitated unprecedented levels of equity withdrawal, fuelling consumer price rises.

House price rises are largely to do with property speculation. While interest rates can curb house prices to a degree, they are a blunt tool in that they also affect other lending and borrowing. High interest rates would, for example, reduce investment. One means of curbing property speculation without harming investment would be to introduce land value taxation, which economists recognise is among the least distortionary form of taxation. Sadly, the Government has shown no willingness to investigate this option.

2. Public spending

A grotesque rise in public spending over the past five years has increased inflation. A particularly egregious example has been overly-generous public sector pay rises that bear no relation to productivity gains.

3. Public borrowing

The Pre-Budget Report forecasts net debt at the end of March 2007 of £503.9 billion. This budgetary imprudence has injected massive liquidity into the public sector and the economy more widely. Effectively, more money is chasing the same number of goods.

4. Taxes

In the pre-budget report the Government added 1.5p/litre to petrol duty. This has been the major factor in the 2p rise in the cost of a litre of petrol, which in turn accounts for two-thirds of the rise in CPI last month.

5. Trade barriers

Cheap imports of goods from emerging Asian manufacturers has applied downward pressure on prices, particularly in clothing and electrical goods. Sadly, the Government and the European Commission (led by Trade Commissioner Peter Peter Mandelson) have imposed additional and ongoing quotas on Chinese textile imports. This is in breach of our commitments under the World Trade Organisation. The result is that customers have been forced to purchase more expensive European products, pushing up retail prices.

6. Immigration

The low inflation enjoyed by the UK over the past two years has been in part due to immigration. As my colleague, David, pointed out a couple of weeks ago, the availability of highly skilled Eastern European workers has kept wage demands within sensible limits. Sadly, the Government has decided not to take advantage of another wave of immigration from Romania and Bulgaria, instead imposing a daft and distortionary quota system. This has removed a further buffer against inflation.

As you will see from the above factors, there is a clear single cause of inflation. Sadly, it is beyond my authority to do anything about it. I think it’s over to you, old chap.

I remain your humble servant,

Mervyn.

A novel solution to policing in Northern Ireland

As part of the peace process, the new Police Service of Northern Ireland (PSNI) is required to recruit equally from the Protestant and Catholic communities. Even though the Catholics remain in a minority within the province, the PSNI is required to recruit on a 50-50 basis.

In practice, this is proving hard, as many Catholics remain suspicious of the police. When it was the Royal Ulster Constabulary it was largely Protestant and many considered it to be partisan. Thus even now only 21 per cent of its officers are Catholic and PNSI has struggled to recruit sufficient numbers of Catholics.

But a novel solution has manifested itself courtesy of one of this blog’s favourite topics, immigration. The Times reports that “Nearly 1,000 of the province’s burgeoning Polish community have responded to a police recruitment drive – and they are nearly all Catholics. Poles accounted for 12 per cent of the 7,749 applicants…”

Is there no problem that can’t be solved by immigration? Our hospitals rely on immigrant nurses and doctors as well as porters and cleaners; the army has relied on recruits from the Commonwealth for years; now the police are recruiting officers from among immigrant communities.

Some complain that this undermines the purpose of the 50-50 rule because it is not ensuring that the police force adequately represents the Irish community. However, this is a mistaken concern. In many ways employing Poles is preferable to employing Catholic and Protestant Irish who have been influenced by the long period of “The Troubles”. Of course there is a need for both sides of Northern Ireland’s divide to be represented in the PSNI. But I can think of nothing better for the province than that hundreds of its police officers have never been involved in the conflict and are interested in nothing other than dispensing justice and upholding the law impartially and neutrally.

Of course Ian Paisley is correct (a sentence that I never thought I would write, even if I am in this case referring to the son of the DUP leader) to say that “You should not recruit on a religious basis”. It is discriminatory and should be illegal in any arm of government. However, Northern Ireland faces particular problems in which the police force is intimately involved. This may not be the time to stand up for liberal principles (another sentence I never thought I’d write!). As long as the quota system is a temporary measure that will ensure a balanced police force and so restore the faith of the Catholic community in the impartiality of policing in the province, it should be tolerated.

Sadly, experience tells us that temporary measures generate vested interests. I can well imagine a future where the PSNI has won the trust of the whole Northern Irish community, but where groups within the province resist efforts to end the quota system. This is the experience of Affirmative Action in the United States. Ironically, perpetuating protectionist measures tends to do more harm than good, even for those so protected. But if in the short term it goes even part way to shoring up the peace process, it will be a price worth paying.

A slap in the face for Migration Watch

Yesterday I reported that Migration Watch had produced figures claiming that the economic impact of immigration from the 2004 EU accession countries is worth just 4p a day per UK citizen or “less than the equivalent of a small Mars bar a month”.

As I noted in my piece yesterday, Migration Watch’s figures for how much each person has benefited do not correspond with those from the Government, the London School of Economics or the Confederation of British Industry.

Today David Blanchflower, one of the nine members of the Bank of England’s Monetary Policy Committee, hit out at Migration Watch, pointing out that immigration has been a vital tool in keeping a lid on inflation (which, though rising under Gordon Brown, is still under control). Immigration “has tended to increase supply by more than it has increased demand in the UK (in the short run), and thereby acted to reduce inflationary pressures.”

As for the oft-cited error that immigrants are stealing our jobs or pushing down wages, this is nonsense. Mr. Blanchflower and the two Bank of England economists with whom he co-authored the report, write that “empirical literature from around the world suggests little or no evidence that immigrants have had a major impact on native labour market outcomes such as wages and unemployment.

But the impact of these immigrants on employment has not been neutral. Oh no! It has in fact reduced joblessness: “There seems to be broad agreement that immigration is likely to have reduced the natural rate of unemployment in the UK over the past few years.”

So, just to get this straight, not only have these hard-working taxpayers added 0.5 per cent to GDP and paid £2 billion in taxes in 2005, but they have also kept both unemployment and inflation lower than they would otherwise have been.

Not only does that leave egg on the face of Sir Andrew Green, but it also demonstrates that the Government were stupid not to repeat the trick by allowing Bulgarians and Romanians to join our economy based on need and not bureaucratic bean-counting.

An awful lot of Mars Bars courtesy of the Poles

Matt Davies reminds me that Migration Watch have produced figures on the economic impact of immigration that dispute those produced by HM Government. According to Migration Watch, the economic impact is worth 4p a day per UK citizen or “less than the equivalent of a small Mars bar a month”

Now you've got to admire those Poles. They make it all the way here with millions of fun-sized mars bars on their backs... That's what I call hard working!

The point of Migration Watch’s figures was to dispute Government figures that migrants have contributed 0.5% to GDP over-and-above what would accrue merely by enlarging the population. However, I have a lot more faith in the Government figures – not because I am particularly disposed to believe what comes out of Whitehall, but because they are supported by research from the London School of Economics and have the confidence of the Confederation of British Industry.

These figures not only add up to £5 billion (c. £1.60 per person per week, which under Labour means almost £1 per person that passes through Government hands) but they are also compounded because they are growth figures. In other words, we gain £5 billion in 2005 and £5 billion £100 + annual growth since 2005 every year from hereon in.

That’s a hell of a lot of Mars Bars!

Welcome to Europe; don't come here

Two stories in the news struck me particularly: the accession of two new countries to the EU and Government plans to change the legal age of smoking.

I doubt I am alone in being angered by the government’s decision to limit the number of EU citizens from Romania and Bulgaria entering the UK. As with the 2004 accession countries, the new entrants should enjoy the same free movement of goods, services, capital and labour that the older members enjoy. What is more, anyone who wants to work hard, pay taxes and obey the law should be welcome in our country.

Whether one believes Mr. Brown has been masterful or fortunate in his tenure as Chancellor of the Exchequer, the decision not to follow most of our European neighbours in restricting the free flow of labour from the 2004 accession countries was a masterstroke. It has been estimated that Britain has enjoyed a boost of 0.5 per cent of GDP over and above the growth that would accrue simply from a larger population: in other words, our society is £5 billion richer. In Labour’s high-tax society, that means our government is £2 billion richer. That buys a lot of teachers.

Labour’s failure to repeat this trick and gain another one-off dividend by admitting the hard-working taxpayers rejected by our protectionist neighbours is a sign of their weakness. Rather than explain to the electorate why everybody benefits from economic migration, Labour has preferred to bow to ignorance and pander to fear. As a result we have a policy that insults the new members and demeans the old.

Labour isn't working

It’s an old story, but it appears that they’re remaking it again. No, it’s not the BBC dramatisation of Dracula. It’s rising unemployment.

Youth unemployment is particularly troubling. In November this year 11,200 young people had been claiming benefits for more than a year. Youth unemployment is now worse than it was when Labour came to power. Figures from the Office of National Statistics are instructive:

1997 2006 Change
16 – 24 year olds unemployed 665,000 702,000 + 37,000
16 – 24 unemployment rate 14.4% 14.5% + 0.1%
16 – 24 unemployment rate – London 22.5% 42.9% + 20.4%


Labour MPs are rushing to blame the usual suspects – immigrants. With simple but flawed logic they suggest that hundreds of thousands of East Europeans have flooded in and taken jobs that might otherwise be filled by British workers. However, if this were the case, why was it that two thirds of a million 16 – 24 year olds were unemployed before the East Europeans arrived? How has Britain managed to absorb hundreds of thousands of East European workers when unemployment has only risen by tens of thousands?

This scapegoating of hard working, tax paying immigrants is a sordid attempt to shift attention from the real culprits: the Labour government. Youth unemployment is on the rise because Labour has strangled business with masses of extra regulation and rising taxation. It is rising because our schools are still failing to teach basic skills to far too many of our children; a quarter are functionally illiterate, innumerate and leave school at 16 with no qualifications worth speaking of. And it is rising because the government’s New Deal is a disaster, costing more and proving less effective than similar schemes in comparable countries, while massaging the jobless statistics by placing young people in jobs that last less than 13 weeks, so that returning jobless do not appear to be long-term unemployed.

In 1997 Gordon Brown described the levels of youth unemployment that Labour inherited from the Conservatives as “sickening”, a “human tragedy”, “an economic disaster”. After nine years of his chancellorship, it is now worse. It is an old Labour story, and each time we read it we feel the same despair. Labour isn’t working.